Income Tax Assessment Act 1997 (ITAA)
This is the Producer Offset legislation. It provides the basis for certifying applicants and calculating QAPE for the Producer Offset and the sister programs, the Location and PDV Offsets. The document is a compilation of Division 376 taking into account amendments up to October 2024, including those that introduced the ‘new rules’ in 2011, the definition of ‘documentary’ in 2013, an amendment to the ‘Gallipoli clause’ in 2018, changes to the amount of the Producer Offset, removal of the 65-commercial-hour cap for drama productions in December 2021 and the new per season threshold for drama series that spend at least $35 million per season in QAPE from 1 July 2024.
Amendments to the ITAA and associated explanatory documents
The original Producer Offset legislation and relevant amending Acts are set out below. Links to relevant Explanatory Memoranda – which seek to explain the content, objectives and operation of the clauses of the associated Bill – are also included.
Tax Laws Amendment (2007 Measures No. 5) Act 2007 – Sch 10
and Explanatory Memorandum to the Tax laws Amendment (2007) Measure No.5) Bill 2007. This is the original legislation which introduced the Producer Offset.
Tax Laws Amendment (2011 Measures No. 7) Act 2011 – Sch 9 and Explanatory Memorandum to the Tax Laws Amendment (2011 Measures No. 7) Bill 2011. This legislation introduced the ‘new rules’ which amended the calculation of QAPE and the eligibility thresholds.
Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013 – Sch 1 and Explanatory Memorandum to the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013. This legislation introduced the definition of ‘documentary’.
Treasury Laws Amendment (Tax Integrity and Other Measures No. 2) Act 2018 – Sch 3. This legislation amended section 376-170 of the ITTA, which amendment related to the provision commonly known as the Gallipoli Clause.
Treasury Laws Amendment (2021 Measures No. 5) Act 2021 – Sch 1 and Explanatory Memorandum to the Treasury Laws Amendment (2021 Measures No. 5) Bill 2021.
This Act introduced the following changes for projects commencing principal photography on or after 1 July 2021:
- the amount of the Producer Offset is 40% for feature films produced for commercial exhibition to the public in cinemas;
- the amount of the Producer Offset for other eligible projects increased from 20% to 30%; and
- removal of the 65-commercial-hour cap for drama productions.
Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Act 2021 – Sch 6 and Explanatory Memorandum to the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Act 2021 – Sch 6.
This Act introduced the following changes for projects commencing principal photography after 1 July 2024:
- The new per season threshold means that drama series that spend at least $35 million per season in QAPE will be eligible for the Producer Offset and not subject to the per hour minimum QAPE requirement of $500,000.
Producer Offset Rules and associated explanatory documents
The Producer Offset Rules specify how applications for provisional and final certificates are to be made to Screen Australia, and set out the procedures by which Screen Australia will consider provisional and final certificate applications. These Rules came into force on 15 February 2018, and repealed the Producer Offset Rules 2007.
Explanatory Statement to the Producer Offset Rules 2018
The Explanatory Statement to the Producer Offset Rules 2018 explains the purpose and operation of the instrument.
Pending changes to the Producer Offset Legislation
On 14 May 2024 as part of the Federal Budget, the Australian Government announced changes to the Producer Offset.
These changes will apply to projects that commence principal photography on or after 1 July 2024 and are subject to the passage of legislation.
The necessary legislation has not passed through parliament yet.
Removing the ‘Above the Line’ cap:
- The Australian Government will remove the 20% above the line cap from the Producer Offset. This will remove the restrictions placed on Australian producers when using major creative talent. It also aligns the Producer Offset with the Location Offset now that the Location Offset rebate rate will be increased to 30 per cent.
- This will support local screen producers, including children’s content producers, by modernising the Producer Offset and allowing local producers better access to top-tier Australian talent.
Removing minimum length requirements:
- The Australian Government will also remove minimum length requirements for most formats under the Producer Offset.
- Many of the current minimum lengths are based on a terrestrial free-to-air broadcast system that are no longer relevant for online streaming platforms. For example, minimum lengths include one commercial hour for a single episode of non-feature programs other than documentaries or animations, and a commercial ¼ hour for short-form animation.
- Note: the minimum length requirements for feature film and large format feature film will remain unchanged. These are still considered appropriate and reflective of the contemporary cinema distribution environment.