The location tax offset

The location tax offset is available for films:

• that do not satisfy the significant Australian content test required for the producer tax offset
• where production (that is, principal photography or production of the animated image) commenced on or after 8 May 2007.

The location tax offset is calculated at:

• 16.5% of the company’s total QAPE on the film if production of the film commenced on or after 10 May 2011
• 15% of the company’s total QAPE on the film if production of the film commenced before 10 May 2011.

The location tax offset is available to a company for the making of a film when the following conditions are met:

• The Minister for the Arts has issued to the company a final certificate for the film in relation to the location offset.
• The company is either an Australian resident or a foreign resident with a permanent establishment in Australia and an ABN.

The company generally claims the tax offset in its income tax return for the income year in which the company’s QAPE on the film ceased.

However, if the company commenced production of the film before 1 July 2010 and the company’s total QAPE on the film is less than $50 million, the company claims the tax offset in its income tax return for the income year in which the company’s ‘production expenditure’ on the film ceased.

The issue by the Minister for the Arts of a final certificate to a company for a film in relation to the location tax offset is the central requirement for the company’s entitlement to the location tax offset in respect of the film.

An application to the Minister for the Arts for such a final certificate is considered by the Film Certification Advisory Board, comprising industry representatives and a senior official from the Office for the Arts, which advises the Minister on whether to issue a final certificate.

Broadly, the Minister for the Arts must be satisfied of the following:

• the film is of an eligible format and genre
• the company’s total QAPE on the film is at least $15 million
• the company has either carried out, or made the arrangements for carrying out, all the activities in Australia necessary for the making of the film.

If the company commenced production of the film before 1 July 2010 and the company’s total QAPE on the film is less than $50 million:

• total QAPE must be at least 70% of the company’s total ‘production expenditure’ on the film, and  
• the company must have either carried out, or made the arrangements for carrying out, all the activities worldwide necessary for the making of the film.

Like the producer tax offset, the company’s total QAPE on the film is determined as part of the final certification process for the location tax offset. That information, along with a copy of the final certificate, is provided to us to enable us to verify claims and process payment of the location tax offset.