Supplementary Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General outline and financial impact
Amendment to the Taxation Laws Amendment (Film Incentives) Bill 2002
The amendment to the Taxation Laws Amendment (Film Incentives) Bill 2002 adds a provision requiring the film incentive initiative to be reviewed in 5 years. Without the amendment, the requirement for review of the incentive would have been only administrative.
Date of effect: This amendment will commence at the same time as those in Schedule 1 to the Taxation Laws Amendment (Film Incentives) Bill 2002.
Proposal announced: The review was announced in Treasurers Press Release No. 65 of 4 September 2001.
Financial impact: The amendment will have no effect on the financial impact of the measures in the bill.
Compliance cost impact: The amendment will involve no additional compliance costs.
Chapter 1 - Amendment to the Taxation Laws Amendment (Film Incentives) Bill 2002
Overview
1.1 The Taxation Laws Amendment (Film Incentives) Bill 2002 (the bill) amends the Income Tax Assessment Act 1997 to create a refundable tax offset for film production in Australia. This measure is designed to attract large budget film productions to Australia in order to develop Australias film industry.
1.2 The amendment to the bill adds a new provision requiring the offset to be reviewed within 5 years. Without the amendment, the requirement for review would have been only administrative.
Purpose of the amendment
1.3 The amendment to the bill will ensure that the refundable tax offset will be reviewed within 5 years to determine if it has been effective as an incentive to encourage big budget films to locate in Australia. The review will also examine the benefits and opportunities the offset has delivered to the Australian film industry.
Explanation of the amendment
1.4 This section requires the review of the offset to be conducted and completed within 5 years of its commencement; that is, before 4 September 2006. Because of the amendment, the review will be mandatory where it would otherwise have been an administrative expectation.
1.5 Allowing for the establishment of the offsets administration by mid-2002, and the need to commence the review by mid-2005, this will provide an effective 3 years of data on which to evaluate the success of the offset as an incentive to attract film production to Australia. This is particularly appropriate for the film industry where the processes surrounding the planning and production of a film project can take several years. [Schedule 1, item 2, subsection 376-110(1)]
Scope of the review
1.6 The evaluation of the success of the offset, taking account of its net cost, in attracting high end quality and big budget film productions is a mandatory part of the review. The review will consider the extent to which the offset has resulted in opportunities for growth in the Australian film production industry, including the production service and post-production industries.
1.7 The Government is concerned to ensure that the offset benefits Australian film industry personnel. The review will therefore also assess the extent to which the offset has resulted in opportunities for employment and skills development of Australian film industry professionals. The requirements allow additional elements to be included in the review, as appropriate when it is actually conducted. [Schedule 1, item 2, paragraph 376-110(2)(a)]
Consultation within the review process
1.8 The offset is targeted at attracting foreign film production to Australia, and is designed to benefit the Australian film industry generally. The review will involve a consultation process that is intended to involve individuals and organisations from all aspects of the Australian film industry, including State government agencies, as well as taking into account the views of the offsets focus group - major international film studios. The review must give film industry participants the opportunity to make written submissions. However, this requirement is not meant to limit the extent of an appropriate consultation process, which may well include other elements. [Schedule 1, item 2, paragraph 376-110(2)(b)]
Reporting the review
1.9 The people who conduct the review must report it in writing, to the Arts Minister. The Minister then has 15 sitting days within which to lay copies of the report before each chamber of the Parliament. This requires the report to be appropriately presented both to the Government and to the Parliament. [Schedule 1, item 2, subsections 376-110(3) and (4)]