Govt overhauls rebates

By Brendan Swift

The Federal Government has revamped the Post, Digital and Visual Effects (PDV) and Location rebates in an effort to attract more offshore productions to Australia.

The overhaul – which has slashed current threshold and minimum spend requirements – follows a period of intense industry lobbying as the number of big budget offshore productions working in Australia has dried up as the value of the local currency has soared.

"These changes ensure the Government's incentives are delivered as effectively as possible, by taking into account the commercial practices of the industry," Assistant Treasurer Nick Sherry said in a statement.

"These changes will increase the likelihood of productions choosing to film in Australia, providing increased employment opportunities for Australian casts and crew."

The changes, which will apply from July 1, were announced as part of the 2010 Federal Budget.

The Government will now lower the PDV threshold to $500,000 from $5 million. Meanwhile, the requirement for mid-range productions to spend at least 70 per cent of their production budgets (between $15 million to $50 million) in Australia under the Location Offset will be removed.

Both changes are expected to cost the Government an extra $6.9 million over the next four financial years. 

"In recent years the requirement for large offshore productions to spend 70 per cent of their budget locally has been a factor in some productions not coming to Australia, particularly smaller budget films wanting to shoot here as one of multiple international locations," Minister for Environment Protection, Heritage and the Arts, Peter Garrett, said in a statement.

"The amendments to the eligibility requirements in the tax law will remove some of the barriers to significant offshore productions considering Australia as a production destination and will help local PDV providers to bid for additional work overseas.

The changes come as the government continues to review industry submissions made to its 2010 Review of the Australian Independent Screen Production Sector.

Local companies such as Fuel VFX (Iron Man 2, The Spirit, Australia) and Rising Sun Pictures (Harry Potter and the Half Blood Prince, X-Men Origins: Wolverine and Terminator Salvation) are likely to be major beneficiaries of the changes to the PDV threshold.

However, the industry is understood to be still calling for the Location rebate to be doubled to 30 per cent in an effort to attract big productions to Australia. Late last year, the proposed big budget Green Lantern feature film left Australilan shores after the dollar rose above 90 US cents.

Fuel VFX executive producer Jason Bath said the industry still needs higher incentives to be truly competitive but the changes were a step in the right direction.

Ausfilm CEO Jackie O’Sullivan said the changes will have an immediate and positive impact for Australia’s film industry. Ausfilm is a public-private partnership which aims to attract international film and television production to Australia.