Miracle Films Pty Ltd and Screen Australia

[2022] AATA 4924

Miracle Films Pty Ltd and Screen Australia [2022] AATA 4924 (27 October 2022)

Division:GENERAL DIVISION

File Number(s):      2021/6777

Re:Miracle Films Pty Ltd

APPLICANT

AndScreen Australia

RESPONDENT

Decision

Tribunal:Senior Member D Benk

Date:27 October 2022

Place:Sydney

The Tribunal has jurisdiction to review the application.

......................[SGD]..................................................

Senior Member D Benk

Catchwords

Catchwords - JURISDICTION - whether Tribunal's jurisdiction enlivened - statutory interpretation - whether party can appeal decision to issue certificate for different classification of film - jurisdiction enlivened

Legislation

Administrative Appeals Tribunal Act 1975

Income Tax Assessment Act 1997
Taxation Administration Act 1953

Cases

Australian Broadcasting Tribunal v Bond (1990) 94 ALR 11

Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297
Public Transport Commissioner of NSW v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336

R v Campbell (2008) 73 NSWLR 272

Secondary Materials

Explanatory Memorandum to the Tax Laws Amendment (2007 Measures No. 5) Bill 2007

REASONS FOR DECISION

Senior Member D Benk

27 October 2022

PROCEDURAL HISTORY

1. On 11 October 2020, the Applicant applied for a producer offset final certificate[1] requesting ‘The Brighton Miracle’ (the film) be considered a feature film eligible thereby attracting a 40% tax offset.

   [1] Tribunal Documents, T5, Producer Offset: Final Certificate Application, p 34-69 (“T5”).)

2. On 28 June 2021, the Respondent issued a final certificate certifying the project as a single episode program attracting a 20% tax offset.[2]

   [2] Tribunal Documents, T118, Letter to applicant and Final Certificate, p 1323 (T118).  

3. The Applicant subsequently lodged an application for review to the Administrative Appeals Tribunal (the Tribunal) requesting a review of the refusal of the application to classify the film as a feature film. 

4. The Respondent submits the Tribunal has no jurisdiction and seeks dismissal, unsurprisingly opposed by the Applicant.

5. The matter was heard by the Tribunal on 23 September 2022 to determine the issue of jurisdiction.

   JURISDICTION

6. The Administrative Appeals Tribunal Act 1975 (AAT Act) does not itself set out the decisions that may be reviewed by the Tribunal.  Section 25 of the AAT Act states that an enactment may provide for review of decisions made in the exercise of powers conferred under that enactment or conferred by an instrument such as rules, regulations or by-laws made under that enactment.  The Tribunal has no jurisdiction unless there is a legislative instrument conferring jurisdiction.  Therefore, in order to determine whether the Tribunal has jurisdiction to review a particular decision, reference must be made to the legislation governing the original decision. 

7. In this case, section 376-255 of the Income Tax Assessment Act 1997 (the Act) provides the Tribunal may review the following decisions;

   (a)a decision made by the * Arts Minister to refuse an application for a certificate under section 376-20 (certificate for the location offset) or 376-45 (certificate for the PDV offset); or

   (b)a decision made by the Arts Minister under section 376-245 to revoke a certificate; or

   (c)a decision made by the * film authority to refuse an application for a certificate under section 376- 65 (certificate for the producer offset); or

   (d)a decision made by the film authority under section 376- 245 to revoke a certificate; or

   (e)a determination by the Arts Minister in relation to the total of a company's * qualifying Australian production expenditure under section 376-30 or 376-50; or

   (f)a determination by the film authority in relation to the total of a company's * qualifying Australian production expenditure under section 376-75.

   CONSIDERATION

8. Before engaging in discernment, an analysis of the process and transactions involved in obtaining a certificate is necessary. In an attempt to make the complex simple, the Tribunal understands the following;

   (a)The Act allows for refundable tax offsets for Australian expenditure incurred in the making of a film. The offset in question in this case is the producer offset.[3]

   (b)The offset is not automatic.  It can only be granted when a number of statutory conditions have been satisfied.  An application for a certificate must be made by an Applicant[4] in the form required by the Respondent.[5]  The form, a 36 page questionnaire[6] requires the Applicant to, amongst other things, specifically nominate the format of the film claimed, provide a synopsis, budget summary, cast list, key dates of production together with  evidence in support of its claims.

   (c)On receipt of an application, the Act states the Respondent must assess the application and evidence provided.

   (d)If an Applicant satisfies the criteria of section 376-65 of the  Act for a producer offset, the Respondent must issue a certificate in writing and also specify the total of the company’s Qualifying Australian Production Expenditure on the film (QAPE).[7]  The Act also requires the certificate be forwarded to the Commissioner of Taxation within 30 days with particulars provided relating to the QAPE along with any other particulars agreed to between the Respondent and Commissioner.

   (e)In the event that a certificate is refused, the Respondent must notify the Applicant in writing.[8]

   (f)Likewise if a certificate is revoked, notice must also be in writing.[9]

   [3] Section 376-55 of the Act.

   [4] Section 376-65 and 376-75 of the Act.

   [5] Section 376-230(5) and the Producer Offset Rules 2018.

   [6] T5 (n 1).

   [7] Section 376-240 of the Act.

   [8] Section 376-235 of the Act.

   [9] Section 376-245 of the Act.

   Respondent’s submissions

9. In summary, the Respondent submits the Tribunal does not have jurisdiction because its decision dated 28 June 2021 did not refuse or revoke the application for a certificate and further the Applicant does not seek a review of the assessed QAPE.    In the absence of such grounds, the Respondent submitted jurisdiction cannot be enlivened and the matter must be dismissed.  

10. As an aside, the Respondent submits the lack of jurisdiction is not fatal to the Applicant’s ultimate goal of maximal tax offset.   The position can be remedied by lodging taxation returns and claiming the 40% offset, (essentially disregarding the contents of the certificate issued by it endorsing the Applicant ‘is entitled to a tax offset of 20% of the company’s qualifying Australian production expenditure, credited in the income year ending 30/06/2020’). It was further suggested the offset percentage will ultimately be the subject of assessment by the Commissioner of Taxation (who is not bound by any findings of the Respondent) and in the event of dispute, relief via objection and appeals process under the Taxation Administration Act 1953 can be sought.

    Applicant’s submissions

11. The Applicant submits the above interpretation of the Act is constrained and fails to take into account the intention of the legislation and role of the Respondent generally because;

    ·Section 376-255 (c) of the Act enlivens jurisdiction where the film authority refuses an application for a certificate under section 376- 65 (certificate for the producer offset).  Here it is accepted a certificate was issued.  However, it was argued that the application was for feature film status and not a single episode program.   The Applicant asked for ‘apples but got lemons’.   In summary, the application for a feature film was refused and so jurisdiction is enlivened;

    ·Further, in support of the above, it was submitted that prior to issuing a certificate the Respondent must be satisfied conditions in section 376-65 (2) to (6) are met.  This requires the film be categorised into one of five types of film stipulated in the section amongst other things.   The determination of the character of the film is a necessary part of the decision and not just a preliminary step[10] and is clearly supported by the application for a certificate which seeks information to enable an assessment of the categorisation of the film for the purposes of the producer offset;

    ·The Respondent’s submission that the classification of the film is not binding on the Commissioner of Taxation is at odds with the obligations of the Respondent being required to assess the mandatory requirements in section 376-55 (2) to (6) of the Act before issuing a Certificate.    It was also submitted that the position is also at odds with the Explanatory Memorandum to the Act which states[11] amongst other things that ‘the film authority must be satisfied that the film is a feature film, a single episode programme, a series….. and as certification requires the film authority to be satisfied of these things, the claim for the producer offset in the tax return is based only on the existence of a certificate and on the level of QAPE…

    [10] Australian Broadcasting Tribunal v Bond (1990) 94 ALR 11.

    [11] See 10.129, 10.130 and 10.134 and 10.135.

12. The arguments above are one of text by the Respondent verses context by the Applicant. Both are arguably correct subject to interpretation.  The fundamental rule of statutory interpretation, to which all others are subordinate, is that a statute is to be expounded according to the intent of the Parliament that made it; and that intention has to be found by an examination of the language used in the statute as a whole.   As Spiegelman CJ has said ‘the courts (tribunals) can no longer approach a statute with scissors in one hand and a dictionary in the other.[12]

    [12] R v Campbell (2008) 73 NSWLR 272 at [49].

13. Although it can be difficult to ascertain a positive intention where there has been legislative inadvertence (ambiguous construction), courts and tribunals may use the effect, or outcome to work out what was not intended.  Specifically where there two meanings or interpretations open, it is proper to adopt that meaning that will avoid consequences that appear irrational and unjust.[13]

    [13] Public Transport Commissioner of NSW v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336 at 350.

14. Further, statutory interpretation, specifically in cases such as this, require a decision maker to assess the inconvenience of the result, or improbability of result, to assist it in concluding that an alternate construction which is reasonably open is to be preferred to the literal meaning because the alternate interpretation more closely conforms to the legislative intention discernible from other provisions in the statute[14].  

    [14] See judgment of Mason and Wilson JJ in Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320-321.

15. The Respondent submits the Tribunal has no jurisdiction as there was no decision by it to refuse or revoke a Certificate. This ‘reading down’ of the section whilst a valid technique of interpretation is, in the view of the Tribunal, too constrained when regard is had to the role of the Respondent, its obligations of enquiry under the Act, its accountability to the Commissioner of Taxation, its actions in issuing a certificate certifying a 20% offset and finally the intention of the Act as expressed in the Explanatory Memorandum.  

16. Further the Respondent submits that a party cannot apply for a ‘certificate for a feature film’ and that only a ‘certificate’ can be applied for. Again, this is a narrow interpretation of the provisions, especially when regard is had to section 376-65 as a whole and specifically the requirement the Respondent be satisfied the film meets one of the categories in subparagraph 376-65(2) (c).   The interpretation is also inconsistent with the actions of the Respondent in issuing a detailed determination and certificate for the producer offset under section 376-65[15] which provides thorough reasons as to why it rejected ‘feature film’ status[16] and where it expressly certifies the Applicant ‘is entitled to a tax offset of 20%.

    [15] T118 (n 2).

    [16] Tribunal Documents, T2, Statement of findings and reasons, p 17-21 [22]-[43].

17. Also, the Respondent contends that as a certificate has been issued, the Applicant is now free to lodge its taxation returns and claim the 40% offset, as the Commissioner of Taxation is not bound by the classification of the film by the Respondent, its focus being the QAPE.   If dissatisfied with the Commissioner’s ultimate assessment, an objection and appeal may be lodged under the provisions of the Taxation Administration Act 1953. The Tribunal was troubled by this submission as it is inconsistent with the Explanatory Memorandum and the Respondent’s own actions in issuing a very specifically worded certificate reflecting its findings and ultimate assessment with reference to its obligations under the Act.

18. Whilst acknowledging the submission of the Respondent, the Tribunal concludes this could not be the intention of the Act as such consequences appear to be irrational and unjust[17]. If the Commissioner is to disregard the Respondent’s characterisation of the film, what is the purpose of the prescriptive process in section 376-55 and why then proceed to certify a specific tax offset in the certificate?  Further if the Commissioner is not bound by any decision of the Respondent, then as the Applicant submits there can be parallel decision making and parallel review processes on the same issue.  This argument has merit as it does appear to be at odds with the Explanatory Memorandum which specifically requires the Respondent to be satisfied as to the characterisation of the film.  Further, to follow the process suggested by the Respondent could produce an irrational, unjust and delayed outcome/result, which is inconsistent with the documented intention of the producer offset to encourage investment in the Australian Screen Industry.    

    [17] See paragraph 13.

19. The Tribunal finds jurisdiction is enlivened due to section 376-255 (c) of the Act.  The Tribunal interprets section 376-65 to be a particular type of certificate, not ‘a’ certificate.   The Respondent’s decision about the characterisation of the film is expressly required to be made under section 376-65(2), such determination being final, operative and determinative.   Here the application for a feature film was refused.  On that basis, the jurisdiction is enlivened.

I certify that the preceding 19 (nineteen) paragraphs are a true copy of the reasons for the decision herein of Senior Member D Benk

......................[SGD]........................................

Associate

Dated: 27 October 2022

Date(s) of hearing: 23 September 2022