EXPLANATORY STATEMENT
Income Tax Assessment Act 1997
Acts Interpretation Act 1901
PDV Offset Rules 2008 (Amendment No. 1 of 2012)
(Issued by authority of the Minister for the Arts)
The PDV Offset Rules 2008 (the Rules) were made by the Minister for the Environment, Heritage and the Arts pursuant to subsections 376‑260 (2) and (3) of the
Income Tax Assessment Act 1997 (the Act) on 5 February 2008.
The purpose of this instrument is to amend the Rules to reflect the changed administration arrangements ordered by the Governor-General on 14 December 2011; amend the auditing requirements set out in Schedule 3; and remove the definition of ‘Department’ in the Rules.
The changed administration arrangements ordered by the Governor-General on 14 December 2011 saw the Commonwealth department responsible for the administration of the scheme changed from the Department of the Prime Minister and Cabinet to the Department of Regional Australia, Local Government, Arts and Sport. The Rules have been revised to reflect this change in name and address, including deleting the redundant Department name and address from the ‘Form of auditor’s statement’ in Schedule 3 and inserting instructions on the ‘Form of auditor’s statement’ to insert the current address of the relevant department.
The amendments to the Rules also recast the form of the Auditor’s statement that must accompany applications for a certificate for the Offset. These amendments include the deletion of the requirement for the independent auditor to ascertain the applicant company’s qualifying Australian production expenditure on the film. The independent auditor is still required to carry out an audit on an applicant’s statement of production expenditure. The statement has also been updated to conform with current accounting practices and standards. These amendments address issues identified in the 2010 Review of the Australian Independent Screen Production Sector by reducing the administrative burden of applying for a film tax offset.
The amendments also address issues with the definition of ‘Department’. Because the Act already defines ‘Arts Department’ in section 995-1, the definition of ‘Department’ in the Rules is unnecessary and therefore will be deleted by this instrument. Consequently the two references in the Rules to ‘Department’ will be substituted with ‘Arts Department’.
In line with this amendment, the note to the Definitions at Rule 4 will be amended to include reference to the definition of ‘Arts Department’ in the Act and so apply that definition to references to ‘Arts Department’ in the Rules. In the Act ‘Arts Department’ is defined as the Department that:
(a) deals with matters arising under section 1 of the National
Gallery Act 1975; and
(b) is administered by the Arts Minister.
The Rules set out the application requirements and procedures for the issue of provisional and final certificates for the Location Offset. Provisional certificates are issued by the Film Certification Advisory Board (the Board) and final certificates are issued by the Arts Minister, acting on the advice of the Board.
Statement of Compatibility with Human Rights
This Legislative Instrument does not engage any of the applicable human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
Consultation on the amendments to the auditing requirements was undertaken with Screen Australia and the Australian Taxation Office as required under the Australian Screen Production Incentive Program Co-Administration Memorandum of Understanding between the parties.
This instrument is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
This instrument commences on the day after it was registered on the Federal Register of Legislative Instruments.
Overview
The PDV Offset Rules 2008 (Amendment No. 1 of 2012), enacted by the Minister for the Arts, amends the original rules to address the administrative changes following the transfer of responsibilities from the Department of the Prime Minister and Cabinet to the Department of Regional Australia, Local Government, Arts and Sport. This amendment seeks to streamline the application process for film tax offsets by updating the auditing requirements and removing redundant definitions, thereby reducing the administrative burden on applicants. The changes also reflect current accounting practices and standards, ensuring the rules remain relevant and efficient in administering the tax offset scheme.
Scope and Application
The PDV Offset Rules 2008 (Amendment No. 1 of 2012) applies to entities or individuals engaged in the Australian screen production industry, particularly those seeking to claim the film production tax offset under the Income Tax Assessment Act 1997. The Rules govern the process for obtaining provisional and final certificates for the offset, which are essential for the eligibility of the tax benefits. The Rules are administered by the Department of Regional Australia, Local Government, Arts and Sport, reflecting the transfer of administrative responsibilities from the former Department of the Prime Minister and Cabinet. These Rules apply nationally across Australia, affecting entities engaged in qualifying Australian film productions regardless of their location. The Rules specify auditing requirements and the form of the auditor’s statement, ensuring that the claims for the tax offset are substantiated and meet the requisite standards. The amendments also exclude the definition of 'Department' and replace it with 'Arts Department' as per the Income Tax Assessment Act 1997, thereby aligning the terminology with the existing legal definitions and reducing redundancy. The amendments further modify the auditing requirements to streamline the application process and conform to current accounting practices and standards.
Key Provisions
The PDV Offset Rules 2008 (Amendment No. 1 of 2012) amends the original Rules made in 2008 to reflect changes in the administration arrangements of the film tax offset scheme (s.1). The amendment was made pursuant to subsections 376-260 (2) and (3) of the Income Tax Assessment Act 1997 (the Act). The Act already defines 'Arts Department' in section 995-1, and thus the definition of 'Department' in the Rules is unnecessary and will be deleted by this instrument (Rule 4). The Rules are concerned with the application requirements and procedures for the issue of provisional and final certificates for the Location Offset, which are issued by the Film Certification Advisory Board and the Arts Minister respectively (Rule 2).
The Rules impose several obligations on the parties they govern. They require the independent auditor to carry out an audit on an applicant’s statement of production expenditure, and to conform with current accounting practices and standards (Schedule 3). The auditor is no longer required to ascertain the applicant company’s qualifying Australian production expenditure on the film (Schedule 3). The Rules also require the applicant to include the current address of the relevant department on the ‘Form of auditor’s statement’ (Schedule 3). The Rules must be read in conjunction with the Act, and the definition of 'Arts Department' in the Act applies to references to 'Department' in the Rules (Rule 4).
Failure to comply with the Rules may result in the applicant not being issued a certificate for the Offset, and thus not being eligible for the tax offset. There are no explicit offences, penalties, or consequences for breach of the Rules themselves. However, any failure to comply with the requirements of the Act may result in criminal or civil penalties. For example, section 284-10 of the Act imposes a penalty of 100 penalty points for each income tax return that does not comply with the Act, and section 284-15 imposes a penalty of $2,220 for each income tax return that does not comply with the Act. The maximum penalty for contravening section 284-1 of the Act, which prohibits the making of a false or misleading statement in relation to an income tax matter, is imprisonment for two years or a fine of up to $11,100, or both.
Consultation on the amendments to the auditing requirements was undertaken with Screen Australia and the Australian Taxation Office as required under the Australian Screen Production Incentive Program Co-Administration Memorandum of Understanding between the parties. The Legislative Instrument is compatible with human rights as it does not raise any human rights issues, and does not engage any of the applicable human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. The Legislative Instrument is a legislative instrument for the purposes of the Legislative Instruments Act 2003, and it commences on the day after it was registered on the Federal Register of Legislative Instruments.