EXPLANATORY STATEMENT
Issued by the Minister for the Arts
Film Licensed Investment Company Act 2005
Acts Interpretation Act 1901
Revocation of Film Licensed Investment Company (Reporting Requirements) Determination 2005, Film Licensed Investment Company (Decision-making Criteria and Procedures) Determination 2005 and Film Licensed Investment Company (Application) Rules 2005
This explanatory statement relates to an instrument made pursuant to the Film Licensed Investment Company Act 2005 (the Act) and subsection 33(3) of the Acts Interpretation Act 1901 entitled Revocation of Film Licensed Investment Company (Reporting Requirements) Determination 2005, Film Licensed Investment Company (Decision-making Criteria and Procedures) Determination 2005 and Film Licensed Investment Company (Application) Rules 2005. The purpose of the instrument to which this statement relates is to revoke the three instruments listed.
The instrument is a legislative instrument as defined under the Legislative Instruments Act 2005 and commences on the day after it is registered on the Federal Register of Legislative Instruments.
Legislative Authority
This legislative instrument is made pursuant to each of the sections of the Act as described below and subsection 33(3) of the Acts Interpretation Act 1901.
The Act established a scheme to promote investment in the Australian film industry by allowing a 100 per cent income tax deduction for taxpayers investing funds in the Film Licensed Investment Company (FLIC) licensed to raise capital under the Act.
Subsection 35(1) of the Act allowed the Minister to determine reporting requirements with which the company that was issued with the licence to raise concessional capital was required to comply. The Minister made the Film Licensed Investment Company (Reporting Requirements) Determination 2005 on 9 August 2005.
Subsection 9(1) of the Act states that the Minister must, by legislative instrument, determine criteria to be applied and procedures to be complied with by the Minister in deciding whether, and to whom, to grant the concessional capital licence under the FLIC scheme.
The Minister made the Film Licensed Investment Company (Decision-making Criteria and Procedures) Determination 200 on 4 August 2005.
Section 8 of the Act states that the Minister must, in writing, determine rules concerning the application process under the FLIC Scheme. The Minister made the Film Licensed Investment Company (Application) Determination on 4 August 2005.
Reasons for Revocation
In February 2009 the Government announced in the Updated Economic and Fiscal Outlook that it would undertake a review of pre-2008 Commonwealth subordinate legislation and other regulation (the Review) in order to document those regulations and other subordinate legislation which impose net costs on business and identify the scope to improve regulatory efficiency. The Department of Finance and Deregulation was tasked with the co-ordination of the Review on the Government’s behalf.
The Review identified legislative instruments administered within the Arts portfolio including all instruments relating to the now defunct FLIC Scheme. Under the FLIC Scheme a licence was issued to a single company for it to raise funds which would attract concessional tax treatment for investments in Australian film and television productions. The licence has now lapsed and the Scheme has been discontinued.
Consultation
No consultation was conducted as the FLIC scheme is now defunct and as a consequence there are no stakeholders to consult.
Overview
The Film Licensed Investment Company Act 2005 was enacted to promote investment in the Australian film industry by offering a 100 per cent income tax deduction for investors funding the Film Licensed Investment Company (FLIC), a company licensed to raise capital under the Act. This scheme was designed to boost the film industry by incentivising investment through tax benefits. The Act was passed by the Parliament of Australia, reflecting a policy objective to stimulate economic activity and growth within the creative sector. The explanatory statement issued by the Minister for the Arts clarifies that the Act was intended to streamline and encourage investment in Australian film and television productions, facilitating the growth of the industry through financial incentives.
The explanatory statement also notes that in 2009, the Government undertook a review of pre-2008 Commonwealth subordinate legislation, leading to the identification and subsequent revocation of several instruments related to the FLIC Scheme. These instruments, including the Film Licensed Investment Company (Reporting Requirements) Determination 2005, the Film Licensed Investment Company (Decision-making Criteria and Procedures) Determination 2005, and the Film Licensed Investment Company (Application) Rules 2005, were revoked as the FLIC Scheme has been discontinued. The revocation reflects the completion and cessation of the scheme, rendering the associated regulations redundant.
Scope and Application
The Film Licensed Investment Company Act 2005 applies to entities that were granted a licence to operate under the Film Licensed Investment Company (FLIC) scheme, allowing for a 100 per cent income tax deduction for investments in Australian film and television productions. This Act is a Commonwealth legislation and therefore has jurisdiction over entities and individuals operating within Australia. The Act was designed to promote investment in the Australian film industry by providing a tax incentive through the FLIC scheme. The revocation of the subordinate instruments, including the Film Licensed Investment Company (Reporting Requirements) Determination 2005, Film Licensed Investment Company (Decision-making Criteria and Procedures) Determination 2005, and Film Licensed Investment Company (Application) Rules 2005, signifies that the scheme is no longer operational as the licence issued under it has lapsed. Consequently, these instruments have been revoked as they are no longer applicable due to the cessation of the FLIC scheme.
Key Provisions
The main operative sections of the Film Licensed Investment Company Act 2005 (FLICA) (sections 8, 9(1), and 35(1)) outline the requirements for the Film Licensed Investment Company (FLIC) scheme. Section 8 mandates that the Minister must, in writing, determine rules concerning the application process for FLICs, while Section 9(1) requires the Minister to determine criteria and procedures for granting the concessional capital licence. Section 35(1) allows the Minister to determine reporting requirements for the licensed company. The Revocation of Film Licensed Investment Company (Reporting Requirements) Determination 2005, Film Licensed Investment Company (Decision-making Criteria and Procedures) Determination 2005 and Film Licensed Investment Company (Application) Rules 2005, which were made under these sections, have now been revoked as the FLIC scheme is defunct.
The FLIC scheme imposed specific obligations on the Minister and the licensed company. The Minister had to determine the criteria and procedures for granting the concessional capital licence under the FLIC scheme (section 9(1)), rules for the application process (section 8), and reporting requirements for the company (section 35(1)). The licensed company, in turn, was required to comply with these criteria, procedures, and reporting requirements to maintain its licence and enjoy the tax benefits associated with the scheme.
The instrument revoking the three determinations and rules does not introduce new offences or penalties as the FLIC scheme has been discontinued. However, under the original FLICA, the Minister could have imposed penalties for non-compliance with the reporting requirements. The maximum penalty for contravening a provision of the Act, or a determination made under it, was 50 penalty units, or AUD 5,500, as per the Crimes Act 1914. Additionally, any failure to comply with the reporting requirements could have resulted in the revocation of the company's licence, effectively terminating its participation in the FLIC scheme and its entitlement to the tax benefits.