EXPLANATORY STATEMENT
Issued by the Minister for the Arts
Income Tax Assessment Act 1997
Acts Interpretation Act 1901
Revocation of Refundable Film Tax Offset Rules 2002, Refundable Film Tax Offset Rules 2002 (Amendment No. 1 of 2003) and Refundable Film Tax Offset Rules 2002 (Amendment No. 1 of 2006)
This explanatory statement relates to an instrument made pursuant to sections 376 – 105 of the Income Tax Assessment Act 1997 and subsection 33(3) of the Acts Interpretation Act 1901 entitled Revocation of Refundable Film Tax Offset Rules 2002, Refundable Film Tax Offset Rules 2002 (Amendment No. 1 of 2003) and Refundable Film Tax Offset Rules 2002 (Amendment No. 1 of 2006). The purpose of the instrument to which this statement relates is to revoke the following instruments:
Refundable Film Tax Offset Rules 2002
Refundable Film Tax Offset Rules 2002 (Amendment No. 1 of 2003)
Refundable Film Tax Offset Rules 2002 (Amendment No. 1 of 2006).
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
Division 376 of the Income Tax Assessment Act 1997 (the Act) contained provisions which entitled a film production company to claim a refundable tax offset for Australian expenditure in making a film in certain circumstances. Once a film had been completed, a film production company could apply to the Minister for a certificate of entitlement to claim the offset. Provided the Minister was satisfied that the statutory requirements for the offset had been met, the Minister could issue a certificate.
The Refundable Film Tax Offset Rules 2002 (the Rules) were made and amended by the Minister pursuant to section 376-105 of the Act. Section 376-105 allowed the Minister to make rules to establish the Board, to govern the issue of provisional certificates, and to specify how applications for certificates are to be made. Although section 376-105 was repealed by Tax Laws Amendment (2007 Measures No.5) Act 2007, item 92 of Part 4 of Schedule 10 to that Act continued to apply that and other provisions for films that commenced principal photography or production of animated image before 8 May 2007.
The Minister is empowered by section 376-105 of the Act and subsection 33(3) of the Acts Interpretation Act 1901 to repeal, rescind, revoke, amend or vary the Rules.
Reason 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 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 reviewed legislative instruments administered within the Arts portfolio including all instruments relating to the Refundable Film Tax Offset scheme. As a result, the Review found that the above 3 instruments were redundant and recommended they be revoked.
The aim of the scheme was to attract large scale film productions to Australia by providing a refundable tax offset. Following a broad review of the Government’s film support measures in 2006 the scheme and other film tax incentives were discontinued and replaced with the Producer, Location and Post, Digital and Visual Effects Offsets.
However, any film which commenced production in Australia prior to 8 May 2007 was still eligible to apply for the refundable film tax offset. As the redundant instruments were required to provide the tax offset, they could not be revoked until all eligible films had their applications completed. An offset certificate was recently issued for what is to be the final eligible film under the scheme. Therefore, it became possible to revoke the instruments.
Consultation
No consultation was conducted as the scheme is now defunct and as a consequence there are no stakeholders to consult.