What is an Aussie film, in terms of financing production, is determined by whether the film has “significant Australian content”. The ‘producer offset’ provide film and television production incentives for Australian producers are a key element in pulling together financing for film and television productions. Qualifying productions are eligible for 40% producer offset payments from the Australian Tax Office (ATO) in respect of feature films that are to be released in cinemas; with 20% producer offset payments in respect to other qualifying productions. There have been films that have been refused producer offset status because they have been assessed as not having sufficient Australian content, such as George Miller's ‘Justice League Mortal’ project in 2008; more recently the Beyond Productions ‘Taboo’ documentary series was refused producer offset status.
Some projects will be at the edge of the envelope as to whether the film “has a significant Australian content” as required under requirement under s 376-65(2) of the Income Tax Assessment Act 1997 (Cth) (the ITAA). This requirement was reviewed by the Administrative Appeals Tribunal of Australia (ATTA) in proceedings between Beyond Productions Pty Ltd and Screen Australia. In that matter Screen Australia had determined that series 4 & 5 of a factual series titled ‘Taboo’, that Beyond produced for the National Geographic Channel, did not have significant Australian content; and that series 4 & 5 of ‘Taboo’ was not “a new creative concept” (s 376-65(5)) ITAA.
As Beyond came into the production of ‘Taboo’ at series 4 & 5, the production of the ‘Taboo’ series was outside what may be the usual project development path of Australian producers. Therefore rather than discussing the specific arguments put before the ATTA as to why the ‘Taboo’ series should have been accepted as having “significant Australian content”, a more generic discussion on that requirement follows.
Section 376-70 (1) sets out the factors to which regard must be had in determining whether a film has a significant Australian content:
(a) the subject matter of the film;
(b) the place where the film was made;
(c) the nationalities and places of residence of the persons who took part in the making of the film;
(d) the details of the production expenditure incurred in respect of the film;
(e) any other matters that the film authority considers to be relevant.
The subject matter of the film
· The ATTA gave general support to the approach taken in Screen Australia’s guidelines where they interpret the ‘subject matter of the film’ as requiring Screen Australia to consider the ‘look and feel of the film’ and determine whether the film is sufficiently Australian or has a significant creative connection with Australia.[1] This approach was consistent with an earlier decision of McVeigh v Willara Pty Ltd – the ‘Captain Invincible’ case – in which the Full Federal Court stated that:
“ "the subject matter of the film" are ordinary English words. They have no technical connotation and entitle, indeed require, … regard to such matters as the setting of the film, whether it purports to tell a story about Australians, whether there is some quality about the film that marks it out as an Australian film. This does not mean that only a film such as Jedda or Gallipoli may be said to have a significant Australian content.”[2]
· Even if the subject matter is international rather than set in Australia or involving identifiable Australian characters, the “subject matter” of a film can still be said to have “significant Australian content”, as described by the ATTA, if there is a “discernible Australian point of view or sensibility that the ordinary viewer would recognise as Australian”. The ‘Captain Invincible’ case referred to where “the subject matter of the film is universal but that it reflects a cultural background peculiar to Australia” which may “warrant a decision that the film has a significant Australian content, notwithstanding that its subject matter has no particularly Australian quality.” [3]
The relative importance of the factors in subparagraphs (a) to (e)
· As to the relative importance of the factors in subparagraphs (a) to (e), the ATTA identified from the Captain Invincible’ case the necessary approach of reviewing each element “individually and cumulatively, is to determine whether they demonstrate significant Australian content.”[4] The ATTA rejected an argument that subparagraphs (b) to (d) can also be considered in relation to subparagraph (a) subject matter; that is, strong Australian elements relevant to subparagraphs (b) to (d) do not add weight to the ‘subject matter’ elements relevant to subparagraph (a).
· The review of each factor cannot be described as an exercise in attributing value (either positive or negative) when assessing each factors (such as in a points based assessment). That is, undue emphasis should not be given to non-Australian elements.[5] The ATTA identified the correct approach as following from “the focus of s 376-70(1), which is whether a film has a significant Australian content” and that the decision maker “must be satisfied, having had regard to the matters specified in paragraphs (a) to (e), “whether there are aspects of the film which give it a content which is significantly Australian”.[6]
The Beyond decision discounts the significance of applications for producer offset status referring to other projects as have been granted producer offset status, as the ATTA stated that “s 376-70 requires that each application must be individually assessed with reference to the specified criteria. The outcome of other applications is not, therefore, a relevant matter in making this determination.”[7] The consequence of this approach is that the focus is on the elements of the project and the extent to which those elements advance the argument that the project has “significant Australian content”.
In separate proceedings before the ATTA involving an Essential Media project, the ATTA took the view that considering how other projects have been assessed by Screen Australia cannot influence the central question in that matter (which is still to be determined by the ATTA) whether the Essential Media project was a ‘documentary’ that is eligible for producer offset status or whether the project is ineligible because fall into the excluded category of ‘infotainment’.[8] [UPDATE: see Lush House - cleaning up the doco scene]
A ‘new creative concept’ (s. 376-70 ITAA)
The ATTA decision in the Beyond matter provides guidance as to what is meant by the words ‘a new creative concept’. The view of the ATTA is that this phrase implies “more than mere difference and ….more than a different treatment of the subject matter, even if the treatment of a subject is an important matter. The words suggest an idea or design for the film in question that involves some originality in how the subject matter is addressed.”[9]
Early focus on the question whether a film has “significant Australian content”
The eligibility of a proposed feature film or television production for producer offset production finance needs to be considered at the time the underlying rights are acquired and co-production contracts are put in place so that these arrangements provide strong arguments to support the application to the producer offset and co-production division of Screen Australia for the necessary producer offset certificate.
UPDATE
On 7 September 2011 Screen Australia announced that following a confidential agreement, Beyond Productions had discontinued its appeal in relation to the AATA decision with respect to the television series ‘Taboo’.
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