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Progress on calls to increase the Location Offset

There is no doubt that it has been a great few years for major film production in Australia, with recent titles filmed including Aquaman, Thor: Ragnarok (pictured above), King Kong, San Andreas and Pirates of the Caribbean on the Gold Coast at Village Roadshow Studios, as well as Pacific Rim Uprising and Alien: Covenant at Fox Studios in Sydney. Queensland in particular, has seen a large increase recently in expenditure in film and television production - in 2012-2013 was only $33 million, that, however, has risen to an impressive $426 million in 2016-2017. In total the industry is worth $1.3 billion in Australia.

Instrumental in getting these films to Australia, in addition to a lower Australian dollar, has been a case by case uplift in the location offset from 16.5% to 30%. The location offset is a tax incentive for large scale film and televisions productions shot in Australia, which gives a rebate for expenditure in Australia when it is classed as qualifying Australia production expenditure.

In the competitive world of film production, the offset offered can often make the difference when selecting the filming location, with delays in increasing the offset being blamed by some to leading to films such as Tomb Raider which had hoped to film on the Gold Coast moving elsewhere. Indeed, Dora the Explorer, which is set to film at Village Roadshow Studios, failed to get the increase in time, and only was secured for filming in Australia when Premier Annastacia Palaszczuk stepped in to increase the offset with state funds.

Ausfilm believes the market for large Hollywood productions looking to shoot in other US states or internationally is between $4.6 and $7.4 billion US dollars. In 2015, of the 91 major productions filmed outside Los Angeles by Hollywood studios, 41 were filmed internationally, with 20 being in the UK, 11 in Canada and 5 in Australia. Both the UK and Canada offer more attractive locations offsets then Australia’s 16.5%, with other jurisdictions offsets being between 25% and 43.7%.

It is worth pointing out that in addition to the location offset, there are a number of other offsets offered by Screen Australia to assist with film production in Australia, namely:

  1. a 40% producer offset for Australian film production;

  2. a 20% producer offset for Australian television (and some other eligible projects) production; and

  3. a 30%  post, digital and visual effects production rebate for such work done in Australia, regardless of where the footage was filmed.

There are also a number of other state level initiatives, and the Gold Coast City Council is even unique in having a city filming initiative to attract productions.

Whilst these other offsets are helpful for Australian productions and foreign filmed post processing work, they are all higher than what a Hollywood production would receive normally filming in Australia.

Many in the film industry believed that the location offset being raised only on a case by case basis made Australia uncompetitive in attracting foreign productions. As such, for several years there has been a push to increase the location offset to make it more competitive internationally. Whilst recent films have received a 30% location offset, this has been on the afore-mentioned case by case basis, and with no certainty as whether a film would get the offset, and with a potentially lengthy process. As such there had been a strong call to increase the offset and make Australia more competitive internationally.

This call was recently heard, and Foreign Affairs Minister Julie Bishop, Arts Minister Mitch Fifield and Trade, Tourism and Investment Minister Steven Ciobo visited Creative Artists Law’s home of Village Roadshow Studios to announce a boost to the location offset for foreign productions. The increase will see a fund of $140 million available over four years to raise the offset to 30% for a number of productions. Details of how the scheme would work have not been released, but it is understood that it will have some capacity to act quickly in approvals as decisions by studios on where to film are often time sensitive. The main benefit will be that there will be certainty for studios that the incentives are there and available should they wish to film in Australia.

In addition to this, Ministers said that it was the first of a number of reforms being considered by the Turnbull government in order to support the industry in Australia. Many are hopeful that this means that reforms will extend to the television production, especially given the recent success of services such as Netflix, Stan and Amazon Prime. These and other streaming services are investing heavily in many countries in television production, and, at the moment, the location offset is not something available to them.

The announcement is therefore a welcome one which comes after years of lobbying by the film industry in Australia and Ausfilm. It has been warmly received by the industry, with many hoping it will pave the way for a more permanent 30% location offset increase for all foreign productions. Feedback from foreign productions is that they love filming in Australia, and with the newly announced grant Australia just became far more competitive in attracting footloose Hollywood productions.

This information is intended for guidance purposes only and does not constitute legal advice. If you do need legal advice, however, get in touch with us!


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