Applying for the Producer Offset? Don’t make this mistake.

As of 12 December 2024

On 18 September 2024, the Administrative Appeals Tribunal (AAT) handed down its decision in Fragmentary v Screen Australia [2024] AATA 3316. The case involved a company which had applied to Screen Australia for a final certificate for the Producer Offset for a film pursuant to subsection 376-65 of the Income Tax Assessment Act 1997 (Cth). This application was denied. Why?

Here’s the law:

The Applicant for the Producer Offset must be a company. This company must have “either carried out, or made the arrangements for the carrying out of, all the activities that were necessary for the making of the film” (s 376.65(1)(a)).

Under the Act, the ‘making’ of a film involves anything “necessary for the production of the first copy of the film”(s 376.125).

This includes (subs (3)):

This does not include (subs (4)):

Here’s the case:

In the Fragmentary case, Screen Australia argued that the applicant company, Fragmentary Pty Ltd, did not carry out or arrange for the carrying out of all essential activities, as required by s 376.65(1)(a).

Rather, it was an individual by the name of Jace Pickard – who would later become the sole director and shareholder of Fragmentary – who undertook a substantial amount of work on the film prior to establishing the company.

He conducted pre-production activities (wrote the script, planned a filming schedule, arranged actors and camera equipment for filming), as well as production activities (undertook and directed nearly all of the principal photography for the film) and even carried out elements of post-production (crowdfunding, promoting the film, conducting edits, and holding a screening of the first cut). In a statement recorded for the crowdfunding page before the company had been registered, Pickard himself even remarked that the film’s completion had “hit the 85 percent mark”.

It was for this reason, described as the “fatal” aspect of the company’s application, that the Tribunal ultimately ruled in favour of Screen Australia.

What does this mean for you?

Activities considered essential to the making of a film can include anything from storyboarding to working with actors to editing a first cut. Whether your completion rate is sitting at 5% or 85%, as a rule of thumb, if it feels like you’re getting a start on making a film, you probably are!

Therefore, it’s best to register a company sooner rather than later. Then, make sure that the company which conducts or organises these activities is the same company you intend to apply for the Offset with.

If you’re interested in reading the whole decision, you can head here.

At Digby Law, we’re here to help you with your film and television production matters. If you have any queries about this recent case and how it might affect you, please don’t hesitate to get in touch.

Liability limited by a scheme approved under Professional Standards Legislation.