Appendix 3 - Response to Question on Notice taken by Treasury

Answer

The provisions at Schedule 10, Part 4, subitem 91(3) of the draft bill present a fair and practical treatment of expenditure for a film that was already in production at 1 July 2007.  Sub subitem (3)(b) allows for the recognition of qualifying Australian production expenditure incurred before 1 July 2007 to the extent that such expenditure is attributable to goods or services provided on or after 1 July 2007.  This provision ensures that any economic activity on a production after 1 July 2007 will be recognised for the purposes of the tax offset, regardless of when any contractual arrangement was entered into or cash was paid for the goods or services.

The principle of attribution is used elsewhere in the tax law.  In this context, it avoids the possibility of the film tax offset being available on activity which occurred prior to the start date of 1 July 2007, simply because the payment for that activity was delayed until after this date.

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