The Pacific Film and Television Commission and the Film Finance Corporation have very different interpretations of what the FFC means when it says the word “intention”, in this case, “intention to release theatrically.” At stake is a lot of money for Trish Lake and Owen Johnson’s feature film Subdivision.
Films that come with the intention to release theatrically get a 40% tax offset against the total Qualifying Australian Production Expenditure in their budgets. The 40% offset can be cashflowed with a loan from a state film agency or from a private source, and the loan repaid when the tax office provides the refund. Films that are made with the intention to release to DVD or television get a 20% offset, which can also be cashflowed. It’s just a lot less.
What the two agencies are arguing about is the time when the intention is formed.
The Pacific Film and Television Commission wants the FFC to guarantee that a film qualifies for the 40% offset if it has a theatrical distribution guarantee (a deal with a distributor) at the commencement of production.
Brian Rosen, CEO of the Film Finance Corporation says that is exactly their position.
Henry Tefay, Head of Production for the Pacific Film and Television Commission, says that it is not, that the FFC wants to measure the intention to distribute theatrically at the time that the film is received by the distributor – when the distributor’s initial intention to release theatrically might have changed.
This would mean that the state film agency had loaned 40%, but the producer could only recover 20% from the tax office, and would significantly increase commercial risk of both the producer and the state agency.
At risk is Trish Lake and Owen Johnson’s feature film, Subdivision, due to start filming in Queensland.
The FFC wants the Pacific Film and Television Commission to provide a cashflow loan of 40%. The PFTC is only offering 20%, because of the risk that it might not be released theatrically, and therefore only qualify for the lower offset. That could leave the producers short of cash to make the film.
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According to Henry Tefay, “as of today, both Triangle and Subdivision have distribution agreements attached that clearly indicate that the intention is for theatrical release. But according to the FFC that doesn’t necessarily mean that by the time the films are actually delivered the distribution company’s intention will remain the same”.
“Clearly, the FFC is of the view that the distribution agreement attesting to the intention of theatrical release at the commencement of production may change by the time the distributor actually accepts delivery (for one reason or another) – otherwise why make it a condition of getting final certification? Why not forgo the condition at the commencement of production based on the intention inherent in the distribution agreement?”
“If the FFC was asked whether some films that had theatrical intention (with supporting DG’s) at commencement of production could fail to get final certificate at the 40% level they would answer in the positive”.
“That was precisely the question that Brian Rosen was asked regarding Triangle [a UK-Australian co-production with Chris Brown producing] and later, Subdivision, and his answer was that yes, there is the risk that when the films were delivered the distributor’s intention could change, which would result in a downgrading of the offset.”
“I understand that the producers of Subdivision requested the FFC to write a letter of guarantee that it would get a final certificate as a feature film. The FFC refused.”
In an interview with Screen Hub, however, Brian Rosen said that the intention to make a film for theatrical release, rather than the whether it was ultimately released theatrically, that would determine whether a film received the 40% offset.
Asked whether intention to produce for theatrical release was enough to qualify, he said “That’s absolutely correct. That is correct.”
And then when further to say that a film did not, in fact, need a distributor attached. It is, Rosen said, also legitimate for a producer to self-distribute and self-exhibit.
According to Richard Harris, CEO of the South Australian Film Corporation, Kojo has already received both offset approval and cashflow where they are both the producer and distributor.
And that still leaves a couple of Queensland producers 20% short of a full rebate.
This article originally appeared in Screen Hub.