The 'Gallipoli Clause’ Explained.
What is the Gallipoli Cause under the Producer Offset Legislation?
With the recent wins for the Australian screen industry, and specifically the retention of the Gallipoli Clause in the Producer Offset legislation, it might be time to revisit this little gem.
For eligible Australian productions (and specifically excluding official co-productions), the Gallipoli Clause refers to a provision in the Producer Offset legislation which allows for some expenditure incurred outside Australia to count towards Qualifying Australian Production Expenditure (or as we otherwise refer to it - QAPE). Upon completion of said eligible production, the production company would be entitled to receive a percentage of their QAPE back from the Aussie government as a tax incentive, otherwise known as the Producer Offset.
So, how does it work? Well, the test for the Gallipoli Clause’s application is as follows:
The spend being made overseas is remuneration for Australian residents or the purchase of goods or services from companies or permanent establishments that have an ABN; and
The overseas spend is during principal photography; and
The subject matter of the film reasonably requires the use of the overseas location.
Unclear? Here are a few examples of how the Gallipoli Clause might play out:
An Australia production pays an Australian director’s fees during principal photography taking place in Turkey. The film is about Gallipoli and so reasonably requires the production to shoot in Turkey. Those fees might be considered QAPE.
An Australian production pays an Australian producer’s fees during principal photography taking place in New York. The film is about a famous New York artist who is located in New York City and there is a short period where production shoots in New York to interview with said artist. Those fees might be considered QAPE.
An Australian production pays an Australian key crew member during principal photography taking place in Russia. The film is about Ra Ra Rasputin and there is a short period where production shoots on location in St. Petersburg. Those fees might be considered QAPE.
If your plan is to rely on the Gallipoli Clause for a portion of your spend, before financing your project, always check with Screen Australia your assumption is correct! A trusty and experienced tax accountant can also help guide you here.
Questions? Drop us a line.
Disclaimer: This post should not be construed as legal or commercial advice and we recommend that you obtain independent advice before making decisions relating to the Producer Offset for your project, or entering into any contracts or agreements for your specific project. E/S Collab. makes no warranty or representation that this information is exhaustive, complete or accurate.