Competitive changes to PDV/location rebates

Future projects in the $0.5-5m range like Iron Man 2 (Fuel VFX) will now be eligible for the PDV offset.The Location and Post, Digital and Visual Effects (PDV) rebates have been officially modified to make Australia more competitive to attract international production.

The changes apply from July 1, with the PDV threshold set at $500,000 (down from $5m). As for the Loction rebate, international productions in the $15-50m range will no longer be required to spend 70 percent of their budget in the country.

The announcement was made as part of the 2010 Federal Budget, and is the result of intense industry lobbying over the loss of competitiveness due to a more expensive Australian dollar and an increase in incentives offered by other countries and US states. The combination of both factors has seen a considerable number of international features and post-production work lost to other territories.

“Reducing the PDV threshold to $500 000 will make Australia’s world-class, but smaller, PDV providers more competitive when bidding for work outsourced by Hollywood studios, increasing both local employment opportunities and skills within our industry,” said Minister Peter Garrett in a statement.

Rising Sun Pictures was the first industry player to welcome the announcement, saying that the lower PDV threshold “promises to pay huge dividends” for the Adelaide-based VFX company.

“It will allow us to compete effectively for many more film projects that previously considered the $5 million threshold an impediment for completing their work in Australia,” said CEO Tony Clark.

As positive as these changes might result for post-production houses and VFX vendors, the PDV and location offset percentages were not increased from 15 to 30 percent, as recommended by the Screen Producers Association of Australia and the state agencies in their submissions for the industry review. There is still hope that, once finalised, further changes will be made to Australia’s international incentives.

“Whilst the erosion of the value of the 15 percent Location and PDV Offset by the strength of the Australian dollar is the single biggest challenge facing the international production sector, this lower threshold will bring immediate benefit for Rising Sun and many PDV businesses around the country whilst we await the outcomes of the Government’s formal review,” said Clark in a statement.

Fuel VFX executive producer Jason Bath – whose 2010 work on the Hollywood blockbuster Iron Man 2 did not qualify under the previous $5m threshold – added: “We still need a higher incentive to be truly competitive, but  this lower threshold will allow the film studios to work more regularly with Australian companies so that we can build long term relationships based on our talent, giving us every chance to work more consistently on top-level work and retain talented staff from project to project.”

According to a release from Minister Garrett’s office, the Government will further consider the outcomes from the 2010 Review of the Australian  Independent Screen Production Sector, after the Department of the Environment,  Water, Heritage and the Arts presents its report later this year.


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