Division 376 of the Income Tax Assessment Act 1997 provides that Screen Australia are in charge of granting tax offsets to film producers and that the offset is only available for expenditure incurred by you in the process of making a film.
Creation Ministries International claimed expenditure incurred by an entity under their control (Fathom Media Pty Ltd) - which they eventually paid for, but the brains trust at Screen Australia were not satisfied that this was claimable expenditure under the act . On appeal to the Administrative Appeals Tribunal, the deputy president held that the amount was not claimable under the act, not because claiming expenditure of a related entity was unlawful, but because the expenses claimed were held on a loan account for Creation Ministries, rather than "incurred" under the legal meaning of that term by the organisation. The tribunal appears to imply that if you do not incur expenditure at the time it is expensed, then you will not be eligible for the offset. If you are going to pay for items through another entity, it appears that there would need to be a strict, legally enforceable agreement in place to ensure that the expenses are incurred by the head entity as defined by tax legislation.
Highlights:
"The applicant, Creation Ministries International Ltd, is a not-for-profit corporation. As is evident from its name, its purpose is to affirm the reliability of the Bible, in particular, the account of creation contained in Genesis. In 2006, and in anticipation of the bicentenary of the birth of Charles Darwin, Creation Ministries decided to make a film concerning the impact of the life and work of Darwin.
The film, which was called “The Voyage that Shook the World”, was produced. It was first exhibited publicly in about May 2009. Because the controlling minds behind Creation Ministries were concerned about the public response to the notion of a creationist entity producing a film about Charles Darwin, it was determined to set up a stalking horse, Fathom Media Pty Ltd, to be the public face of the production of the film." (p 1-2)
"In oral argument, Creation Ministries pointed to the agreement of 30 October 2008. That agreement operated retrospectively and prospectively it was said. Because Creation Ministries had agreed to indemnify Fathom Media, expenditure incurred nominally by Fathom Media was, additionally, incurred by Creation Ministries.
I am unable to agree. The argument fails on the facts because, despite the agreement of 30 October 2008, the parties did not act in accordance with its terms. They treated the relationship between Creation Ministries and Fathom Media as that of lender and borrower. " (p 20-21)
"Creation Ministries was never under a “presently existing liability”; it was not “definitively committed” nor “completely subjected” to, the amounts paid by Fathom Media to discharge its contractual obligations to suppliers and other third parties. Fathom Media was the contracting party; it was the entity that incurred the expenditure. Creation Ministries did not incur the expenditure by lending Fathom Media sufficient funds to discharge the contractual debts that Fathom Media incurred.
It follows that the decision under review was correct. It will be affirmed." (p 24-25)
The case [2015] AATA 250: http://www.austlii.edu.au/au/cases/cth/AATA/2015/250.html
No comments:
Post a Comment