Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Link to this | Hansard source

I present a supplementary explanatory memorandum to the bill and I move the government amendment as circulated:

(1)    Schedule 8, item 4, page 109 (after line 25), after subparagraph 102NA(2)(b)(ii), insert:

             or (iii)    a trust whose trustee was, before the scheme was completed, assessed and liable to pay tax under Division 6B or this Division and that was, before the scheme was completed, one of those stapled entities; or

                 (iv)    an entity that is controlled or able to be controlled, directly or indirectly, by the trust referred to in subparagraph (iii);

Schedule 8 of the bill includes a measure that allows a staple group of entities to restructure with an interposed head trust without triggering certain taxation consequences. Under the measure, a restructure that involves interposing a head trust over a public unit trust that is a staple to a company will not result in the interposed head trust being taxed as a company under division 6C of the Income Tax Assessment Act 1936.

Some staple entities, however, consist of public unit trusts that are staple to other trusts that, while taxed as companies, are not companies at law. Under this amendment to schedule 8, a restructure that involves interposing a head trust over a public unit trust that is staple to a trust taxed like a company will also obtain the benefits of the measure in schedule 8. Full details of the changes are contained in the supplementary explanatory memorandum.

Question agreed to.

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I move the amendment circulated in my name:

Schedule 10, item 1, page 137 (lines 19-20), after paragraph 376-65(5)(b), insert:

; and

(c)

if the application for the certificate is for an animated film that is a *film that is a series and not for a film that is a season of that series:

(i)

the series is made up of at least twelve episodes and each episode is at least one quarter of a commercial hour in duration and the series has a new creative concept (see section 376-70); or

(ii)

in the case of projects, the series is made up of at least four episodes and each episode is at least one quarter of a commercial hour in duration and the series has a new creative concept (see section 376-70).

I flagged this amendment during the second reading debate. I regard this not as a matter of politics but as a very sensible and minor reform, but one nevertheless with some significant consequences. This amendment pays due deference to a unanimous recommendation of the Senate Standing Committee on Economics, recommendation 4, which stated:

The committee recommends that the bill be amended to allow ten or fifteen minute animation episodes to be categorised as a ‘series’ for the purposes of qualifying for the producer offset, provided that a total commercial hours threshold is met.

The Senate economics committee unanimously came to that conclusion based on evidence presented to it by various witnesses—in particular that of Mr Burnett, who represented the Screen Producers Association of Australia, who pointed out to the Senate economics committee that there are many programs currently in development being financed that are commercial 15-minute programs. Those programs would fall under this definition. The Film Finance Corporation allows the financing of 15-minute episodes. This would effectively go against the trend with digital media. The notion of 13, 26 or 52 episodes per series is changing under the program-stripping that is occurring in broadcast digital media internationally et cetera. So we request that the definition of an animated series be amended to include episodes of commercial 15 minutes or more with no fewer than 12 episodes per series.

As I say, we regard this as a very sensible amendment which I hope the government will see fit to support. It will come as no revelation to the House that animations, or cartoons, are generally of a short duration. I know this because, whenever I get home—on those rare occasions—and my daughter is watching cartoons, I will sit down and watch one with her, and there are very few that go for more than 15 minutes. I am sure the Assistant Treasurer, as the father of children of a similar age, would agree with me; I am sure he watches the odd cartoon with his children as well, and he would know that cartoons going for 30 minutes are very rare indeed.

So, seriously, these are very important productions, and it would be a shame to have these productions denied the tax benefits which are applied to other productions, through what I would regard as probably an unintended consequence, by the government. There are other ways of doing it. There was some discussion of a 10-minute threshold. It could possibly be dealt with in regulation rather than in legislation. I am relaxed about the method. This is our proposed method. If the government has a different method, I am happy to hear it and consider it and, in all likelihood, we would be happy to support it. But, as I say, I do not seek to make points. I am not critical of the government. It simply is one of those things which should be fixed, and I would ask the House to support the amendment.

Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Link to this | Hansard source

The Senate Standing Committee on Economics, as has been noted, made a recommendation to widen the concession to cover shorter animation series. The government is giving serious consideration to this recommendation. The reason we cannot support the amendment moved so graciously by my opposite number is that the advice from Treasury and DCITA is that the ALP’s amendment would not achieve the right outcome. So we cannot support that. But my understanding is that the Minister for the Arts and Sport will be making an announcement shortly on this and, given the importance of the changes in this bill, the government will proceed with its passage without further amendments to the film incentives, and any changes to the film incentives can be legislated at a later date.

So that is the government’s position—one of providing support to the industry but also providing the necessary urgent passage of this bill. We will address those concerns and, as I say, the Minister for the Arts and Sport will be making an announcement which I think will give satisfaction to the industry. Again, this government continues to provide significant and ongoing support to what is a very worthy industry. The Minister for the Arts and Sport has been, and continues to be, a most capable person in that role, and I know that the industry very much appreciates his support. That has been evidenced by the comments that have been made in relation to the government’s announcements which are now being legislated.

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I am prepared to take that on good faith from the minister: if the minister says an alternative method is under consideration, I accept that. This, as I said, was the Labor Party’s proposal; if there is a different way of dealing with it, I am happy to hear it and, in all likelihood, if it would achieve the same result, I would be happy to give it bipartisan support and see its speedy passage through both houses.

I agree with the minister in this respect: this certainly should not delay the bill. There are enough important matters in this bill—some of which we have been waiting five or seven years for, in relation to schedule 1—such that I certainly would not delay it any further. I made that clear in my remarks on the second reading. So we will press the amendment, but I do take that on good faith from the minister, and I am glad to hear that there is bipartisan agreement that this—something I would regard as probably an unintended consequence—is, in all likelihood, going to be dealt with.

Kim Wilkie (Swan, Australian Labor Party) Share this | Link to this | Hansard source

The question is that the amendment be agreed to.

Question negatived.

Bill, as amended, agreed to.