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ASIC hammers film schemes

PERTH’S filmmaking fraternity is up in arms over a new Australian Securities and Investments Commission booklet that casts doubt on the effectiveness of tax-driven film investment schemes.

Named Don’t Kiss Your Money Goodbye, the booklet has incensed major WA film production companies, who view such schemes as the lifeblood for developing Australia’s screen culture.

ASIC national compliance adviser Pauline Vamos said schemes under Chapter 5C of the Corporations Law were known as managed investments and were regulated by ASIC as such.

They are required to be registered with ASIC and abide by a number of conditions.

Ms Vamos said the booklet did not refer to the FLICS (Film Licence Investment Com-pany Scheme) and Section 51.1 schemes.

She said the film industry was often viewed as a ‘glamour’ business to invest in, “bringing fame, fortune and fabulousness to those who are associated with it”.

“This can lead to unscrupulous operators trying to cash in on a reputation without following all the rules required by the law,” Ms Vamos said.

“The first thing to do is ask for the scheme’s Australian Registered Scheme Number.

“If the scheme doesn’t have one, don’t invest in it.”

RT Films executive producer Tania Chambers said the Australian Tax Office’s 10BA provision had provided much needed concessional capital for Australian film and television productions for around twenty-five years, using “private money, not subsidy”.

“Clearly, film investors should take the same care as with other investment opportunities, assessing the track record of the people involved and looking at the reasonableness of fees and the budget overall,” Ms Chambers said.

“It took us months to get a prospectus for Lockie Leonard as the registration process under the Corporations Law is rigorous.

“For someone like Barron Entertainment, tax-driven film investment schemes would be worth around $20 million per year.

“Some projects in the past have delivered fine returns.”

Ms Vamos said many film schemes didn’t turn a profit at the end of the day.

“If the film turns a profit, you’re likely to be left with a large tax bill that you didn’t plan for when the investment matures,” Ms Vamos said.

“These schemes are not usually tax-saved, just postponed.

“On the other hand, if the film fails to find a buyer, it’s unlikely to produce any income.

“Under 10BA, the ATO might decide the scheme wasn’t really intended as an income producing asset and disallow your tax deductions, leaving you with a considerable tax bill,” she said.

Ms Vamos said, even when film schemes found a buyer, there was no guarantee the film would be a hit at the box office.

“Since 1988, the Australian Film Finance Corporation has provided financial assistance to 152 feature film productions,” Ms Vamos said.

“Of the 105 films that have been in the marketplace long enough to show a return, only seven have gone into profit”.

Barron Entertainment Limited managing director Paul Barron said everyone knew an investment in film and television projects involved risks.

“This is something that is specifically noted in virtually all film prospectuses,” Mr Barron said.

“The film and television industry is recognised as an essential, vibrant and important part of Australia – both in industrial and cultural terms.

“The freelance production industry, which produces most of the feature films and TV dramas, employs thousands of people around the country.

“It is an export industry that earns significant revenues from sales around the world.

“At the same time, feature films and TV programs provide supporting benefits including promoting tourism.

“Crocodile Dundee was an outstanding advertisement that lifted Australia’s profile as a tourist destination with direct cash benefits to the economy,” he said.

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