QAPE stands for Qualifying Australian Production Expenditure: broadly, the money spent in Australia on your production. Relevant expenses must be recorded correctly in a general ledger to be eligible as QAPE. Properly recorded costs form the expenditure record that supports your QAPE and stands up to audit.
Here are the five most common scenarios for handling production expenses that production accountants see, and how GST is handled in each.
For more on Special Purpose Vehicles (SPVs), see our guide to Using Special Purpose Vehicles for filmmaking in Australia.
Let’s run through the different scenarios:
Scenario 1 – Normal operations
The production accountant will receive an invoice. Once authorised for payment, it will be paid and then reconciled in the SPV’s accounting system. GST will be noted if applicable. Similarly, payroll will be prepared in the accounting system and paid. These are the normal operations during a production.
Scenario 2 – Advances
It is common on productions for certain crew members to receive a cash advance from the production, also known as Petty Cash. The crew member will then purchase items required for the film. They will then complete a Petty Cash Acquittal form, noting the GST on purchases, and showing where the money was spent. Any money not spent is returned to the production.
Scenario 3 – Expense claims
Although less common, sometimes a crew member will pay for a film expense and then submit an expense claim to be reimbursed. This is normally for a time-sensitive purchase. The Expense Claim form is similar to the Petty Cash Acquittal form, in that each purchase is noted, described, the expense account and GST noted on the form.
Scenario 4 – Development expenses
Prior to an SPV being set up when a production is greenlit, certain expenses may be incurred by the production company. For example, these may be for research, writers’ fees, budget and schedule preparation etc. These invoices need to be invoiced to the SPV once it is set up. Note the invoice from the production company must have GST on it if the company is registered for GST, even if the original payment did not have GST on it.
Also note that it is the expense net of GST that is charged to the SPV, otherwise when you add GST, you are charging GST on GST, which is not correct.
Scenario 5 – Ongoing expenses paid by the production company
Sometimes, and mostly for cash flow reasons, an invoice for the SPV may be invoiced to and paid by the production company. Similar to Scenario 4, this expense needs to be invoiced down to the SPV.
The other situation is where the production company pays for an invoice addressed to the SPV. This is not a great situation, as the production company has paid an invoice which is not in their name. In this situation the production company should submit an expense claim, the same as an individual would, as it has paid an expense on behalf of another company, and would be reimbursed.
In conclusion
Correctly managing expense claims and GST on-charging is important, especially in film production, where financial structures can be complex due to the use of SPVs.
Keep clear records and correctly account for GST so you don’t make a costly mistake that can impact your finances.
At Above The Line Accounting, we specialise in SPVs and getting them set up correctly, including for the Producer Offset.
We’d love to help you ensure your SPV is set up correctly, and manage your expenses efficiently – so you can focus on telling captivating stories.
Feel free to contact us for a free consultation call to discuss how we can help your production company ensure its film finances are sorted.
Related: How do I apply for the Producer Offset?
A note on this article
Information provided by Above the Line Accounting on this website is general in nature and does not take into consideration your personal financial situation. It is for educational purposes only and does not constitute formal financial advice.