A Special Purpose Vehicle (SPV) is a company set up specifically for your production, used to access the Producer Offset and keep your production’s finances separate from other business activities. Once the Producer Offset rebate lands in the SPV, the next question is how to get that money out to reinvest or use elsewhere.
The rebate itself isn’t taxed, since it comes back to the SPV as a tax rebate. Getting it out is usually done through a loan agreement, where the rebate repays the loan. Loan repayments are capital in nature, so this generally has a smaller income tax impact, though it can affect the equity held in the film.
Loan agreements aren’t the only consideration. Below is a checklist of the entity structure and planning questions worth working through before the rebate lands.
Things to review to ensure you can get your Producer Offset funds:
- Have you got the correct entity structure in place?
- Are you using a holding entity to receive the Producer Offset from the SPV?
- Are you maximising the tax rebate to the correct entity?
- Have you created a correct loan agreement with appropriate dates, terms and interest rates?
- Have you considered the equity in the film and the impact of loans or other agreements?
- Have you correctly planned for the tax impacts of the SPV?
It’s always good to plan ahead, but even if you commenced without carefully considering the effect of the Producer Offset, there are still opportunities to tidy things up.
Please contact us for a confidential discussion on how we can assist with your tax planning, so that we can assist you with receiving the Producer Offset and all the preparation that goes with it.
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.