LBSPG FAQs
LARGE BUDGET SCREEN PRODUCTION GRANT - FREQUENTLY ASKED QUESTIONS
NOTE: A printable version of these FAQs is downloadable at the bottom of this page
These Frequently Asked Questions and Answers (FAQs) are intended as a guide to assist with the interpretation of the LBSPG Criteria issued on 12 April 2011. As such, these FAQs are not intended to be legal advice nor are they intended to be comprehensive. In the event of any conflict between these FAQs and the Criteria, the Criteria will prevail. Before acting on this information, we advise you to seek advice from the NZFC and/or other professional and legal advice.
DATE: 12 April 2012
The following abbreviations are used:
NZFC New Zealand Film Commission
LBSPG Large Budget Screen Production Grant
QNZPE Qualifying New Zealand Production Expenditure
PDV Post, Digital and Visual Effects Production
MED Ministry of Economic Development
IRD Inland Revenue Department
CONTENTS
1. Administration
1.1 Who administers the LBSPG?
1.2 How do I get an application form?
1.3 What documentation will be required?
1.4 When should I apply for a grant?
1.5 Who can apply for a grant?
1.6 How long will it take for my application to be processed?
1.7 If a grant is approved, how do I get paid?
1.8 Does the applicant have to be a New Zealand registered company?
1.9 If there are several companies working on the screen production, which company should apply?
1.10 Can I still access other incentives if I apply for a grant?
1.11 If I have received production funding from the NZFC can I still apply for a grant?
1.12 Can Co-Productions apply for a grant?
1.13 Can I apply for the LBSP Grant and the PDV Grant?
1.14 Do I have to provide a credit to the New Zealand Government?
1.15 Who assesses applications for a grant?
1.16 Can Panel decisions be appealed?
1.17 If a cost is allowed or disallowed in an interim application, can it be revisited at a future interim application or the final application?
2. Initial Assessment
2.1 How do I obtain pre-approval for a grant?
2.2 How do I ensure that exchange rate fluctuations don’t cause the QNZPE to fall below the spend threshold?
3. Formats
3.1 What are eligible formats?
3.2 What formats are ineligible?
4. Definitions
4.1 When is a screen production considered to be ‘completed’?
5. QNZPE
5.1 What costs are excluded from QNZPE?
5.2 Can freight count towards QNZPE?
5.3 Can agents' fees and similar costs count towards QNZPE?
5.4 Should wardrobe/makeup/props be treated as expenses or assets?
5.5 Can business overheads count towards QNZPE?
5.6 What company does the cap on New Zealand business overheads apply to?
5.7 If New Zealand resident cast and crew are taken to another country for part of the shoot, does their remuneration for services performed outside New Zealand count towards QNZPE?
5.8 Can pre-production expenditure count towards QNZPE?
5.9 If props are purchased outside New Zealand but are brought into New Zealand for the production, will the cost of those props count towards QNZPE?
5.10 If non-New Zealand cast and crew are used in the production, do these costs count as QNZPE?
5.11 Do cast and crew perks/expenses count towards QNZPE?
5.12 What does “chain of title” mean in paragraph 28 of the Criteria?
5.13 How does paragraph 42 of the Criteria apply (costs of services embodied in goods)?
5.14 What publicity and promotion expenditure does NOT qualify as QNZPE?
5.15 Can I claim a deposit paid on overseas goods before those goods are in New Zealand and being used on the production (i.e. when making an interim application)?
5.16 Are freight costs relating to the personal effects for non-New Zealand crew working on the production for less than 14 days QNZPE?
5.17 Can fees for assistants to executive producers be claimed?
5.18 I have contracted a New Zealand company to work on the film. Are all of its costs automatically QNZPE?
5.19 Can I claim costs related to the trailer?
6. Exchange Rates/IRD/Banking/Tax/GST
6.1 I understand that the application needs to be in NZ dollars. What rate/s should I use to convert non-NZ dollar spend to NZ dollars?
6.2 What is the role of the IRD?
6.3 Can transactions through foreign bank accounts and/or transactions in foreign currencies count towards QNZPE?
6.4 Is it OK to use different bank accounts in different currencies?
6.5 Can payments in foreign currencies count towards QNZPE?
6.6 Does the grant include GST?
6.7 Do I have to pay New Zealand Income tax on the grant?
6.8 Do I need to set up a seperate entity to apply for a grant?
7. Insurance
7.1 Can the costs of production insurance and completion bonds be included within QNZPE?
7.2 Does Errors and Omissions insurance count towards QNZPE?
8. Travel
8.1 Does travel to and from NZ count towards QNZPE?
8.2 Are airport transfers included in QNZPE?
8.3 What travel counts towards QNZPE?
8.4 What is a return commercial airfare and what happens if I incur additional costs in changing the outgoing airfare only?
8.5 Are companion airfares QNZPE?
9. Auditors
9.1 How do I find out if the auditor I am using will be approved by the NZFC?
9.2 Are copies of contracts/invoices/paid cheques etc. acceptable?
9.3 Do audit costs count towards QNZPE?
10. Bundling
10.1 How does bundling work?
10.2 Who can apply for a bundle of screen productions?
10.3 What does ‘shareholding’ mean for the purposes of assessing whether an applicant in a bundle has 50% or more shareholding in common with the other applicants?
10.4 I need to set up a special purpose company for each production – will this qualify as a bundle?
10.5 Can I include PDV Production within a bundle?
10.6 If I include a TV series in a bundle, how long do I have to complete principal photography on this series?
11. PDV Production
11.1 What if I incur QNZPE on a PDV activity that is not listed in annexure 1 to the Criteria?
11.2 Can the NZ supplier of PDV Production apply for the grant on behalf of an overseas client?
11.3 Do the costs of PDV services sub-contracted to a country outside New Zealand qualify as QNZPE?
11.4 Can I include business overheads in my application for a PDV Grant?
11.5 Are file transfers included in PDV Production activities?
11.6 If the shoot is outside New Zealand but the PDV work is carried out in New Zealand, do any non-New Zealand costs of the PDV supplier count as QNZPE?
11.7 Does clause 52 (Non-New Zealand PDV Production) relate just to sub-contractors?
12. Series
12.1 When is a TV series completed?
12.2 Does the 12-month period limit the expenditure that can be claimed as QNZPE?
12.3 Can the 12-month period be nominated to obtain the greatest benefit?
12.4 Can I include a TV series in a bundle of productions?
13. Accounting Treatment
13.1 When is a payment ‘incurred’?
13.2 Can non-cash payments be treated as QNZPE?
13.3 Can I run two separate general ledgers e.g. one in USD and one in NZD and link together by a spread-sheet rather than by ledger entries?
14. Miscellaneous
14.1 Do the Cook Islands count as part of New Zealand for the LBSPG?
1. Administration
1.1 Who administers the LBSPG?
The New Zealand Film Commission.
1.2 How do I get an application form?
Application forms are available on the NZFC website: www.nzfilm.co.nz.
1.3 What documentation will be required?
The application form.
1.4 When should I apply for a grant?
When QNZPE on the screen production is completed OR once the QNZPE has exceeded NZ 50 million. Applications for a grant must be lodged with the NZFC no later than 3 months after completion of the screen production.
1.5 Who can apply for a grant?
An applicant must be the entity responsible for all activities involved in making the production or carrying out the PDV in New Zealand. Only one entity per screen production is eligible for a grant.
1.6 How long will it take for my application to be processed?
Assuming that all relevant information is included in the application, we aim to process applications within 3 months of receipt. If approved, payment of the grant is made within 10 working days of receipt of an invoice.
1.7 If a grant is approved, how do I get paid?
Once your application has been approved you will be sent an approval letter along with a pro forma invoice. You must then send an invoice to the Ministry of Economic Development including your bank account details and the payment will be made into the nominated bank account within 10 working days of the Ministry receiving the invoice.
1.8 Does the applicant have to be a New Zealand registered company?
An applicant must be either (a) a New Zealand resident company; or (b) a foreign corporation operating with a fixed establishment in New Zealand for the purposes of lodging an income tax return (both when it lodges the grant application and when the grant is paid); and must also be the entity that incurred the QNZPE.
1.9 If there are several companies working on the screen production, which company should apply?
The applicant should be the entity that is responsible for all activities involved in making the production or carrying out the PDV work in New Zealand. Only one entity per screen production can be eligible for a grant.
1.10 Can I still access other incentives if I apply for a grant?
An applicant seeking a grant will not be eligible for any other New Zealand Government film finance or tax incentives in relation to the screen production (including year 1 deductions under section DS2 of the Income Tax Act 2007, or funding through government agencies such as NZFC, NZ On Air, Te Mangai Paho, or through the NZ Film Production Fund). Applicants will however continue to be eligible for development funding that is financed by New Zealand Government agencies.
1.11 If I have received production funding from the NZFC can I still apply for a grant?
No.
1.12 Can Co-Productions apply for a grant?
A screen production which is financially and creatively structured to take advantage of a film co-production treaty between New Zealand and any other country will be eligible for a grant as long as the production does not access any of the Government incentives above.
1.13 Can I apply for the LBSP Grant and the PDV Grant?
No, you can only apply for one grant per production. If you submit a final application for either the PDV Grant or the LBSP Grant and then incur additional QNZPE, you cannot submit another application.
1.14 Do I have to provide a credit to the New Zealand Government?
This is not a requirement, but an on screen credit would be appreciated along the following lines: “With the assistance of the New Zealand Large Budget Screen Production Grant [or: the New Zealand Post, Digital and Visual Effects Grant]”.
1.15 Who assesses applications for a grant?
The LBSPG Panel assess all applications for LBSP or PDV grants. In coming to a decision, the Panel considers the Auditor’s report, the Independent Consultant’s report, the NZFC’s report and the IRD’s report. The Panel comprises:
(a) The Chief Executive of the NZFC
(b) The Deputy Chief Executive of the NZFC
(c) A representative from the MED
(d) A Senior Manager or Board Member of the NZFC
(e) Up to 10 screen production industry practitioners
1.16 Can Panel decisions be appealed?
No, the decisions of the Panel are final. Prior to each Panel meeting, the NZFC or the Independent Consultant will attempt to advise applicants of the proposed recommendation to the Panel and applicants will have an opportunity to comment on the recommendation.
1.17 If a cost is allowed or disallowed in an interim application, can it be revisited at a future interim application or the final application?
Yes. If further information comes to light following an interim application, a previous decision of the LBSPG Panel can be reversed up until the final application.
2. Initial Assessment
2.1 How do I obtain pre-approval for a grant?
You need to fill out the Initial Assessment Application Form which is available from the NZFC. In this form, you are asked about the nature of the project, the screen production format, the budget and anything else you might think is applicable. A non-binding assessment will be provided in writing by the NZFC.
2.2 How do I ensure that exchange rate fluctuations don’t cause the QNZPE to fall below the spend threshold?
You submit an application for initial assessment. At this time you need to notify the NZFC that you may require any non-NZ dollar currency to be converted at the preset exchange rate and you will need to nominate the currency or currencies. On the date this is received, the NZFC will obtain the relevant exchange rate/s from the Reserve Bank of New Zealand’s website (www.rbnz.govt.nz). This will be the ‘preset exchange rate/s’.
However you should only do this if:
- your budget is close to an expenditure threshold ($15m for LBSP Grant, and $3m for PDV Grant); and
- part of your budget will be spent in non-NZ dollars; and
- you are concerned that exchange rate fluctuations over the production period may lead to your actual expenditure falling below the relevant threshold.
If you have submitted an application for initial assessment and at the time you submit your final application, your QNZPE is below the threshold, then the NZFC will recalculate your eligibility to meet the threshold. This recalculation will apply the preset exchange rate against QNZPE incurred in the nominated non-NZ dollar currency or currencies. If your QNZPE then meets the threshold and your application is approved, the amount of the grant will be calculated and paid on actual QNZPE.
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3. Formats
3.1 What are eligible formats?
Feature films (including those shot directly to video), television movies and television drama series or mini-series. You can bundle any of these formats together provided they each have a minimum QNZPE of $3 million to achieve a total QNZPE of $30 million, and provided also that the principal photography or PDV (as the case may be) on each production within a bundle is completed within a 24--month period.
3.2 What formats are ineligible?
Documentaries, reality TV shows, advertising programmes, commercials, training programmes, productions of public events/sports events, discussion programmes, current affairs, news, panel programmes, variety programmes.
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4. Definitions
4.1 When is a screen production considered to be ‘completed’?
A screen production is considered to be completed when it is in a state where it could reasonably be considered ready for distribution, broadcast or exhibition to the general public.You may apply for a grant as soon as the QNZPE (or qualifying PDV expenditure) is completed, but you cannot apply later than 3 months after completion of the screen production.
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5. QNZPE
5.1 What costs are excluded from QNZPE?
Costs excluded from QNZPE are contained in paragraphs 39 to 45 of the Criteria.
5.2 Can freight count towards QNZPE?
Yes, but only if the freight costs are paid to a New Zealand supplier.
5.3 Can agents' fees and similar costs count towards QNZPE?
Agents' fees that are paid by the production company and deducted from a cast or crew member’s gross remuneration will qualify as QNZPE if the remuneration qualifies as QNZPE. Agents' fees paid by the production company in respect of services provided to that company will generally only qualify as QNZPE if the agent’s services are performed in New Zealand.
5.4 Should wardrobe/makeup/props be treated as expenses or assets?
It depends on what the value of each item is at the end of the production. If items have no value at the end of production and are thrown away or destroyed, then the full purchase price can count towards QNZPE. If there is still some value at the end of production, and the item is sold, then the difference in price is what needs to be counted towards QNZPE. In other words, usual accounting practices should be applied here. For this, use the ‘best estimate approach’ for value of assets props/wardrobe etc. to evaluate how much they are worth at the end of the shoot.
5.5 Can business overheads count towards QNZPE?
Yes. New Zealand business overheads can count towards QNZPE. Expenditure on these overheads may be claimed as QNZPE to the extent that the amount does not exceed the lesser of 3% of the total of the company’s QNZPE on the screen production or qualifying PDV expenditure (as the case may be) or NZ$500,000.
5.6 What company does the cap on New Zealand businesse overheads apply to?
The cap on New Zealand business overheads applies to the general business overheads of the applicant company and any associate companies (including parent and subsidiary companies).
5.7 If New Zealand resident cast and crew are taken to another country for part of the shoot, does their remuneration for services performed outside New Zealand count towards QNZPE?
No. Only fees for services performed in New Zealand qualify.
5.8 Can pre-production expenditure count towards QNZPE?
Only New Zealand development and pre-production expenditure will count towards QNZPE.
5.9 If props are purchased outside New Zealand but are brought into New Zealand for the production, will the cost of those props count towards QNZPE?
Yes (subject to paragraph 42 of the Criteria – costs embodied in goods), but if those props are also used outside New Zealand the cost must be apportioned appropriately.
5.10 If non-New Zealand cast and crew are used in the production, do their costs count as QNZPE?
Non-New Zealand crew costs for time spent working on the production in New Zealand (with a 14 day minimum) do qualify as QNZPE. Similarly, all non-New Zealand cast costs will qualify as QNZPE for time spent working on the production in New Zealand (with no minimum number of days required to qualify). In verifying an application the IRD compare withholding tax and employee tax (as applicable) records with amounts claimed under cast and crew as QNZPE.
5.11 Do cast and crew perks/expenses count towards QNZPE?
Perks do not count as QNZPE unless the applicant is contractually obliged to provide the ‘perk’ to the relevant cast or crew member in relation to their services in New Zealand (e.g. companion airfares – note however, that only the incoming fare can be claimed).
5.12 What does “chain of title” mean in paragraph 28 of the Criteria?
The reference to “chain of title” in paragraph 28 of the Criteria refers only to the copyright in the script and not to cast and crew contracts, production service agreements and similar contracts. Legal costs incurred in relation to these other contracts may, however, qualify as New Zealand business overheads within the limits provided.
5.13 How does paragraph 42 of the Criteria apply (costs of services embodied in goods)?
If you acquire goods from overseas for use in the screen production in New Zealand and more than 50% of the cost of those goods relate to services (e.g. labour costs) then that portion of the cost will not qualify as QNZPE. When acquiring goods from overseas, you should ask the supplier for a breakdown of the cost of such goods. It is not expected that you will be able to obtain this breakdown for ‘off-the-shelf’ goods but you should obtain this for all goods which are made to order for the production.
5.14 What publicity and promotion expenditure does NOT qualify as QNZPE?
Expenditure incurred in relation to publicity or promotion for the screen production does NOT qualify unless:
(a) it is incurred prior to the completion of the production; and
(b) the copyright in the publicity or promotion material is owned by a person or company who is resident in New Zealand for tax purposes.
For example, costs which relate to the production of a trailer do not qualify unless the copyright in the trailer is held by a New Zealand tax resident. Also, the costs of any stills photography do not qualify unless the copyright in the stills is held by a New Zealand tax resident.
5.15 Can I claim a deposit paid on overseas goods before those goods are in New Zealand and being used on the production (i.e. when making an interim application)?
No, paragraph 25 of the Criteria only allows this cost to be claimed once the good is located in New Zealand.
5.16 Are freight costs relating to the personal effects for non-New Zealand crew working on the production for less than 14 days QNZPE?
No. If the costs are incurred in relation to services that are not QNZPE then any associated freight costs are also not QNZPE.
5.17 Can fees for assistants to executive producers be claimed?
If a person is providing services to the executive producer directly rather than the production then their expenses should be excluded from QNZPE.
5.18 I have contracted a New Zealand company to work on the film. Are all of its costs automatically QNZPE?
No, just because payment is made to a New Zealand company does not mean all costs are automatically QNZPE. The definition of QNZPE still applies to third party suppliers. Therefore, if a supplier performs any element of its services offshore, these services need to be separately identified in any invoices and excluded from QNZPE. This requirement is particularly relevant to PDV work where the majority of the expenditure is often payable to one supplier. The applicant for a PDV Grant must require suppliers of PDV Production services to provide invoices which are broken down to show the cost of New Zealand and non-New Zealand services.
5.19 Can I claim costs related to the trailer?
Trailer costs are regarded as publicity and promotion expenditure. These costs are only QNZPE if they meet the requirements of paragraph 32:
- The expenditure was incurred by the applicant company before completion of the screen production; and
- Copyright in the publicity material is held by a person the Income Tax Act 2007 treats as either being resident in New Zealand under section YD 1 or YD 2, or who carries on business in New Zealand through a fixed establishment.
Any acceleration costs charged by a supplier primarily for expediting production of the trailer will only be QNZPE to the extent the trailer costs themselves are QNZPE.
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6. Exchange Rates/ IRD/Banking/Tax/GST
6.1 I understand that the application needs to be in NZ dollars. What rate/s should I use to convert non-NZ dollar spend to NZ dollars?
The mid-month exchange rates published by the Reserve Bank of New Zealand or the Inland Revenue Department exchange rates should to be used to convert foreign currency QNZPE into New Zealand dollars. Alternatively, you can use the rate at the date the expenditure is paid, as long as the approach adopted is applied consistently to all foreign currency expenditure.
Link: http://www.ird.govt.nz/calculators/keyword/overseascurrencies/
Note: if you are concerned that your QNZPE may not meet the expenditure threshold due to exchange rate fluctuations, refer to FAQ 2.2.
6.2 What is the role of the IRD?
The IRD’s primary role is to verify the information contained in the application against the GST, PAYE, income tax and other returns and information it holds.
6.3 Can transactions through foreign bank accounts and/or transactions in foreign currencies count towards QNZPE?
Yes, so long as the applicant is the person that spent the QNZPE.
6.4 Is it OK to use different bank accounts in different currencies?
Yes.
6.5 Can payments in foreign currencies count towards QNZPE?
If the payment would otherwise qualify as QZNPE, it will still qualify whichever currency it is paid in as long as the transaction is linked back to the applicant.
6.6 Does the grant include GST?
The grant is calculated in relation to amounts that are net of GST. However, due to New Zealand tax law it is required that the grant is paid GST inclusive. For this reason, the grant will be made to eligible applicants on a GST plus basis with applicants having to return the GST component in their normal GST returns.
6.7 Do I have to pay New Zealand Income Tax on the grant?
No, the grant is exempt for the purposes of income tax.
6.8 Do i need to set up a separate entity to apply for a grant?
This is not strictly necessary provided the applicant is a New Zealand registered company or a foreign company with a fixed establishment in New Zealand for tax purposes. However, if you have not set up a separate entity for the production then you should:
(a) contact the IRD's Screen Production Industry Desk (+644-890-3240) before you set up your accounting/tax systems for the production. This is to ensure that your systems are set up in such a way as to enable the IRD to verify the tax information provided with your final application.
(b) discuss the structure of your production service contracts with the NZFC as there may be unforeseen difficulties in this area which the NZFC can help you to identify and resolve.
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7. Insurance
7.1 Can the costs of production insurance and completion bonds be included within QNZPE?
Only if they are provided by a New Zealand provider. There are currently no completion bond companies operating in New Zealand.
7.2 Does Errors and Omissions insurance count towards QNZPE?
No.
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8. Travel
8.1 Does travel to and from NZ count towards QNZPE?
No, only inbound travel can count towards QNZPE, therefore you should claim for half of a commercial return airfare.
8.2 Are airport transfers included in QNZPE?
Only New Zealand-based transfers for cast and crew whose fees qualify as QNZPE.
8.3 What travel counts towards QNZPE?
Travel into New Zealand, being the equivalent of half a commercial return airfare to New Zealand, will qualify as QNZPE even though the services may be performed outside New Zealand possibly by an overseas airline and they may be booked through an overseas travel agent. This is a specific concession. However, additional fees charged by overseas travel agents do not qualify. Travel costs in relation to an overseas trip undertaken by a New Zealand resident do not qualify as QNZPE.
8.4 What is a return commercial airfare and what happens if I incur additional costs in changing the outgoing airfare only?
A return airfare is an airfare that is purchased for both legs (incoming and outgoing) of a journey between two countries. It is not the combination of two single airfares for a journey between two countries. If you purchase a return airfare between New Zealand and another country then you can claim 50% of the value of that airfare. However, if you purchase two single airfares then only the cost of the incoming airfare can be claimed.
If you incur additional costs due to changing an airfare then only the costs relating to the incoming airfare may be claimed as QNZPE.
8.5 Are companion airfares QNZPE?
Any companion airfares which are contracted as part of the total remuneration of a cast or crew member whose fees qualify as QNZPE are also treated as QNZPE. Additional airfares different to or in excess of what is contracted should be excluded from QNZPE. To avoid any delays in processing your application please ensure that the relevant cast and crew contracts are signed and dated.
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9. Auditors
9.1 How do I find out if the auditor I am using will be approved by the NZFC?
Contact the NZFC.
9.2 Are copies of contracts/invoices/paid cheques etc. acceptable?
The requirement for originals vs. photocopies of contracts, invoices etc. is to be left to the discretion of the auditor.
9.3 Do audit costs count towards QNZPE?
Yes, if the audit services are provided in New Zealand.
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10. Bundling
10.1 How does bundling work?
If you bundle several films, telemovies or TV series together to achieve a total QNZPE spend of $30m you will qualify for a grant provided each production has a QNZPE of at least $3m and also provided that principal photography or PDV Production (as the case may be) on all screen productions within a bundle must be completed within a 24-month period.
10.2 Who can apply for a bundle of screen productions?
The applicant for each production in a bundle of screen productions must be either:
- the same entity for each production; or
- related to the applicant for each other production by having 50% or more of its shareholding in common with those applicants.
If there is more than one applicant per bundle, then, unless one of the applicants is applying for an interim grant, you should ensure that the applications are submitted at the same time or as a ‘bundle’ to the NZFC. The NZFC will not commence processing an application for a screen production within a bundle until such time as all applications for the bundle have been received.
10.3 What does ‘shareholding’ mean for the purposes of assessing whether an applicant in a bundle has 50% or more shareholding in common with the other applicants?
The test for shareholding will be the same as that used by the IRD for tax purposes. Please contact the NZFC if you need further information about this.
10.4 I need to set up a special purpose company for each production – will this qualify as a bundle?
Yes, but only if each special purpose company has 50% or more of its shareholding in common with the other special purpose companies.
10.5 Can I include PDV Production within a bundle?
Yes, in which case PDV production work (which has reached the qualifying threshold) must have been completed within the same 24-month period as would otherwise apply to principal photography.
10.6 If I include a TV series in a bundle, how long do I have to complete principal photography on this series?
You must complete principal photography on any TV series within a 12-month period.
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11. PDV Production
11.1 What if I incur QNZPE on a PDV activity that is not listed in annexure 1 to the Criteria?
You should contact the NZFC to see whether that activity can be included.
11.2 Can the NZ supplier of PDV Production apply for the grant on behalf of an overseas client?
Yes, if they are a New Zealand registered company and have incurred all of the QNZPE being claimed. However, the New Zealand supplier will not have ‘incurred’ and cannot therefore claim its own fees or profit as this would be treated as income and not expenditure.
11.3 Do the costs of PDV services sub-contracted to a country outside New Zealand qualify as QNZPE?
No, only the cost of services supplied in New Zealand can be included in QNZPE.
11.4 Can I include business overheads in my application for a PDV Grant?
Yes, you can include New Zealand business overheads provided they do not exceed the lesser of 3% of the total qualifying PDV expenditure or $500,000.
11.5 Are file transfers included in PDV Production activities?
Yes, provided the cost is paid to a company in New Zealand.
11.6 If the shoot is outside New Zealand but the PDV work is carried out in New Zealand, do any non-New Zealand costs of the PDV supplier count as QNZPE?
No. On-set costs relating to data capture that are performed by a New Zealand supplier in another country should be separately identified in any invoices and excluded from QNZPE. The applicant for a PDV Grant must require suppliers of PDV Production services to provide invoices which are broken down to separately show the cost of New Zealand and non-New Zealand services.
11.7 Does clause 52 (Non-New Zealand PDV Production) relate just to sub-contractors?
Clause 52 is not just limited to sub-contractors. In circumstances where a supplier is providing services outside New Zealand, whether by a sub-contractor or not, the applicant should require a further breakdown from the supplier.
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12. Series
12.1 When is a TV series completed?
When the episodes that had completed principal photography within the requisite 12-month period are completed and ready for broadcast. An application for the grant should be sent in within 3 months of the date the last of those episodes has been completed. This could well be another few months beyond the 12-month period as post production can take place outside the 12 months.
12.2 Does the 12-month period limit the expenditure that can be claimed as QNZPE?
Only costs relating to the episodes shot within the requisite 12-month period can be claimed as QNZPE. However, it does not matter how much it costs to shoot the episodes in the 12 months, as long as at completion, the total cost (including post production costs which could have taken place outside the 12-month period) is on average a minimum of $500,000 per commercial hour. The episodes bundled together then need to be at least $15 million (or if bundled with other screen productions, $3million). Therefore, the 12 months relates only to the shoot, ie: QNZPE can go beyond the 12 months but costs have to relate to the episodes shot within the 12 months.
Although there is a requirement that episodes must have completed principal photography within a 12-month period, they may or may not be totally completed ready for broadcast. For example, post production on the episodes might not yet have been started, let alone completed. Where episodes completed principal photography within the 12-month period, but were not yet completed ready for broadcast, then expenditure outside the 12-month period relating to the episodes that had principal photography completed within the 12 months will count for the purposes of the grant.
12.3 Can the 12-month period be nominated to obtain the greatest benefit?
If there is only a finite number of episodes for a TV series and they are shot (i.e. principal photography is completed) within a 12-month period or less, given that the costs for completion of the episodes outside the 12-month period will count, you do not need to nominate a 12-month period to obtain a greater benefit. If however, the TV series was ongoing, and shooting continued on episodes well beyond a 12-month period, it would make sense to choose a 12-month period which included episodes that were the most expensive to shoot.
12.4 Can I include a TV series in a bundle of productions?
Yes, provided it meets the format requirements set out above.
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13. Accounting Treatment
13.1 When is a payment ‘incurred’?
The LBSPG scheme is administered on a cash basis. This means that applications will be assessed on a cash basis and that an item of expenditure will generally be considered to have been ‘incurred’ at the time the payment is made.
13.2 Can non-cash payments be treated as QNZPE?
No, for the purposes of the LBSPG scheme, only expenses paid in cash can be claimed as QNZPE. In addition, the payment must have been made before the application is submitted.
13.3 Can I run two separate general ledgers e.g. one in USD and one in NZD and link together by a spread-sheet rather than by ledger entries?
So long as there is an overall consolidated summary or overarching spread-sheet and, where appropriate, an agreement linking all companies and/or general ledgers then such practice is acceptable for the purposes of the grant.
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14. Miscellaneous
14.1 Do the Cook Islands count as part of New Zealand for the LBSPG?
No.
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For further information please contact:
The Manager, LBSPG
New Zealand Film Commission
Level 3, 119 Ghuznee Street
PO Box 11 546
Wellington 6142
TEL +64 4 382 7680
FAX +64 4 384 9719
EMAIL
lbspg@nzfilm.co.nz