It is easy to pick the two most leftfield business-related measures in this year’s Federal Budget – a special change to GST laws to help Australia’s recreational boat builders, and a boost to the film production sector.
The Government hopes to boost export sales of boat builders by changing GST laws such that recreational boats can be purchased GST-free if the boat is exported by the purchase within 12 months and only used for recreation within Australia.
Currently, the law requires that boats be exported within 60 days to qualify for GST-free status.
“These changes will allow Australian boat builders to overcome disadvantages they face relative to foreign competitors, who can more easily sell boats for export tax free,” the Assistant Treasurer Chris Bowen proudly announced in a statement.
There is an argument that the Australian recreational boat-building sector, which is centred around the Gold Coast, is badly in need of a boost.
Since the onset of the GFC, industry experts suggest global luxury boat sales have plummeted as much as 80% and about 10 Australian boat companies have collapsed, including the industry leader, Riviera.
The company, which had $300 million in debts when it was placed in receivership, is still trading, but remains in the hands of receivers, who have so far been unable to find a buyer.
But regardless of the sector’s worthiness, it remains something of a mystery as to why this sector rose to the top of the Government’s list of ailing sectors to help.
Crikey‘s political expert Bernard Keane says the Federal Gold Coast seat is a safe seat for the Opposition, so a political logic can be ruled out.
Whatever the reason, boat builders will be thrilled, although the GST change will be subject to public consultation and will require the unanimous agreement of the States and Territories.
The cost to the Budget of this measure was not disclosed.
The film sector will also be happy with the decision to spend $6.9 million over four years to fund changes to the film tax offsets program.
The minimum qualifying expenditures for the post, digital and visual effects offset will fall from $5 million to $500,000, while the Government will also remove the requirement for films with a production value of between $15 million and $50 million to spend a minimum of 70% of their production budgets in Australia.
In one of his rare appearances in the Budget documents, Arts Minister Peter Garrett says the changes will make Australia a more attractive destination for offshore productions.
“In recent years the requirement for large offshore productions to spend 70% of their budget locally has been a factor in some productions not coming to Australia, particularly smaller budget films wanted to shoot here as one of multiple international locations.”
The changes will apply from July 1.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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