Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Hobbit tax rebate swells to $67.1M in year two of production

Hobbit tax rebate swells to $67.1 mln in second year of production

By Paul McBeth

Nov. 26 (BusinessDesk) - New Zealand taxpayers lent a $67.1 million helping hand via tax rebates for the making of Peter Jackson's movie The Hobbit in the first two years of actual production, according to its financial statements.

The movie, produced by Warner Bros Entertainment subsidiary 3 Foot 7, reaped $46.9 million from New Zealand's large budget screen production grant in the 12 months ended March 31, according to statements lodged with the Companies Office. That added to the $20.2 million tax rebate it received in 2011, the first year it got the subsidy.

Shooting on The Hobbit wrapped in early July of this year, meaning the company should be able to claim a further rebate in the 2013 period.

The subsidy over the two years amounts to about 14.6 percent of the $459.6 million production cost incurred over the 2011 and 2012 financial years, just below the 15 percent of locally incurred costs that can be claimed back in tax under the scheme, known as qualifying New Zealand production expenditure.

New Zealand is coming under pressure to raise the subsidy as the weak US dollar eats into Hollywood studios' margins. Last month producer James Cameron, who used Wellington-based Weta Digital for his Avatar film, told TVNZ's Q&A programme Prime Minister John Key discussed "the idea of possibly altering the rebate scheme to keep pace with the change in the dollar" with studio executives on a whirlwind visit to Los Angeles.

The Hobbit production company narrowed its loss to $8.2 million in the 2012 year from $70.4 million a year earlier. The way the production is financed means filming costs are covered by interest free loans from New Line Cinema. 3 Foot 7 can then satisfy that debt, plus take a margin, by charging production service fees once filming is completed.

The company lifted its production service fee to $266.3 million in the 2012 period, from $50.1 million a year earlier. That left $27.6 million in outstanding production advances, as at March 31.

New Zealand's capital, Wellington, is preparing to host the world premiere of the first Hobbit film on Wednesday, and Wellington City Council has put up some $1.1 million for a raft of activities, including outdoor screenings of the Lord of the Rings trilogy and a week-long artisan market two blocks away from the red carpet.

The movie trilogy, originally slated for two films, suffered several delays, including funding woes from MGM, first-choice director Guillermo del Toro quitting and producer Peter Jackson taking over, a threatened actors’ boycott, and surgery for Jackson.

The film became a political football in 2010, and saw Prime Minister Key step in to broker a deal with Warner Bros executives amid fears the production could be shipped somewhere cheaper as local actors sought to firm up their working conditions.

That saw the government give the studios an extra subsidy of up to US$7.5 million per movie for spending more than $200 million, expanding what spending qualifies for the rebate under the existing rules, and changing employment law to classify all film workers as contractors by default. It would also stump up US$10 million to market local tourism as part of The Hobbit’s release.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Court Ruling: Kiwifruit NZ Ordered To Consider Collaborative Marketing Proposals

The High Court has told kiwifruit marketer Zespri to reconsider collaborative marketing proposals from Splice Fruit and Seeka Kiwifruit to sell fruit offshore that its board had previously rejected. More>>

ALSO:

Electric Vehicles: No Road User Charges Feature In Govt Package

Drivers of electric vehicles won't have to pay road user charges and will be allowed to drive in bus lanes as part of a new government plan to double EV numbers annually to a target 64,000 by 2021. More>>

ALSO:

Pre-Budget: Computer Emergency Response Team, Assemble!

John Key told the country's first ever Cyber Security Summit in Auckland that the government had earmarked funding set up a national Computer Emergency Response Team to help prevent and act on cyber incidents in partnership with the private sector and other organisations. More>>

ALSO:

Job Cutter Goes: Mark Weldon To Step Down As MediaWorks CEO

“When I joined MediaWorks in August 2014, I had a mandate to lead a significant change programme to bring the business back from receivership into a position where it could once again be a strong competitor in the market, with a sound and sustainable future. It was a big brief, laden with inherent challenges, but I took it in good faith and have dedicated myself fully to the goal since." More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news