What is QAPE?
QAPE stands for Qualifying Australian Production Expenditure. It is the measure used to calculate the value of Australia’s screen production tax offsets – the Producer Offset, the Location Offset, the PDV Offset, and the Digital Games Tax Offset.
QAPE is defined in Division 376 of the Income Tax Assessment Act 1997. In practical terms, it covers money spent on goods and services that are provided in Australia for the purpose of making your film, television show, or digital game.
Why does QAPE matter so much? Because your offset payment is calculated directly from it. The formula is simple:
Offset payment = QAPE x offset rate
So if your production has $2,000,000 in qualifying Australian production expenditure and you are claiming the Producer Offset at 40%, your offset payment is $800,000. Every dollar of legitimate QAPE that you fail to capture is money you are leaving on the table – and every dollar you incorrectly claim will be knocked out during the audit process. Use the Producer Offset Calculator to run the numbers for your production.
Getting your QAPE right is not just an accounting exercise. It directly determines how much money comes back to your production. For a step-by-step walkthrough of the claiming process, see the guide on how to claim the Producer Offset. At Count Out Loud, Blake works closely with production companies to make sure every qualifying dollar is captured, documented, and defensible.
QAPE Eligible Expenditure – The Complete Checklist
The following checklist covers the major categories of expenditure that qualify as QAPE, organised by production phase. This is designed as a practical reference for producers and production accountants working through their offset claims. The key requirement across all categories is that the goods or services must be provided in Australia.
Pre-Production QAPE
Qualifying expenditure during pre-production includes:
- Script development – writing, rewriting, and script editing fees, provided these are incurred after the date of your provisional certificate from Screen Australia
- Location scouting within Australia – travel, accommodation, and fees related to scouting and securing locations domestically
- Casting sessions in Australia – casting director fees, venue hire, travel for auditions conducted in Australia
- Crew hiring and pre-production salaries – wages for production office staff, department heads brought on during prep, and their associated on-costs
- Set construction and props – materials and labour for set builds, prop sourcing, and art department purchases from Australian suppliers
- Equipment hire from Australian suppliers – camera, lighting, grip, sound, and specialist equipment hired from Australian rental houses
- Insurance premiums paid to Australian insurers – production insurance, public liability, workers compensation, and equipment insurance
- Office and studio rental in Australia – production office lease costs, studio hire, and workshop space
- Travel within Australia for pre-production – domestic flights, car hire, accommodation, and per diems for recce trips and prep meetings
Production QAPE
During principal photography, qualifying expenditure expands significantly:
- All Australian crew wages, salaries, and per diems – from the director of photography through to production assistants, including overtime, penalty rates, and living allowances
- Australian cast fees and living allowances – above-the-line and below-the-line talent performing services in Australia, including their per diems and accommodation
- Equipment hire and consumables – ongoing rental costs, expendable supplies, tape, batteries, gaffer tape, gels, and other consumable items sourced in Australia
- Location fees and permits – location access fees, council permits, police and traffic management, and location restoration costs
- Catering from Australian suppliers – on-set catering, craft services, and meal buyouts
- Transport and accommodation within Australia – unit vehicles, fuel, flights between Australian locations, crew accommodation during shoots away from base
- Set construction and wardrobe – ongoing art department builds, wardrobe purchases and hire, hair and makeup supplies
- Special effects and stunts – SFX crews, materials, stunt coordination, and safety equipment, provided these services are performed by Australian-based crews
- Film stock, digital media, and hard drives – physical recording media and data storage purchased in Australia
- Superannuation contributions – SG payments made on behalf of Australian crew and cast
- Workers compensation insurance premiums – premiums paid for crew coverage during the production period
- Post-production facility deposits – advance payments to Australian post-production facilities, if paid during the production phase
Post-Production QAPE
Post-production QAPE covers all finishing work done in Australia:
- Editing services in Australia – editor fees, assistant editor wages, editing suite hire, and offline and online editing costs
- Sound design and mixing – sound editing, Foley, ADR recording, re-recording mix, and facility hire at Australian studios
- Music composition and recording – fees for Australian composers, musicians, recording studio hire, and music supervision services performed in Australia
- VFX and CGI done in Australia – visual effects work performed by Australian VFX houses or freelancers working in Australia
- Colour grading – grading sessions and colourist fees at Australian facilities
- Subtitling and captioning – closed captions, open captions, and subtitle creation by Australian providers
- Quality control and deliverables preparation – QC checks, technical reviews, and preparation of delivery masters
- Mastering and format conversion – DCP creation, broadcast master preparation, and digital format encoding by Australian facilities
What Does NOT Count as QAPE
Understanding what is excluded from QAPE is just as important as knowing what qualifies. Incorrectly including non-qualifying expenditure in your claim will result in adjustments during the audit, delays to your offset payment, and in serious cases, scrutiny of the entire application. Here are the key exclusions.
- Financing costs – interest on production loans, gap finance arrangement fees, completion bond fees, and legal costs related to financing agreements. These are costs of raising money, not costs of making the production.
- Marketing and distribution costs – festival submission fees, market screenings, publicity materials, distribution agreements, and sales agent commissions. These fall outside the scope of production expenditure.
- Expenditure on goods or services provided outside Australia – even if paid in Australian dollars and invoiced by an Australian entity, the test is where the goods or services are provided. VFX work done at an overseas studio does not qualify, regardless of who invoices it.
- Development expenditure incurred before the provisional certificate date – this is one of the most common and costly exclusions. Any money spent on script development, research, or pre-production before Screen Australia issues your provisional certificate is not QAPE.
- Expenditure already claimed under another government incentive – you cannot double-dip. If a cost has been funded by a state government incentive or another Commonwealth programme, it cannot also be claimed as QAPE for offset purposes.
- Amounts paid to related parties above market rate – payments between related entities are only QAPE to the extent they reflect fair market value. Inflated invoices between associated companies will be adjusted down.
- Costs of applying for the offset itself – the fees and professional costs associated with preparing your offset application, including audit fees required by the ATO and Screen Australia, are not QAPE.
- General overhead not directly related to the production – ongoing company running costs that are not specifically incurred for the purpose of making the qualifying project are excluded. If your production company runs multiple projects, you need to allocate shared costs properly.
- Expenditure on acquisition of copyright – purchasing underlying rights (such as a book option or format licence) is generally not QAPE, unless the expenditure relates to goods or services provided in Australia for the making of the film.
Common QAPE Mistakes That Cost Producers Money
Blake has worked with dozens of production companies on their QAPE tracking and offset claims. These are the mistakes that come up most often – and they are almost always avoidable with the right systems and advice in place from the start.
1. Not Getting the Provisional Certificate Early Enough
This is the single most expensive QAPE mistake a producer can make. Any development or pre-production expenditure incurred before your provisional certificate date is excluded from QAPE. Productions have lost tens of thousands of dollars in qualifying expenditure by waiting until cameras were about to roll before applying for their provisional certificate. Apply early – ideally before you start spending significant money on pre-production.
2. Poor Documentation of Travel Allowances and Per Diems
Travel and living allowances are legitimate QAPE, but only if they are properly documented. You need records showing who received what, when, and for what purpose. A line item in your accounts that says “crew per diems – $45,000” is not sufficient. You need individual records, signed acquittals, and evidence that the allowances relate to genuine production travel within Australia.
3. Missing Above-the-Line Expenditure That Qualifies
Some producers assume that above-the-line fees (director, producer, principal cast) do not count as QAPE. They do – provided the services are performed in Australia. Director fees for prep, shoot, and post supervision in Australia are all qualifying. Producer fees for work done in Australia qualify. Principal cast salaries for shooting days in Australia qualify. Do not leave ATL expenditure off your QAPE schedule without checking.
4. Incorrect Allocation of Shared Costs
When a production company runs multiple projects simultaneously, or when costs are shared between qualifying and non-qualifying activities, the allocation methodology matters. An arbitrary 50/50 split will not satisfy auditors. You need a defensible, documented basis for every allocation – typically based on time, usage, or direct attribution.
5. Not Tracking Australian-Sourced Goods Properly
Equipment purchased overseas and shipped to Australia is not QAPE – even if you use it on an Australian production. Equipment hired from an Australian rental house is QAPE. The distinction matters, and your records need to make the sourcing clear for every significant purchase and hire. Blake flags this with every production team during initial setup.
6. Forgetting to Include Superannuation Contributions
Superannuation paid on behalf of Australian crew and cast is QAPE. At the current SG rate of 12%, that adds up quickly. On a production with $1M in qualifying crew wages, that is $120,000 in additional QAPE that some producers forget to include in their claim. For more on super obligations in the screen industry, see the guide on superannuation for film crews.
7. Not Claiming Workers Compensation Insurance Premiums
Workers compensation insurance premiums paid to Australian insurers are QAPE. On a large production, this can be a significant amount – particularly for departments with higher risk ratings like stunts, construction, and rigging.
To put the impact in perspective: Blake and the team recently reviewed the QAPE schedule for a single documentary production and identified significant undocumented QAPE that had been missed. Through thorough review, they recovered a substantial additional offset that would otherwise have been left unclaimed.
How to Track QAPE Effectively
The key to getting QAPE right is building tracking into your accounting system from the very first transaction. If you wait until the end of production to classify expenditure, you are guaranteed to miss things and create extra work for yourself and your auditors.
Here is the process Blake recommends for every production:
- Set up dedicated Xero tracking categories from day one – create a QAPE tracking category in Xero that allows you to tag every transaction as QAPE-eligible or non-QAPE at the point of entry. This takes minutes to set up and saves weeks of work later.
- Tag every transaction at point of entry – do not batch-classify transactions at the end of the month. When an invoice comes in and gets recorded, it should be tagged as QAPE or non-QAPE immediately. This forces you to think about the classification while the context is fresh.
- Use project tracking to separate productions – if your production company runs multiple projects, use Xero’s project tracking to keep each production’s expenditure cleanly separated. This makes QAPE reconciliation straightforward and prevents cross-contamination between projects.
- Run monthly QAPE reconciliation reports – at the end of each month, run a report showing total QAPE to date, QAPE by category, and projected offset value. This gives you visibility on where you stand and flags any classification issues early.
- Keep all supporting documentation digital – scan or photograph every receipt, contract, and invoice. Store them in a structured digital filing system linked to your Xero transactions. When auditors ask for documentation – and they will – you want to be able to produce it instantly, not dig through boxes.
- Maintain a QAPE register alongside your cost report – your cost report tracks total production expenditure. Your QAPE register tracks qualifying expenditure specifically. Running these in parallel ensures nothing falls through the cracks and gives your auditors a clear trail to follow.
For more on setting up production budgets with proper tracking from the start, see the guide on budgeting for film productions.
QAPE Thresholds by Offset Type
Each offset type has a minimum QAPE threshold that your production must meet to be eligible. Below are the current thresholds and rates.
| Offset Type | Minimum QAPE | Offset Rate |
|---|---|---|
| Producer Offset (feature film) | $500,000 | 40% |
| Producer Offset (other format, under 65 mins) | $250,000 | 30% |
| Producer Offset (other format, 65+ mins) | $500,000 | 30% |
| Location Offset | $20,000,000 | 30% |
| PDV Offset | $500,000 | 30% |
| Digital Games Tax Offset | $500,000 | 30% |
The minimum QAPE threshold is a critical planning consideration. If your production’s QAPE falls below the relevant threshold, you are not eligible for the offset at all – it is not a sliding scale. This means smaller productions need to carefully estimate their QAPE during budgeting to determine whether an offset claim is viable. If your projected QAPE is close to the threshold, every dollar of qualifying expenditure matters. If you are establishing a production company specifically for an offset claim, see the guide on setting up an SPV for film production.
Frequently Asked Questions
Does above-the-line talent count as QAPE?
Yes, if they are performing services in Australia. This includes director fees, producer fees, and principal cast salaries for work done in Australia. The key test is not where the person is from or where they are tax-resident — it is where the services are actually performed. A director who flies in from overseas and works in Australia for three months generates QAPE for those three months of Australian-based work.
Can travel to Australia count as QAPE?
Travel to Australia for foreign cast and crew does not count as QAPE. The expenditure must be on goods or services provided in Australia, and international travel is provided outside Australia. However, travel within Australia during production does count. Domestic flights between shooting locations, ground transport, and accommodation for interstate shoots are all qualifying expenditure.
Do superannuation contributions count as QAPE?
Yes. Superannuation guarantee contributions paid on behalf of Australian crew and cast are QAPE. At the current rate of 12%, this represents a meaningful portion of your total qualifying expenditure. Make sure your payroll system correctly captures and reports super as a separate QAPE line item. For more detail, see the full guide on superannuation for film crews.
What about post-production done partly overseas?
Only the portion of post-production work done in Australia counts as QAPE. If you split VFX work between an Australian studio and an overseas facility, you need clear documentation showing exactly what work was done where and the cost allocation for each. A single lump-sum invoice covering both Australian and overseas work is not sufficient — you need the split broken out and supported by contracts, work orders, or statements of work.
When should I start tracking QAPE?
From the date of your provisional certificate. Any qualifying expenditure from that date forward is potentially QAPE. But ideally, you should set up your tracking system before the provisional certificate is issued, so that the moment it arrives, your accounting system is ready to capture and classify expenditure correctly from day one. Retroactively classifying weeks or months of transactions is slower and more error-prone.
Is there a time limit for claiming the Producer Offset?
You must lodge your final certificate application with Screen Australia within two years of the completion of the film. After receiving the final certificate, you then lodge your offset claim with the ATO as part of your company tax return. Missing these deadlines means losing the offset entirely, so it pays to stay on top of the timeline. For guidance on tax lodgement deadlines, see the post on late lodgement obligations.
Get Expert Help With QAPE Tracking
QAPE tracking is detail-oriented work, and the stakes are high. Every qualifying dollar you miss reduces your offset payment. Every non-qualifying dollar you include creates problems during audit. Blake and the Count Out Loud team advise production companies on screen production offset claims, and the difference almost always comes down to how well QAPE is tracked from the start.
Whether you are in early development planning your budget, mid-production needing to get your tracking systems in order, or preparing your final certificate application, Count Out Loud can help.
- Phone: (02) 9043 1525
- Services: Producer Offset Services | Production Tax Advisory
- Address: 1 James Place, North Sydney, NSW 2060
Contact Count Out Loud to talk to Blake and the team about your production’s QAPE tracking. The team can help ensure you capture every qualifying dollar and have the documentation to back it up.
Cast and crew with fluctuating income across financial years may also benefit from income averaging for special professionals, which can significantly reduce the tax impact of irregular earnings in the screen industry.