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Film Investment in Australia
Injecting money into the film industry could prove to be a culturally rewarding step towards a tax-deductible investment.

According to the Income Tax Assessment Act, the deduction covers capital expenditure incurred when acquiring an interest in the initial copyright of a new Australian film. To qualify, the ATO says you must be an Australian resident, who outlays capital expenditure to contribute to the film's production. You must also become the first owner or one of the first owners of the film's copyright and intend to use the copyright to produce income via cinema or television broadcast. You may also be eligible for a deduction for the entire amount you expended or contributed under a contract.

A deduction is usually allowed in the year the money is spent to produce the film, but other deductions for expenses, such as interest on the funds used to make capital contributions are limited to the amount of film income for that particular year. Subject to this limitation, any unused deduction can be carried forward and applied against income from the film in future years.

Investors and potential investors should be aware that while a deduction can be claimed up front according to the ATO, this deduction is subject to the following conditions:

• The film must receive a final certificate from the Minister for Communications, Information Technology and the Arts certifying the film is a qualifying Australian film;
• It must be exhibited commercially within two years of the end of the income year in which capital money was first spent to produce the film or contributed to the cost of producing it; or
• If the copyright of the film did not come into existence within the relevant two-year period, you must have derived assessable income under an agreement granting another person the rights to exhibit the film.

Source: Gold Coast Bulletin Dec 29-30 2001. For further details concerning any project contact THE SOURCE Information shall be provided to each respective party.

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