Taxation Laws Amendment (Film Licensed Investment Company) Act 1998 (Cth)

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Taxation Laws Amendment (Film Licensed Investment Company) Act 1998

Act No. 108 of 1998 as amended

This compilation was prepared on 6 August 2002

[This Act was amended by Act No. 57 of 2002]

Amendment from Act No. 57 of 2002

[Schedule 12 (item 79) repealed Item 12 of Schedule 1

Schedule 12 (item 79) commenced on 3 July 2002]

Prepared by the Office of Legislative Drafting,

Attorney‑General’s Department, Canberra

Contents

An Act to provide income tax deductions for investment in film licensed investment companies, and for related purposes

[Assented to 7 December 1998]

The Parliament of Australia enacts:

1Short title

This Act may be cited as the Taxation Laws Amendment (Film Licensed Investment Company) Act 1998.

2Commencement

This Act commences on the same day as the Film Licensed Investment Company Act 1998.

3Schedule(s)

Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Schedule 1AmendmentPart 1Insertion of new Subdivision 375‑H

Income Tax Assessment Act 1997

1

Section 375‑820 (link note)

Repeal the link note.

2

After Subdivision 375‑G

Insert:

Subdivision 375‑H—Deductions for shares in a film licensed investment company

375‑850What this Subdivision is about

You can deduct amounts you have paid for shares issued to you by a film licensed investment company (FLIC). The deduction does not apply to shares issued after 1 July 2000.

Because of these deductions, there are special rules about the tax treatment of FLICs.

Table of sections

Provisions affecting you if you own shares in a film licensed investment company

375‑855 What can you deduct?

375‑860 When can you claim the deduction?

375‑865 How can you lose your entitlement?

375‑870 How this Subdivision applies to partners and partnerships

Provisions affecting film licensed investment companies

375‑875 Tax losses cannot be transferred to or from FLICs

375‑880 FLIC cannot claim deductions for concessional capital

Provisions affecting you if you own shares in a film licensed investment company

375‑855What can you deduct?

  1. (1)

    You can deduct money you pay for *shares in a *film licensed investment company (a FLIC) if the shares are issued to you by the FLIC during the period the FLIC’s concessional capital licence is in force.

    Note: The period a FLIC’s licence is in force is determined under the Film Licensed Investment Company Act 1998. It cannot be in force after 30 June 2000.

  2. (2)

    A film licensed investment company is a company that has been granted a licence to raise concessional capital under the Film Licensed Investment Company Act 1998 (whether or not the licence has ceased to be in force).

    Note: Under the Film Licensed Investment Company Act 1998 concessional capital is money paid to the FLIC for the issue of shares during the period its concessional capital licence is in force (see section 5 of that Act).

375‑860When can you claim the deduction?

  1. (1)

    If you pay for the *shares in an income year and the shares are issued in the same income year, you get the deduction for that income year.

  2. (2)

    If you pay for the *shares in an income year but the shares are not issued until a later income year, you get the deduction for the later income year.

    Note: A FLIC can only issue fully paid shares (see section 15 of the Film Licensed Investment Company Act 1998).

375‑865How can you lose your entitlement?

  1. (1)

    You lose your entitlement to the deduction if the *Arts Minister decides to remove the concessional status of your shares.

    Note: The Arts Minister may do this if the FLIC in which you hold shares breaches the conditions imposed on it under the FLIC’s Act. See section 32 of the Film Licensed Investment Company Act 1998.

  2. (2)

    You also lose your entitlement to the deduction if the Commissioner is satisfied that:

    1. (a)

      the *FLIC in which you hold the *shares has breached a condition imposed on it under the Film Licensed Investment Company Act 1998; and

    (b) the Arts Minister has been given notice that the Commissioner is satisfied as mentioned in paragraph (a); and

    1. (c)

      the Arts Minister has not, within 6 months after that notice, notified the Commissioner that the Arts Minister has made a decision about the alleged breach of conditions.

    Note: The Arts Minister’s decisions about alleged breaches of conditions are made under section 32 of the Film Licensed Investment Company Act 1998. Subsection (2) above is only relevant in a situation where the Arts Minister has, as far as the Commissioner knows, made no decision under that section.

  3. (3)

    If the Commissioner is satisfied of the matters set out in subsection (2), the Commissioner must, within 28 days, give written notice to the *Arts Minister about the loss of entitlement that has occurred under subsection (2).

Amendment of assessment

  1. (4)

    If you lose your entitlement after you have already got the deduction, your assessment may be amended to disallow the deduction.

375‑870How this Subdivision applies to partners and partnerships

Application

  1. (1)

    This section applies to allocate to you, for the purposes of this Subdivision, money paid for *shares issued by a *FLIC during an income year if:

    1. (a)

      you are a partner in a partnership; and

    2. (b)

      the shares have been issued to you and your partners jointly; and

    3. (c)

      the partnership has paid for the shares.

Allocation of payments to partners

  1. (2)

    For the purposes of this Subdivision, you are taken to have paid for the shares during that income year:

    1. (a)

      the amount of the payment for the *shares that the partners agreed is attributable to you; or

    2. (b)

      if there was no such agreement—the proportion of the payment for the shares that is equal to the proportion of your individual interest in the net income or partnership loss of the partnership for that income year.

This Subdivision does not apply to net income or partnership loss

  1. (3)

    Disregard this Subdivision when working out the net income or partnership loss of the partnership under section 90 of the Income Tax Assessment Act 1936.

Provisions affecting film licensed investment companies

375‑875Tax losses cannot be transferred to or from FLICs

  1. (1)

    A *FLIC cannot transfer to another company a *tax loss or a *net capital loss for an income year if the FLIC’s concessional capital licence is in force during some or all of that income year.

  2. (2)

    A company cannot transfer to a *FLIC a *tax loss or a *net capital loss for an income year if the FLIC’s concessional capital licence is in force during some or all of that income year.

    Note 1: A FLIC’s concessional capital licence is granted under the Film Licensed Investment Company Act 1998.

    Note 2: These 2 rules are exceptions to the general rules about transfer of losses between companies in Subdivisions 170‑A and 170‑B.

375‑880FLIC cannot claim deductions for concessional capital

  1. (1)

    If a *FLIC has spent an amount of *FLIC concessional capital in respect of a film, the FLIC cannot deduct the amount under this Act.

  2. (2)

    FLIC concessional capital means money paid to the FLIC by a person for the issue, during the period the FLIC’s concessional capital licence is in force, of *shares to that person.

[The next Division is Division 385.]

Part 2Consequential amendments

Income Tax Assessment Act 1997

3

Section 12‑5 (table item headed “shares”)

After:

employee share acquisition schemes, deduction for provider of qualifying shares or rights ...........................................

139DC

insert:

film licensed investment companies, deduction for subscription for shares in ..................................................

Subdivision 375‑H

  1. 4

    Section 12‑5 (after the table item headed “film income”)

    Insert:

film licensed investment companies (FLICs)

see shares

  1. 5

    Section 40‑30 (before the table item dealing with films, Australian)

    Insert:

Film licensed investment companies

Money paid for issue of shares in a film licensed investment company

Any entity

Immediate 100% write off

See Parts 3‑1 and 3‑3 (CGT)

Subdivision 375‑H

6

At the end of section 170‑5

Add:

Note: This Subdivison does not apply in some circumstances involving film licensed investment companies. These circumstances are set out in Subdivision 375‑H.

7

At the end of section 170‑105

Add:

Note: This Subdivison does not apply in some circumstances involving film licensed investment companies. These circumstances are set out in Subdivision 375‑H.

8

Subsection 995‑1(1)

Insert:

Arts Minister means the Minister administering the Film Licensed Investment Company Act 1998.

9

Subsection 995‑1(1)

Insert:

film licensed investment company has the meaning given by section 375‑855.

10

Subsection 995‑1(1)

Insert:

FLIC (film licensed investment company) has the meaning given by section 375‑855.

11

Subsection 995‑1(1)

Insert:

FLICconcessional capital has the meaning given by section 375‑880.

[Minister’s second reading speech made in—

House of Representatives on 11 November 1998

Senate on 23 November 1998]

(150/98)

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