INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 79F   FILM LOSSES OF 1989-90 to 1996-97 YEARS OF INCOME  

79F(1A)   [No operation from 1997/98 year onwards]  

This section does not apply to the 1997-98 year of income or a later year of income.

Note 1:

To work out the amount of a film loss for the 1997-98 or a later income year: see Subdivision 375-G of the Income Tax Assessment Act 1997 .

Note 2:

To find out how much of a film loss incurred in a post-1989 year of income you can deduct for the 1997-98 or a later year of income: see section 36-105 of the Income Tax (Transitional Provisions) Act 1997 .

79F(1)   [Film loss incurred]  

For the purposes of this section, a taxpayer incurs a film loss in a post-1989 year of income if:

(a) the amount of the taxpayer's film deductions for the year exceeds the sum of the taxpayer's assessable film income and net exempt film income for the year; and

(b) the taxpayer incurs a loss for the year for the purposes of section 79E .

79F(2)   [Amount of loss]  

The amount of the film loss is so much of the excess referred to in paragraph (1)(a) as does not exceed the amount of the loss referred to in paragraph (1)(b).

79F(3)   [Where taxpayer subject to Subdiv B of Div 2A]  

In spite of subsection (1), if Subdivision B of Division 2A applies in relation to a taxpayer in relation to a post-1989 year of income, then, for the purposes of this section, the taxpayer incurs a film loss in the year of income if, and only if:

(a) the taxpayer's current year loss amount for the year exceeds the taxpayer's net exempt film income of the year; and

(b) the taxpayer incurs a loss in the year of income for the purposes of section 79E .

79F(4)   [Amount of loss under subsec (3)]  

The amount of the film loss is so much of the excess referred to in paragraph (3)(a) as does not exceed the amount of the loss referred to in paragraph (3)(b).

79F(5)   [Determination re current year loss amount]  

In determining for the purposes of subsection (3) whether a taxpayer has a current year loss amount, the only assessable income of the taxpayer to be taken into account is assessable film income and the only allowable deductions of the taxpayer to be taken into account are film deductions.

79F(5A)   [Where Sch 2F applies]  

In spite of subsection (1), if Schedule 2F applies in relation to a taxpayer for a post-1989 year of income, then, for the purposes of this section the film loss incurred by the taxpayer in the year of income is worked out under section 268-55 of that Schedule.

79F(6)   [Deduction for film losses]  

Subject to this section, so much of a taxpayer's film losses incurred in any of the post-1989 years of income before a particular year of income as has not been allowed as a deduction from the taxpayer's income of any of those years is allowable as a deduction in accordance with the following provisions:

(a) where the taxpayer has not derived exempt income in the particular year of income, the deduction is to be made from the taxpayer's assessable income of that year;

(b) where the taxpayer has derived exempt income in that year, the deduction is to be made successively from the taxpayer's net exempt income and from the taxpayer's assessable income of that year;

(c) where a deduction is allowable under this section in respect of 2 or more losses, the losses are to be taken into account in the order in which they were incurred.

79F(6A)   [Reduced loss under commercial debt forgiveness provisions]  

If a loss referred to in subsection (6) is taken to be reduced under Subdivision 245-E of Schedule 2C in its application to the year of income or a previous year of income, any reference to that loss in this section is to be treated as a reference to that loss as so taken to be reduced.

79F(7)   [Maximum deduction allowable]  

For the purposes of applying subsection (6) in relation to a taxpayer in relation to a year of income:

(a) the amount of the deduction to be made from the taxpayer's net exempt income of the year of income is not to exceed the amount of the taxpayer's net exempt film income of the year of income; and

(b) the amount of the deduction to be made from the taxpayer's assessable income of the year of income is not to exceed the amount of the taxpayer's net assessable film income of the year of income.

79F(8)   [Bankruptcy, etc]  

In spite of any other provision of this section, if, before a year of income, a taxpayer:

(a) has become a bankrupt; or

(b) not having become a bankrupt, has been released from any debts by the operation of an Act relating to bankruptcy;

then no film loss incurred by the taxpayer before the day on which the taxpayer became a bankrupt or was so released is an allowable deduction in respect of the year of income under subsection (6).

79F(8A)   [Annulment of bankruptcy to be disregarded]  

If:

(a) a taxpayer becomes a bankrupt, but the bankruptcy is later annulled; and

(b) disregarding the annulment, subsection (8) applies to the bankruptcy; and

(c) the annulment occurred under section 74 of the Bankruptcy Act 1966 ; and

(d) under the composition or scheme of arrangement concerned, the taxpayer has been, will be or may be, released from any debts, from which he or she would have been released if he or she had been instead discharged from the bankruptcy;

then, for the purposes of subsection (8), the annulment is disregarded.

79F(9)   [Debt paid after bankruptcy, etc]  

Where:

(a) in a year of income (in this section called the ``payment year'' ), a taxpayer pays an amount in respect of a debt incurred by the taxpayer in a preceding year of income; and

(b) that preceding year of income (in this section called the ``loss year'' ) is a year in which the taxpayer incurred a loss to which subsection (8) applies; and

(c) the debt was incurred in the course of deriving or gaining amounts to which section 26AG applies in relation to the taxpayer in relation to any year of income;

then, subject to subsection (10), the amount paid by the taxpayer is an allowable deduction for the payment year, but only to the extent (if any) that it does not exceed so much of the debt as the Commissioner is satisfied was taken into account in calculating the amount of the loss.

79F(10)   [Limit on subsec (9) deductions]  

The total deductions allowable to the taxpayer for the payment year under subsection (9) are not to exceed the amount of the film loss reduced by the sum of:

(a) the deductions (if any) allowed under subsection (9) from the taxpayer's income of a year or years of income before the payment year in relation to the payment of other amounts in respect of debts incurred by the taxpayer in the loss year; and

(b) so much (if any) of the loss as has been allowed under subsection (6) as a deduction or deductions from the taxpayer's income (including the taxpayer's net exempt income) of a year or years of income before the payment year; and

(c) so much (if any) of the film loss as, but for subsection (8), would have been allowed or allowable under subsection (6) as a deduction or deductions from the taxpayer's net exempt income of the payment year or of a year or years of income before the payment year.

79F(11)   [Effect of s 80AAA(12)]  

Subsection 80AAA(12) has the same effect in relation to deductions under subsection (6) of this section as it does in relation to deductions under subsection 80AAA(7) .

79F(12)   [Definitions]  

In this section:

"assessable film income"
, in relation to a taxpayer in relation to a year of income, means so much of the amount, or the sum of the amounts, to which section 26AG applies in relation to the taxpayer in relation to the year of income as is assessable income;

"current year loss amount"
has the same meaning as in section 79E ;

"exempt film income"
, in relation to a taxpayer in relation to a year of income, means so much of the amount, or the sum of the amounts, to which section 26AG applies in relation to the taxpayer in relation to the year of income as is exempt income;

"film deductions"
, in relation to a taxpayer in relation to a year of income, means:

(a) deductions allowable to the taxpayer in respect of the year of income under sections 124ZAF and 124ZAFA ; and

(b) deductions allowable to the taxpayer in respect of the year of income that are deductions to which section 124ZAO applies in relation to the taxpayer in relation to the year of income;

"net assessable film income"
, in relation to a taxpayer in relation to a year of income, means the amount of the assessable film income of the taxpayer of the year of income as reduced by the film deductions of the taxpayer of the year of income;

"net exempt film income"
, in relation to a taxpayer in relation to a year of income, means the amount of the exempt film income of the taxpayer of the year of income as reduced by the sum of:

(a) any taxes payable in respect of that exempt film income in any country or place outside Australia; and

(b) any expenses (not being expenses of a capital nature) to the extent to which they were incurred in the year of income in deriving that exempt film income;

"net exempt income"
has the same meaning as in section 79E ;

"post-1989 year of income"
means the year of income commencing on 1 July 1989 or any later year of income.