INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 80AAA   FILM LOSSES OF PRE-1990 YEARS OF INCOME  

80AAA(1)   [Interpretation]  

In this section:

(a) a reference to the exempt film income of a taxpayer of a year of income is a reference to 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;

(b) a reference to the assessable film income of a taxpayer of a year of income is a reference to 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;

(c) a reference to the film deductions of a taxpayer of a year of income is a reference to:

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

(ii) 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;

(d) a reference to the net exempt film income of a taxpayer of a year of income is a reference to the amount of the exempt film income of the taxpayer of the year of income as reduced by the aggregate of:

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

(ii) 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; and

(e) a reference to the net assessable film income of a taxpayer of a year of income is a reference to 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.

80AAA(2)   [Interpretation]  

In this section, ``exempt income'' and ``net exempt income'' have the same respective meanings as in section 80 .

80AAA(2A)   [Application of section]  

This section does not apply to a film loss incurred in the year of income commencing on 1 July 1989 or any later year of income.

80AAA(3)   [Film loss]  

For the purposes of this section, a taxpayer shall be deemed to have incurred a film loss in a year of income if:

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

(b) for the purposes of section 80 , a loss is deemed to have been incurred by the taxpayer in the year of income; and

(c) where the taxpayer is deemed to have incurred a loss in the year of income for the purposes of section 80AA , the amount of that loss is less than the amount of the loss referred to in paragraph (b);

and the amount of the film loss that the taxpayer is deemed to have incurred in the year of income is:

(d) if the taxpayer is not deemed to have incurred a loss in the year of income for the purposes of section 80AA and the amount of the excess referred to in paragraph (a) is equal to the amount of the loss referred to in paragraph (b) - the amount of the excess referred to in paragraph (a);

(e) if the taxpayer is not deemed to have incurred a loss in the year of income for the purposes of section 80AA and paragraph (d) does not apply - the amount of the excess referred to in paragraph (a) or the amount of the loss referred to in paragraph (b), whichever is the less;

(f) if the taxpayer is deemed to have incurred a loss in the year of income for the purposes of section 80AA and the amount of the excess referred to in paragraph (a) is equal to the amount by which the amount of the loss referred to in paragraph (b) exceeds the amount of the loss that the taxpayer is deemed to have incurred for the purposes of section 80AA - the amount of the excess referred to in paragraph (a); and

(g) if the taxpayer is deemed to have incurred a loss in the year of income for the purposes of section 80AA and paragraph (f) does not apply - the amount of the excess referred to in paragraph (a) or the amount by which the amount of the loss referred to in paragraph (b) exceeds the amount of the loss that the taxpayer is deemed to have incurred for the purposes of section 80AA , whichever is the less.

80AAA(4)   [Calculation of loss]  

Notwithstanding subsection (3), if Subdivision B of Division 2A applies, in relation to a year of income, to a taxpayer which, but for this subsection, would be deemed to have incurred a film loss in the year of income, a film loss shall, for the purposes of this section, be deemed to be incurred by the taxpayer in the year of income if, and only if:

(a) for the purposes of section 80 , a loss was incurred by the taxpayer in the year of income;

(b) where the taxpayer is deemed to have incurred a loss in the year of income for the purposes of section 80AA , the amount of that loss is less than the amount of the loss referred to in paragraph (a); and

(c) the sum of:

(i) if, for the purposes of that Subdivision, the taxpayer has a notional loss in respect of a relevant period, or notional losses in respect of relevant periods, in relation to the year of income and the amount of that notional loss or the sum of the amounts of those notional losses, as the case may be, exceeds the amount (if any) that is the eligible notional loss of the taxpayer in relation to the year of income - the amount of the excess; and

(ii) if, in the application of subsection 50C(2) in relation to the taxpayer in relation to the year of income, the deductible amount referred to in that subsection exceeds the income amount referred to in that subsection - the amount of the excess;

exceeds the amount of any net exempt film income of the taxpayer of the year of income;

and the amount of the film loss that the taxpayer is to be deemed to have incurred in the year of income is:

(d) if the taxpayer is not deemed to have incurred a loss in the year of income for the purposes of section 80AA and the notional film loss of the taxpayer is equal to the amount of the loss that the taxpayer is deemed to have incurred for the purposes of section 80 - the amount of the notional film loss;

(e) if the taxpayer is not deemed to have incurred a loss in the year of income for the purposes of section 80AA and paragraph (d) does not apply - the amount of the notional film loss of the taxpayer or the amount of the loss that the taxpayer is deemed to have incurred for the purposes of section 80 , whichever is the less;

(f) if the taxpayer is deemed to have incurred a loss in the year of income for the purposes of section 80AA and the amount of the notional film loss of the taxpayer is equal to the amount by which the amount of the loss that the taxpayer is deemed to have incurred for the purposes of section 80 exceeds the amount of the loss that the taxpayer is deemed to have incurred for the purposes of section 80AA - the amount of the notional film loss; and

(g) if the taxpayer is deemed to have incurred a loss in the year of income for the purposes of section 80AA and paragraph (f) does not apply - the amount of the notional film loss of the taxpayer or the amount by which the amount of the loss that the taxpayer is deemed to have incurred for the purposes of section 80 exceeds the amount of the loss that the taxpayer is deemed to have incurred for the purposes of section 80AA , whichever is the less.

80AAA(5)   [``notional film loss'']  

For the purposes of the application of subsection (4) in relation to a taxpayer in relation to a year of income, ``notional film loss'' means the amount by which the sum of the excess to which subparagraph (4)(c)(i) applies and the excess to which subparagraph (4)(c)(ii) applies exceeds the amount of any net exempt film income of the taxpayer of the year of income.

80AAA(6)   [Calculation of loss - Subdiv B of Div 2A]  

In the application of Subdivision B of Division 2A in relation to a taxpayer in relation to a year of income in determining, for the purposes of subsection (4):

(a) whether the taxpayer has a notional loss in respect of a relevant period for the purposes of that Subdivision and the amount of any such notional loss;

(b) whether the taxpayer has an eligible notional loss in relation to the year of income for the purposes of that Subdivision and the amount of any such eligible notional loss; and

(c) the amount that, for the purposes of subsection 50C(2) , is the deductible amount or the income amount in relation to the taxpayer in relation to the year of income;

regard shall not be had to assessable income of the taxpayer other than assessable film income and regard shall not be had to allowable deductions other than film deductions.

80AAA(7)   [Conditions for allowance of loss]  

Subject to this section, so much of the film losses incurred by a taxpayer in any of the 7 years next preceding the year of income as has not been allowed as a deduction from his income of any of those years under this section is allowable as a deduction in accordance with the following provisions:

(a) where the taxpayer has not in the year of income derived exempt income, the deduction shall be made from the assessable income;

(b) where the taxpayer has in that year derived exempt income, the deduction shall be made successively from the net exempt income and from the assessable income;

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

80AAA(7A)   [Reduced loss under commercial debt forgiveness provisions]  

If a loss referred to in subsection (7) 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.

80AAA(8)   [Deduction limited to film income]  

For the purposes of the application of subsection (7) in relation to a taxpayer in relation to a year of income:

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

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

80AAA(9)   [Bankruptcy, etc]  

Notwithstanding any other provision of this section, where, before the year of income, a taxpayer has become a bankrupt, or, not having become a bankrupt, has been released from any debts by the operation of an Act relating to bankruptcy, no film loss that was incurred by him before the date on which he became a bankrupt or the date on which he was so released, as the case may be, is an allowable deduction.

80AAA(9A)   [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 (9) 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 (9), the annulment is disregarded.

80AAA(10)   [Debt paid after bankruptcy]  

Where:

(a) in a year of income (in this subsection referred to as the ``relevant year of income'' ) a taxpayer pays an amount in respect of a debt;

(b) the debt was incurred by the taxpayer in one of the 7 years next preceding the relevant year of income;

(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; and

(d) the year of income in which the debt was incurred by the taxpayer is a year in which he incurred a loss to which subsection (9) applies;

the amount paid by the taxpayer in respect of the debt is, subject to subsection (11), an allowable deduction from the assessable income of the taxpayer of the relevant year of income to the extent to which it does not exceed so much of the debt as the Commissioner is satisfied was taken into account in ascertaining the amount of the loss.

80AAA(11)   [Maximum deductions under s 80AAA(10)]  

The aggregate of the deductions allowable under subsection (10) from the income of the taxpayer of the year of income in relation to the payment of amounts in respect of debts incurred by the taxpayer in a year of income in which he incurred a film loss (in this subsection referred to as ``the year of loss'' ) shall not exceed the amount of that film loss less the sum of:

(a) the deduction (if any) allowed under subsection (10) from his income of a year or years of income before the year of income in relation to the payment of other amounts in respect of debts incurred by the taxpayer in the year of loss;

(b) so much (if any) of the film loss as has been allowed under subsection (7) as a deduction or deductions from his income (including his net exempt income) of a year or years of income before the year of income; and

(c) so much (if any) of the film loss as, but for subsection (9), would have been allowed or allowable under subsection (7) as a deduction or deductions from his net exempt income of the year of income or of a year or years of income before the year of income.

80AAA(12)   [Losses referable to certain tax avoidance schemes disregarded]  

For the purpose of determining whether a deduction is allowable to a taxpayer under subsection (7) and for the purpose of ascertaining the amount of any such deduction, there shall be disregarded so much of the amount of any film loss deemed to have been incurred by the taxpayer as would not have been deemed, for the purposes of this section, to have been incurred by the taxpayer if:

(a) the condition specified in subsection 80(6) were applicable for the purpose of determining whether the taxpayer is deemed, in any year of income, to have incurred a film loss and in determining the amount of any such loss; and

(b) Part IVA extended to schemes entered into or carried out on or before 27 May 1981.