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This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

End of attention

From 2008-09 new foreign income tax offset rules apply.

Information that may assist you determine whether these rules affect you is provided in the document Summary of changes to foreign loss and foreign tax credit calculation rules from 1 July 2008 including transitional rules.

Prior years

For 2007-08 and prior income years, you calculate foreign losses and foreign tax credits under the rules explained in TaxPack.

For further information, see Guide to foreign income tax offset rules 2008-09 available on our website at www.ato.gov.au.

Deduction safeguards

There are safeguard provisions to ensure that Australian film industry incentives are not exploited. Two examples are:

  • Expenditure qualifying for the Division 10BA deduction is limited to amounts that the investor may lose if the film venture fails.
  • The Tax Office must be satisfied that the deductions claimed under Division 10B or Division 10BA have not been inflated as part of a non-arm's length transaction.

Repeal of Division 10B and Division 10BA

As a consequence of the introduction of the new film production offsets, Division 10B and Division 10BA have been repealed. Applications for certificates under Division 10B and Division 10BA will not be accepted after 25 September 2007. A first deduction under Division 10B will only be available up until 30 June 2009, and a deduction under Division 10BA is not allowable in relation to the 2009-10 income year or a later income year.

Investment in a film licensed investment company (FLIC)

Under Subdivision 375-H of the ITAA 1997 taxpayers are able to claim deductions for amounts paid by them for shares in a company which has been granted a license to raise concessional capital under the Film Licensed Investment Company Act 2005. Deductions are not available for shares issued after 30 June 2007.

The FLIC tax concession allows certain returns of concessional capital (that is, capital invested in a FLIC during its licence period) to be treated as franked dividends. If you are an investor in a FLIC, you may have received a notice from the company advising that it is returning to you an amount of concessional capital that is, for tax purposes, a franked dividend. The FLIC will advise you of the amount of your dividend and the franking credit.

Last modified: 07 Aug 2009QC 21782