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Taxation Laws Amendment (Film Licensed Investment Company) Bill 1998



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Bills Digest No. 222  1997-98

 

Taxation Laws Amendment (Film Licensed Investment Company) Bill 1998

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not ha ve any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Contents

 

 

Passage History

Taxation Laws Amendment (Film Licensed Investment Company) Bill 1998

Date Introduced: 14 May 1998

House: House of Representatives

Portfolio:  Treasury

Commencement:  On the same day as the proposed Film Licensed Investment Company Act 1998 commences

Purpose

To allow a deduction for funds spent on acquiring shares in Film Licensed Investme nt Companies (FLIC).

Background

Refer to the Digest for the Film Licensed Investment Company Bill 1998.

Main Provisions

Schedule 1 of the Bill will insert a new Subdivision 375-H into the Income Tax Assessment Act 1997 that will allow deductions in respect of shares issued in FLICs.

Proposed section 375-855 will allow a deduction for funds paid in acquiring shares in a FLIC while a licence is in force for the FLIC. The deduction will be available in the year of payment if the shares are issued in that year or, if the shares are issued in a later year, in the year that the shares are issued ( proposed section 375-860 ).

The ability to claim such a deduction will be lost if:

• the Arts Minister determines that the concession should be removed under proposed sect ion 32 of the Film Licensed Investment Company Bill 1998

• the Commissioner is satisfied that the FLIC has breached a condition of its license, the Arts Minister has been notified of the breach and within 6 months after giving the notice the Arts Minister has not made a decision regarding the breach ( proposed section 375-865 ).

Proposed subsection 375-865(4) makes it clear that if an entitlement to the deduction is lost after the deduction has already been allowed the taxpayer’s assessment may be amended to disallow the deduction.

If the investment is made by a partnership, the deduction is to be allocated amongst the partners according to any agreement between the partners on the payment for the shares or, if no such agreement exists, according to the partners interest in the profit or loss of the partnership ( proposed section 375-875 ).

FLICs will not be able to transfer a tax or capital loss to another company during a year for which a license is in force. Similarly, another company will not be able to transfer such a loss to a FLIC while the FLICs licence is in force ( proposed section 375-875 ).

If a FLIC spends concessional capital (ie. capital which is raised by the issue of shares while a license is in force) the FLIC will not be able to claim a deduction for the expenditure (this will prevent double deduction for such funds)( proposed section 375-880 ).

 

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Contact Officer

Chris Field

1 June 1998

Bills Digest Service

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