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New measures to support the film industry: Film Licensed Investment Company\nscheme extension: joint media release.

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Tuesday 10th May, 2005

Joint Media Release

Minister for Revenue and Assistant Treasurer Minister for the Arts and Sport

New measures to support the film industry — Film Licensed Investment Company Scheme Extension

The Government will extend the pilot Film Licensed Investment Company (FLIC) scheme for two years.

The Minister for the Arts and Sport, Rod Kemp, and the Minister for Revenue and Assistant Treasurer, Mal Brough, jointly announced the new arrangements today.

‘This extension fulfils the Government’s commitment to help gear up much needed private sector investment in the film industry and provides alternative avenues for co-production,’ Mr Kemp said.

The FLIC structure itself allows investors to spread risk by investing in a slate of film projects whilst receiving a 100 per cent income tax deduction on the funds invested.

The extension will allow one licensee to raise concessional capital which will be capped at $10 million in each of the two years. The concessional capital raising will begin from the date of issue of the licence and will conclude on 30 June 2007.

This new measure fulfils the Government’s 2004 election commitment to extend the pilot FLIC scheme over two years at a cost of $8 million, as announced in Strengthening Australian Arts, A World Class Australian Film Industry.

In another positive step for the Australian film industry, section 79D of the Income Tax

Assessment Act 1936 will be amended to allow taxpayers to deduct foreign losses from domestic income. This broad measure fulfils the Government's election commitment to amend the law in regard to the interaction of the foreign loss quarantining rules and the Australian film tax deduction concessions contained in Divisions 10BA and 10B. The measure removes the quarantining rule altogether, thus fulfilling the promise. For further information on this measure please see the Treasurer’s press release International Tax Reforms, particularly attachment C released on 10 May 2005.

A review of the key provisions of Divisions 10BA and 10B was also announced as part of the 2004 election policy. A discussion paper calling for submissions to the review will be issued shortly.

CANBERRA 10 May 2005

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