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Income Tax Act 2007

Deductions - Film industry expenditure

DS 2: Film production expenditure

You could also call this:

“Rules for claiming deductions on film production costs”

You can get a deduction for money you spend on making a film if the film is finished and you have rights to it. This can be before, during, or after the film is completed.

If you pay someone back for their film-making costs before the film is done, it counts as your spending. You can also claim money you pay back to someone for interest they paid while making the film.

This rule doesn’t work for films mainly made for TV in New Zealand, advertisements, or films covered by section DS 2B.

The timing of your deduction depends on whether the film gets a large budget film grant. If it does, section EJ 4 or EJ 5 applies. If not, section EJ 7 or EJ 8 applies.

You can’t get any other deductions for film-making costs except under section DS 2B.

Your deduction might be reduced or delayed under section GB 17, GB 18, or GB 19.

This rule overrides the capital limitation, but other general limitations still apply. You need to meet either the general permission or a rule that adds to it.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514022.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
Previous

DS 1: Acquiring film rights, or

“Getting a tax deduction for buying the right to use a completed film”

Next

DS 2B: Expenditure when film or film right intended for disposal, or

“Deductions for film expenses when planning to sell”

Part D Deductions
Film industry expenditure

DS 2Film production expenditure

  1. A person is allowed a deduction for film production expenditure if—

  2. the film is completed; and
    1. the person has a film right in it—
      1. before it is completed:
        1. at the time it is completed:
          1. after it is completed.

          2. For the purposes of subsection (1),—

          3. if a person (person A) reimburses another person (person B) for film production expenditure that person B incurs, and does it before the film is completed, the reimbursement is treated as film production expenditure incurred by person A; and
            1. if a person (person A) reimburses another person (person B) for expenditure on interest incurred by person B in producing the film, person A may treat the reimbursement as film production expenditure incurred by person A.

              1. This section does not apply to film production expenditure if the film—

              2. is produced mainly for broadcast in New Zealand by a person who operates a television station, a television network, or a cable television system:
                1. is intended to be shown as an advertisement:
                  1. section DS 2B applies to the film production expenditure.

                    1. The deduction is allocated under—

                    2. section EJ 4 or EJ 5 (which relate to expenditure incurred in acquiring film rights) if the film is one for which a large budget film grant is made; or
                      1. section EJ 7 or EJ 8 (which relate to film production expenditure) if the film is not one for which a large budget film grant is made.

                        1. No other deduction for film production expenditure is allowed under a provision of this Act other than section DS 2B.

                        2. The amount of the deduction may be reduced or the timing of the deduction may be delayed under—

                        3. section GB 17 (Excessive amounts for film rights or production expenditure):
                          1. section GB 18 (Arrangements to acquire film rights or incur production expenditure):
                            1. section GB 19 (When film production expenditure payments delayed or contingent).

                              1. The link between this section and subpart DA (General rules) is as follows:

                              2. it overrides the capital limitation; and
                                1. the other general limitations still apply; and
                                  1. either—
                                    1. the general permission must be satisfied; or
                                      1. a provision that supplements the general permission must be satisfied.

                                      Compare
                                      Notes
                                      • Section DS 2(3) heading: substituted, on , by section 346(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                                      • Section DS 2(3): substituted, on , by section 346(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                                      • Section DS 2(4) heading: substituted, on , by section 95(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                      • Section DS 2(4): substituted, on , by section 95(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                      • Section DS 2(4)(a): amended (with effect on 1 January 2010), on , by section 23(1)(a) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                                      • Section DS 2(4)(b): amended (with effect on 1 January 2010), on , by section 23(1)(b) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                                      • Section DS 2(5): amended, on , by section 346(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                                      • Section DS 2 list of defined terms government screen production payment: repealed (with effect on 1 January 2010), on , by section 23(2)(a) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                                      • Section DS 2 list of defined terms government screen production payment: inserted, on , by section 95(2)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                      • Section DS 2 list of defined terms large budget film grant: inserted (with effect on 1 January 2010), on , by section 23(2)(b) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                                      • Section DS 2 list of defined terms large budget screen production grant: repealed, on , by section 95(2)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).