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EJ 3: Spreading forward of fertiliser expenditure
or “How farmers can spread fertiliser costs over time for tax purposes”
You could also call this:

“Tax deductions for buying rights to use feature films”

When you spend money to get the right to use a feature film, you can claim this as a deduction on your taxes. This applies if you’re allowed to claim it under section DS 1 or section DS 2, and for section DS 2, it’s only if the film got a large budget film grant.

If you still have the right to use the film at the end of the tax year, you can only claim part of the deduction. You can claim whichever is smaller: either the bigger of a calculated amount or the money you made from the film, or the leftover deduction you haven’t claimed yet.

To figure out the calculated amount, you use a special formula. You divide the number of months the film has been finished by 24 minus the months it’s been finished, and then multiply that by your leftover deduction.

If you sell your right to use the film during the year and don’t have it anymore at the end of the year, you can claim all of your leftover deduction.

The “leftover deduction” means the money you spent before the end of the tax year that you haven’t claimed in earlier years.

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Next up: EJ 5: Expenditure incurred in acquiring film rights in films other than feature films

or “Money back for buying rights to non-feature films”
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Part E Timing and quantifying rules
Spreading of specific expenditure

EJ 4Expenditure incurred in acquiring film rights in feature films

  1. A deduction for expenditure that a person incurs in acquiring a film right is allocated under this section if the film is a feature film and—

  2. the deduction is allowed under section DS 1 (Acquiring film rights):
    1. the deduction is allowed under section DS 2 (Film production expenditure) and the film is one for which a large budget film grant is made.

      1. If the person has the film right at the end of an income year, the deduction that is allocated to the income year is the lesser of—

      2. the greater of—
        1. an apportioned amount of the deduction, calculated for the income year under subsection (3); and
          1. the amount of film income derived in the income year; and
          2. the remaining deduction.

            1. The apportioned amount is calculated for the income year using the formula—

              (completed months ÷ non-completed months) × deduction.

              Where:

              • In the formula,—

              • completed months is the number of months in the income year, including a part of a month, for which the film is completed:
                1. non-completed months is 24, reduced by the number of complete months in the period that—
                  1. starts on the first day of the month in which the film is completed; and
                    1. ends on the last day of the income year before the income year referred to in subsection (2):
                    2. deduction is the remaining deduction.

                      1. If the person disposes of the film right during an income year, and does not have a film right in the film at the end of the income year, the remaining deduction is allocated to the income year.

                      2. In this section, remaining deduction means, for an income year, the amount of the deduction for expenditure incurred before the end of the income year that has not been allocated to an earlier income year.

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                      Notes
                      • Section EJ 4(1): substituted, on , by section 360 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                      • Section EJ 4(1)(b): substituted, on , by section 123(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                      • Section EJ 4(1)(b): amended (with effect on 1 January 2010), on , by section 32(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                      • Section EJ 4 list of defined terms government screen production payment: repealed (with effect on 1 January 2010), on , by section 32(2)(a) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                      • Section EJ 4 list of defined terms large budget film grant: inserted (with effect on 1 January 2010), on , by section 32(2)(b) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).