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Income Tax Act 2007

Timing and quantifying rules - Spreading of specific expenditure

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

You could also call this:

“Money back for buying rights to non-feature films”

This law is about how you can claim money back (deduct) when you buy the right to use a film that’s not a feature film. You can do this in two ways:

  1. If you’re allowed to claim money back for buying film rights under section DS 1.

  2. If you’re allowed to claim money back for making a film under section DS 2, and the film got a large budget film grant.

If you still have the film right at the end of the tax year, you can claim back some money that year and some the next year. Here’s how it works:

In the year you buy the film right (or when the film is finished, if that’s later), you can claim back either:

  • Half of what you paid, or
  • If you made more than half of what you paid from the film that year, you can claim back all of what you made from the film (but not more than what you paid for it).

The next year, you can claim back whatever is left over.

If you sell the film right during the year and don’t have it anymore at the end of the year, you can claim back all the leftover money that year.

“Leftover money” means any money you were allowed to claim back but haven’t claimed in earlier years.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515105.

Topics:
Money and consumer rights > Taxes
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EJ 4: Expenditure incurred in acquiring film rights in feature films, or

“Tax deductions for buying rights to use feature films”

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EJ 6: Certification of New Zealand films, or

“How New Zealand films get official recognition”

Part E Timing and quantifying rules
Spreading of specific expenditure

EJ 5Expenditure incurred in acquiring film rights in films other than 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 not 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,—

      2. the deduction that is allocated to the income year in which the film right is acquired or the film is completed, whichever is later, is—
        1. 50% of the deduction; or
          1. if the film income derived in the income year is more than 50% of the deduction, the lesser of the amount of film income and the total amount of the deduction; and
          2. the deduction that is allocated to the next income year 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 that has not been allocated to an earlier income year.

            Compare
            Notes
            • Section EJ 5(1): substituted, on , by section 361 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
            • Section EJ 5(1)(b): substituted, on , by section 124(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
            • Section EJ 5(1)(b): amended (with effect on 1 January 2010), on , by section 33(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
            • Section EJ 5 list of defined terms government screen production payment: repealed (with effect on 1 January 2010), on , by section 33(2)(a) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
            • Section EJ 5 list of defined terms large budget film grant: inserted (with effect on 1 January 2010), on , by section 33(2)(b) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).