I just thought that I would explain what 10BA is and how it works.
10BA refers to part 10BA of the Income Tax Assessment Act 1936. It was a special section introduced in the early eighties, believe it or not, by John Howard when he was Malcolm Fraser treasuer.
The original section allowed for 150% of the capital invested in an Australian Film to be written off if certain conditions applied, in particular the film had to registed with the Department of Arts.
The problem was that the 150% deduction meant that scheme could be put together where by the taxpayer could make and investment and get a greater tax deduction than the amout invested on a cash basis. That is the taxpayer, provided the film lost money, made a profit on the tax deduction alone.
You can imagine what happened, there was lots of hot money chasing the tax deduction and lots of “crappy” films getting made, although the occasional good one emerged e.g. Picnic at Hanging Rock.
The concession ended up costing more than the Government had planned and over a number of years the size of the concession was wound back to 100%.
The key advantage of 10BA is that it allows the cost of production to be written off for tax purposes immediatly, thus delivering an immediate deduction to the taxpayer/investor. The disadvantage is that the very first $1 of income back to the taxpayer/investor is taxable. In essence 10BA provides a deferral of tax rather than a permenant deduction to the investor.
Read all your comments – have you ever made a film thta has been distributed.
No, but I did get a distribution deal in place and had an Australian Distributor and Foreign sales agent contracted. The project didn’t proceed because of delay upon delay upon delay from the Australian Tax Office concerning the Tax Ruling attached to the project