A tax loss may have a film component if you incurred film deductions in the loss year.

If so, the film component is regarded as a separate tax loss. You can deduct the film loss from your film income only.

Do you what the Income Tax Assessment Act deems to be the effective life of a unit of industrial property consisting of copyright?

The answer is 25 years.

So to calculate the deduction under the industrial property provisions, you divide the residual value by 25.

A film usually has a life of a few years so the industrial property write off an not be said to recognise the reality of the film industry's working environment

(can you think of a 25 year old film currently being exhibited at a cinema?)

In view of this, and the resurgence of the Australian film industry in the 1970's, it was decided to modify the industrial property division of the Act to shorten the deemed effective life of Australian films to 2 years.

The effective life of an Australian film shall be deemed to commence at the start of the year in which it is first used to produce assessable income and end 2 years later

That means unless the film is a blockbuster of 'Crodocile Dundee' proportions you are likely have a very big deduction of the 2 years following your investment.

That would give rise to a very big loss to be offset against your other assessable income were it not for sec 375-815

(1) You can deduct a *film loss only from your *net exempt film income or your *net assessable film income.

(2) Your net assessable film income for an income year is your *assessable film income for that year reduced by your *film deductions for that year.

(3) This section applies in addition to the other rules about how *tax losses are applied.

In other words, you can only deduct film losses against income you have made from investing in other Australian films