Income Tax Act 2007 section 400

Film partnerships

Section 400 restricts interest relief to 40% of the amount otherwise eligible where a loan is used to invest in a film partnership but is secured on an asset or activity of a separate investment partnership in which the borrower has a disproportionately low profit share relative to their capital contribution.

• The restriction applies where a loan to invest in a film trade partnership is secured against assets or activities of a separate "investment partnership" of which the borrower is or was a member
• The restriction is triggered when the borrower's share of the investment partnership's profits is less than the proportion of that partnership's capital they have contributed
• Partnership capital includes partners' capital, partners' equity and loans made to the partnership by partners or connected persons, while profits only count amounts treated as income for income tax purposes
• Capital contributions attributed to the borrower include amounts paid to acquire partnership interests, loans to the partnership, and amounts made available directly or indirectly to others who hold interests in or have lent to the partnership