Batt O'Keeffe
Question:91 Mr. B. O'Keeffe asked the Minister for Finance the plans, if any, he has to lift curbs on section 35 tax investment for low budget film production. [9492/96]
Written Answers. - Section 35 Tax Investment.
An undertaking was given in the 1994A Programme for Partnership Government to review and assess the performance of section 35 film relief which was due to end in 1996. As the Deputy is aware, an independent consultant was engaged to carry out an extensive study involving consultation with the various interested parties. As a result of that review it was decided to renew this incentive for the film industry in a more targeted and focused manner. The new section 35 relief is designed to reduce the overall cost of the relief to the Exchequer and encourage indigenous film making.
One of the main recommendations of the consultant's report was that the 100 per cent relief should be reduced to 80 per cent. The reduction from 100 per cent to 80 per cent relief should be considered in the context of the change in the shareholding requirement from three years to one year. As a result the annual percentage return on investment for the individual will increase, not decrease and film investment remains an attractive investment opportunity.
Furthermore, the new section 35 relief has been structured to include elements favouring low budget productions. For example, section 35 finance is permitted in respect of up to 60 per cent of the total cost for films with a budget of £4 million or less. The permitted level of finance for productions over £4 million is 50 per cent with a sliding scale adjustment for films costing between £4 million and £5 million. In addition, there is a new total corporate investment limit of up to £6 million in respect of which investment in any one film cannot exceed £2 million and the excess up to £6 million can only be invested in film projects with a budget of less than £4 million. I do not intend to make any further changes to the structure of the new film relief.