I propose to take Questions Nos. 279 and 280 together as they were previously answered together in the PQ referred to in the question.
The first question asks about tax relief for investment in films and I am advised by the Revenue Commissioners that the Section 481 Film Tax relief cost €45.7 million for the 2011 tax year and the number of investors was 2,669.
The Film Relief scheme currently provides tax relief towards the cost of production of qualifying films. The maximum amounts which can be raised under the scheme are up to 80% of the cost of production for all budgets up to a maximum of €50,000,000.
Tax relief on 100% of their investment is available to individual investors and to corporate investors.
Individual investors can invest up to €50,000 under the scheme in any year of assessment and will be entitled to tax relief on that amount at their marginal rate of tax. An investor who cannot obtain relief on all his/her investment in a year of assessment, either because his/her investment exceeds the maximum of €50,000 or his/her income in that year is insufficient to absorb all of it, can carry forward the unrelieved amount to following years up to and including 2015, subject to the normal limit of €50,000 on the amount of investment that can be relieved in any one year.
A corporate investor and any connected companies can invest up to €10,160,000 in any 12 month period. The company will be entitled to a deduction, from its total profits, of the amount invested. There is provision for carry forward of an unrelieved amount. The total amount which can be invested by a company, in any one film, cannot exceed €3,810,000.
The Revenue Commissioners took over the certification of films qualifying for Film Relief in 2005 and my attention has not been drawn to any abuse in relation to films certified by them. Prior to then there was a number of tax avoidance schemes involving Film Relief which have been challenged by Revenue and the legislation has been changed as required over the years.
Finance Act 2013 introduced changes to give Film Relief a new focus. The delivery mechanism of the incentive will change. Relief will not, in the future, be available to investors in qualifying films. Instead a payable tax credit of 32% will be paid directly by the Revenue Commissioners to a Producer Company, which produces a qualifying film. The legislation provides for measures to ensure that, in the event that the qualifying company does not satisfy any statutory conditions or conditions imposed by a film certificate issued by the Revenue Commissioners, any amount paid by the Revenue Commissioners can be recouped.
The commencement of the section is subject to EU approval. The changes are expected to be effective from the 1 January 2016. The current scheme expires on 31 December 2015.
The second question asks about the tax exemption for profits or gains from woodlands. The details in Parliamentary Question 20065/13 to which the Deputy refers relate to exemptions contained in Sections 232 and 140 of the TCA 1997. I am advised by the Revenue Commissioners that profits or gains from the occupation of woodlands in the State managed on a commercial basis are exempt from Income Tax and Corporation Tax, (but not from the USC or PRSI) under Section 232 TCA 1997. Section 140 provides that distributions paid out of such exempt profits or gains are not regarded as income for the purposes of the Taxes Acts. The exemption granted to such profits, gains and dividends is, however, subject to the High Earners Restriction.
For chargeable periods commencing on or after 1 January 2004 details of all such profits, gains and losses must be included in the annual return of income to the Revenue Commissioners. The normal rules relating to the keeping of records and the making available of those records for inspection by the Revenue also apply.
Capital gains arising to an individual on the sale of woodlands are also exempt from CGT insofar as they relate to standing timber. Any gain attributable to the underlying land is subject to CGT. Companies and other bodies of persons are liable to CGT on gains arising from the sale of woodlands and standing timber.
The Revenue Commissioners are not aware of any abuse of the scheme.
