Tinseltown and the tax shelters
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Sunday October 22 2006
Investing in movies has always had a certain glamorous appeal. Yet in the past it was often seen as a way to simply wave goodbye to your cash.
Only a small portion of films which go into development ever see the light of day, with many ending up on the cutting room floor - and only a small portion of these ever make money.
Partly because of these difficulties, and also because of the tourism benefits of being a location for a big movie, the Government has a range of tax incentives for movie makers.
But there are also tax incentives for ordinary individuals to invest in film here, and the amounts you need to invest will probably still leave you change from your SSIA. The result is that it is a growing business - and Ireland is an increasingly popular location for many film-makers, especially for the small screen.
The latest Jane Austen TV series is set here, despite the fact that it is set in the quintessentially English city of Bath. Northanger Abbey, like many other a TV series, was lured to these shores by the good tax breaks available.
Other British TV series have also been filmed here recently, including The Tudors, starring Jonathan Rhys Meyers as Henry VIII, while Becoming Jane, a Jane Austen biopic starring Anne Hathaway, was only partly shot here. And it's no great surprise that Rough Diamond, the BBC series set in the Irish horseracing industry, was also filmed on these shores.
So if you want to be part of this action, how do you go about it? You could choose to invest some of your SSIA - and you can also avail of the tax write-off.
In short, you are allowed to invest a maximum of €31,750 in film production. Tax relief is restricted to 80 per cent, or a maximum of €25,400, according to Anglo Irish Bank, who are specialists in the area.
The important thing is that you only invest an amount relevant to your taxable income. If you are single or your spouse earns more than €35,000, the maximum investment is €3,750 which gives you tax relief of €1,260 and a profit of €240.
The amounts rise depending on how much you earn. For example, with earnings of €45,000 the maximum investment is €16,250, tax relief is €5,460 equity is €4,387 and profit is €1,073. The maximum profit is €2,095 for an investment of €31,750 which gives tax relief of €10,668 and equity of €8,573.
Your investment is actually in shares of the production company, which will be liquidated once the distributor has accepted the film. The investment itself is actually split in two parts - the taxpayers' equity and a bank loan - for at least 12 months.
Generally you get your money back when the film is finished and delivered to the distributor. If the film or series is not made, the equity is not repaid. However, according to the specialists at Anglo Irish, a prospective film usually has an independent completion bond, but for TV you are relying on the track record of the producers.
You may also not get your equity back if the distributor is not satisfied with the technical quality of the film. However, Anglo insists they have a 100 per cent success record in this.
Previous films which have been produced include such big-name international pictures as Saving Private Ryan and Angela's Ashes for Paramount Pictures, as well as Michael Collins for Warner Brothers, and An Everlasting Piece for the DreamWorks camp. The BBC and Miramax have also produced Ballykissangel and About Adam under the scheme.
This year Anglo has already helped to raise money for about 20 films to be made in Ireland, although it is still raising money for Noel Pearson's How About You, which stars Brenda Fricker, Imelda Staunton and Vanessa Redgrave.
Next year it is hoped that The Tudors II will go into production, plus repeat series of RTE's The Clinic and Murphy's Law for BBC.
So if you have some of your SSIA cash to spare, buying a little bit of Tinseltown could even win you some tax breaks.
- Jane Suiter
