Film relief claims to be scrutinised

Section 481:The Minister for Finance, Mr McCreevy, has taken action to ensure that those seeking to abuse the generous tax reliefs available for film-makers will be dissuaded from doing so.

This year's Finance Bill, launched yesterday, confirmed that section 481 film tax relief would be extended until the end of 2008 and that the ceiling of investment in a film would be raised from €10.5 million to €15 million.

Mr McCreevy has also outlined new watchdog measures for the scheme, sending a clear signal that "instances of abuse" will not be tolerated.

The revamped section 481 system will include a revision of the certification procedures for films, as well as provisions to deal with "overcomplicated financial structures" within operations seeking the relief.

Film production companies participating in the scheme will also be required to meet enhanced standards on record keeping.

The moves come in response to revelations late last year that the Revenue Commissioners was seeking to recover €17 million considered to have been lost to the Exchequer through abuse of section 481. At that stage, the Revenue had uncovered 30 projects that had wrongly claimed the relief between 1994 and 2001.

The Bill also reaffirmed plans laid in last December's Budget to extend a range of other tax incentive and tax allowance schemes.

Capital allowances for student accommodation, multistorey car parks and rural, urban and town renewal have all been extended until July 2006. Allowances for holiday cottages, hotels and holiday camps have been extended, as have the park-and-ride scheme and a scheme for buildings used for third-level education.

The extension of these schemes from the end of 2004 to mid-2006 came as a surprise to many last December. Revenue figures have shown that the schemes are particularly popular among higher earners seeking to shelter their income from tax.