Tax revision for film industry

Press, 3 June 1982, Page 25

Tax revision for film industry

PA Wellington New tax provisions for investors in New Zealand’s growing film industry are expected later this month. The results of a departmental review of film financing are expected by the Minister in charge of the Inland Revenue Department (Mr Falloon) about the middle of the month. Mr Falloon, who is also Associate Minister of Finance, said he was sympathetic to the film industry but warned that changes in the present system were likely.

The Government was concerned that under the system recently suspended by the tax department, investors were being insulated against all risk, he said.

Certain types of loan to a loss-making film could actually make the investor a tax-write-off profit over and above the return of his original investment.

In spite of industry’ claims that the suspension of writeoff provisions could cripple domestic film making, Mr Falloon feels it is “only being moderately disadvantaged.” A committee of officials

from the tax department. Internal Affairs, and the Treasury are studying the situation, including a detailed report from the Film Commission. But some form of tax-deductibility for investment in the industry is certain to remain. “Obviously it is like any other business investment. You are allowed to deduct in general terms, your investment — your costs. “What we are saying is in terms of the law at the moment, they have an exces-

sive deductibility because they are deducting, in effect, a grant.” The Australian experience would be closely examined, he said. Mr Falloon said the film industry was still eligible for export incentives and “one would have to be fairly chary" about whether the industr.v should get more than it was getting now in tax assistance. The Government was "delighted” by the success of the industry.

“It is terrific, but as Minister of Inland Revenue, I do not think we should necessarily fund the entire amount of the development — it is a matter of- degree," said Mr Falloon. The Film Commission was funded by the Government and through extensive tax write-offs the whole development was being funded by the taxpayer. However, this Government was concerned to ensure the industry’s continuing success, Mr Falloon said.