section 481 film relief

nino1

thinking of investing in section 481 film relief scheme.
Seems like minimial risk.
Anyone hear any stories of investment being lost in this scheme?

Cute Hoor

nino1 wrote: »

thinking of investing in section 481 film relief scheme.
Seems like minimial risk.
Anyone hear any stories of investment being lost in this scheme?

I've done it now for a couple of years and absolutely no problem. Haven't heard any story about investment being lost, but of course it can't be without risk otherwise Revenue wouldn't run with it.

cruhoortwunk

Hey lads, thinking of an investment using section481.
I have a few questions on it.
Do you have to invest 50k or is that an upper limit?
And does it only make sense to invest whatever amount of your salary that you pay 41% on? Eg if on salary of €52,800, then it would make sense only to invest the 41% portion ie. €20k? (52800 - 32800)

The explanation I have read is this:

Essentially you are investing in a film production that is produced under 481 rules (simply put the money is spent in this country). Under the agreement 50k is drawn down in two loans. One for €33,400 is repaid by the film company and one for €16,600 is repaid by you from your tax refund which is 41% of the 50k.

The loan you repay is €16,600 plus 4-5 months interest. You pocket the difference between this and the tax refund of circa 21k. No tax paid on this gain either.

rf1980

The folks over at Mazars have some info on this mazars.ie/Home/News/Publications/Brochures/Service-brochures/Tax-brochures/Section-481-An-overview

cruhoortwunk

Do you have to use a middle man like mazars to do it? I'm sure they'd charge a fee?

useless

Id imagine that you will have to use a 'middleman'. The film company won't want to deal with multiple small investors- they'd prefer to deal with one party.

Also, in the scheme Mazars and others were offering last year, the two loans were 32750 and 17250, which was a change from the previous year (I think the numbers of 34400 and 16600 quoted above are what I had in 2012)
The upshot is that you're paying capital and interest on 17250 and as a result the amount of the tax relief you get to keep is reduced.

rf1980

The returns are better if you invest the full 50,000 without taking out a loan. Is the loan part just to remove some risk, otherwise I don't see why you would bother with it as it reduces the return i.e. having to pay the 1 year interest.

useless

using the loans allows wageslaves like me to access the tax relief without having to tie up 50k in cash for over a year.

cruhoortwunk

useless wrote: »

using the loans allows wageslaves like me to access the tax relief without having to tie up 50k in cash for over a year.

Plus, from what I understand, you would need to be in the 41% tax bracket for that 50k to get the benefit of it.
So you would need to be on over 82k salary

beachyboy

useless wrote: »

using the loans allows wageslaves like me to access the tax relief without having to tie up 50k in cash for over a year.

Plus it seems like a lot of money to risk for a small enough return. Even if it is a small risk.