The points-based cultural test that was being developed by Film Finance Corporation Australia (FFC) has been scrapped, and the local industry has reverted back to the less prescriptive method that has been in place for more than 20 years.

The FFC had based its proposed new method of determining which films are Australian on the UK Film Council's cultural test - and had thought it would give producers more certainty. Instead it caused concerns because it was perceived as being too prescriptive and not leaving any room for discretion.

However, two significant changes have been applied to the existing test:

* When determining whether a film is Australian it is no longer necessary to consider who holds the copyright or where the finance has come from. This will make it easier for US studios to make Australian films eligible for the newly introduced 40% production rebate that is paid to the producer on the completion of the film. Considerable interest in making Australian films is already being shown by overseas producers and investors.

* Producers will need to get a provisional certificate stipulating that a film is Australian before applying for the rebate, just as they have to do to access FFC funds. Certification was previously handled by staff in the Department of Communications, Information Technology and the Arts, but was yesterday put under the auspices of the FFC.

The new rebate scheme came into effect on July 1 but only in theory: the legislation is still being drawn up and is not expected to be introduced into the Australian Parliament until August or September. Australia is likely to have an election this year but the Opposition Labour Party has said it is broadly supportive of the overhaul announced in May.

Once the FFC's direct production investment functions are folded into the new Australian Screen Authority (ASA) in one year's time, the ASA will be the certifying authority. The Australian Film Commission, a development agency, and documentary production house Film Australia, will also be merged into this new super agency.

Meanwhile the FFC has announced its intention to invest in three projects including a second collaboration between Look Both Ways writer-director Sarah Watt and producer Bridget Ikin.

Letters of Intent through Evaluation:

* The Mindless Ferocity Of Sharks

Go Patterson Films Pty Ltd

Producer: Mark Patterson

Director: Jonathan Teplitzky

Writer: Brett D'Arcy

Sales and Distribution: Lightning Entertainment

Synopsis: A young boy's coming of age through the lore of sharks.

* My Year Without Sex

Hibiscus Films Pty Ltd

Producer: Bridget Ikin

Director/writer: Sarah Watt

Sales and Distribution: Footprint Films

Synopsis: A romantic and slightly dark comedy exploring religion, sport, consumerism, self-improvement, the sexualisation of children, the pervasive instructions of the media - and love.

* The Visitor

Visitor Films Pty Ltd

Executive producers: Tim Benjamin, David Court

Producer: Anthony Buckley

Director/writer: Greg Woodland

Sales and Distribution: BVI

Synopsis: 12-year-old Hal is a new boy to a country town in rural NSW. A mysterious nocturnal prowler descends on Hal's family when his commercial traveller father is away on business. Hal's investigation of the frightening Visitor draws him closer to the decaying caravan on the hill where a family once lived and was murdered, and leads him to some shattering revelations about his own family.