Finance Bill, 1970: Fifth Stage.

Question proposed: "That the Bill do now pass."

There are one or two matters which I undertook to look at and which I want to mention. First, in regard to a point raised by Deputy O'Higgins, I undertook to see if it would be possible to draft an amendment which might go some way to meet his suggested amendment, namely, that section 23 should not apply where one man in a two man professional partnership dies. I am afraid it is not feasible to meet the Deputy's point on a partial basis, which was what I said I would try to do. In order to meet it at all, it would have to be met fully.

If I were to meet it fully, as I have already explained to the House, logically it would require a similar amendment to section 62 of the Income Tax Act, 1967, which also applies to a discontinuance which takes place when one trader in a two trading partnership dies. However, if we were to amend section 62 of the 1967 Act in that way, there would be considerable scope for evasion, and it was specifically to prevent that evasion that section 62 of the 1967 Act was introduced. I think I indicated this difficulty when we were discussing this on Committee Stage. In these circumstances I am afraid it is not possible for me to meet the point raised.

Another matter to which I want to refer is that certain amendments were put forward by Deputy Cosgrave and Deputy O'Higgins in connection with the granting of a lease for a period in excess of 50 years in one case or 99 years in the other. It was suggested that they should be regarded as a disposal of the full interest of the lessor in the property, thereby enabling the lessee to claim the allowances.

In that connection I want to say that it is undoubtedly the position that, where a lease of an industrial premises was given for whatever length, the fact that the lessor would be entitled under existing law to claim both initial and annual industrial building allowances would have been taken into account in determining the rent to be paid or, where this was commuted by way of a fine, in the amount of the fine. This would be of special significance in relation to those industrial buildings which attract an initial allowance of 10 per cent and an annual allowance of the same amount, resulting in a writing-off of the total expenditure over nine years. Such buildings would include hotels, holiday camps and holiday cottages.

I am sure it will be appreciated that, with that relatively short period, this allowance would certainly be a considerable factor in determining the rent or the fine, as the case might be. If we were at this stage to make the changes suggested, I think those changes could be very strongly criticised on the grounds that a higher rent or fine would have been charged if the withdrawal of these allowances had been envisaged. In effect, there would be a variation in the terms of the lease in favour of the lessee without any right of redress being conferred on the lessor who had made his bargain on the basis that the allowances would be available to him.

One proposal was to apply this to leases in excess of 99 years. Another was to apply it to leases in excess of 50 years. There is no particular reason why a lease of any specific duration should be singled out for special treatment. For instance, if the proposal were in relation to 50 year leases, and if that were accepted, I think it is inevitable that pressure would be exerted later on to have leases of shorter duration given similar treatment. Ultimately this would have the effect of depriving all lessors of the benefit of the capital allowances, including those who lease their premises at an economic rent. In all these circumstances I have found it impossible to agree to the proposals, having further considered the matter as carefully as I could.

I certainly did not envisage the effect, or the purported effect, of the amendment I moved on Committee Stage involving the cases mentioned by the Minister such as hotels or holiday accommodation. I suppose the same is true of the one moved by Deputy O'Higgins. The problem I was concerned with was the effect on persons operating factories or industries in factories built in industrial estates which, because of the arrangement under which the developer provided the factories, were made available on lease rather than for sale. If the firm concerned had constructed the factory they would get the benefit of the allowance, or if the factory had been bought.

The cases drawn to my attention were in respect of one particular industrial estate but I gather the same thing exists in others. The one I am most familiar with is the Dún Laoghaire industrial estate where a certain number of factories are obviously affected. The Minister might have the matter further considered to see whether it would be possible to frame a section at some stage that would cover it.

The Minister argued on Committee Stage that this benefit may have been got in another way but I think that is not strictly so in the sense that the lease is at a relatively low rent. The firm in question obviously had to pay a fine for it and that may vary or differ depending on the length of the lease and the circumstances of the arrangement.

From time to time certain booklets are published by the Revenue Commissioners, laying down changes made, and so on. The Schedule to this Bill dealing with stamp duties follows the arrangement in the earlier Stamp Duties Acts and, while it is possible, in conjunction with the other Act, to see what changes are made in each case, it is pretty cumbersome and complicated and requires a great deal of research in order to see what amendments have been made and the manner in which they apply. There is a case to be made for issuing some memo or booklet which would indicate these changes clearly.

The Revenue Commissioners might also consider that certain precedents are established in Revenue and, in certain cases, are known to practitioners either solicitors or accountants or both. The number of practitioners who may not have practices sufficiently large to make them aware of these are denied the knowledge, or if not denied it, it may not come to their notice. I think there is something to be said for issuing some sort of guideline that would indicate that precedents of a particular character apply in certain cases. It might even be understood that these guidelines are laid down for general guidance and do not involve any particular obligation on the Revenue Commissioners to follow them in all cases. Because of this certain difficulties or problems arise for particular practitioners.

It is hoped to produce a book or booklet to embody the new Schedule and the current law in simplified terms and it is hoped that it will appear in the autumn.

Will that be a legal interpretation or just advice?

When it is in simplified terms it can only be taken as rather like——

The SW4?

Question put and agreed to.

This Bill is certified a Money Bill in accordance with Article 22 of the Constitution.