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.
