Dáil Éireann debate -
Tuesday, 16 Dec 1975

Vol. 286 No. 10

Capital Acquisitions Tax Bill, 1975: Committee Stage (Resumed).

Question proposed: "That section 32 stand part of the Bill."

Mr. Colley

I refer the Minister to the proviso in subsection (1):

For the purposes of this Act, an interest in a policy of assurance upon human life shall be deemed to become an interest in possession when and only when, either—

(a) the policy matures; or

(b) prior to the maturing of the policy, the policy is surrendered to the insurer for a consideration in money or money's worth:

Provided that if, during the currency of the policy, the insurer makes a payment of money or money's worth, in full or partial discharge of the policy, the interest shall be deemed to have come into possession to the extent of such payment.

Does that mean that in such circumstances the policy would be valued at the amount of payment or the amount of the surrender value?

Minister for Lands (Mr. T.J. Fitzpatrick,

Cavan): The purpose of the section in general is to prevent an insurance policy being taxed before anything becomes payable under it. Generally speaking, an insurance policy will not be taxed until it matures or until the death of the insured person. The proviso is there to ensure that if, during the currency of the policy, some capital payment is made under it-supposing it is surrendered or that the insured person accepts a lump sum in payment of all moneys due under the policy— that would be treated as a gift and taxed, if it were liable to tax. If instead of surrendering the policy the insured person accepted a partial payment under it—say he surrendered a half, one-third or a quarter of its value—then the amount payable would be taxed as a gift as of the date on which the payment is made.

Mr. Colley

I take it we are talking of a policy in respect of which the person deemed to have received the gift has not paid full consideration, that in the ordinary case of a policy on which the person has paid consideration, the question of a gift does not arise.

Mr. T.J. Fitzpatrick

(Cavan): That would be right. If a person bought over the policy at full consideration there would be no question of a gift.

Mr. Colley

If a person pays a premium on a policy, and in due course the policy matures and he accepts——

Mr. T.J. Fitzpatrick

(Cavan): There is no question of a gift in that case.

Question put and agreed to.

Section 33 agreed to.

SECTION 34.

Question proposed: "That section 34 stand part of the Bill."

Mr. Colley

Will the Minister outline the general purpose of the section?

Mr. T.J. Fitzpatrick

(Cavan): The general effect of section 34 is that it provides, as set out in the explanatory memorandum, that:

in the event of a disposition being made or a gift or an inheritance being taken, by a private company as defined in section 16, or in the event of consideration being paid to or by the company, the beneficial owners of shares and of certain entitlements in the company will be treated as disponers, donees or successors or, as paying or receiving the consideration, as the case may be, in the proportion of their beneficial interests in the company.

Where shares and entitlements are held in trust and there is no ascertainable beneficial owner, a disposition made, or consideration paid, by the company, is considered to have been made, or paid by the disponer in the trust.

Question put and agreed to.

SECTION 35.

An Ceann Comhairle

As amendments Nos. 29 and 30 are cognate I suggest that they be taken together.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 29:

In page 26, subsection (2) (a) (ii), line 52, after "worth" to insert ", or a person deriving title from or under such a purchaser or mortgagee".

These amendments are designed to protect not only the bona fide purchaser or mortgagee but also the person who buys a property from him or receives a gift or legacy thereof from him. It might be said that, once protection was afforded to the purchaser or the mortgagee, the protection would carry through to a person deriving title from him. To remove any doubt, the amendments are being moved.

Mr. Colley

The principle involved here is acceptable but the only question I intend raising is the one to which the Minister adverted: that, on the face of it, it seems to me that if the purchaser is free from liability any person deriving title from him or because of him would be freed from liability also.

Mr. T.J. Fitzpatrick

(Cavan): It would appear that way but the amendments are designed to put the matter beyond aye or nay.

Amendment agreed to.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 30:

In page 27, subsection (2) (b), line 8, after "worth" to insert ", or a person deriving title from or under such a purchaser or mortgagee".

Amendment agreed to.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 31:

In page 27, subsection (2) after line 8, to add the following proviso to the subsection:

"Provided that the disponer as such shall not be so accountable in the case where the date of the disposition was prior to the 28th day of February, 1974.".

The White Paper on capital taxation says at paragraph 102, page 48, that concurrent liability would attach to donors, among others. This was given effect to in section 35, subsection (2) (a) (i) of the Bill as initiated. But representations have been made to the effect that this was unfair to the donor who has made the disposition by way of discretionary trust, for example, before the issue of the White Paper. This amendment is intended to give relief to the disponer where the date of the disposition was before the issue of the White Paper which put people on notice of liability by exempting such a disponer from accountability for tax.

Mr. Colley

The first point I want to raise here is a technical one. The Minister will see that the proposal is to add the proviso: "In page 27, subsection (2) (a) after line 8." Perhaps it relates to subsection (2) (a) and that, consequently, it should be added on page 26.

Mr. T.J. Fitzpatrick

(Cavan): I think it is subsection (2) (b).

Mr. Colley

It is (2) (a) on my sheet.

Mr. T.J. Fitzpatrick

(Cavan): It is not too clear but it is intended to be (2) (b).

Mr. Colley

If it relates to (a), it is in the wrong place.

Mr. T.J. Fitzpatrick

(Cavan): For the purpose of clarification I would ask that it be read: “In page 27, subsection (2) (b), after line 8, to add the following proviso.”

Mr. Colley

Is the Minister sure that it relates to (b) and not to (a)? He will see that in (a) there is a reference to the disponer but that there is no such reference in (b) although the amendment relates to the disponer.

Mr. T.J. Fitzpatrick

(Cavan): On my copy it certainly is not (a) but there could be something crossed out. However, I understand that it is intended to cover the entire section.

Mr. Colley

Both (a) and (b)?

Mr. T.J. Fitzpatrick

(Cavan): Yes. It covers (a) but it is a proviso to subsection (2). I would ask that it be put in there but that it read: “In page 27, subsection (2), after line 8, to add the following proviso.” I am sorry for the confusion.

Mr. Colley

That would make it clearer. In relation to a disposition which had occurred prior to 28th February, 1974, is there any case that would render a person liable, be he disponer or otherwise?

Mr. T.J. Fitzpatrick

(Cavan): If the disposition were left to A for life and then to B, I am advised that B would be liable but not the disponer.

Mr. Colley

Therefore, if prior to 28th February, 1974, the disposition was made for life to A and then to B and if A's death occurred after that date, B would be liable?

Mr. T.J. Fitzpatrick

(Cavan): Yes.

Mr. Colley

The purpose of the amendment is to provide that in such circumstances the disponer would have no liability?

Mr. T.J. Fitzpatrick

(Cavan): Yes. If a discretionary trust were set up, say, ten years ago, and if after the coming into operation of the Bill a person takes something out of that discretionary trust, he, as the beneficiary, would be liable to tax. Were it not for this provision which seeks to exempt the disponer, he would be the one who would be liable.

Mr. Colley

He would have been secondarily liable?

Mr. T.J. Fitzpatrick

(Cavan): Yes.

Mr. Colley

But not now?

Mr. T.J. Fitzpatrick

(Cavan): No.

Amendment agreed to.

An Ceann Comhairle

Amendment No. 32 seems related to amendments Nos. 33 and 34. Consequently, I suggest that the three be taken together.

Mr. Colley

I can see how Nos. 33 and 34 are related but I am not quite so clear as to how No. 32 relates to them, so if the Chair would not mind, I suggest that we discuss No. 32 separately.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 32:

In page 27, subsection (6), after line 34, to add the following proviso:

"Provided that the liability of a personal representative under this subsection shall not exceed the amount for which the accountable person, of whom he is the personal representative, was liable.".

Amendments Nos. 32, 33 and 34 are related but I quite agree to the Deputy dealing with them separately if he wishes. The purpose of these amendments is to give the personal representative of an accountable person who is liable to pay tax under subsection (6) (b) the same protection as to the extent of this liability and as to the right to recover tax from the person primarily accountable or out of the property as the person secondarily accountable. It is to extend that to his personal representative.

Mr. Colley

If we did not have this amendment, how could it happen that a personal representative could be liable for a greater amount than the accountable person?

Mr. T.J. Fitzpatrick

(Cavan): Under the section as drafted, an accountable person could be liable to the extent of £100. Were it not for the amendment the only limitation on his personal representative's liability would be the limit imposed by the assets the personal representative received. The object of the amendment is to limit the personal representative's liability to £100, the same as the testator.

Mr. Colley

I appreciate that but I am not clear on the circumstances in which the testator could be liable for, say, £100 but, in the absence of this amendment, where his personal representative could be liable for £500. I do not understand how that situation can arise.

Mr. T.J. Fitzpatrick

(Cavan): If the total liability was £1,000 but if the testator received only £100 he could be liable only to the extent of the £100 he received. I am advised that were it not for these amendments if the second executor received much more assets—perhaps a few thousand pounds—he could be liable to the full amount of the £1,000.

Mr. Colley

The Minister mentioned the case of the testator being liable——

Mr. T.J. Fitzpatrick

(Cavan): I meant the testator who had been the executor of another person. If he received only £100 he could be liable only for that £100 on a claim of £1,000——

Mr. Colley

That is because he had received assets of only £100?

Mr. T.J. Fitzpatrick

(Cavan): Yes. If we did not have these amendments the executor of the person who got a large estate could be made liable for the full £1,000.

Mr. Colley

Even though the estate was not the estate out of which the tax was payable?

Mr. T.J. Fitzpatrick

(Cavan): So I believe.

Mr. Colley

I seems rather odd but if the Minister says there is a danger I will agree with it.

Mr. T.J. Fitzpatrick

(Cavan): I am advised it is safer to have the amendments.

Amendment agreed to.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 33:

In page 27, subsection (7), line 35, after "or (b)" to insert "or in subsection (6) (b)".

Amendment agreed to.

Question proposed: "That section 35, as amended, stand part of the Bill."

Mr. Colley

The first matter I want to raise on the section is one to which we adverted on section 23. The Minister for Finance, who is dealing with the matter, suggested, and I agreed, that we should leave it over until we came to this section. Perhaps the Minister could explain why the exceptional treatment is proposed in this section in relation to what I might call a section 23 case? The Minister will see that subsection (1) states:

(1) The person primarily accountable for the payment of tax shall be—

(a) save as provided in paragraph (b), the done or successor, as the case may be;

Will the Minister explain why the exceptional treatment in the section 23 case?

Mr. T.J. Fitzpatrick

(Cavan): Section 35 indicates the person liable for payment of tax and distinguishes primary from secondary liability. The primary liability rests on the done or successor or the transferee, in any case where the provisions of section 23 apply. Those with secondary liability, who will be called on to account only if those with primary liability default in payment, include the disponer, the trustees of the disposition under which the gift or inheritance is taken and every trustee, guardian, committee, personal representative, agent or manager who has the care of the property or its income and transferees other than purchasers. In the case of those with secondary liability, except in the case of the disponer, they will be liable only to the extent of the property which they have received and which is comprised in the gift or inheritance. Once tax is paid they will be entitled to reimbursement from the person primarily accountable. The section provides also for the payment of tax out of the property affected by the tax. It also gives the right to the Revenue Commissioners to inspect records in the custody of any public officer.

Section 35 indicates the person liable for payment of tax and distinguishes primary from secondary liability. The primary liability rests on the donee or successor. In the case dealt with by section 23, where the benefit is transferred to a transferee by the beneficiary before it becomes an interest in possession, the primary liability rests on the transferee.

Under subsection (8) the person primarily accountable for payment of the tax may raise the amount of the tax and interest and expenses by sale or mortgage of the property. Those with secondary liability are (1) in the case of a gift, the disponer and (2) in the case of the gift or an inheritance (a) every trustee, guardian, committee, personal representative, agent or other person in whose care any property comprised in the gift or inheritance or the income therefrom is placed at the date of the gift or at any time thereafter; and (b) every person in whom the property is vested after the date of the gift or inheritance except bona fide purchasers and mortgagees.

In the section 23 case, the donee or successor is out of it since the time he gave his interest to the transferee, and may be dead or may have gone away, so that the transferee is the logical person to pay the tax.

Mr. Colley

It is following the property.

Mr. T.J. Fitzpatrick

(Cavan): Exactly, because the person who transferred it may be a man of straw. He may have left the country.

Mr. Colley

I could accept the proposition that you cannot let the transferee go because the other man, as the Minister said, may be a man of straw. I would have thought that in such circumstances the donee or successor going back to the original transaction should be primarily liable and the transferee only ultimately liable. After all, is it not the donee's or successor's sale of the interest that gives rise to the tax?

Mr. T.J. Fitzpatrick

(Cavan): It is more reasonable to make the person who has actual custody or possession, or is in beneficial occupation or possession, primarily liable.

Mr. Colley

Although he may have bought it?

Mr. T.J. Fitzpatrick

(Cavan): Yes. In the old days when income tax was payable on a property the purchaser had to protect himself by ensuring that there was no liability for these taxes on the property which he had bought until the 12 or six-year period, or whatever it was, had expired.

Mr. Colley

I am not going to make an issue of it. It just strikes me as putting the cart before the horse. Could I refer the Minister to subsection (2), line 51, on page 26. There is a reference to "for consideration in money or money's worth". I suggest that that should be "full consideration in money or money's worth". If that is not put in, there may be a loophole. This expression is used in the Minister's own amendment No. 45 which provides "property comprised in a taxable gift or taxable inheritance shall not, as against a bona fide purchaser for full consideration in money or money's worth...”. The phrase is used there, and I think it should be used here.

Mr. T.J. Fitzpatrick

(Cavan): Deputy Colley has a valid point. It would be safer to insert the word “full” before “consideration” and I will introduce an amendment on Report Stage. We shall do the same in relation to (b) on the next page.

Major de Valera

I was going to say that.

Mr. Colley

In fact, it occurs in some later sections. I have not spotted them all, but I am sure the Minister's advisers will.

Major de Valera

There is another point which is not so much a question of possible evasion as of a certain vagueness which I should like to draw to the Minister's attention. Owing to the time that is available in this Bill, I do not intend to do more than mention it. Many people have misgivings about the capturing of a confidential agent like a solicitor, in particular, by clauses of this nature. I do not want to repeat all the things I have said on this, but even in the case of a solicitor the point I am about to make should have attention. Under subsection (4) of this section the person who acts solely in the capacity of the agent as I understand it receives immunity under the section until an event happens, and the event in question is provided for in the following subsection. The subsection (4) to which I am referring says:

(4) A person who acts solely in the capacity of an agent shall not be liable for tax chargeable on a gift or inheritance to an amount in excess of the market value of so much of the property of which the gift or inheritance consists and of the income from such property which he held, or which came into his possession, at any time after the serving on him of the notice referred to in subsection (5).

Asking to be considered as making all the points that were made before in reference to solicitors in this context, I refer to subsection (5), which specifies that the tax is recoverable from that agent inter alios after the requisite notice has been served. That puts the agent in the same position as if, from that out, subsection (4) was not there; in other words, subsection (4) ceases to operate to protect him. I could develop this argument in support of the argument for exempting particularly solicitors from such provisions, but having said that on other Acts, as I say, I want that point to stand by itself. The point I want to make now, therefore, is a new one arising under subsection (8) which says that (a) a person who is primarily accountable for the payment of tax and (b) a person who is authorised or required to pay tax—again I am referring to the agent:

in respect of any property shall, for the purpose of paying the tax, or raising the amount of the tax when already paid, have power, whether the property is or is not vested in him, to raise the amount of such tax and any interest and expenses properly paid or incurred by him in respect thereof, by the sale or mortgage of, or a terminable charge on, that property or any part thereof.

It seems to me that that requires something like the qualification that Deputy Colley mentioned in regard to consideration. There is a defect or a danger there in that the sale of the mortgage could be effected, to the loss of the person beneficially entitled, by an agent merely to raise the cash to pay duty. It might be argued from the Revenue Commissioners' point of view that, if the tax has not been paid properly in the first instance and so on, this is equitable.

On the other hand, there is a danger—I would go so far as to say a temptation—that, if substantial property were to be in the hands of an agent, in certain circumstances that agent could either sell or mortgage the property under the colour of realising the funds necessary for the discharge of duties. As I have said, in that case the powers are too wide and, although they are not dangerous to the Revenue, they are a dangerous provision in the legislation from the point of view of the regulation of agents generally.

I wonder would the Minister consider whether any limitation could be put on that power of sale to ensure that assets are neither misappropriated, nor squandered, nor the subject of any question about negotiations or deals, that they are disposed of for full value and that the full difference will accrue in the proper location. It is difficult to see how to amend the section as it stands in that regard. It seems to me that this is a desirable amendment, from the point of view of the public and not from the Revenue point of view. I hope I have made the point clear to the Minister. If there is anything in an Act which would facilitate undesirable traffic, or even misappropriation of somebody else's property we should at least attempt to include some provision to safeguard the beneficiary, or whoever is really entitled. In the case of an agent, it might easily be a question not only of a minor or an incapacitated person but, worse still, it could be the widow who might not be emotionally equipped at the time to deal with the problems which might arise.

Mr. T.J. Fitzpatrick

(Cavan): Deputy de Valera raised two points. First, he is worried lest the relief or the protection given in subsection (4) is in some way taken away by subsection (5). I do not think the Deputy need have any such worry because subsection (5) deals with the serving of a notice. After the notice is served, the person referred to in subsection (4) is liable only to the extent of what he had at that date. He has had notice that a claim is being made. If he parts with a possession, or gives it away, or divests himself of it, he does so in the full knowledge that a claim is being made and the amount of the claim involved. I cannot see how subsection (5) in any way takes away from the protection given in subsection (4). Subsection (5) is part of the machinery used in subsection (4).

Major de Valera

Quite. I wonder would the Minister allow me to answer that point first. I would respectfully submit that there is this difference. Subsection (4) makes him liable only for such property as comes into his hands. Subsection (5), in effect, enables the Commissioners to make a complete assessment, and serve a notice, and the tax is recoverable from any accountable persons, one of whom the agent is. That assessment could go beyond the property which came into the agent's hands. I may be in error. I may have read subsection (6) as part of subsection (5). I will qualify the case I was about to make on subsection (6). I intended to make the case that subsection (6) was substantially part of subsection (5). If the Minister makes the point that subsection (6) stands completely on its own I am answered in part. Nevertheless, there is a point there.

Mr. T.J. Fitzpatrick

(Cavan): What I am saying is that subsection (4) stands clearly on its own. It says:

A person who acts solely in the capacity of an agent shall not be liable for tax chargeable on a gift or inheritance to an amount in excess of the market value of so much of the property of which the gift or inheritance consists and of the income from such property which he held, or which came into his possession, at any time after the serving on him of the notice referred to in subsection (5).

The Revenue Commissioners cannot recover from that person any more than he had or received after the serving of the notice on him.

Major de Valera

I accept that. The Minister is right.

Mr. T.J. Fitzpatrick

(Cavan): In regard to subsection (8), there is a proviso similar to this in the estate duty code under section 9 (5) of the Finance Act, 1894. This provision does not seem to have been abused. A liability to pay tax could not be placed on a trustee without giving him the right to recover the tax out of the property. If a donee or a successor defaults in paying the tax, he has no legitimate grievance if his trustee pays the tax out of the property. If a donee or a successor has been bona fide unable to produce funds to pay the tax, he should inform the Revenue of the circumstances.”

When this type of situation arose under the old death duty code, the Revenue were usually able to make a suitable arrangement with the taxpayer. They have power under section 44 (1) to make the arrangements for capital acquisitions tax. As the Deputy will have seen from what I have said, this provision has been in existence since 1894 and it has not been abused. If I followed Deputy de Valera's argument correctly, he was afraid the agent or trustee might abuse this subsection. While I would not like to give gratuitous advice on the subject I imagine if he abused it he would be guilty of a breach of trust and he would be liable to an action by the beneficiary. That would be an added reason why he would behave in a responsible manner.

Major de Valera

In view of the fact that it has been the subject of test over the years, the Minister's answer is satisfactory.

Mr. Colley

I want to refer briefly to subsections (4) and (5) but on a different point to that made by Deputy de Valera. I would settle for both of those sections. I sought to have this done in the Wealth Tax Act by amendment, which was rejected, because I felt that an agent should not under any circumstances be made liable to account for tax when he is not even aware that there is tax due. This provides that he is not liable unless he is notified, which I consider is reasonable. My only complaint is why it was not done in the Wealth Tax Act when we asked that it be done.

The other point I want to raise is in relation to subsection (9). There is a reference to "every public officer". Could the Minister indicate the kind of person in mind and if there is a definition anywhere of what "public officer" means? Is there any precedent for the kind of provision there is in section 9?

Mr. T.J. Fitzpatrick

(Cavan): Subsection (9) allows access by the Revenue Commissioners to any public or official records that may tend to secure the tax, or to prove or lead to the discovery of any fraud or omission in relation to the tax. This provision continues the provision of section 16 of the Stamps Act, 1891, for capital acquisitions tax purposes and it is in practically the same terms as that section. Section 16 of the 1891 Act is incorporated bodily in the capital transfer tax code by the British Finance Act, 1975, Schedule IV, paragraph 42 (2).

Mr. Colley

Has the Minister answered my question?

Mr. T.J. Fitzpatrick

(Cavan): I have, by saying that we are continuing something that is there since 1891.

Mr. Colley

I was asking if there was a precedent for it and there is.

Question put and agreed to.

SECTION 36.

Question proposed: "That section 36 stand part of the Bill."

Major de Valera

I am not sure if I should discuss this matter on this section or if I should wait until the next section but the two sections are tied together. These two sections provide for the administrative mechanism in regard to gifts and inheritances. They are necessarily inter-linked because the incidence of gifts is of cumulative importance when it comes to inheritances. We have here the extension of the present mechanism by which the Estate Duty Office functions, starting with the returns, the Inland Revenue affidavit and so on. Could the Minister indicate to me, as most of what I have to say is in regard to inheritance procedure, what the procedure here is in regard to gifts in so far as they do not tie up with inheritances? Am I right in taking the two sections that way?

Mr. T.J. Fitzpatrick

(Cavan): Section 36 deals with gifts and inheritances.

Major de Valera

Therefore, we have to take the two together.

Mr. T.J. Fitzpatrick

(Cavan): Yes.

Major de Valera

Would it shorten the matter if the Chair allowed me to refer to section 38 also because some of the things I have to say are tied in with that section? This would prevent repetition.

Mr. Colley

I am sure the Chair would agree with anything that would prevent repetition.

Major de Valera

Gifts are something new. In so far as they do not impinge on an inheritance or questions of inheritance they are something new to the law from a revenue point of view and, therefore, will naturally have to have the appropriate machinery in the Estate Duty Office to deal with the matter. In so far as they are tied up with inheritances, that office would naturally be dealing with them the same as it would with death duties. Am I correct if I assume that what was the Estate Duty Office up to now is to be expanded and reorganised but forms the basis of the administrative organisation to collect and account for these duties?

Mr. T.J. Fitzpatrick

(Cavan): Might I shorten the debate by saying that I am not in a position to say if it would be extended or expanded but it will deal with both gifts and inheritances?

Major de Valera

Even when we spoke about these Bills on the Second Stage, there was a considerable jam in the Estate Duty Office but my information now is that there has been a considerable clearance, that matters have greatly improved and the pressures have eased where that office is concerned. It seems that the procedures will remain the same. It is convenient to deal with an inheritance here in the case of a death because the problems that arise on a death are the most general ones embracing both gifts and inheritances. In such a case, whether the devolution is testate or intestate, as I understand it, the first move by the personal representative, agent or other person acting is to furnish the inland Revenue affidavit. These two sections, in effect, provide the statutory base for what must be disclosed and set out in the Inland Revenue affidavit. At the moment there takes place, as quickly as the Revenue Commissioners can manage it, a provisional grant assessment, and that provisional grant assessment is made and furnished to the accountable person, the personal representative or whoever, and upon payment of that assessment—which is then required to be paid—a receipt is endorsed on a copy of the Inland Revenue affidavit and it is returned and thereafter the process of law can take place. In other words, when the accountable person or personal representative or agent is in possession of the duplicate Inland Revenue affidavit with the receipt endorsed thereon he may lodge the papers in the probate office and proceed to extract probate or letters of administration as the case may be.

I understand this is the opening gambit in the administration and incidentally in the collection of debts. Once the grant has issued the authorised person can pay debts and proceed to administration and distribution but at the same time it is necessary to have regard to possible revenue directions in other contexts with the Revenue Commissioners who may give directions and may make further requisitions. I understand that in cases like that, if a solicitor or agent is acting, these documents are furnished equally to the personal representative as well as to the agent. There may then be what can prove sometimes a long process of corrective affidavits and receipts and you then come to a residuary account; but in the end there may be an additional balance of duty and there will be a final assessment. On payment of the balance of the duty the Revenue Commissioners give a certificate of discharge.

To summarise, the present procedure seems to be the furnishing of the affidavit, the provisional grant assessment and payment of it, the subsequent taking out of probate or letters of administration, the administration of the estate, the payment of the balance of the duty and the final discharge from liability by the certificate of discharge from the Revenue Commissioners. My first question therefore is: does this mechanism hold and are we to interpret these two sections as the new statutory base requiring the furnishing of information within that framework? In particular, I want to ask will it be necessary to wait for a provisional grant assessment before going further and will it be necessary to pay the duty on the provisional grant assessment before moving to the probate office?

These questions are more than academic since a substantial difference has been made in where the primary liability—particularly in the case of debts—lies. The Minister for Finance has been at great pains to point out that under the estate duty code the liability was on the estate and that now, in the case of inheritances, the liability is on the legatee. It is, therefore, of some importance to know what is the mechanism on which the operation of these two sections will be based. I have outlined the system heretofore, as I conceive it, by asking the Minister if that is to apply and, if so, is it to be varied or changed and if so, what new system will be substituted for it?

Mr. T.J. Fitzpatrick

(Cavan): The procedure to be followed in regard to inheritances arising on death will be largely the procedure followed with estate duty at present in regard to payment of estate duty on estates, with one notable exception and that is that normally it will not be necessary to pay any tax.

Major de Valera

There will not be a payment on the provisional grant assessment?

Mr. T.J. Fitzpatrick

(Cavan): I refer the Deputy to section 60 of the Bill, which says:

(1) Where an Inland Revenue affidavit has been delivered to the Commissioners and they are satisfied—

(a) that an adequate payment on account of inheritance tax in respect of the property passing under the deceased person's will or intestacy or Part IX or section 56 of the Succession Act, 1965, has been made; or

(b) that the payment of inheritance tax in respect of such property may be deferred for the time being.

they shall issue the certificate which will enable probate to be taken out.

If the Deputy goes to subsection (3) of that section he will see:

If, in the opinion of the Commissioners, the payment of inheritance tax in respect of the property passing under the deceased person's will or intestacy or Part IX or section 56 of the Succession Act, 1965 cannot be deferred for the time being without serious risk of such tax not being recovered, they may refuse to issue the certificate referred to in subsection (1) until the tax has been paid, or until such payment as is referred to in paragraph (a) of that subsection has been made.

That would be the exceptional case where the executor or administrator is out of the country or where, for some other reason, the Revenue Commissioners thought it would not be safe not to secure the tax before issuing the certificate. The Deputy will see that from the solicitor's point of view and from the executor's point of view it has been considerably simplified because he will not have to raise the tax in advance of getting out the grant in a normal case.

Major de Valera

Actually section 60 in relation to these sections is an admirable example of the type of discretion I have been urging on the Minister and on the Minister for Finance to incorporate in this legislation.

Question put and agreed to.

SECTION 37.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 35:

In page 29, after line 46, to insert the following subsection:

"(4) A return, additional return, affidavit, additional affidavit, account or additional account, delivered under this Act, shall be made on a form provided by the Commissioners.".

This subsection is being added to secure uniformity in the forms of return to be delivered to avoid having to ask for further particulars as far as possible and to streamline the administration of assessments.

Amendment agreed to.

Section 37, as amended, agreed to.

Section 38 agreed to.

SECTION 39.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 36:

In page 31, after line 12, to insert the following subsections:

"(6) Any assessment, correcting assessment or additional assessment under this section may be made by the Commissioners from any return or additional return delivered under the provisions of section 36 or from any other information in the possession of the Commissioners or from any one or more of these sources.

(7) The Commissioners, in making any assessment, correcting assessment or additional assessment, otherwise than from a return or an additional return which is satisfactory to them, shall make an assessment of such amount of tax as, to the best of their knowledge, information and belief, ought to be charged, levied and paid.".

These additions were considered necessary to enable the Revenue Commissioners to make assessments in cases where no return is delivered, or where an unsatisfactory or inadequate return is delivered.

Major de Valera

What is in this section would simply correspond to the procedures or corrective affidavits and accounts that were there before? Is that not what the section is providing, plus what the Minister has in this amendment?

Mr. T.J. Fitzpatrick

(Cavan): Yes, this is what might be described as an assessment on the best information available to the Revenue Commissioners.

Amendment agreed to.

Section 39, as amended, agreed to.

Section 40 agreed to.

SECTION 41.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 37:

In page 31, to delete subsection (4) and to substitute the following subsection:

"(4) A payment on account of tax shall be applied—

(a) if there is interest due on tax at the date of the payment, to the discharge, so far as may be, of the interest so due; and

(b) if there is any balance of that payment remaining, to the discharge of so much tax as is equal to that balance.".

Subsection (4) of the Bill, as initiated, was thought to contain a possible ambiguity. The subsection has been rewritten by this amendment. The previous version could have been interpreted as discharging the whole of tax or interest by a part payment, or as allowing a payment on account to be used twice, once in discharge of interest and again in discharge of tax. It is what I would describe as a drafting amendment to clear up a possible ambiguity.

Amendment agreed to.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 38:

In page 31, subsection (7), line 43, after "a gift" to insert "or inheritance".

The purpose of this amendment is to relieve the successor from interest on inheritance tax which accrued after the 1st of April, 1975, and before the Bill is passed. The Bill, as initiated, had provided already—subsection (7)—for interest on gift tax. When the Bill was being drafted it was anticipated that it would be law by the date on which inheritances became liable to capital acquisitions tax, the 1st of April, 1975. Since this date has long since passed, it would be unfair to charge interest on a liability which could not be accounted for through no fault of the accountable person.

Amendment agreed to.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 39:

In page 31, after line 47, to insert the following subsection:

"(8) Where the value of a limited interest falls to be ascertained in accordance with Rule 8 of the First Schedule as if it were a series of absolute interests, this section shall have effect, in relation to each of those absolute interests, as if the references to the valuation date in subsections (1), (2) and (3) were references to the date of the taking of that absolute interest.".

Subsection (8), which this amendment proposes to add to section 41, is designed to make rule 8 of the First Schedule more workable by not charging interest on tax payable when funds are applied from time to time, except from the date of application of the funds.

Rule 8 in the First Schedule was included in order to deal with the valuation of limited interests which are given in such terms that the other rules in the First Schedule do not provide a method of valuing them. Rule 8 provides that tax shall be payable in such a case on each application of funds in or towards satisfaction of the interest as if such application were the giving of an absolute interest.

The subsection (8) now being added to section 41 is designed to make the charge for interest on tax in this type of case consistent with the method provided by Rule 8—interest in such cases will be charged only from the date of application of the funds.

Amendment agreed to.

Question proposed: "That section 41, as amended, stand part of the Bill."

Mr. Colley

I do not want to waste time going back over the same ground but I do want to record our disapproval of a rate of interest of 18 per cent per annum, as is proposed in subsection (2) here. Of course, it is in conformity with what is being done in other legislation that has come before us but that does not make it right. In my view, it leads to problems for the Revenue Commissioners, problems which should not arise, because the rate of interest is excessive. I do not want to labour that point. We made our views clear on it before.

However, I do want to ask the Minister if he could outline for us the position in regard to liability to interest, particularly having regard to the valuation date on the one hand and the date of assessment on the other. In other words, how does this difference arise: that it is the valuation date on the one hand and the assessment date on the other? What is the precise effect in regard to liability to interest, as provided in the section, in relation to both the valuation date and the date of assessment?

Mr. T.J. Fitzpatrick

(Cavan): If I understand the Deputy's point correctly, it might be answered by saying that the date of death would be the date of inheritance. The valuation date would be the date on which the residue was ascertained, which might be two years afterwards. It is proposed only to charge interest from the valuation date, not from the date of death. Of course, if the beneficiary became entitled to interest from the date of death or from any date subsequent to the date of death, that interest would be added to the inheritance, would form part of the inheritance and tax would be charged on it.

Mr. Colley

Would it be convenient for the Minister to refer me to the section which determines the valuation date?

Mr. T.J. Fitzpatrick

(Cavan): If the Deputy will refer to section 21.

Mr. Colley

The Minister has said, I think, that the valuation date would be the date on which the value of the residue was ascertained. Is that correct?

Mr. T.J. Fitzpatrick

(Cavan): Yes.

Mr. Colley

The Minister will agree, I think, that section 21—which defines the valuation date—is a good deal broader than that. Can we take it that in any normal case, if I might call it that, the valuation date and therefore liability to interest will not commence until the value of all of the residue has been ascertained?

Mr. T.J. Fitzpatrick

(Cavan): Yes, that is in the case of tax on the residue or legacy.

Mr. Colley

Yes, but in the case of tax on a legacy presumably that would be from the date——

Mr. T.J. Fitzpatrick

(Cavan): Of payment of the legacy.

Mr. Colley

Or entitlement to it?

Mr. T.J. Fitzpatrick

(Cavan): Exactly.

Mr. Colley

And liability to interest would commence on that date?

Mr. T.J. Fitzpatrick

(Cavan): Yes.

Mr. Colley

What about the date of assessment then, say, in relation to a legacy on the one hand or residue on the other?

Mr. T.J. Fitzpatrick

(Cavan): In the case of the residue, of course it could not be assessed until it was ascertained.

Mr. Colley

But having been ascertained, we will say, by the personal representatives, that is not necessarily the date of assessment?

Mr. T.J. Fitzpatrick

(Cavan): He must deliver a return within three months of the valuation date, that is, the date of ascertainment. We dealt with that a few sections back. Therefore, he must make the return within three months of the date of ascertainment or the valuation date.

Mr. Colley

Perhaps I might illustrate the point I am making more clearly. Assume a situation in which there is a legacy which is subject to inheritance tax and there is also a residue which is subject to inheritance tax, and the legatee becomes entitled to go into possession of the property left to him a considerable time before the value of the residue is ascertained.

Mr. T.J. Fitzpatrick

(Cavan): There would be two separate returns, the legacy and the residuary amount. At the moment you are supposed to pay tax on a legacy at the time of payment.

Mr. Colley

In that case there would be a return within three months of the date on which the legatee became entitled?

Mr. T.J. Fitzpatrick

(Cavan): Yes.

Mr. Colley

And, if it were paid within the three months, there would be no liability for interest?

Mr. T.J. Fitzpatrick

(Cavan): That is so by virtue of subsection (3) of section 41.

Mr. Colley

Let us assume the return is made within the three months and it is then assessed—I do not know how long it would take, but let us say two months——

Mr. T.J. Fitzpatrick

(Cavan): Then a person would have a month's grace. If he pays within three months of the valuation date he would not be liable to any interest.

Mr. Colley

But the date of assessment could be two months after and he gets, on the face of it, 30 days to pay from the date of assessment, but if he pays within the 30 days is he liable for any interest at all?

Mr. T.J. Fitzpatrick

(Cavan): Subsection (3) of section 41 provides:

Notwithstanding the provision of subsection (2), interest shall not be payable on tax which is paid within three months of the valuation date, and where tax and interest, if any, thereon is paid within thirty days of the date of assessment thereof, interest shall not run on that tax for the period of 30 days from the date of the assessment...

I take it that means a person has three months from the valuation date and 30 days from the date of assessment which would mean that, if the Revenue Commissioners did not assess until another 30 days from the date of assessment——

Mr. Colley

But he has three months within which he can make a return.

Mr. T.J. Fitzpatrick

(Cavan): No, he has three months within which he can make his payment. Supposing the legacy is paid over and the accountable person makes a return immediately, he can then sit back and do nothing until three months from the valuation date and he can then pay his duty but, if he makes his return within the three months and the assessment is not raised until near the end of the three months, he has another 30 days from that date.

Mr. Colley

But if he makes a return towards the end of the three months and the assessment is not made until another three months, what is his liability for interest then? I am sure the Minister is aware of what I am getting at: can the taxpayer become liable for interest because of delay in assessment?

Mr. T.J. Fitzpatrick

(Cavan): I suppose if he did not send in his return until after three months he would be liable for tax from the end of the three months until the date of assessment. He would be liable for tax from the valuation date until the date of assessment.

Mr. Colley

Yes and he would then have 30 days' grace, but he could still be liable for interest on the period the Minister mentions.

Mr. T.J. Fitzpatrick

(Cavan): He could, yes. He would have 30 days' grace from the date of assessment.

Mr. Colley

That is clear enough. But the one I am concerned with is where he puts in his return within the three months and, because the assessment is not made for, say, another month or two months, he might then become liable to interest effectively because of delay in assessment. I want to be assured this will not happen.

Mr. T.J. Fitzpatrick

(Cavan): I understand that, under the estate duty code, the Revenue Commissioners had discretion to exempt death duty from interest in respect of a period caused by delay in the office and they always operated that. When discussing the provisions of the Wealth Tax Bill I think a similar undertaking was given but, if I am not satisfied on looking into this further that there is an inherent discretion in the Revenue Commissioners, I shall do something about it between now and the Report Stage.

Mr. Colley

I am satisfied with that.

Question put and agreed to.

SECTION 42.

Question proposed: "That section 42 stand part of the Bill."

Mr. Colley

I would refer the Minister to the second last line of the section which refers to "the amount so paid shall be treated as a payment on account of the inheritance tax". Does that include interest?

Mr. T.J. Fitzpatrick

(Cavan): I am advised it does.

Question put and agreed to.

SECTION 43.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 40:

In page 32, subsection (3), line 21, to delete "sold," and to substitute "sold or compulsorily acquired,".

This amendment is necessary because the Revenue Commissioners had been advised that a compulsory acquisition of land is not a sale and this amendment is designed to include a compulsory acquisition.

Amendment agreed to.

Question proposed: "That section 43, as amended, stand part of the Bill."

Mr. Colley

I am not quite sure if I have interpreted this section correctly but, if I have, it seems to me that there is not a great deal of concession involved in allowing payment of the tax by installment if the outstanding balance will be subject to interest at the rate of 18 per cent per annum. Am I correct in thinking that where payment by instalment is allowed all outstanding tax will continue to be subject to interest at the rate of 18 per cent per annum?

Mr. T.J. Fitzpatrick

(Cavan): That is the position at the moment and will be for so long as the rate remains at 1½ per cent per month.

Mr. Colley

The Minister will agree it is not much of a concession.

Mr. T.J. Fitzpatrick

(Cavan): It is not.

Mr. Colley

In fact, it would probably be cheaper to borrow from the bank, if one had to.

Mr. T.J. Fitzpatrick

(Cavan): If it is I am sure the taxpayer will adopt that course.

Mr. Colley

What is the reasoning behind subsection (5)?

Mr. T.J. Fitzpatrick

(Cavan): The subsection provides that where the donee or successor who is a life tenant dies before all the instalments have become due, those instalments due after his death will not be payable. If all the tax, or some instalments thereof, have been paid in advance the amount of tax or those instalments due for the period subsequent to his death will be treated as an overpayment of tax and be refunded. If he dies reasonably quickly, it is possible that the tables have overvalued the gift or inheritance and it is an attempt by the Bill to have regard to the condition of the person's health and to take into consideration a health factor.

Mr. Colley

Very edifying, but it is so untypical of the Revenue Commissioners' general approach that I had to question it.

Mr. T.J. Fitzpatrick

(Cavan): As we go through this Bill I am moving amendments designed to put reliefs beyond doubt and this is another example of that.

Mr. Colley

This is in a slightly different category but I am not going to look a gift horse in the mouth.

Mr. T.J. Fitzpatrick

(Cavan): I understand there is a precedent for it in succession duty.

Question put and agreed to.

SECTION 44.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 41:

In page 32, to delete subsection (2) and to substitute the following subsection:

"(2) If, after the expiration of the relevant period immediately following the date on which any tax became due and payable, the tax or any part thereof remains unpaid, the Commissioners may, if they think fit, remit the payment of any interest accruing after such expiration on the unpaid tax; and in this subsection, `relevant period' means the period at the end of which the interest on an amount payable in respect of tax would, at the rate from time to time chargeable during that period in respect of interest on tax, equal the amount of such tax.".

The purpose of this amendment is to provide that, where the interest accrued on tax exceeds the amount of the tax, the Commissioners may remit the amount by which the interest exceeds the tax. From my own experience there is nothing new in this. I believe there was a similar provision in the estate duty code. Back in the old days there was such a thing as a 50/- assessment and if the interest exceeded 50/- it was written off.

Mr. Colley

Would the Minister indicate the reason for the change from the eight years provided for in the Bill originally in subsection (2) to the different approach now in the amendment which is where the interest equals the amount of tax?

Mr. T.J. Fitzpatrick

(Cavan): I understand that when the Bill was drafted eight years was approximately the equivalent of 100 per cent of the tax. The date of interest is changed from 12 to 18 per cent or from 1 per cent to 1½ per cent.

Mr. Colley

It was changed from 12 to 18 per cent but the eight years was not changed until now.

Mr. T.J. Fitzpatrick

(Cavan): We have done it in another way and we have followed an old precedent which is in the estate duty code.

Amendment agreed to.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 42:

In page 32, subsection (3), line 51, after "thereof" to insert "and all or any interest thereon".

Mr. Colley

To save the Minister trouble we agree to that amendment.

Amendment agreed to.

Section 44, as amended agreed to.

SECTION 45.

Question proposed: "That section 45 stand part of the Bill."

Mr. Colley

I should like to point out that this provision is desirable and necessary but it seems that the Bill should also contain provision to carry over the special provisions existing in the death duty code relating to, for instance, the special method of treating shares in Irish companies in certain circumstances. Indeed, all of the reliefs which applied in the death duty code should have been applied to inheritance tax unless specifically excluded. If they were specifically excluded the Minister should explain why. There are quite a number of reliefs, such as quick succession relief, that should apply automatically to inheritance tax unless specifically excluded.

Mr. T.J. Fitzpatrick

(Cavan): Because of their familiarity with the old death duty system, many professional advisers and TDs have pointed out that well-known reliefs in the estate duty field find no place in the Capital Acquisitions Tax Bill. The simple answer is that these reliefs grew up with the gradual increase in severity of the impact of estate duty, in order to alleviate genuine hardships, or to cut down a heavy burden of tax on particular property. Such reliefs were necessitated by the high rates of tax and the low thresholds of liability.

Sophisticated reliefs, especially when costly to administer and of doubtful value socially or to the development of the economy, are out of place in the new tax system proposed in this Bill. The new tax will bear very lightly on beneficiaries who might be said to have a moral right to receive the bounty of others—spouses, children and even parents and grandchildren. Outside the immediate family, a person is usually very fortunate to receive such an acquisition as would bear a significant amount of tax under this Bill.

Practical experience of the tax in action may, over the years, show areas in which reliefs, other than the very generous reliefs already given, may be desirable. If a genuine, widespread hardship exists, a remedy will be considered. But one or two hard cases— often caused by unwise dispositions of property, or neglect to make a will— are not grounds for a general relief which benefits the fortunate with the unfortunate and erodes the yield from the tax.

In relation to yield, the new tax will probably be relatively expensive to administer: a multiplicity of exemptions and reliefs would have the effect of so eroding the yield as to increase to an unacceptable level the costs of collection of the tax, with a consequent demand for an increase in the effective rates of tax for those not relieved.

Furthermore, it can confidently be stated that the burden of the tax, for virtually all taxpayers, is very light, compared to that imposed by the death or inheritance tax systems of other countries, not to mention the inroads into capital made by the now defunct death duty system here. That is the reason behind the failure to carry forward all the reliefs which grew up over the years.

Mr. Colley

May I take it from what the Minister has said that all the reliefs in the death duty code have been specifically examined and a decision made as to whether or not to include them in this Bill? If they do not appear here, may we take it a decision has been made not to include them?

Mr. T.J. Fitzpatrick

(Cavan): The Deputy may be assured that all of the reliefs which were available and applicable under the estate duty code were considered in the light of the capital acquisitions tax and the death duty system which it replaces. A deliberate decision was made not to carry them forward.

Amendment agreed to.

Section 45, as amended, agreed to.

SECTION 46.

Question proposed: "That section 46 stand part of the Bill."

Mr. Colley

I should like to ask the Minister the justification for providing in the section that if a taxpayer overpays tax he is refunded the overpayment with interest but with a limit on the amount of interest, that limit being the amount of the excess payment of tax. What is the justification for limiting the interest repayable by the Revenue Commissioners? I hope the Minister will not tell me it is because he provides it the other way. That is not justification.

Mr. T.J. Fitzpatrick

(Cavan): I understand that was raised on some of the other Bills. If the Deputy refers to the section we dealt with a few moments ago he will see we are not collecting more than 100 per cent.

Mr. Colley

I said I do not think that is justification for this provision.

Mr. T.J. Fitzpatrick

(Cavan): I would say that the provision follows the same line of thinking and principle —we are not charging more than 100 per cent tax if the person fails to pay within a specified time. Here, if a person pays too much we are refunding him only 100 per cent, and I think that is reasonable. It will be on a very rare occasion that a person overpays.

Mr. Colley

I agree, but there is a principle involved. Would the Minister agree—as far as I know this is so —that there is no precedent for this provision in any legislation introduced prior to March, 1973?

Mr. T.J. Fitzpatrick

(Cavan): It is quite correct to say there is no precedent for this, the reason being that none of the present Minister's predecessors ever gave interest on overpayment.

Mr. Colley

That is not true. I did it.

Mr. T.J. Fitzpatrick

(Cavan): I am advised that none of the Minister's predecessors, or the present Minister, ever paid interest on over-payments.

Mr. Colley

Then the Minister's present advisers are not familiar with VAT. If they look at it they will see that I provided for interest on overpayment at exactly the same rate as was being paid to the commissioners on arrears. There was no limitation on the amount that would be chargeable or, particularly, repayable by the commissioners.

Mr. T.J. Fitzpatrick

(Cavan): The Deputy will appreciate that VAT is a different code of tax altogether. Here we are dealing with capital tax and I have said that never before were the commissioners required to pay interest on overpayment of capital tax.

Mr. Colley

I introduced the principle.

Mr. T.J. Fitzpatrick

(Cavan): In income tax not alone is interest not paid but the commissioners are entitled to apply the statute of limitations and if the payment is not made within six years the taxpayer will not be paid at all. Here, when a man is liable to pay interest on tax we are limiting the amount the commissioners will claim to an amount equivalent to 100 per cent of the tax due. If he has overpaid tax we are limiting the interest to an amount equivalent to 100 per cent.

Mr. Colley

I do not think it is right.

Question put and agreed to.

SECTION 47.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 43:

In page 33, subsection (1), line 25, after "property" to insert "(other than money or negotiable instruments)".

This is to free money or negotiable instruments from the tax. I take it the principle is accepted by Deputy Colley and that the amendment is accepted.

Mr. Colley

Yes. I do not think that in practice such a charge can be applied.

Amendment agreed to.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 44:

In page 33, subsection (1), line 26, after "consists" to insert "at the valuation date".

This is to insert the words "at the valuation date" to make it clear which property exactly is being charged. It is for the purpose of clarification.

Amendment agreed to.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 45:

In page 33, to delete subsection (2) and to substitute the following subsection:

"(2) Property comprised in a taxable gift or taxable inheritance shall not, as against a bona fide purchaser for full consideration in money or money's worth, or a mortgagee, or a person deriving title from or under such a purchaser or mortgagee, remain charged with or liable to the payment of tax after the expiration of twelve years from the date of the gift or the date of the inheritance.”.

Subsection (2) is being deleted and substituted so as to cover personal property as well as real property.

Mr. Colley

I referred to this amendment earlier as importing the word "full" before "consideration". I refer the Minister to the next amendment.

Mr. T.J. Fitzpatrick

(Cavan): I should like to tell the Deputy that I propose to withdraw amendment No. 46 and reintroduce an amendment on Report Stage.

Amendment agreed to.

Amendment No. 46 not moved.

Question proposed: "That section 47, as amended, stand part of the Bill."

Mr. Colley

Here we are deleting the reference to "real property" which was in subsection (2), which we are now taking out but in subsection (1) and the proviso to it we are specifically referring to "real property". Can the Minister indicate why this difference in approach? There may be a case for doing what has been done in the amendment to subsection (2), simply to refer to "property". I refer the Minister to his phrasing "money or negotiable instruments".

Mr. T.J. Fitzpatrick

(Cavan): I understand it is not very important whether we retain it or not. If it will make the Deputy happier, we can have a look at it between now and the next Stage.

Mr. Colley

I would appreciate it if the Minister would. I am not sure of the implications, but I think it would be better if it were taken out, if there are no reasons to the contrary.

Mr. T.J. Fitzpatrick

(Cavan): Like everything else, there is a precedent for it.

Mr. Colley

There is no doubt about that.

Mr. T.J. Fitzpatrick

(Cavan): It is lifted out of section 42 of the Succession Duty Act but if it can be improved it should be improved. We will have a look at it.

Question put and agreed to.

SECTION 48.

Question proposed: "That section 48 stand part of the Bill."

Mr. Colley

Subsection (1) reads:

When any amount in respect of tax is paid. the Commissioners shall give a receipt for the payment.

Subsection (2) deals with the use of that receipt but should subsection (1) not read: "When any amount in respect of tax or interest thereof is paid..."?

Mr. T.J. Fitzpatrick

(Cavan): I expect the words “in respect of tax” would cover interest.

Mr. Colley

In other sections tax is distinguished from interest.

Mr. T.J. Fitzpatrick

(Cavan): I am satisfied that the term “in respect of tax” is wide enough to cover interest charged on tax.

Mr. Colley

Before advertising to subsection (3), I might draw the Minister's attention to the proviso to subsection (4) and ask whether the word "full" should appear before the word "consideration"?

Mr. T.J. Fitzpatrick

(Cavan): An amendment is to be introduced on Report Stage to deal with that.

Mr. Colley

Subsection (3) provides that the commissioners on an application to them by a person who is an accountable person will issue what is the equivalent of a certificate of discharge from death duties as would be the case in relation to inheritance tax. I am wondering whether there ought not to be provision stipulating: "a person who is an accountable person or a person who has an interest in the property". I am using that term loosely. For instance, if one were dealing with the case of a bona fide purchaser for value who has notice of the liability, ought he not be in a position to apply for the certificate? He might have completed the sale quickly knowing that this was outstanding. In the case of his having to discharge the liability should he not be in a position to get this certificate?

Mr. T.J. Fitzpatrick

(Cavan): The purchaser would require the vendor to hand over a certificate of discharge on closing as would have happened in respect of a certificate in relation to death duties or income tax.

Mr. Colley

That would be the normal situation but I am visualising the possibility of the purchaser, while being well aware of the liability, having to close the sale quickly for extraneous reasons but knowing that the liability was outstanding. Is it the Minister's contention that if the purchaser makes it a condition of sale that the liability be discharged, he is saved?

Mr. T.J. Fitzpatrick

(Cavan): Yes. I assume it would be an implied condition of the sale that the vendor would discharge such taxes as were payable but I think the Deputy has in mind a case where the sale is closed and the tax has not been paid but, presumably, where the advisers for the purchaser had not raised the matter.

Mr. Colley

That is a different situation I am visualising a case where a person has notice. If he has no notice and is acting bona fide he is saved but if he has notice but for other reasons has to close the sale quickly without the tax liability having been discharged, he might close it on the basis of withholding the amount of the tax and saying that he will pay it later. The purchaser might agree to that.

Mr. T.J. Fitzpatrick

(Cavan): If they were getting on that well surely the vendor would tell the purchaser that he—the vendor—would pay and the purchaser could get a certificate of discharge. The only possible case I could visualise presenting any difficulty would be if the vendor closed without adverting to the fact of tax, that the advisers for the purchaser did not get a certificate of discharge and that he was saddled with the payment of the tax. In such circumstances he might be in some difficulty in obtaining a certificate of discharge because at that stage he would be an accountable person. If he is called on to pay, he is an accountable person and can apply for and get a certificate.

Mr. Colley

He might pay without being called on to pay because otherwise there would be a charge on the property.

Mr. T.J. Fitzpatrick

(Cavan): We will have a look at it and if we decide that it is better to put in some such words as: “the accountable person or the person by whom the tax is payable”, we shall insert such words.

Question put and agreed to.

SECTION 49.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 47:

In page 34, after line 39, to insert the following subsections:

"(3) If any accountable person is liable under section 36 to deliver to the Commissioners a return or an additional return and makes default in so doing, the Attorney-General or the Minister for Finance or the Commissioners may sue by action or other appropriate proceeding in the Circuit Court for an order directing the person so making default to deliver such return or additional return or to show cause to the contrary; and the Circuit Court may by order direct such accountable person to deliver such return or additional return within such time as may be specified in the order.

(4) Whenever property is subject to a charge by virtue of section 47, the Attorney-General or the Minister for Finance or the Commissioners may sue by action or other appropriate proceeding in any court of competent jurisdiction for, and the court may make, an order directing the owner of the property to pay the tax with which the property is charged.".

This amendment enables the commissioners to take legal proceedings to enforce the delivery of a return and to collect tax from the owner of property on which the tax is a charge.

Amendment agreed to.

Question proposed: "That section 49, as amended, stand part of the Bill."

Mr. Colley

The reference here is to proceedings at the suit of the Attorney-General or the Minister for Finance or the commissioners. Is the inclusion of the Attorney-General in this context an innovation?

Mr. T.J. Fitzpatrick

(Cavan): I understand it is not new.

Section 49, as amended, agreed to.

Sections 50 and 51 agreed to.

SECTION 52.

Question proposed: "That section 52 stand part of the Bill."

Mr. Colley

Subsection (2) provides that:

Subject to the other provisions of this Act, a person who is called upon by the Commissioners to pay an assessment of tax in respect of any property and who is aggrieved by the amount of the assessment may...

and so on. I am thinking of a person who is aggrieved not by the amount but on the basis that he is not the person liable. There was provision in the Wealth Tax Act to cover a case of this kind but there seems to be no such provision here.

Mr. T.J. Fitzpatrick

(Cavan): Subsection (2) provides that any person who is called on to pay an assessment of tax may appeal against his assessment to the Appeal Commissioners who shall hear the appeal and determine on it. While the appeal was against the assessment there is no restriction on the issues on which an appeal can be granted. The determination shall be final and conclusive unless the appeal is required to be reheard by a judge of the Circuit Court or a case is required to be stated in relation to it for the opinion of the High Court on a point of law. The Deputy raised the word “amount”.

Mr. Colley

I am speaking from recollection but I am almost certain that in the wealth tax legislation there is a specific provision for a person who is appealing because he is not the person liable as distinct from the amount of assessment.

Mr. T.J. Fitzpatrick

(Cavan): I think the Deputy is suggesting that the subsection should read: “... who is aggrieved by the assessment”.

Major de Valera

"... or the amount thereof".

Mr. T.J. Fitzpatrick

(Cavan): I think Deputy Colley would be satisfied if the subsection read: “... who is aggrieved by the assessment”.

Mr. Colley

I think that would cover it.

Mr. T.J. Fitzpatrick

(Cavan): Personally I think there is something in that and I will have it looked into.

Question put and agreed to.

Progress reported; Committee to sit again.