Written Answers. - Resort Tax Reliefs.
Michael Ring
Question:
73
Mr. Ring
asked the
Minister for Finance
the changes, if any, that were made in the Finance Act, 1996, in relation to tax relief for certain resort areas; and the effects, if any, these changes will have on the existing scheme that was introduced in July 1995.
[10967/96]
Section 30 of this year's Finance Act amends the pilot renewal scheme for traditional seaside resorts in respect of the self-catering aspect of the scheme. The action taken in this year's Finance act was necessary in order to close a loophole which was being exploited and to counter essentially contrived schemes of holiday cottages and apartments at maximum cost to the Exchequer. These measures therefore prevent the self-catering holiday accommodation sector becoming a tax shelter and the object of over-investment to the detriment of other types of investment in seaside resort areas.
Section 30 of the 1996 Finance Act amends only one aspect of the legislation dealing with the pilot renewal scheme for traditional seaside resorts, namely, the self-catering area. This amendment will not, for instance, affect hotels, guesthouses/B & B establishments, holiday camps, leisure and sports facilities and all the other facilities which are eligible for relief under the scheme.
However, section 30 of the 1996 Finance Act restricts capital allowances for holiday cottages, apartments and other self-catering holiday accommodation in resort areas in two ways. First, it provides that the double rent allowance and capital allowances cannot both apply in the case of holiday cottages, apartments and other self-catering accommodation. Second, the section restricts the manner in which capital allowances for registered apartments and other self-catering accommodation can be set-off. From 5 April 1996, capital allowances in such cases can only be offset against an individual's rental income, including rental income from other sources. Likewise, where a trade is carried on, capital allowances can only be set against the income of the trade. This is already the position with regard to registered holiday cottages where capital allowances have been ringfenced since 1992.
Finally, I would like to point out to the Deputy that section 30 makes provision for very generous transitional arrangements to apply where certain conditions are met. The restrictions imposed by section 30 will not apply where there is evidence that steps have been taken before 5 April 1996 in relation to the planning or development of holiday cottages, apartments or other self-catering accommodation.
First, the section will not apply if, in relation to a holiday cottage etc., the following has taken place, before 5 April 1996:— (a) a contract for acquisition or construction was concluded, or; (b) a planning application was received by a planning authority, or; (c) a particular opinion was issued by the Revenue Commissioners.
Second, the section will also not apply where, before 5 April 1996, land was acquired or a contract for the acquisition of land was concluded for the construction of a holiday cottage etc. However, this is conditional on a person being able to demonstrate that plans had been prepared and that discussions had taken place with a planning authority between budget day 1995 and 5 April 1996 and that a planning authority can give an affidavit to this effect.
I am satisfied that the changes to the seaside resort scheme as enacted in this year's Finance Act are necessary and that ample provisions have been made to allow for projects which are only at an early stage of development.
