Dáil Éireann debate -
Tuesday, 14 Dec 1999

Vol. 512 No. 6

Written Answers. - Tax Relief.

Richard Bruton

Question:

186 Mr. R. Bruton asked the Minister for Finance if his attention has been drawn to the fact that capital gains tax can cause hardship for persons in nursing homes compelled to sell stocks or shares in order to finance the costs of the nursing home or other medical or nursing costs; and if he will make a statement on the matter. [26767/99]

Minister for Finance (Mr. McCreevy)

In my first budget I reduced the rate of capital gains tax from 40% to 20%. There is also an annual de minimis of £1,000 to exempt small gains from the tax. While I sympathise with the cases mentioned by the Deputy, I have no proposals to amend the capital gains tax code in this regard. There are already income tax reliefs in the system to assist persons meeting medical and nursing bills.

Richard Bruton

Question:

187 Mr. R. Bruton asked the Minister for Finance if his attention has been drawn to the anomaly where rollover relief from capital gains tax is not available where shares must be sold in the context of a takeover; and if he will make a statement on the matter. [26768/99]

Minister for Finance (Mr. McCreevy)

Rollover relief under the capital gains tax code provides for a deferral of tax if the proceeds from the disposal of certain trading assets are reinvested in new trading assets within three years of the disposal. The tax position on the gain from the old asset is looked at when the new asset acquired is disposed of and there is not a subsequent reinvestment.

In general, rollover relief is not available on the sale of shares. However, a type of rollover relief may be available if shares in a company are disposed of by an employee or director of a company and the proceeds are reinvested within three years in new shares in a company in which the person concerned becomes an employee or director and holds at least 15% of the ordinary share capital of the company within three years of the original disposal. This relief is to encourage entrepreneurs to reinvest in start-up companies.

A further type of rollover relief may also be available where a company finances a takeover by issuing its own shares to a person in exchange for the shares of the company the subject of the takeover. Rollover relief is provided by treating the new shares as if they were the old shares for capital gains tax purposes, i.e. the disposal of the old shares and the acquisition of the new shares are ignored for capital gains tax purposes. Any gain or loss on the disposal of the old shares is effectively deferred until the new shares are disposed of. A similar relief is available in the case of company mergers. This relief recognises that a person involved in a share for share exchange receives no cash.

I do not propose to introduce further reliefs to apply in respect of the proceeds of shares sold in the context of a takeover, given that the rate of capital gains tax is only 20%.

Donal Carey

Question:

189 Mr. D. Carey asked the Minister for Finance if he has concluded his review of the case made for inclusion in the disabled drivers and disabled passengers refund scheme by an association (details supplied) which has assembled a very substantial case (details supplied); and if he will make a statement on the matter. [26845/99]

Minister for Finance (Mr. McCreevy)

As I have informed the House on several occasions, I am well aware of the demands from many groups and individuals, including the Blind Car Owners' and Users' Association, for admittance into the Disabled Drivers' and Disabled Passengers' (Tax Concessions) Scheme.

I have also informed the House that I await the report of the interdepartmental review group under the chair of the Department of Justice, Equality and Law Reform. Pending receipt of that report, I do not consider that it is prudent for me to comment in any way on the case made by the association.

Minister for Finance (Mr. McCreevy)

I am informed by the Revenue Commissioners that the numbers of claimants for tax relief in respect of rent paid for private rented accommodation are shown in the following table. Separate figures are shown in respect of claimants aged under 55 and over 55.

Claimants of allowances in respect of rent paid for private rented accommodation.

	1995/96	1996/97	1997/98	1998/99	1999/2000
Age	Claimants	Claimants	Claimants	Claimants	Claimants
Under 55	29,700	44,700	57,800	74,100	n/a
Over 55	3,400	3,200	3,100	3,000	n/a

The numbers of claimants in respect of 1997/98 and 1998/99 are projected estimates.

As I said in my Budget Speech of 1 December 1999, the Bacon report on housing last March recommended that the rent relief for under 55's be increased to take account of the recent trends in rents across the country. Accordingly, the rent relief allowance for those under 55 will be increased by 50% from 6 April next from £500 single £750 widowed and £1,000 married, to £750 single, £1,125 widowed and £1,500 marriedper annum. The cost of this increase is estimated at £7 million in a full year.

In addition, I propose to standard-rate the rent relief for those aged 55 and over, which is currently available at the tax payers marginal rate, while ensuring, at the same time, that no person claiming the relief at the higher rate of income tax will lose out. Consequently, the rental relief for those aged 55 and over will be double from 6 April next to £2,000 single, £3,000 widowed and £4,000 marriedper annum and will be applied at the standard rate of income tax. Since 80% of those on the relief are standard rate taxpayers, this amounts, in effect, to a doubling of the relief for four out of five claimants. The cost of this measure is just under £1 million in a full year.