I propose to take Questions Nos. 101, 102, 104 and 106 together.
I should point out that the phased abolition of property-based tax reliefs announced in the recent Budget relates to both residential and non-residential property.
I am informed by the Revenue Commissioners that the latest relevant information available on the tax relief allowable for residential property related tax schemes is based on claims for section 23 type relief in 2008 personal income tax returns filed by non-PAYE taxpayers. These claims relate to properties for which tax relief was not previously claimed and exclude any claims made in an earlier year where these were subsequently carried forward into 2008 as unabsorbed losses. On this basis the ultimate cost to the Exchequer of the relief associated with these claims is estimated at €74.7 million and was claimed by 2,429 taxpayers.
It should be noted that any corresponding data returned by PAYE taxpayers in the income tax return (Form 12) is not captured in the Revenue computer system. However, any PAYE taxpayer with non-PAYE income greater than €3,174 is required to complete an income tax return (Form 11).
The estimated relief claimed has assumed tax forgone at the 41% rate for 2008 in the case of individuals. The figures shown correspond to the maximum Exchequer cost.
I am informed by the Revenue Commissioners that the other detailed information requested by the Deputy in regard to the numbers who claimed tax relief against different types of income and the levels of incomes and claims involved, is not readily available and could not be obtained without conducting a protracted examination of the Revenue Commissioners' records.
I am advised by Revenue that they are not yet in a position to provide data in respect of the number of claimants for 2009, as all tax returns for that year have not yet been processed.
The measures relating to property-based "legacy" tax reliefs announced in the Budget are in line with our commitment in the Joint Programme for Government to end unnecessary tax reliefs where possible. The structure of these property-based schemes has resulted in substantial ongoing legacy costs to the Exchequer.
I have sought to adopt a pragmatic and balanced approach and provide for an orderly winding down of these schemes to reduce and eliminate the remaining cost to the Exchequer over the period of the National Recovery Plan.
The measures announced in the Budget are targeted solely at passive investors and will restrict the use of and carry forward of capital allowances and limit Section 23 relief to income from the individual Section 23 property.
The changes to section 23-type reliefs, which are contained in Financial Resolution No. 20 are broadly as follows.
Firstly, for chargeable periods ending on or after 1 January 2011, section 23-type relief will be restricted to set-off against rental income only from the section 23 property itself. Up until now this set-off could be against all rental income in that year.
Secondly, unused section 23-type relief previously available for carry forward beyond the 10 year "normal life" of the relief will be lost.
Thirdly, where a person sells a section 23 property within the 10 year period at any time on or after 1 January 2011, the new owner will get no section 23 relief.
Fourthly, for unused section 23 properties that are, as yet, unsold, the relevant 10 year period for these properties would normally begin once the property is sold and let under a qualifying lease. The Budget change provided that where any of these properties have yet to commence qualifying leases as of 30 June 2011, the 10-year period will commence on that day.
The conditions relating to the sale of section 23 properties remain unchanged insofar as where a property is sold within the 10 year relevant period the seller continues to be subject to a clawback of relief already given.
I also announced in the Budget that a guillotine will be introduced to terminate all unclaimed and unused capital allowances, arising after, or carried forward from 2014 as well as unused section 23 relief carried forward from 2014.
However, in advance of this an impact assessment will be undertaken into the effects of the phased abolition of the property-based measures and the guillotine provision. This guillotine provision, which is intended to take effect at end 2014, will be provided for in future legislation. The arrangements for the impact assessment, and any consultation mechanisms involved have yet to be made.
The measures apply to all schemes involving accelerated capital allowances and tax incentive schemes relating to rented residential accommodation (section 23 type relief).
The National Recovery Plan outlines the projected savings related to these property based relief measures over the period of the Plan.
I am informed by the Revenue Commissioners that from examination of claims relating to property based incentive schemes, residential and non-residential, in personal income tax returns filed by non-PAYE taxpayers for 2008, approximately one quarter of the relief was claimed by individuals with not more than €50,000 gross rental income. If a similar proportion is assumed to apply in respect of the Budget proposal for phased abolition of property-based tax "legacy" reliefs it would result in a quarter of the expected Exchequer yield from that measure being forgone if investors with no more than €50,000 annual rental income were exempted.