I am glad of the opportunity to put this substantial Bill before the Seanad. It contains many important measures and reliefs affecting the tax system. I propose to outline the main features of the Bill for the benefit of the House and I hope we can have a productive examination of the measures it contains.
The Bill will confirm the important new income tax and corporation tax reliefs announced in the budget; extend various capital gains tax and capital acquisitions tax reliefs to assist business; introduce a series of widely welcomed reliefs to assist those in rented accommodation, to provide tax relief on local authority service charges, to encourage donations to Third World Charities and to afford the opportunity for our cultural institutions to build up the national collection of heritage items; and provide additional powers to the Revenue Commissioner to counter tax evasion and, in the light of a recent court ruling, to secure the position of the Revenue Commissioners in the application of its traditional powers in the excise area. The Bill also applies particular requirements on tax advisers and auditors in relation to the reporting of tax evasion. This provision honours the commitment made by the Oireachtas to implement the recommendations of the beef tribunal report.
The Bill refocuses and confirms certain anti-evasion measures, such as the VAT monthly control statement and tax clearance rules, while at the same time easing the penalties for late filing under self-assessment; brings in a significant range of reliefs in the business sphere to promote enterprise and the renewal and upgrading of particular urban areas and tourist resorts; gives effect to a new relief to stimulate R & D expenditure which should be increasingly a key element in the strategy to upgrade and enhance the quality of jobs being created here; removes certain competitive distortions in the application of VAT to certain sporting facilities and implements a new EU regime for VAT on secondhand goods.
In the Bill, the Government is taking major steps to reduce the tax burden on employment, low incomes and the cost of employing labour. In this context, I am seeking to widen the tax base, to confine reliefs to the standard rate and to lessen the burden on business in general. I am sure the House will support these aims and give the Bill a speedy passage.
Turning to particular sections of the Bill, sections 1 to 4 provide for the major improvements in income tax announced in the budget. These cover increases in the personal allowances, the widening of the standard rate bands and the adjustment of the existing PRSI allowance and a new PRSI allowance of £50 per week introduced in the budget. The improvement in personal allowances, together with the significant widening of the standard band, mean that the thresholds for the higher tax rate in the case of most employees will be increased from £22,186 to £23,740 per annum for a married couple, and from £11,636 to £12,340 for single persons.
Section 5 provides, further to the budget announcement, for the introduction of a tax allowance for all tenants in private rented accommodation effective from 6 April 1995. This new relief is essentially a broadening of the relief currently available to the over-55s in such accommodation — the main differences are that the new relief will be at the 27 per cent rate and the annual allowances will be £500 for a single person, £750 for a widowed person and £1,000 for a married couple. The over-55s will continue to enjoy their existing level of entitlements, that is, relief at their marginal rate of tax allowances of up to £1,000 for single persons, £1,500 for widowed persons and £2,000 for married persons. While the relief for the over-55s operates on a previous calendar year basis, the Bill provides that this new relief, and the over-55s relief, will, from the 1995-96 tax year, operate on a current tax year basis.
Section 6 provides tax relief for tuition fees paid to private colleges in respect of approved courses. The Minister for Education will approve the colleges, courses and the level of fees eligible for tax relief. Only full time undergraduate courses of at least two years duration will be eligible for approval. The tax relief will be available for fees paid from the academic year 1996-97 and will be at the standard rate of tax.
In the budget, I announced a tax allowance in respect of local authority service charges which are paid in full and on time. The allowance will be given at the standard rate of tax up to a maximum of £150. Section 7 provides for this allowance and extends it to certain payments in respect of privately operated refuse collections, at a flat rate of £50 per annum, and to payments for domestic water supplies by members of approved group water schemes. To deal with a situation where a son or daughter might pay the charges on behalf of their parents, I extended the relief to charges paid by another person living in the same house.
Section 8 relates to tax relief for donations to designated Irish Third World charities. These charities will qualify for tax relief in respect of certain donations by individuals in the range £200 to £750. This will be topped up by the Revenue Commissioners remitting to the charity the tax associated with the contributions at the standard rate. Thus, a donation of £750 will be worth an extra £277 to the charity concerned. The figure of £750 represents the maximum qualifying contributions that an individual can make to all designated charities in a year. Relief will also be available where the qualifying contribution is made by instalments.
I know that Senators have received representations from the Irish Red Cross Society to the effect that it will be unable to benefit from section 8 because the society is active throughout Ireland as well as abroad. I should point out that, under section 13 of the Bill, the Red Cross as a human rights body will benefit from the continued availability of tax relief on income covenanted to the society by donors. This relief is more generous in a number of ways than the relief under section 8.
First, the tax relief is available in respect of all contributions, subject only to a limit on the donation of 5 per cent of the donor's income which in many cases would exceed the £750 limit under section 8. Second, the relief is given at the donor's marginal rate and both the recipient and the donor, if he or she is a higher rate taxpayer, can benefit from the relief. The covenant must, however, be payable for three years or longer, but this is a feature of other types of covenant relief, e.g., covenants for research purposes which has not prevented research bodies from successfully making use of the relief.
Sections 12 and 13 provide for changes in the tax treatment of covenants made by individuals. These changes are being made both as part of the overall changes in the financing of third level education and in order to reduce an area of tax expenditure which has been growing significantly over the last few years. This year's changes are as follows. First, tax relief is abolished on covenants in favour of minor children, except in the case of a covenant in favour of an Incapacitated minor child who is not the child of the covenantor. Second, tax relief on all covenants made by individuals, other than those in favour of the incapacitated, will be subject to an overall limit of 5 per cent of the covenantor's income.
From 6 April 1995 tax relief will no longer be available generally for covenants made by individuals. Tax relief will, however, continue to be available in the following four cases. First, tax relief will continue to be available, on an unrestricted basis, to covenants in favour of incapacitated adults and those in favour of incapacitated children, provided that the covenantor is not the child's parent. The other three categories of covenants will be allowed tax relief subject to an overall limit of 5 per cent of the covenantor's income. These are covenants in favour of those aged 65 or over, covenants for the purposes of research or the teaching of the natural sciences and covenants to certain bodies established for the promotion of human rights.
In order to deal with a limited number of hardship cases affecting certain cohabiting couples in long standing relationships who are bringing up children, I have included a provision to allow the Revenue Commissioners to continue covenant tax relief in such cases for three years subject to certain conditions. I am sure Senators will welcome this new feature.
Section 17 gives effect to a series of changes in the seed capital scheme, most of which were announced in the budget. These measures will make the scheme more effective as an incentive to new business start-ups by increasing the amount of tax relief available, removing a number of restrictions on the operation of the relief and allowing greater flexibility in how the scheme is applied.
The section also extends the qualifying activities for the purposes of both the BES and the seed capital scheme to commercial research and development activities and the cultivation of horticultural produce in greenhouses. There has been a significant increase in interest in this scheme in the past few months and the changes in the Bill will encourage other new entrepreneurs to look to the scheme for assistance.
Section 20 amends the public access requirements set out in section 19 of the Finance Act, 1982, which provides for relief from income or corporation tax, as appropriate, for owners of approved buildings of significant scientific, historic, architectural or aesthetic interest in regard to certain expenditure.
Buildings approved by the Commissioners of Public Works will now be able to qualify either by being open to the public on a bed and breakfast basis for at least six months of the year, of which four months must be in the period 1 May to 30 September, or by complying with the existing public access requirements, which require them to be open to the general public for 60 days, of which at least 40 must be in the period 1 May to 30 September.
Section 21 provides for the continuation of stock relief for farmers at 25 per cent for a further two years to 5 April 1997. The section also provides for stock relief at a rate of 100 per cent for four years for certain young trained farmers who first qualify for grant aid under the scheme of installation aid for young farmers in 1993-94 or later, or who first become chargeable to income tax in respect of profits or gains from farming for the year 1993-94 or any subsequent year of assessment up to 1997-98, and who were under 35 at the start of that year and meet specific training requirements.
Section 22 provides for a special relief for farmers in respect of profits arising where cattle herds are disposed of because of statutory disease eradication measures. This relief allows deferral of the profits for tax purposes over two years and the application of 100 per cent stock relief to the profits so deferred. The special treatment is available in the case of total herd disposals arising under disease eradication schemes, except in the case of a brucellosis disposal where it will be available for partial disposals subject to certain conditions.
Section 29 provides for the introduction of a significant new scheme aimed at attracting to Ireland certain major multinational corporations. Where the qualifying conditions are met, such companies will be exempt from Irish tax on the profits of their foreign branches. Entitlement to the relief will be dealt with by certification by the Minister for Finance in consultation with the Minister for Enterprise and Employment.
Sections 19, 30, 31 and 66 provide for certain changes to the self-assessment system in recognition of the improvement in voluntary compliance. The changes in the Bill follow a recent review of the system involving the tax administration liaison committee and include a reduction in surcharges and penalties for late filing of returns, the non-application of surcharges to businesses in their first year, the introduction of a direct debit facility for the payment of preliminary tax and the removal of a number of anomalies in the operation of the self-assessment system.
The Bill contains a number of measures dealing with the urban renewal scheme which, as Senators will know, is aimed at revitalising certain urban areas and assisting employment in the construction industry. Section 32 provides for a two year extension up to 24 January 1999 to the deadlines for the urban renewal tax incentives for the Custom House Docks area. Section 34 extends by two years to 5 April 1998 the period for the availability of the tax incentives in the Temple Bar area.
Section 35 provides for a scheme of tax reliefs for six enterprise areas located in Dublin, Cork and Galway. Capital allowances are available for the construction or refurbishment of premises used for certified projects carrying on manufacturing or the provision of internationally traded services. Double rent allowances for qualifying traders will be available for ten years as will rates relief. The capital allowances will apply in respect of either industrial or commercial buildings, including offices.
In addition section 35 provides for offices to be allowed as qualifying buildings for the purposes of the 1994 urban renewal scheme in the designated areas outside the five county boroughs of Dublin, Cork, Limerick, Galway and Waterford. This measure is retrospective to 1 August 1994 when the new scheme came into being.
A further incentive is provided in the section for the construction or refurbishment of certain multi-storey car parks where the local authority certifies the car park has been developed in accordance with criteria laid down by the Minister for the Environment and the Minister for Finance. The reliefs, which will be available from 1 July 1995 to 30 June 1998, consist of capital allowance of 50 per cent which may be taken in full in the first year by owner-occupiers; and in the case of lessors, may be taken at a rate of 25 per cent in the first year with annual allowance of 2 per cent per annum thereafter up to the balance of the 50 per cent. Double rent allowance will also be available to lessees in respect of rent paid on qualifying car parks.
Finally, sections 32, 34 and 35 increase from 90 to 125 square meters the maximum permissible floor size for newly built apartments in the various urban renewal areas. This is to encourage the provision of larger family oriented accommodation in these areas.
Section 43 provides for a corporation tax exemption in respect of employment grants paid by the industrial development agencies to medium and large industrial undertakings. A similar exemption already exists for employment grants to small and service businesses. The concession will increase the real value of the grant in the hands of recipient companies and thus provide an additional incentive for employment in such enterprises.
Section 44 provides for an exemption from corporation tax and capital gains tax for the Irish Horseracing Authority and its subsidiaries, Irish Thoroughbred Marketing Limited and Tote Ireland Limited from their inauguration dates of 1 December 1994. In line with precedent these bodies will not be exempt from retention tax on deposit interest.
Section 45 and the Second Schedule provide that following the reduction in the standard rate of corporation tax from 40 per cent to 38 per cent from 1 April last, the associated tax credits applicable to distributions to shareholders will be reduced by a corresponding amount in respect of distributions made on or after 6 April 1995. The reduction in the standard rate of corporation tax provided for in section 54 should be viewed as a first step on the road to securing a rate comparable with our overseas competitors. To that end the aim will be to reduce the standard rate further in future years, as resources permit.
I turn now to the pilot renewal scheme for seaside resorts. Chapter III of Part I of the Bill provides for a new scheme of tax reliefs from 1 July aimed at renewing and updating the tourist amenities and facilities in certain coastal resorts, namely Achill, Arklow, Ballybunion, Bettystown/Laytown/Mosney, Bundoran, Clogherhead, Clonakilty, Courtown, Enniscrone, Kilkee, Lahinch, Salthill, Tramore, Westport and Youghal. The precise qualifying areas are described in the Third Schedule.
Sections 47 and 48 provide for accelerated capital allowances in respect of capital expenditure incurred on the construction or refurbishment of hotels, holiday camps, holiday cottages and other tourist accommodation registered or approved by Bord Fáilte. The accelerated capital allowances will also be available in respect of capital expenditure incurred on the construction or refurbishment of types of non-accommodation tourist facilities as set out in a list to be published by the Minister for Tourism and Trade with the consent of the Minister for Finance.
Section 49 provides for a double rent allowance as a deduction in computing trading income of the lessor for the first ten years rent paid under a qualifying lease on a qualifying tourist business premises in a resort area.
Sections 50, 51 and 52 provide for reliefs for 100 per cent of expenditure incurred on the construction, conversion and refurbishment of certain rented residential accommodation. Under these reliefs the qualifying expenditure can be offset against all the rental income of the claimant in computing liability to tax but will be available where the accommodation is available primarily for letting to tourists.
Sections 56 and 142 deal with the bank levy. Section 142 provides for the phasing out of the bank levy from £36 million in 1994 to £24 million in 1995 to £12 million in 1996 and to nil in 1997. There is no net cost to the Exchequer since the levy is already fully offset against the banks' corporation tax liability. There would, however, be a cash flow loss in the current year due to the later payment date for corporation tax. To overcome this the banks have agreed to a compensatory cash flow arrangement whereby in 1995 they will make an earlier payment of corporation tax of £12 million in order to cover the £12 million reduction in the levy. Thus the Exchequer will not be at a loss. This compensatory cash flow arrangement will be continued in subsequent years.
Section 58 requires certain Irish registered companies which are not resident in the State for tax purposes to supply certain particulars to the Revenue Commissioners on their activities, including the identity of the individuals who control them and the country in which they are controlled. The provisions do not apply to companies actually trading in the State as these are subject to other information requirements. The measure is aimed at certain non-resident companies using Irish registered status to conduct undesirable activities abroad which have the potential to bring bona fide Irish companies into disrepute.
Section 59 gives a new relief for incremental expenditure on research and development incurred by a manufacturing company not in receipt of research and development grant aid over a three year period. For every year in that period such companies will be entitled to a quadruple deduction for tax purposes for additional expenditure on research and development in that year of between £25,000 and £175,000. These limits apply on a group basis in the case of a group of companies. Where a company obtains relief under this section it will not be entitled to raise BES funds in the three year period of the relief.
The International Financial Services Centre has been a great success. To facilitate the development of treasury activities in the IFSC and the Shannon zone, section 62 provides that, subject to certain restrictions, corporation tax on foreign interest receipts may be grouped together in determining the double taxation relief to be given for foreign withholding tax on intra-group interest receipts. Section 65 removes restrictions on the 10 per cent corporation tax treatment of dealings in commodity futures and commodity options on the Dublin Exchange Facility where dealing in futures and options is the principal trading activity of the company.
To facilitate the development of the collective funds sector in the IFSC section 38 will allow tax transparency where all the unit holders in a collective fund are themselves collective investors. Also in the collective funds sector, section 37 removes, in specific circumstances only, the advance corporation tax liability of certain investment companies. The IFSC companies will also benefit from other provisions in the Bill which are of a more general application.
Sections 68 and 69 provide for the taxation of investment returns under foreign reinsurance contracts taken out by Irish based life assurance companies. The provision is necessary because of a recent change in UK tax legislation which would have allowed life assurance companies established here to reinsure investment policies with UK reinsurers without paying either UK or Irish tax.
Sections 71 and 72 provide significant improvements in the retirement relief for the disposal of business assets by entrepreneurs aged over-55.
Section 74 provides for significant changes in the rollover relief for equity investment, the aim of which is to make the relief available to a wider range of entrepreneurs. Also, by virtue of section 73, rollover relief is being extended to the disposals of development land used for trading purposes where the business has to relocate for environmental reasons.
Senators may recall that a 27 per cent rate of capital gains tax was introduced in last year's Finance Act for disposals of ordinary shares in trading companies held by individuals for at least five years. Section 75 extends the 27 per cent rate on a once-off basis to persons who are currently unable to qualify because their business was subject to a restructuring or take-over and their shares were exchanged for non-qualifying shares or securities prior to the introduction of the reduced rate. Only disposals in the current tax year will be able to avail of this facility.
I will now deal with excise duties. Sections 77 to 84 provide for the extension of tobacco stamps to non-cigarette products such as roll-your-own tobacco. Tax stamps are due to come into effect on packet cigarettes this autumn and on roll-your-own tobacco next year.
In the area of excise duty compliance and enforcement, the Bill includes provisions to update and clarify Revenue powers to stop, search, detain and seize goods liable for forfeiture under excise law. The powers in sections 85 to 96 are largely a restoration of the search and seizure powers together with the reenactment of provisions in the Finance Act, 1992, and related basic excise management provisions from earlier statutes as well as a right to appeal against the seizure and forfeiture of goods. The need for this restatement of powers arises from a High Court decision last year.
The Bill provides for a vehicle registration tax relief scheme which I announced in the budget. Schemes of this type have been successful in other years. Tax relief of £1,000 will be granted by way of repayment where a car at least ten years old is scrapped and the owner purchases a new car. This approach ensures that the concession will accrue fully to the qualifying new car purchaser.
The Bill also includes other proposed amendments to VRT law which increase the minimum amount of tax payable on category A vehicles, mainly cars, from £100 to £250 and which make technical changes in the way VRT is calculated when a vehicle is converted to a category subject to a higher rate of tax. The VRT provisions are contained in sections 97 and 98 of the Bill.
Sections 103 to 109 provide for an appeals system whereby persons dissatisfied with an appeals determination of the Revenue Commissioners in relation to excise duty, including VRT, can appeal to the independent appeals commissioners who already provide a similar procedure in relation to other taxes, such as income tax and VAT. This extension of the appeals mechanism is supplemented by provisions later in the Bill improving the operation of the appeals system generally.
I want to refer to the implementation of the EU Seventh VAT Directive. Sections 118 to 141 of the Bill relate to VAT and are predominantly concerned with the transposition into Irish VAT law of the EU Seventh VAT Directive. The directive contains new rules for the VAT treatment of sales of second hand moveable goods, works of art, collectors' items and antiques. The objective of the directive is to avoid double taxation of such goods. Under the new system — the margin scheme — the dealer has the option to charge VAT on his profit margin only rather than, as has applied up to now, on the full sale price of the goods which would include an element of trapped VAT. The Bill also establishes a special scheme for auctioneers, which is similar to the margin scheme, and provides for the retention, in a slightly modified form, of our existing VAT input credit arrangements for dealers in second hand motor vehicles.
Irish VAT law currently provides that, in addition to the VAT chargeable on the supply of goods being sold through hire purchase or on credit sale, VAT is also chargeable at 21 per cent on the interest portion of hire purchase and credit sales transactions. Sections 120, 125, 128 and 139 of the Bill provide for the exemption of these interest payments and will bring Irish law into line with EU VAT law, as recently clarified by the terms of a judgment by the European Court of Justice.
The Bill contains two initiatives in the area of sporting and health and fitness which have the purpose of ensuring equity and consistency of treatment in relation to VAT. These changes are covered by sections 124, 137, 139 and 140 of the Bill. In the case of the golfing facilities, it is proposed that, where a member owned club's turnover from non-members exceeds, or is likely to exceed, £20,000 per annum — the normal registration threshold for services — it will be liable to VAT at 12.5 per cent on that turnover, in other words, the turnover from green fees from non members. Such clubs will remain exempt with regard to turnover derived from normal membership fees and where turnover from non-members' fees does not exceed the £20,000 threshold.
The Bill also includes an enabling provision which will allow the Revenue Commissioners to determine, on a case by case basis, if the VAT exemption afforded to non-profit making bodies operating in the general area of sports and health and fitness should be withdrawn where the £20,000 turnover limit is exceeded. It is not intended to apply a heavy handed approach in this area. A determination made under these provisions may be appealed to the appeal commissioners.
The measures represent a considered effort to respond to the many representations received on behalf of the commercial sectors concerned and are designed to conform to existing EU requirements that VAT exemptions should not give rise to distortions of competition. They will all take effect from 1 January 1996.
The Bill provides in section 133 that, if requested to do so, any VAT registered traders operating cash rebates or other incentives not recorded in normal trade documentation will be required to notify the Revenue Commissioners of all such payments or benefits given in connection with supplies to other trades. This measure, which replaces the monthly control statement requirement, will be reinforced by the continued development of the Revenue Commissioners' existing sector by sector audit programme. Business interests in general will welcome these new arrangements.
A number of technical VAT measures are introduced aimed at the clarification of existing practice, ensuring better management of the present system and generally simplifying the tax environment for business. The Bill clarifies that, in the case of the supply of new houses, in line with long standing practice, VAT is chargeable on the full value of the transaction, including the site value. It also clarifies that, as a basic rule, the place of supply of services is the place where the supplier has established his business or where he has his fixed establishment. A facility is proposed to enable me, as Minister for Finance, by order, to increase the annual turnover threshold for eligibility to account for VAT on a cash receipts basis.
For traders on annual accounting, provision is made for the alignment of the annual return with the trader's own accounting period. In future, VAT refunds will be effected directly into a bank account nominated by the trader concerned, thereby making the whole system faster, more efficient and secure. The rate of VAT on greyhound feeding stuffs is being reduced from 21 per cent to 12.5 per cent in response to concerns about cross-Border competition with Northern Ireland where such products are zero rated. Finally, there is a provision for a right of appeal to the appeal commissioners with regard to VAT registration rulings made by the Revenue Commissioners.
Turning to stamp duties, the Bill contains a number of measures which will be of particular assistance to the business sector. Sections 143 and 144 give stamp duty relief for company restructuring. Section 146 exempts health insurance from the 2 per cent levy on non-life insurance premiums which would otherwise have applied to the VHI when it becomes an authorised non-life insurer. Section 150 provides a stamp duty exemption to facilitate stock borrowing by member firms on the Irish Stock Exchange to improve market liquidity.
Sections 151 to 155 contain new provisions with regard to the residential property tax. The Bill increases the thresholds for property value and income as announced in the budget. The new thresholds for 1995 are £94,000 for property and £29,500 per annum for income. The tax will be at a flat rate of 1.5 per cent.
The Bill contains a number of important measures which will help family businesses. With regard to capital acquisitions tax, section 161 provides for an increase in business relief to a flat rate of 50 per cent on all qualifying assets. Previously, only the first £250,000 per beneficiary qualified for 50 per cent relief, with 25 per cent relief on the balance. In addition, more favourable instalment payment terms are being introduced in section 164 for capital acquisitions tax. This will give business owners the option of discharging their liabilities over five years at a competitive interest rate of 9 per cent.
I turn now to heritage companies. A number of family owned companies holding heritage houses, gardens and other items of historic or aesthetic interest are currently unable to avail of the capital acquisitions tax relief for heritage property which does not extend to company shares. In order to assist the preservation of such properties for public viewing, section 166 provides for the granting of relief to shares in existing heritage companies to the extent that the underlying value of the shares is attributable to heritage property.
Sections 167 to 170 make a number of amendments to the legislative provisions dealing with the Irish residence of individuals for tax purposes. Section 167 provides that the exemption from liability to DIRT will now be based on the non-residence status instead of the non-ordinary residence status of the taxpayer. Section 168 makes a similar change in regard to the exclusion from the obligation on financial institutions to report details of deposit interest to Revenue.
Section 169 introduces an annual £3,000 threshold in regard to the Irish tax liability on the foreign investment income of an individual who leaves Ireland to work abroad for a number of years. At present, all the foreign investment income of such a person is liable to Irish tax for the first three years of his or her stay abroad. Section 170 deals with the tax relief for Irish individuals who go abroad to work on foreign assignments and removes the existing disallowance of the first 15 days spent abroad in computing the amount of relief.
I turn now to Revenue offences and related reporting requirements. Section 172 deals with the reporting of tax evasion by auditors and tax advisers. It arises from the recommendations of the beef tribunal which the Houses, including the Seanad, accepted last year.
The essential requirement of this section is that auditors and tax advisers generally, who become aware in the course of their normal work for the client of material tax evasion committed by the company, must report this to the company and request that the matter be rectified and that the company should report the offence to Revenue. If, at the end of six months, it is not established to the satisfaction of the auditor or adviser that the matter has been so rectified or reported, the auditor or adviser must cease to act as auditor, or cease to assist or advise the company in tax matters, for a period of either three years from the date of the report to the company or until the auditor or adviser is satisfied that the matter has been rectified, whichever is the earlier. However, there is an important proviso that nothing in this section will prevent a person assisting or advising a company in preparing for or conducting legal proceedings, either civil or criminal, which are extant or pending at the end of the six month period in question.
The new section confines the list of reportable offences to serious tax evasion and deletes a variety of offences in the Bill as originally published. It does not seek to define materiality. It will be a matter for the auditor or adviser in any particular case to assess what is material taking account of their own professional standards and of the requirements of the section. The requirements apply to accounting periods beginning after 30 June 1995.
In the case of auditors, and in line with the beef tribunal recommendation, the new section also provides that they must report their resignation to Revenue if they have resigned in accordance with the provisions of this Bill.
While the section in its previous incarnation as section 153 generated a good deal of public concern and controversy, the amended section retains the essential core of the beef tribunal recommendation and places a statutory duty on tax advisers generally to assist in countering tax evasion. I believe that this is a substantive and important change in how tax evasion is to be treated by professional advisers. The public debate which has focused on this issue has made it clear to all concerned that compliant taxpayers and the PAYE sector in general will not accept the shielding or assisting of serious tax evaders. I know the House will endorse that view.
Section 173 provides for improvements in the administration of the income tax appeals machinery to the benefit of the taxpayer. The changes enhance the role of the appeal commissioners in dealing with applications for appeal hearing and will add to the independent status of the commissioners. In addition, section 173 also amends section 429 of the Income Tax Act, 1967, to confirm the right of accountants and tax practitioners to represent clients at the rehearing of tax appeals before a Circuit Court judge.
The black economy monitoring group and ICTU have identified access by the Revenue Commissioners to information held by public authorities as a valuable tool in identifying the black economy and combating abuse. Accordingly, section 175 empowers the Revenue Commissioners, for the purposes of the assessment, charge, collection and recovery of tax, to obtain from a Minister of the Government details regarding payments made by the Minister to specified persons. For example, this would relate to details of payments made to landlords by a community welfare officer for rent supplement, which are currently denied to the tax authorities. It will give the relevant authorities the power to obtain such information.
On a separate but related issue, section 14 introduces an amendment to the Income Tax Act, 1967, to require a return to the Revenue Commissioners of payments to landlords in relation to rent or rent subsidy by public bodies, such as health boards.
Further to the announcement in the budget, section 176 provides for a scheme of tax relief on donations of items of national heritage. It provides that the annual aggregate value of all items to be accepted under the scheme by an expert selection committee for donation to one of the national cultural institutions or approved bodies will be £0.5 million. No individual item worth less than £75,000 will be eligible for acceptance under the scheme. The tax relief available to donors will apply to income tax, corporation tax, capital gains tax and gift and inheritance tax and will be available also in respect of arrears of such taxes.
Section 177 deals with tax clearance procedures which must be complied with prior to the award of certain public sector contracts. The section confirms the powers of the Revenue to examine if the tax affairs of the applicant for a tax clearance certificate are fully in order and up to date and extends this examination to certain connected persons or enterprises to ensure that the procedures are not circumvented.
I wish to draw the attention of the House to certain minor corrections which I seek to have made by the Clerk under the direction of the Cathaoirleach. First, a typographical error in the reference on page 202, line 10 to a Department of Finance circular, F49/24/84, which should be amended to F49/29/84. Second, a correction to a cross reference to section 86(4)(f) on page 132, line 35 was made by default and without authority. The formal agreement of the Cathaoirleach is sought to confirm this correction.
I mentioned a minor textual correction at the conclusion of the Committee Stage debate in the Dáil, but this was not noted in the Official Report and consequently was not made. The correction in lines 17 to 19 on page 182 of the Bill requires the words "there has been a breach of any condition specified in paragraph (b) or (c) of subsection (1)" to be moved down and out under (c) of that subsection. I hope the Seanad will indulge me and allow those corrections to be made to the inadvertent errors made on Committee Stage in the other House.
I appreciate the attention which Members have given to this extensive and at times technical exposition. I will be glad to go into further detail on Committee Stage, if required. I commend the Bill to the House.