Is section 200 agreed? Agreed.
NEW SECTIONS.
SECTION 200.
Chairman
I move amendment No. 135.
In page 203, before section 201, but in Part (VI), to insert the following new section:
"201.—Section 58 (2) A of Capital Acquisitions Act, 1976 is hereby amended by the insertion in subsection (2) (a) of the following:
‘(iii) A person or a child of a person with whom the disponer is living as man and wife.'.".
This is the same point that I made previously. The arguments have already been discussed I will not press the amendment unless the Minister has something further to add.
The only point I would make is on the Revenue Commissioner's administrative practice, which I did not cover before, where the legal position can give rise to cases of hardship when the death of one of the partners brings about a liability in the capital acquisition tax. I can give an assurance that in these circumstances it is not the policy of the Revenue Commissioners to force the sale of a house as a means of recovering the tax liability. The existing legislation allows the Revenue Commissioners to deal with individual cases of hardship. This is the subject of a detailed statement of practice which was issued two years ago. While accepting that not all cases involved in the death of a cohabiting partner fall into the category, the Revenue Commissioners are aware and sensitive to the potential for hardship in this area and have used, and continue to use, the existing legislation to alleviate this hardship.
I am relieved to hear that the Revenue Commissioners can display such extraordinary levels of clemency once a person has died. Many citizens would like to know that the same level of clemency could be displayed if one does not die. I believe the Revenue Commissioners are being practical and are probably ahead of us in relation to this matter.
The Revenue Commissioners' consideration is for those surviving.
Point taken.
Amendment, by leave, withdrawn.
I move amendment No. 135a:
In page 203, before section 201, but in Part VI, to insert the following new section:
"201—Section 19 (1) of the Principal Act is hereby amended by the substitution in the definition of ‘agriculture value' of ‘75 per cent' for ‘55 per cent."'.
Capital acquisitions tax, relates to a gift of inheritance. On the transfer of agricultural land there is a concept called agricultural relief. The sections were originally drawn up on the basis that, agricultural land and the farmhouse would be valued at 50 per cent of its market value for the purposes of calculating the tax liability. In other words, if the house and farm were worth £100,000 for tax purposes, a figure of £50,000 would be recorded. All of the other assets, herd, machinery and so on would be valued at their market value and that was the base from which tax was calculated. On amendments such as these, the present Taoiseach, Deputy Albert Reynolds, last year or the year before accepted an increase in the agricultural relief so that the relief was extended to 55 per cent in order that the computation would be on 45 per cent of the market value. In recent years, many farms which it was not intended should be caught within the scope of the provision, have been caught, particularly in dairy farms where the value of a milk quota is calculated in addition to the value of land or where land with a milk quota is being artificially boosted in value. The effect of this amendment would be to lift the remission from 55 per cent to 75 per cent so that there would, in effect, be extra additional exemption in the calculation of agricultural land for taxation purposes under CAT.
The effect of the proposed amendment would be to reduce the market value of agricultural property comprising a gift or inheritance by 75 per cent of that value or £200,000, whichever is the lesser. Last year the relief was increased from 50 to 55 per cent. The ongoing cost of that to the Exchequer is £1,500,000. This approximates to 50 per cent of the normal yield expected from farmers or about £3 million in a non-amnesty year. The amendment does not address the problem which arises under the taxation of life-time transfers as compared with transfers on death. In view of the commitments in the Programme for Economic and Social Progress, Government policy on farm transfers and the changes made in the capital taxation will have to deal with the lifetime transfer. The issue is a complex one. I have asked my officials to consider the Macra reports when looking at this.
Could you consider this aspect——
Yes.
——particularly in terms of gift tax transfer, inter vivos transfer will be calculated for tax purposes.
The gift transfer?
Gift as distinct from inheritance.
Amendment, by leave, withdrawn.
Sections to 204, inclusive, agreed.