Dáil Éireann Debate, Tuesday - 30 November 2004
231 Mr. Naughten asked the Minister for Finance if he will introduce roll over relief on capital gains tax for landowners who have had their lands purchased for road construction; and if he will make a statement on the matter. [31134/04]
View answerAs I previously advised to the Deputy in a reply to a parliamentary question on 5 October 2004, capital gains tax is a tax on a capital gain arising on the disposal of assets. A 20% rate of capital gains tax now applies on the gains arising on the disposal of assets, including land which is the subject of a compulsory purchase order. It was announced in the 2003 budget that no roll-over relief would be allowed for any purpose on gains arising from disposals on or after 4 December 2002. This relief was introduced when capital gains tax rates were much higher than current levels. In effect, it was a deferral of tax to be paid, where the proceeds of disposal were re-invested into replacement assets. The taxation of these gains would take place following the eventual disposal of the new assets without their replacement. The abolition of this relief was in accordance with the overall taxation policy of widening the tax base to keep direct tax rates low. Reliefs and allowances made sense when capital gains tax rates were 40% and above. In the 1998 budget, the rate was halved from 40% to 20%. Taxing capital gains when they are realised is the most logical time to do so, and this change brought capital gains tax into line with other areas.
It is not the practice to comment in the lead up to the annual Budget Statement and Finance Bill on the intention or otherwise to make changes in taxation.
