The Deputy is referring to a change in the Finance Act 2013 which provided that the release/forgiveness of a debt relating to land, which is held as trading stock is regarded as (notional) income for tax purposes. The debt forgiveness is regarded as “reckonable income” for PRSI purposes and is liable to PRSI at the Class S rate of 4%.
This provision only applies to individuals:
- who own land as part of their trade,
- the value of that land was previously written down, in many cases giving rise to large trading losses, and,
- who benefitted from debt forgiveness on borrowings made to purchase that land.
Given the complexity of this issue, in particular to ensuring the correct application of the PRSI charge, my officials are currently re-examining this issue and the Department will be in contact with the relevant bodies including those who have contacted the Deputy on finalisation of its deliberations.