Bertie Ahern
Ceist:42 Mr. B. Ahern asked the Minister for Finance if he will give details of representations, if any, made to him by persons (details supplied) in respect of changes in the law on discretionary trusts. [23802/96]
Written Answers. - Discretionary Trusts Legislation.
Representations were received in February last from the persons mentioned by the Deputy for changes in the taxation legislation dealing with discretionary trusts. Two changes were proposed in the representations. One change proposed was the extension of the capital gains tax retirement relief to cover specified categories of disposals of business assets by trustees to specified categories of relatives of the person who set up the trust. The second change proposed was the crediting of discretionary trust tax paid against any capital acquisitions tax liability arising for the recipients of assets distributed from discretionary trusts. Discussions subsequently took place between officials and representatives of the person concerned in regard to the proposals in view of their complex nature and the issues involved. It was made clear by officials that they had no mandate for negotiation and what they were doing was exploring the matter. In the event the proposals put forward by the representatives were not acceptable and this was made clear to the representatives in October.
It should be pointed out that proposals from other persons or representative groups suggesting changes in the taxation rules governing discretionary trusts have been made from time to time over recent years. The last change in the taxation legislation governing discretionary trusts occurred in the 1994 Finance Act when the 3 per cent initial tax on these trusts was doubled to 6 per cent.
It should also be mentioned that the introduction of and improvement in the business relief for capital acquisitions tax in the last three Finance Acts has significantly changed the taxation environment relating to the reasons for the setting up of discretionary trusts where business assets are involved, and this undoubtedly prompted requests for certain taxation changes in relation to these trusts. As the Deputy will know, the new business relief was welcomed by various Dáil spokesmen during the course of the discussions on the budget and Finance Bill.