Dáil Éireann díospóireacht -
Tuesday, 23 Apr 2002

Vol. 552 No. 3

Written Answers. - Tax Reliefs.

Austin Deasy

Ceist:

55 Mr. Deasy asked the Minister for Finance his proposals to reduce capital acquisition tax to the owners of caravan sites and parks accommodating mobile holiday homes which are used as summer residences; and if he will make a statement on the matter. [12456/02]

Minister for Finance (Mr. McCreevy)

I understand that the Deputy is referring to the issue of an extension of the provision of business property relief in the context of capital acquisitions tax to caravan park operators. The business relief provisions were introduced to alleviate the threat to active trading businesses and the potential threat to employment in those businesses from having to fund heavy CAT liabilities from current resources. A business consisting of the operation of a caravan park, which is passed on by way of a gift or an inheritance, is not excluded from the business relief provisions. A difficulty may, however, exist for certain caravan park operations where the business activity is predominantly one of exploiting an interest in land.

I understand that Revenue has published its practice statement on the circumstances in which caravan parks qualify for the relief. The approach of the Revenue Commissioners is to look at the type of letting activity which takes place at the caravan site that is, how much of the letting relates to the provision of furnished caravans owned by the business and how much involves the letting of pitch sites. As a general guideline, where an operator's own caravans account for at least half of the total number of lettings, the caravan park is likely to qualify for business relief. Instances where the letting of pitch sites predominates will not qualify for the relief as the business primarily involves an exploitation of an interest in land.

No amendment was made in the Finance Act, 2002, to extend business relief to caravan parks due to concerns that an extension would undermine the original intention of the relief. I would be concerned that this would lead to similar claims for inclusion in the relief by other persons engaged in purely passive investment. Indeed, if the type of letting involved here were to qualify for the relief it would be difficult to deny relief to what is pure investment property such as rented land, houses and apartments, quoted shares and securities, money in the bank, etc., with a significant loss in the CAT yield.

Another factor which should be borne in mind is that the current Group A threshold for transfers of property from a parent to a child is €422,148. This means that a child can take property from a parent which is below this value, free of tax – provided that there were no prior benefits – and each child in a family is, individually, entitled to this threshold amount.

I understand that the Revenue Commissioners are prepared to discuss the issue of caravan parks and business relief generally with caravan park owners. In addition, if there are any specific cases which the Deputy wishes to discuss, these can also be submitted to Revenue for consideration.