Select Committee on Finance and General Affairs díospóireacht -
Thursday, 5 May 1994

SECTION 16.

Mr. Yates

I move amendment No. 58:

In page 26, line 32, to delete "90 days". and substitute "40 days".

Section 16 relates to the question of access to heritage buildings granted tax relief for renovations and improvements, stately homes which are part of the historical heritage of this country but which are a major liability. However, for good reasons, the Government saw fit to support investment in them. The particular provisions of this section on the surface seem to deal with an area of abuse by people who owned these heritage properties. Under section 19 of the 1982 Finance Act an individual can obtain tax relief for investment in a heritage home. The proposals in section 16 of this Bill tend to widen the requirement to open the buildings to the public. At present it is for a period of 30 days to allow a form of public access. It is not unreasonable in principle that the public should have access to these historical properties if the Exchequer is foregoing tax revenue for their renovation. However, a number of practical difficulties arise. The first is that all the owners of heritage properties are confronted by difficult decisions in relation to insurance. We all know if one is running a twopence halfpenny fair or fete one will have problems with insurance. Therefore there are problems with the contents of buildings and there is the public liability cover in general terms. If someone breaks their necks going down the marble staircase the heritage owner who may have got £6,000 tax relief could be faced with a bill of £250,000.

Mr. M. McDowell

Sue the staircase manufacturers.

Mr. Yates

Only a mind like Deputy McDowell's could counterpunch like that. If the opening period is extended to an unreasonable level this could have the effect of increasing premiums on their insurance cover to an unreasonable cost on the historic home. Some of these homes — not all of them — are designed to be lived in. They are not suitable for large numbers of people to be going through the private living area throughout the year. In one particular home only six people can go through at one time. Therefore there are enormous variations in the physical characteristics of these buildings. A general rule may be unfairly applied in terms of access in this regard.

The visitation by the public to these homes is in some cases uneconomic. To provide a tour guide and so on would place an additional economic strain on their family and in some cases would be unmanageable. If there is obligation to be open for three months it is going to make it very difficult for people to live in these properties. Therefore I think in view of the varying circumstances my amendment to substitute 40 days in lieu of 90 days and delete 60 days and substitute 30 days in the summer is not unreasonable.

This scheme has been abused. Some people have advertised the opening of their historic homes in the most obscure publications in the Irish language over limited periods like Christmas day when people would not think of visiting. I agree that there is some attempt here to make people who have abused this scheme comply with it. However, in the process, the Minister is hitting the people who have tried to conform to the access requirements of the scheme. We should also take into account that many of these properties operate a paying guest business as an additional source of income to defray costs. There is one such home in County Mayo that comes to mind.

Naturally the demand for these services is at a peak during the months of July and August which is the peak tourism season. Therefore under the provisions of this section people will be in a dilemma as to whether to avail of the relief at all or how to ensure that they do so over a limited period.

The Irish Georgian Society have also been in touch with me and are deeply concerned about section 16 of the Bill. The changes the Minister has suggested will eliminate for many owners the option of opening properties to the public as an increase in opening times will prove prohibitive. They acknowledge the abuses and are prepared to work with the Office of Public Works, the Revenue Commissioners and Bord Fáilte to eradicate them. They feel the notification procedures have been greatly improved. We want to strike a balance between tourism interests and the personal considerations of those involved. It would not be fair if the cost of openings exceeded the reliefs and that is what is likely to happen. If they opened for such a long period that they had losses which would mean that they would get tax relief, they would not renovate the home and everybody would lose. The general intention would be lost. I suggest a compromise of say 40 days or 45 days as well as perhaps a quarterly notification procedure. Consultations with the National Heritage Council and others would facilitate such a compromise. The media are interested in this and I understand there is some element of flexibility on the Minister's side to look at this again. It should be introduced on a step by step basis and reviewed thereafter. The same arguments apply to sections 60 and 61 on art objects.

Some people did not realise that the Revenue Commissioners assessed art as a benefit-in-kind and they are afraid that under the provisions of section 17 of the Bill the Revenue Commissioners in a paradoxical way will now say that if some body such as GPA gives Tony Ryan a Picasso and he puts in his house, it will now be construed as a benefit-in-kind. Heretofore, experts in tax administration have advised me that they never made a return for benefit-in-kind in this regard because they were not aware that it was liable to income tax. Will the Minister clarify the BIK provisions on art and say whether a new Pandora's box is being opened up with the inclusion of Section 17?

Mr. B. Ahern

This issue arose during the year. The Georgian Society and others raised the question of benefit in kind where companies were lending them works of art and their premises were open to the public. I sympathise with the position. Some of the houses with which I am familiar and others have been in touch to tell me that the cost of upkeep, insurance, restoration and refurbishment is excessive.

Amendment 62 introduces a new relief which exempts from the benefit-in-kind income tax charged, under section 117 of the Income Tax Act, 1967, certain benefits provided by an employer to a director or employee. For the exemption to apply, the benefit must consist of a loan to the individual of a work of art or a scientific collection owned by the employer and to which reasonable access is available for viewing to the public in a building or garden owned or occupied by the individual which is itself open to viewing by the public for the purposes of the separate reliefs for significant buildings and gardens.

I looked at the provisions and I thought they had a reasonable case on the basis that it was open to the public. Under the old provisions, it would have to be open for 30 days in the year. I thought if they were getting this concession it would be fair to ask them to increase the number of days. I proposed an increase to 90 days in the year, including 60 days between June and September. The Irish Georgian Society and other owners of individual premises have been in touch with me about this. Deputies Yates and Cox raised it on Second Stage. I have looked at it and I will modify the required number of days downwards as 90 days may be too many. I do not want to bring it down too low as it is a quid pro quo.

Deputy Yates asked, in regard to works of art, if in a case where an employer gave a director a work of art, it would be open to benefit-in-kind taxation as in the normal way? If the house was not open to the public then it would be liable in the normal way. Any benefit that an employer confers on a director or employee under the Income Tax Act, 1967 would be liable for tax as benefit-in-kind.

Mr. Yates

If one had a painting hanging in Kinsealy or wherever, what return would one be supposed to make? Does one assess the value of the painting divided by some figure? One can imagine all sorts of situations. I am told that accountants are not returning this. It was news to them. They did not know.

Mr. B. Ahern

This would only apply in the case of a company. The Deputy is asking if this applies where an individual owns a work and it is hanging in his or her home. In that case, no. If it was a gift, then Gift Tax would apply.

Mr. Yates

If the work was on loan from the company how much of it would be assessed?

Mr. B. Ahern

It is BIK. I think 12.5 per cent per annum is the figure. That is the normal position. In this case I am going to assist people who open the house and have a collection which they want people to see them. I will reduce the number of open days required to qualify.

Mr. Yates

What does the Minister have in mind?

Mr. B. Ahern

I thought 60 days was a reasonable figure.

Mr. Yates

In the summer would it still be 60 days?

Mr. B. Ahern

The majority of the days should be in the summer, maybe 60:40.

Mr. M. McDowell

Is it the case that the people who are in these houses are under any obligation to draw the status of the house to the public's attention.

Mr. B. Ahern

We have dealt with this. It was not the case before. You could put the sign on the ditch during the night. Now it must be on the Bord Fáilte list of heritage houses. Last year I included gardens. I accept that it is an intrusion on people, opening up their houses. Trips are normally organised, but it must be advertised in a selected way — not in the newspapers where they might invite the wrong people but in the Bord Fáilte tour guide.

Amendment, by leave, withdrawn.

Amendment No. 59 not moved.

Section 16 agreed to.