Arthur Morgan
Ceist:149 Deputy Arthur Morgan asked the Minister for Finance the potential gain to the Exchequer in a full year if dividend withholding tax was applied to pension funds. [34332/10]
Amharc ar fhreagraThursday, 30 September 2010
Ceisteanna (149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 159, 160, 161, 162, 163, 164, 165, 166, 167)
Freagraí scríofa
I am informed by the Revenue Commissioners that statistical data is not available to distinguish the amount of dividends associated with pension funds. Accordingly, the specific information requested by the Deputy is not available.
Arthur Morgan
Ceist:150 Deputy Arthur Morgan asked the Minister for Finance the potential gain for the Exchequer annually if the repayable DIRT for over 65 year olds was to be means tested and no longer applied to savings in excess of €300,000. [34333/10]
Amharc ar fhreagraI am advised by the Revenue Commissioners that sufficiently detailed figures are not captured on the statutory return of DIRT filed by the financial institutions in such a way as to provide a basis for compiling estimates of the impact on the Exchequer from the change mentioned in the question. Accordingly, the specific information requested by the Deputy is not available.
An individual aged 65 or over is only eligible for a refund of or exemption from DIRT if his or her taxable income, including deposit interest, does not exceed the relevant income tax exemption limit — €20,000 for single individuals and €40,000 for married couples. Such individuals would be unlikely to have savings in excess of €300,000.
Arthur Morgan
Ceist:151 Deputy Arthur Morgan asked the Minister for Finance the amount lost to the Exchequer annually through the tax relief made payable for trading losses. [34334/10]
Amharc ar fhreagraArthur Morgan
Ceist:152 Deputy Arthur Morgan asked the Minister for Finance if the Revenue Commissioners have undertaken any kind of investigation to establish the potential losses to the Exchequer annually caused by the ability of companies to surrender trading losses to members of their corporate group in order to allow other companies within the group to write those losses off against their profits. [34335/10]
Amharc ar fhreagraI propose to take Questions Nos. 151 and 152 together.
I am informed by the Revenue Commissioners that the aggregate amount of trading losses for Corporation Tax returned by companies for accounting periods ending in 2008 (the latest year for which figures are available) was approximately €17.4 billion and the aggregate amount of losses carried forward from earlier accounting periods was €11.7 billion. The equivalent figures for Income Tax were €653 million and €438 million.
These figures reflect an inevitable increase in the incidence of trading losses due to the economic downturn. I should emphasise that the figures do not represent the actual amount of trading losses used to claim relief in the period. Revenue's computer systems do not provide data on the aggregate amount of trading losses actually used by companies to offset profits in a year and, therefore, information is not available on the overall Exchequer effect of loss relief claimed each year. The Revenue Commissioners are currently examining how best their data processing systems for Corporation Tax can be adapted to provide details of the aggregate amount of loss relief used in a year and the Exchequer effect of such relief.
In relation to the surrender of trading losses by Companies to other Group Companies, claimed as an element of group relief, I am informed by the Revenue Commissioners that the aggregate amount group relief claimed by companies for accounting periods ending in 2008 was approximately €8.4 billion. This includes trading losses and various other amounts surrendered by group companies such as capital allowances and non-trade charges. However, it is not possible to separately identify the amount of trading losses that are included in the figure and, as the figures are from the tax returns submitted, they may be subject to change following processing and assessment in Revenue. Therefore, the amount of losses actually used as group relief in the periods concerned may differ from the figure above.
I should add that losses incurred in a trade are a fact of business life and the provision of relief for such losses is a standard feature of our tax code and that of all other countries in the OECD. It would be difficult to justify taxing business income without taking due account of business losses or, in the context of groups of companies under common ownership, without allowing the sideways set-off within the group of losses that reduce the overall profitability of the group.
Arthur Morgan
Ceist:153 Deputy Arthur Morgan asked the Minister for Finance the potential gains for the Exchequer of lifting the exemption on capital gains tax for transfer of pension fund rights. [34336/10]
Amharc ar fhreagraI am informed by the Revenue Commissioners that figures are not captured in such a way as to provide a dedicated basis for compiling an estimate of the gain to the Exchequer from the change mentioned in the question. Accordingly, the specific information requested by the Deputy is not available.
Arthur Morgan
Ceist:154 Deputy Arthur Morgan asked the Minister for Finance the amount lost to the Exchequer annually through the awarding of shares as opposed to cash bonuses to employees. [34337/10]
Amharc ar fhreagraIf an employee is given free shares by his or her employer, the employee is normally chargeable to income tax on the value of the shares, just as the employee would be chargeable to income tax on the value of a cash bonus. However, where the shares are awarded through a Revenue approved profit sharing scheme, the employees are not chargeable to income tax on the value of the shares awarded, subject to a general annual limit of €12,700 on the value of shares. The cost to the Exchequer is essentially the income tax foregone on the value of any shares awarded under such schemes. Apart from approved profit sharing schemes, there are some other tax-advantaged employee financial participation schemes that must be approved by the Revenue Commissioners in order for the tax relief to apply. These are:
Approved share option schemes, under which employees are not chargeable to income tax on any gains arising on the exercise of share options;
Savings-related share option schemes, which comprise a share option scheme element and a savings element. Interest or bonuses arising on any savings that may be used to acquire shares are not chargeable to income tax;
Employee share ownership trusts, which work in conjunction with approved profit sharing schemes and have the further tax advantage of not being taxable on any dividends received in respect of shares held by the trust where such dividend income is used to purchase further shares;
Income tax relief in respect of new shares purchased on issue by employees of certain trading companies up to a lifetime limit of €6,350.
The following table sets out the estimated cost to the Exchequer in terms of income tax foregone in respect of the various share-related schemes for 2007, the latest year for which this information is available.
|
Employee Share Schemes |
Estimated cost to the Exchequer* |
|
€m |
|
|
Approved profit-sharing schemes |
106 |
|
Employee share-ownership trusts |
4 |
|
Approved share-option schemes |
3 |
|
Approved savings-related share option schemes |
12 |
|
Relief for new shares purchased on issue by employees |
<1 |
*Figures are particularly tentative and subject to a considerable margin of error.
Arthur Morgan
Ceist:155 Deputy Arthur Morgan asked the Minister for Finance the potential gain to the Exchequer annually of placing a levy of 1% on profits of holding companies here. [34338/10]
Amharc ar fhreagraGiven that holding companies of domestic groups do not generally have profits chargeable to Corporation Tax, thus imposing a 1% levy would not provide a yield for the Exchequer, I am presuming that the Deputy is referring to holding companies with foreign subsidiaries. It is not possible to predict the effect such a levy would have on the behaviour and decisions of holding companies with foreign subsidiaries. Therefore, it is not possible to provide a reliable estimate of any yield that might accrue to the Exchequer if such a levy were imposed on the their profits. In any event, such a levy would be unlikely to yield significant additional Irish tax because many of the holding companies with foreign subsidiaries would be entitled, under the terms of our Double Taxation Treaties, to reduce the additional charge by the amount of foreign tax paid on the profits out of which their dividend income was paid.
Arthur Morgan
Ceist:156 Deputy Arthur Morgan asked the Minister for Finance the rationale behind the stamp duty exemption for transfers of loan capital and the potential gain to the Exchequer annually of abolishing the exemption. [34339/10]
Amharc ar fhreagraThe rationale behind the Stamp Duty exemption for transfers of loan capitalis to facilitate business by avoiding the imposition of a Stamp Duty charge in cases where it was not intended that such a charge should apply. I am informed by the Revenue Commissioners that figures are not captured in such a way as to provide a dedicated basis for compiling estimates of the impact on the Exchequer from changes mentioned in the questions. Accordingly, the specific information requested by the Deputy is not available.
Arthur Morgan
Ceist:157 Deputy Arthur Morgan asked the Minister for Finance the rationale behind the exemptions on stamp duty for the transfer of units in regulated collective investment undertakings and the potential gain to the Exchequer annually if the exemption was abolished. [34341/10]
Amharc ar fhreagraThe rationale for the changes introduced in Finance Act 2010 arises principally from the new European UCITS (Undertakings for Collective Investment in Transferable Securities) IV Directive which will become operational on 1 July 2011. The measures extended the circumstances in which Irish investment undertakings can avail of existing Stamp Duty relief following a merger or reorganisation with the aim of removing a potential barrier to the development of the Funds Industry in Ireland.
I am informed by the Revenue Commissioners that figures are not captured in such a way as to provide a dedicated basis for compiling estimates of the impact on the Exchequer from changes mentioned in the questions. Accordingly, the specific information requested by the Deputy is not available.
Arthur Morgan
Ceist:158 Deputy Arthur Morgan asked the Minister for Finance the potential gain to the Exchequer annually from the abolition of the exemption from stamp duty on the transfer of foreign immovable properties. [34343/10]
Amharc ar fhreagraArthur Morgan
Ceist:159 Deputy Arthur Morgan asked the Minister for Finance the potential gain to the Exchequer annually from the abolition of the exemption from stamp duty on transfer of intellectual property. [34344/10]
Amharc ar fhreagraI propose to take Questions Nos. 158 and 159 together.
I am informed by the Revenue Commissioners that figures are not captured in such a way as to provide a dedicated basis for compiling estimates of the impact on the Exchequer from the changes mentioned in the questions. Accordingly, the specific information requested by the Deputy is not available.
Arthur Morgan
Ceist:160 Deputy Arthur Morgan asked the Minister for Finance the potential gain to the Exchequer annually from the abolition of the tax exemption applied for resident companies receiving dividends from other resident companies. [34345/10]
Amharc ar fhreagraThe Taxes Consolidation Act 1997 provides that Corporation Tax is not charged on dividends received by a company from another company resident in the State, subject to certain exceptions. The reason for this exemption is that such dividends are paid out of profits of the dividend-paying company which have already been subject to Corporation Tax and to apply a corporation tax charge on the company receiving the dividends would, in effect, amount to double taxation.
If the exemption were to be abolished and companies were to be made chargeable to Corporation Tax on dividends received from other companies resident in the State, it would be necessary to allow a credit for Corporation Tax paid by the dividend-paying company on the profits out of which the dividends were paid. As such a credit would offset the Corporation Tax payable on dividends received, there would be no net gain to the Exchequer from the abolition of this exemption, but there would be additional administrative demands on companies and the Revenue Commissioners.
Arthur Morgan
Ceist:161 Deputy Arthur Morgan asked the Minister for Finance the rationale behind, and the potential gain to the Exchequer annually from the abolition of the capital gains tax deferment allowed to amalgamated or reorganised companies. [34346/10]
Amharc ar fhreagraArthur Morgan
Ceist:163 Deputy Arthur Morgan asked the Minister for Finance the rationale behind, and the potential gain to the Exchequer annually from the abolition of the corporation tax deferment where shares held as trading stock are exchanged in a corporate reorganisation. [34348/10]
Amharc ar fhreagraI propose to take Questions Nos. 161 and 163 together.
Deferral of Capital Gains Tax is provided for in a company reorganisation or amalgamation that does not involve a cash payment. These are generally referred to as "paper for paper" transactions. If the company reorganisation or amalgamation involves a cash payment, the cash element is taxed in the normal way.
Deferring tax in the case of a paper for paper exchange recognises not only the fact that the transaction has not produced cash with which to pay tax, but also that the parties concerned have not disposed of their interest in the underlying assets. This treatment is in line with international practice. It is also provided for in the EU Mergers Directive (90/434/EEC) OJ No. L 225 28.8.1990.
Where shares are exchanged in a corporate reorganisation, the exchange does not give rise to a charge to Capital Gains Tax. However, shares held as trading stock are not chargeable assets and do not come within the scope of the Capital Gains Tax Acts. Shares held as trading stock are relevant to the computation of income rather than capital gains. In computing a company's income there are no special rules relating to the exchange of shares held as trading stock. A disposal of shares held as trading stock is within the charge to tax as part of the company's trading profits, which are computed in accordance with accounting principles. As transfers in the course of corporate reorganisations or amalgamations do not give rise to tax under the current legislation the Revenue Commissioners do not have information regarding the number of value of such transactions.
Arthur Morgan
Ceist:162 Deputy Arthur Morgan asked the Minister for Finance the rationale behind, and the potential gain to the Exchequer annually from, the abolition of the capital gains tax deferment allowed for the transfer of assets within a corporate group. [34347/10]
Amharc ar fhreagraAs transfers between Group Companies are not taxable transactions, the Revenue Commissioners do not have information regarding such transactions that would enable the figure requested to be estimated.
The Capital Gains Tax Acts permit the transfer of assets within a Corporate Group on a no gain/no loss basis for Capital Gains Tax purposes and tax is then levied when assets are sold outside the Group. The tax payable when the asset is sold outside the Group will be the tax on the full gain accruing since the asset was first acquired by a Group Company.
For financial reporting purposes, a Company prepares its own accounts and then, if it is a member of a Group, these results will be consolidated into the financial results of its ultimate Parent Company. In this way, the Group is treated as a single business entity with the results of each Group member being pooled to give the results and financial position for the Group as a whole. However, for tax purposes, each Company within a Group is treated as a separate entity. Each Company in the Group makes its own Tax Return, computes its own liability and is assessed on and pays that liability separately. This separate Company approach is modified in specific respects to acknowledge the common ownership of the Companies that are members of the same Corporate Group. In relation to transfers of assets within a Corporate Group, the Tax Acts reflect the fact that the transfer does not result in a change in the ultimate corporate ownership of the asset.
Question No. 163 answered with Question No. 161.
Arthur Morgan
Ceist:164 Deputy Arthur Morgan asked the Minister for Finance if he will estimate the losses incurred to the Exchequer annually by the deferment of capital gains tax when a business is transferred from an individual to a company. [34349/10]
Amharc ar fhreagraArthur Morgan
Ceist:165 Deputy Arthur Morgan asked the Minister for Finance the potential gains to the Exchequer annually if a limit of €300,000 was applied to the capital gains tax exemption for the transfer of assets between married couples. [34350/10]
Amharc ar fhreagraI propose to take Questions Nos. 164 and 165 together.
I am informed by the Revenue Commissioners that figures are not captured in such a way as to provide a dedicated basis for compiling estimates of the impact on the Exchequer from the changes mentioned in the questions. Accordingly, the specific information requested by the Deputy is not available.
Arthur Morgan
Ceist:166 Deputy Arthur Morgan asked the Minister for Finance the potential gains to the Exchequer annually if a limit of €300,000 was applied to the capital acquisitions tax exemption between married people. [34351/10]
Amharc ar fhreagraI am informed by the Revenue Commissioners that figures are not captured in such a way as to provide a dedicated basis for compiling an estimate of the gain to the Exchequer from the change mentioned in the question. Accordingly, the specific information requested by the Deputy is not available.
Arthur Morgan
Ceist:167 Deputy Arthur Morgan asked the Minister for Finance if the four-year write-off period for stallions is still in existence and the potential gains to the Exchequer annually from the abolition of this exemption. [34352/10]
Amharc ar fhreagraI am advised by the Revenue Commissioners that the 4 year write-off period for stallions for tax purposes, which was introduced on 1 August 2008 (at the time the tax exemption for stallion stud fees was abolished), is still in existence.
The four-year write down period reflects the fact that some stallions have a short nomination life and also takes into account that the majority of stallions are unsuccessful at stud.
If this provision was discontinued, the cost of a stallion would be allowed as a deduction upon its disposal or death under normal rules. As the benefit of the 4 year write-off is largely one of timing, its abolition would not be expected to give rise to gains to the Exchequer in the long run, as any resultant annual gains would be offset by increased tax deductions in the year of disposal or death of the stallion.