Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

Amendments Nos. 73 to 75, inclusive, propose to make changes to section 43 which inserts a new section 597A into the Taxes Consolidation Act 1997. Section 43 provides a new CGT relief for entrepreneurs who reinvest the proceeds of previous disposals of assets, on which they have paid CGT, in the acquisition of chargeable assets used in new business ventures. The effect of these three amendments would be to extend the relief beyond what is intended in the section as published.

The first amendment would extend the relief to companies and other persons.

The second amendment would extend the relief to individuals who are full-time working directors but who are not in control of the companies in which they work. The third amendment would give a capital gains tax credit to any individual in respect of any gain made on the disposal of any asset on which capital gains tax has been paid on or after 1 January 2010, regardless of whether it is a chargeable business. These proposed amendments would significantly widen the scope of the proposed relief in a manner which could have significant costs for the Exchequer. In these circumstances I cannot accept the proposed amendments.

I accept that this is a limited relief. There is broad support for the idea that if people are making money from a capital disposal and then decide to reinvest it in a business, we should encourage that and treat it differently under the tax code. That is quite targeted. Deputy Michael McGrath is posing a fair question. Does it make a difference in terms of what we are trying to achieve, because of the conditionality that exists? Clearly they are within section 43. The answer to that is that we should see where it goes. This is something new. In his Budget Statement the Minister said he was prepared to do this to send out a strong message to entrepreneurs who wanted to reinvest in business that there was a good business environment for this. It would be for a future finance Bill to decide whether we should extend it further along the lines Deputy McGrath has outlined in his amendments because otherwise the potential cost could be quite significant.

Many of the reliefs that existed some years ago, particularly on the property side, were so expansive as to expose the country's ultimate tax base when times became difficult. We do not want to return to that. We need very targeted reliefs to engender confidence in business and economic activity. If, as we go through this year, a case can be made for extending this further in the knowledge of the kinds of benefits we get from it, we will look at it. However, we could not take the extensive approach the Deputy proposes in his amendments.