Eoghan Murphy (Dublin Bay South, Fine Gael) | Oireachtas source

The Deputy is correct to state it was not anticipated we would have this situation. We are now trying to address it through the amendment. In so far as CGT is concerned, this is a policy decision in trying to incentivise the holding of the asset for a longer-term period. This is why it is being introduced for disposal within a five-year period. This policy decision has been taken to try to incentivise longer-term holding and longer-term investment.

In so far as the 25% proportionality test is concerned, there is a main purpose test, so if someone is trying to be creative, as the Deputy outlined, he or she could still be caught under the main purpose provision, so that person would not try to make a property investment play and hide it as something else through the structuring of his or her funds or other investments he or she might make. With regard to why we took 25% and not a different percentage or a lower percentage, it is also about proportionality. Funds will diversify their risk and will have investments in various areas. There will be funds with some investment in Irish property to a much smaller extent. We do not want to do something that might encourage funds to dump a current holding or discourage funds from investing in the future as part of diversification of the portfolio for investors. When we look at what is happening in the country, with regard to the vast majority of the 96 entities, what they control and why they do it, the vast majority will be caught by this provision. Where someone would seek to use our threshold of 25% to step outside of being caught by the provision, there is also the main purpose test for anti-avoidance measures.