Paschal Donohoe (Dublin Central, Fine Gael)

The primary policy rationale for business relief is to encourage enterprise, support the intergenerational transfer of family businesses and prevent the sale or break-up of businesses in order to pay a capital acquisitions tax liability. Under existing rules, an asset is excluded from the relief if it was not used for the purposes of the business for at least two years prior to the date of the gift or inheritance. Some concerns have been raised that this historic use test is overly restrictive, particularly where cash has been built up in a business to fund a business expansion or asset acquisition. The introduction of this future use test seeks to address these concerns and will ensure that the relief is appropriately targeted at supporting business succession. The amendment will provide the legislative basis for allowing assets which are required for future business commitments to be regarded as relevant business property. It will ensure, for example, that where a beneficiary takes a gift or inheritance of shares in qualifying companies where the cash reserves earmarked for specific business purposes are in the next six years, the cash reserves will not be excluded when calculating the amount of business relief that is available.