Michael Noonan (Limerick City, Fine Gael)
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It is a measure introduced on the advice of the Revenue Commissioners to close a potential tax avoidance scheme. It does not have the wider implication that has already been brought to my attention. Section 17 deals only with trades dealing in or developing land; therefore, it has no implications for other trades or debt relief on mortgages. The purpose of the losses provisions in the Finance Acts is to allow relief on genuine losses. This section is aimed at situations where a taxpayer buys land for development but has until now claimed a tax deduction where the land falls in value. That is fine if the taxpayer buys the land from his own resources. If, however, he or she borrows to buy it, it falls in value and is sold and the bank only gets back the proceeds of the sale, there is no economic loss to the taxpayer. The effect of the section is to balance the loss on the land with the amount of the loan write-off. If I remember correctly, the Personal Insolvency Bill states a write-down of mortgage debt cannot be treated as benefit-in-kind; therefore, this will not affect someone who negotiates a write-down of a mortgage debt. It is specifically tied to somebody involved in the trade of building and developing. They buy land with borrowed money, the land falls in value and the bank only gets the sale price. That has to be corrected. The Deputy can see the potential for tax avoidance in this. The Revenue Commissioners brought this issue to our attention and asked us to close a potential tax avoidance gap.