Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I move amendment No. 36:

In page 37, between lines 24 and 25, to insert the following:

"(3) The Minister shall within one month of the passing of this Act, prepare and lay before the Oireachtas a report on the potential impacts of changes to section 135 of the Principal Act on management buy-ins and buy-outs and third party SME company purchases and whether legislative changes can be used to mitigate these impacts.".

During Committee Stage the Minister introduced an amendment to section 135 of the Principal Act. He put on record the rationale for the change. He explained at the time that the package of anti-avoidance measures was being introduced to deal with a number of specific tax-avoidance schemes which had been uncovered by the Revenue Commissioners. He said that, essentially, those schemes involved converting what should be taxable income payments into capital gains to avail of the lower capital gains tax, CGT, rates. The Minister went into an amount of detail in that regard. I have no issue with introducing anti-avoidance measures to deal with those contrived arrangements.

I must ask the question on behalf of those who raised the issue who claim that this will also affect bona fide commercial transactions. Has the Minister examined the impact of this proposal in that respect because a number of people put it to me that the measure will close down most forms of commercially motivated management buy-out transactions and many third party SME company purchases because of the wording adopted? It is important that the Department would deal with it. That is the essential claim that is being made by some representatives and I ask the Minister to give an assurance that it would not be the case and that the anti-avoidance measures that have been introduced by him on Committee Stage are only going to affect the type of contrived arrangements we all agree should not be allowed.

See this speech in context