Thursday, 22 March 2012
Finance Bill 2012 (Certified Money Bill): Committee and Remaining Stages
Katherine Zappone (Independent)
I move recommendation No. 23:
In page 221, between lines 21 and 22, to insert the following subsection:
“(3) Section 1031O of the Taxes Consolidation Act 1997, as inserted by the Finance (No.3) Act 2011, is amended by substituting the following for subsection (1):
“(1) Notwithstanding any other provision of the Capital Gains Tax Acts, where by virtue or in consequence of an order made under Part 12 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010, on or following:
(a) the granting of a decree of dissolution, or
(b) a dissolution deemed under section 5(4) of that Act to be a dissolution under section 110 of that Act, or
(c) An agreement, arrangement, or any other act giving rise to a legally enforceable obligation and made or done in consideration or in consequence of the dissolution or annulment of a civil partnership,
either of the civil partners concerned disposes of an asset to his or her civil partner, then, subject to subsection (3), both civil partners shall be treated for the purpose of the Capital Gains Tax Acts as if the asset was acquired from the civil partner making the disposal for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to the civil partner making the disposal.”.”.
This is the first time for me to speak this afternoon and I too welcome the Minister. It is a great pleasure for me to watch him work. I will now comment generally on section 134 which has amendments on civil partners that I welcome and then I will comment on my amendment.
I shall begin by thanking the Minister for his speech last evening and his response to all of our contributions, particularly to my own on page 4 of his speech. I appreciate his statement that efforts have been made by his Department, the Revenue Commissioners and the Office of the Attorney General to amend aspects of the tax code to provide the same treatment for civil partners as for married couples and to thoroughly examine tax legislation in that regard.
I also thank the Minister for his willingness to accept a legal opinion from a taxpayer who assisted me in my work on these complex matters. Also, in terms of the speech last evening, I thank him for pointing out a section that I highlighted yesterday on the principal private dwelling relief. It was dealt with in previous legislation and I welcome the change.
I want to take a few minutes to mention a number of examples again where parity still has not been achieved between civil partners and couples in a marriage. There is more work to be done but I understand that the Minister is open to considering them. Again, in his response to me last evening, he indicated that consanguinity relief was extended to civil partners in the Finance (No. 3) Act. As he will be aware consanguinity relief provides for a reduced rate of stamp duty on transfers of property between relatives. That relief has been extended to include some of the relatives of civil partners but not all. From my reading of it, equivalence with civil marriage has not been fully achieved. The relief has been extended to include transfers made to an individual’s civil partner, the civil partner of a parent or the civil partner of a lineal descendent but fails to include all of the equivalent degrees of relationship that apply in marriage. For example, the law has not changed so that the relief applies to the civil partner of a grandparent, or the brother or sister of a civil partner of a parent. These changes must take place in order to achieve full equivalence.
Tax treatment of civil partners differs from married couples. I refer to other sections of the Taxes Consolidation Act, specifically sections that relate to tax relief that is available subsequent to the break-up of a relationship. Once a separation agreement is in place for married couples tax relief is available from capital gains tax on the transfer of assets. Similarly, once a separation agreement is in place for a married couple, tax relief is available from capital acquisitions tax, stamp duty on the transfer of assets and the deferral of tax on share options. Civil partners must wait for two years for a statutory dissolution before they can avail of those reliefs as the law still stands. In order for equivalence to be achieved it seems that the laws need to be changed to ensure that civil partners have access to the reliefs once they have a legally enforceable agreement in place. I understand from the Minister’s comments that there is an intent and acceptance to move towards equivalence and I am simply pointing out some other places where changes need to be made.
I will make a last and more general comment in that regard. Yesterday I mentioned that definitions of “relative” and “family” used throughout the tax code refer to their ordinary meaning except if the meaning of these words is being supplemented for the purposes of the tax code. The ordinary meaning of relative and family means that one has a blood relationship or is married. Therefore, relatives and family of civil partners require a specific expressed inclusion in the tax code because civil partners are not married and a number of sections still fail to do it or do it adequately. I can provide the Minister with some examples from the legal opinion that I have offered to share with him this afternoon. Those are my general comments on the efforts to move towards equivalence.
With regard to my recommendation, in the opening speech delivered yesterday by the Minister of State, Deputy Brian Hayes, he referred to one of the recommendations that I tabled a number of months ago on the tax treatment of civil partners’ maintenance payments on the break-up of their relationship. I appreciate that it has been accepted and included in the Bill. The principle involved in that recommendation was that tax relief would be extended to civil partners on the break-up once “a legally binding agreement between the two parties is drawn up [..] or any other act giving rise to a legally enforceable obligation” took place. That mitigates the need for the parties to wait two years for a statutory dissolution because parties to a civil marriage can avail of tax relief at an earlier time. I understand that the principle was accepted regarding maintenance payments. It is that same principle that I wish to draw attention to when I put forward my recommendation today where I proposed that tax relief from capital gains on the transfer of assets can simply be applied in an equivalent timeframe for civil partners as it is for married couples. I understand that this is not the case at present but I hope that the Minister will accept my recommendation in light of that being the principle.
I also hope that other relevant sections of the Taxes Consolidation Act will be changed by applying the same principle. For example, capital acquisitions tax, stamp duty on transfers and I mentioned more examples a few minutes ago. I have not put forward recommendations on existing anomalies today because they would be very technical and my tax expert that has assisted me on the tax code, is on leave. However, I made an effort to put forward one recommendation based on the principle and I appreciate all of the help that the Bills Office gave me in preparing it. I hope that the Minister will accept my recommendation and will consider making more changes. If my changes were applied it would simply mean that tax relief would be available at the equivalent point in time on the break-up of a civil partnership as is currently the case for the break-up of a marriage.