Michael Ring (Mayo, Fine Gael)
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Question 56: To ask the Minister for Finance if he will quantify the total amount of tax forfeited by Revenue by virtue of the tax exemption on stud fees since this scheme was first introduced. [19592/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Section 35 of the Finance Act 2003 provided that details of exempt income from a number of sources, including from stallion and greyhound stud fees, would be returned to the Revenue Commissioners. This information was first included in personal income tax returns for the tax year 2004 filed in October and November 2005 and, in the case of companies, in corporation tax returns filed up to the end of 2005. The relevant information available is based on tax returns by individuals and companies of tax exempt profits, including distributions out of exempt income, from greyhound and stallion stud fees for the tax years 2004, 2005 and 2006. Before that taxpayers were not required to include such income in their tax returns and the information sought by the Deputy is therefore not available for Exchequer costs incurred prior to 2004.

Data for the tax year 2007 is not yet available as the income tax returns for that year are not due for filing until October 2008 (by 17th November 2008 in the case of returns filed via ROS) and the bulk of corresponding corporation tax returns are not due for filing until September 2008. I am advised by the Revenue Commissioners that based on the information that has been received and collated to date, a total of €29 million was included in the relevant returns for 2004 as profits or gains exempt under section 231 of the Taxes Consolidation Act in relation to stud fees. This figure would correspond to a maximum Exchequer cost of the order of €11 million in 2004, in terms of income tax and corporation tax forgone; however, the actual Exchequer cost in relation to the income declared to date could be lower, to the extent that the exempt income would be subject to deductions for allowable expenses and other costs, thereby reducing the level of income that is actually subject to tax.

Corresponding data available for the tax years 2005 and 2006 indicate that some €52 million and almost €91 million respectively was included in the relevant returns for those years as tax exempt profits or gains corresponding to maximum Exchequer costs of the order of €13 million for 2005 and €22.5 million for 2006. Such income will now be subject to tax from 31 July 2008. It should be noted that Revenue were concerned at preliminary indications that in some instances the new, separately categorised data on exempt income and property incentives may not have been correctly entered on the 2004 Income Tax returns. Revenue engaged with the tax practitioner bodies to draw attention to these deficiencies and to rectify them. Revenue also increased awareness among its own staff involved in processing tax returns of the need to ensure, through closer examination of the returns, that they were correctly completed.