Richard Bruton (Dublin North Central, Fine Gael)
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Question 128: To ask the Minister for Finance if he has received correspondence from a business (details supplied) regarding the impact on the business of the proposed windfall tax; and if he has considered any modification in the tax proposed to deal with this problem. [44453/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Correspondence has been received from the business in question.

The windfall tax rate of 80%, which was introduced under the National Asset Management Agency Act, will apply to the portion of any profit or gain made on the disposal of land which is attributable to a rezoning, where both the rezoning and the disposal of land giving rise to the windfall occur after 30 October 2009. The rationale for taxing this part of the profit or gain at a higher rate is because it is attributable to an administrative decision – that is, to rezone the land – rather than to anything done by the landowner.

A rezoning for windfall tax purposes is defined as a change from a non-development land use to a development land use or a mixture of such uses, or a change of development land use. If no change of zoning is required, or if the land was rezoned before 30 October 2009, the windfall rate will not apply.

For the purpose of the windfall tax, "non-development land use" means agricultural, amenity, open space or recreational use, and "development land use" means residential, commercial or industrial use.

The 80% rate only applies to the portion of the profit or gain on the disposal of the land which is attributable to a rezoning. The balance of the gain is taxable at the normal capital gains tax rate, if the disposal is treated as a chargeable gain, or at the appropriate income tax or corporation tax rate, if the disposal is as part of a trade of dealing in or developing land.

It would not be appropriate for me to discuss the specific business. However, as the Deputy is aware, all taxes and potential taxation measures are constantly reviewed in the context of the Budget and Finance Bill.