New tax law; flawed, inequitable and ageist, says PwC

In their efforts to promote the early transfer of businesses from one generation to the next, our legislators have introduced new tax rules which will, most likely, lead to delays in such transfers. In a provision due to come into effect from 1 January 2014, transfers of family businesses above a value of €3m will incur a penal capital gains tax charge where the transferor is over 65 years old. Speaking in Galway today at the Annual Conference of the Irish Tax Institute, PwC Tax Partner, Dermot Reilly, said that "the logic behind the new legislation is fundamentally flawed and indeed could be subject to legal challenge on grounds of ageism. Citing one example where a 65 year old could transfer a business free of capital gains tax while a 66 year old would incur a liability of €2.3m on a similar transfer, Reilly said the new provisions were not just inequitable but would have the opposite effect to that intended."

Reilly commented that “at a time of unprecedented uncertainty for business owners, they are being pressurised to effect business transfers when neither they, nor their business, are ready. The successor, even if identified, may not yet be capable of taking control, while a person aged 66 will often be best placed to run the business for at least another fifteen years. There is little doubt but that the majority of business owners will, instead of acting now, wait to benefit from the ultimate tax shelter – death! This can hardly be in the best interests of the economy generally and the situation merits a serious rethink by our legislators”.

ENDS

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