Number 20 of 1975
CAPITAL GAINS TAX ACT, 1975
ARRANGEMENT OF SECTIONS
Preliminary
Section | |
Taxation of Capital Gains
Capital gains accruing to an individual: alternative charge. | |
Inheritances and Settled Property
Exemptions and Reliefs
Special Reliefs
Unit Trusts
Anti-avoidance
Miscellaneous and Supplemental
PART I
PART II
Acts Referred to | |
1967, No. 6 | |
1965, No. 27 | |
1940, No. 31 | |
1971, No. 23 | |
1968, No. 14 | |
1973, No. 19 | |
1946, No. 9 | |
1974, No. 27 | |
1972, No. 19 | |
1938, No. 34 | |
1960, No. 12 | |
1930, No. 29 | |
1931, No. 8 | |
1941, No. 3 | |
1971, No. 6 | |
1970, No. 14 | |
1956, No. 47 | |
European Communities (Retirement of Farmers) Regulations, 1974 | S.I. No. 116 of 1974 |
1963, No. 28 | |
1974, No. 27 | |
Companies Act, 1963 | 1889, c. 60 |
1972, No. 17 | |
1931, No. 31 | |
Deeds of Arrangement Act, 1887 | 1887, c. 57 |
1963, No. 33 | |
1927, No. 7 | |
Inland Revenue Regulation Act, 1890 | 1890, c. 21 |
Number 20 of 1975
CAPITAL GAINS TAX ACT, 1975
PART I
Preliminary
Short title.
1.—This Act may be cited as the Capital Gains Tax Act, 1975.
Interpretation.
2.—(1) In this Act, unless the context otherwise requires—
“Appeal Commissioners” has the meaning assigned to it by section 156 of the Income Tax Act, 1967;
“body of persons” has the meaning assigned to it by section 1 of the Income Tax Act, 1967;
“branch or agency” means any factorship, agency, receivership, branch or management, but does not include the brokerage or agency of a broker or agent referred to in section 205 of the Income Tax Act, 1967;
“local authority” has the meaning assigned to it by section 23 (2);
“allowable loss” has the meaning assigned to it by section 12;
“capital allowance” means any allowance under the provisions of the Income Tax Acts which relate to allowances in respect of capital expenditure and includes an allowance under section 241 of the Income Tax Act, 1967;
“chargeable gain” has the meaning assigned to it by section 11 (2);
“charity” has the meaning assigned to it by section 334 (3) of the Income Tax Act, 1967;
“class”, in relation to shares or securities, means a class of shares or securities of any one company;
“company” means any body corporate;
“controlled company” has the meaning assigned to it by section 35 and “control” in relation to a company shall be construed accordingly;
“inspector” means an inspector of taxes appointed under section 161 of the Income Tax Act, 1967;
“land” includes any interest in land;
“lease”—
(a) in relation to land, includes an underlease, sublease or any tenancy or licence, and any agreement for a lease, under-lease, sublease or tenancy or licence and, in the case of land outside the State, any interest corresponding to a lease as so defined,
(b) in relation to any description of property other than land, means any kind of agreement or arrangement under which payments are made for the use of, or otherwise in respect of, property,
and “lessor”, “lessee” and “rent” shall be construed accordingly;
“legatee” includes any person taking under a testamentary disposition or an intestacy or partial intestacy or by virtue of the Succession Act, 1965, or by survivorship, whether he takes beneficially or as trustee, and a person taking under a donatio mortis causa shall be treated as a legatee and his acquisition as made at the time of the donor's death and, for the purposes of this definition and of any reference to a person acquiring an asset “as legatee”, property taken under a testamentary disposition or on an intestacy or partial intestacy or by virtue of the Succession Act, 1965, includes any asset appropriated by the personal representatives in or towards the satisfaction of a pecuniary legacy or any other interest or share in the property devolving under the disposition or intestacy or by virtue of the Succession Act, 1965;
“minerals” has the meaning assigned to it by section 3 of the Minerals Development Act, 1940;
“mining” means mining operations within the State for the purpose of obtaining, whether by underground or surface working, any minerals;
“part disposal” has the meaning assigned to it by section 8 (1);
“personal representatives” has the meaning assigned to it by section 450 (2) (a) of the Income Tax Act, 1967;
“prescribed” means prescribed by the Revenue Commissioners;
“profession” includes vocation;
“resident” and “ordinarily resident” have the same meanings as in the Income Tax Acts;
“settled property” means any property held in trust other than property to which section 8 (3) applies but does not include any property held by a trustee or assignee in bankruptcy or under a deed of arrangement;
“settlement” and “settlor” have the meanings assigned to them by section 96 (3) (h) of the Income Tax Act, 1967, and “settled property” shall be construed accordingly;
“shares” includes stock, and shares or debentures comprised in any letter of allotment or similar instrument shall be treated as issued unless the right to the shares or debentures thereby conferred remains provisional until accepted and there has been no acceptance;
“trade” has the same meaning as in the Income Tax Acts;
“trading stock” has the meaning assigned to it by section 62 (2) of the Income Tax Act, 1967;
“unit trust” means any arrangements made for the purpose, or having the effect, of providing facilities for the participation by the holders of units, as beneficiaries under a trust, in profits or income arising from the acquisition, holding, management or disposal of securties or any other property whatsoever;
“units”, in relation to a unit trust, means any units (described whether as units or otherwise) into which are divided the beneficial interests in the assets subject to the trusts of a unit trust;
“unit holder”, in relation to a unit trust, means a holder of units of the unit trust;
“wasting asset” has the meaning assigned to it by paragraph 8 of Schedule 1 and paragraph 1 of Schedule 3;
“year of assessment”, in relation to capital gains tax, means a year beginning on the 6th day of April and “1974-75” and so on indicate years of assessment as in the Income Tax Acts.
(2) For the purposes of this Act, any question whether a person is connected with another shall be determined in accordance with section 33.
(3) References in this Act to a married woman living with her husband shall be construed in accordance with subsections (1) and (2) of section 196 of the Income Tax Act, 1967.
(4) Any provision in this Act introducing the assumption that assets are sold and immediately re-acquired shall not imply that any expenditure is incurred as incidental to the sale or re-acquisition.
(5) References to profits or gains in the Income Tax Acts shall not include references to chargeable gains.
(6) References in this Act to any enactment shall, unless the context otherwise requires, be construed as references to that enactment as amended or extended by any subsequent enactment.
(7) In this Act, a reference to a section or schedule is a reference to a section of or schedule to this Act unless it is indicated that reference to some other enactment is intended.
(8) In this Act, a reference to a subsection, paragraph, sub-paragraph or clause is to the subsection, paragraph, subparagraph or clause of the provision (including a schedule) in which the reference occurs, unless it is indicated that reference to some other provision is intended.
PART II
Taxation of Capital Gains
Taxation of capital gains and rate of charge.
3.—(1) Tax shall be charged in accordance with this Act in respect of capital gains, that is, in respect of chargeable gains computed in accordance with this Act and accruing to a person on the disposal of assets.
(2) The tax, to be known as capital gains tax, shall be assessed and charged for the year 1974-75 and for subsequent years of assessment in respect of chargeable gains accruing in those years, and shall be so charged in accordance with the following provisions of this Act.
(3) Subject to section 6, the rate of capital gains tax shall be 26 per cent.
Persons chargeable.
4.—(1) Subject to any exceptions in this Act, a person shall be chargeable to capital gains tax in respect of chargeable gains accruing to him in a year of assessment for which he is resident or ordinarily resident in the State.
(2) Subject to any such exceptions, a person who is neither resident nor ordinarily resident in the State shall be chargeable to capital gains tax for a year of assessment in respect of chargeable gains accruing to him in that year on the disposal of—
(a) land in the State;
(b) minerals in the State or any rights, interests or other assets in relation to mining or minerals or the searching for minerals;
(c) assets situated in the State which, at or before the time when the chargeable gains accrued, were used in or for the purposes of a trade carried on by him in the State through a branch or agency, or which at or before that time were used or held or acquired for use by or for the purposes of the branch or agency:
Provided that this subsection shall not apply to a person who, by virtue of the provisions of the agreements contained in Schedule 6 to the Income Tax Act, 1967 is exempt from income tax chargeable for the year of assessment.
(3) Subsection (1) shall not apply in respect of gains accruing from the disposal of assets situated outside the State and the United Kingdom (being chargeable gains accruing on or after the 6th day of April, 1974) to an individual who satisfies the Revenue Commissioners that he is not domiciled in the State, but—
(a) the tax shall be charged on the amounts received in the State in respect of those chargeable gains,
(b) any such amounts shall be treated for the purposes of this Act as gains accruing when they are received in the State, and
(c) any losses accruing to the individual on the disposal of assets situated outside the State and the United Kingdom shall not be allowable losses for the purposes of this Act.
(4) For the purposes of subsection (3), there shall be treated as received in the State in respect of any gain all amounts paid, used or enjoyed in or in any manner or form transmitted or brought to the State and section 4 of the Finance Act, 1971 (under which income applied outside the State in payment of debts is, in certain cases, treated as received in the State) shall apply as it would apply for purposes of the said section 4 if the gain were income arising from possessions out of the State.
(5) Where two or more persons carry on a trade or business or profession in partnership—
(a) tax in respect of chargeable gains accruing to them on the disposal of any partnership assets shall be assessed and charged on them separately, and
(b) any partnership dealings in assets shall be treated as dealings by the partners and not by the firm as such.
(6) Any gains accruing on the disposal of exploration or exploitation rights in a designated area shall be treated for the purposes of this Act as gains accruing on the disposal of assets situated in the State.
(7) Any gains accruing to a person who is neither resident nor ordinarily resident in the State on the disposal of such assets as are mentioned in subsection (2) (b) and subsection (6) shall be treated for the purposes of capital gains tax as gains accruing on the disposal of assets used for the purposes of a trade carried on by that person in the State through a branch or agency.
(8) In this section—
(a) references to the disposal of such assets as are mentioned in paragraphs (a) and (b) of subsection (2) and subsection (6) include references to the disposal of shares deriving their value or the greater part of their value directly or indirectly from those assets, other than shares quoted on a stock exchange;
(b) “designated area” has the meaning assigned to it by section 1 of the Continental Shelf Act, 1968;
(c) “exploration or exploitation rights” has the meaning assigned to it by section 33 of the Finance Act, 1973;
(d) “shares” includes stock and any security; and
(e) “security” includes securities not creating or evidencing a charge on assets, and interest paid by a company on money advanced without the issue of a security for the advance, or other consideration given by a company for the use of money so advanced, shall be treated as if paid or given in respect of a security issued for the advance by the company.
Amount chargeable and time of payment.
5.—(1) Capital gains tax shall be charged on the total amount of chargeable gains accruing to the person chargeable in the year of assessment, after deducting any allowable losses accruing to that person in that year of assessment, and, so far as they have not been allowed as a deduction from chargeable gains accruing in any previous year of assessment, any allowable losses accruing to that person in any previous year of assessment (not earlier than the year 1974-75).
(2) Capital gains tax assessed on any person in respect of gains accruing in any year shall be payable by that person at or before the expiration of the three months following that year, or at the expiration of a period of two months beginning with the date of making the assessment, whichever is the later.
Capital gains accruing to an individual: alternative charge.
6.—(1) Subject to the provisions of this section, an individual shall, in respect of any year of assessment for which he was resident or ordinarily resident in the State be entitled to an adjustment of his capital gains tax for that year of assessment.
(2) The adjustment shall be such as to secure that the amount of capital gains tax to which he is chargeable for that year of assessment shall not exceed the further amount of income tax to which he would be chargeable if, in addition to any other liability to income tax, he was chargeable to income tax for that year under Case IV of Schedule D—
(a) where the amount on which he would, but for this subsection, have been chargeable to capital gains tax for that year under section 5 does not exceed £5,000, on a sum equal to one-half of that amount, and
(b) where that amount exceeds £5,000, on a sum equal to £2,500 plus the excess of that amount over £5,000.
(3) That amount of income tax shall be arrived at on the assumption that the income to which the individual would be so chargeable to income tax—
(a) is not available for set off under any of the provisions of the Income Tax Acts against any loss, or against any payments which may be made out of profits or gains brought into charge for tax, and is not available for the purpose of any other relief under the Income Tax Acts other than the personal reliefs, and for this purpose it shall be assumed that all such provisions of the Income Tax Acts are applied without regard to the income so chargeable under Case IV of Schedule D, and
(b) is to be treated as the highest part of the individual's income for the year, notwithstanding any provision of the Income Tax Acts directing other income to be treated as the highest part of the individual's total income.
In this subsection “personal reliefs” has the same meaning as in section 193 of the Income Tax Act, 1967.
(4) The provisions of this section shall not affect the provisions of section 5 as to the circumstances in which an allowable loss accruing in one year may be deducted from chargeable gains accruing in any other year.
(5) If capital gains tax is chargeable under section 5 in respect of chargeable gains accruing to a married woman who in the year of assessment is a married woman living with her husband, then, whether or not the husband is chargeable to capital gains tax for that year of assessment under the said section 5, and whether or not the married woman is separately assessed to income tax—
(a) in determining the adjustment, if any, to be made under subsection (2), account shall be taken of income tax chargeable on the husband as well as of income tax chargeable on the woman,
(b) the reference to the individual's income in subsection (3) (b) shall be a reference to the husband's income including income of his wife which under the Income Tax Acts is deemed to be his income,
(c) if both the married woman and her husband are chargeable to capital gains tax for that year of assessment, the adjustment under subsection (2) shall be by reference to the sum of the capital gains tax so chargeable on them under section 5, and the further amount to which the husband would be chargeable to income tax if, in addition to any other liability to income tax, he was chargeable to income tax for that year of assessment under Case IV of Schedule D shall be computed—
(i) where the aggregate amount to which he and his wife would, but for subsection (2), have been chargeable to capital gains tax for that year under section 5 does not exceed £5,000, on a sum equal to one-half of that amount, and
(ii) where that aggregate amount exceeds £5,000, on a sum equal to £2,500 plus the excess of that aggregate amount over £5,000, and
(d) account shall be taken of the provisions of section 13 (3) and, where applicable, the proviso to that subsection and any reduction in capital gains tax effected by paragraph (c) shall be apportioned to the husband and wife in proportion to the respective amounts on which they would, under the said section 5, be chargeable to capital gains tax for the year of assessment.
(6) Any chargeable gain which accrued to an individual in a year of assessment on the disposal of an asset which the individual acquired (otherwise than as legatee) not more than two years before the disposal from a person who, in the terms of section 33, was a person connected with the individual shall be left out of account for the purposes of this section, and—
(a) capital gains tax shall be charged on the amount of that chargeable gain in accordance with the foregoing provisions of this Act,
(b) no loss shall be deductible under section 5 (1) or 13 (3) from that amount if relief is given under this section in respect of any other chargeable gain which accrued to the individual or, in accordance with subsection (4), to the husband or wife of the individual, in the said year of assessment.
Assets.
7.—(1) All forms of property shall be assets for the purposes of this Act whether situated in the State or not, including—
(a) options, debts and incorporeal property generally,
(b) any currency, other than Irish currency and sterling, and
(c) any form of property created by the person disposing of it, or otherwise becoming owned without being acquired.
(2) If under this Act an asset is not a chargeable asset, then, no chargeable gain or allowable loss shall accrue on its disposal.
Disposal of assets.
8.—(1) For the purposes of this Act—
(a) references to a disposal of an asset include, except where the context otherwise requires, references to a part disposal of an asset, and
(b) there is a part disposal of an asset where an interest or right in or over the asset is created by the disposal, as well as where it subsists before the disposal, and generally, there is a part disposal of an asset where, on a person making a disposal, any description of property derived from the asset remains undisposed of.
(2) (a) Subject to subsection (4) and to the exceptions in this Act, there is for the purposes of this Act, a disposal of assets by their owner where any capital sum is derived from assets notwithstanding that no asset is acquired by the person paying the capital sum, and this paragraph applies in particular to—
(i) capital sums received by way of compensation for any kind of damage or injury to assets or for the loss, destruction or dissipation of assets or for any depreciation or risk of depreciation of an asset,
(ii) capital sums received under a policy of insurance of the risk of any kind of damage or injury to, or the loss or depreciation of, assets,
(iii) capital sums received in return for forfeiture or surrender of rights, or for refraining from exercising rights, and
(iv) capital sums received as consideration for use or exploitation of assets.
(b) Without prejudice to paragraph (a) (ii) and notwithstanding the other provisions of this section, neither the rights of the insurer nor the rights of the insured under any policy of insurance, whether the risks insured relate to property or not, shall constitute an asset on the disposal of which a gain may accrue and in this paragraph “policy of insurance” does not include a policy of assurance on human life:
Provided that paragraph (b) shall not have effect where the right to any capital sum falling within paragraph (a) (ii) is assigned after the event giving rise to the damage or injury to, or the loss or depreciation of, an asset has occurred and, for the purposes of this Act, such an assignment shall be deemed to be a disposal of an interest in the asset concerned.
(3) In relation to assets held by a person as nominee for another person, or as trustee for another person absolutely entitled as against the trustee, or for any person who would be so entitled but for being an infant or other person under disability (or for two or more persons who are or would be jointly so entitled), this Act shall apply as if the property were vested in, and the acts of the nominee or trustee in relation to the assets were the acts of, the person or persons for whom he is the nominee or trustee (acquisitions from or disposals to him by that person or persons being disregarded accordingly).
(4) The conveyance or transfer by way of security of an asset or of an interest or right in or over it, or transfer of a subsisting interest or right by way of security in or over an asset (including a retransfer on redemption of the security), shall not be treated for the purposes of this Act as involving any acquisition or disposal of the asset.
(5) Where a person entitled to an asset by way of security or to the benefit of a charge or incumbrance on an asset deals with the asset for the purpose of enforcing or giving effect to the security, charge or incumbrance, his dealings with it shall be treated for the purposes of this Act as if they were done through him as nominee by the person entitled to it subject to the security, charge or incumbrance; and this subsection shall apply to the dealings of any person appointed to enforce or give effect to the security, charge or incumbrance as receiver and manager or judicial factor as it applies to the dealings of the person entitled as aforesaid.
(6) An asset shall be treated as having been acquired free of any interest or right by way of security subsisting at the time of any acquisition of it, and as being disposed of free or any such interest or right subsisting at the time of the disposal; and where an asset is acquired subject to any such interest or right the full amount of the liability thereby assumed by the person acquiring the asset shall form part of the consideration for the acquisition and disposal in addition to any other consideration.
(7) In this section “capital sum” means any money or money's worth which is not excluded from the consideration taken into account in the computation under Part I of Schedule 1.
Consideration.
9.—(1) Subject to the provisions of this Act, a person's acquisition of an asset shall, for the purposes of this Act, be deemed to be for a consideration equal to the market value of the asset—
(a) where he acquires the asset otherwise than by way of a bargain made at arm's length (including in particular where he acquires it by way of gift),
(b) where he acquires the asset by way of distribution from a company in respect of shares in the company, or
(c) where he acquires the asset wholly or partly for a consideration that cannot be valued, or in connection with his own or another's loss of office or employment or diminution of emoluments, or otherwise in consideration for or recognition of his or another's services or past services in any office or employment or of any other service rendered or to be rendered by him or another.
(2) Subject to the provisions of this Act, a person's disposal of an asset shall, for the purposes of this Act, be deemed to be for a consideration equal to the market value of the asset—
(a) where he disposes of the asset otherwise than by way of a bargain made at arm's length (including in particular where he disposes of it by way of gift), or
(b) where he disposes of the asset wholly or partly for a consideration that cannot be valued:
Provided that this subsection shall not apply to a disposal by way of gift made prior to the 20th day of December, 1974, and any loss incurred on a disposal by way of gift made prior to the 20th day of December, 1974, shall not be an allowable loss.
Time of disposal.
10.—(1) (a) Subject to subsection (3) and paragraph (b), where an asset is disposed of and acquired under a contract, the time at which the disposal and acquisition is made is the time the contract is made, (and not, if different, the time at which the asset is conveyed or transferred);
(b) if the contract is conditional (and, in particular, if it is conditional on the exercise of an option), the time at which the disposal and acquisition is made is the time when the condition is satisfied;
(c) where an interest in land is acquired, otherwise than under a contract, by an authority possessing compulsory purchase powers, the time at which the disposal and acquisition is made is the time at which the compensation for the acquisition is agreed or otherwise determined (variations on appeal being disregarded for this purpose) or, if earlier, the time when the authority enter on the land in pursuance of their powers.
(2) A hire purchase or other transaction under which the use and enjoyment of an asset is obtained by a person for a period at the end of which the property in the asset will or may pass to that person shall be treated for the purposes of this Act, both in relation to that person and in relation to the person from whom he obtains the use and enjoyment of the asset, as if it amounted to an entire disposal of the asset to that person at the beginning of the period for which he obtains the use and enjoyment of the asset, but subject to such adjustments of tax, whether by way of repayment or discharge of tax or otherwise, as may be required where the period for which the person has the use and enjoyment of the asset terminates without the property in the asset passing to him.
(3) For the purposes of subparagraphs (i) to (iv) of section 8 (2) (a), the time of the disposal shall be the time when any capital sum is received.
Computation of chargeable gains.
11.—(1) The amount of the gains accruing on the disposal of assets shall be computed in accordance with Part I of Schedule 1, and subject to the further provisions in Part II of Schedule 1 and in Schedules 2 and 3.
(2) Every gain accruing on or after the 6th day of April, 1974, shall, except so far as otherwise expressly provided by this Act, be a chargeable gain, but subject to the provisions of Part II of Schedule 1 (which restrict the amount of chargeable gains accruing on the disposal of assets owned on the 6th day of April, 1974).
Losses.
12.—(1) Except as otherwise expressly provided, the amount of a loss accruing on a disposal of an asset shall be computed in the same way as the amount of a gain accruing on a disposal is computed.
(2) Except as otherwise expressly provided, all the provisions of this Act which distinguish gains which are chargeable gains from those which are not, or which make part of a gain a chargeable gain, and part not, shall apply also to distinguish losses which are allowable losses from those which are not, and to make part of a loss an allowable loss, and part not; and references in this Act to an allowable loss shall be construed accordingly.
(3) Subject to the provisions of this Act and, in particular, to section 47 (options), the occasion of the entire loss, destruction, dissipation or extinction of an asset shall, for the purposes of this Act, constitute a disposal of the asset whether or not any capital sum by way of compensation or otherwise is received in respect of the destruction, dissipation or extinction of the asset.
(4) If, on a claim by the owner of an asset, the inspector is satisfied that the value of an asset has become negligible, he may allow the claim and thereupon this Act shall have effect as if the claimant had sold, and immediately re-acquired, the asset for a consideration of an amount equal to the value specified in the claim.
(5) For the purposes of subsections (3) and (4), a building and any permanent or semi-permanent structure in the nature of a building, may be regarded as an asset separate from the land on which it is situated, but where either of those subsections applies in accordance with this subsection, the person deemed to make the disposal of the building shall be treated as if he had also sold, and immediately re-acquired, the site of the building or structure (including in the site any land occupied for purposes ancillary to the use of the building or structure) for a consideration equal to its market value at that time.
(6) A loss accruing to a person in a year of assessment for which he is neither resident nor ordinarily resident in the State shall not be an allowable loss for the purposes of this Act unless, under section 4 (2) (charge on non-resident persons), he would be chargeable to capital gains tax in respect of a chargeable gain if there had been a gain instead of a loss on that occasion.
(7) Except as provided by section 14 (loss sustained in year of death) an allowable loss accruing in a year of assessment shall not be allowable as a deduction from chargeable gains accruing in any earlier year of assessment, and relief shall not be given under this Act more than once in respect of any loss or part of a loss, and shall not be given under this Act if and so far as relief has been or may be given in respect of it under the Income Tax Acts.
Married persons.
13.—(1) Subject to the provisions of this section, the amount of capital gains tax on chargeable gains accruing to a married woman in a year of assessment, or part of a year of assessment, during which she is a married woman living with her husband shall be assessed and charged on the husband and not otherwise, but this subsection shall not affect the amount of capital gains tax chargeable on the husband apart from this subsection nor result in the additional amount of capital gains tax charged on the husband by virtue of this subsection being different from the amount which would otherwise have remained chargeable on the married woman.
(2) Subsection (1) shall not apply in relation to a husband and wife in any year of assessment if, before the 6th day of July in the year next following that year of assessment, an application is made by either the husband or wife that subsection (1) shall not apply, and such an application duly made shall have effect not only as respects the year of assessment for which it is made but also for any subsequent year of assessment:
Provided that if the applicant gives, for any subsequent year of assessment, a notice withdrawing that application, the application shall not have effect with respect to the year for which the notice is given or any subsequent year but such notice of withdrawal shall not be valid unless it is given before the 6th day of July in the year next following the year of assessment for which the notice is given.
(3) In the case of a woman who, during a year of assessment or part of a year of assessment, is a married woman living with her husband any allowable loss which, under section 5 (1), would be deductible from the chargeable gains accruing in that year of assessment to the one spouse but for an insufficiency of chargeable gains shall, for the purposes of that subsection, be deductible from chargeable gains accruing in that year of assessment to the other:
Provided that this subsection shall not apply in relation to losses accruing in a year of assessment to either if an application that this subsection shall not apply is made by the husband or the wife before the 6th day of July in the year next following that year of assessment.
(4) In applying the provisions of section 16 (gains of £500 and under), and in particular in ascertaining the amount of an individual's chargeable gains for a year of assessment for the purposes of those provisions, it shall be assumed that subsection (1) applies for all years of assessment but where, by virtue of subsection (2), any amount is chargeable and assessable on a married woman, the exemption afforded by the said section 16 shall be apportioned between the husband and the wife according to the respective amounts of their chargeable gains for the year of assessment.
(5) Where in any year of assessment in which, or in part of which, the married woman is a married woman living with her husband, the husband disposes of an asset to the wife, or the wife disposes of an asset to the husband, both shall be treated as if the asset was acquired from the one 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 one making the disposal:
Provided that this subsection shall not apply if, until the disposal, the asset formed part of trading stock of a trade carried on by the one making the disposal, or if the asset is acquired as trading stock for the purposes of a trade carried on by the one acquiring the asset.
(6) Subsection (5) shall have effect notwithstanding the provisions of paragraph 15 of Schedule 1 or of any other provisions of this Act fixing the amount of the consideration deemed to be given on a disposal or acquisition.
(7) Where subsection (5) is applied in relation to a disposal of an asset by a husband to his wife, or by his wife to him, then in relation to a subsequent disposal of the asset (not within the said subsection) the one making the disposal shall be treated for the purposes of this Act as if the other's acquisition or provision of the asset had been his or her acquisition or provision of it.
(8) An application or notice of withdrawal under this section shall be in such form and made in such manner as may be prescribed.
PART III
Inheritances And Settled Property
Death.
14.—(1) For the purposes of this Act, the assets of which a deceased person was competent to dispose—
(a) shall be deemed to be acquired on his death by the personal representatives or other person on whom they devolve as if the deceased person's acquisition of the assets had been the acquisition of those assets by the personal representatives or such other person; but
(b) shall not be deemed to be disposed of by him on his death (whether or not they were the subject of a testamentary disposition).
(2) Allowable losses sustained by an individual in the year of assessment in which he dies may, so far as they cannot be deducted from chargeable gains accruing in that year, be deducted from chargeable gains accruing to the deceased in the three years of assessment preceding the year of assessment in which the death occurs, taking chargeable gains accruing in a later year before those accruing in an earlier year and there shall be made all such amendments of assessments or repayments of tax as may be necessary to give effect to this subsection.
(3) In relation to property forming part of the estate of a deceased person the personal representatives shall for the purposes of this Act be treated as being a single and continuing body of persons (distinct from the persons who may from time to time be the personal representatives), and that body shall be treated as having the deceased's residence, ordinary residence, and domicile at the date of death.
(4) Where any asset is acquired by a person as legatee, no chargeable gain shall accrue to the personal representatives but the legatee shall be treated as if the personal representatives' acquisition of the asset had been his acquisition of it.
(5) In this section references to assets of which a deceased person was competent to dispose are references to assets of the deceased which he could, if of full age and capacity, have disposed of by his will, assuming that all the assets were situated in the State and that he was domiciled in the State, and include references to his severable share in any assets to which, immediately before his death, he was beneficially entitled as a joint tenant.
(6) If not more than two years, or such longer period as the Revenue Commissioners may by notice in writing allow, after a death any of the dispositions of the property of which the deceased was competent to dispose, whether effected by will, or under the law relating to intestacies, or otherwise, are varied by a deed of family arrangement or similar instrument, this section shall apply as if the variations made by the deed or other instrument were effected by the deceased, and no disposition made by the deed or other instrument shall constitute a disposal for the purposes of this Act.
Settled property.
15.—(1) In relation to settled property, the trustees of the settlement shall for the purposes of this Act be treated as being a single and continuing body of persons (distinct from the persons who may from time to time be the trustees), and that body shall be treated as being resident and ordinarily resident in the State unless the general administration of the trusts is ordinarily carried on outside the State and the trustees or a majority of them for the time being are not resident or not ordinarily resident in the State:
Provided that a person carrying on a business which consists of or includes the management of trusts, and acting as trustees of a trust in the course of that business, shall be treated in relation to that trust as not resident in the State if the whole of the settled property consists of or derives from property provided by a person not at the time (or, in the case of a trust arising under a testamentary disposition or on an intestacy or partial intestacy, at his death) domiciled, resident or ordinarily resident in the State and if in such a case the trustees or a majority of them are or are treated in relation to that trust as not resident in the State, the general administration of the trust shall be treated as ordinarily carried on outside the State.
(2) A gift in settlement, whether revocable or irrevocable, shall be a disposal of the entire property thereby becoming settled property notwithstanding that the donor has some interest as a beneficiary under the settlement and notwithstanding that he is a trustee, or the sole trustee of the settlement.
(3) On the occasion when a person becomes absolutely entitled to any settled property as against the trustee all the assets forming part of the settled property to which he becomes so entitled shall be deemed to have been disposed of by the trustee, and immediately re-acquired by him in his capacity as a trustee within section 8 (3), for a consideration equal to their market value.
(4) Where, by virtue of subsection (3), the assets forming part of any settled property are deemed to be disposed of and re-acquired by the trustee on the occasion when a person becomes absolutely entitled thereto as against the trustee, then, if that occasion is the termination of a life interest (within the meaning of this section) by the death of the person entitled to that interest—
(a) no chargeable gain shall accrue on the disposal; and
(b) the disposal and re-acquisition under that subsection shall be deemed to be for such consideration as to secure that neither a gain nor a loss accrues to the trustee, and shall, except where, at any time previously, those assets, while forming part of that settled property, were, by virtue of subsection (5), deemed to be disposed of and immediately re-acquired for a consideration equal to the whole or a corresponding part of the market value of the asset, if the trustee had first acquired the property at a date earlier than the 6th day of April, 1974, be deemed to be at that earlier date.
(5) On the termination at any time on or after the 6th day of April, 1974, of a life interest in possession in all or any part of settled property, the whole or a corresponding part of each of the assets forming part of the settled property and not ceasing at that time to be settled property, shall be deemed for the purposes of this Act at that time to be disposed of and immediately re-acquired by the trustee for a consideration equal to the whole or a corresponding part of the market value of the asset.
(6) For the purposes of subsection (5)—
(a) a life interest which is a right to part of the income of settled property shall be treated as a life interest in a corresponding part of the settled property, and
(b) if there is a life interest in a part of the settled property and, where that interest is a life interest in income, there is no right of recourse to, or to the income of, the remainder of the settled property, the part of the settled property in which the life interest subsists shall while it subsists be treated for the purposes of this subsection as being settled property under a separate settlement.
(7) Subsections (3) and (5) shall apply, where an annuity which is not a life interest within the meaning of this section is terminated by the death of the annuitant, as they apply on the termination of a life interest by the death of the person entitled thereto.
(8) On the occasion when a person becomes absolutely entitled to any settled property as against the trustee, any allowable loss which has accrued to the trustee in respect of property which is, or is represented by, the property to which that person so becomes entitled (including any allowable loss carried forward to the year of assessment in which that occasion falls), being a loss which cannot be deducted from chargeable gains accruing to the trustee in that year, but before that occasion, shall be treated as if it were an allowable loss accruing at that time to the person becoming so entitled, instead of to the trustee.
(9) If any amount of capital gains tax assessed on the trustees, or any one trustee, of a settlement in respect of a chargeable gain accruing to the trustee is not paid within six months from the date when it becomes payable by the trustees or trustee, and before or after the expiration of that period of six months the asset in respect of which the chargeable gain accrued, or any part of the proceeds of sale of that asset, is transferred by the trustees to a person who as against the trustees is absolutely entitled to it, that person may at any time within two years from the time when that amount of tax became payable be assessed and charged (in the name of the trustees) to an amount of capital gains tax not exceeding the amount of capital gains tax chargeable on an amount equal to the amount of the chargeable gain and, where part only of the asset or of the proceeds was transferred, not exceeding a proportionate part of that amount.
(10) References in this Act to any asset held by a person as trustee for another person absolutely entitled as against the trustee are references to a case where that other person has the exclusive right, or would have such a right if he were not an infant or other person under disability, subject only to satisfying any outstanding charge, lien or right of the trustees to resort to the asset for payment of duty, taxes, costs or other outgoings, to direct how that asset shall be dealt with.
(11) For the purposes of this section, where part of the property comprised in a settlement is vested in one trustee or set of trustees and part in another (and in particular where settled land within the meaning of the Settled Land Act, 1882, is vested in the tenant for life and investments representing capital money are vested in the trustees of the settlement), they shall be treated as together constituting and, in so far as they act separately, as acting on behalf of a single body of trustees.
(12) (a) In this section “life interest” in relation to a settlement—
(i) includes a right under the settlement to the income of, or the use or occupation of, settled property for the life of a person (or for the lives of persons) other than the person entitled to the right,
(ii) does not include any right which is contingent on the exercise of the discretion of the trustee or the discretion of some other person, and
(iii) does not include an annuity, notwithstanding that the annuity is payable out of or charged on settled property or the income of settled property except where some or all of the settled property is appropriated by the trustees as a fund out of which the annuity is payable and there is no right of recourse to settled property not so appropriated, or to the income of settled property not so appropriated.
(b) Without prejudice to subsection (6) (b), where under paragraph (a) (iii) an annuity is to be treated as a life interest in relation to a settlement, the settled property or the part of the settled property appropriated by the trustees as a fund out of which the annuity is payable shall, while the annuity is payable, and on the occasion of the death of the annuitant, be treated for the purposes of subsection (5) as being settled property under a separate settlement.
PART IV
Exemptions and Reliefs
Gains of £500 and under.
16.—(1) An individual shall not be chargeable to capital gains tax for a year of assessment if the amount on which he is chargeable to capital gains tax under section 5 (1) for that year does not exceed £500.
(2) If the amount on which an individual is chargeable to capital gains tax under section 5 (1) for a year of assessment exceeds £500, only the excess of that amount over £500 shall be charged to capital gains tax for that year.
(3) In the case of an individual dying in the year of assessment, this section shall apply with the substitution for the reference to the individual of a reference to his personal representatives, and the amount of chargeable gains shall be that on which the personal representatives are chargeable in respect of gains accruing before death.
(4) Relief shall not be given under this section where an adjustment is allowed under section 6 (alternative charge by reference to income tax), or relief is allowed under section 26 (disposal of business or farm on retirement) or section 27 (disposal within the family of business or farm).
Chattels sold for £2,000 or less.
17.—(1) Subject to this section, a gain accruing on a disposal by an individual of an asset which is tangible movable property shall not be a chargeable gain if the amount or value of the consideration for the disposal does not exceed £2,000.
(2) (a) The amount of capital gains tax chargeable in respect of a gain accruing on a disposal falling within subsection (1) for a consideration the amount or value of which exceeds £2,000 shall not exceed half the difference between the amount of that consideration and £2,000.
(b) For the purposes of this subsection the capital gains tax chargeable in respect of the gain shall be the amount of tax which would not have been chargeable but for that gain.
(3) Subsections (1) and (2) shall not affect the amount of an allowable loss accruing on the disposal of an asset, but for the purposes of computing under this Act the amount of a loss accruing on the disposal by an individual of tangible movable property the consideration for the disposal shall, if less than £2,000, be deemed to be £2,000 and the losses which are allowable losses shall be restricted accordingly.
(4) If two or more assets which have formed part of a set of articles of any description all owned at one time by one person are disposed of by that person—
(a) to the same person, or
(b) to persons who are acting in concert or who are, in the terms of section 33, connected persons,
whether on the same or different occasions, the two or more transactions shall be treated as a single transaction disposing of a single asset, but with any necessary apportionments of the reductions in tax, and in allowable losses, under subsections (2) and (3); and this subsection shall also apply where the assets, or some of the assets, are disposed of on different occasions, and one of them falls after the 28th day of February, 1974, but before the 6th day of April, 1974, but not so as to make any gain accruing on a disposal before the 6th day of April, 1974, a chargeable gain.
(5) If the disposal is of a right or interest in or over tangible movable property—
(a) in the first instance subsections (1), (2) and (3) shall be applied in relation to the asset as a whole, taking the consideration as including, in addition to the consideration for the disposal (referred to in this subsection as the actual consideration), the market value of what remains undisposed of,
(b) where the sum of the actual consideration and that market value exceeds £2,000, the limitation on the amount of tax in subsection (2) shall be to half the difference between that sum and £2,000 multiplied by the fraction equal to the actual consideration divided by the said sum, and
(c) where that sum is less than £2,000, any loss shall be restricted under subsection (3) by deeming the consideration to be the actual consideration plus the said fraction of the difference between the said sum and £2,000.
(6) This section shall not apply—
(a) in relation to a disposal of commodities of any description by a person dealing on a terminal market or dealing with or through a person ordinarily engaged in dealing on a terminal market, or
(b) in relation to a disposal of currency of any description.
(7) In this section tangible movable property shall not include a wasting asset within the meaning of Schedule 1.
Wasting chattels.
18.—(1) Subject to the provisions of this section, no chargeable gain shall accrue on the disposal of, or of an interest in, an asset which is tangible movable property and which is a wasting asset.
(2) Subsection (1) shall not apply to a disposal of, or of an interest in, an asset—
(a) if, from the beginning of the period of ownership of the person making the disposal to the time when the disposal is made, the asset has been used and used solely for the purposes of a trade, or profession, and if that person has claimed or could have claimed any capital allowance in respect of any expenditure attributable to the asset or interest under clause (a) or (b) of paragraph 3 (1) of Schedule 1, or
(b) if the person making the disposal has incurred any expenditure on the asset or interest which has otherwise qualified in full for any capital allowance.
(3) In the case of the disposal of, or of an interest in, an asset which, in the period of ownership of the person making the disposal, has been used partly for the purposes of a trade or profession and partly for other purposes, or has been used for the purposes of a trade or profession for part of that period, or which has otherwise qualified in part only for capital allowances—
(a) the consideration for the disposal, and any expenditure attributable to the asset or interest by virtue of the said clause (a) or (b), shall be apportioned by reference to the extent to which that expenditure qualified for capital allowances,
(b) the computation under the said Schedule 1 shall be made separately in relation to the apportioned parts of the expenditure and consideration, and
(c) subsection (1) shall not apply to any gain accruing by reference to the computation in relation to the part of the consideration apportioned to use for the purposes of the trade, or profession, or to the expenditure qualifying for capital allowances.
(4) Subsection (1) shall not apply to a disposal of commodities of any description by a person dealing on a terminal market or dealing with or through a person ordinarily engaged in dealing on a terminal market.
Government and other securities.
19.—The following shall not be chargeable assets—
(a) securities (including savings certificates) issued under the authority of the Minister for Finance;
(b) stock issued by any of the following authorities—
(i) a local authority;
(ii) a harbour authority mentioned in the First Schedule to the Harbours Act, 1946;
(c) land bonds issued under the Land Purchase Acts; and
(d) debentures, debenture stock, certificates of charge or other forms of security issued by the Electricity Supply Board, Córas Iompair Éireann, The Agricultural Credit Corporation, Limited, Bord na Móna, Aerlínte Éireann, Teoranta, Aer Lingus, Teoranta or Aer Rianta, Teoranta.
Life assurance and deferred annuities.
20.—(1) This section has effect as respects any policy of assurance or contract for a deferred annuity on the life of any person.
(2) No chargeable gain shall accrue on the disposal of, or of an interest in, the rights under any such policy of assurance or contract except where the person making the disposal is not the original beneficial owner and acquired the rights or interests for a consideration in money or money's worth.
(3) Subject to subsection (2), the occasion of the payment of the sum or sums assured by a policy of assurance or of the first instalment of a deferred annuity, and the occasion of the surrender of a policy of assurance or of the rights under a contract for a deferred annuity, shall be the occasion of a disposal of the rights under the policy of assurance or contract for a deferred annuity and the amount of the consideration for the disposal of a contract for a deferred annuity shall be the market value at that time of the right to that and further instalments of the annuity.
(4) In subsection (3) the reference to payment of the sum assured shall include a reference to the transfer of investments or other assets to the owner of the policy in accordance with the policy.
Superannuation funds.
21.—(1) A gain shall not be a chargeable gain if accruing to a person from his disposal of investments held by him as part of a fund approved under—
(a) section 222 of the Income Tax Act, 1967;
(b) section 235 (4) of the Income Tax Act, 1967;
(c) section 235A (5) of the Income Tax Act, 1967 (inserted by the Finance Act, 1974); or
(d) section 16 of the Finance Act, 1972:
Provided that where part only of a fund is approved under any of the said sections, the gain shall be exempt from being a chargeable gain to the same extent only as income derived from the assets would be exempt under the relevant section under which approval was given.
(2) For the purposes of this section, the fund set up under section 6A of the Oireachtas (Allowances to Members) Act, 1938 (inserted by the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1960), shall be deemed to be a fund approved under section 16 of the Finance Act, 1972.
Charities.
22.—(1) Subject to subsection (2), a gain shall not be a chargeable gain if it accrues to a charity and is applicable and applied for charitable purposes.
(2) If property held on charitable trusts ceases to be subject to charitable trusts—
(a) the trustees shall be treated as if they had disposed of, and immediately re-acquired, the property for a consideration equal to its market value, any gain on the disposal being treated as not accruing to a charity, and
(b) if and so far as any of that property represents, directly or indirectly, the consideration for the disposal of assets by the trustees, any gain accruing on that disposal shall be treated as not having accrued to a charity,
and an assessment to capital gains tax chargeable by virtue of paragraph (b) may be made at any time not more than ten years after the end of the year of assessment in which the property ceases to be subject to charitable trusts.
Other bodies.
23.—(1) A gain shall not be a chargeable gain if it accrues to—
(a) a registered trade union to the extent that its income is exempt from income tax under section 336 of the Income Tax Act, 1967,
(b) an unregistered friendly society whose income is exempt from income tax under section 335 (1) of the said Act, or
(c) a registered friendly society whose income is exempt from income tax under section 335 (1) of the said Act,
(d) a local authority,
(e) the Central Bank of Ireland,
(f) a health board,
(g) a vocational education committee established under the Vocational Education Act, 1930, and
(h) a committee of agriculture established under the Agriculture Act, 1931.
(2) In this section “local authority” has the meaning assigned to it by section 2 (2) of the Local Government Act, 1941, and includes a body established under the Local Government Services (Corporate Bodies) Act, 1971.
Miscellaneous exemptions for certain kinds of property.
24.—(1) The following shall not be chargeable gains—
(a) any bonus payable under an instalment saving scheme, within the meaning of section 53 of the Finance Act, 1970;
(b) prizes under section 22 of the Finance (Miscellaneous Provisions) Act, 1956;
(c) sums obtained by way of compensation or damages for any wrong or injury suffered by an individual in his person or in his profession.
(2) Winnings from betting, including pool betting, or lotteries or sweepstakes or games with prizes shall not be chargeable gains and rights to winnings obtained by participating in any pool betting or lottery or sweepstake or game with prizes shall not be chargeable assets.
(3) No chargeable gain shall accrue on the disposal of a right to, or to any part of—
(a) any allowance, annuity or capital sum payable out of any superannuation fund, or under any superannuation scheme, established solely or mainly for persons employed in a profession, trade, undertaking or employment, and their dependants, or
(b) an annuity granted otherwise than under a contract for a deferred annuity by a company as part of its business of granting annuities on human life, whether or not including instalments of capital, or
(c) annual payments which are due under a covenant made by any person and which are not secured on any property.
(4) (a) No chargeable gain shall accrue on the disposal of an interest created by or arising under a settlement (including, in particular, an annuity or life interest, and the reversion to an annuity or life interest) by the person for whose benefit the interest was created by the terms of the settlement or by any other person except one who acquired, or derives his title from one who acquired, the interest for a consideration in money or money's worth, other than consideration consisting of another interest under the settlement.
(b) Subject to paragraph (a), where a person who has acquired an interest in settled property (including in particular the reversion to an annuity or life interest) becomes, as the holder of that interest, absolutely entitled as against the trustee to any settled property, he shall be treated as disposing of the interest in consideration of obtaining that settled property (but without prejudice to any gain accruing to the trustee on the disposal of that property deemed to be effected by him under section 15 (3)).
PART V
Special Reliefs
Private residence.
25.—(1) This section applies to a gain accruing to an individual on the disposal of, or of an interest in—
(a) a dwelling-house or part of a dwelling-house which is, or has been occupied by him as his only or main residence, or
(b) land which he has for his own occupation and enjoyment with that residence as its garden or grounds up to an area (exclusive of the site of the dwelling-house) not exceeding one acre:
Provided that where part of the land occupied with a residence is and part is not within this subsection, then that part shall be taken to be within this subsection which, if the remainder were separately occupied, would be the most suitable for occupation and enjoyment with the residence.
(2) The gain shall not be a chargeable gain if the dwelling-house or the part of a dwelling-house has been occupied by the individual as his only or main residence throughout the period of ownership, or throughout the period of ownership except for all or any part of the last twelve months of that period.
(3) Where subsection (2) does not apply, such portion of the gain shall not be a chargeable gain as represents the same proportion of the gain as—
(a) the length of the part or parts of the period of ownership during which the dwelling-house or the part of a dwelling-house was occupied by the individual as his only or main residence, but inclusive of the last twelve months of the period of ownership in any event, bears to
(b) the length of the period of ownership.
(4) (a) For the purposes of subsections (2) and (3)—
(i) any period of absence throughout which the individual worked in an employment or office all the duties of which were performed outside the State, and in addition
(ii) any period of absence not exceeding four years (or periods of absence which together did not exceed four years) throughout which the individual was prevented from residing in the dwelling-house or the part of a dwelling-house in consequence of the situation of his place of work or in consequence of any condition imposed by his employer requiring him to reside elsewhere, being a condition reasonably imposed to secure the effective performance by the employee of his duties,
shall be treated as if in that period of absence the dwelling-house or the part of a dwelling-house was occupied by the individual as his only or main residence if both before and after the period the dwelling-house (or the part in question) was occupied by the individual as his only or main residence.
(b) In this subsection “period of absence” means a period during which the dwelling-house or the part of a dwelling-house was not the individual's only or main residence and throughout which he had no residence or main residence eligible for relief under this section.
(5) If the gain accrues from the disposal of a dwelling-house or part of a dwelling-house part of which is used exclusively for the purposes of a trade or business or of a profession, the gain shall be apportioned and the foregoing subsections shall apply in relation to the part of the gain apportioned to the part which is not exclusively used for those purposes.
(6) If at any time in the period of ownership there is a change in the dwelling-house or the part of it that is occupied as the individual's residence, whether on account of a reconstruction or conversion of a building or for any other reason, or there have been changes as regards the use of part of the dwelling-house for the purpose of a trade or business, or of a profession, or for any other purpose, the relief given by this section may be adjusted in such manner as the inspector and the individual may agree, or as the Appeal Commissioners may on an appeal, consider to be just and reasonable.
(7) For the purposes of this section an individual shall not be treated as having more than one main residence at any one time and so far as it is necessary to determine which of two or more residences is an individual's main residence for any period—
(a) that question may be concluded by agreement between the inspector and the individual on the latter giving notice in writing to the inspector within two years from the beginning of that period, or given by the end of the year 1975-76, if that is later, and
(b) failing such agreement, the question shall be concluded by the determination of the inspector, which determination may be as respects either the whole or specified parts of the period of ownership in question,
and notice of any determination of the inspector under paragraph (b) shall be given to the individual who may appeal to the Appeal Commissioners against that determination within twenty-one days of service of the notice.
(8) In the case of a man and his wife living with him—
(a) there can only be, for the purposes of this section, one residence or main residence for both, so long as living together, and, where a notice under subsection (7) (a) affects both the husband and his wife, it must be made by both, and
(b) if the one disposes of, or of his or her interest in, the dwelling-house or part of a dwelling-house which is their only or main residence to the other, or if it passes on death to the other as legatee, the other's period of ownership shall begin with the beginning of the period of ownership of the one making the disposal or from whom it passes on death, and
(c) if paragraph (b) applies, but the dwelling-house or part of a dwelling-house was not the only or main residence of both throughout the period of ownership of the one making the disposal, account shall be taken of any part of that period during which it was his only or main residence as if it was also that of the other, and
(d) any notice under subsection (7) (b) which affects a residence owned by the husband and a residence owned by the wife shall be given to each and either may appeal under that subsection.
(9) This section shall also apply in relation to a gain accruing to a trustee on a disposal of settled property being an asset within subsection (1) where during the period of ownership of the trustee the dwelling-house or the part of a dwelling-house mentioned in that subsection has been the only or main residence of an individual entitled to occupy it under the terms of the settlement and in this section as so applied—
(a) references to the individual shall be taken as references to the trustee except in relation to the occupation of the dwelling-house or the part of a dwelling-house, and
(b) the notice which may be given to the inspector under subsection (7) (a) shall be a joint notice by the trustee and the person entitled to occupy the dwelling-house or the part of a dwelling-house.
(10) This section shall not apply in relation to a gain if the acquisition of, or of the interest in, the dwelling-house or the part of a dwelling-house was made wholly or mainly for the purpose of realising a gain from the disposal of it, and shall not apply in relation to a gain so far as the gain is attributable to any expenditure which was incurred after the beginning of the period of ownership and was incurred wholly or mainly for the purpose of realising a gain from the disposal.
(11) Apportionments of consideration shall be made wherever required by this section and, in particular, where a person disposes of a dwelling-house only part of which is his only or main residence.
(12) In this section “the period of ownership”—
(a) where the individual has had different interests at different times, shall be taken to begin from the first acquisition taken into account in arriving at the expenditure which under Schedule 1 is allowable as a deduction in computing under that Schedule the amount of the gain to which this section applies, and
(b) for the purposes of subsections (2), (3) and (4), shall not include any period before the 6th day of April, 1974.
Disposal of business or farm on retirement.
26.—(1) (a) Subject to the provisions of this section where an individual who has attained the age of fifty-five years disposes of the whole or part of his qualifying assets—
(i) if the amount or value of the consideration for the disposal does not exceed £50,000, relief shall be given in respect of the full amount of capital gains tax chargeable on any gain accruing on the disposal;
(ii) if the amount or value of the consideration for the disposal exceeds £50,000, the amount of capital gains tax chargeable on the gain accruing on the disposal shall not exceed half the difference between the amount of that consideration and £50,000.
(b) For the purposes of paragraph (a), the amount capital gains tax chargeable in respect of the gain shall be the amount of tax which would not have been chargeable but for that gain.
(2) For the purposes of subsection (1) the consideration on the disposal of qualifying assets by the individual shall be aggregated and nothing in this section shall affect the computation of gains accruing on the disposal of assets other than qualifying assets.
(3) Where a disposal of qualifying assets includes a disposal of shares or securities of the individual's family company, the amount of the consideration to be taken into account for the purposes of subsection (1) in respect of those shares or securities shall be the proportion of the consideration for such shares or securities which is equal to the proportion which the part of the value of the company's assets (including cash) at the time of the disposal which is attributable to the value of the company's chargeable business assets bears to the whole of that value:
Provided that nothing in this section shall affect liability on any gains calculated by reference to the balance of the consideration for the disposal of the shares or securities.
(4) (a) The total of the amounts of relief given under this section for any year of assessment, and all years of assessment before such year, shall not exceed such amount as would reduce the total amount of capital gains tax chargeable for all those years of assessment below the amount which would be chargeable if the disposals of qualifying assets had all been made in the year of assessment.
(b) Where at any time the relief given under this section exceeds the amount of relief which would be given if the disposals of qualifying assets for the year of assessment and all years of assessment before such year had been made in the year of assessment, any necessary adjustment may be made by way of assessment or additional assessment and such assessment may be made at any time not more than ten years after the end of the year of assessment in which the last of such disposals is made.
(c) For the purposes of this subsection, a disposal of qualifying assets other than a disposal of the whole of such assets, by a husband to a wife or by a wife to a husband shall, notwithstanding the provisions of section 13 (5), be taken into account at the market value of the assets.
(5) Subsection (1) shall apply where under paragraph 1 of Schedule 2 an individual is treated as disposing of interests in shares or securities of his family company in consideration of a capital distribution from the company (not being a distribution consisting of chargeable business assets) in the course of dissolving or winding up the company as it applies where he disposes of shares or securities of the company.
(6) (a) In this section and section 27—
“chargeable business asset” means an asset (including goodwill but not including shares or securities or other assets held as investments) which is, or is an interest in, an asset used for the purposes of a trade, farming, profession, office or employment carried on by the individual, or as the case may be by the individual's family company, other that a private residence to which section 25 applies;
“family company” means, in relation to an individual, a company the voting rights in which are—
(i) as to not less than 25 per cent., exercised by the individual, or
(ii) as to not less than 75 per cent., exercisable by the individual or a member of his family, and, as to not less than 10 per cent., exercisable by the individual himself;
“family” means, in relation to an individual, the husband or wife of the individual, and a relative of the individual or the individual's husband or wife, and “relative” means brother, sister, ancestor or lineal descendant;
“full time working director” means a director who is required to devote substantially the whole of his time to the service of the company in a managerial or technical capacity;
“qualifying assets”, in relation to a disposal, includes the chargeable business assets of the individual which, apart from tangible movable property, he has owned for a period of not less than ten years ending with the disposal and the shares or securities which he has owned for a period of not less than ten years ending with the disposal being shares or securities of a company which has been a trading or a farming company and his family company during a period of not less than ten years ending with the disposal and of which he has been a full time working director throughout that period:
Provided that there shall be taken into account for the purposes of this definition—
(i) the period of ownership of a spouse of the individual as if it were a period of ownership of the individual,
(ii) where the chargeable business assets are new assets, within the meaning of section 28, the period of ownership of the old assets as if it were a period of ownership of the new assets,
(iii) where the qualifying assets are shares or securities in a family company to which paragraph 6 of Schedule 2 applies, the period immediately before the transfer to the company of chargeable business assets during which those assets were owned by the individual as if it were a period of ownership of the individual of the qualifying assets or a period throughout which he was a full time working director, as may be appropriate, and
(iv) a period immediately before the death of the spouse of the individual throughout which the deceased spouse was a full time working director as if it were a period throughout which the individual was a full time working director;
“trade”, “farming”, “profession”, “office” and “employment” have the same meanings as in the Income Tax Acts;
“trading company” means a company whose business consists wholly or mainly of the carrying on of a trade or trades.
(b) In this section, references to the disposal of the whole or part of an individual's qualifying assets include references to the disposal of the whole or part of the assets provided or held for the purposes of an office or employment by the individual exercising that office or employment.
(7) An individual who has been granted relief under this section shall not be granted relief under section 27.
Disposal within the family of business or farm.
27.—(1) (a) Subject to the provisions of this section, where an individual who has attained the age of fifty-five years, disposes of the whole of his qualifying assets to one or more of his children—
(i) if the amount or value of the consideration for the disposal does not exceed £150,000, relief shall be given in respect of the full amount of capital gains tax chargeable on any gain accruing on the disposal;
(ii) if the amount or value of the consideration for the disposal exceeds £150,000, the amount of capital gains tax chargeable on the gain accruing on the disposal shall not exceed half the difference between the amount of that consideration and £150,000.
(b) For the purposes of paragraph (a), the amount of capital gains tax chargeable in respect of the gain shall be the amount of tax which would not have been chargeable but for that gain.
(c) In paragraph (a) “children”, in relation to a disposal, includes nephews and nieces who have worked substantially on a full-time basis for the period of 5 years ending with the disposal in carrying on, or assisting in the carrying on of, the trade, business or profession or the work of or connected with the office or employment.
(2) For the purposes of this section—
(a) subsections (2) and (3) of section 26 shall apply to a disposal falling within subsection (1) as they apply to a disposal falling within section 26 (1), and
(b) section 26 (4) shall have effect as if the disposal of qualifying assets in the year of assessment and all years of assessment before such year were disposals of assets owned by the individual at the time of the disposal falling within subsection (1).
(3) Where assets comprised in a disposal in respect of which relief has been granted under this section are disposed of within ten years of the earlier disposal, section 9 (acquisition and disposal deemed to be at market value) shall not apply to the earlier disposal and, notwithstanding any other provisions in this Act—
(a) the disposal and acquisition of the assets under that earlier disposal shall be deemed, for the purposes of this Act, to be for such consideration as would have secured that neither a gain nor a loss accrued on that disposal, and
(b) the acquisition of the assets by the individual making the earlier disposal shall be deemed, for the purposes of this Act, to be the acquisition of the individual making the later disposal:
Provided that nothing in this subsection shall affect the amount of capital gains tax chargeable in respect of the earlier disposal, but, to the extent that tax so chargeable has been paid, relief shall be granted by set-off against the amount of capital gains tax chargeable on the later disposal and not otherwise.
(4) An individual who has been granted relief under this section shall not be granted relief under section 26.
Replacement of business and other assets.
28.—(1) If the consideration which a person carrying on a trade obtains for the disposal of, or of his interest in, assets (in this section referred to as the old assets) used, and used only, for the purposes of the trade throughout the period of ownership is applied by him in acquiring other assets, or an interest in other assets (in this section referred to as the new assets) which on the acquisition are taken into use, and used only, for the purposes of the trade, and the old assets and the new assets are assets of a kind specified in subsection (5), then the person carrying on the trade shall, on making a claim in that behalf, be treated for the purposes of this Act as if the chargeable gain accruing on the old assets did not accrue until he ceases to use the new assets for the purposes of the trade:
Provided that if the consideration for the disposal of the new assets is applied in acquiring other new assets which on the acquisition are taken into use, and used only, for the purposes of the trade and are assets specified in subsection (5), the person carrying on the trade shall be treated as if the chargeable gain accruing on the disposal of the old assets did not accrue until he ceases to use the other new assets aforesaid and any further new assets which are acquired in a similar manner, taken into use, and used only, for the purposes of the trade and are assets specified in subsection (5).
(2) Subsection (1) shall not apply if part only of the amount or value of the consideration for the disposal of, or of the interest in, the old assets is applied as described in that subsection, but if all of the amount or value of the consideration except for a part which is less than the amount of the gain (whether all chargeable gain or not) accruing on the disposal of, or of the interest in, the old assets is so applied, then, the person carrying on the trade shall, on making a claim in that behalf, be treated, for the purposes of this Act, as if the amount of the gain accruing on the disposal of the old assets were reduced to the amount of consideration not applied in the acquisition of the new assets (and if not all chargeable gain with a proportionate reduction in the amount of the chargeable gain) and the balance of the gain (or chargeable gain) shall be treated as if it did not accrue until he ceases to use the new assets for the purposes of the trade.
(3) This section shall only apply if the acquisition of, or of the interest in, the new assets takes place, or an unconditional contract for the acquisition is entered into, in the period beginning twelve months before and ending three years after the disposal of, or of the interest in, the old assets, or at such earlier or later time as the Revenue Commissioners may by notice in writing allow:
Provided that, where an unconditional contract for the acquisition is so entered into, this section may be applied on a provisional basis without waiting to ascertain whether the new assets, or the interest in the new assets, is acquired in pursuance of the contract, and, when that fact is ascertained, all necessary adjustments shall be made by making assessments or by repayment or discharge of tax, and shall be so made notwithstanding any limitation in this Act on the time within which assessments may be made.
(4) This section shall not apply unless the acquisition of, or of the interest in, the new assets, was made for the purpose of their use in the trade, and not wholly or partly for the purpose of realising a gain from the disposal of, or of the interest in, the new assets.
(5) The following are assets for the purpose of this section—
(a) plant or machinery;
(b) except where the trade is a trade of dealing in or developing land, or of providing services for the occupier of land in which the person carrying on the trade has an estate or interest—
(i) any building or part of a building and any permanent or semi-permanent structure in the nature of a building, occupied (as well as used) only for the purposes of the trade,
(ii) any land occupied (as well as used) only for the purposes of the trade, provided that where the trade is a trade of dealing in or developing land, but a profit on the sale of any land held for the purposes of the trade would not form part of the trading profits, the trade shall be treated for the purposes of this subsection as if it were not a trade of dealing in or developing land;
(c) goodwill.
(6) If, over the period of ownership or any substantial part of the period of ownership, part of a building or structure is, and part is not, used for the purposes of a trade, this section shall apply as if the part so used, with any land occupied for purposes ancillary to the occupation and use of that part of the building or structure, were a separate asset, and subject to any necessary apportionments of consideration for an acquisition or disposal of, or of an interest in, the building or structure and other land.
(7) If the old assets were not used for the purposes of the trade throughout the period of ownership, this section shall apply as if a part of the asset representing its use for the purposes of the trade having regard to the time and extent to which it was, and was not, used for those purposes, were a separate asset which had been wholly used for the purposes of the trade, and this subsection shall apply in relation to that part subject to any necessary apportionment of consideration for an acquisition or disposal of, or of the interest in, the asset.
(8) (a) This section shall apply in relation to a person who carries on two or more trades which are in different localities, but which are concerned wholly or mainly with goods or services of the same kind, as if, in relation to the assets used for the purposes of the trades, the trades were the same trade.
(b) This section shall apply in relation to a person who ceases to carry on a trade or trades (the old trade or trades) which he has carried on for a period of ten years or more and commences to carry on another trade or trades (the new trade or trades) within a period of two years from the date on which he ceased to carry on the trade or trades as if, in relation to the old assets used for the purposes of one of the old trades and the new assets used for the purposes of the new trade, the two trades were the same trade.
(9) This section shall apply with the necessary modifications—
(a) in relation to the discharge of the functions of a public authority,
(b) in relation to the occupation of woodlands where the woodlands are managed by the occupier on a commercial basis and with a view to the realisation of profits,
(c) in relation to a profession, office or employment,
(d) in relation to such of the activities of a body of persons whose activities are carried on otherwise than for profit and are wholly or mainly directed to the protection or promotion of the interests of its members in the carrying on of their trade or profession as are so directed,
(e) in relation to the activities of a body of persons being a body not established for profit whose activities are wholly or mainly carried on otherwise than for profit but in the case of assets within subsection (5) (b) only if they are both occupied and used by the body and in the case of other specified assets only if they are used by the body,
(f) in relation to such of the activities of a body of persons established for the sole purpose of promoting athletic or amateur games or sports as are directed to that purpose, and
(g) in relation to farming,
as it applies in relation to a trade, and in this section “farming”, “trade”, “profession”, “office” and “employment” have the same meanings as in the Income Tax Acts, but not so as to apply the provisions of the Income Tax Acts as to the circumstances in which, on a change in the persons carrying on a trade, a trade is to be regarded as discontinued, or as set up and commenced and “a trade of dealing in or developing land” shall include a business of dealing in or developing land regarded as a trade under those Acts.
(10) Without prejudice to the provisions of this Act providing generally for apportionments, where consideration is given for the acquisition or disposal of assets some or part of which are assets in relation to which a claim under subsection (1) or (2) applies, and some or part of which are not, the consideration shall be apportioned in such manner as is just and reasonable.
Compensation and insurance money.
29.—(1) If the recipient so claims, receipt of a capital sum within paragraph (i), (ii), (iii) or (iv) of section 8 (2) (a) derived from an asset which is not lost or destroyed shall not be treated as a disposal of the asset if—
(a) the capital sum is wholly applied in restoring the asset, or
(b) the capital sum is applied in restoring the asset except for a part of the capital sum which is not reasonably required for the purpose and which is small, as compared with the whole capital sum,
but, if the receipt is not treated as a disposal, all sums which would, if the receipt had been so treated, have been brought into account as consideration for that disposal in the computation of a gain accruing on the disposal shall be deducted from any expenditure allowable under Schedule 1 as a deduction in computing a gain on the subsequent disposal of the asset:
Provided that this subsection shall not apply to cases falling within paragraph (b) of this subsection if immediately before the receipt of the capital sum there is no expenditure attributable to the asset under clauses (a) and (b) of paragraph 3 (1) of Schedule 1 (deduction allowable in computing a gain) or if the consideration for the part disposal so deemed to be effected on receipt of the capital sum exceeds that expenditure.
(2) If an asset is lost or destroyed and a capital sum received by way of compensation for the loss or destruction, or under a policy of insurance of the risk of the loss or destruction, is, within one year of receipt, or such longer period as the inspector may allow, applied in acquiring an asset in replacement of the asset lost or destroyed, the owner shall if he so claims be treated for the purposes of this Act—
(a) as if the consideration for the disposal of the old asset were (if otherwise of a greater amount) of such amount as would secure that on the disposal neither a loss nor a gain accrued to him, and
(b) as if the amount of the consideration for the acquisition of the new asset were reduced by the excess of the amount of the capital sum received by way of compensation or under the policy of insurance, together with any residual or scrap value, over the amount of the consideration which he is treated as receiving under paragraph (a).
(3) A claim shall not be made under subsection (2) if part only of the capital sum is applied in acquiring the new asset but if all of that capital sum except for a part which is less than the amount of the gain (whether all chargeable gain or not) accruing on the disposal of the old asset is so applied, then the owner shall, if he so claims, be treated for the purposes of this Act—
(a) as if the amount of the gain so accruing were reduced to the amount of the said part not applied in acquiring the new assets (and, if not all chargeable gain, with a proportionate reduction in the amount of the chargeable gain), and
(b) as if the amount of the consideration for the acquisition of the new asset were reduced by the amount by which the gain is reduced under paragraph (a).
(4) Where subsection (2) (a) applies to exclude from charge to capital gains tax a gain which, in consequence of Part II of Schedule 1 (assets held on the 6th day of April, 1974), is not all chargeable gain, the amount of the reduction to be made under subsection (2) (b) shall be the amount of the chargeable gain and not the whole amount of the gain; and in subsection (3) (b) for the reference to the amount by which the gain is reduced under subsection (3) (a) there shall substituted a reference to the amount by which the chargeable gain is proportionately reduced under the said subsection (3) (a).
(5) This section shall not apply in relation to a wasting asset.
Scheme for retirement of farmers.
30.—For the purposes of this Act, an amount by way of capital sum or premium provided under the European Communities (Retirement of Farmers) Regulations, 1974, whether or not an annuity is granted in lieu thereof, shall not be deemed to form part of the consideration for the disposal in relation to which such capital sum or premium is provided.
PART VI
Unit Trusts
Unit trusts.
31.—(1) Without prejudice to the provisions of section 15 (settled property), chargeable gains accruing to a unit trust in any year of assessment shall be assessed and charged on the trustees of the unit trust.
(2) The trustees of a unit trust shall for the purposes of this Act be treated as being a single and continuing body of persons (distinct from the persons who may from time to time be the trustees) and that body shall be treated as being resident and ordinarily resident in the State unless the general administration of the unit trust is ordinarily carried on outside the State and the trustees or a majority of them for the time being are not resident or not ordinarily resident in the State.
(3) Where a person receives or becomes entitled to receive in respect of units in a unit trust any capital distribution from the unit trust, he shall be treated as if he had, in consideration of that capital distribution, disposed of an interest in the units.
(4) If throughout a year of assessment all the issued units in a unit trust are assets such that any gain accruing if they were disposed of by the unit holder would be wholly exempt from capital gains tax (otherwise than by reason of residence), gains accruing to the unit trust in that year shall not be chargeable gains.
(5) If throughout a year of assessment all the assets of a unit trust are such that they are not chargeable assets or are assets in respect of which a gain would not be a chargeable gain, the units in the unit trust shall be deemed not to be chargeable assets for the purposes of this Act.
(6) In this section “capital distribution” means any distribution from a unit trust, including a distribution in the course of terminating the unit trust, in money or money's worth except a distribution which in the hands of the recipient constitutes income for the purposes of income tax and in section 32 “distribution of capital” shall be construed in accordance with this definition.
Unit trusts: special arrangements.
32.—(1) This section shall apply to a unit trust—
(a) which is a registered unit trust scheme within the meaning of section 3 of the Unit Trusts Act, 1972,
(b) the trustees of which are resident and ordinarily resident in the State,
(c) the prices of units in which are published regularly by the managers, and
(d) all the units of which are of equal value and carry the same rights.
(2) The Revenue Commissioners may enter into arrangements with the trustees of any unit trust to which this section applies in respect of the year 1974-75 and in respect of any later year of assessment if the following conditions are satisfied—
(a) throughout the relevant year of assessment—
(i) not less than 80 per cent. of the units were held by persons who acquired them pursuant to an offer made to the general public,
(ii) the number of unit holders is not less than 50 and no one unit holder was the beneficial owner of more than 5 per cent. of the units in issue at any time and, for the purposes of this subparagraph, a person and any persons with whom he is connected shall be treated as one unit holder,
(iii) the value of quoted securities held by the trustees on behalf of the unit trust was not less than 80 per cent. by value of the total investments so held by the trustees, and
(iv) the securities held by the trustees on behalf of the unit trust in any one company did not exceed 15 per cent. by value of the total securities so held by the trustees, and
(b) the trustees have—
(i) in respect of each distribution of income or capital of the unit trust to unit holders informed the unit holders of the amount, if any, of the chargeable gains included therein, and
(ii) given to the Revenue Commissioners such particulars of the chargeable gains distributed to each unit holder as they may require.
(3) Any arrangement under this section shall secure that the amount of capital gains tax payable by the unit trust shall be that portion of the amount of tax which, but for the arrangement, would be payable under section 31 for the relevant year of assessment as bears the same proportion to the amount of tax so payable under section 31 as the amount of income and chargeable gains of that year not distributed bears to the total amount of income and chargeable gains of that year.
(4) Any arrangement under this section for any year of assessment shall be made on or before the 5th day of April next following the end of that year and effect shall be given to the arrangement by adjustment of the assessment and if tax has been paid, any amount overpaid shall be repaid.
(5) The Revenue Commissioners may enter into an arrangement under this section with the trustees of a unit trust for any year of assessment notwithstanding that one or more of the conditions stated in subsections (1) and (2) was or were not complied with.
(6) In this section—
“securities” include securities falling within section 19 and stocks, shares, bonds and obligations of any government, municipal corporation, company or other body corporate;
“quoted securities” means securities which at any time during the year of assessment or in the period of six years immediately prior to the year of assessment have had quoted market values on a stock exchange in the State or elsewhere.
PART VII
Anti-Avoidance
Connected persons.
33.—(1) This section shall apply where a person acquires an asset and the person making the disposal is connected with him.
(2) Without prejudice to the generality of section 9, the person acquiring the asset and the person making the disposal shall be treated as parties to a transaction otherwise than by way of a bargain made at arm's length.
(3) If on the disposal a loss accrues to the person making the disposal, it shall not be deductible except from a chargeable gain accruing to him on some other disposal of an asset to the person acquiring the asset mentioned in subsection (1), being a disposal made at a time when they are connected persons:
Provided that this subsection shall not apply to a disposal by way of gift in settlement if the gift and the income from it is wholly or primarily applicable for educational, cultural or recreational purposes, and the persons benefiting from the application for those purposes are confined to members of an association of persons for whose benefit the gift was made, not being persons all or most of whom are connected persons.
(4) Where the asset mentioned in subsection (1) is an option to enter into a sale or other transaction given by the person making the disposal, a loss accruing to the person acquiring the asset shall not be an allowable loss unless it accrues on a disposal of the option at arm's length to a person who is not connected with him.
(5) In a case where the asset mentioned in subsection (1) is subject to any right or restriction enforceable by the person making the disposal, or by a person connected with him, then (the amount of the consideration for the acquisition being, in accordance with subsection (2), deemed to be equal to the market value of the asset) that market value shall be—
(a) what its market value would be if not subject to the right or restriction, as reduced by—
(b) the market value of the right or restriction or the amount by which its extinction would enhance the value of the asset to its owner, whichever is the less:
Provided that if the right or restriction—
(i) is of such a nature that its enforcement would or might effectively destroy or substantially impair the value of the asset without bringing any countervailing advantage either to the person making the disposal or a person connected with him,
(ii) is an option or other right to acquire the asset, or
(iii) in the case of incorporeal property, is a right to extinguish the asset in the hands of the person giving the consideration by forfeiture or merger or otherwise,
that market value of the asset shall be determined, and the amount of the gain accruing on the disposal shall be computed, as if the right or restriction did not exist.
(6) Subsection (5) shall not apply to a right of forfeiture or other right exercisable on breach of a covenant contained in a lease of land or other property, and shall not apply to any right or restriction under a mortgage or other charge.
(7) Any question whether a person is connected with another shall be determined in accordance with the following provisions (any provision that one person is connected with another being taken to mean that they are connected with one another)—
(a) a person is connected with an individual if that person is the individual's husband or wife, or is a relative, or the husband or wife of a relative, of the individual or of the individual's husband or wife;
(b) a person, in his capacity as trustee of a settlement, is connected with any individual who in relation to the settlement is a settlor, with any person who is connected with such an individual and with a body corporate which is deemed to be connected with that settlement, and a body corporate shall be deemed to be connected with a settlement in any year if at any time in the year it is a controlled company (or only not a controlled company because it is not resident in the State) and the shareholders then include the trustees of or a beneficiary under the settlement;
(c) except in relation to acquisitions or disposals of partnership assets pursuant to bona fide commercial arrangements, a person is connected with any person with whom he is in partnership, and with the husband or wife or a relative of any individual with whom he is in partnership;
(d) a company is connected with another company—
(i) if the same person has control of both, or a person has control of one and persons connected with him, or he and persons connected with him, have control of the other, or
(ii) if a group of two or more persons has control of each company, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by one or more persons with whom he is connected;
(e) a company is connected with another person, if that person has control of it or if that person and persons connected with him together have control of it;
(f) any two or more persons acting together to secure or exercise control of or to acquire a holding in a company shall be treated in relation to that company as connected with one another and with any person acting on the direction of any of them to secure or exercise control of or to acquire a holding in the company.
(8) In subsection (7) “relative” means brother, sister, uncle, aunt, niece, nephew, ancestor, lineal descendant, or a person adopted under the Adoption Acts, 1952 to 1974, or under the law of any place outside the State.
Assets disposed of in a series of transactions.
34.—If a person is given, or acquires from one or more persons with whom he is connected, by way of two or more transactions, assets of which the aggregate market value, when considered separately in relation to the separate other transactions, is less than the aggregate market value of those assets when considered together, then for the purposes of this Act the market value of the assets where relevant, shall be taken to be the larger market value and that value shall be apportioned rateably to the respective disposals.
Controlled company transferring assets at undervalue.
35.—(1) If on or after the 6th day of April, 1974, a company which is a controlled company transfers an asset to any person otherwise than by way of a bargain made at arm's length and for a consideration of an amount or value less than the market value of the asset, an amount equal to the difference shall be apportioned among the issued shares of the company, and the holders of those shares shall be treated in accordance with the following provisions of this section.
(2) For the purposes of the computation of a chargeable gain accruing on the disposal of any of those shares by the person owning them on the date of transfer, an amount equal to the amount so apportioned to that share shall be excluded from the expenditure allowable as a deduction under paragraph 3 (1) (a) of Schedule 1 from the consideration for the disposal.
(3) If the person owning any of the said shares at the date of transfer is itself a controlled company, an amount equal to the amount apportioned to the shares so owned under subsection (1) to that controlled company shall be apportioned among the issued shares of that controlled company, and the holders of those shares shall be treated in accordance with subsection (2), and so on through any number of controlled companies.
(4) (a) A controlled company means a company resident in the State—
(i) in which the number of persons holding shares is not more than 50;
(ii) which has not issued any of its shares as a result of a public invitation to subscribe for shares; and
(iii) which is under the control of not more than 5 persons.
(b) A company shall be deemed to be under the control of any persons where the majority of the voting power or shares is in the hands of those persons or nominees of those persons.
(c) For the purposes of this subsection, a person and any persons with whom he is connected shall be treated as one person.
(5) This section shall apply to a company falling within section 36 as it applies to a controlled company.
Non-resident company.
36.—(1) This section applies as respects chargeable gains accruing to a company—
(a) which is not resident in the State, and
(b) which would be a controlled company if it were resident in the State.
(2) Subject to this section, every person who, at the time when the chargeable gain accrues to the company—
(a) is resident or ordinarily resident in the State,
(b) if an individual is domiciled in the State, and
(c) holds shares in the company,
shall be treated for the purposes of this Act as if a part of the chargeable gain had accrued to him.
(3) That part of the chargeable gain shall be equal to the proportion of the assets of the company to which that person would be entitled on a liquidation of the company at the time when the chargeable gain accrues to the company.
(4) This section shall not apply in relation to—
(a) any amount in respect of the chargeable gain which is distributed, whether by way of dividend or distribution of capital or on the dissolution of the company, to persons holding shares in the company, or creditors of the company, within two years from the time when the chargeable gain accrued to the company,
(b) a chargeable gain accruing on the disposal of assets, being tangible property, whether movable or immovable, or a lease of such property, where the property was used, and used only, for the purposes of a trade carried on by the company wholly outside the State,
(c) a chargeable gain accruing on the disposal of currency or of a debt within section 46 (6) (foreign bank accounts), where the currency or debt is or represents money in use for the purposes of a trade carried on by the company wholly outside the State, or
(d) a chargeable gain in respect of which the company is chargeable to tax by virtue of subsection (2) or (7) of section 4 (charge to tax on non-residents).
(5) Subsection (4) (a) shall not prevent the making of an assessment in pursuance of this section, but if, by virtue of subsection (4) (a), this section is excluded, all such adjustments, whether by way of repayment or discharge of tax or otherwise, shall be made as will give effect to the provisions of subsection (4) (a).
(6) The amount of capital gains tax paid by a person in pursuance of subsection (2) (so far as not reimbursed by the company) shall be allowable as a deduction in the computation, under this Act, of a gain accruing on the disposal by him of the shares by reference to which the tax was paid.
(7) To the extent that it would reduce or extinguish chargeable gains accruing by virtue of this section to a person in a year of assessment, this section shall apply in relation to a loss accruing to the company on the disposal of an asset in that year of assessment as it would apply if a gain instead of a loss had accrued to the company on the disposal, but shall only so apply in relation to that person; and subject to the foregoing provisions of this subsection, this section shall not apply in relation to a loss accruing to the company.
(8) If the person owning any of the shares in the company at the time when the chargeable gain accrues to the company is itself a company which is not resident in the State but which would be a controlled company if it were resident in the State, an amount equal to the amount apportioned under subsection (3) out of the chargeable gain to the shares so owned shall be apportioned among the issued shares of the second-mentioned company, and the holders of those shares shall be treated in accordance with subsection (2), and so on through any number of companies.
(9) If any tax payable by any person by virtue of subsection (2) is paid by the company to which the chargeable gain accrues, or in a case under subsection (8) is paid by any such other company, the amount so paid shall not for the purposes of income tax, or for the purposes of this Act, be regarded as a payment to the person by whom the tax was originally payable.
Non-resident trust.
37.—(1) This section applies as respects chargeable gains accruing to the trustees of a settlement if the trustees are not resident and not ordinarily resident in the State, and if the settlor, or one of the settlors, is domiciled and either resident or ordinarily resident in the State, or was domiciled and either resident or ordinarily resident in the State when he made the settlement.
(2) Any beneficiary under the settlement who is domiciled and either resident or ordinarily resident in the State in any year of assessment shall be treated for the purposes of this Act as if an apportioned part of the amount, if any, on which the trustees would have been chargeable to capital gains tax under section 5 (1), if domiciled and either resident or ordinarily resident in the State in that year of assessment, had been chargeable gains accruing to the beneficiary in that year of assessment; and for the purposes of this section any such amount shall be apportioned in such manner as is just and reasonable between persons having interests in the settled property, whether the interest be a life interest or an interest in reversion, and so that the chargeable gain is apportioned, as near as may be, according to the respective values of those interests, disregarding in the case of a defeasible interest the possibility of defeasance.
(3) For the purposes of this section—
(a) if in any of the five years ending with that in which the chargeable gain accrues a person has received a payment or payments out of the income of the settled property made in exercise of a discretion, he shall be regarded, in relation to that chargeable gain, as having an interest in the settled property of a value equal to that of an annuity of a yearly amount equal to one-fifth of the total of the payments so received by him in the said five years, and
(b) if a person receives at any time after the chargeable gain accrues a capital payment made out of the settled property in exercise of a discretion, being a payment which represents the chargeable gain in whole or in part, then, except so far as any part of the gain has been attributed under this section to some other person who is domiciled and resident or ordinarily resident in the State, that person shall, if domiciled and resident or ordinarily resident in the State, be treated as if the chargeable gain, or as the case may be the part of the chargeable gain represented by the capital payment, had accrued to him at the time when he received the capital payment.
(4) In the case of a settlement made before the 28th day of February, 1974—
(a) subsection (2) shall not apply to a beneficiary whose interest is solely in the income of the settled property, and who cannot by means of the exercise of any power of appointment or power of revocation or otherwise, obtain for himself, whether with or without the consent of any other person, any part of the capital represented by the settled property, and
(b) payment of capital gains tax chargeable on a gain apportioned to a beneficiary in respect of an interest in reversion in any part of the capital represented by the settled property may be postponed until that person becomes absolutely entitled to that part of the settled property, or disposes of the whole or any part of his interest, unless he can, by any means described in paragraph (a), obtain for himself any of it at any earlier time,
and, for the purposes of this subsection, property added to a settlement after the settlement is made shall be regarded as property under a separate settlement made at the time when the property is so added.
(5) In any case in which the amount of any capital gains tax payable by a beneficiary under a settlement in accordance with the provisions of this section is paid by the trustees of the settlement, such amount shall not for the purposes of income tax or capital gains tax be regarded as a payment to such beneficiary.
(6) This section shall not apply in relation to a loss accruing to the trustees of the settlement.
PART VIII
Miscellaneous and Supplemental
Double taxation relief.
38.—(1) For the purposes of giving relief from double taxation in relation to capital gains tax charged under the law of any country outside the State, in section 361 of, and Schedule 10 to, the Income Tax Act, 1967, as they apply for the purposes of income tax, for references to income there shall be substituted references to capital gains, and for references to income tax there shall be substituted references to capital gains tax meaning, as the context may require, tax charged under the law of the State or tax charged under the law of a country outside the State.
(2) So far as by virtue of this section capital gains tax charged under the law of a country outside the State may be brought into account under the said provisions of the Income Tax Act, 1967, as applied by this section, that tax, whether relief is given by virtue of this section in respect of it or not, shall not be taken into account for the purposes of those provisions as they apply apart from this section.
(3) Section 361 (7) of the Income Tax Act, 1967 (disclosure of information for purposes of double taxation), shall apply in relation to capital gains tax as it applies in relation to income tax.
Disposals to State, charities and other bodies.
39.—(1) Where a disposal of an asset is made otherwise than under a bargain at arm's length—
(a) to the State,
(b) to a charity, or
(c) to any of the bodies falling within section 28 (3) of the Finance Act, 1931 (national institutions and other public bodies),
section 9 (consideration deemed to be equal to market value) shall not apply, but if the disposal is for no consideration or for a consideration not exceeding the sums allowable as a deduction under paragraph 3 of Schedule 1, then—
(i) the disposal and acquisition shall be treated for the purposes of this Act as being made for such consideration as to secure that neither a gain nor a loss accrues on the disposal, and
(ii) where, after the disposal, the asset is disposed of by the person who acquired it under the disposal, its acquisition by the person making the earlier disposal shall be treated for the purposes of this Act as the acquisition of the person making the later disposal.
(2) Where under subsection (3) or (5) of section 15, any assets or parts of any assets forming part of settled property are deemed to be disposed of and re-acquired by the trustee, and—
(a) where the assets deemed to be disposed of under section 15 (3) are re-acquired on behalf of the State, a charity or a body falling within the said section 28 (3); or
(b) the assets which or parts of which are deemed to be disposed of and re-acquired under section 15 (5) are held for the purposes of the State, a charity or a body falling within the said section 28 (3);
then, if no consideration is received by any person for or in connection with any transaction by virtue of which the State, the charity or other body becomes so entitled or the assets are so held, the disposal and acquisition of the assets to which the State, the charity or other body becomes so entitled or of the assets which are held as mentioned in paragraph (b) shall be treated for the purposes of this Act as made for such consideration as to secure that neither a gain nor a loss accrues on the disposal.
Assets of insolvent persons.
40.—(1) In relation to assets held by a person as trustee or assignee in bankruptcy or under a deed of arrangement, this Act shall apply as if the assets were vested in, and the acts of the trustee or assignee in relation to the assets were the acts of, the bankrupt or debtor (acquisitions from or disposals to him by the bankrupt or debtor being disregarded accordingly), and tax in respect of any chargeable gains which accrue to any such trustee or assignee shall be assessable on and recoverable from him.
(2) Assets held by a trustee or assignee in bankruptcy or under a deed of arrangement at the death of the bankrupt or debtor shall for the purposes of this Act be regarded as held by a personal representative of the deceased and—
(a) subsection (1) shall not apply after the death, and
(b) section 14 (1) (under which assets passing on a death are deemed to be acquired by the persons on whom they devolve) shall apply as if any assets held by a trustee or assignee in bankruptcy or under a deed of arrangement at the death of the bankrupt or debtor were assets of which the deceased was competent to dispose and which then devolved on the trustee or assignee as if he were a personal representative.
(3) Assets vesting in a trustee in bankruptcy after the death of the bankrupt or debtor shall for the purposes of this Act be regarded as held by a personal representative of the deceased, and subsection (1) shall not apply.
(4) In this section “deed of arrangement” means a deed of arrangement to which the Deeds of Arrangement Act, 1887, applies.
Liquidation of companies.
41.—Where assets of a company are vested in a liquidator under section 230 of the Companies Act, 1963, or otherwise, this Act shall apply as if the assets were vested in, and the acts of the liquidator in relation to the assets were the acts of, the company (acquisitions from or disposals to him by the company being disregarded accordingly).
Funds in court.
42.—(1) In this section—
“funds in court” means any monies (and investments representing such monies), annuities, stocks, shares or other securities standing or to be placed to the account of the Accountant in the books of the Bank of Ireland or any company, and includes boxes and other effects;
“the Accountant” means the Accountant attached to the court or a deputy appointed by the Minister for Justice;
“court”, except where the reference is to the Circuit Court, means the High Court.
(2) For the purposes of section 8 (3), funds in court shall be regarded as held by the Accountant as nominee for the persons entitled to or interested in the funds, or as the case may be for their trustees.
(3) Where funds in court standing to an account in the books of the Accountant are invested or, after investment, are realised, the method by which the Accountant effects the investment or the realisation of investments shall not affect the question whether there is for the purposes of this Act an acquisition, or as the case may be a disposal, of an asset representing funds in court standing to that account, and, in particular, there shall for those purposes be an acquisition or disposal of assets notwithstanding that the investment of funds in court standing to an account in the books of the Accountant, or the realisation of funds which have been so invested, is effected by setting off, in the Accountant's accounts, investment in one account against realisation of investments in another.
(4) This section shall apply with any necessary modifications to funds in the Circuit Court as it applies to funds in court.
Unremittable gains.
43.—(1) In this section—
“particular gains” means chargeable gains accruing from the disposal of assets situated outside the State, the amount of which is, or is included in, the amount (in this section referred to as the said amount) on which, in accordance with this Act, the tax is computed.
(2) Subject to subsections (3), (4) and (5), the provisions of this section shall have effect where capital gains tax has been charged by an assessment for the year in which the particular gains accrued and the tax has not been paid.
(3) In any case in which, on or after the date on which the capital gains tax has become payable, such proof is given to the Revenue Commissioners as renders them satisfied that particular gains cannot, by reason of legislation in the country in which they have accrued or of executive action of the government of that country, be remitted to the State, the Revenue Commissioners may, for the purposes of collection, treat the assessment as if the said amount did not include the particular gains, but such treatment shall terminate on the Revenue Commissioners ceasing to be satisfied as aforesaid.
(4) The Revenue Commissioners may, for the purposes of this section, call for such information as they consider necessary.
(5) Any person who is dissatisfied with a decision of the Revenue Commissioners under subsection (3) may, by giving notice in writing to the Revenue Commissioners within twenty-one days after the notification of the decision to him, apply to have the matter referred to the Appeal Commissioners, as if it were an appeal against an assessment, and the provisions of the Income Tax Act, 1967, relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.
Consideration due after time of disposal.
44.—(1) If the consideration, or part of the consideration, taken into account in the computation of a chargeable gain is payable by instalments over a period beginning not earlier than the time when the disposal is made, being a period exceeding eighteen months then, if the person making the disposal satisfies the Revenue Commissioners that he would otherwise suffer undue hardship, the tax on a chargeable gain accruing on a disposal may, at his option, be paid by such instalments as the Revenue Commissioners may allow over a period not exceeding five years and ending not later than the time at which the last of the first-mentioned instalments is payable.
(2) In the computation of a chargeable gain, consideration for the disposal shall be brought into account without any discount for postponement of the right to receive any part of it and without regard to a risk of any part of the consideration being irrecoverable or to the right to receive any part of the consideration being contingent:
Provided that if any part of the consideration so brought into account is shown to the satisfaction of the inspector to be irrecoverable, such adjustment, whether by way of discharge or repayment of tax or otherwise, shall be made as the case may require.
Transfers of value derived from assets.
45.—(1) Without prejudice to the generality of the provisions of this Act as to the transactions which are disposals of assets, any transaction which under this section is to be treated as a disposal of an asset shall be so treated (with a corresponding acquisition of an interest in the asset) notwithstanding that there is no consideration and so far as, on the assumption that the parties to the transaction were at arm's length, the party making the disposal could have obtained consideration, or additional consideration, for the disposal, the transaction shall be treated as not being at arm's length and the consideration so obtainable, added to the consideration actually passing, shall be treated as the market value of what is acquired.
(2) (a) If a person having control of a company exercises his control so that value passes out of shares in the company owned by him or a person with whom he is connected, or out of rights over the company exercisable by him or by a person with whom he is connected, and passes into other shares in or rights over the company, that exercise of his control shall be a disposal of the shares or rights out of which the value passes by the person by whom they were owned or exercisable.
(b) References in paragraph (a) to a person include references to two or more persons connected with one another.
(3) If, after a transaction which results in the owner of land or of any other description of property becoming the lessee of the property there is any adjustment of the rights and liabilities under the lease (whether or not involving the grant of a new lease) which is as a whole favourable to the lessor, that shall be a disposal by the lessee of an interest in the property.
(4) If an asset is subject to any description of right or restriction, the extinction or abrogation, in whole or in part, of the right or restriction by the person entitled to enforce it shall be a disposal by him of the right or restriction.
Debts.
46.—(1) Where a person incurs a debt to another (that is, the original creditor), whether in Irish currency or in some other currency, no chargeable gain shall accrue to that creditor or his personal representative or legatee on a disposal of the debt:
Provided that this subsection shall not apply in the case of the debt on a security as defined in paragraph 3 of Schedule 2 (conversion of securities).
(2) Subject to the provisions of the said paragraph 3 and of paragraph 4 of Schedule 2 (company amalgamations), and subject to the foregoing subsection, the satisfaction of a debt or part of it (including a debt on a security as defined in the said paragraph 3) shall be treated as a disposal of the debt or of that part by the creditor made at the time when the debt or that part is satisfied.
(3) Where property is acquired by a creditor in satisfaction of his debt or part of it, then subject to the provisions of the said paragraph 3 and 4 the property shall not be treated as disposed of by the debtor or acquired by the creditor for a consideration greater than its market value at the time of the creditor's acquisition of it; but if under subsection (1) (and in a case not falling within either of the said paragraphs 3 or 4 no chargeable gain is to accrue on a disposal of the debt by the creditor (that is, the original creditor), and a chargeable gain accrues to him on a disposal by him of the property, the amount of the chargeable gain shall (where necessary) be reduced so as not to exceed the chargeable gain which would have accrued if he had acquired the property for a consideration equal to the amount of the debt or that part of it.
(4) A loss accruing on the disposal of a debt acquired by the person making the disposal from the original creditor or his personal representative or legatee at a time when the creditor or his personal representative or legatee is a person connected with the person making the disposal, and so acquired either directly or by one or more purchases through persons all of whom are connected with the person making the disposal, shall not be an allowable loss.
(5) Where the original creditor is a trustee and the debt, when created, is settled property, subsections (1) and (4) shall apply as if for the references to the original creditor's personal representative or legatee there were substituted references to any person becoming absolutely entitled, as against the trustee, to the debt on its ceasing to be settled property, and to that person's personal representative or legatee.
(6) This section shall not apply to a debt owed by a bank which is not in Irish currency or in sterling and which is represented by a sum standing to the credit of a person in an account in the bank unless it represents currency acquired by the holder for the personal expenditure outside the State of himself or his family or dependants (including expenditure on the maintenance of any residence outside the State).
Options.
47.—(1) Without prejudice to the provisions of section 8, the grant of an option, including—
(a) the grant of an option in the case where the grantor binds himself to sell an asset he does not own, and because the option is abandoned, never has occasion to own, and
(b) the grant of an option in a case where the grantor binds himself to buy an asset, which, because the option is abandoned, he does not acquire,
is the disposal of an asset (namely, of the option), but subject to the following provisions of this section as to treating the grant of an option as part of a larger transaction.
(2) If an option is exercised, the grant of the option and the transaction entered into by the grantor in fulfilment of his obligations under the option shall be treated as a single transaction and accordingly—
(a) if the option binds the grantor to sell, the consideration for the option is part of the consideration for the sale, and
(b) if the option binds the grantor to buy, the consideration for the option shall be deducted from the cost of acquisition incurred by the grantor in buying in pursuance of his obligations under the option.
(3) The exercise or abandonment of an option by the person for the time being entitled to exercise it shall not constitute the disposal of an asset by that person, but if an option is exercised, then the acquisition of the option (whether directly from the grantor or not) and the transaction entered into by the person exercising the option in exercise of his rights under the option shall be treated as a single transaction and accordingly—
(a) if the option binds the grantor to sell, the cost of acquiring the option shall be part of the cost of acquiring the asset which is sold, and
(b) if the option binds the grantor to buy, the cost of the option shall be treated as a cost incidental to the disposal of the asset which is bought by the grantor of the option.
(4) In relation to the disposal by way of transfer of an option binding the grantor to sell or buy shares or securities which have a quoted market value on a stock exchange in the State or elsewhere, the option shall be regarded as a wasting asset the life of which ends when the right to exercise the option ends, or when the option becomes valueless, whichever is the earlier, but without prejudice to the application of the provisions in Schedule 1 relating to wasting assets to other descriptions of options.
(5) Where an option which is an option to acquire assets exercisable by a person intending to use them, if acquired, for the purposes of a trade carried on by him or which he commences to carry on within two years of his acquisition of the option, is disposed of or abandoned, then—
(a) if the option is abandoned, the abandonment shall, notwithstanding subsection (3), constitute the disposal of an asset (namely, the option), and
(b) paragraph 9 of Schedule 1 (restriction of allowable expenditure for wasting asset) shall not apply.
(6) (a) Where an option to subscribe for shares in a company, being an option of a kind which, at the time of disposal or abandonment, is quoted, and, in the same manner as shares, dealt in on a stock exchange in the State or elsewhere, is disposed of or abandoned, then—
(i) if the option is abandoned, the abandonment shall, notwithstanding subsection (3) constitute the disposal of an asset (namely, of the option), and
(ii) paragraph 9 of Schedule 1 (restriction of allowable expenditure for wasting asset) and subsection (4) shall not apply.
(b) Where an option mentioned in paragraph (a) is dealt in within three months after the taking effect, with respect to the company granting the option, of any reorganisation, reduction, conversion or amalgamation to which paragraphs 2, 3, 4 or 5 of Schedule 2 applies (or within such longer period as the Revenue Commissioners may by notice in writing allow), the option shall, for the purposes of the said paragraphs 2, 3, 4 or 5, be regarded as the shares which could be acquired by exercising the option and section 49 (3) shall apply for determining its market value.
(7) In the case of an option relating to shares or securities, this section shall apply subject to the provisions of paragraph 13 of Schedule 1 and accordingly the option may be regarded in relation to the grantor or in relation to the person entitled to exercise the option, as relating to part of a holding of shares or securities as defined in the said paragraph 13.
(8) This section shall apply in relation to an option binding the grantor both to sell and to buy as if it were two separate options with half the consideration attributed to each.
(9) In this section references to an option include references to an option binding the grantor to grant a lease for a premium, or enter into any other transaction which is not a sale, and references to buying and selling in pursuance of an option shall be construed accordingly.
(10) This section shall apply in relation to a forfeited deposit of purchase money or other consideration money for a prospective purchase or other transaction which is abandoned as it applies in relation to the consideration for an option which binds the grantor to sell and which is not exercised.
Location of assets.
48.—The situation of any such assets as are specified in this section shall, except as otherwise provided by section 4, be determined in accordance with the following provisions:
(a) the situation of rights or interests (otherwise than by way of security) in or over immovable property is that of the immovable property,
(b) subject to the following provisions of this section, the situation of rights or interests (otherwise than by way of security) in or over tangible movable property is that of the tangible movable property,
(c) subject to the following provisions of this section, a debt, secured or unsecured, is situated in the State if and only if the creditor is resident in the State,
(d) shares or securities issued by any municipal or governmental authority, or by any body created by such an authority, are situated in the country of that authority,
(e) subject to paragraph (d), registered shares or securities are situated where they are registered and, if registered in more than one register, where the principal register is situated,
(f) a ship or aircraft is situated in the State if and only if the owner is resident in the State, and an interest or right in or over a ship or aircraft is situated in the State if and only if the person entitled to the interest or right is resident in the State,
(g) the situation of goodwill as a trade, business or professional asset is at the place where the trade, business or profession is carried on,
(h) patents, trade marks and designs are situated where they are registered, and if registered in more than one register, where each register is situated and copyright, franchises, rights and licences to use any copyright material, patent, trade mark or design are situated in the State if they, or any rights derived from them, are exercisable in the State, and
(i) a judgment debt is situated where the judgment is recorded.
Valuation.
49.—(1) Subject to the following subsections, in this Act “market value”, in relation to any assets, means the price which those assets might reasonably be expected to fetch on a sale in the open market.
(2) In estimating the market value of any assets no reduction shall be made in the estimate on account of the estimate being made on the assumption that the whole of the assets is to be placed on the market at one and the same time.
(3) The market value of shares or securities quoted on a stock exchange in the State or in the United Kingdom shall, except where in consequence of special circumstances the prices quoted are by themselves not a proper measure of market value, be as follows—
(a) in relation to shares or securities listed in the Stock Exchange Official List—Irish—
(i) the price shown in that list at which bargains in the shares or securities were last recorded (the previous price), or
(ii) where bargains, other than bargains done at special prices, were recorded in that list for the relevant date, the price at which the bargains were so recorded, or if more than one such price was so recorded, a price halfway between the highest and the lowest of such prices,
taking the amount under subparagraph (i) if less than under subparagraph (ii) or if no such business was recorded on the relevant date, and taking the amount under subparagraph (ii) if less than under subparagraph (i), and
(b) in relation to shares or securities listed in the Stock Exchange Daily Official List—
(i) the lower of the two prices shown in the quotations for the shares or securities on the relevant date plus one-quarter of the difference between those two figures, or
(ii) where bargains, other than bargains done at special prices were recorded in that list for the relevant date, the price at which the bargains were so recorded, or if more than one such price was so recorded, a price halfway between the highest and the lowest of such prices,
taking the amount under subparagraph (i) if less than under subparagraph (ii) or if no such bargains were recorded for the relevant date, and taking the amount under subparagraph (ii) if less than under subparagraph (i):
Provided that—
(a) where the shares or securities are listed in both of the said Official Lists for the relevant date, the lower of the two amounts as ascertained under paragraph (a) and paragraph (b) shall be taken;
(b) this subsection shall not apply to shares or securities for which some other stock exchange affords a more active market; and
(c) if the stock exchange concerned, or one of the stock exchanges concerned, is closed on the relevant date, the market value shall be ascertained by reference to the latest previous date or earliest subsequent date on which it is open, whichever affords the lower market value.
(4) Where shares and securities are not quoted on a stock exchange at the time at which their market value falls to be determined by virtue of subsection (1), it shall be assumed, for the purposes of such determination, that, in the open market which is postulated for the purposes of the said subsection (1), there is available to any prospective purchaser of the asset in question all the information which a prudent prospective purchaser of the asset might reasonably require if he were proposing to purchase it from a willing vendor by private treaty and at arm's length.
(5) In this Act “market value”, in relation to any rights of unit holders in any unit trust (including any unit trust legally established outside the State) the buying and selling prices of which are published regularly by the managers of the trust, shall mean an amount equal to the buying price (that is the lower price) so published on the relevant date, or if none were published on that date, on the latest date before.
(6) If and so far as any appeal against an assessment to capital gains tax or against a decision on a claim under this Act involves the question of the value of any shares or securities in a company resident in the State, other than shares or securities quoted on a stock exchange, that question shall be determined in like manner as an appeal against an assessment made on the company.
(7) In relation to an asset of a kind the sale of which is subject to restrictions imposed under the Exchange Control Act, 1954, such that part of what is paid by the purchaser is not retainable by the seller, the market value, as arrived at under this section, shall be subject to such adjustment as is appropriate having regard to the difference between the amount payable by a purchaser and the amount receivable by a seller.
Extension of certain Acts.
50.—(1) Section 1 of the Provisional Collection of Taxes Act, 1927, is hereby amended by the insertion of “and capital gains tax” before “but no other tax or duty”.
(2) Section 39 of the Inland Revenue Regulation Act, 1890, is hereby amended by the insertion of “capital gains tax” before “stamp duties”.
Supplemental.
51.—(1) Schedule 1 (computation), Schedule 2 (companies and shareholders), Schedule 3 (leases), and Schedule 4 (administration) shall have effect for the purposes of this Act.
(2) So far as the provisions of this Act as modified by Part II of Schedule 1 require the computation of a gain by reference to events before the 6th day of April, 1974, all those provisions, including Part I of Schedule 1 and Schedules 2 and 3 and the provisions fixing the amount of the consideration deemed to be given on a disposal or an acquisition, shall apply except so far as expressly excluded.
SCHEDULE 1
Computation Rules
Sections 11 and 51.
PART I
General
Preliminary
1.—(1) No deduction shall be allowable in a computation under this Act more than once from any sum or from more than one sum.
(2) References in this Schedule to sums taken into account as receipts or as expenditure in computing profits, gains or losses for the purposes of the Income Tax Acts shall include references to sums which would be so taken into account but for the fact that any profits or gains of a trade, profession or employment are not chargeable to income tax or that losses are not allowable for those purposes.
(3) In this Part references to income or profits charged or chargeable to tax include references to income or profits taxed or as the case may be taxable by deduction at source.
(4) For the purposes of any computation under this Schedule any necessary apportionments shall be made of any consideration or of any expenditure and the method of apportionment adopted shall, subject to the express provisions of this Schedule, be such method as appears to the inspector or on appeal the Appeal Commissioners to be just and reasonable.
(5) In this Schedule “renewals allowance” has the meaning assigned to it by paragraph 5 (3).
(6) Paragraph 6 and all other provisions for apportioning on a part disposal expenditure which is deductible in computing a gain, are to be operated before the operation of, and without regard to—
(a) section 13 (5) (married persons),
(b) section 28 (replacement of business and other assets),
(c) any other provision making an adjustment to secure that neither a gain nor a loss accrues on a disposal.
Exclusion from consideration for disposals of sums chargeable to income tax
2.—(1) There shall be excluded from the consideration for a disposal of assets taken into account in the computation under this Schedule of the gain accruing on that disposal any money or money's worth charged to income tax as income of, or taken into account as a receipt in computing income, profits, gains or losses for the purposes of the Income Tax Acts of, the person making the disposal:
Provided that the exclusion from consideration under this subparagraph shall not be taken as applying to a computation in accordance with the provisions of Case I of Schedule D for the purpose of restricting relief in respect of expenses of management under section 214 of the Income Tax Act, 1967.
(2) Subparagraph (1) shall not be taken as excluding from the consideration so taken into account any money or money's worth which is taken into account in the making of a balancing charge under Part XVI of the Income Tax Act, 1967.
(3) This paragraph shall not preclude the taking into account in a computation under this Schedule, as consideration for the disposal of an asset, of the capitalised value of a rent (as in a case where rent is exchanged for some other asset), or of a right of any other description to income or to payments in the nature of income over a period, or to a series of payments in the nature of income.
(4) In this paragraph “rent” includes any rent charge, fee farm rent and any payment in the nature of a rent.
Expenditure: general provisions
3.—(1) Subject to the provisions of this Act, the sums allowable as a deduction from the consideration in the computation under this Schedule of the gain accruing to a person on the disposal of an asset shall be restricted to—
(a) the amount or value of the consideration, in money or money's worth, given by him or on his behalf wholly and exclusively for the acquisition of the asset, together with the incidental costs to him of the acquisition or, if the asset was not acquired by him, any expenditure wholly and exclusively incurred by him in providing the asset,
(b) the amount of any expenditure wholly and exclusively incurred on the asset by him or on his behalf for the purpose of enhancing the value of the asset, being expenditure reflected in the state or nature of the asset at the time of the disposal, and any expenditure wholly and exclusively incurred by him in establishing, preserving or defending his title to, or to a right over, the asset,
(c) the incidental costs to him of making the disposal.
(2) For the purposes of this paragraph and for the purposes of all other provisions of this Act, as respects the person making the disposal, the incidental costs to him of the acquisition of the asset or of its disposal shall consist of expenditure wholly and exclusively incurred by him for the purposes of the acquisition or, as the case may be, the disposal, being fees, commission or remuneration paid for the professional services of any surveyor or valuer, or auctioneer, or accountant, or agent, or legal adviser and costs of transfer or conveyance (including stamp duty) together—
(a) in the case of the acquisition of an asset, with costs of advertising to find a seller, and
(b) in the case of a disposal, with costs of advertising to find a buyer and costs reasonably incurred in making any valuation or apportionment required for the purposes of the computation under this Schedule, including in particular expenses reasonably incurred in ascertaining market value where required by this Act.
(3) (a) Where—
(i) a company incurs expenditure on the construction of any building, structure or works, being expenditure allowable as a deduction under subparagraph (1) in computing a gain accruing to the company on the disposal of the building, structure or works, or of any asset comprising it,
(ii) that expenditure was defrayed out of borrowed money, and
(iii) the company charged to capital all or any part of the interest on that borrowed money referable to a period ending on or before the disposal,
the sums so allowable under the said subparagraph (1) shall include the amount of that interest charged to capital except in so far as such interest has been taken into account for the purposes of relief under the Income Tax Acts, or could have been so taken into account but for an insufficiency of income or profits or gains.
(b) Subject to clause (a), no payment of interest shall be allowable as a deduction under this paragraph.
(4) Without prejudice to the provisions of paragraph 4, there shall be excluded from the sums allowable as a deduction under this paragraph any premium or other payments made under a policy of insurance of the risk of any kind of damage or injury to, or loss or depreciation of, the asset.
(5) In the case of a gain accruing to a person on the disposal of, or of a right or interest in or over, an asset to which he became absolutely entitled as legatee or as against the trustees of settled property—
(a) any expenditure within subparagraph (2) incurred by him in relation to the transfer of the asset to him by the personal representatives or trustees, and
(b) any such expenditure incurred in relation to the transfer of the asset by the personal representatives or trustees,
shall be allowable as a deduction under this paragraph.
(6) Subject to the provisions of this Act as regards double taxation relief, the tax chargeable under the law of any country outside the State on the disposal of an asset which is borne by the person making the disposal shall be allowable as a deduction in the computation under this Schedule.
(7) There shall be excluded from the computation under this Schedule any expenditure which has been or is to be met directly or indirectly by any government, by any board established by statute or by any public or local authority whether in the State or elsewhere.
Exclusion of expenditure by reference to income tax
4.—(1) There shall be excluded from the sums allowable under paragraph 3 as a deduction any expenditure allowable as a deduction in computing the profits or gains or losses of a trade or profession for the purposes of income tax or allowable as a deduction in computing any other income or profits or gains or losses for the purposes of the Income Tax Acts and any expenditure which, although not so allowable as a deduction in computing any losses, would be so allowable but for an insufficiency of income or profits or gains; and this subparagraph applies irrespective of whether effect is or would be given to the deduction in computing the amount of tax chargeable or by discharge or repayment of tax or in any other way.
(2) Without prejudice to the provisions of subparagraph (1), there shall be excluded from the sums allowable under paragraph 3 as a deduction any expenditure which, if the assets, or all the assets to which the computation relates, were, and had at all times been, held or used as part of the fixed capital of a trade the profits or gains of which were chargeable to income tax would be allowable as a deduction in computing the profits or gains or losses of the trade for the purposes of the Income Tax Acts.
Restriction of losses by reference to capital allowances and renewals allowances
5.—(1) Paragraph 4 shall not require the exclusion from the sums allowable as a deduction under paragraph 3 of any expenditure as being expenditure in respect of which a capital allowance or renewals allowance is made, but in the computation under this Schedule of the amount of a loss accruing to the person making the disposal, there shall be excluded from the sums allowable as a deduction any expenditure to the extent to which any capital allowance or renewals allowance has been or may be made in respect of it.
(2) If the person making the disposal acquired the asset—
(a) by a transfer by way of sale in relation to which an election under section 299 (4) of the Income Tax Act, 1967, was made, or
(b) by a transfer to which section 277 (5) or 278 of that Act applies,
(being provisions under which a transfer is treated for the purposes of capital allowances as being made at written down value), this paragraph shall apply as if any capital allowance made to the transferor in respect of the asset had (except so far as any loss to the transferor was restricted under those provisions) been made to the person making the disposal (that is, the transferee); and where the transferor acquired the asset by such a transfer, capital allowances which by virtue of this subparagraph can be taken into account in relation to the transferor shall also be taken into account in relation to the transferee (that is, the person making the disposal), and so on for any series of transfers before the disposal.
(3) In this paragraph “renewals allowance” means a deduction allowable in computing profits or gains or losses for the purposes of the Income Tax Acts by reference to the cost of acquiring an asset in replacement of another asset, and for the purposes of this Schedule a renewals allowance shall be regarded as a deduction allowable in respect of the expenditure incurred on the asset which is being replaced.
(4) The amount of capital allowances to be taken into account under this paragraph in relation to a disposal includes any allowances falling to be made by reference to the event which is the disposal, and there shall be deducted from the amount of the allowances the amount of any balancing charge to which effect has been or is to be given by reference to the event which is the disposal, or any earlier event, and of any balancing charge to which effect might have been so given but for the making of an election under section 273 of the Income Tax Act, 1967 (option in case of replacement of machinery or plant).
Part disposals
6.—(1) Where a person disposes of an interest or rights in or over an asset and, generally wherever on the disposal of an asset, any description of property derived from that asset remains undisposed of, the sums which under clauses (a) and (b) of paragraph 3 (1) are attributable to the asset shall, both for the purposes of the computation under this Schedule of the gain accruing on the disposal and for the purpose of applying this Schedule in relation to the property which remains undisposed of, be apportioned.
(2) Such portion of the expenditure shall be allowable as a deduction in computing under this Schedule the amount of the gain accruing on the disposal as bears the same proportion to the total of the said sums as the value of the consideration for the disposal bears to the aggregate of the said value and the market value of the property which remains and the balance of the expenditure shall be attributed to the property which remains undisposed of.
(3) Any apportionment to be made in pursuance of this paragraph shall be made before operating the provisions of paragraph 5, and if, after a part disposal, there is a subsequent disposal of an asset the capital allowances or renewals allowances to be taken into account in pursuance of that paragraph in relation to the subsequent disposal shall, subject to the next following subparagraph, be those referable to the sums which under clauses (a) and (b) of paragraph 3 (1) are attributable to the asset whether before or after the part disposal, but those allowances shall be reduced by the amount (if any) by which the loss on the earlier disposal was restricted under the provisions of that paragraph.
(4) This paragraph shall not be taken as requiring the apportionment of any expenditure which, on the facts, is wholly attributable to the asset or part of the asset which is disposed of, or wholly attributable to the asset or part of the asset which remains undisposed of.
Assets derived from other assets
7.—(1) If and so far as, in a case where assets have been merged or divided or have changed their nature or rights or interests in or over assets have been created or extinguished, the value of an asset is derived from any other asset in the same ownership, an appropriate proportion of the sums allowable as a deduction in respect of the other asset under clauses (a) and (b) of paragraph 3 (1) shall, both for the purpose of the computation of a gain accruing on the disposal of the first-mentioned asset and, if the other asset remains in existence, on a disposal of that other asset, be attributed to the first-mentioned asset.
(2) The appropriate proportion shall be computed by reference to the market value at the time of disposal, of the assets (including rights or interests in or over the assets) which have not been disposed of and the consideration received in respect of the assets (including rights or interests in or over the assets) disposed of.
Wasting assets
8.—(1) In this Schedule “wasting asset” means an asset with a predictable life not exceeding fifty years but so that—
(a) freehold land shall not be a wasting asset whatever its nature, and whatever the nature of the buildings or works on it,
(b) “life”, in relation to any tangible movable property, means useful life, having regard to the purpose for which the tangible assets were acquired or provided by the person making the disposal,
(c) plant and machinery shall in every case be regarded as having a predictable life of less than fifty years, and in estimating that life it shall be assumed that its life will end when it is finally put out of use as being unfit for further use, and that it is going to be used in the normal manner and to the normal extent and is going to be so used throughout its life as so estimated, and
(d) a life interest in settled property shall not be a wasting asset until the predictable expectation of life of the life tenant is fifty years or less, and the predictable life of life interests in settled property and of annuities shall be ascertained from actuarial tables approved by the Revenue Commissioners.
(2) In this Schedule “the residual or scrap value”, in relation to a wasting asset, means the predictable value, if any, which the wasting asset will have at the end of its predictable life as estimated in accordance with this paragraph.
(3) The question what is the predictable life of an asset, and the question what is its predictable residual or scrap value at the end of that life, if any, shall, so far as those questions are not immediately answered by the nature of the asset, be taken, in relation to any disposal of the asset, as they were known or ascertainable at the time when the asset was acquired or provided by the person making the disposal.
Wasting assets: restriction of allowable expenditure
9.—(1) In the computation under this Schedule of the gain accruing on the disposal of a wasting asset, it shall be assumed—
(a) that any expenditure attributable to the asset under paragraph 3 (1) (a), after deducting the residual or scrap value, if any, of the asset, is written off at a uniform rate from its full amount at the time when the asset is acquired or provided, to nothing at the end of its life, and
(b) that any expenditure attributable to the asset under paragraph 3 (1) (b) is written off at a uniform rate from the full amount of that expenditure at the time when that expenditure is first reflected in the state or nature of the asset to nothing at the end of its life.
(2) If any expenditure attributable to the asset under paragraph 3 (1) (b) creates or increases a residual or scrap value of the asset, the residual or scrap value to be deducted under subparagraph (1) (a) shall be the residual or scrap value so created or as so increased.
(3) Any expenditure written off under this paragraph shall not be allowable as a deduction under paragraph 3.
Wasting assets qualifying for capital allowances
10.—(1) Paragraph 9 shall not apply in relation to a disposal of an asset—
(a) which, from the beginning of the period of ownership of the person making the disposal to the time when the disposal is made, is used and used solely for the purposes of a trade or profession and in respect of which that person has claimed or could have claimed any capital allowance in respect of any expenditure attributable to the asset under clause (a) or (b) of paragraph 3 (1), or
(b) on which the person making the disposal has incurred any expenditure which has otherwise qualified in full for any capital allowance.
(2) In the case of the disposal of an asset which, in the period of ownership of the person making the disposal, has been used partly for the purposes of a trade or profession and partly for other purposes, or has been used for the purposes of a trade or profession for part of that period, or which has otherwise qualified in part only for capital allowances—
(a) the consideration for the disposal, and any expenditure attributable to the asset by clause (a) or (b) of paragraph 3 (1), shall be apportioned by reference to the extent to which that expenditure qualified for capital allowances,
(b) the computation under this Schedule shall be made separately in relation to the apportioned parts of the expenditure and consideration,
(c) paragraph 9 shall not apply for the purposes of the computation in relation to the part of the consideration apportioned to use for the purposes of the trade or profession, or to the expenditure qualifying for capital allowances,
(d) if an apportionment of the consideration for the disposal has been made for the purposes of making any capital allowance to the person making the disposal or for the purpose of making any balancing charge on him, that apportionment shall be employed for the purposes of this paragraph, and
(e) subject to clause (d), the consideration for the disposal shall be apportioned for the purposes of this paragraph in the same proportions as the expenditure attributable to the asset is apportioned under clause (a).
Contingent liabilities
11.—No allowance shall be made under paragraph 3—
(a) in the case of a disposal by way of assigning a lease of land or other property, for any liability remaining with, or assumed by, the person making the disposal by way of assigning the lease which is contingent on a default in respect of liabilities thereby or subsequently assumed by the assignee under the terms and conditions of the lease,
(b) for any contingent liability of the person making the disposal in respect of any covenant for quiet enjoyment or other obligation assumed—
(i) as vendor of land, or of any estate or interest in land,
(ii) as a lessor, or
(iii) as grantor of an option binding him to sell land or an interest in land or to grant a lease of land,
(c) for any contingent liability in respect of a warranty or representation made on a disposal by way of sale or lease of any property other than land:
Provided that if it is shown to the satisfaction of the inspector that any such contingent liability has become enforceable and is being or has been enforced, such adjustment, whether by way of discharge or repayment of tax or otherwise, shall be made as may be necessary.
Woodlands
12.—(1) In the computation under this Schedule of the gain accruing on the disposal by an individual of woodland, there shall be excluded—
(a) consideration for the disposal of trees growing on the land, and
(b) notwithstanding the provisions of section 8 (2), capital sums received under a policy of insurance in respect of the destruction of or damage or injury to trees by fire or other hazard on such land.
(2) In the computation under this Schedule so much of the cost of woodland shall be disregarded as is attributable to trees growing on the land.
(3) References in this paragraph to trees include references to saleable underwood.
Dealing in marketable securities, commodities, etc.: pooling
13.—(1) Any number of shares of the same class held by one person in one capacity shall for the purposes of this Act be regarded as indistinguishable parts of a single asset (in this paragraph referred to as a holding) growing or diminishing on the occasions on which additional shares of the class in question are acquired, or some of the shares of the class in question are disposed of.
(2) Without prejudice to the generality of subparagraph (1), a disposal of shares in a holding, other than the disposal outright of the entire holding, is a disposal of part of an asset and the provisions of this Act relating to the computation of a gain accruing on a disposal of part of an asset shall apply accordingly.
(3) Shares shall not be treated for the purposes of this paragraph as being of the same class unless they are so treated by the practice of a stock exchange in the State or elsewhere or would be so treated if dealt with on such a stock exchange, but shares shall be treated in accordance with this paragraph notwithstanding that they are identified in some other way by the disposal or by the transfer or delivery giving effect to it.
(4) This paragraph shall apply separately in relation to any shares of a company held by a person to whom they were issued as an employee of the company or of any other person on terms which restrict his rights to dispose of them, so long as those terms are in force, and, while applying separately to any such shares, shall have effect as if the owner held them in a capacity other than that in which he holds any other shares of the same class.
(5) Nothing in this paragraph shall be taken as affecting the manner in which the market value of any asset is to be ascertained.
(6) This paragraph, without subparagraph (3), shall apply in relation to a disposal of any assets as it applies in relation to a disposal of shares, where the assets are of a nature to be dealt in without identifying the particular assets disposed of or acquired.
(7) This paragraph shall not apply in relation to shares held by a person on the 6th day of April, 1974, while that person continues to hold them and, in particular, shall not apply in relation to a disposal of the shares by him.
(8) This paragraph applies in relation to securities as it applies in relation to shares.
(9) This paragraph shall apply subject to the provisions of paragraph 14.
Disposal within four weeks of acquisition
14.—(1) Where the same person in the same capacity disposes of shares of the same class as shares which he acquired within four weeks preceding the disposal, the shares disposed of shall be identified with the shares so acquired within that four weeks.
(2) Where the quantity of shares of the same class disposed of exceeds the quantity of shares of the same class acquired within the period of four weeks preceding the disposal, the excess shall be identified with shares of the same class acquired otherwise than within the period of four weeks.
(3) Where a loss accrues to a person on the disposal of shares and he re-acquires shares of the same class within four weeks after the disposal, that loss shall not be allowable under section 12 otherwise than by deduction from a chargeable gain accruing to him on the disposal of the shares re-acquired:
Provided that, if the quantity of shares so re-acquired is less than the quantity so disposed of, such proportion of the loss shall be allowable under section 12 as bears the same proportion to the loss on the disposal as the quantity not re-acquired bears to the quantity disposed of.
(4) In the case of a man and his wife living with him—
(a) subparagraphs (1) and (2) shall, with the necessary modifications, apply where shares are acquired by the one of them and shares of the same class are disposed of within four weeks by the other; and
(b) subparagraph (3) shall, with the necessary modifications, apply also where a loss on the disposal accrues to the one of them and the acquisition after the disposal is made by the other.
(5) This paragraph applies in relation to securities as it applies in relation to shares.
(6) Paragraphs 13, 16 and 20 shall apply subject to subparagraph (1).
Appropriations to and from stock in trade
15.—(1) Where an asset acquired by a person otherwise than as trading stock of a trade carried on by him is appropriated by him for the purposes of the trade as trading stock (whether on the commencement of the trade or otherwise) and, if he had then sold the asset for its market value, a chargeable gain or allowable loss would have accrued to him, he shall be treated as having thereby disposed of the asset by selling it for its then market value.
(2) If at any time an asset forming part of the trading stock of a person's trade is appropriated by him for any other purpose, or is retained by him on his ceasing to carry on the trade, he shall be treated as having acquired it at that time for a consideration equal to the amount brought into the accounts of the trade in respect of it for purposes of income tax on the appropriation or on his ceasing to carry on the trade, as the case may be.
(3) Subparagraph (1) shall not apply in relation to a person's appropriation of an asset for the purposes of a trade if he is chargeable to income tax in respect of the profits of the trade under Case I of Schedule D, and elects that instead the market value of the asset at the time of the appropriation shall, in computing the profits of the trade for purposes of income tax, be treated as reduced by the amount of the chargeable gain or increased by the amount of the allowable loss referred to in that subparagraph, and where the subparagraph does not apply by reason of such an election, the profits of the trade shall be computed accordingly:
Provided that if a person making an election under this subparagraph is at the time of the appropriation carrying on the trade in partnership with others, the election shall not have effect unless concurred in by the others.
PART II
Assets Held on the 6th day of April, 1974
Quoted securities
16.—(1) This paragraph applies—
(a) to shares and securities which on the 6th day of April, 1974, had quoted market values on a stock exchange in the State or elsewhere, or which had such quoted market values at any time in the period of six years ending on the 6th day of April, 1974, and
(b) to rights of unit holders in any unit trust (including any unit trust legally established outside the State) the prices of which are published regularly by the managers of the unit trust.
(2) For the purposes of this Act it shall be assumed, wherever relevant, that any assets to which this paragraph applies were sold, and immediately re-acquired, at their market value on the 6th day of April, 1974, by the person who held them on that date.
(3) Subparagraph (2) shall not apply in relation to a disposal of assets—
(a) if on the assumption in that subparagraph a gain would accrue on that disposal to the person making the disposal and either a smaller gain or a loss would so accrue (computed in accordance with the provisions of Part I of this Schedule) if subparagraph (2) did not apply, or
(b) if on the assumption in subparagraph (2) a loss would so accrue and either a smaller loss or a gain would accrue if subparagraph (2) did not apply,
and accordingly the amount of the gain or loss accruing on the disposal shall be computed without regard to the provisions of this Part except that in a case where this subparagraph would otherwise substitute a loss for a gain or a gain for a loss it shall be assumed, in relation to the disposal, that the relevant assets were acquired by the owner for a consideration such that, neither a gain nor a loss accrued to him on making the disposal.
(4) This paragraph shall not apply in relation to a disposal of shares or securities of a company by a person to whom those shares were issued as an employee either of the company or of some other person on terms which restrict his rights to dispose of them.
(5) For the purpose of—
(a) identifying shares or securities held on the 6th day of April, 1974, with shares previously acquired, and
(b) identifying the shares or securities held on that date with shares or securities subsequently disposed of, and distinguishing them from shares or securities acquired subsequently,
so far as that identification is needed for the purposes of subparagraph (3), and so far as the shares or securities are of the same class, shares or securities acquired at an earlier time shall be deemed to be disposed of before shares or securities acquired at a later time.
Sales of land in the State reflecting development value
17.—(1) This paragraph shall apply in relation to a disposal of an asset which is land in the State—
(a) if, but for this paragraph, the expenditure allowable as a deduction in computing under this Schedule the gain accruing on the disposal would include any expenditure incurred before the 6th day of April, 1974, and
(b) if the consideration for the disposal exceeds what the market value of the asset would be if, immediately before the disposal, it had become unlawful to carry out any development (within the meaning of section 3 (1) of the Local Government (Planning and Development) Act, 1963) in, on or over the land other than development of the kinds specified in section 4 (1) of the said Act.
(2) For the purposes of this Act, it shall be assumed in relation to the disposal and, if it is a part disposal, in relation to any subsequent disposal of the asset which is land in the State that the asset was sold by the person making the disposal, and immediately re-acquired by him, at its market value on the 6th day of April, 1974.
(3) Subparagraph (2) shall apply also in relation to any prior part disposal of the asset and, if tax has been charged, or relief allowed, by reference to that part disposal in accordance with any other provision of this Act, all such adjustments shall be made, whether by way of assessment or discharge or repayment of tax as are required to give effect to the provisions of this subparagraph.
(4) Subparagraph (2) shall not apply in relation to a disposal of assets—
(a) if on the assumption in that subparagraph a gain would accrue on that disposal to the person making the disposal and either a smaller gain or a loss would so accrue (computed in accordance with the provisions of Part I of this Schedule) if subparagraph (2) did not apply, or
(b) if on the assumption in subparagraph (2) a loss would so accrue and either a smaller loss or a gain would accrue if subparagraph (2) did not apply,
and accordingly the amount of the gain or loss accruing on the disposal shall be computed without regard to the provisions of this Part except that in a case where this subparagraph would otherwise substitute a loss for a gain or a gain for a loss it shall be assumed, in relation to the disposal, that the relevant assets were acquired by the owner, for a consideration such that neither a gain nor a loss accrued to him on making the disposal.
Apportionment of gain or loss by reference to uniform rate of growth over period of ownership
18.—(1) This paragraph applies subject to the provisions of paragraphs 16 and 17.
(2) On the disposal of assets by a person whose period of ownership began before the 6th day of April, 1974, only so much of any gain accruing on the disposal as is under this paragraph to be apportioned to the period beginning with the 6th day of April, 1974, shall be a chargeable gain.
(3) Subject to the following provisions of this Schedule, the gain shall be assumed to have grown at a uniform rate from nothing at the beginning of the period of ownership to its full amount at the time of the disposal and the portion attributable to the period beginning on the 6th day of April, 1974, shall be determined accordingly.
(4) If any of the expenditure which is allowable as a deduction in the computation under this Schedule of the gain is within paragraph 3 (1) (b)—
(a) the gain shall be attributed to the expenditure, if any, allowable under paragraph 3 (1) (a) as one item of expenditure, and to the respective items of expenditure under paragraph 3 (1) (b) in proportion to the respective amounts of those items of expenditure, taking into account the period which has elapsed between the time when each item of expenditure was first reflected in the value of the asset and the time of disposal,
(b) subparagraph (3) shall apply to the part of the gain attributed to the expenditure under paragraph 3 (1) (a),
(c) each part of the gain attributed to the items of expenditure under paragraph 3 (1) (b) shall be assumed to have grown at a uniform rate from nothing at the time when the relevant item of expenditure was first reflected in the value of the asset to the full amount of that part of the gain at the time of the disposal and the portion of each part of the gain so treated as growing before the 6th day of April, 1974, shall not be chargeable and each portion treated as growing on and after that date shall be chargeable.
(5) In a case within subparagraph (4) where there is no expenditure under paragraph 3 (1) (a) or such expenditure is, compared with any item of expenditure under paragraph 3 (1) (b), disproportionately small having regard to the value of the asset immediately before the subsequent item of expenditure was incurred, the part of the gain which is not attributable to the enhancement of the value of the asset due to any item of expenditure under paragraph 3 (1) (b) shall be deemed to be attributed to expenditure incurred at the beginning of the period of ownership and allowable under paragraph 3 (1) (a), and the part or parts of the gain attributable to expenditure under paragraph 3 (1) (b), shall be reduced accordingly.
(6) In the case of an asset the cost of which cannot be established or which was acquired otherwise than under a bargain at arm's length, the beginning of the period over which a gain, or a part of a gain, is, under subparagraphs (3) and (4), assumed to have grown shall not be earlier that the 6th day of April, 1964, and this subparagraph shall have effect notwithstanding any provision of this Act.
(7) If in pursuance of paragraph 6 the market value of an asset at a date before the 6th day of April, 1974, is to be ascertained, subparagraphs (3) to (6) shall have effect as if that asset had been on that date sold by the owner, and immediately re-acquired by him, at that market value.
(8) If in pursuance of paragraph 6 the market value of an asset at a date on or after the 6th day of April, 1974, is to be ascertained, subparagraphs (3) to (5) shall have effect as if the asset had been on that date sold by the owner, and immediately re-acquired by him, at that market value, and accordingly, the computation of any gain on a subsequent disposal of that asset shall be computed—
(a) by apportioning in accordance with this paragraph the gain or loss over a period ending on the said date (the date of the part disposal), and
(b) by bringing into account the entire gain or loss over the period from the date of the part disposal to the date of subsequent disposal.
(9) For the purposes of this paragraph, the period of ownership of an asset shall, where under paragraph 7 account is to be taken of expenditure in respect of an asset from which the asset disposed of was derived, or where it would so apply if there were any relevant expenditure in respect of that other asset, include the period of ownership of that other asset.
(10) If under this paragraph part only of a gain is a chargeable gain, the proportion in section 25 (3) (private residence) shall be applied to that part, instead of to the whole of the gain.
Election for valuation on the 6th day of April, 1974
19.—(1) If the person making a disposal so elects, paragraph 18 shall not apply in relation to that disposal and it shall be assumed, both for the purposes of computing under this Schedule the gain accruing to that person on the disposal, and for all other purposes both in relation to that person and other persons, that the assets disposed of, and any assets of which account is to be taken in relation to the disposal under paragraph 7, being assets which were in the ownership of the said person on the 6th day of April, 1974, were on that date sold, and immediately re-acquired, by him at their market value on the 6th day of April, 1974.
(2) Subparagraph (1) shall not apply in relation to a disposal of assets to the extent that on the assumption in that subparagraph a loss would accrue on that disposal to the person making the disposal and either a smaller loss or a gain would accrue if the said subparagraph (1) did not apply, but in a case where this subparagraph would otherwise substitute a gain for a loss it shall be assumed, in relation to the disposal, that the relevant assets were acquired by the owner, for a consideration such that, on the disposal, neither a gain nor a loss accrued to the person making the disposal:
Provided that nothing in this subparagraph shall be taken as bringing paragraph 18 into operation where an election under subparagraph (1) has been made.
(3) An election under this paragraph is irrevocable.
(4) An election may not be made under this paragraph as respects, or in relation to, an asset the market value of which at a date on or after the 6th day of April, 1974, and before the date of the disposal to which the election relates, is to be ascertained in pursuance of paragraph 6.
(5) An election under this paragraph shall be made by notice in writing to the inspector given within two years from the end of the year of assessment in which the disposal is made or such further time as the Revenue Commissioners may by notice in writing allow.
(6) This paragraph shall not apply to a disposal of an asset on which the person making the disposal has incurred any expenditure which has qualified for any capital allowance or renewals allowance.
Shares, commodities, etc.
20.—(1) This paragraph has effect as respects shares held by any person on the 6th day of April, 1974, other than shares which are to be treated under this Act as if disposed of and immediately re-acquired by him on that date.
(2) This paragraph applies to securities as it applies to shares.
(3) For the purpose of—
(a) identifying the shares so held on the 6th day of April, 1974, with shares previously acquired, and
(b) identifying the shares so held on that date with shares subsequently disposed of, and distinguishing them from shares acquired subsequently,
so far as the shares are of the same class, shares acquired at an earlier time shall be deemed to have been disposed of before shares acquired at a later time.
(4) Shares shall not be treated for the purposes of this paragraph as being of the same class unless if dealt with on a stock exchange in the State or elsewhere they would be so treated, but shall be treated in accordance with this paragraph notwithstanding that they are identified in a different way by a disposal or by the transfer or delivery giving effect to it.
(5) This paragraph, without subparagraph (4), shall apply in relation to any assets, other than shares, which are of a nature to be dealt with without identifying the particular assets disposed of or acquired.
Reorganisation of share capital, conversion of securities, etc.
21.—(1) For the purposes of this Act, it shall be assumed that any shares or securities held by a person on the 6th day of April, 1974 (identified in accordance with paragraph 20), which, in accordance with paragraphs 2 to 5 of Schedule 2, are to be regarded as being or forming part of a new holding, were sold and immediately re-acquired by him on the 6th day of April, 1974, at their market value on that date.
(2) If the event which results in a new holding in accordance with the said paragraphs 2 to 5 occurs at a time after the 5th day of April, 1974, subparagraphs (3) to (5) of paragraph 18 shall have effect as if the new holding had at that time been sold by the owner, and immediately re-acquired by him, at its market value at that time, and accordingly, the amount of any gain on a disposal of the new holding or any part of it shall be computed—
(a) by apportioning in accordance with paragraph 18 the gain or loss over a period ending at the said time, and
(b) by bringing into account the entire gain or loss over the period from that time to the date of the disposal.
(3) This paragraph shall not apply in relation to a reorganisation of a company's share capital if the new holding differs only from the original shares in being a different number, whether greater or less, of shares of the same class as the original shares.
Assets transferred to controlled companies
22.—(1) This paragraph has effect where—
(a) at any time, including a time before the 6th day of April, 1974, any of the persons having control of a controlled company, or any person who (in the terms of section 33) is connected with a person having control of a controlled company, has transferred assets to the company, and
(b) paragraph 18 applies in relation to a disposal by one of the persons having control of the company of shares or securities in the company, or in relation to a disposal by a person having, up to the time of disposal, a holding of shares or securities in the company, being in either case a disposal after the transfer of the assets.
(2) So far as the gain accruing to the said person on the disposal of the shares is attributable to a profit on the assets so transferred, the period over which the gain is to be treated under paragraph 18 as growing at a uniform rate shall begin with the time when the assets were transferred to the company, and accordingly a part of a gain attributable to a profit on assets transferred on or after the 6th day of April, 1974, shall all be a chargeable gain.
(3) This paragraph shall not apply where a loss, and not a gain, accrues on the disposal.
SCHEDULE 2
Companies and Shareholders
Sections 11 and 51.
Capital distributions by companies
1.—(1) Where a person receives or becomes entitled to receive in respect of shares in a company any capital distribution from the company (other than a new holding as defined in paragraph 2), he shall be treated as if he had in consideration of that capital distribution disposed of an interest in the shares.
(2) In this paragraph “capital distribution” means any distribution from a company, including a distribution in the course of dissolving or winding up the company, in money or money's worth except a distribution which in the hands of the recipient constitutes income for the purposes of income tax.
Reorganisation or reduction of share capital
2.—(1) This paragraph shall apply in relation to any reorganisation or reduction of a company's share capital, and in this paragraph—
(a) references to a reorganisation of a company's share capital include—
(i) any case where persons are, whether for payment or not, allotted shares in or debentures of the company in respect of and in proportion to (or as nearly as may be in proportion to) their holdings of shares in the company or of any class of shares in the company; and
(ii) any case where there are more than one class of shares and the rights attached to shares of any class are altered; and
(b) “original shares” means shares held before and concerned in the reorganisation or reduction of capital, and “new holding” means, in relation to any original shares, the shares in and debentures of the company which as a result of the reorganisation or reduction of capital represent the original shares (including such, if any, of the original shares as remain).
(2) Subject to the following subparagraphs, a reorganisation or reduction of a company's share capital shall not be treated as involving any disposal of the original shares or any acquisition of the new holding or any part of it but the original shares (taken as a single asset) and the new holding (taken as a single asset) shall be treated as the same asset acquired as the original shares were acquired.
(3) Where, on a reorganisation or reduction of a company's share capital, a person gives or becomes liable to give any consideration for his new holding or any part of it, that consideration shall, in relation to any disposal of the new holding or any part of it, be treated as having been given for the original shares, and if the new holding or part of it is disposed of with a liability attaching to it in respect of that consideration, the consideration given for the disposal shall be adjusted accordingly:
Provided that there shall not be treated as consideration given for the new holding or any part of it—
(a) any surrender, cancellation or other alteration of the original shares or of the rights attached thereto, or
(b) any consideration consisting of any application in paying up the new holding or any part of it, of assets of the company, or of any dividend or other distribution declared out of those assets but not made,
but, where in relation to an issue of share capital, section 56 of the Finance Act, 1974, applies, there shall be allowed as consideration given for the new holding which includes that share capital the sum in cash which he would have received if he had not exercised the option to receive additional share capital instead of a sum in cash.
(4) Where, on a reorganisation or reduction of a company's share capital, a person receives (or is deemed to receive), or becomes entitled to receive, any consideration, other than the new holding, for the disposal of an interest in the original shares, and in particular—
(a) where under paragraph 1 he is to be treated as if he had in consideration of a capital distribution disposed of an interest in the original shares, or
(b) where he receives (or is deemed to receive) consideration from other shareholders in respect of a surrender of rights derived from the original shares,
he shall be treated as if the new holding resulted from his having for that consideration disposed of an interest in the original shares (but without prejudice to the original shares and the new holding being treated in accordance with subparagraph (2) as the same asset).
(5) Where, for the purpose of computing the gain or loss accruing to a person from the acquisition and disposal of any part of the new holding, it is necessary to apportion the cost of acquisition of any of the original shares between the part which is disposed of and the part which is retained, the apportionment shall be made by reference to market value at the date of the disposal (with such adjustment of the market value of any part of the new holding as may be required to offset any liability attaching thereto but forming part of the cost to be apportioned); and any corresponding apportionment for the purposes of subparagraph (4) shall be made in like manner.
(6) Notwithstanding subparagraph (5)—
(a) where a new holding—
(i) consists of more than one class of shares in or debentures of the company and one or more of those classes is of shares or debentures which, at any time not later than the end of the period of three months beginning with the date on which the reorganisation or reduction of capital took effect, or of such longer period as the Revenue Commissioners may by notice in writing allow, had quoted market values on a recognised stock exchange in the State or elsewhere, or
(ii) consists of more than one class of rights of unit holders and one or more of those classes is of rights the prices of which were published regularly by the managers of the scheme at any time not later than the end of that period of three months (or longer if so allowed), and
(b) where for the purpose of computing the gain or loss accruing to a person from the acquisition and disposal of the whole or any part of any class of shares or securities or rights of unit holders forming part of a new holding of the kind referred to in clause (a) it is necessary to apportion costs of acquisition between the part that is disposed of and the part that is retained,
then the cost of acquisition of the new holding shall first be apportioned between the entire classes of shares or debentures or rights of which it consists by reference to market value on the first day (whether that day fell before the reorganisation or reduction of capital took effect or later) on which market values or prices were quoted or published for the shares, debentures or rights as mentioned in clause (a) or (b) (with such adjustment of the market value of any class as may be required to offset any liability attaching thereto but forming part of the cost to be apportioned) and for the purposes of this subparagraph the day on which a reorganisation of share capital involving the allotment of shares or debentures or unit holders' rights takes effect is the day following the day on which the right to renounce any allotment expires.
(7) Where a person receives or becomes entitled to receive in respect of any shares or debentures in a company a provisional allotment of shares in or debentures of the company and he disposes of his rights, paragraph 1 shall apply as if the amount of the consideration for the disposal were a capital distribution received by him from the company in respect of the first-mentioned shares, and as if that person had, instead of disposing of the rights, disposed of an interest in those shares.
(8) If under Part II of Schedule 1 it is to be assumed that, at a time after a person received or became entitled to receive in respect of any shares in or debentures of a company a provisional allotment of shares in or debentures of the company and before the disposal of his rights, the said person sold and immediately re-acquired the shares in respect of which the rights were created, subparagraph (7) shall have effect as if the same assumption applied as respects the rights.
(9) References in this paragraph to a reduction of share capital do not include the paying off of redeemable share capital, and where shares in a company are redeemable by the company otherwise than by the issue of shares or debentures (with or without other consideration) and otherwise than in a liquidation, the shareholder shall be treated as disposing of the shares at the time of the redemption.
Conversion of securities
3.—(1) Paragraph 2 shall apply with any necessary adaptations in relation to the conversion of securities as it applies in relation to the reorganisation or reduction of a company's share capital.
(2) In this paragraph—
“conversion of securities” includes—
(a) a conversion of securities of a company into shares in the company,
(b) a conversion at the option of the holder of the securities converted as an alternative to the redemption of those securities for cash, and
(c) any exchange of securities effected in pursuance of any enactment (including an enactment passed after this Act) which provides for the compulsory acquisition of any shares or securities and the issue of securities or other securities instead;
“security” includes any loan stock or similar security whether of any government or of any public or local authority or of any company and whether secured or unsecured but excluding securities falling within section 19.
Company amalgamations by exchange of shares
4.—(1) Subject to paragraph 5, where a company issues shares or debentures to a person in exchange for shares in or debentures of another company, paragraph 2 shall apply with any necessary adaptations as if the two companies were the same company and the exchange were a reorganisation of its share capital.
(2) This paragraph shall apply only where the company issuing the shares or debentures has or in consequence of the exchange will have control of the other company, or where the first-mentioned company issues the shares or debentures in exchange for shares as the result of a general offer made to members of the other company or any class of them (with or without exceptions for persons connected with the first-mentioned company) the offer being made in the first instance on a condition such that if it were satisfied the first-mentioned company would have control of the other company.
Company reconstruction and amalgamations
5.—(1) Where under any arrangement between a company and the persons holding shares in or debentures of the company or any class of such shares or debentures, being an arrangement entered into for the purposes of or in connection with a scheme of reconstruction or amalgamation, another company issues shares or debentures to those persons in respect of and in proportion to (or as nearly as may be in proportion to) their holdings of the first-mentioned shares or debentures, but the first-mentioned shares or debentures are either retained by those persons or cancelled, then those persons shall be treated as exchanging the first-mentioned shares or debentures for those held by them in consequence of the arrangement (any shares or debentures retained being for this purpose regarded as if they had been cancelled and replaced by a new issue) and accordingly paragraph 4 (other than subparagraph (2)) shall apply to such exchange of shares or debentures.
(2) Subparagraph (1) shall apply in relation to a company which has no share capital as if references to shares in or debentures of a company included references to any interests in the company possessed by members of the company and paragraphs 2 and 4 shall apply accordingly.
(3) In this paragraph “scheme of reconstruction or amalgamation” means a scheme for the reconstruction of any company or companies or the amalgamation of any two or more companies, and references to shares or debentures being retained include their being retained with altered rights or in an altered form whether as the result of reduction, consolidation, division or otherwise.
Transfer of business to a company
6.—(1) This paragraph shall apply for the purposes of this Act where a person who is not a company transfers to a company a business as a going concern, together with the whole of the assets of the business, or together with the whole of those assets other than cash, and the business is so transferred wholly or partly in exchange for shares (in this paragraph referred to as the new assets) issued by the company to the person transferring the business.
(2) The amount determined under subparagraph (4) shall be deducted from the aggregate (in this paragraph referred to as the gain on the old assets) of the net chargeable gains.
(3) For the purpose of computing any chargeable gain accruing on the disposal of any new asset—
(a) the amount determined under subparagraph (4) shall be apportioned between the new assets as a whole, and
(b) the sums allowable as a deduction under paragraph 3 (1) (a) of Schedule 1 shall be reduced by the amount apportioned to the new asset under clause (a),
and if the shares which comprise the new assets are not all of the same class, the apportionment between the shares under clause (a) shall be in accordance with their market values at the time they were acquired by the transferor.
(4) The amount referred to in subparagraphs (2) and (3) (a) shall be such portion of the gain on the old assets as bears the same proportion to the total of such gains as the cost of the new assets bears to the value of the whole of the consideration received by the transferor in exchange for the business and for the purposes of this subparagraph “the cost of the new assets” means any sums which would be allowable as a deduction under paragraph 3 (1) (a) of Schedule 1 if the new assets were disposed of as a whole in circumstances giving rise to a chargeable gain.
(5) In this paragraph “net chargeable gains” means chargeable gains less allowable losses.
(6) References in this paragraph to the business, in relation to shares or consideration received in exchange for the business, include references to such assets of the business as are referred to in subparagraph (1).
SCHEDULE 3
Leases
Section 11 and 51.
Leases of land as wasting assets: restriction of allowable expenditure
1.—(1) A lease of land shall not be a wasting asset until the time when its duration does not exceed fifty years.
(2) If at the beginning of the period of ownership of a lease of land it is subject to a sub-lease not at a rent representing the full value of the land together with any buildings thereon and the value of the lease at the end of the duration of the sub-lease, estimated as at the beginning of the period of ownership, exceeds the expenditure allowable under paragraph 3 (1) (a) of Schedule 1 in computing the gain accruing on a disposal of the lease, the lease shall not be a wasting asset until the end of the duration of the sub-lease.
(3) In the case of a wasting asset which is a lease of land, the rate at which expenditure is assumed to be written off shall, instead of being a uniform rate as provided by paragraph 9 of Schedule 1, be a rate fixed in accordance with the Table to this paragraph.
(4) Accordingly, for the purposes of the computation under Schedule 1 of the gain accruing on a disposal of a lease, and where—
(a) the percentage derived from the Table for the duration of the lease at the beginning of the period of ownership is P (1),
(b) the percentage so derived for the duration of the lease at the time when any item of expenditure attributable to the lease under paragraph 3 (1) (b) of Schedule 1 is first reflected in the nature of the lease is P(2), and
(c) the percentage so derived for the duration of the lease at the time of the disposal is P(3),
then—
(i) there shall be excluded from the expenditure attributable to the lease under the said paragraph 3 (1) (a) a fraction equal to 
, and
(ii) there shall be excluded from any item of expenditure attributable to the lease under the said paragraph 3 (1) (b) a fraction equal to 
.
(5) This paragraph applies notwithstanding that the period of ownership of the lease is a period exceeding fifty years and, accordingly, no expenditure shall be written off under this paragraph in respect of any period earlier than the time when the lease becomes a wasting asset.
(6) Paragraph 10 of Schedule 1 shall apply in relation to this paragraph as it applies in relation to paragraph 9 of that Schedule.
TABLE
Years | Percentage | Years | Percentage |
50 (or more) | 100·0 | 25 | 81·1 |
49 | 99·7 | 24 | 79·6 |
48 | 99·3 | 23 | 78·1 |
47 | 98·9 | 22 | 76·4 |
46 | 98·5 | 21 | 74·6 |
45 | 98·1 | 20 | 72·8 |
44 | 97·6 | 19 | 70·8 |
43 | 97·1 | 18 | 68·7 |
42 | 96·6 | 17 | 66·5 |
41 | 96·0 | 16 | 64·1 |
40 | 95·5 | 15 | 61·6 |
39 | 94·8 | 14 | 59·0 |
38 | 94·2 | 13 | 56·2 |
37 | 93·5 | 12 | 53·2 |
36 | 92·8 | 11 | 50·0 |
35 | 92·0 | 10 | 46·7 |
34 | 91·2 | 9 | 43·2 |
33 | 90·3 | 8 | 39·4 |
32 | 89·4 | 7 | 35·4 |
31 | 88·4 | 6 | 31·2 |
30 | 87·3 | 5 | 26·7 |
29 | 86·2 | 4 | 22·0 |
28 | 85·1 | 3 | 17·0 |
27 | 83·8 | 2 | 11·6 |
26 | 82·5 | 1 | 6·0 |
0 | 0·0 |
If the duration of the lease is not an exact number of years the percentage to be derived from the Table above shall be the percentage for the whole number of years plus one-twelfth of the difference between that and the percentage for the next higher number of years for each odd month counting an odd 14 days or more as one month.
Premiums for leases
2.—(1) Subject to this Schedule where the payment of a premium is required under a lease of land, or otherwise under the terms subject to which a lease of land is granted, there is a part disposal of the freehold or other asset out of which the lease is granted.
(2) In applying paragraph 6 of Schedule 1 to such a part disposal, the property which remains undisposed of includes a right to any rent or other payments, other than a premium, payable under the lease, and that right shall be valued as at the time of the part disposal.
Payment during currency of lease treated as premium
3.—(1) Where, under the terms subject to which a lease of land is granted, a sum becomes payable by the lessee in lieu of the whole or part of the rent for any period, or as consideration for the surrender of the lease, the lease shall be deemed for the purposes of this Schedule to have required the payment of a premium to the lessor (in addition to any other premium) of the amount of that sum for the period in relation to which the sum is payable.
(2) Where, as consideration for the variation or waiver of any of the terms of a lease of land, a sum becomes payable by the lessee otherwise than by way of rent, the lease shall be deemed for the purposes of this Schedule to have required the payment of a premium to the lessor (in addition to any other premium) of the amount of that sum for the period from the time when the variation or waiver takes effect to the time when it ceases to have effect.
(3) If under subparagraph (1) or (2) a premium is deemed to have been received by the lessor, otherwise than as consideration for the surrender of the lease, then—
(a) subject to clause (b), both the lessor and the lessee shall be treated as if that premium were, or were part of, the consideration for the grant of the lease due at the time when the lease was granted, but
(b) if the lessor is a lessee under a lease the duration of which does not exceed fifty years, this Schedule shall apply as if—
(i) the said premium had been given by way of consideration for the grant of the part of the sub-lease covered by the period in respect of which the premium is deemed to have been paid, and
(ii) that consideration were expenditure incurred by the sub-lessee and attributable to the said part of the sub-lease under paragraph 3 (1) (b) of Schedule 1.
(4) Where subparagraph (3) (a) applies, the gain accruing to the lessor on the disposal by way of grant of the lease shall be recomputed and any necessary adjustments of tax, whether by way of assessment for the year in which the premium is deemed to have been received or by way of discharge or repayment of tax, made accordingly.
(5) Where under subparagraph (1) a premium is deemed to have been received as consideration for the surrender of a lease, that premium shall be regarded as consideration for a separate transaction consisting of the disposal by the lessor of his interest in the lease.
(6) Subparagraph (2) shall apply in relation to a transaction not at arm's length, and in particular in relation to a transaction entered into gratuitously, as if such sum had become payable by the tenant otherwise than by way of rent as might have been required of him if the transaction had been at arm's length.
Sub-leases out of short leases
4.—(1) This paragraph applies in relation to a lease which is a wasting asset.
(2) In the computation under Schedule 1 of the gain accruing on the part disposal of a lease by way of the grant of a sub-lease for a premium (in this paragraph referred to as the actual premium), the expenditure attributable to the lease under clauses (a) and (b) of paragraph 3 (1) of Schedule 1 shall be apportioned in accordance with this paragraph, and paragraph 6 of Schedule 1 shall not apply.
(3) Out of each item of the expenditure attributable to the lease under the said clauses (a) and (b) there shall be apportioned to the part disposal—
(a) if the amount of the actual premium is not less than the amount which would be obtainable by way of premium for the said sub-lease if the rent payable under the sub-lease were the same as the rent payable under the lease (in this paragraph referred to as the full premium), the amount (in this paragraph referred to as the allowable amount) which, under paragraph 1 (3), is to be written off over the period which is the duration of the sub-lease, and
(b) if the amount of the actual premium is less than the full premium, such proportion of the allowable amount as is equal to the proportion which the actual premium bears to the full premium.
(4) If the sub-lease is a sub-lease of part only of the land comprised in the lease, this paragraph shall apply only in relation to a proportion of the expenditure attributable to the lease under the said clauses (a) and (b) which is the same as the proportion which the value of the land comprised in the sub-lease at the time when the sub-lease is granted bears to the value of that and the other land comprised in the lease at the said time; and the remainder of that expenditure shall be apportioned to the other land.
Exclusion of premiums taxed under Case V of Schedule D
5.—(1) Where by reference to any premium income tax has become chargeable under section 83 of the Income Tax Act, 1967 (treatment of premiums, etc., as rent), on any amount, that amount shall be excluded from the consideration brought into account in the computation under Schedule 1 of a gain accruing on a disposal of the interest in respect of which income tax becomes so chargeable, except where, in an apportionment under paragraph 6 of the said Schedule, the value of the consideration is taken into account in the aggregate of the said value and the market value of the property which remains undisposed of.
(2) Where by reference to any premium in respect of a sub-lease granted out of a lease the duration of which (that is, of the lease) does not, at the time of granting the lease, exceed fifty years, income tax has become chargeable under the said section 83 on any amount, that amount shall be deducted from any gain accruing on the disposal for which the premium is consideration as computed in accordance with the provisions of this Act apart from this subparagraph, but not so as to convert the gain into a loss, or to increase any loss.
(3) Where income tax has become chargeable under section 85 of the Income Tax Act, 1967 (sale of land with right of reconveyance), on any amount, that amount shall be excluded from the consideration brought into account in the computation under Schedule 1 of a gain accruing on the disposal of the estate or interest in respect of which income tax becomes so chargeable, except where, in an apportionment made under paragraph 6 of the said Schedule, the value of the consideration is taken into account in the aggregate of the said value and the market value of the property which remains undisposed of:
Provided that if the part or interest disposed of is the remainder of a lease or a sub-lease out of a lease the duration of which does not exceed fifty years, the foregoing provisions of this subparagraph shall not apply but the said amount shall be deducted from any gain accruing on the disposal as computed in accordance with the provisions of this Act apart from this subparagraph, but not so as to convert the gain into a loss, or to increase any loss.
(4) References in subparagraphs (1) and (2) to a premium include references to a premium deemed to have been received under subsection (3) or (4) of section 83 of the Income Tax Act, 1967 (which correspond to paragraph 3 (1) and (2)).
(5) Paragraph 2 of Schedule 1 shall not be taken as authorising the exclusion of any amount from the consideration for a disposal of assets taken into account in the computation under that Schedule by reference to any amount chargeable to tax under Chapter VI of Part IV of the Income Tax Act, 1967.
Disallowance of premium treated as rent under superior lease
6.—(1) If under section 92 (1) of the Income Tax Act, 1967 (allowance, on the grant of a sub-lease, by reference to premiums etc. paid), a person is to be treated as paying additional rent in consequence of having granted a sub-lease, the amount of any loss accruing to him on the disposal by way of the grant of the sub-lease shall be reduced by the total amount of rent which he is thereby treated as paying over the term of the sub-lease (and without regard to whether relief is thereby effectively given over the term of the sub-lease), but not so as to convert the loss into a gain, or to increase any gain.
(2) Nothing in paragraph 2 of Schedule 1 shall be taken as applying in relation to any amount on which tax is paid under section 84 of the Income Tax Act, 1967 (charge on assignment of lease granted at undervalue).
(3) If any adjustment is made under section 85 (2) (b) of the Income Tax Act, 1967 (adjustment of charge on sale of land with right to reconveyance), on a claim under that paragraph, any necessary adjustment shall be made to give effect to the consequences of the claim on the operation of this paragraph or paragraph 5.
Expenditure by lessee under terms of lease
7.—If under section 83 (2) of the Income Tax Act, 1967 (lessee's expenditure treated as premium), income tax is chargeable on any amount, as being a premium the payment of which is deemed to be required by the lease, the person so chargeable shall be treated for the purposes of the computation of any gain accruing to him on the disposal by way of grant of the lease, and on any subsequent disposal of the asset out of which the lease was granted, as having incurred at the time the lease was granted expenditure of that amount (in addition to any other expenditure) attributable to the asset under paragraph 3 (1) (b) of Schedule 1.
Duration of leases
8.—(1) In ascertaining for the purposes of this Act the duration of a lease of land, the following provisions shall have effect.
(2) Where the terms of the lease include provision for the determination of the lease by notice given by the lessor, the lease shall not be treated as granted for a term longer than one ending at the earliest date on which it could be determined by notice given by the lessor.
(3) Where any of the terms of the lease (whether relating to forfeiture or to any other matter) or any other circumstances render it unlikely that the lease will continue beyond a date falling before the expiration of the term of the lease, the lease shall not be treated as having been granted for a term longer than one ending on that date and this subparagraph applies in particular where the lease provides for the rent to be increased after a given date, or for the lessee's obligations to become in any other respect more onerous after a given date, but includes provision for the determination of the lease on that date by notice given by the lessee, and those provisions render it unlikely that the lease will continue beyond that date.
(4) Where the terms of the lease include provision for the extension of the lease beyond a given date by notice given by the lessee, this paragraph shall apply as if the term of the lease extended for as long as it could be extended by the lessee, but subject to any right of the lessor by notice to determine the lease.
(5) The duration of a lease shall be decided, in relation to the grant or any disposal of the lease, by reference to the facts which were known or ascertainable at the time when the lease was acquired or created.
Leases of property other than land
9.—(1) Paragraphs 2, 3, 4 and 8 shall apply in relation to leases of property other than land as they apply to leases of land subject to any necessary modifications.
(2) In the case of a lease of a wasting asset which is movable property, the lease shall be assumed to terminate not later than the end of the life of the wasting asset.
Interpretation
10.—In this Schedule “premium” includes any like sum, whether payable to the intermediate or a superior lessor and for the purposes of this Schedule any sum (other than rent) paid on or in connection with the granting of a tenancy shall be presumed to have been paid by way of premium except in so far as other sufficient consideration for the payment is shown to have been given.
SCHEDULE 4
Administration
Administration, assessment and collection: general
1.—(1) Capital gains tax shall be under the care and management of the Revenue Commissioners.
(2) Assessments under this Act shall be made by the inspectors or such other officers as the Revenue Commissioners shall appoint in that behalf.
(3) The Collector-General for the time being appointed under section 162 of the Income Tax Act, 1967, shall collect and levy capital gains tax from time to time charged in all assessments made under the provisions of this Act of which particulars have been transmitted to him under section 187 of the Income Tax Act, 1967, as applied by paragraph 2, and the further provisions of the said section 162 with regard to the nomination by the Revenue Commissioners of persons to act as the Collector-General or to exercise the powers of the Collector-General shall apply to capital gains tax as they apply to income tax.
Application of income tax administrative provisions
2.—(1) The provisions of the Income Tax Acts relating to the care, management, assessment, collection and recovery of income tax shall, subject to any necessary modifications, apply in relation to capital gains tax as they apply in relation to income tax chargeable under Schedule D.
(2) In particular and without prejudice to the generality of subparagraph (1), the provisions of the said Acts specified in the Table to this paragraph shall, subject to any necessary modifications, apply to capital gains tax.
TABLE
INCOME TAX PROVISIONS APPLIED TO CAPITAL GAINS TAX
Section 76 (5), (6) | (appeal on question of domicile or ordinary residence). |
Section 155 (2), (3), (4) and (5) | (powers and functions of the Revenue Commissioners). |
Section 165 | (prescription of forms). |
Sections 181, 182, 184 and 186 | (making of assessments and additional assessments, notice of and time limit for assessment and granting of allowances and reliefs). |
Section 187 | (transmission to Collector of particulars of sums to be collected). |
Section 188 | (loss or destruction of assessments and other documents). |
Section 190 | (provision against double assessment). |
Section 191 | (relief in respect of error or mistake in return). |
Section 200 | (non-residents: assessment). |
Section 201 | (assessment of agent and non-resident). |
Part IX, Chapter III | (representative assessments) except section 213. |
Section 417 | (grounds of appeal to be stated). |
Section 419 | (recovery of tax not in dispute). |
Section 432 | (making of claims etc. and appeals and rehearings). |
Part XXXIII | (collection) except sections 476, 477, 479, 484 and 495. |
Section 498 | (limit of time for repayment claims). |
Section 537 | (effect of want of form in assessments and other documents). |
Section 538 | (exemption of appraisements and valuations from stamp duty). |
Section 542 | (delivery, service and evidence of notices and forms). |
Sections 550 and 551 | (interest on overdue tax). |
Finance (Miscellaneous Provisions) Act, 1968
Section 27 | (taking by Collector-General of proceedings in bankruptcy). |
Section 20 | (charge of interest in cases of fraud or neglect). |
Section 33 (4), (7) and Third Schedule | (activities on the Continental Shelf). |
Returns and information
3.—(1) The provisions of the Income Tax Acts relating to the making or delivery of any return, statement, declaration, list or other document, the furnishing of any particulars, the production of any document, the making of anything available for inspection, the delivery of any account or the making of any representation, shall, subject to any necessary modifications, apply in relation to capital gains tax as they apply in relation to income tax.
(2) In particular and without prejudice to the generality of subparagraph (1), the provisions of the said Acts specified in the Table to this paragraph shall, subject to any necessary modifications, apply in relation to capital gains tax, and sections 500, 501 and 503 of the Income Tax Act, 1967, as applied by this paragraph, shall, for the purposes of this Act, be construed as if in Schedule 15 to the Income Tax Act, 1967, there were included—
(a) in column 1, references to paragraphs 4 to 7 inclusive,
(b) in column 2, a reference to paragraph 8, and
(c) in column 3, a reference to paragraph 11.
(3) A notice under any of the said provisions of the Income Tax Acts, as applied by this paragraph, may require particulars of any assets acquired by the person on whom the notice was served (or if the notice relates to income or chargeable gains of some other person for whom the person who receives the notice is required to make a return under section 170 of the Income Tax Act, 1967, as so applied by this paragraph, of any assets acquired by that other person) in the period specified in the notice, being a period beginning not earlier than the 6th day of April, 1974, but excluding—
(a) any assets exempted by section 19 (Government and other securities) or section 24 (miscellaneous exemptions) or
(b) any assets acquired as trading stock.
(4) The particulars required under this paragraph may include particulars of the person from whom the asset was acquired and of the consideration for the acquisition.
(5) A return of income of a partnership under section 70 of the Income Tax Act, 1967, shall include—
(a) with respect to any disposal of partnership assets during a period to which any part of the return relates, the like particulars as if the partnership were liable to tax on any chargeable gain accruing on the disposal, and
(b) with respect to any acquisition of partnership assets, the particulars required by subparagraph (3).
(6) Where any person has been required by notice or precept given under the provisions of the Income Tax Acts, as applied by this paragraph, or under the provisions of the following paragraphs, to do any act of a kind mentioned in any of the said provisions, and he fails to comply with the notice or precept, or where any person fraudulently or negligently makes, delivers, furnishes or produces any incorrect return, statement, declaration, list, account, particulars or other document (or knowingly makes any false statement or false representation) under any of the said provisions, Part XXXV (penalties and assessments) of the Income Tax Act, 1967, shall apply to that person for the purposes of capital gains tax as they apply in the case of a like failure or act for the purposes of income tax.
TABLE
FURTHER INCOME TAX PROVISIONS APPLIED TO CAPITAL GAINS TAX
Section 94 | (returns in relation to leases). |
Section 70 | (partnership returns). |
Section 169 | (returns by persons chargeable). |
Section 170 | (persons acting for incapacitated persons and non-residents). |
Section 172 | (power to require return). |
Section 174 | (power to require production of accounts and books). |
Part XXXV | (penalties and assessments). |
Finance Miscellaneous Provisions) Act, 1968
Section 5 | (giving notice by person of liability to tax). |
Third Schedule, paragraph 1 (holder of mineral licence).
Returns by issuing houses, stockbrokers, auctioneers, etc.
4.—(1) For the purpose of obtaining particulars of chargeable gains, an inspector may by notice in writing require a return under any of the provisions of this paragraph.
(2) (a) An issuing house or other person carrying on a business of effecting public issues of shares or securities in any company, or placings of shares or securities in any company, either on behalf of the company, or on behalf of holders of blocks of shares or securities which have not previously been the subject of a public issue or placing, may be required to make a return of all such public issues or placings effected by that person in the course of the business in the period specified in the notice requiring the return, giving particulars of the persons to or with whom the shares or securities are issued, allotted or placed, and the number or amount of the shares or securities so obtained by them respectively.
(b) In this subparagraph “shares” includes units in a unit trust.
(3) A person not carrying on such a business may be required to make a return as regards any such issue or placing effected by that person and specified in the notice, giving particulars of the persons to or with whom the shares or securities are issued, allotted, or placed and the number or amount of the shares or securities so obtained by them respectively.
(4) A member of a stock exchange in the State may be required to make a return giving particulars of any transactions effected by him in the course of his business in the period specified in the notice requiring the return and giving particulars of—
(a) the parties to the transactions,
(b) the number or amount of the shares or securities dealt with in the respective transactions, and
(c) the amount or value of the consideration.
(5) A person (other than a member of a stock exchange in the State) who acts as an agent in the State in transactions in shares or securities may be required to make a return giving particulars of any such transactions effected by him in the period specified in the notice and giving particulars of—
(a) the parties to the transactions,
(b) the number or amount of the shares or securities dealt with in the respective transactions, and
(c) the amount or value of the consideration.
(6) An auctioneer, and any person carrying on a trade of dealing in any description of tangible movable property, or of acting as an agent or intermediary in dealings in any description of tangible movable property, may be required to make a return giving particulars of any transactions effected by or through him in which any asset which is tangible movable property is disposed of for a consideration the amount or value of which, in the hands of the recipient, exceeds two thousand pounds.
(7) No person shall be required under this paragraph to include in a return particulars of any transaction effected before the 6th day of April, 1974, or more than three years before the service of the notice requiring him to make the return.
Returns by nominee shareholders
5.—(1) If, for the purpose of obtaining particulars of chargeable gains, any person in whose name any shares of a company are registered is so required by notice in writing by the Revenue Commissioners or by an inspector, he shall state whether or not he is the beneficial owner of those shares and, if not the beneficial owner of those shares or any of them, shall furnish the name and address of the person or persons on whose behalf the shares are registered in his name.
(2) In this paragraph references to shares include references to securities and loan capital.
Returns by party to a settlement
6.—The Revenue Commissioners may by notice in writing require any person, being a party to a settlement, to furnish them within such time as they may direct (not being less than twenty-eight days) with such particulars relating to the settlement as they think necessary for the purposes of this Act.
Returns relating to non-resident companies and trusts
7.—A person holding shares or securities in a company which is not resident or ordinarily resident in the State, or who is beneficially interested or who acts as agent for or on behalf of a person who is beneficially interested in settled property under a settlement the trustees of which are not resident or ordinarily resident in the State, may be required by a notice by the Revenue Commissioners to give such particulars as the Revenue Commissioners may consider are required to determine whether the company or trust falls within section 36 (non-resident companies) or section 37 (non-resident trusts), and whether any chargeable gains have accrued to that company, or to the trustees of that settlement, in respect of which the person to whom the notice is given is liable to capital gains tax under the said section 36 or 37.
Appeals
8.—(1) A person aggrieved by any assessment under this Act made upon him by the inspector or such other officer as is mentioned in paragraph 1 (2) shall be entitled to appeal to the Appeal Commissioners on giving, within twenty-one days after the date of the notice of assessment, notice in writing to the inspector or other officer, and in default of notice of appeal by a person to whom notice of assessment has been given or in case of the neglect or refusal of a person, who has given notice of appeal, to attend before the Appeal Commissioners at the time and place appointed for the purpose of hearing appeals, the assessment made, on him shall be final and conclusive.
(2) The provisions of the Income Tax Acts relating to—
(a) the appointment of times and places for the hearing of appeals;
(b) the giving of notice to each person who has given notice of appeal of the time and place appointed for the hearing of his appeal;
(c) the determination of an appeal by agreement between the appellant or his agent and an inspector of taxes or such other officer as is mentioned in paragraph 1 (2);
(d) the determination of an appeal by the appellant giving notice of his intention not to proceed with the appeal;
(e) the hearing and determination of an appeal by the Appeal Commissioners including the hearing and determination of an appeal by one Appeal Commissioner;
(f) the determination of an appeal through the neglect or refusal of a person who has given notice of appeal to attend before the Appeal Commissioners at the time and place appointed;
(g) the extension of the time for giving notice of appeal, and the readmission of appeals by the Appeal Commissioners;
(h) the rehearing of an appeal by a judge of the Circuit Court and the statement of a case for the opinion of the High Court on a point of law;
(i) the payment of tax in accordance with the determination of the Appeal Commissioners notwithstanding that an appeal is required to be reheard by a judge of the Circuit Court or that a case for the opinion of the High Court on a point of law has been required to be stated or is pending;
(j) the payment of tax which is agreed not to be in dispute in relation to an appeal; and
(k) the procedures for appeal,
shall, with any necessary modifications, apply to an appeal under any of the provisions of this Act which provide for an appeal to the Appeal Commissioners as if the appeal were an appeal against an assessment to income tax.
Regulations with respect to appeals
9.—(1) The Revenue Commissioners may make regulations—
(a) as respects the conduct of appeals against assessments and decisions on claims under this Act,
(b) entitling persons, in addition to those who would be so entitled apart from the regulations, to appear on such appeals,
(c) regulating the time within which such appeals or claims may be brought or made,
(d) where the market value of an asset on a particular date or an apportionment or any other matter may affect the liability to capital gains tax of two or more persons, enabling any such person to have the matter determined by the tribunal having jurisdiction to determine that matter if arising on an appeal against an assessment, and prescribing a procedure by which the matter is not determined differently on different occasions,
(e) authorising an inspector or other officer of the Revenue Commissioners, notwithstanding the obligation as to secrecy imposed by the Income Tax Acts or any other Act, to disclose to a person entitled to appear on such an appeal the market value of an asset as determined by an assessment or decision on a claim, or to disclose to a person whose liability to tax may be affected by the determination of the market value of an asset on a particular date, or an apportionment or any other matter, any decision on the matter made by an inspector or other officer of the Revenue Commissioners.
(2) Regulations under this paragraph may contain such supplemental and incidental provisions as appear to the Revenue Commissioners to be necessary.
(3) Every regulation made under this paragraph shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next twenty-one days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.
Married persons
10.—(1) A return under section 172 of the Income Tax Act, 1967 (as applied by this Schedule), as respects chargeable gains accruing to a married woman in a year of assessment, or part of a year of assessment, during which she is a married woman living with her husband may be required either from her or, if her husband is liable under section 13 (1) from him.
(2) Section 194 of the Income Tax Act, 1967 (collection from wife of tax assessed on husband attributable to her income), and section 195 of the said Act (right of husband to disclaim liability for tax on deceased wife's income) shall apply with any necessary modifications in relation to capital gains tax as they apply in relation to income tax.
Disposal of certain assets by non-resident
11.—(1) This paragraph shall apply to assets that are—
(a) land in the State;
(b) minerals in the State or any rights, interests or other assets in relation to mining or minerals or the searching for minerals;
(c) exploration or exploitation rights in a designated area;
(d) shares in a company deriving their value or the greater part of their value directly or indirectly from assets specified in clause (a), (b) or (c) other than shares quoted on a stock exchange; and
(e) goodwill of a trade carried on in the State.
(2) Upon payment of the consideration for acquiring an asset to which this paragraph applies, the person by or through whom any such payment is made shall deduct thereout a sum representing an amount of capital gains tax on one-half of the said payment at the rate of such tax in force at the time the payment is made and the person to whom the payment is made shall allow such deduction upon receipt of the residue of the payment and the person making the deduction shall, on proof of payment to the Revenue Commissioners of the amount so deducted, be acquitted and discharged of so much money as is represented by the deduction as if that sum had been actually paid to the person making the disposal:
Provided that where the person disposing of the asset produces to the person acquiring the asset a certificate issued under subparagraph (6) in relation to the disposal, no such deduction shall be made.
(3) Where any such payment as aforesaid is made by or on be half of any person, that person shall forthwith deliver to the Revenue Commissioners an account of the payment, and of the amount deducted therefrom, and the inspector shall, notwithstanding any other provision of this Act, assess and charge that person to capital gains tax for the year of assessment in which the payment was made on an amount equal to one-half of the payment at the rate specified in section 3 (3).
(4) The inspector may, where, in relation to any such payment as aforesaid, any person has made default in delivering an account required by this paragraph, or where he is not satisfied with the account, estimate the amount of the payment to the best of his judgment and, notwithstanding section 5 (1), assess and charge that person to capital gains tax for the year of assessment in which the payment was made on an amount equal to one-half of the amount so estimated at the rate specified in section 3 (3).
(5) Where the amount of capital gains tax assessed and charged under subparagraph (3) or (4) is paid, appropriate relief shall, on a claim being made in that behalf, be given to the person chargeable in respect of the gain on the disposal, whether by discharge or repayment or otherwise.
(6) A person chargeable to capital gains tax on the disposal of any asset to which this paragraph applies may apply to the inspector for a certificate that tax should not be deducted from the consideration for the disposal of the asset and, if the inspector is satisfied that the person making the application is the person making the disposal and that—
(a) he is ordinarily resident in the State, or
(b) no amount of capital gains tax is payable in respect of the disposal, or
(c) the capital gains tax chargeable for the year of assessment for which he is chargeable in respect of the disposal of the asset and the tax chargeable on any gain accruing in any earlier year of assessment (not being a year ending earlier than the 6th day of April, 1974) on a previous disposal of the asset has been paid,
the inspector shall issue the certificate.
(7) This paragraph shall not apply where the consideration on a disposal does not exceed the sum of fifty thousand pounds:
Provided that if an asset owned at one time by one person, being an asset to which this paragraph would, but for this subparagraph apply, is disposed of by that person in parts—
(a) to the same person, or
(b) to persons who are acting in concert or who are in the terms of section 33 connected persons,
whether on the same or different occasions, the several disposals shall for the purposes of this subparagraph but not for any other purpose be treated as a single disposal.
(8) Notwithstanding section 5 (2), where an amount of capital gains tax is assessed and charged pursuant to this paragraph, such amount shall be due and payable on the day next after the day on which the assessment is made.
(9) In this paragraph “exploration and exploitation rights”, “designated area” and “shares” have the same meanings as in section 4 (8).
(10) This paragraph shall apply only in relation to disposals and acquisitions occurring after the passing of this Act.
Liability of trustees, etc.
12.—(1) Capital gains tax chargeable in respect of chargeable gains accruing to the trustees of a settlement or capital gains tax due from the personal representatives of a deceased person may be assessed and charged on and in the name of any one or more of those trustees or personal representatives.
(2) Subject to section 8 (3), chargeable gains accruing to the trustees of a settlement or to the personal representatives of a deceased person, and capital gains tax chargeable on or in the name of such trustees or personal representatives, shall not be regarded for the purposes of this Act as accruing to, or chargeable on, any other person, nor shall any trustee or personal representative be regarded for the purposes of this Act as an individual.
Conclusiveness of income tax decisions
13.—Any assessment to income tax or decision on a claim under the Income Tax Acts, and any decision on an appeal under the Income Tax Acts against such an assessment or decision, shall be conclusive so far as under section 6 or Schedule 1 or any other provision of this Act liability to tax depends on the provisions of the Income Tax Acts.
Valuation of assets: power to inspect
14.—(1) An inspector or such other officer as is mentioned in paragraph 1 (2) shall be authorised to inspect any property for the purpose of ascertaining its market value and the person having the custody or possession of that property shall permit the inspector or other officer so authorised, on producing if so required evidence of his authority, to inspect it at such reasonable times as the Revenue Commissioners may consider necessary.
(2) Section 515 of the Income Tax Act, 1967, shall apply to an inspector or other officer referred to in subparagraph (1) and to a person acting in the aid of such an inspector or officer as it applies in relation to the persons referred to in paragraphs (a) and (b) of subsection (1) of that section.
Capital gains tax: preferential payment
15.—The priority attaching to assessed taxes under section 4 of the Preferential Payment in Bankruptcy (Ireland) Act, 1889 and sections 98 and 285 of the Companies Act, 1963, shall apply to capital gains tax.
Power to combine returns, etc. with income tax documents
16.—Any return or assessment or other document relating to chargeable gains or capital gains tax may be combined with one relating to income or income tax.
Recovery of tax from shareholder
17.—(1) This paragraph applies where a person who is connected with a company resident in the State receives or becomes entitled to receive in respect of shares in the company any capital distribution from the company, other than a capital distribution representing a reduction of capital, and—
(a) the capital so distributed derives from the disposal of assets in respect of which a chargeable gain accrues to the company, or
(b) the distribution constitutes such a disposal of assets.
(2) If the capital gains tax assessed on the company for the year of assessment in which the chargeable gain accrues included any amount in respect of that chargeable gain, and any of the tax assessed on the company for that year is not paid within six months from the date when it becomes payable by the company, the said person may by an assessment made within two years from that date be assessed and charged (in the name of the company) to an amount of that capital gains tax—
(a) not exceeding the amount or value of the capital distribution which that person has received or became entitled to receive, and
(b) not exceeding a proportion equal to that person's share of the capital distribution made by the company of capital gains tax on the amount of that gain at the rate in force when the gain accrued.
(3) A person paying any amount of tax under this paragraph shall be entitled to recover a sum equal to that amount from the company.
(4) The provisions of this paragraph are without prejudice to any liability of the person receiving or becoming entitled to receive the capital distribution in respect of a chargeable gain accruing to him by reference to the capital distribution as constituting a disposal of an interest in shares in the company.
(5) In this paragraph “capital distribution” has the same meaning as in paragraph 1 of Schedule 2 and a person shall be regarded as connected with a company if that person would be so regarded for the purposes of section 33.
Gifts: recovery of tax from donee
18.—(1) If in any year of assessment a chargeable gain accrues to any person on the disposal of an asset by way of gift and any amount of capital gains tax assessed on that person for that year of assessment is not paid within twelve months from the date when the tax becomes payable, the donee may, by an assessment made not later than two years from the date when the tax became payable, be assessed and charged (in the name of the donor) to capital gains tax on an amount not exceeding the amount of the chargeable gain so accruing, and not exceeding such an amount of chargeable gains as would, if charged at the rate provided in section 3 (3), result in liability to an amount of capital gains tax equal to the said amount of capital gains tax which was not paid by the donor.
(2) Where the gift consists of a new asset, the donee may, in addition to being assessed and charged under subparagraph (1) in respect of the new asset, be assessed and charged as if the chargeable gain on the disposal of the old asset were a chargeable gain on the disposal of the new asset the capital gains tax in respect of which was not paid within twelve months from the date when the tax had become payable.
(3) (a) Where a person on whom capital gains tax is assessed and charged in respect of the disposal of an asset transfers directly or indirectly by way of gift to a donee the whole of the proceeds of the disposal, or, where the asset is a new asset acquired by the use of the proceeds of the disposal of an old asset, the whole of the proceeds of the disposal of the new asset, subparagraphs (1) and (2) shall apply to the amount of capital gains tax so assessed and charged.
(b) Where a person on whom capital gains tax is assessed and charged in respect of the disposal of an asset transfers directly or indirectly by way of gift to a donee part of the proceeds of the disposal, or, where the asset is a new asset acquired by the use of the proceeds of the disposal of an old asset, part of the proceeds of the disposal of the new asset, subparagraphs (1) and (2) shall apply to such part of the amount of capital gains tax so assessed and charged as bears to the whole of such tax the same proportion that the part aforesaid of the proceeds aforesaid bear to the whole of those proceeds.
(4) The donee of a gift paying any amount of tax in pursuance of this paragraph shall, subject to any terms or conditions of the gift, be entitled to recover a sum of that amount from the donor of the gift as a simple contract debt in any court of competent jurisdiction.
(5) References in this paragraph to a donor include, in the case of an individual who has died, references to his personal representatives.
(6) In this paragraph references to a gift include references to any transaction otherwise than by way of a bargain made at arm's length so far as money or money's worth passes under the transaction without full consideration in money or money's worth, and “donor” and “donee” shall be construed accordingly; and this paragraph shall apply in relation to a gift made to two or more donees with any necessary modifications and subject to the proviso that each such donee shall be liable to be assessed and charged in respect only of such part of the amount of capital gains tax payable by the donees by virtue of this paragraph as bears to the whole of such tax the same proportion as the part of the gift made to that donee bears to the whole of the gift.
(7) In this paragraph “old asset” and “new asset” have the same meanings as in section 28.
Miscellaneous
19.—For the purposes of this Schedule, section 94 of the Income Tax Act, 1967, as applied by paragraph 3 (returns and information) shall apply to property or leases of property other than premises as it applies to premises or leases of premises.