Capital Gains Tax Act 1975

PART I Preliminary

1 Short title.

1.—This Act may be cited as the Capital Gains Tax Act, 1975.

2 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

3 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.

4 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.

5 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.

6 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.

7 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.

8 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.

9 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.

10 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.

11 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).

12 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.

13 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

14 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.

15 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

16 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).

17 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.

18 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.

19 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.

20 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.

21 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.

22 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.

23 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.

24 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

25 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.

26 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.

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.

28 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.

29 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.

30 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

31 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.

32 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;