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,