Taxes Consolidation Act 1997

Type Act

Publication 1997-11-30

State In force

Source Irish Statute Book

articles 1104

(iv) a relevant person were references to a person who in the normal course of such person's trade or business would issue such a policy or make such a contract.

(4) (a) In this subsection, “reinsurance contract” means any contract or other agreement for reassurance or reinsurance in respect of—

(i) any policy of assurance on the life of any person, or

(ii) any class of such policies.

(b) Where apart from this paragraph a reinsurance contract would not be a policy of assurance on the life of any person for the purposes of the Capital Gains Tax Acts, it shall be deemed to be such a policy for those purposes.

(c) Subsections (2) and (3) shall not apply to, and shall be deemed never to have applied to, reinsurance contracts; but, where apart from this paragraph a reinsurance contract would not be a relevant policy within the meaning of section 595 for the purposes of that section, it shall be deemed not to be such a policy for those purposes.

(d) (i) Subject to paragraph (e), where subsection (2) would (apart from paragraph (c)) apply to a reinsurance contract in respect of any policy of assurance on the life of any person, being a policy issued on or after the 1st day of January, 1995, section 593(2) shall not apply in respect of any disposal or deemed disposal on or after the 1st day of January, 1995, of, or of any interest in, rights of the insured company under the reinsurance contract to the extent that—

(I) those rights refer to that policy, and

(II) the insured company could receive, otherwise than on the death, disablement or disease of any person or one of a class of persons to whom that policy refers, payment on a disposal of those rights the aggregate amount of which would exceed the aggregate amount of payment made by it in respect of those rights.

(ii) Subparagraph (i) shall apply as if—

(I) as respects any reinsurance contract made before the 20th day of May, 1993, that contract were made on that day, and

(II) as respects any reinsurance contract made or modified on or after the 1st day of January, 1995, there were deleted from subparagraph (i) “being a policy issued on or after the 1st day of January, 1995,”.

(iii) Subparagraphs (i) and (ii) of subsection (1)(a) shall apply for the purposes of this paragraph as if for “the 20th day of May, 1993” there were substituted “the 1st day of January, 1995”.

(e) Paragraph (d) shall not apply to any disposal of or of any interest in rights under a reinsurance contract, being a disposal resulting directly from the death, disablement or disease of a person or one of a class of persons to whom the reinsurance contract refers; but in computing any gain or loss in respect of a disposal or deemed disposal of or of any interest in rights of the insured company under a reinsurance contract—

(i) there shall be excluded from the sums allowable under section 552 so much of any payment made by the insured company under the reinsurance contract as is paid in respect of an entitlement to a payment on the death, disablement or disease of a person, or one of a class of persons, and

(ii) there shall be added to the consideration taken into account under Chapter 2 of this Part the market value of an entitlement for any period, commencing on or after the most recent acquisition or deemed acquisition by the insured company of those rights, to a payment on the death, disablement or disease of a person, or one of a class of persons, to the extent that the insured company held the entitlement for that period in place of any return which would otherwise have accrued under the reinsurance contract and increased that consideration.

595 Life assurance policy or deferred annuity contract entered into or acquired by company. [CGTA75 s20B; FA94 s58]

595.—(1) (a) In this section—

“relevant disposal” means a disposal of or an interest in the rights under any relevant policy, other than—

(i) a disposal by a person who is not the original beneficial owner of those rights and who acquired them or an interest in them for a consideration in money or money's worth, or

(ii) a disposal resulting directly from the death, disablement or disease of a person, or one of a class of persons, specified in the terms of the policy;

“relevant gain” means a chargeable gain arising on a relevant disposal;

“relevant policy” means a policy of life assurance or a contract for a deferred annuity on the life of any person, entered into or acquired by a company on or after the 11th day of April, 1994, which is not a policy to which section 594(2) applies.

(b) (i) For the purposes of this section, a policy of assurance or a contract for a deferred annuity on the life of any person, entered into by a company before the 11th day of April, 1994, shall be treated as a policy or contract, as the case may be, entered into on or after that date if there is a variation of the policy or contract on or after that date which directly or indirectly increases the benefits secured by, or extends the term of, the policy or contract, as the case may be.

(ii) For the purposes of subparagraph (i), where a policy or contract entered into by a company before the 11th day of April, 1994, provides an option to have another policy or contract substituted for it or to have any of its terms changed, any change in the terms of the policy or contract which is made in pursuance of the option shall be deemed to be a variation of the policy or contract, as the case may be.

(c) Subject to subsection (2), this section shall be construed together with subsections (3) and (4) of section 593, as if subsection (3) of that section were not subject to subsection (2) of that section.

(2) Section 593(2) shall not apply in respect of any relevant disposal.

(3) (a) For the purposes of the Corporation Tax Acts—

(i) any relevant gain arising to a company shall be treated as if it were the net amount of a gain from the gross amount of which corporation tax has been deducted at the standard rate (within the meaning of section 3) of income tax,

(ii) the amount to be taken into account in respect of the relevant gain in computing in accordance with section 78 the company's chargeable gains, for the accounting period in which the relevant gain arises, shall be that gross amount, and

(iii) the corporation tax treated as deducted from that gross amount shall—

(I) be set off against the corporation tax assessable on the company for that accounting period, or

(II) in so far as it cannot be set off in accordance with clause (I), be repaid to the company.

(b) Paragraph (a) shall be disregarded for the purposes of section 546(2).

(4) For the purposes of this section, a contract, being a policy of life assurance or a contract for a deferred annuity on the life of any person, shall be treated as having been entered into by a company before the 11th day of April, 1994, if—

(a) (i) a document referable to the contract was served on the company in pursuance of section 52 of the Insurance Act, 1989, before the 11th day of April, 1994, and

(ii) the company entered into the contract on or before the 22nd day of April, 1994,

(b) (i) the contract was entered into before the 30th day of June, 1994, by the company,

(ii) before the 11th day of April, 1994—

(I) there was in existence a binding agreement in writing under which the company was obliged to acquire land, and

(II) preliminary commitments or agreements had been entered into by the company—

(A) to obtain a loan, which was to be secured on the land, to defray money applied in acquiring the land, and

(B) to enter into the contract primarily for the purpose of repaying the loan,

and

(iii) the agreement under which the loan was advanced obliges the company to apply any payment made to it under the contract to the repayment of the loan before any other application by it of such payment.

CHAPTER 6 Transfer of business assets

596 Appropriations to and from stock in trade. [CGTA75 s51(1) and Sch1 par15; FA90 s86]

596.—(1) Where an asset acquired by a person otherwise than as trading stock of a trade carried on by the person is appropriated by that person for the purposes of the trade as trading stock (whether on the commencement of the trade or otherwise) and, if that person had then sold the asset for its market value, a chargeable gain or allowable loss would have accrued to that person, that person shall be treated for the purposes of the Capital Gains Tax Acts as having by such appropriation disposed of the asset by selling it for its then market value.

(2) Where at any time an asset forming part of the trading stock of a person's trade is appropriated by the person for any other purpose or is retained by the person on that person ceasing to carry on the trade, that person shall be treated for the purposes of the Capital Gains Tax Acts as having acquired the asset at that time for a consideration equal to the amount brought into the accounts of the trade in respect of the asset for the purposes of income tax on the appropriation or on that person ceasing to carry on the trade, as the case may be.

(3) Subsection (1) shall not apply in relation to a person's appropriation of an asset for the purposes of a trade if the person is chargeable to income tax in respect of the profits of the trade under Case I of Schedule D, and instead elects that the market value of the asset at the time of the appropriation shall, in computing the profits of the trade for the purposes of income tax, be treated as reduced by the amount of the chargeable gain or increased by the amount of the allowable loss referred to in that subsection and, where that subsection does not apply by reason of such an election, the profits of the trade shall be computed accordingly; but—

(a) if a person making an election under this subsection is at the time of the appropriation carrying on the trade in partnership with others, the election shall not have effect unless concurred in by the others, and

(b) an election under this subsection shall not be made in any case where the application of subsection (1) would give rise to an allowable loss.

597 Replacement of business and other assets. [CGTA75 s28; CGT(A)A78 s9]

597.—(1) In this section, “farming”, “trade”, “profession”, “office” and “employment” have the same meanings respectively as in the Income Tax Acts, but not so as to apply the provisions of those 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.

(2) This section shall apply with the necessary modifications in relation to—

(a) the discharge of the functions of a public authority,

(b) 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,

(d) 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) 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 (3)(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) 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) farming,

as it applies in relation to a trade.

(3) The following shall be 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;

(4) (a) Where—

(i) the consideration which a person carrying on a trade obtains for the disposal of, or of that person's interest in, assets (in this section referred to as “the old assets”) used only for the purposes of the trade throughout the period of ownership is applied by that person in acquiring other assets, or an interest in other assets (in this section referred to as “the new assets”),

(ii) the new assets on their acquisition are taken into use and used only for the purposes of the trade, and

(iii) the old assets and the new assets are assets of a kind specified in subsection (3),

then, the person carrying on the trade shall on making a claim in that behalf be treated for the purposes of the Capital Gains Tax Acts as if the chargeable gain accruing on the old assets did not accrue until that person ceases to use the new assets for the purposes of the trade.

(b) Where 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 (3), then, 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 that person ceases to use the other new assets for the purposes of the trade 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 (3).

(5) Subsection (4) 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 the Capital Gains Tax Acts 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 that person ceases to use the new assets for the purposes of the trade.

(6) A chargeable gain or the balance of a chargeable gain which under subsection (4) or (5), as may be appropriate, is treated as accruing on a date later than the date of the disposal on which it accrued shall not be so treated for the purposes of section 556.

(7) This section shall apply only 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 12 months before and ending 3 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; but, 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 are, 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 the Capital Gains Tax Acts on the time within which assessments may be made.

(8) 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.

(9) Where 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, together 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.

(10) Where 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.

(11) (a) This section shall apply in relation to a person who carries on 2 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 (in this paragraph referred to as “the old trade or trades”) which the person has carried on for a period of 10 years or more and commences to carry on another trade or trades (in this paragraph referred to as “the new trade or trades”) within a period of 2 years from the date on which the person ceased to carry on the old 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 2 trades were the same trade.

(12) Without prejudice to the provisions of the Capital Gains Tax Acts 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 (4) or (5) applies, and some or part of which are not, the consideration shall be apportioned in such manner as is just and reasonable.

598 Disposals of business or farm on “retirement”. [CGTA75 s26(1) to (6); FA90 s84(c)(iii); FA91 s42(b); FA95 s71(1); FA96 s60(1)]

598.—(1) (a) In this section and in section 599—

“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 farming, or a trade, profession, office or employment, carried on by—

(i) the individual,

(ii) the individual's family company, or

(iii) a company which is a member of a trading group of which the holding company is the individual's family company,

other than an asset on the disposal of which no gain accruing would be a chargeable gain;

“family company”, in relation to an individual, means, subject to paragraph (b), 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 or her family and, as to not less than 10 per cent, exercisable by the individual himself or herself;

“family”, in relation to an individual, means the husband or wife of the individual, and a relative of the individual or of the individual's husband or wife, and “relative” means brother, sister, ancestor or lineal descendant;

“full-time working director” means a director required to devote substantially the whole of his or her time to the service of the company in a managerial or technical capacity;

“holding company” means a company whose business (disregarding any trade carried on by it) consists wholly or mainly of the holding of shares or securities of one or more companies which are its 75 per cent subsidiaries;

“qualifying assets”, in relation to a disposal, includes—

(i) the chargeable business assets of the individual which apart from tangible movable property he or she has owned for a period of not less than 10 years ending with the disposal, and

(ii) the shares or securities which the individual has owned for a period of not less than 10 years ending with the disposal, being shares or securities of a company which has been a trading or a farming company and the individual's family company or a member of a trading group of which the holding company is that individual's family company during a period of not less than 10 years ending with the disposal and of which he or she has been a working director for a period of not less than 10 years during which period he or she has been a full-time working director of that company for a period of not less than 5 years;

“trade”, “farming”, “profession”, “office” and “employment” have the same meanings respectively as in the Income Tax Acts;

“trading company” means a company whose business consists wholly or mainly of the carrying on of one or more trades or professions;

“trading group” means a group of companies consisting of the holding company and its 75 per cent subsidiaries, the business of whose members taken together consists wholly or mainly of the carrying on of one or more trades or professions;

“75 per cent subsidiary” has the meaning assigned to it by section 9.

(b) For the purposes of the definition of “family company”, where a company which is a holding company would not but for this paragraph be an individual's family company, but would be such a company if the individual had not at any time on or after the 6th day of April, 1987, and before the 6th day of April, 1990, disposed of shares in the company to a child (within the meaning of section 599) of the individual, the company shall be deemed to be the individual's family company.

(c) 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.

(d) For the purposes of the definition of “qualifying assets”, there shall be taken into account—

(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 597, 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 section 600 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 or she 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 was a full-time working director as if it were a period throughout which the individual was a full-time working director.

(2) (a) Subject to this section, where an individual who has attained the age of 55 years disposes of the whole or part of his or her qualifying assets, then—

(i) if the amount or value of the consideration for the disposal does not exceed £250,000, 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 £250,000, the amount of capital gains tax chargeable on the gain accruing on the disposal shall not exceed 50 per cent of the difference between the amount of that consideration and £250,000.

(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.

(3) For the purposes of subsection (2), 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.

(4) 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 (2) in respect of those shares or securities shall be the proportion of the consideration for those shares or securities which is equal to—

(a) in a case where the individual's family company is not a holding company, the proportion which the part of the value of the company's chargeable assets 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, and

(b) in a case where the individual's family company is a holding company, the proportion which the part of the value of the chargeable assets of the trading group (excluding shares or securities of one member of the group held by another member of the group) at the time of the disposal which is attributable to the value of the chargeable business assets of the trading group bears to the whole of that value;

but nothing in this section shall affect liability on any gains calculated by reference to the balance of the consideration for the disposal of those shares or securities.

(5) For the purposes of subsection (4), every asset shall be a chargeable asset except one on the disposal of which by the company or a member of the trading group, as the case may be, at the time of the disposal of the shares or securities, no gain accruing to the company or member of the trading group, as the case may be, would be a chargeable gain.

(6) (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 means of assessment or additional assessment and such assessment may be made at any time not more than 10 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 section 1028(5), be taken into account at the market value of the assets.

(7) Subsection (2) shall apply where under section 583 an individual is treated as disposing of interests in shares or securities of his or her 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 or she disposes of shares or securities of the company.

599 Disposals within family of business or farm. [CGTA75 s27; CGT(A)A78 s8; FA90 s85; FA95 s72; FA96 s132(2) and Sch5 Pt II]

599.—(1) (a) In this section, “child”, in relation to a disposal, includes a nephew or a niece who has 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 concerned or the work of, or connected with, the office or employment concerned.

(b) Subject to this section, where an individual who has attained the age of 55 years disposes of the whole or part of his or her qualifying assets to his or her child, relief shall be given in respect of the capital gains tax chargeable on any gain accruing on the disposal.

(c) For the purposes of paragraph (b), 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.

(2) Nothing in this section shall affect the computation of gains accruing on the disposal of assets other than qualifying assets by an individual who makes a disposal within subsection (1).

(3) Section 598(4) shall apply to a disposal within subsection (1) as it applies to a disposal within section 598(2).

(4) (a) Where assets comprised in a disposal to a child in respect of which relief has been granted under this section are, within 6 years of the disposal by the individual concerned, disposed of by the child, the capital gains tax which if subsection (1) had not applied would have been charged on the individual on his or her disposal of those assets to the child shall be assessed and charged on the child, in addition to any capital gains tax chargeable in respect of the gain accruing to the child on the child's disposal of those assets.

(b) An assessment to give effect to this subsection shall not be out of time if made within 10 years after the end of the year of assessment in which the assets are disposed of by the child.

(5) The consideration on a disposal within subsection (1) shall not be taken into account for the purposes of aggregation under section 598(3).

600 Transfer of business to company. [CGTA75 s51(1) and Sch2 par6; FA92 s61]

600.—(1) In this section—

“net chargeable gains” means chargeable gains less allowable losses;

references to the business, in relation to shares or consideration received in exchange for the business, include references to assets of the business referred to in subsection (2).

(2) This section shall apply for the purposes of the Capital Gains Tax Acts where a person who is not a company transfers to a company a business as a going concern, together with the whole of the assets of the business or together with the whole of those assets other than cash, and the business is so transferred wholly or partly in exchange for shares (in this section referred to as “the new assets”) issued by the company to the person transferring the business.

(3) The amount determined under subsection (5) shall be deducted from the aggregate (in this section referred to as “the gain on the old assets”) of the net chargeable gains.

(4) For the purpose of computing any chargeable gain accruing on the disposal of any new asset—

(a) the amount determined under subsection (5) shall be apportioned between the new assets as a whole, and

(b) the sums allowable as a deduction under section 552(1)(a) shall be reduced by the amount apportioned to the new asset under paragraph (a),

and, if the shares which comprise the new assets are not all of the same class, the apportionment between the shares under paragraph (a) shall be in accordance with their market values at the time they were acquired by the transferor.

(5) (a) In this subsection, “the cost of the new assets” means any sums which would be allowable as a deduction under section 552(1)(a) if the new assets were disposed of as a whole in circumstances giving rise to a chargeable gain.

(b) The amount referred to in subsections (3) and (4)(a) shall be such portion of the gain on the old assets as bears the same proportion to the total of such gains as the cost of the new assets bears to the value of the whole of the consideration received by the transferor in exchange for the business.

(6) This section shall not apply to the transfer by a person of a business to a company wholly or partly in exchange for shares issued by the company, unless it is shown that the transfer is effected for bona fide commercial reasons and does not form part of any arrangement or scheme of which the main purpose or one of the main purposes is avoidance of liability to tax.

CHAPTER 7 Other reliefs and exemptions

601 Annual exempt amount. [CGTA75 s16; CGT(A)A78 s16, s17, Sch1 par8 and Sch2; FA92 s59]

601.—(1) An individual shall not be chargeable to capital gains tax for a year of assessment if the amount on which he or she is chargeable to capital gains tax under section 31 for that year does not exceed £1,000.

(2) Where the amount on which an individual is chargeable to capital gains tax under section 31 for a year of assessment exceeds £1,000, only the excess of that amount over £1,000 shall be charged to capital gains tax for that year.

(3) Where, on the assumption that subsection (2) did not apply, an individual would be chargeable under the Capital Gains Tax Acts at more than one rate of tax for a year of assessment, the relief to be given under that subsection in respect of the first £1,000 of chargeable gains shall be given—

(a) if the individual would be so chargeable at 2 different rates, in respect of the chargeable gains which would be so chargeable at the higher of those rates and, in so far as relief cannot be so given, in respect of the chargeable gains which would be so chargeable at the lower of those rates, and

(b) if the individual would be so chargeable at 3 or more rates, in respect of the chargeable gains which would be so chargeable at the highest of those rates and, in so far as relief cannot be so given, in respect of the chargeable gains which would be so chargeable at the next highest of those rates, and so on.

(4) In the case of an individual who dies in the year of assessment, this section shall apply with the substitution for the reference to the individual of a reference to his or her 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.

(5) Relief shall not be given under this section where relief is allowed under section 598 or 599.

602 Chattel exemption. [CGTA75 s17]

602.—(1) In this section, tangible movable property shall not include a wasting asset within the meaning of section 560.

(2) 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.

(3) (a) The amount of capital gains tax chargeable in respect of a gain accruing on a disposal within subsection (2) for a consideration the amount or value of which exceeds £2,000 shall not exceed 50 per cent of 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.

(4) Subsections (2) and (3) shall not affect the amount of an allowable loss accruing on the disposal of an asset, but for the purposes of computing under the Capital Gains Tax Acts 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.

(5) Where 2 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 connected persons,

whether on the same or different occasions, the 2 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 (3) and (4), and this subsection shall also apply where the assets or some of the assets are disposed of on different occasions, and one of those occasions 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.

(6) Where the disposal is of a right or interest in or over tangible movable property, then—

(a) in the first instance, subsections (2) to (4) shall be applied in relation to the asset as a whole, taking the consideration as including, in addition to the consideration for the disposal (in this subsection referred to as “the actual consideration”), the market value of what remains undisposed of,

(b) if the sum of the actual consideration and that market value exceeds £2,000, the limitation on the amount of tax in subsection (3) shall be to 50 per cent of the difference between that sum and £2,000 multiplied by the fraction equal to the actual consideration divided by that sum, and

(c) if that sum is less than £2,000, any loss shall be restricted under subsection (4) by deeming the consideration to be the actual consideration plus that fraction of the difference between that sum and £2,000.

(7) 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.

603 Wasting chattels. [CGTA75 s18]

603.—(1) Subject to this section, no chargeable gain shall accrue on the disposal of or of an interest in an asset which is tangible movable property and a wasting asset.

(2) Subsection (1) shall not apply to a disposal of or of an interest in an asset where—

(a) 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 that person has claimed or could have claimed any capital allowance in respect of any expenditure attributable to the asset or interest under paragraph (a) or (b) of section 552(1), or

(b) 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 under paragraph (a) or (b) of section 552(1) shall be apportioned by reference to the extent to which that expenditure qualified for capital allowances,

(b) the computation of the gain 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.

604 Disposals of principal private residence. [CGTA75 s25; FA79 s35; FA80 s61(c); FA84 s67; FA97 s146(1) and Sch9 PtI par9(2)]

604.—(1) 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 determining the expenditure which under the Capital Gains Tax Acts is allowable as a deduction in computing the amount of the gain to which this section applies, and

(b) for the purposes of subsections (3) to (5), shall not include any period before the 6th day of April, 1974.

(2) This section shall apply 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 the individual as his or her only or main residence, or

(b) land which the individual has for his or her 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;

but, 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.

(3) 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 or her only or main residence throughout the period of ownership or throughout the period of ownership except for all or any part of the last 12 months of that period.

(4) Where subsection (3) does not apply, such portion of the gain shall not be a chargeable gain as represents the same proportion of the gain as 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 or her only or main residence, but inclusive of the last 12 months of the period of ownership in any event, bears to the length of the period of ownership.

(5) (a) In this subsection, “period of absence” means a period during which the dwelling house or part of a dwelling house was not the individual's only or main residence and throughout which he or she had no residence or main residence eligible for relief under this section.

(b) For the purposes of subsections (3) and (4)—

(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

(ii) in addition, any period of absence not exceeding 4 years (or periods of absence which together did not exceed 4 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 the individual's place of work or in consequence of any condition imposed by the individual's employer requiring the individual to reside elsewhere, being a condition reasonably imposed to secure the effective performance by the employee of the employee's 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 or her 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 or her only or main residence.

(6) Where 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, business or profession, the gain shall be apportioned and subsections (2) to (5) shall apply in relation to the part of the gain apportioned to the part which is not exclusively used for those purposes.

(7) Where at any time in the period of ownership there is a change in the dwelling house or the part of it which 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, business or 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.

(8) For the purposes of this section, an individual shall not be treated as having more than one main residence at any one time and in so far as it is necessary to determine which of 2 or more residences is an individual's main residence for any period—

(a) that question may be determined by agreement between the inspector and the individual on the latter giving notice in writing to the inspector by the end of the year 1975-76 or within 2 years from the beginning of that period if that is later, and

(b) failing such agreement, the question shall be determined by the inspector, whose determination may be as respects either the whole or specified parts of the period of ownership in question,

and notice of any determination by the inspector under paragraph (b) shall be given to the individual who may appeal to the Appeal Commissioners against that determination within 21 days of service of the notice.

(9) In the case of a man and his wife living with him—

(a) there may be for the purposes of this section only one residence or main residence for both so long as they are living together and, where a notice under subsection (8)(a) affects both the husband and his wife, it must be made by both,

(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,

(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 the only or main residence of the one as if it was also the only or main residence of the other, and

(d) any notice under subsection (8)(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.

(10) 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 (2), 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 (8)(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.

(11) (a) In this subsection, “dependent relative”, in relation to an individual, means a relative of the individual, or of the wife or husband of the individual, who is incapacitated by old age or infirmity from maintaining himself or herself, or the widowed father or widowed mother (whether or not he or she is so incapacitated) of the individual or of the wife or husband of the individual.

(b) Where as respects a gain accruing to an individual on the disposal of, or of an interest in, a dwelling house or part of a dwelling house which is, or has at any time in his or her period of ownership been, the sole residence of a dependent relative of the individual, provided rent-free and without any other consideration, the individual so claims, such relief shall be given in respect of it and of its garden or grounds as would be given under this section if the dwelling house (or part of the dwelling house) had been the individual's only or main residence in the period of residence by the dependent relative, and shall be so given in addition to any relief available under this section apart from this subsection; but no more than one dwelling house (or part of a dwelling house) may qualify for relief as being the residence of a dependent relative of the claimant at any one time.

(12) (a) In this subsection—

“base date”, in relation to an asset disposed of by an individual, means the date of acquisition by the individual of the asset or, if the asset was held by the individual on the 6th day of April, 1974, that date;

“base value”, in relation to an asset disposed of by an individual, means the amount or value of the consideration, in money or money's worth, given by the individual or on his or her behalf wholly and exclusively for the acquisition of the asset exclusive of the incidental costs to the individual of the acquisition or, if the asset was held by the individual on the 6th day of April, 1974, the market value of the asset on that date;

“current use value” and “development land” have the same meanings respectively as in section 648.

(b) Where—

(i) a gain accrues to an individual on the disposal of or of an interest in an asset which is development land, and

(ii) apart from this subsection relief would be given under this section in respect of the disposal of that asset (being an asset within subsection (2) or (11)),

then, subject to paragraph (c), that relief shall be given in respect of the gain (or where appropriate in respect of a portion of the gain) only to the extent (if any) to which such relief would be given if, in computing the chargeable gain accruing on the disposal (notwithstanding that the disposal was a disposal of development land), there were excluded from the computation—

(I) the amount (if any) by which the base value of the asset exceeds the current use value of the asset on the base date,

(II) the amount by which the consideration for the disposal of the asset exceeds the current use value of the asset on the date of the disposal,

(III) if the asset was not held by the individual on the 6th day of April, 1974, such proportion (if any) of the incidental costs to the individual of the acquisition of the asset as would be referable to the amount (if any) referred to in subparagraph (I), and

(IV) such proportion of the incidental costs to the individual of the disposal of the asset as would be referable to the amount referred to in subparagraph (II).

(c) Paragraph (b) shall not apply to a disposal made by an individual in any year of assessment if the total consideration in respect of all disposals made by that individual in that year and to which that paragraph would otherwise apply does not exceed £15,000.

(13) 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 the person's only or main residence.

(14) 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 the 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 in so far as the gain is attributable to any expenditure which was incurred after the beginning of the period of ownership and wholly or mainly for the purpose of realising a gain from the disposal.

605 Disposals to authority possessing compulsory purchase powers. [CGT(A)A78 s5]

605.—(1) Where a person makes a disposal of or of an interest in property situate in the State (in this section referred to as “the original assets”) to an authority possessing compulsory purchase powers and claims and proves to the satisfaction of the Revenue Commissioners that—

(a) the disposal would not have been made but for—

(i) the exercise of those powers, or

(ii) the giving by the authority of formal notice of its intention to exercise those powers,

(b) the whole of the consideration for the disposal and no more is applied in acquiring other property situate in the State or an interest in such other property (in this section referred to as “the replacement assets”), and

(c) the original assets and the replacement assets are within one, and the same one, of the classes of assets specified in subsection (5),

then, for the purposes of the Capital Gains Tax Acts, the disposal shall not be treated as involving any disposal of the original assets and the acquisition shall not be treated as involving any acquisition of the replacement assets or any part of those assets, but the original assets and the replacement assets shall be treated as the same assets acquired as the original assets were acquired.

(2) In a case where subsection (1) would apply but for the fact that an amount in excess of the amount or value of the consideration for the disposal concerned is applied as described in paragraph (b) of that subsection—

(a) the person making the disposal shall be treated for the purposes of the Capital Gains Tax Acts as if, in consideration of that excess, that person had acquired at the time of the acquisition of the replacement assets a portion of those assets which bears to the whole the same proportion as the amount of the excess bears to the amount or value of the consideration applied in acquiring the replacement assets, and

(b) subsection (1) shall apply to the remainder of those assets and to the original assets.

(3) In a case where subsection (1) would apply but for the fact that part of the amount or value of the consideration for the disposal concerned is not applied as described in paragraph (b) of that subsection—

(a) the person making the disposal shall be treated for the purposes of the Capital Gains Tax Acts as if, in consideration of that part, that person had disposed of an interest in the original assets, and

(b) subsection (1) shall apply to the remainder of those assets and to the replacement assets.

(4) This section shall apply only if the acquisition of the replacement assets takes place, or an unconditional contract for the acquisition is entered into, in the period beginning 12 months before and ending 3 years after the disposal of the original assets, or at such earlier or later time as the Revenue Commissioners may by notice in writing allow; but, where an unconditional contract for the acquisition is so entered into, this section may be applied on a provisional basis without ascertaining whether the replacement assets are 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 the Capital Gains Tax Acts on the time within which assessments may be made.

(5) The classes of assets referred to in subsection (1) shall be as follows:

Class 1

Assets of a trade carried on by the person making the disposal which consist of—

(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,

Class 2

Any land or buildings, not being land or buildings within Class 1, but excluding a dwelling house or part of a dwelling house in relation to which the person making the disposal would be entitled to claim relief under section 604.

606 Disposals of work of art, etc., loaned for public display. [FA91 s43(1) and (2)]

606.—(1) This section shall apply to an object, being any picture, print, book, manuscript, sculpture, piece of jewellery or work of art which—

(a) in the opinion of the Revenue Commissioners, after such consultation (if any) as may seem to them to be necessary with such person or body of persons as in their opinion may be of assistance to them, has a market value of not less than £25,000 at the date when the object is loaned to a gallery or museum in the State, being a gallery or museum approved of by the Revenue Commissioners for the purposes of this section, and

(b) is the subject of or included in a display to which the public is afforded reasonable access in the gallery or museum to which it has been loaned for a period (in this section referred to as “the qualifying period”) of not less than 6 years from the date the object is so loaned.

(2) Where after the end of the qualifying period a disposal of an object to which this section applies is made by the person who had loaned the object in the circumstances described in subsection (1), the disposal shall be treated for the purposes of the Capital Gains Tax Acts as being made for such consideration as to secure that neither a gain nor a loss accrues on the disposal.

607 Government and certain other securities. [CGTA75 s19; FA82 s41(a); FA84 s66; FA88 s70(2); FA89 s32 and s95(2); FA92 s24(2); FA96 s39(1) and (5)]

607.—(1) 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—

(i) a local authority, or

(ii) a harbour authority mentioned in the First Schedule to the Harbours Act, 1946,

(d) debentures, debenture stock, certificates of charge or other forms of security issued by the Electricity Supply Board, Bord Gáis Éireann, Radio Telefís Éireann, ICC Bank plc, Bord Telecom Éireann, Irish Telecommunications Investments plc, Córas Iompair Éireann, ACC Bank plc, Bord na Móna, Aerlínte Éireann, Teoranta, Aer Lingus, Teoranta or Aer Rianta, Teoranta,

(e) securities issued by the Housing Finance Agency under section 10 of the Housing Finance Agency Act, 1981,

(f) securities issued by a body designated under section 4(1) of the Securitisation (Proceeds of Certain Mortgages) Act, 1995,

(g) securities issued in the State, with the approval of the Minister for Finance, by the European Community, the European Coal and Steel Community, the International Bank for Reconstruction and Development, the European Atomic Energy Community or the European Investment Bank, and

(h) securities issued by An Post and guaranteed by the Minister for Finance.

(2) (a) All futures contracts which—

(i) are unconditional contracts for the acquisition or disposal of any of the instruments referred to in subsection (1) or any other instruments to which this section applies by virtue of any other enactment (whenever enacted), and

(ii) require delivery of the instruments in respect of which the contracts are made,

shall not be chargeable assets.

(b) The requirement in paragraph (a) that the instrument be delivered shall be treated as satisfied where a person who has entered into a futures contract dealt in or quoted on a futures exchange or stock exchange closes out the futures contract by entering into another futures contract, so dealt in or quoted, with obligations which are reciprocal to those of the contract so closed out and are thereafter settled in respect of both futures contracts by means (if any) of a single cash payment or receipt.

608 Superannuation funds. [CGTA75 s21; FA88 s30(1) and (2)(b); FA91 s38]

608.—(1) (a) In this subsection, “financial futures” and “traded options” mean respectively financial futures and traded options for the time being dealt in or quoted on any futures exchange or any stock exchange, whether or not that exchange is situated in the State.

(b) For the purposes of subsection (2), a contract entered into in the course of dealing in financial futures or traded options shall be regarded as an investment.

(2) A gain shall not be a chargeable gain if accruing to a person from the person's disposal of investments held by that person as part of a fund approved under section 774, 784(4) or 785(5).

(3) Where part only of a fund is approved under a section referred to in subsection (2), 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 that section.

(4) 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 774.

609 Charities. [CGTA75 s22]

609.—(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) Where 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 reacquired 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 in 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 10 years after the end of the year of assessment in which the property ceases to be subject to charitable trusts.

610 Other bodies. [CGTA75 s23; FA89 s33; FA91 s20(2) and s44; FA94 s32(5); FA95 s44(1) and (3); FA96 s39(1) and (6) and s64; FA97 s49(1) and (3)]

610.—(1) A gain shall not be a chargeable gain if it accrues to a body specified in Part 1 of Schedule 15.

(2) A gain shall not be a chargeable gain if it accrues to a body specified in Part 2 of Schedule 15 in respect of a disposal by that body of an asset to the Interim Board established under the Milk (Regulation of Supply) (Establishment of Interim Board) Order, 1994 (S.I. No. 408 of 1994).

611 Disposals to State, public bodies and charities. [CGTA75 s39; CGT(A)A78 s10]

611.—(1) (a) Where a disposal of an asset is made otherwise than under a bargain at arm's length—

(i) to the State,

(ii) to a charity, or

(iii) to any of the bodies within section 28(3) of the Finance Act, 1931,

section 547 shall not apply but, if the disposal is for no consideration or for a consideration not exceeding the sums which would be allowable as a deduction under sections 552 and 828(4) for the purposes of computing a chargeable gain, then—

(I) the disposal and acquisition shall be treated for the purposes of the Capital Gains Tax Acts as being made for such consideration as to secure that neither a gain nor a loss accrues on the disposal, and

(II) where the disposal is to a person within subparagraph (ii) or (iii) and the asset is later disposed of by that person in such circumstances that if a gain accrued on the later disposal it would be a chargeable gain, the capital gains tax which would have been chargeable in respect of the gain accruing on the earlier disposal if section 547 had applied in relation to it shall be assessed and charged on the person making the later disposal in addition to any capital gains tax chargeable in respect of the gain accruing to that person on the later disposal.

(b) Where relief was given under this subsection in respect of a disposal to a person of an asset, being a disposal made before the 20th day of December, 1978, and there is a later disposal of the asset by the person on or after that date, paragraph (a)(II) shall apply as if the first-mentioned disposal were the earlier disposal referred to in that paragraph.

(c) An assessment to give effect to paragraph (a)(II) shall not be out of time if made within 10 years after the end of the year of assessment in which the asset concerned is disposed of by the person making the later disposal.

(d) For the purposes of paragraph (a)(II), the amount of the capital gains tax which would have been chargeable in respect of the gain accruing on the earlier disposal shall be the amount of tax which would not have been chargeable but for that gain.

(2) Where under section 576(1) or 577(3) any assets or parts of any assets forming part of settled property are deemed to be disposed of and reacquired by the trustee, and—

(a) where the assets deemed to be disposed of under section 576(1) are reacquired on behalf of the State, a charity or a body within section 28(3) of the Finance Act, 1931, or

(b) the assets which or parts of which are deemed to be disposed of and reacquired under section 577(3) are held for the purposes of the State, a charity or a body within section 28(3) of the Finance Act, 1931,

then, if no consideration is received by any person for or in connection with any transaction by virtue of which the State, the charity or other body becomes so entitled or the assets are so held, the disposal and acquisition of the assets to which the State, the charity or other body becomes so entitled or of the assets which are held as mentioned in paragraph (b) shall be treated for the purposes of Capital Gains Tax Acts as made for such consideration as to secure that neither a gain nor a loss accrues on the disposal.

612 Scheme for retirement of farmers. [CGTA75 s30]

612.—For the purposes of the Capital Gains Tax Acts, an amount by means of capital sum or premium provided under the European Communities (Retirement of Farmers) Regulations, 1974 (S.I. No. 116 of 1974), whether or not an annuity is granted in place of such capital sum or premium, shall not be deemed to form part of the consideration for the disposal in relation to which such capital sum or premium is provided.

613 Miscellaneous exemptions for certain kinds of property. [CGTA75 s24]

613.—(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) any prize under section 22 of the Finance (Miscellaneous Provisions) Act, 1956;

(c) any sum obtained by means of compensation or damages for any wrong or injury suffered by an individual in his or her person or in his or her profession.

(2) Winnings from betting (including pool betting), lotteries, sweepstakes or games with prizes shall not be chargeable gains, and rights to winnings obtained by participating in any pool betting, lottery, 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,

(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

(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)—

(i) by the person for whose benefit the interest was created by the terms of the settlement, or

(ii) by any other person except one who acquired, or derives that person's 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, the person 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 the trustee under section 576(1).

PART 20 Companies' Chargeable Gains

CHAPTER 1 General

614 Capital distribution derived from chargeable gain of company: recovery of tax from shareholder. [CTA76 s126]

614.—(1) In this section, “capital distribution” has the same meaning as in section 583.

(2) This section shall apply where a person connected with a company resident in the State receives or becomes entitled to receive in respect of shares in the company any capital distribution from the company, other than a capital distribution representing a reduction of capital, and—

(a) the capital so distributed derives from the disposal after the 5th day of April, 1976, of assets in respect of which a chargeable gain accrues to the company, or

(b) the distribution constitutes such a disposal of assets.

(3) Where the corporation tax assessed on the company for the accounting period in which the chargeable gain accrues included any amount in respect of chargeable gains, and any of the tax assessed on the company for that period is not paid within 6 months from the date when it becomes payable by the company, the person referred to in subsection (2) may by an assessment made within 2 years from that date be assessed and charged (in the name of the company) to an amount of that corporation tax—

(a) not exceeding the amount or value of the capital distribution which that person has received or became entitled to receive, and

(b) not exceeding a proportion equal to that person's share of the capital distribution made by the company of corporation tax on the amount and at the rate charged in respect of that gain in the assessment in which that tax was charged.

(4) A person paying any amount of tax under this section shall be entitled to recover a sum equal to that amount from the company.

(5) This section is without prejudice to any liability of the person receiving or becoming entitled to receive the capital distribution in respect of a chargeable gain accruing to such person by reference to the capital distribution as constituting a disposal of an interest in shares in the company.

615 Company reconstruction or amalgamation: transfer of assets. [CTA76 s127; CGT(A)A78 s13]

615.—(1) In this section—

“scheme of reconstruction or amalgamation” means a scheme for the reconstruction of any company or companies or the amalgamation of any 2 or more companies;

“trading stock” has the same meaning as in section 89.

(2) Subject to this section, where—

(a) any scheme of reconstruction or amalgamation involves the transfer of the whole or part of a company's business to another company,

(b) at the time of the transfer both companies are resident in the State, and

(c) the first-mentioned company receives no part of the consideration for the transfer (otherwise than by the other company taking over the whole or part of the liabilities of the business),

then, in so far as relates to corporation tax on chargeable gains, the 2 companies shall be treated as if any assets included in the transfer were acquired by the one company from the other company for a consideration of such amount as would secure that on the disposal by means of the transfer neither a gain nor a loss would accrue to the company making the disposal, and for the purposes of section 556 the acquiring company shall be treated as if the respective acquisitions of the assets by the other company had been the acquiring company's acquisition of the assets.

(3) This section shall not apply in relation to an asset which until the transfer formed part of trading stock of a trade carried on by the company making the disposal, or in relation to an asset which is acquired as trading stock for the purposes of a trade carried on by the company acquiring the asset.

616 Groups of companies: interpretation. [CTA76 s129(1) to (6)(b); FA90 s58]

616.—(1) For the purposes of this section and of the following sections of this Part—

(a) references to a company shall, subject to section 621(1), apply only to a company, as limited by subsection (2), which is resident in the State;

(b) a principal company and all its 75 per cent subsidiaries shall form a group, and where a principal company is a member of a group as being itself a 75 per cent subsidiary that group shall comprise all its 75 per cent subsidiaries;

(d) in applying the definition of “75 per cent subsidiary” in section 9, any share capital of a registered industrial and provident society shall be treated as ordinary share capital;

(e) “group” and “subsidiary” shall be construed with any necessary modifications where applied to a company incorporated under the law of a country outside the State.

(2) For the purposes of this section and of the following sections of this Part, references to a company shall apply only to—

(a) a company within the meaning of the Companies Act, 1963,

(b) a company constituted under any other Act or a charter or letters patent or (although resident in the State) formed under the law of a country or territory outside the State,

(d) a building society incorporated or deemed by virtue of section 124(2) of the Building Societies Act, 1989, to be incorporated under that Act.

(3) For the purposes of this section and of the following sections of this Part, a group shall remain the same group so long as the same company remains the principal company of the group and, if at any time the principal company of a group becomes a 75 per cent subsidiary of another company, the group of which it was the principal company before that time shall be regarded as the same as the group of which that other company is the principal company or a 75 per cent subsidiary, and the question whether or not a company has ceased to be a member of a group shall be determined accordingly.

(4) For the purposes of this section and of the following sections of this Part, the passing of a resolution or the making of an order or any other act for the winding up of a company shall not be regarded as the occasion of that company or of any 75 per cent subsidiary of that company ceasing to be a member of a group of companies.

(5) (a) The following sections of this Part, except in so far as they relate to the recovery of tax, shall also apply in relation to bodies from time to time established by or under any enactment for the carrying on of any industry or part of an industry, or of any undertaking, under national ownership or control as if—

(i) such bodies were companies within the meaning of those sections,

(ii) any such bodies charged with related functions and subsidiaries of any of them formed a group, and

(iii) any 2 or more such bodies charged at different times with the same or related functions were members of a group.

(b) Paragraph (a) shall apply subject to any enactment by virtue of which property, rights, liabilities or activities of one such body mentioned in that paragraph are to be treated for corporation tax as those of another such body.

(6) For the purposes of this Part—

(a) section 557 and all other provisions for apportioning on a part disposal expenditure which is deductible in computing a gain shall be operated before the operation of and without regard to—

(i) section 617(1), and

(ii) any other enactment making an adjustment to secure that neither a gain nor a loss occurs on a disposal;

(b) section 589 shall not apply where the transfer is a disposal to which section 617(1) applies.

617 Transfers of assets, other than trading stock, within group. [CTA76 s130]

617.—(1) Notwithstanding any provision in the Capital Gains Tax Acts fixing the amount of the consideration deemed to be received on a disposal or given on an acquisition, where a member of a group of companies disposes of an asset to another member of the group, both members shall, except where provided by subsections (2) and (3), be treated, in so far as relates to corporation tax on chargeable gains, as if the asset acquired by the member to whom the disposal is made were acquired for a consideration of such amount as would secure that on the other member's disposal neither a gain nor a loss would accrue to that other member; but, where it is assumed for any purpose that a member of a group of companies has sold or acquired an asset, it shall be assumed also that it was not a sale to or acquisition from another member of the group.

(2) Subsection (1) shall not apply where the disposal is—

(a) a disposal of a debt from a member of a group of companies effected by satisfying the debt or part of it, or

(b) a disposal of redeemable shares in a company on the occasion of their redemption,

and the reference in that subsection to a member of a group of companies disposing of an asset shall not apply to anything which under section 583 is to be treated as a disposal of an interest in shares in a company in consideration for a capital distribution (within the meaning of that section) from that company, whether or not involving a reduction of capital.

(3) For the purposes of subsection (1), in so far as the consideration for the disposal consists of money or money's worth by means of compensation for any kind of damage or injury to assets, or for the destruction or dissipation of assets or for anything which depreciates or might depreciate an asset, the disposal shall be treated as being to the person who, whether as an insurer or otherwise, ultimately bears the burden of furnishing that consideration.

618 Transfers of trading stock within group. [CTA76 s131]

618.—(1) Where a member of a group of companies acquires an asset as trading stock from another member of the group and the asset did not form part of the trading stock of any trade carried on by the other member, the member acquiring the asset shall be treated for the purposes of section 596 as having acquired the asset otherwise than as trading stock and immediately appropriated it for the purposes of the trade as trading stock.

(2) Where a member of a group of companies disposes of an asset to another member of the group and the asset formed part of the trading stock of a trade carried on by the member disposing of the asset but is acquired by the other member otherwise than as trading stock of a trade carried on by that other member, the member disposing of the asset shall be treated for the purposes of section 596 as having immediately before the disposal appropriated the asset for some purpose other than the purpose of use as trading stock.

619 Disposals or acquisitions outside group. [CTA76 s132; CGT(A)A78 s14; FA92 s73]

619.—(1) Where a company which is or has been a member of a group of companies disposes of an asset which it acquired from another member of the group at a time when both were members of the group, section 555 shall apply in relation to any capital allowances made to the other member (in so far as not taken into account in relation to a disposal of the asset by that other member), and so on as respects previous transfers of the asset between members of the group, but this shall not be taken as affecting the consideration for which an asset is deemed under section 617(1) to be acquired.

(2) (a) Section 556 shall apply in relation to a disposal of an asset by a company which is or has been a member of a group of companies, and which acquired the asset from another member of the group at a time when both were members of the group, as if all members of the group for the time being were the same person, and as if the acquisition or provision of the asset by the group, so taken as a single person, had been the acquisition or provision of the asset by the member disposing of the asset.

(b) Notwithstanding paragraph (a), where at any time after the asset was acquired or provided by the group so taken as a single person and before the 24th day of April, 1992, there was an acquisition (in this paragraph referred to as “the later acquisition”) of the asset by a member of the group from another member of the group as a result of a relevant disposal (within the meaning of section 648), this subsection shall apply as if the reference in paragraph (a) to the acquisition or provision of the asset by the group were a reference to the later acquisition or, where there was more than one, the last such acquisition.

620 Replacement of business assets by members of group. [CTA76 s133]

620.—For the purposes of section 597, all the trades carried on by members of a group of companies shall be treated as a single trade (except in a case of one member of the group acquiring, or acquiring the interest in, the new assets from another member or disposing of, or disposing of the interest in, the old assets to another member).

621 Depreciatory transactions in group. [CTA76 s138]

621.—(1) For the purposes of this section—

“securities” includes any loan stock or similar security whether secured or unsecured;

references to the disposal of assets include references to any method by which one company which is a member of a group appropriates the goodwill of another member of the group;

a “group of companies” may consist of companies some or all of which are not resident in the State.

(2) References in this section to the disposal of shares or securities include references to the occasion of the making of a claim under section 538(2) that the value of shares or securities has become negligible, and references to a person making a disposal shall be construed accordingly.

(3) This section shall apply as respects a disposal of shares in or securities of a company (in this section referred to as an “ultimate disposal”) if the value of the shares or securities has been materially reduced by a depreciatory transaction effected on or after the 6th day of April, 1974, and for this purpose “depreciatory transaction” means—

(a) any disposal of assets at other than market value by one member of a group of companies to another, or

(b) any other transaction satisfying the conditions of subsection (4); but a transaction shall not be treated as a depreciatory transaction to the extent that it consists of a payment which is required to be or has been taken into account, for the purposes of corporation tax on chargeable gains, in computing a chargeable gain or allowable loss accruing to the person making the ultimate disposal.

(4) The conditions referred to in subsection (3)(b) are—

(a) that the company, the shares in which or securities of which are the subject of the ultimate disposal, or any 75 per cent subsidiary of that company, was a party to the transaction, and

(b) that the parties to the transaction were or included 2 or more companies which at the time of the transaction were members of the same group of companies.

(5) Without prejudice to the generality of subsection (3), the cancellation of any shares in or securities of one member of a group of companies under section 72 of the Companies Act, 1963, shall, to the extent that immediately before the cancellation those shares or securities were the property of another member of the group, be taken to be a transaction fulfilling the conditions in subsection (4).

(6) Where the person making the ultimate disposal is or has at any time been a member of the group of companies referred to in subsection (3) or (4), any allowable loss accruing on the disposal shall be reduced to such extent as appears to the inspector, or on appeal the Appeal Commissioners, or on a rehearing by a judge of the Circuit Court, that judge, to be just and reasonable having regard to the depreciatory transaction; but, if the person making the ultimate disposal is not a member of that group when disposing of the shares or securities, no reduction of the loss shall be made by reference to a depreciatory transaction which took place when that person was not a member of that group.

(7) The inspector, the Appeal Commissioners or the judge of the Circuit Court shall make the decision under subsection (6) on the basis that the allowable loss ought not to reflect any diminution in the value of the company's assets attributable to a depreciatory transaction, but allowance may be made for any other transaction on or after the 6th day of April, 1974, which has enhanced the value of the company's assets and depreciated the value of the assets of any other member of the group.

(8) (a) Where under subsection (6) a reduction is made in an allowable loss, any chargeable gain accruing on a disposal of the shares in or securities of any other company which was a party to the depreciatory transaction by reference to which the reduction was made, being a disposal not later than 10 years after the depreciatory transaction, shall be reduced to such extent as appears to the inspector, or on appeal to the Appeal Commissioners, or on a rehearing by a judge of the Circuit Court, that judge, to be just and reasonable having regard to the effect of the depreciatory transaction on the value of those shares or securities at the time of their disposal.

(b) Notwithstanding paragraph (a), the total amount of any one or more reductions in chargeable gains made by reference to a depreciatory transaction shall not exceed the amount of the reductions in allowable losses made by reference to that depreciatory transaction.

(c) All such adjustments, whether by means of discharge or repayment of tax or otherwise, as are required to give effect to this subsection may be made at any time.

622 Dividend stripping. [CTA76 s139]

622.—(1) This section shall apply where one company (in this section referred to as “the first company”) has a holding in another company (in this section referred to as “the second company”) and the following conditions are fulfilled—

(a) that the holding amounts to, or is an ingredient in a holding amounting to, 10 per cent of all holdings of the same class in the second company,

(b) that the first company is not a dealing company in relation to the holding,

(c) that a distribution is or has been made on or after the 6th day of April, 1974, to the first company in respect of the holding, and

(d) that the effect of the distribution is that the value of the holding is or has been materially reduced.

(2) (a) Where this section applies in relation to a holding, section 621 shall apply in relation to any disposal of any shares or securities comprised in the holding, whether the disposal is by the first company or by any other company to which the holding is transferred by a transfer to which section 617 applies, as if the distribution were a depreciatory transaction and, if the companies concerned are not members of a group of companies, as if they were.

(b) Notwithstanding paragraph (a), the distribution shall not be treated as a depreciatory transaction to the extent that it consists of a payment which is required to be or has been taken into account, for the purposes of corporation tax on chargeable gains, in computing a chargeable gain or allowable loss accruing to the person making the ultimate disposal.

(3) This section shall be construed together with section 621.

(4) For the purposes of this section, a company shall be a dealing company in relation to a holding if a profit on the sale of the holding would be taken into account in computing the company's trading profits.

(5) References in this section to a holding in a company are references to a holding of shares or securities by virtue of which the holder may receive distributions made by the company, but so that—

(a) a company's holdings of different classes in another company shall be treated as separate holdings, and

(b) holdings of shares or securities which differ in the entitlements or obligations they confer or impose shall be regarded as holdings of different classes.

(6) For the purposes of subsection (1)—

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