TAXES CONSOLIDATION ACT, 1997

• (8) A capital sum which under section 536(1)(a) is to be deducted from any expenditure allowable as a deduction in computing a gain on the disposal of an asset shall be deducted from the sum applied in restoring the asset before subsection (2) is applied to the residue, if any, of that sum.

• (9) An amount determined in accordance with subsection (3) in respect of an asset shall be reduced by any expenditure within section 565 which relates to the asset and which was incurred before the 6th day of April, 1974, and subsection (2) shall apply to the residue of that amount.

557 Part disposals. [CGTA75 s51(1) and Sch1 par6]

557.—(1) Where a person disposes of an interest or rights in or over an asset and, generally wherever on the disposal of an asset, any description of property derived from that asset remains undisposed of, the sums which under paragraphs (a) and (b) of section 552(1) are attributable to the asset shall be apportioned both for the purposes of the computation under this Chapter of the gain accruing on the disposal and for the purpose of applying this Chapter in relation to the property which remains undisposed of.

• (2) Such portion of the expenditure shall be allowable as a deduction in computing under this Chapter the amount of the gain accruing on the disposal as bears the same proportion to the total of those sums as the value of the consideration for the disposal bears to the aggregate of that value and the market value of the property which remains, and the balance of the expenditure shall be attributed to the property which remains undisposed of.

• (3) Any apportionment to be made in pursuance of this section shall be made before the operation of section 555 and, if after a part disposal there is a subsequent disposal of an asset, the capital allowances or renewals allowances to be taken into account in pursuance of that section in relation to the subsequent disposal shall, subject to subsection (4), be those referable to the sums which under paragraphs (a) and (b) of section 552(1) are attributable to the asset whether before or after the part disposal, but those allowances shall be reduced by the amount (if any) by which the loss on the earlier disposal was restricted under that section.

• (4) This section shall not be taken as requiring the apportionment of any expenditure which on the facts is wholly attributable to the asset or part of the asset which is disposed of or wholly attributable to the asset or part of the asset which remains undisposed of.

558 Part disposals before 6th day of April, 1978. [CGT(A)A78 s16 and Sch1 par10(1) and (2)]

558.—(1) Where on or after the 6th day of April, 1974, but before the 6th day of April, 1978, a person made a disposal (to which paragraph 6 of Schedule 1 to the Capital Gains Tax Act, 1975, applied) of an asset held by such person on the 6th day of April, 1974, and—

• (a) the amount of the chargeable gain which accrued on that disposal was determined under paragraph 18 of Schedule 1 to the Capital Gains Tax Act, 1975, and

• (b) any property derived from that asset remained undisposed of on the 6th day of April, 1978,

then, for the purpose of determining the balance of the expenditure which under section 557 is to be attributed to the property which remains undisposed of, it shall be assumed that on the disposal the amount of the chargeable gain referred to in paragraph (a) had been determined, not under paragraph 18 of Schedule 1 to the Capital Gains Tax Act, 1975, but on the assumption that the asset was disposed of and immediately reacquired by the person on the 6th day of April, 1974.

• (2) Where on or after the 6th day of April, 1974, but before the 6th day of April, 1978, a person made a disposal (to which paragraph 6 of Schedule 1 to the Capital Gains Tax Act, 1975, applied) of an asset acquired by such person on a death which occurred on or after the 6th day of April, 1974, and—

• (a) the amount of the chargeable gain which accrued on that disposal was determined on the basis that the asset had been acquired by such person on a date earlier than the date of that death, and

• (b) any property derived from that asset remained undisposed of on the 6th day of April, 1978,

then, notwithstanding subsection (1), for the purpose of determining the balance of the expenditure which under section 557 is to be attributed to the property which remains undisposed of, it shall be assumed that on the disposal the amount of the chargeable gain referred to in paragraph (a) had been determined as if section 14(1) of the Capital Gains Tax Act, 1975 (as amended by section 6 of the Capital Gains Tax (Amendment) Act, 1978) or, as the case may be, section 15(4)(b) of the Capital Gains Tax Act, 1975 (as amended by section 7 of the Capital Gains Tax (Amendment) Act, 1978) had applied at the date of that disposal.

559 Assets derived from other assets. [CGTA75 s51(1) and Sch1 par7]

559.—(1) If and in so far as, in a case where assets have been merged or divided or have changed their nature, or rights or interests in or over assets have been created or extinguished, the value of an asset is derived from any other asset in the same ownership, an appropriate proportion of the sums allowable as a deduction in respect of the other asset under paragraphs (a) and (b) of section 552(1) shall, both for the purpose of the computation of a gain accruing on the disposal of the first-mentioned asset and, if the other asset remains in existence, on a disposal of that other asset, be attributed to the first-mentioned asset.

• (2) The appropriate proportion shall be computed by reference to the market value at the time of disposal of the assets (including rights or interests in or over the assets) which have not been disposed of and the consideration received in respect of the assets (including rights or interests in or over the assets) disposed of.

560 Wasting assets. [CGTA75 s51(1) and Sch1 pars 8 and 9]

560.—(1) In this Chapter—

“the residual or scrap value”, in relation to a wasting asset, means the predictable value, if any, which the wasting asset will have at the end of its predictable life as estimated in accordance with this section;

“wasting asset” means an asset with a predictable life not exceeding 50 years, but so that—

• (a) freehold land shall not be a wasting asset whatever its nature and whatever the nature of the buildings or works on that land,

• (b) “life”, in relation to any tangible movable property, means useful life, having regard to the purpose for which the tangible assets were acquired or provided by the person making the disposal,

• (c) plant and machinery shall in every case be regarded as having a predictable life of less than 50 years, and in estimating that life it shall be assumed that its life will end when it is finally put out of use as being unfit for further use and that it will be used in the normal manner and to the normal extent and will be so used throughout its life as so estimated, and

• (d) a life interest in settled property shall not be a wasting asset until the predictable expectation of life of the life tenant is 50 years or less, and the predictable life of life interests in settled property and of annuities shall be ascertained from actuarial tables approved by the Revenue Commissioners.

• (2) The question as to what is the predictable life of an asset, and the question as to what is its predictable residual or scrap value, if any, at the end of that life, shall, in so far as those questions are not immediately answered by the nature of the asset, be taken in relation to any disposal of the asset as they were known or ascertainable at the time when the asset was acquired or provided by the person making the disposal.

• (3) In the computation under this Chapter of the gain accruing on the disposal of a wasting asset, it shall be assumed—

• (a) that any expenditure attributable to the asset under section 552(1)(a), after deducting the residual or scrap value, if any, of the asset, is written off at a uniform rate from its full amount at the time when the asset is acquired or provided to nil at the end of its life, and

• (b) that any expenditure attributable to the asset under section 552(1)(b) is written off at a uniform rate from the full amount of that expenditure at the time when that expenditure is first reflected in the state or nature of the asset to nil at the end of its life.

• (4) Where any expenditure attributable to the asset under section 552(1) (b) creates or increases a residual or scrap value of the asset, the residual or scrap value to be deducted under subsection (3)(a) shall be the residual or scrap value so created or increased.

• (5) Any expenditure written off under this section shall not be allowable as a deduction under section 552.

561 Wasting assets qualifying for capital allowances. [CGTA75 s51(1) and Sch1 par10]

561.—(1) Subsections (3) to (5) of section 560 shall not apply in relation to a disposal of an asset—

• (a) which, from the beginning of the period of ownership of the person making the disposal to the time when the disposal is made, is used solely for the purposes of a trade or profession and in respect of which that person has claimed or could have claimed any capital allowance in respect of any expenditure attributable to the asset under paragraph (a) or (b) of section 552(1), or

• (b) on which the person making the disposal has incurred any expenditure which has otherwise qualified in full for any capital allowance.

• (2) In the case of the disposal of an asset which in the period of ownership of the person making the disposal has been used partly for the purposes of a trade or profession and partly for other purposes, or has been used for the purposes of a trade or profession for part of that period, or which has otherwise qualified in part only for capital allowances—

• (a) the consideration for the disposal and any expenditure attributable to the asset 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 under this Chapter of the gain on the disposal shall be made separately in relation to the apportioned parts of the expenditure and consideration,

• (c) subsections (3) to (5) of section 560 shall not apply for the purposes of the computation in relation to the part of the consideration apportioned to use for the purposes of the trade or profession or to the expenditure qualifying for capital allowances,

• (d) if an apportionment of the consideration for the disposal has been made for the purposes of making any capital allowance to the person making the disposal or for the purpose of making any balancing charge on that person, that apportionment shall be employed for the purposes of this section, and

• (e) subject to paragraph (d), the consideration for the disposal shall be apportioned for the purposes of this section in the same proportions as the expenditure attributable to the asset is apportioned under paragraph (a).

562 Contingent liabilities. [CGTA75 s51(1) and Sch1 par11]

562.—(1) No allowance shall be made under section 552—

• (a) in the case of a disposal by means of assigning a lease of land or other property, for any liability remaining with or assumed by the person making the disposal by means of assigning the lease which is contingent on a default in respect of liabilities thereby or subsequently assumed by the assignee under the terms and conditions of the lease;

• (b) for any contingent liability of the person making the disposal in respect of any covenant for quiet enjoyment or other obligation assumed—

• (i) as vendor of land or of any estate or interest in land,

• (ii) as a lessor, or

• (iii) as grantor of an option binding that person to sell land or an interest in land or to grant a lease of land;

• (c) for any contingent liability in respect of a warranty or representation made on a disposal by means of a sale or lease of any property other than land.

• (2) Where it is shown to the satisfaction of the inspector that any contingent liability mentioned in subsection (1) has become enforceable and is being or has been enforced, such adjustment, whether by means of discharge or repayment of tax or otherwise, shall be made as may be necessary.

563 Consideration due after time of disposal. [CGTA75 s44(2); CTA76 s140(2) and Sch2 PtII par6]

563.—(1) (a) In the computation of a chargeable gain, consideration for the disposal shall be taken into account without any discount for postponement of the right to receive any part of the consideration and without regard to a risk of any part of the consideration being irrecoverable or to the right to receive any part of the consideration being contingent.

• (b) Where any part of the consideration taken into account in accordance with paragraph (a) is shown to the satisfaction of the inspector to be irrecoverable, such adjustment, whether by means of discharge or repayment of tax or otherwise, shall be made as the case may require.

• (2) Subsection (1) shall apply for the purposes of corporation tax as it applies for the purposes of capital gains tax.

564 Woodlands. [CGTA75 s51(1) and Sch1 par12]

564.—(1) In the computation under this Chapter of the gain accruing on the disposal by an individual of woodland, there shall be excluded—

• (a) consideration for the disposal of trees growing on the land, and

• (b) notwithstanding section 535(2), capital sums received under a policy of insurance in respect of the destruction of or damage or injury to trees by fire or other hazard on such land.

• (2) In the computation under this Chapter of the gain, so much of the cost of woodland as is attributable to trees growing on the land shall be disregarded.

• (3) References in this section to trees include references to saleable underwood.

565 Expenditure reimbursed out of public money. [CGTA75 s51(1) and Sch1 par3(7)]

565.—There shall be excluded from the computation under this Chapter of a gain accruing on a disposal any expenditure which has been or is to be met directly or indirectly by any government, by any board established by statute or by any public or local authority whether in the State or elsewhere.

566 Leases. [CGTA75 s51(1)]

566.—Schedule 14 shall apply for the purposes of the Capital Gains Tax Acts.

CHAPTER 3 Assets held in a fiduciary or representative capacity, inheritances and settlements

567 Nominees, bare trustees and agents. [CGTA75 s8(3), s15(10), s51(1) and Sch4 par2; FA73 s33(4) and (7)]

567.—(1) References in the Capital Gains Tax Acts to any asset held by a person as trustee for another person absolutely entitled as against the trustee are references to a case where that other person has the exclusive right, or would have such a right if that other person were not an infant or other person under disability, subject only to satisfying any outstanding charge, lien or right of the trustees to resort to the asset for payment of duty, taxes, costs or other outgoings, to direct how that asset shall be dealt with.

• (2) In relation to assets held by a person (in this subsection referred to as “the first-mentioned person”) as nominee for another person, or as trustee for another person absolutely entitled as against the trustee, or for any person who would be so entitled but for being an infant or other person under disability (or for 2 or more persons who are or would be jointly so entitled), the Capital Gains Tax Acts shall apply as if the property were vested in, and the acts of the first-mentioned person in relation to the assets were the acts of, the person or persons for whom the first-mentioned person is the nominee or trustee (acquisitions from or disposals to the first-mentioned person by that person or those persons being disregarded accordingly).

• (3) Where exploration or exploitation activities are carried on by a person on behalf of the holder of a licence granted under the Petroleum and Other Minerals Development Act, 1960, the holder of the licence shall for the purpose of any assessment to capital gains tax be deemed to be the agent of that person.

• (4) Schedule 1 shall apply for the purpose of supplementing subsection (3).

568 Liability of trustees, etc. [CGTA75 s51(1) and Sch4 par12]

568.—(1) Capital gains tax chargeable in respect of chargeable gains accruing to the trustees of a settlement or capital gains tax due from the personal representatives of a deceased person may be assessed and charged on and in the name of one or more of those trustees or personal representatives.

• (2) Subject to section 567(2), chargeable gains accruing to the trustees of a settlement or to the personal representatives of a deceased person, and capital gains tax chargeable on or in the name of such trustees or personal representatives, shall not be regarded for the purposes of the Capital Gains Tax Acts as accruing to or chargeable on any other person, nor shall any trustee or personal representative be regarded for the purposes of those Acts as an individual.

569 Assets of insolvent person. [CGTA75 s40]

569.—(1) In this section, “deed of arrangement” means a deed of arrangement to which the Deeds of Arrangement Act, 1887, applies.

• (2) In relation to assets held by a person as trustee or assignee in bankruptcy or under a deed of arrangement, the Capital Gains Tax Acts shall apply as if the assets were vested in, and the acts of the trustee or assignee in relation to the assets were the acts of, the bankrupt or debtor (acquisitions from or disposals to such person by the bankrupt or debtor being disregarded accordingly), and tax in respect of any chargeable gains which accrue to any such trustee or assignee shall be assessable on and recoverable from such trustee or assignee.

• (3) Assets held by a trustee or assignee in bankruptcy or under a deed of arrangement at the death of the bankrupt or debtor shall for the purposes of the Capital Gains Tax Acts be regarded as held by a personal representative of the deceased, and—

• (a) subsection (2) shall not apply after the death, and

• (b) section 573(2) shall apply as if any assets held by a trustee or assignee in bankruptcy or under a deed of arrangement at the death of the bankrupt or debtor were assets of which the deceased was competent to dispose and which then devolved on the trustee or assignee as if the trustee or assignee were a personal representative.

• (4) Assets vesting in a trustee in bankruptcy after the death of the bankrupt or debtor shall for the purposes of the Capital Gains Tax Acts be regarded as held by a personal representative of the deceased, and subsection (2) shall not apply.

570 Company in liquidation. [CGTA75 s41]

570.—Where assets of a company are vested in a liquidator under section 230 of the Companies Act, 1963, or otherwise, the Capital Gains Tax Acts shall apply as if the assets were vested in, and the acts of the liquidator in relation to the assets were acts of, the company (acquisitions from or disposals to the liquidator by the company being disregarded accordingly).

571 Chargeable gains accruing on disposals by liquidators and certain other persons. [FA83 s56]

571.—(1) In this section—

“accountable person” means—

• (a) a liquidator of a company, or

• (b) any person entitled to an asset by means of security or to the benefit of a charge or encumbrance on an asset or, as the case may be, any person appointed to enforce or give effect to the security, charge or encumbrance;

“the company” has the meaning assigned to it by subsection (6);

“the debtor” has the meaning assigned to it by subsection (5);

“referable capital gains tax” has the meaning assigned to it by subsection (2);

“referable corporation tax” has the meaning assigned to it by subsection (3);

“relevant disposal” has the same meaning as in section 648.

• (2) In this section—

• (a) in a case where no chargeable gains other than the chargeable gains mentioned in subsection (5)(a) (in this subsection referred to as “the referable gains”) accrued to the debtor in the year of assessment, “referable capital gains tax” means the amount of capital gains tax which apart from subsection (5) would be assessable on the debtor in respect of the referable gains;

• (b) in a case where, in addition to the referable gains, other chargeable gains accrued to the debtor in the year of assessment and, in charging all of those gains to capital gains tax without regard to subsection (5), the same rate of tax would apply, and either—

• (i) none of the disposals on which the chargeable gains accrued is a relevant disposal, or

• (ii) each of the disposals is a relevant disposal,

“referable capital gains tax” means an amount of tax determined by the formula—

A ___ B	× C

where—

A is the amount of capital gains tax which apart from subsection (5) would be assessable on the debtor in respect of the referable gains if no other chargeable gains accrued to the debtor in the year of assessment and if no deductions or reliefs were to be allowed against the referable gains,

B is the amount of capital gains tax which apart from subsection (5) would be assessable on the debtor in respect of all chargeable gains, including the referable gains, which accrued to the debtor in the year of assessment, if no deductions or reliefs were to be allowed against those chargeable gains, and

C is the amount of capital gains tax which apart from subsection (5) would be assessable on the debtor in respect of the total amount of chargeable gains, including the referable gains, which accrued to the debtor in the year of assessment;

• (c) in any other case, “referable capital gains tax” means the amount of capital gains tax which apart from subsection (5) and taking into account—

• (i) all other chargeable gains accruing to the debtor in the year of assessment, and

• (ii) where appropriate, sections 546(6), 601(3) and 653,

would be the amount of capital gains tax appropriate to the referable gains.

• (3) In this section—

• (a) in a case where no chargeable gains other than—

• (i) the chargeable gains mentioned in subsection (6)(a) (in this subsection referred to as “the referable gains”), or

• (ii) any chargeable gains accruing on a relevant disposal,

accrued to the company in the accounting period, “referable corporation tax” means the amount of capital gains tax which apart from subsection (6) would be assessable on the company in respect of the referable gains on the assumptions that—

• (I) notwithstanding any provision to the contrary in the Corporation Tax Acts, capital gains tax was to be charged in respect of the refereable gains in accordance with the Capital Gains Tax Acts, and

• (II) accounting periods were years of assessment,

or, if it is less, the amount of corporation tax which apart from subsection (6) would be assessable on the company for the accounting period;

• (b) in a case where, in addition to the referable gains, other chargeable gains (not being chargeable gains accruing on a relevant disposal) accrued to the company in the accounting period and, on the assumptions made in paragraph (a), in charging all of those gains to capital gains tax without regard to subsection (6), the same rate of tax would apply, “referable corporation tax” means an amount of tax determined by the formula—

D ___ E	× F

where—

D is the amount of capital gains tax which, apart from subsection (6) and on the assumptions made in paragraph (a), would be assessable on the company in respect of the referable gains if no other chargeable gains accrued to the company in the accounting period and if no deductions or reliefs were to be allowed against the referable gains,

E is the amount of capital gains tax which, apart from subsection (6) and on the assumptions made in paragraph (a), would be assessable on the company in respect of all chargeable gains including the referable gains (but not including chargeable gains accruing on a relevant disposal) which accrued to the company in the accounting period, if no deductions or reliefs were to be allowed against those chargeable gains, and

F is the amount (in this subsection referred to as “the notional amount”) of capital gains tax which apart from subsection (6) would in accordance with section 78(2) be calculated in relation to the company for the accounting period in respect of all chargeable gains including the referable gains or, if it is less, the amount of corporation tax which apart from subsection (6) would be assessable on the company for the accounting period;

• (c) (i) in any other case, “referable corporation tax” means, subject to subparagraph (ii), the amount of capital gains tax which, apart from subsection (6) and on the assumptions made in paragraph (a), and taking into account—

• (I) all other chargeable gains (not being chargeable gains accruing on a relevant disposal) accruing to the company in the accounting period, and

• (II) where appropriate, sections 546(6) and 653,

would be the amount of capital gains tax appropriate to the referable gains;

• (ii) in any case in which subparagraph (i) applies, if the notional amount is greater than the amount of corporation tax which apart from subsection (6) would be assessable on the company for the accounting period, “referable corporation tax” shall mean an amount determined by the formula—

G ___ H	× K

where—

G is the amount which under subparagraph (i) would be the referable corporation tax,

H is the notional amount, and

K is the amount of corporation tax which apart from subsection (6) would be assessable on the company for the accounting period.

• (4)
• (a) In any case where, in calculating an amount of referable capital gains tax or referable corporation tax under subsection (2)(c) or (3)(c), deductions or reliefs were to be allowed against chargeable gains accruing in a year of assessment or in an accounting period and apart from this subsection those deductions or reliefs (or part of them) would be set against 2 or more chargeable gains chargeable at the same rate of capital gains tax, then, those deductions or reliefs (or, as the case may be, that part of them) shall, in so far as is necessary to calculate the amount of referable capital gains tax or referable corporation tax, be apportioned between the chargeable gains chargeable at the same rate in proportion to the amounts of those chargeable gains.

• (b) In the case of chargeable gains accruing to a company (not being chargeable gains accruing on a relevant disposal), any reference in paragraph (a) to a rate of tax shall be construed as a reference to the rate of capital gains tax which would be applicable to those gains on the assumptions made in subsection (3)(a).

• (5) Where section 537(2) or 570 applies in respect of the disposal of an asset in a year of assessment by an accountable person, then, notwithstanding any provision of the Capital Gains Tax Acts—

• (a) any referable capital gains tax in respect of any chargeable gains which accrue on the disposal shall be assessable on and recoverable from the accountable person,

• (b) the referable capital gains tax shall be treated as a necessary disbursement out of the proceeds of the disposal and shall be paid by the accountable person out of those proceeds, and

• (c) referable capital gains tax paid by the accountable person shall discharge a corresponding amount of the liability to capital gains tax, for the year of assessment in which the disposal is made, of the person (in this section referred to as “the debtor”) who apart from this subsection is the chargeable person in relation to the disposal.

• (6) Where section 78(8) or 537(2) applies in respect of the disposal (not being a relevant disposal) of an asset in an accounting period of a company by an accountable person, then, notwithstanding any provision of the Corporation Tax Acts—

• (a) any referable corporation tax in respect of any chargeable gains which accrue on the disposal shall be assessable on and recoverable from the accountable person,

• (b) the referable corporation tax shall be treated as a necessary disbursement out of the proceeds of the disposal and shall be paid by the accountable person out of those proceeds, and

• (c) referable corporation tax paid by the accountable person shall discharge a corresponding amount of the liability to corporation tax, for the accounting period in which the disposal is made, of the company (in this section referred to as “the company”) which apart from this subsection is the chargeable person in relation to the disposal.

• (7) Notwithstanding any provision of the Capital Gains Tax Acts or of the Corporation Tax Acts, the amount of referable capital gains tax or referable corporation tax, as the case may be, which under this section is assessable on an accountable person in relation to a disposal, shall be recoverable by an assessment on the accountable person to income tax under Case IV of Schedule D for the year of assessment in which the disposal occurred on an amount the income tax on which at the standard rate for that year of assessment is equal to the amount of the referable capital gains tax or referable corporation tax, as the case may be.

• (8) Where tax is paid by an accountable person under this section and it is established that the amount of tax paid is excessive, appropriate relief by means of repayment or otherwise shall be given to the accountable person.

• (9) Subject to subsections (5)(c) and (6)(c), nothing in this section shall affect the amount of chargeable gains on which—

• (a) the debtor is chargeable to capital gains tax, or

• (b) the company is chargeable to corporation tax.

572 Funds in court. [CGTA75 s42]

572.—(1) In this section—

“the Accountant” means the Accountant attached to the court or a deputy appointed by the Minister for Justice, Equality and Law Reform;

“court” means the High Court except where the reference is to the Circuit Court;

“funds in court” means any moneys (and investments representing such moneys), annuities, stocks, shares or other securities standing or to be placed to the account of the Accountant in the books of the Bank of Ireland or any company, and includes boxes and other effects.

• (2) For the purposes of section 567(2), funds in court shall be regarded as held by the Accountant as nominee for the persons entitled to or interested in the funds or, as the case may be, for their trustees.

• (3) Where funds in court standing to an account in the books of the Accountant are invested or after investment are realised, the method by which the Accountant effects the investment or the realisation of investments shall not affect the question as to whether there is for the purposes of the Capital Gains Tax Acts an acquisition or, as the case may be, a disposal of an asset representing funds in court standing to that account, and in particular there shall for those purposes be an acquisition or disposal of assets notwithstanding that the investment of funds in court standing to an account in the books of the Accountant, or the realisation of funds which have been so invested, is effected by setting off in the Accountant's accounts investment in one account against realisation of investments in another.

• (4) This section shall apply with any necessary modifications to funds in the Circuit Court as it applies to funds in court.

573 Death. [CGTA75 s14; CGT(A)A78 s6(1)]

573.—(1) In this section, references to assets of which a deceased person was competent to dispose are references to assets of the deceased which the deceased could if of full age and capacity have disposed of by will, assuming that all the assets were situated in the State and that the deceased was domiciled in the State, and include references to the deceased's severable share in any assets to which immediately before his or her death he or she was beneficially entitled as a joint tenant.

• (2) For the purposes of the Capital Gains Tax Acts, the assets of which a deceased person was competent to dispose—

• (a) shall be deemed to be acquired on his or her death by the personal representatives or other person on whom they devolve for a consideration equal to their market value at the date of the death; but

• (b) shall not be deemed to be disposed of by him or her on his or her death (whether or not they were the subject of a testamentary disposition).

• (3) Allowable losses sustained by an individual in the year of assessment in which he or she dies may, in so far as they cannot be deducted from chargeable gains accruing in that year, be deducted from chargeable gains accruing to the deceased in the 3 years of assessment preceding the year of assessment in which the death occurs, taking chargeable gains accruing in a later year before those accruing in an earlier year, and there shall be made all such amendments of assessments or repayments of tax as may be necessary to give effect to this subsection.

• (4) In relation to property forming part of the estate of a deceased person, the personal representatives shall for the purposes of the Capital Gains Tax Acts be treated as being a single and continuing body of persons (distinct from the persons who may from time to time be the personal representatives), and that body shall be treated as having the deceased's residence, ordinary residence and domicile at the date of death.

• (5) Where any asset is acquired by a person as legatee no chargeable gain shall accrue to the personal representatives, but the legatee shall be treated as if the personal representatives' acquisition of the asset had been the legatee's acquisition of the asset.

• (6) Where not more than 2 years, or such longer period as the Revenue Commissioners may by notice in writing allow, after a death any of the dispositions of the property of which the deceased was competent to dispose, whether effected by will or under the law relating to intestacies or otherwise, are varied by a deed of family arrangement or similar instrument, this section shall apply as if the variations made by the deed or other instrument were effected by the deceased, and no disposition made by the deed or other instrument shall constitute a disposal for the purposes of the Capital Gains Tax Acts.

574 Trustees of settlement. [CGTA75 s15(1), (9) and (11)]

574.—(1) (a) In relation to settled property, the trustees of a settlement shall for the purposes of the Capital Gains Tax Acts be treated as being a single and continuing body of persons (distinct from the persons who may from time to time be the trustees) and, subject to paragraph (b), that body shall be treated as being resident and ordinarily resident in the State unless the general administration of the trusts is ordinarily carried on outside the State and the trustees or a majority of them for the time being are not resident or not ordinarily resident in the State.

• (b) A person carrying on a business which consists of or includes the management of trusts, and acting as trustees of a trust in the course of that business, shall be treated in relation to that trust as not resident in the State if the whole of the settled property consists of or derives from property provided by a person not at the time (or, in the case of a trust arising under a testamentary disposition or on an intestacy or partial intestacy, at his or her death) domiciled, resident or ordinarily resident in the State and, if in such a case the trustees or a majority of them are or are treated in relation to that trust as not resident in the State, the general administration of the trust shall be treated as ordinarily carried on outside the State.

• (2) Where any amount of capital gains tax assessed on the trustees or any one trustee of a settlement in respect of a chargeable gain accruing to the trustee is not paid within 6 months from the date when it becomes payable by the trustees or trustee and, before or after the expiration of that period of 6 months, the asset in respect of which the chargeable gain accrued, or any part of the proceeds of sale of that asset, is transferred by the trustees to a person who as against the trustees is absolutely entitled to it, then, that person may, at any time within 2 years from the time when that amount of tax became payable, be assessed and charged (in the name of the trustees) to an amount of capital gains tax not exceeding the amount of capital gains tax chargeable on an amount equal to the amount of the chargeable gain and, where part only of the asset or of the proceeds was transferred, not exceeding a proportionate part of that amount.

• (3) For the purposes of this section, where part of the property comprised in a settlement is vested in one trustee or set of trustees and part in another trustee or set of trustees (and in particular where settled land within the meaning of the Settled Land Act, 1882, is vested in the tenant for life and investments representing capital money are vested in the trustees of the settlement), they shall be treated as together constituting and, in so far as they act separately, as acting on behalf of a single body of trustees.

575 Gifts in settlement. [CGTA75 s15(2)]

575.—A gift in settlement, whether revocable or irrevocable, shall be a disposal of the entire property thereby becoming settled property notwithstanding that the donor has some interest as a beneficiary under the settlement and notwithstanding that the donor is a trustee or the sole trustee of the settlement.

576 Person becoming absolutely entitled to settled property. [CGTA75 s15(3) and (8)]

576.—(1) On the occasion when a person becomes absolutely entitled to any settled property as against the trustee, all the assets forming part of the settled property to which the person becomes so entitled shall be deemed for the purposes of the Capital Gains Tax Acts to have been disposed of by the trustee, and immediately reacquired by the trustee in the trustee's capacity as a trustee within section 567(2), for a consideration equal to their market value.

• (2) On the occasion when a person becomes absolutely entitled to any settled property as against the trustee, any allowable loss which has accrued to the trustee in respect of property which is, or is represented by, the property to which that person becomes so entitled (including any allowable loss carried forward to the year of assessment in which that occasion falls), being a loss which cannot be deducted from chargeable gains accruing to the trustee in that year, but before that occasion, shall be treated for the purposes of the Capital Gains Tax Acts as if it were an allowable loss accruing at that time to the person becoming so entitled, instead of to the trustee.

577 Termination of life interest on death of person entitled. [CGTA75 s15(4), (5), (5A), (6) and (12); CGT(A)A78 s7(1); FA97 s73(1)]

577.—(1) (a) In this section, “life interest”, in relation to a settlement—

• (i) includes a right under the settlement to the income of, or the use or occupation of, settled property for the life of a person (or for the lives of persons) other than the person entitled to the right,

• (ii) does not include any right which is contingent on the exercise of the discretion of the trustee or the discretion of some other person, and

• (iii) does not include an annuity, notwithstanding that the annuity is payable out of or charged on settled property or the income of settled property except where some or all of the settled property is appropriated by the trustees as a fund out of which the annuity is payable and there is no right of recourse to settled property not so appropriated, or to the income of settled property not so appropriated.

• (b) Without prejudice to subsection (4)(b), where under paragraph (a) (iii) an annuity is to be treated as a life interest in relation to a settlement, the settled property or the part of the settled property appropriated by the trustees as a fund out of which the annuity is payable shall, while the annuity is payable and on the occasion of the death of the annuitant, be treated for the purposes of subsection (3) as being settled property under a separate settlement.

• (2) Where by virtue of section 576(1) the assets forming part of any settled property are deemed to be disposed of and reacquired by the trustee on the occasion when a person becomes absolutely entitled to the assets as against the trustee, then, if that occasion is the termination of a life interest by the death of the person entitled to that interest—

• (a) no chargeable gain shall accrue on the disposal, and

• (b) the reacquisition under that section shall be deemed to be for a consideration equal to the market value of the assets at the date of the death.

• (3) On the termination of a life interest in possession in all or any part of settled property, the whole or a corresponding part of each of the assets forming part of the settled property and not ceasing at that time to be settled property shall be deemed for the purposes of the Capital Gains Tax Acts at that time to be disposed of by the trustee, and immediately reacquired by the trustee, for a consideration equal to the whole or a corresponding part of the market value of the asset.

• (4) For the purposes of subsection (3)—

• (a) a life interest which is a right to part of the income of settled property shall be treated as a life interest in a corresponding part of the settled property, and

• (b) if there is a life interest in a part of the settled property and, where that interest is a life interest in income, there is no right of recourse to, or to the income of, the remainder of the settled property, the part of the settled property in which the life interest subsists shall while it subsists be treated for the purposes of this subsection as being settled property under a separate settlement.

• (5)
• (a) Subject to paragraph (b), where—

• (i) as a consequence of a termination, on the death of the person entitled to it, of a life interest in settled property, subsection (3) applies, and

• (ii) an asset which forms the whole or any part of that settled property—

• (I) is comprised in an inheritance (within the meaning of the Capital Acquisitions Tax Act, 1976) taken on the death, and

• (II) is exempt from tax in relation to the inheritance under section 55 of that Act, or that section as applied by section 39 of the Finance Act, 1978,

that asset shall for the purposes of subsection (3), be excluded from the assets deemed to be disposed of and immediately reacquired.

• (b) Where, in a year of assessment, in respect of an asset an exemption from tax in relation to an inheritance referred to in paragraph (a) ceases to apply, then, the chargeable gain which but for paragraph (a) would have accrued to the trustee on the termination of the life interest in accordance with subsection (3) shall be deemed to accrue to the trustee in that year of assessment and shall accordingly be included in the return required to be made by the trustee concerned under section 951 for that year of assessment.

578 Death of annuitant. [CGTA75 s15(7)]

578.—Sections 576(1) and 577(3) shall apply where an annuity which is not a life interest within the meaning of section 577 is terminated by the death of the annuitant as they apply on the termination of a life interest (within the meaning of that section) by the death of the person entitled to that life interest.

579 Non-resident trusts. [CGTA75 s37]

579.—(1) This section shall apply as respects chargeable gains accruing to the trustees of a settlement where the trustees are not resident and not ordinarily resident in the State, and where the settlor or one of the settlors is domiciled and either resident or ordinarily resident in the State, or was domiciled and either resident or ordinarily resident in the State when such settlor made the settlement.

• (2)
• (a) Any beneficiary under the settlement who is domiciled and either resident or ordinarily resident in the State in any year of assessment shall be treated for the purposes of the Capital Gains Tax Acts as if an apportioned part of the amount, if any, on which the trustees would have been chargeable to capital gains tax under section 31, if domiciled and either resident or ordinarily resident in the State in that year of assessment, had been chargeable gains accruing to the beneficiary in that year of assessment.

• (b) For the purposes of this section, any amount referred to in paragraph (a) shall be apportioned in such manner as is just and reasonable between persons having interests in the settled property, whether the interest is a life interest or an interest in reversion, and so that the chargeable gain is apportioned as near as may be according to the respective values of those interests, disregarding in the case of a defeasible interest the possibility of defeasance.

• (3) For the purposes of this section—

• (a) where in any of the 5 years ending with that in which the chargeable gain accrues a person has received a payment or payments out of the income of the settled property made in exercise of a discretion, such person shall be regarded, in relation to that chargeable gain, as having an interest in the settled property of a value equal to that of an annuity of a yearly amount equal to 20 per cent of the total of the payments so received by such person in those 5 years, and

• (b) where a person (in this paragraph referred to as “the recipient”) receives at any time after the chargeable gain accrues a capital payment made out of the settled property in exercise of a discretion, being a payment which represents the chargeable gain in whole or in part, then, except in so far as any part of the gain has been attributed under this section to some other person who is domiciled and resident or ordinarily resident in the State, the recipient shall, if domiciled and resident or ordinarily resident in the State, be treated as if the chargeable gain or, as the case may be, the part of the chargeable gain represented by the capital payment, had accrued to the recipient at the time when the recipient received the capital payment.

• (4) In the case of a settlement made before the 28th day of February, 1974—

• (a) subsection (2) shall not apply to a beneficiary whose interest is solely in the income of the settled property and who cannot, by means of the exercise of any power of appointment or power of revocation or otherwise, obtain for himself or herself, whether with or without the consent of any other person, any part of the capital represented by the settled property, and

• (b) payment of capital gains tax chargeable on a gain apportioned to a beneficiary in respect of an interest in reversion in any part of the capital represented by the settled property may be postponed until that person becomes absolutely entitled to that part of the settled property, or disposes of the whole or any part of his or her interest, unless he or she can, by any means described in paragraph (a), obtain for himself or herself any of it at any earlier time,

and, for the purposes of this subsection, property added to a settlement after the settlement is made shall be regarded as property under a separate settlement made at the time when the property is so added.

• (5) In any case in which the amount of any capital gains tax payable by a beneficiary under a settlement in accordance with this section is paid by the trustees of the settlement, such amount shall not for the purposes of income tax or capital gains tax be regarded as a payment to such beneficiary.

• (6) This section shall not apply in relation to a loss accruing to the trustees of the settlement.

CHAPTER 4 Shares and securities

580 Shares, securities, etc: identification. [CGT(A)A78 s16 and Sch1 par4]

580.—(1) For the purposes of identifying shares acquired with shares subsequently disposed of, in so far as the shares are of the same class, shares acquired at an earlier time shall for the purposes of the Capital Gains Tax Acts be deemed to have been disposed of before shares acquired at a later time.

• (2) Shares shall not be treated for the purposes of this section as being of the same class unless, if dealt with on a stock exchange, they would be so treated, but shall be treated in accordance with this section notwithstanding that they are identified in a different way by a disposal or by the transfer or delivery giving effect to the disposal.

• (3) This section shall apply to securities as it applies to shares.

• (4) This section apart from subsection (2) shall apply in relation to any assets as it applies in relation to shares where the assets are of a nature to be dealt in without identifying the particular assets disposed of or acquired.

• (5)
• (a) This subsection shall apply in relation to the disposal of any assets to which paragraph 13 of Schedule 1 to the Capital Gains Tax Act, 1975, applied, where—

• (i) any such assets were on the 6th day of April, 1978, comprised in a holding of the kind referred to in that paragraph,

• (ii) the holding consisted of assets acquired on different dates, and

• (iii) before the 6th day of April, 1978, there had been a disposal of assets which if that disposal had not taken place would have been comprised in the holding on that date.

• (b) For the purposes of applying subsection (1) in relation to each disposal to which this subsection applies—

• (i) shares acquired on different dates shall be treated as if they were distinguishable parts of a single asset (in this subsection referred to as “the holding”) acquired respectively on the separate dates on which they were acquired and for the consideration for which they were acquired, and

• (ii) it shall be assumed that, on each occasion before the 6th day of April, 1978, on which a disposal was made of shares in the holding, each of the distinguishable parts of the holding as it existed immediately before the disposal was reduced, both as regards the number of shares comprised in that part and the expenditure attributable to that part under paragraphs (a) and (b) of section 552(1), in the same proportion as the number of shares so disposed of bears to the number of shares comprised in the holding immediately before that disposal, and

• (iii) the number of shares comprised in each such part on the 6th day of April, 1978, and the expenditure attributable (apart from section 556) to that part under paragraphs (a) and (b) of section 552(1) shall, in relation to a disposal made on or after that date, be the number and expenditure respectively determined in accordance with this subsection.

• (c) Nothing in this subsection shall affect the computation of any chargeable gain or allowable loss in relation to any disposal of assets made before the 6th day of April, 1978.

• (6) This section shall apply subject to section 581.

581 Disposals of shares or securities within 4 weeks of acquisition. [CGTA75 s51(1) and Sch1 par14(1) to (5)]

581.—(1) For the purposes of the Capital Gains Tax Acts, where the same person in the same capacity disposes of shares of the same class as shares which such person acquired within 4 weeks preceding the disposal, the shares disposed of shall be identified with the shares so acquired within those 4 weeks.

• (2) For the purposes of the Capital Gains Tax Acts, where the quantity of shares of the same class disposed of exceeds the quantity of shares of the same class acquired within the period of 4 weeks preceding the disposal, the excess shall be identified with shares of the same class acquired otherwise than within the period of 4 weeks.

• (3) Where a loss accrues to a person on the disposal of shares and such person reacquires shares of the same class within 4 weeks after the disposal, that loss shall not be allowable under section 538 or 546 otherwise than by deduction from a chargeable gain accruing to such person on the disposal of the shares reacquired; but, if the quantity of shares so reacquired is less than the quantity so disposed of, such proportion of the loss shall be allowable under section 538 or 546 as bears the same proportion to the loss on the disposal as the quantity not reacquired bears to the quantity disposed of.

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

• (a) subsections (1) and (2) shall, with the necessary modifications, apply where shares are acquired by one of them and shares of the same class are disposed of within 4 weeks by the other, and

• (b) subsection (3) shall, with the necessary modifications, apply also where a loss on the disposal accrues to one of them and the acquisition after the disposal is made by the other.

• (5) This section shall apply to securities as it applies to shares.

582 Calls on shares. [CGT(A)A78 s16 and Sch1 par3]

582.—Where, as respects an issue of shares in or debentures of a company, a person gives any consideration on a date which is more than 12 months after the date on which the shares or debentures were allotted, the consideration shall, in the computation of a gain accruing to such person on a disposal of the shares or debentures, be deemed for the purposes of section 556 to be expenditure incurred on the date on which the consideration was given.

583 Capital distributions by companies. [CGTA75 s51(1) and Sch2 par1]

583.—(1) In this section, “capital distribution” means any distribution from a company (including a distribution in the course of dissolving or winding up the company) in money or money's worth except a distribution which in the hands of the recipient constitutes income for the purposes of income tax.

• (2) Where a person receives or becomes entitled to receive in respect of shares in a company any capital distribution from the company (other than a new holding within the meaning of section 584), such person shall be treated for the purposes of the Capital Gains Tax Acts as if such person had in consideration of that capital distribution disposed of an interest in the shares.

584 Reorganisation or reduction of share capital. [CGTA75 s51(1) and Sch2 par2(1) to (7) and (9); CGT(A)A78 s16 and Sch1 par5]

584.—(1) In this section—

“new holding”, in relation to any original shares, means the shares in and debentures of the company which as a result of the reorganisation or reduction of capital represent the original shares (including such, if any, of the original shares as remain);

“original shares” means shares held before and concerned in the reorganisation or reduction of capital;

references to a reorganisation of a company's share capital include—

• (a) any case where persons are, whether for payment or not, allotted shares in or debentures of the company in respect of and in proportion to (or as nearly as may be in proportion to) their holdings of shares in the company or of any class of shares in the company, and

• (b) any case where there is more than one class of shares and the rights attached to shares of any class are altered;

references to a reduction of share capital do not include the paying off of redeemable share capital and, where shares in a company are redeemable by the company otherwise than by the issue of shares or debentures (with or without other consideration) and otherwise than in a liquidation, the shareholder shall be treated as disposing of the shares at the time of the redemption.

• (2) This section shall apply for the purposes of the Capital Gains Tax Acts in relation to any reorganisation or reduction of a company's share capital.

• (3) Subject to subsections (4) to (8), a reorganisation or reduction of a company's share capital shall not be treated as involving any disposal of the original shares or any acquisition of the new holding or any part of it; but the original shares (taken as a single asset) and the new holding (taken as a single asset) shall be treated as the same asset acquired as the original shares were acquired.

• (4)
• (a) Where on a reorganisation or reduction of a company's share capital a person gives or becomes liable to give any consideration for such person's new holding or any part of it, that consideration shall, in the computation of a gain accruing to such person on a disposal of the new holding or any part of it, be deemed for the purposes of section 556 to be expenditure incurred on the date the consideration was given and, if the new holding or part of it is disposed of with a liability attaching to it in respect of that consideration, the consideration given for the disposal shall be adjusted accordingly.

• (b) Notwithstanding paragraph (a), there shall not be treated as consideration given for the acquisition of the new holding—

• (i) any surrender, cancellation or other alteration of the original shares or of the rights attached to the original shares, or

• (ii) any consideration consisting of any application, in paying up the shares or debentures or any part of them, of any assets of the company, or of any dividend or other distribution declared out of those assets but not made;

but, if section 816 applies in relation to the issue of any of the shares, the sum in cash which the person would have received if the person had not exercised the option to receive additional share capital instead of a sum in cash shall be treated for the purposes of this subsection as consideration given for those shares.

• (5) Where on a reorganisation or reduction of a company's share capital a person receives (or is deemed to receive), or becomes entitled to receive, any consideration other than the new holding for the disposal of an interest in the original shares, and in particular—

• (a) where under section 583 such person is to be treated as if such person had in consideration of a capital distribution disposed of an interest in the original shares, or

• (b) where such person receives (or is deemed to receive) a consideration from other shareholders in respect of a surrender of rights derived from the original shares,

such person shall be treated as if the new holding resulted from such person having for that consideration disposed of an interest in the original shares (but without prejudice to the original shares and the new holding being treated in accordance with subsection (3) as the same asset).

• (6) Where, for the purpose of computing the gain or loss accruing to a person from the acquisition and disposal of any part of the new holding, it is necessary to apportion the cost of acquisition of any of the original shares between the part which is disposed of and the part which is retained, the apportionment shall be made by reference to market value at the date of the disposal (with such adjustment of the market value of any part of the new holding as may be required to offset any liability attaching to the new holding but forming part of the cost to be apportioned), and any corresponding apportionment for the purposes of subsection (5) shall be made in the like manner.

• (7) Notwithstanding subsection (6)—

• (a) where a new holding—

• (i) consists of more than one class of shares in or debentures of the company and one or more of those classes is of shares or debentures which, at any time not later than the end of the period of 3 months beginning on the date on which the reorganisation or reduction of capital took effect, or of such longer period as the Revenue Commissioners may by notice in writing allow, had quoted market values on a recognised stock exchange in the State or elsewhere, or

• (ii) consists of more than one class of rights of unit holders and one or more of those classes is of rights the prices of which were published regularly by the managers of the scheme at any time not later than the end of that period of 3 months (or longer if so allowed), and

• (b) where, for the purpose of computing the gain or loss accruing to a person from the acquisition and disposal of the whole or any part of any class of shares or securities or rights of unit holders forming part of a new holding of the kind referred to in paragraph (a), it is necessary to apportion costs of acquisition between the part that is disposed of and the part that is retained,

then, the cost of acquisition of the new holding shall first be apportioned between the entire classes of shares or debentures or rights of which it consists by reference to market value on the first day (whether that day fell before the reorganisation or reduction of capital took effect or later) on which market values or prices were quoted or published for the shares, debentures or rights mentioned in paragraph (a) or (b) (with such adjustment of the market value of any class as may be required to offset any liability attaching thereto but forming part of the cost to be apportioned) and, for the purposes of this subsection, the day on which a reorganisation of share capital involving the allotment of shares or debentures or unit holders' rights takes effect shall be the day following the day on which the right to renounce any allotment expires.

• (8) Where a person receives or becomes entitled to receive in respect of any shares in or debentures of a company a provisional allotment of shares in or debentures of the company and such person disposes of such person's rights, section 583 shall apply as if the amount of the consideration for the disposal were a capital distribution received by such person from the company in respect of the first-mentioned shares, and as if such person had, instead of disposing of the rights, disposed of an interest in those shares.

585 Conversion of securities. [CGTA75 s51(1) and Sch2 par3]

585.—(1) In this section—

“conversion of securities” includes—

• (a) a conversion of securities of a company into shares in the company,

• (b) a conversion at the option of the holder of the securities converted as an alternative to the redemption of those securities for cash, and

• (c) any exchange of securities effected in pursuance of any enactment which provides for the compulsory acquisition of any shares or securities and the issue of securities or other securities instead;

“security” includes any loan stock or similar security, whether of any government or of any public or local authority or of any company and whether secured or unsecured but excluding securities within section 607.

• (2) Section 584 shall apply with any necessary modifications in relation to the conversion of securities as it applies in relation to the reorganisation or reduction of a company's share capital.

586 Company amalgamations by exchange of shares. [CGTA75 s51(1) and Sch2 par4; FA82 s63(1)(a) and (2)]

586.—(1) Subject to section 587, where a company issues shares or debentures to a person in exchange for shares in or debentures of another company, section 584 shall apply with any necessary modifications as if the 2 companies were the same company and the exchange were a reorganisation of its share capital.

• (2) This section shall apply only where—

• (a) the company issuing the shares or debentures has, or in consequence of the exchange will have, control of the other company, or

• (b) the first-mentioned company issues the shares or debentures in exchange for shares as the result of a general offer made to members of the other company or any class of them (with or without exceptions for persons connected with the first-mentioned company), the offer being made in the first instance on a condition such that if it were satisfied the first-mentioned company would have control of the other company.

• (3)
• (a) In this subsection, “shares” includes stock, debentures and any interests to which section 587(3) applies and also includes any option in relation to such shares.