Lease Possibilities There are special rules for capital gains tax rules on leases. The rules reflect the range of transactions that may be effected by a lease. It is possible to have a term ranging from a very short period to something approximating to an outright sale. The rent may range from a nominal rent to a full market value rent and any corresponding premium […]
Assets for CGT Assets for capital gain tax purposes cover anything incapable of being owned. This is wider than property in the ordinary sense of the word. It would include land, buildings, movable property, shares together with a host of intangible type assets. It covers anything capable of being owned or sold. The essence of the capital gain is that that which is owned is […]
Special Rules Development land has always been subject to special capital gains tax rules. The rules are more restrictive than in the case of other assets. The thinking behind this approach is that development windfalls are linked to the decisions of private authorities rather than intrinsic improvement of the land. Development Land Development land is any land whose price does not reflect its current use […]
Price less Cost Broadly speaking, a capital gain is the difference between the sale price and acquisition cost of a capital asset. Usually, the price received for the sale of the assets is the sum used in calculating the gain. However where the sale is other than at market value, or where the transaction is between connected person, the market value is substituted for the […]
Residence An individual who is resident in Ireland is liable to capital gains tax on all of his gains worldwide. He may also be liable in another country or jurisdiction in which event a double taxation or a unilateral credit may be available for tax paid in that other country. The rules for residence are the same as in income tax. The so called split […]
CGT v Income Tax Capital gains tax is charged on the profit on the disposal of capital assets. It taxes the rise in value of the asset between the date of acquisition and the disposal. Capital gains tax is the complimentary tax to income tax. Capital gains tax applies to disposals which are not subject to income tax. What may be a capital gain in […]
Overview All disposals of assets in the year of assessment are aggregated. The year of assessment is the calendar year. Transactions are not assessed individually. Gains are netted against losses in the year. The return must be made by 31st October in their year following the year of disposal. (as with income tax, even if a person is not liable to income tax, they must […]
Shares Shaves give ownership rights in respect of companies. Shares quoted on a stock exchange are usually readily saleable and substantial information on the company is published on an ongoing basis. Shares in a private company do not have a ready market. Indeed the definition of a private company requires that there are substantial restrictions on sale. See the section on company law and chapters […]
Reporting Where a resident individual creates a trust in another jurisdiction, there is an obligation on that person creating the trust to notify Revenue within three month. The person creating the settlements must make the return if the trustees are not resident. There are similar obligations on certain advisors who are involved in the making of the settlement. Reporting obligations in respect of tax avoidance […]
Types of Trust Tax rules make persons such as trustees, nominee holders of securities, personal representatives and others in similar positions, personally responsible for capital gains tax in relation to the trust assets. There are similar responsibilities for income tax. The liability may be satisfied from the trust fund or equivalent. They may incur personal liability where they distribute funds without making provision for the […]
Reliefs There are reliefs from capital gains tax for amalgamations and reconstructions of companies. There are similar although slightly different reliefs for a stamp duty. There are also reliefs from CGT for mergers and acquisitions deriving from EU legislaiton. This extends to EEA companies and to the UK. Unlike the position in the UK there is no relief available by which the shareholders or a […]
Groups Capital gains tax reliefs exist to cater for the fact that businesses are often organised in groups of companies. A group of companies under Company Law comprises a holding company and one or more layers of subsidiaries Companies are said to be in the same group when one is a parent or subsidiary of another (either directly or indirectly )or both are subsidiaries of […]
Exempt Assets Some very important classes of assets are exempt from Capital Gains Tax. This includes principally; a debt owed to the original creditor; domestic currency; movable assets with an expected life of less than 50 years (a wasting chattel); other wasting chattels / movable assets sold by individuals for less than €2540; government securities (national debt; comprised in bonds and bills); securities (issued by […]
Original Charge There has been a CGT charge when a company goes non-resident in relation to assets which are thereby outside the scope of Irish CGT for many years. There have been important exceptions. Cessation of residence in the State will take place when it becomes resident in another country rather than ceases to exist. Where a company ceases to be resident in the State, […]
Qualifying Individuals There is a reduced rate of capital gains tax on disposal of chargeable business assets or shares by a qualifying individual. The purpose is to incentivise entrepreneurs. Entrepreneurs relief provides a reduced capital gains tax of 10% applicable to disposals made after 2016.there is a lifetime limit of €1 million per person. All disposals after 1 January 2016 are taken into account for […]
Farming Retirement relief applies to farming. There are further provisions which facilitate retirement from farming. See also the separate chapter. The relief applies to land used for farming for at least 10 years prior to transferring an interest under the European Union early retirement from farming provisions Single farm payment rights dispose of at the same time as land also qualify for the exemption subject […]
Retirement relief Retirement relief applies on the sale or transfer (including by gift) of assets by someone over 55 years of age. It applies when business assets or shares are disposed of, irrespective of whether the person concerned actually retires. Retirement is not a condition of the relief, so that the common name given to it is a misnomer. Relief is available to persons over […]
Transfer of business to company There is an important relief from capital gains tax, where a business is transferred from an individual into his company. This is designed to assist sole traders and partners form tax consequences when they incorporate and transfer their business to a company. The business must be transferred as a going concern. The person need not work in the business. The […]
Principal Private Residence The sale of a principal private residence is exempt from the tax. The exemption applies in full only if it has been used as the seller’s sole or main residence throughout his period of ownership. The residence must be a dwellinghouse and land up to an acre. A person can only have one principal private residence at a time. A married couple […]