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 make a capital gains tax return form if the have had disposal) A person who is not liable to income tax, may file short form capital gains tax return.
There is an obligation to make a self assessed return. It is the obligation of the taxpayer to make the return, irrespective of whether the Revenue raises an assessment or issues a form of return.
The basic principle is that any person who disposes of an asset such as to be chargeable to capital gains tax must make a return in a form prescribed by the Revenue Commissioners. Certain re-organisation and other transactions must be reported even though they do not trigger a charge to capital gains tax.
As well as the general anti-avoidance provisions there are several specific capital gains tax based anti-avoidance provisions. A recent wide ranging provision aimed at artificial creation of losses has been recently introduced. If a transaction creates a loss and the main purpose or one of the main purpose is to gain a tax advantage the last may be disallowed.
Income Tax Obligations Apply
The obligations in relation to income tax returns also apply to capital gains tax. The obligation in relation to capital gains tax parallel those for income tax.
Generally, a single form is used to declare both income and capital gains tax . A company declares capital gains as corporation tax and as part of the return for that tax. A form of return that relates to capital gains tax only is available.
Persons who are obliged to make income tax returns on behalf of others have the same broad obligations for capital gains tax. Therefore, for example, nominee shareholders and trustees have similar obligations in relation to capital gains as in relation to income tax.
Married / Civil Partners
Married couples may elect to be jointly assessed for capital gains tax.Spouses may make a joint return in the same way as in respect of income tax. In respect of partners, the precedent partner makes the return. See our section in relation to income tax in relation to who is the precedent partner.
Their rules in relation to assessment of spouses are similar to those for income tax. Individuals can elect for joint assessment or separate assessment, The assessment can be in the name of the husband or wife as the parties choose.
Transactions between spouses are not subject to capital gains tax, This is consistent with the tax treatment of other transactions. Spouses can transfer their assets between each other, free of stamp duty, inheritance tax and capital gains tax. The acquiring spouse is deemed to have acquired the asset at the price at which his or her spouse acquired it.
Companies must make the return within nine months of the end of the relevant accounting period in which the gain arises.
In the case of companies the capital gains tax is converted to an equivalent amount of corporation tax and applies to the accounting period in which the disposal took place. The payment dates accord with the dates for corporate tax returns payments and self-assessment.
Capital gains tax must be paid on account during their year in advance of the actual tax returns. If assets are disposed of between 1st January and 30th November, payment must be made by 15th December. In respect of disposals between1st December and 31st December, the payment on account of tax must be made by 31st Janauary.
The second payment is due on 31st October, in the following year, i.e. it is to be made with the tax return. As with income tax returns taxpayers who return via Revenue Online Service (“ROS”) obtain an extension of the due date. The extended date of mid-November only applies to those who pay and file online through ROS, as will be usually the case.
The date of payment for companies is determined by corporation tax rules. This is usually 8 months and three weeks after the accounting date. The return must be a true and full return.
Irish capital gains tax charges non-residents in respect of specified assets, as set out above. Where the sale price for specified assets exceeds €1,000,000, the seller must withhold 15% and pay it to the Revenue, unless the Revenue issues tax clearance certificate authorising payment without deduction.
Interest, Penalties & Surcharge
Interest applies on overdue capital gains tax as with other taxes. The current rate is 0.219% per day.
A surcharge will apply if a person fails to make a return or a correct return. Interest runs on late payment of tax and a surcharge and penalties may apply. Where the return is up to two months late, the surcharge is 5% of the tax up to €12,695. If the return is more than two months late, the surcharge is 10% of the tax up to €63,485.
As with income tax a fraudulent or negligent return is deemed not to be a timely return. The consequences that apply to failure to make a return therefore follow.
There are penalties for failure to make the return equivalent to those for income tax. Certain penalties may be recovered from the company secretary. Failure to make a return is also an offence subject to prosecution.
In much the same way as income tax the Revenue may make an assessment if they are not satisfied with the self-assessment. The assessment cannot be raised until before the earlier of the making of the return or the due date for the making of the return. An assessment may be made within four years provided a full and true return has been made. In the case of fraud or negligence there is no time limit. An assessment may be amended outside the four year time limit in certain limited circumstances.
The assessment may be based on the best of the special tax information and belief either where there is no return or the return is not satisfactory. Enquiries may be made in order to obtain information upon which to base a return. A non-resident may be assessed separately in respect of the disposal within the year. Revenue need not wait after the year end. This facilitates procurement of a tax clearance certificate in respect of certain assets on which non-residents must pay capital gains tax.
As with income tax Revenue have comprehensive powers. A statement of affairs may be required. The provisions in relation to appeals apply in respect of capital gains tax as well as income tax.
Donee of Gift
Where capital gains tax arises due to a gift and the tax is not paid within 12 months the beneficiary of the gift may be assessed. He may recover it from the donor
The specified assets in respect of which the withholding tax apply are:
- Irish land;
- Companies deriving the value or the greater part of the value from Irish land;
- Mineral or exploration rights;
- Goodwill of a trade carried on in Ireland.
Similar provisions apply where a transfer is not in money. Where there is non- monetary consideration withholding obligations apply unless clearance certificate is issued. In the absence the acquirer of the assets must make a return and pay 15% of the estimated value. The purchaser is the person who must pay the requisite sum to the Revenue within 30 days in the absence of a clearance certificate. Non-residents will not usually obtain clearance certificates unless the tax liability is fully accounted for and dealt with.
The Revenue have comprehensive powers to inspect assets in the context of making assessments.
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