Trusts & Similar

Table of Contents

Taxes Consolidation Act

Part 31 Taxation of Settlors, Etc., in Respect of Settled or Transferred Income (ss. 791-798)

Chapter 1 Revocable dispositions for short periods and certain dispositions in favour of children (ss. 791-793)

791. Income under revocable dispositions.

(1)In this Chapter and in paragraph 27 of Schedule 32, except where the context otherwise requires, “disposition” includes any trust, covenant, agreement or arrangement.

(2)Any income of which any person (in this subsection referred to as “the first-mentioned person”) is able or has been able, without the consent of any other person by means of the exercise of any power of appointment, power of revocation or otherwise however by virtue or in consequence of a disposition made directly or indirectly by the first-mentioned person, to obtain for the first-mentioned person the beneficial enjoyment shall be deemed for the purposes of the Income Tax Acts to be the income of the person who is or was able to obtain such beneficial enjoyment, and not to be the income of any other person.

(3)Where any power referred to in subsection (2) may be exercised by a person with the consent of the wife, husband or civil partner of the person, the power shall for the purposes of subsection (2) be deemed to be exercisable without the consent of another person, except where the husband and wife, or civil partners, are living apart either by agreement or under an order of a court of competent jurisdiction.

(4)Where any power referred to in subsection (2) is exercisable by the wife or husband of the person who made the disposition, the power shall for the purposes of subsection (2) be deemed to be exercisable by the person who made the disposition.

792. Income under dispositions for short periods.

(1)

(a)In this subsection, “relevant individual” means an individual who is –

(i)permanently incapacitated by reason of mental or physical infirmity, or

(ii)aged 65 years or over.

(b)Any income which, by virtue of or in consequence of any disposition made directly or indirectly by any person (other than a disposition made for valuable and sufficient consideration), is payable to or applicable for the benefit of any other person, but excluding any income which –

(i)arises from capital of which the disponer by the disposition has divested absolutely himself or herself in favour of or for the benefit of the other person,

(ii)[deleted]

(iii)[deleted]

(iv)being payable to a relevant individual for the individual’s own use, is so payable for a period which exceeds or may exceed 6 years, or

(v)being applicable for the benefit of a named relevant individual, is so applicable for a period which exceeds or may exceed 6 years,

shall be deemed for the purposes of the Income Tax Acts to be the income of the person, if living, by whom the disposition was made and not to be the income of any other person.

(2)

(a)This subsection shall apply to a disposition or dispositions of a kind or kinds referred to in subparagraphs (ii) to (v) of subsection (1)(b) made directly or indirectly by a person being an individual (in this subsection referred to as “the disponer”) except in so far as, by virtue or in consequence of such disposition or dispositions, income is payable or applicable in a year of assessment, in the manner referred to in subparagraph (iv) or (v) of that subsection, to or for the benefit of an individual referred to in subsection (1)(a)(i).

(b)Notwithstanding subsection (1), in relation to the disponer, any income which –

(i)is payable or applicable in a year of assessment by virtue or in consequence of a disposition or dispositions to which this subsection applies, and

(ii)is in excess of 5 per cent of the total income of the disponer for the year of assessment,

shall be deemed for the purposes of the Income Tax Acts to be the income of the disponer, if living, and not to be the income of any other person.

(c)Where paragraph (b) applies in relation to the disponer, for the purpose of determining for income tax purposes the amount of income which remains the income of persons other than the disponer for a year of assessment by virtue or in consequence of a disposition or dispositions to which this subsection applies, the aggregate of the income so remaining shall be apportioned amongst those other persons in proportion to their entitlements under such disposition or dispositions for that year.

(3)[deleted]

(4)As respects the year of assessment 1997-98, this section shall apply subject to paragraph 27 of Schedule 32 in respect of a disposition to which that paragraph applies by a person in so far as, by virtue or in consequence of such a disposition, income is payable in that year of assessment to or for the benefit of an individual to whom that paragraph applies.

793. Recovery of tax from trustee and payment to trustee of excess tax recoupment.

(1)Where by virtue of section 792 any income tax becomes chargeable on and is paid by the person by whom the disposition was made, that person shall be entitled –

(a)to recover from any trustee or other person to whom the income is payable by virtue or in consequence of the disposition the amount of the tax so paid, and

(b)for that purpose to require the Revenue Commissioners to furnish to that person a certificate specifying the amount of the income in respect of which that person has so paid tax and the amount of the tax so paid, and any certificate so furnished shall be evidence until the contrary is proved of the matters of fact stated in that certificate.

(2)Where any person obtains in respect of any allowance or relief a repayment of income tax in excess of the amount of the repayment to which that person would but for section 792 have been entitled, an amount equal to the excess shall be paid by that person to the trustee or other person to whom the income is payable by virtue or in consequence of the disposition or, where there are 2 or more such persons, shall be apportioned among those persons as the case may require.

(3)Where any question arises as to the amount of any payment or as to any apportionment to be made under subsection (2), that question shall be decided by the Appeal Commissioners whose decision on that question shall be final.

(4)Any income which is deemed by virtue of this Chapter to be the income of any person shall be deemed to be the highest part of that person’s income.

Chapter 2 Settlements on children generally (ss. 794-798)

794. Interpretation and application (Chapter 2).

(1)In this Chapter –

“income” (except where in sections 795(1), 796(2)(b) and subsections (4) and (5) of section 797 it is immediately preceded by “as” or “that person’s” and except also in section 798) includes any income chargeable to income tax by deduction or otherwise and any income which would have been so chargeable if it had been received in the State by a person resident or ordinarily resident in the State;

“settlement” includes any disposition, trust, covenant, agreement or arrangement, and any transfer of money or other property or of any right to money or other property.

(2)This Chapter shall apply to every settlement wherever and whenever made or entered into.

(3)This Chapter shall not apply in relation to any income arising under a settlement in any year of assessment for which the settlor is not chargeable to income tax as a resident in the State, and references in this Chapter to income shall be construed accordingly.

(4)This Chapter shall not apply to any income which, by virtue or in consequence of a settlement and during the life of the settlor, is in any year of assessment paid to or for the benefit of a minor, not being a child of the settlor or the settlor’s civil partner, if such minor is permanently incapacitated by reason of mental or physical infirmity.

(5)For the purposes of this Chapter, the following provisions shall apply in relation to the construction of “irrevocable instrument”:

(a)an instrument shall not be an irrevocable instrument if the trusts of the instrument provide for all or any one or more of the following matters –

(i)the payment or application to or for the settlor for the settlor’s own benefit of any capital or income or accumulations of income in any circumstances whatever during the life of a person (in this paragraph referred to as a “beneficiary”) to or for the benefit of whom any income or accumulations of income is or are or may be payable or applicable under the trusts of the instrument,

(ii)the payment or application during the life of the settlor to or for the husband, wife or civil partner of the settlor for his own or her own benefit of any capital or income or accumulations of income in any circumstances whatever during the life of any beneficiary,

(iii)the termination of the trusts of the instrument by the act or on the default of any person, and

(iv)the payment by the settlor of a penalty in the event of the settlor failing to comply with the instrument;

(b)an instrument shall not be prevented from being an irrevocable instrument by reason only that the trusts of the instrument include any one or more of the following provisions –

(i)a provision under which any capital or income or accumulations of income will or may become payable to or applicable for the benefit of the settlor or the husband, wife or civil partner of the settlor, on the bankruptcy of a person (in this paragraph referred to as a “beneficiary”) to or for the benefit of whom any income or accumulations of income is or are or may be payable or applicable under the trusts of the instrument,

(ii)a provision under which any capital or income or accumulations of income will or may become payable to or applicable for the benefit of the settlor or the husband, wife or civil partner of the settlor, in the event of any beneficiary making an assignment of or charge on such capital or income or accumulations of income, and

(iii)a provision for the termination of the trusts of the instrument in such circumstances or manner that such termination would not, during the life of any beneficiary, benefit any person other than that beneficiary or that beneficiary’s husband, wife, civil partner or issue;

(c)”irrevocable instrument” includes instruments whenever made.

795. Income settled on children.

(1)Where, by virtue or in consequence of a settlement and during the life of the settlor, any income is in any year of assessment paid to or for the benefit of a person, such income shall, if at the time of payment such person is a minor, be treated for the purposes of the Income Tax Acts as income of the settlor for that year and not as income of any other person.

(2)For the purposes of this Chapter, but subject to section 796 –

(a)income which, by virtue or in consequence of a settlement to which this Chapter applies, is so dealt with that it or assets representing it will or may become payable or applicable to or for the benefit of a person in the future (whether on the fulfilment of a condition, or on the happening of a contingency, or as the result of the exercise of a power or discretion conferred on any person, or otherwise) shall be deemed to be paid to or for the benefit of that person, and

(b)any income dealt with in the manner referred to in paragraph (a) which is not required by the settlement to be allocated, at the time when it is so dealt with, to any particular person or persons shall be deemed to be paid in equal shares to or for the benefit of each of the persons to or for the benefit of whom or any of whom the income or assets representing it will or may become payable or applicable.

796. Irrevocable instruments.

(1)In this section, “property” does not include any annual or other periodical payment secured by the covenant of the settlor, or by a charge made by the settlor on the whole or any part of the settlor’s property or the whole or any part of the settlor’s future income, or by both such covenant and such charge.

(2)Where by virtue of an irrevocable instrument property is vested in or held by trustees on such trusts that in any year of assessment section 795 would but for this section apply to the income of such property, the following provisions shall apply:

(a)section 795 shall not apply –

(i)in respect of any part of such income which is in that year of assessment accumulated for the benefit of a person, or

(ii)in respect of income arising in that year of assessment from accumulations of income referred to in subparagraph (i);

(b)whenever in any year of assessment any sum whatever is paid under the trusts of such irrevocable instrument out of –

(i)such property,

(ii)the accumulations of the income of such property,

(iii)the income of such property, or

(iv)the income of those accumulations,

to or for the benefit of a person who at the time of payment is a minor, such sum shall, subject to the limitation in paragraph (c), be deemed for the purposes of this Chapter to be paid as income;

(c)paragraph (b) shall not apply to so much of such sum as is equal to the amount by which the aggregate of such sum and all other sums (if any) paid after the 5th day of April, 1937, under the trusts of such irrevocable instrument to or for the benefit of that person or any other person (being a person who at the time of payment was a minor) exceeds the aggregate amount of the income arising after the 5th day of April, 1937, from such property together with the income arising after that date from those accumulations;

(d)for the purposes of paragraph (c), the reference in that paragraph to another sum paid to or for the benefit of a person who at the time of payment was a minor shall be construed, in relation to a payment to which this paragraph applies of any such sum, as a reference to a sum so paid to or for the benefit of a person who at the beginning of the year of assessment in which such other sum was paid was a minor;

(e)paragraph (d) shall apply to any payment of any such sum –

(i)made before the 6th day of April, 1971, or

(ii)in the case of a payment to or for the benefit of a child born after the 6th day of April, 1971, and so made by virtue or in consequence of a settlement made before the 28th day of April, 1971, made in the year 1971-72;

(f)for the purposes of paragraphs (c) and (d), references in those paragraphs to a person being at a particular time a minor shall, where that time is before the 6th day of April, 1986, be construed as references to a person who at that time was under the age of 21 years and was not or had not been married.

797. Recovery of tax from trustee and payment to trustee of excess tax recoupment.

(1)Where by virtue of this Chapter any income tax becomes chargeable on and is paid by a settlor, such settlor shall be entitled –

(a)to recover from any trustee or other person to whom the income is payable by virtue or in consequence of the settlement the amount of the tax so paid, and

(b)for that purpose to require the Revenue Commissioners to furnish to such settlor a certificate specifying the amount of the income in respect of which such settlor has so paid tax and the amount of the tax so paid, and every certificate so furnished shall be evidence until the contrary is proved of the matters of fact stated in the certificate.

(2)Where any person obtains in respect of any allowance or relief a repayment of income tax in excess of the amount of the repayment to which that person would but for this Chapter have been entitled, an amount equal to the excess shall be paid by that person to the trustee or other person to whom the income is payable by virtue or in consequence of the settlement and, where there are 2 or more such trustees or other persons, in such proportions as the circumstances may require.

(4)Any income which by virtue of this Chapter is treated as income of any person shall be deemed to be the highest part of that person’s income.

(5)No repayment shall be made under paragraph 21 of Schedule 32 on account of tax paid in respect of any income which has by virtue of this Chapter been treated as income of a settlor.

798. Transfer of interest in trade to children.

(1)Where by any means whatever (including indirect means or means consisting of a series of operations and whenever adopted) a trade, which at any time before the adoption of such means was carried on by any person solely or in partnership, becomes a trade carried on by one or more than one child of such person or such person’s civil partner or by means of a partnership in which such person and one or more than one child of such person or such person’s civil partner are partners, the following provisions shall apply:

(a)such means shall for the purposes of this Chapter be deemed to constitute a settlement as respects which such person shall be deemed to be the settlor;

(b)the profits or gains arising from the trade after the adoption of such means, in so far as they arise to one or, as the case may be, more than one child of such person or such person’s civil partner shall for the purposes of this Chapter be deemed to be the same income as would have arisen to such person had such means not been adopted;

(c)”income” where it first occurs in section 795 shall be deemed to include those profits or gains in so far as they arise to one or more than one child of such person or such person’s civil partner.

(2)The amount of the income of a person from the profits or gains of a trade deemed by virtue of subsection (1) to be income of another person shall, if the first-mentioned person is engaged actively in the carrying on of the trade, be the full amount of that income reduced by a sum (in subsection (3) referred to as “the appropriate sum”) equal to the amount which would have been allowed in computing those profits or gains in respect of the first-mentioned person if that person, instead of being a person engaged in the carrying on of the trade, had been a person employed by a person or persons carrying on the trade.

(3)The appropriate sum shall be deemed to be profits or gains arising to the first-mentioned person referred to in subsection (2) from the exercise of an office or employment within the meaning of Schedule E.

Part 46 Persons Chargeable in a Representative Capacity (ss. 1044-1051)

Chapter 1 Income tax and corporation tax (ss. 1044-1050)

1044. Bodies of persons.

(1)Subject to section 21, every body of persons shall be chargeable to income tax in the like manner as any person is chargeable under the Income Tax Acts.

(2)The treasurer (or other officer acting as such), auditor or receiver for the time being of any body of persons chargeable to income tax shall be answerable for doing all such acts as are required to be done under the Income Tax Acts for the purpose of the assessment of such body and for payment of the tax, and for the purpose of the assessment of the officers and persons in the employment of such body; but, in the case of a company, the person so answerable shall be the secretary of the company or other officer (by whatever name called) performing the duties of secretary.

(3)Every such officer may from time to time retain out of any money coming into his or her hands on behalf of the body so much of that money as is sufficient to pay the tax charged on the body, and shall be indemnified for all such payments made in pursuance of the Income Tax Acts.

1045. Trustees, guardians and committees.

The trustee, guardian or committee of any incapacitated person having the direction, control or management of the property or concern of any such person, whether such person resides in the State or not, shall be assessable and chargeable to income tax in the like manner and to the like amount as that person would be assessed and charged if he or she were not an incapacitated person.

1046. Liability of trustees, etc.

(1)The person chargeable in respect of an incapacitated person or in whose name a non-resident person is chargeable shall be answerable for all matters required to be done under the Income Tax Acts for the purpose of assessment and payment of income tax.

(2)Any person charged under the Income Tax Acts in respect of any incapacitated or non-resident person may from time to time retain out of money coming into the first-mentioned person’s hands on behalf of that incapacitated or non-resident person so much of that money as is sufficient to pay the tax charged, and shall be indemnified for all such payments made in pursuance of the Income Tax Acts.

(3)Without prejudice to the general application of income tax procedure to corporation tax, subsections (1) and (2), in so far as they are applicable to tax chargeable on a company, shall apply with any necessary modifications in relation to corporation tax chargeable on companies not resident in the State.

1047. Liability of parents, guardians, executors and administrators.

(1)Where an individual chargeable to income tax dies, the executor or administrator of the deceased person shall be liable for –

(a)the tax charged on such deceased individual,

(b)the interest on late payment of tax in respect of which the deceased individual is liable, and

(c)any penalties in respect of which the deceased individual is liable,

and all such sums shall be a debt on the estate of the deceased individual and an executor or administrator may deduct all such payments out of the assets and effects of the person deceased.

(2)Where an individual chargeable to income tax is an infant, the parent or guardian of the infant shall be liable for the tax in default of payment by the infant and a parent or guardian who makes such payment shall be allowed all sums so paid in his or her accounts.

1048. Assessment of executors and administrators.

(1)Where a person dies, an assessment or an amended assessment, as the case may be, may be made for any year of assessment for which an assessment or an amended assessment could have been made on the person immediately before his or her death, or could be made on the person if he or she were living, in respect of the profits or gains which arose or accrued to such person before his or her death, and the amount of the income tax on such profits or gains shall be a debt due from and payable out of the estate of such person, and the executor or administrator of such person shall be assessable and chargeable in respect of such tax.

(2)No assessment under this section shall be made later than 3 years after the expiration of the year of assessment in which the deceased person died in a case in which the grant of probate or letters of administration was made in that year, and no such assessment shall be made later than 2 years after the expiration of the year of assessment in which such grant was made in any other case; but this subsection shall apply subject to the condition that where the executor or administrator –

(a)after the year of assessment in which the deceased person died, delivers an additional affidavit under section 48 of the Capital Acquisitions Tax Consolidation Act 2003, or

(b)is liable to deliver an additional affidavit under that section, has been so notified by the Revenue Commissioners and did not deliver the additional affidavit in the year of assessment in which the deceased person died,

such assessment may be made at any time before the expiration of 2 years after the end of the year of assessment in which the additional affidavit was or is delivered.

(3)The executor or administrator of any such deceased person shall, when required to do so by a notice given to the executor or administrator by an inspector, prepare and deliver to the inspector a statement in writing signed by such executor or administrator and containing particulars, to the best of such executor’s or administrator’s judgment and belief, of the profits or gains which arose or accrued to such deceased person before his or her death and in respect of which such executor or administrator is assessable under this section, and the provisions of the Income Tax Acts relating to statements to be delivered by any person shall apply with any necessary modifications to statements to be delivered under this section.

1049. Receivers appointed by court.

(1)A receiver appointed by any court in the State which has the direction and control of any property in respect of which income tax or, as the case may be, corporation tax is charged in accordance with the Tax Acts shall be assessable and chargeable with income tax or, as the case may be, corporation tax in the like manner and to the like amount as would be assessed and charged if the property were not under the direction and control of the court.

(2)Every such receiver shall be answerable for doing all matters and things required to be done under the Tax Acts for the purpose of assessment and payment of income tax or, as the case may be, corporation tax.

1050. Protection for trustees, agents and receivers.

(1)A trustee who has authorised the receipt of profits arising from trust property by or by the agent of the person entitled to such profits shall not, if –

(a)that person or agent actually received the profits under that authority, and

(b)the trustee makes a return as required by section 890 of the name, address and profits of that person,

be required to do any other act for the purpose of the assessment of that person, unless the Revenue Commissioners require the testimony of the trustee pursuant to the Income Tax Acts.

(2)An agent or receiver of any person resident in the State, other than an incapacitated person, shall not, if that agent or receiver makes a return as required by section 890 of the name, address and profits of that person, be required to do any other act for the purpose of the assessment of that person, unless the Revenue Commissioners require the testimony of the agent or receiver pursuant to the Income Tax Acts.

Chapter 2 Capital gains tax (s. 1051)
1051. Application of Chapter 1 for purposes of capital gains tax.
Chapter 1 other than section 1050 shall, subject to any necessary modifications, apply to capital gains tax.