an bille um chain ghnochan caipitiuil (leasu), · profits of companies) of corporation tax act,...
TRANSCRIPT
AN BILLE UM CHAIN GHNOCHAN CAIPITIUIL (LEASU),1978
CAPITAL GAINS TAX (AMENDMENT) BILL, 1978
Mar a leasaiodh i gCoiste As amended in Committee
ARRANGEMENT OF SECTIONS
Section1. Interpretation.2. Amendment of section 3 (taxation of capital gains and rate
of charge) of Principal Act.3. Computation of gains: adjustment of allowable expenditure
by reference to consumer price index.4. Reduced rate of charge by reference to period of ownership.5. Compulsory acquisition: relief in certain cases.6. Amendment of section 14 (death) of Principal Act.7. Amendment of section 15 (settled property) of Principal Act.8. Disposal within the family of business or farm.9. Amendment of section 28 (replacement of business and other
assets) of Principal Act.10. Amendment of section 39 (disposals to State, charities and
other bodies) of Principal Act.11. Amendment of sections 13 (computation of chargeable gains)
and 37 (chargeable gains reserved for policy holders) of Corporation Tax Act, 1976.
12. Amendment of section 90 (distributions made out of capitalprofits of companies) of Corporation Tax Act, 1976.
13. Amendment of section 127 (company reconstruction oramalgamation: transfer of assets) of Corporation Tax Act, 1976.
14. Amendment of section 132 (disposal or acquisition outsidea group) of Corporation Tax Act, 1976.
15. Amendment of Schedule 4 (administration) to Principal Act.16. Supplemental.17. Repeals.18. Short title, construction and commencement.
SCHEDULE 1 Supplementary Provisions
SCHEDULE 2 Enactments Repealed
acts referred to
Capital Gains Tax Act, 1975 1975, No. 20Corporation Tax Act, 1976 1976, No. 7Finance Act, 1931 1931, No. 43Finance Act, 1974 1974, No. 27Finance Act, 1977 1977, No. 18Local Government (Planning and Development) Act, 1963 1963, No. 28
[No. 26a of 1978]
Interpretation.
Amendment of section 3 (taxation of capital gains and rate of charge) of Principal Act.
Computation of gains: adjustment of allowable expenditure by reference to consumer price index.
AN BILLE UM CHAIN GHNOCHAN CAIPITIUIL (LEASU),1978
CAPITAL GAINS TAX (AMENDMENT) BILL, 1978
BILLentitled 5
AN ACT TO AMEND AND EXTEND THE CAPITAL GAINS TAX ACTS.
BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:
1.—(1) In this Act and in any Act passed after this Act, except in so far as the context otherwise requires, “ the Capital Gains Tax 10 Acts” means the Capital Gains Tax Act, 1975, and every other enactment relating to capital gains tax.
(2) In this Act “ the Principal Act ” means the Capital Gains Tax Act, 1975.
(3) References in this Act to any enactment shall, unless the con- 15 text otherwise requires, be construed as references to that enactmentas amended or extended by any subsequent enactment.
(4) In this Act a reference to a section or schedule is a referenceto a section of or schedule to this Act unless it is indicated that reference to some other enactment is intended. 20
(5) In this Act a reference to a subsection, paragraph, subparagraph or clause is to the subsection, paragraph, subparagraph or clause of the provision (including a schedule) in which the reference occurs, unless it is indicated that reference to some other provisionis intended. 25
2.—Section 3 of the Principal Act is hereby amended, for the year 1978-79 and each subsequent year of assessment, by the substitution for subsection (3) of that section of the following subsection :
“ (3) Except as otherwise provided for by the Capital Gains Tax Acts, the rate of capital gains tax shall be 30 per cent.”. 30
3,—(1) For the purposes of computing the chargeable gain accruing to a person on the disposal of an asset, each sum (in this section referred to subsequently as “ deductible expenditure ”) allowable as a deduction from the consideration for the disposal under clauses (a) and (b) of paragraph 3 (1) of Schedule 1 to the Principal 35 Act shall be adjusted by multiplying it by the figure (in this section referred to subsequently as the “ multiplier ”) specified in subsection(4) or determined under subsection (5), as may be appropriate (the multiplier being the quotient, rounded up to three decimal places, obtained by dividing the consumer price index number relevant to 40 the year of assessment in which the disposal is made by the consumer price index number relevant to the year of assessment in which the deductible expenditure was incurred):
2
Provided that this subsection shall not apply in relation to deductible expenditure where the person making the disposal had incurred the expenditure within the period of twelve months ending with the date of the disposal.
5 (2) For the purposes of the Capital Gains Tax Acts it shall beassumed that an asset held by a person on the 6th day of April, 1974, was sold and immediately re-acquired by him on that date and there shall be deemed to have been given by him, as consideration for the re-acquisition, an amount equal to the market value of the
10 asset at the said date.
(3) Subsections (/) and (2) shall not apply in relation to the disposal of an asset—
(a) if as a consequence of the application of the said subsections(/) and (2) a gain would accrue on that disposal to the
15 person making the disposal and either a smaller gain or aloss would so accrue if the said subsections (/) and (2) did not apply, or
(b) if as a consequence of the application of the said subsections(/) and (2) a loss w'ould so accrue and either a smaller
20 loss or a gain would accrue if subsections (/) and (2) didnot apply,
and, accordingly, in a case to which paragraph (a) or (h) applies, the amount of the gain or loss accruing on the disposal shall be computed without regard to the provisions of the preceding subsections
25 of this section but, in a case where this subsection would otherwise substitute a loss for a gain or a gain for a loss, it shall be assumed, in relation to the disposal, that the relevant asset was acquired by the owner for a consideration such that neither a gain nor a loss accrued to him on making the disposal.
30 (4) Tn relation to the disposal of an asset made in the year1978-79, the multiplier shall be the figure mentioned in column (2) of the Table to this subsection opposite the mention in column (/) of the said Table of the year of assessment in which the deductibleexpenditure was incurred.
TABLE
Year of assessment in which deductible'expenditure incurred
Multiplier
0) (2)
1974-75 ......................................................................... 1-8151975-76 ......................................................................... 1-4661976-77 ......................................................................... 1-2631977-78 ......................................................................... 1-083
35 (5) The Revenue Commissioners shall make regulations specifyingthe multipliers, determined in accordance with subsection (/), in relation to the disposal of an asset made in the year 1979-80 and shall make corresponding regulations in relation to the disposal of an asset made in each subsequent year of assessment.
40 (6) Every regulation made under this section shall be laid beforeDdil £ireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Ddil fiireann within the next twenty-one days on which Ddil fiireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but
45 without prejudice to the validity of anything previously done thereunder.
(7) In this section “ the consumer price index number ” means the All Items Consumer Price Index Number compiled by the Central Statistics Office and the consumer price index number relevant to
50 any year of assessment means the consumer price index number at the mid-February next before the commencement of that year expressed on the basis that the consumer price index number at mid-November, 1968, is 100.
3
Reduced rate of charge by reference to period of ownership.
4.—(1) Notwithstanding section 3 (3) of the Principal Act, but subject to the provisions of this section, a person (not being a company) who is resident or ordinarily resident in the State and who makes, in the manner prescribed by the Capital Gains Tax Acts, a claim in that behalf and makes a return in the prescribed form shall, for the 5 year 1978-79 and each subsequent year of assessment, be entitled, in respect of chargeable gains accruing to him on the disposal of an asset owned by him for a period of ownership of more than three years and not more than twenty-one years, to be charged at a reduced rate of tax for the year of assessment in which the disposal is made and such 10 reduced rate shall be as follows, that is to say, if his period of ownership of the asset is—
more than 3 years and not more than 6 years...........25.5 per cent.
more than 6 years and not more than 9 years...........21.0 per centmore than 9 years and not more than 12 years...........16.5 per cent. 15
more than 12 years and not more than 15 years........... 12.0 per cent.more than 15 years and not more than 18 years........... 7.5 per cent.
more than 18 years and not more than 21 years.......... 3.0 per cent.
(2) Assets shall not be chargeable assets where they are owned by a person, within the meaning of subsection (/), whose period of 20 ownership thereof exceeds twenty-one years.
(3) (a) Subsections (/) and (2) shall not apply in respect of chargeable gains accruing on the disposal of—
(i) land in the State the consideration for the disposal ofwhich exceeds what the market value of the land 25 would be if, immediately before the disposal, it had become unlawful to carry out any development (within the meaning of section 3 (1) of the Local Government (Planning and Development) Act, 1963) in relation to the land other than development of the 30 kinds specified in section 4 (1) of that Act;
(ii) minerals in the State or any rights, interests or otherassets in relation to mining or minerals or the searching for minerals; or
(iii) exploration or exploitation rights in a designated 35area.
(6) References in paragraph (a) to the disposal of assets mentioned in subparagraphs (i), (ii) and (iii) of that paragraph include references to the disposal of shares deriving their value or the greater part of their value directly or 40 indirectly from those assets, other than shares quoted on a stock exchange.
(4) Subsections (I) and (2) shall not apply where the amount chargeable to capital gains tax is an amount determined in accordance with section 4 (3) of the Principal Act. 45
(5) A claim under this section shall be made by notice in writing to the inspector given within two years from the end of the year of assessment in which the disposal is made or such longer period as the Revenue Commissioners may by notice in writing allow.
(6) This section shall apply to chargeable gains accruing to a 50 qualifying unit trust, within the meaning of section 32 (inserted by the Finance Act, 1977) of the Principal Act, as if. in subsection (2) of that section, for the reference to section 3 (3) of that Act, there were substituted a reference to this section.
4
(7) Section 5 (1) of the Principal Act shall apply subject to the provisions of this section and of paragraph 7 of Schedule 1.
(8) In this section—
“ designated area ”, “ exploration or exploitation rights ” and 5 “ shares ” have the same meanings as in section 4 (8) of the Prin
cipal Act;
“ period of ownership ”, in relation to a person making a disposal of an asset, means his period of continuous ownership of the asset, in the same capacity, ending with the date of such disposal, and, for
10 the purposes of this definition, a period of ownership shall be determined without regard to the provisions of section 3 (2).
5.—(1) Where, on or after the 6th day of April, 1978, a person makes a disposal of, or of an interest in, property situate in the State (in this section referred to subsequently as “ the original assets ”) to
15 an authority possessing compulsory purchase powers and claims and proves to the satisfaction of the Revenue Commissioners—
(a) that the disposal would not have been made but for—
(i) the exercise of those powers, or(ii) the giving by the authority of formal notice of its
20 intention to exercise those powers,
{b) that the whole of the consideration for the disposal, and no more, is applied in acquiring other property situate in the State or an interest in such other property (in this section referred to subsequently as “ the replacement assets ”),
25 and(c) that the original assets and the replacement assets are within
one, and the same one, of the classes of assets specified in subsection (5),
then, for the purposes of the Capital Gains Tax Acts, the disposal 30 shall not be treated as involving any disposal of the original assets
and the acquisition shall not be treated as involving any acquisition of the replacement assets or any part of them but the original assets and the replacement assets shall be treated as the same assets acquired as the original assets were acquired.
35 (2) In a case where subsection (/) would apply but for the fact thatan amount in excess of the amount or value of the consideration for the disposal concerned is applied as described in paragraph (b) of that subsection, the person making the disposal shall be treated, for the purposes of the Capital Gains Tax Acts, as if, in consideration of
40 that excess, he had acquired, at the time of the acquisition of the replacement assets, a portion of those assets which bears to the whole the same proportion as the amount of the excess bears to the amount or value of the consideration applied in acquiring the replacement assets and subsection (I) shall apply to the remainder of those assets
45 and to the original assets.
(3) In a case where subsection (7) would apply but for the fact that part of the amount or value of the consideration for the disposal concerned is not applied as described in paragraph (b) of that subsection, the person makine the disposal shall be treated, for the pur-
50 poses of the Capital Gains Tax Acts, as if, in consideration of the said part, he had disposed of an interest in the original assets and subsection (/) shall apply to the remainder of those assets and to the replacement assets.
(4) This section shall only apply if the acquisition of the replace- 55 ment assets takes place, or an unconditional contract for the acquisi
tion is entered into, in the period beginning twelve months before and ending three years after the disposal of the original assets, or at such earlier or later time as the Revenue Commissioners may by notice in writing allow:
Compulsory acquisition: relief in certain cases.
5
Amendment of section 14 (death) of Principal Act.
Amendment of section IS (settled property) of Principal Act.
Provided that, where an unconditional contract for the acquisition is so entered into, this section may be applied on a provisional basis without waiting to ascertain whether the replacement assets are acquired in pursuance of the contract, and, when that fact is ascertained, all necessary adjustments shall be made by making 5 assessments or by repayment or discharge of tax, and shall be so made notwithstanding any limitation in the Capital Gains Tax Acts on the time within which assessments may be made.
(5) The classes of assets for the purposes of this section are as follows: 10
Class 1Assets of a trade carried on by the person making the disposal
which consist of—
A. plant or machinery;
B. except where the trade is a trade of dealing in or developing 15land, or of providing services for the occupier of land in which the person carrying on the trade has an estate or interest—(i) any building or part of a building and any permanent
or semi-permanent structure in the nature of a build- 20 ing, occupied (as well as used) only for the purposes of the trade,
(ii) any land occupied (as well as used) only for the purposes of the trade, provided that where the trade is a trade of dealing in or developing land, but a profit on 25 the sale of any land held for the purposes of the trade would not form part of the trading profits, the trade shall be treated for the purposes of this subsection as if it were not a trade of dealing in or developing land; 30
C. goodwill.
Class 2
Any land or buildings, not being land or buildings within Class 1, but excluding a dwelling-house or part of a dwelling-house in relation to which the person making the disposal would be entitled to claim 35 relief under section 25 of the Principal Act.
6.—(1) Section 14 of the Principal Act is hereby amended by the substitution, for subsection (1) of that section, of the following subsection :
“ (1) For the purposes of this Act, the assets of which a 40deceased person was competent to dispose—
(a) shall be deemed to be acquired on his death by thepersonal representatives or other person on whom they devolve for a consideration equal to their market value at the date of the death; but 45
(b) shall not be deemed to be disposed of by him on his death (whether or not they were the subject of a testamentary disposition).”.
(2) This section shall apply in relation to a disposal of assets made on or after the 6th day of April. 1978, by the personal representatives 50 or other person on whom those assets devolved on a death.
7.—(1) Section 15 of the Principal Act is hereby amended by the substitution for subsection (4) (b) of the following paragraph:
6
“ (b) the re-acquisition under that subsection shall be deemed to be for a consideration equal to the market value of the assets at the date of the death.”.
(2) This section shall apply in relation to a disposal of assets 5 made cn or after the 6th day of April, 1978, by a trustee of the kind
referred to in subsection (4) of the said section 15, in his capacity as a trustee within section 8 (3) of the Principal Act, or by the person becoming absolutely entitled to the assets in the circumstances referred to in the said subsection (4).
10 8.—The following section shall be substituted for section 27 of thePrincipal Act:
“27.—(l)(n) Subject to the provisions of this section, where an individual who has attained the age of fifty- five years disposes of the whole or part of his
15 qualifying assets to a child of his, relief shall begiven in respect of the capital gains tax chargeable on any gain accruing on the disposal.
(6) For the purposes of paragraph (a), the capital gains tax chargeable in respect of the gain shall
20 be the amount of tax which would not havebeen chargeable but for that gain.
(c) In paragraph (a) ‘ child ’, in relation to a disposal, includes a nephew or a niece who has worked substantially on a full-time basis for the
25 period of five years ending with the disposal incarrying on, or assisting in the carrying on of, the trade, business or profession concerned or the work of, or connected with, the office or employment concerned.
30 (2) Nothing in this section shall affect the computation ofgains accruing on the disposal of assets other than qualifying assets by an individual who makes a disposal falling within subsection (1).
(3) Section 26 (3) shall apply to a disposal falling within sub- 35 section (1) as it applies to a disposal falling within section 26 (1).
(4) (a) Where assets comprised in a disposal to a child inrespect of which relief has been granted, whether before or after the commencement of the Capital Gains Tax (Amendment) Act, 1978, under this
40 section are, within ten years of the disposal by theindividual concerned, disposed of by the child, the capital gains tax which, if subsection (1) had not applied, would have been charged on the individual on his disposal of those assets to the child shall be
45 assessed and charged on the child, in addition to anycapital gains tax chargeable in respect of the gain accruing to the child on his disposal of those assets.
(b) An assessment to give effect to the provisions of this subsection shall not be out of time if made within
50 ten years after the end of the year of assessment inwhich the assets are disposed of by the child.
(5) The consideration on a disposal falling within subsection(1) shall not be taken into account for the purposes of aggregation under section 26 (2).”.
55 9.—Section 28 of the Principal Act is hereby amended by the insertion after subsection (2) of the following subsection :
“ (2A) A chargeable gain or the balance of a chargeable gain which, under the provisions of subsection (1) or (2), as may be appropriate, is treated as accruing at a date later than the date
60 of the disposal on which it accrued shall not be so treated for the purposes of section 3 of the Capital Gains Tax (Amendment)
Disposal within the family of business or farm.
Amendment of section 28 (replacement of business and other assets) of Principal Act
7
Amendment of section 39 (disposals to State, chanties and other bodies) of Principal Act.
Amendment of sections 13 (computation of chargeable gains) and 37 (chargeable gains reserved for policy holders) of Corporation Tax Act, 1976.
Act, 1978, or for the purposes of determining the period of ownership under section 4 of that Act.”.
10.—Section 39 of the Principal Act is hereby amended by the substitution for subsection (1) of the following subsection:
“ (l) (a) Where a disposal of an asset is made otherwise 5 than under a bargain at arm’s length—(i) to the State,(ii) to a charity, or
(iii) to any of the bodies falling within section28 (3) of the Finance Act, 1931 (national 10 institutions and other public bodies),
section 9 (consideration deemed to be equal to market value) shall not apply, but if the disposal is for no consideration or for a consideration not exceeding the sums which would be allowable 15 as a deduction under paragraph 3 of Schedule 1 for the purposes of computing a chargeable gain, then—(I) the disposal and acquisition shall be treated
for the purposes of this Act as being made 20 for such consideration as to secure that neither a gain nor a loss accrues on the disposal, and
(II) where the disposal is to a person within subparagraph (ii) or (iii) and the asset is 25 later disposed of by that person in such circumstances that if a gain accrued on the later disposal it would be a chargeable gain, the capital gains tax which would have been chargeable in respect of the gain accruing 30 on the earlier disposal if the said section 9 had applied in relation to it shall be assessed and charged on the person making the later disposal in addition to any capital gains tax chargeable in respect of the gain 35 accruing to him on the later disposal.
(b) Where relief was given under this subsection inrespect of a disposal to a person of an asset, being a disposal made before the commencement of the Capital Gains Tax (.Amendment) 40 Act, 1978, and there is a later disposal of the asset by the person after such commencement, paragraph (a) (II) shall have effect as if the first- mentioned disposal were the earlier disposal referred to in that paragraph. 45
(c) An assessment to give effect to the provisions ofparagraph (a) (II) shall not be out of time if made within ten years after the end of the year of assessment in which the asset concerned is disposed of by the person making the later 50 disposal.
(d) For the purposes of paragraph (a) (II), the amountof the capital gains tax which would have been chargeable in respect of the gain accruing on the earlier disposal shall be the amount of tax which 55 would not have been chargeable but for that gain.”.
11.—(l) Sections 13 (1) and 37 (3) (a) of the Corporation Tax Act, 1976, are hereby amended as respects—
(a) the financial year 1978 in relation to any accounting period ^0 or part of an accounting period falling after the 5th day of April, 1978, and
8
(h) the financial year 1979 and each subsequent financial year,
by the substitution of “fifteen-forty-fifths” for “nineteen-forty- fifths ” (inserted by the Finance Act, 1977).
(2) Section 37 (1) of the Corporation Tax Act, 1976, is hereby 5 amended as respects—
(а) the financial year 1978 in relation to any accounting periodor part of an accounting period falling after the 5th day of April, 1978, and
(б) the financial year 1979 and each subsequent financial year,
10 by the substitution of “ 30 per cent.” for “ 26 per cent.”.
12.—(1) Section 90 (3) of the Corporation Tax Act, 1976, is hereby amended by the substitution of “ are chargeable gains ” for “ have been charged to capital gains tax or, after the reduction provided for by section 13 (computation of chargeable gains), to corporation tax ”
15 and “ have been so charged ”, respectively, and the said section 90(3), as so amended, is set out in the Table to this section.
Amendment of section 90 (distributions made out of capital profits of companies) of Corporation Tax Act, 1976.
(2) Section 90 (4) of the Corporation Tax Act, 1976, is hereby amended by the substitution of “ are chargeable gains ” for “ have been charged to capital gains tax or, after the reduction provided for
20 by section 13, to corporation tax” and of “by virtue of section 3 (3) of the Capital Gains Tax Act, 1975, for the year of assessment in which the chargeable gains accrued ” for “ under section 3 of the Capital Gains Tax Act, 1975, for the year of assessment in which the distribution is made ” and the said section 90 (4), as so amended,
25 is set out in the Table to this section.
TABLE
(3) Where a distribution (including part of a distribution treated under subsection (1) as a distribution) to which subsection (2) applies is made partly out of capital profits which are
30 chargeable gains and partly out of other capital profits, the distribution shall be treated as if it consisted of two distributions respectively made out of capital profits which are chargeable gains and out of other capital profits.
(4) Where on or after the 6th day of April, 1976, a com- 35 pany makes a distribution out of capital profits which are charge
able gains, the tax charged under subsection (2) shall be reduced by an amount equal to the amount of capital gains tax which would be chargeable by virtue of section 3 (3) of the Capital Gains Tax Act, 1975, for the year of assessment in which the
40 chargeable gains accrued on an amount equal to the aggregate of the distribution and the tax credit which would apply in respect of the distribution if the person receiving it were an individual resident in the State.
13.—Section 127 (1) of the Corporation Tax Act, 1976, is hereby 45 amended by the substitution of “ section 3 of the Capital Gains Tax
(Amendment) Act, 1978," for “ Part II of Schedule 1 to the Capital Gains Tax Act, 1975 (assets held on the 6th day erf April, 1974),” and the said section 127 (1), as so amended, is set out in the Table to this section.
Amendment of section 127 (company reconstruction or amalgamation: transfer of assets) of Corporation Tax Act, 1976.
TABLE
(1) Subject to the provisions of this section, where—
(a) any scheme of reconstruction or amalgamation involves the transfer of the whole or part of a company’s business to another company, and
9
Amendment of section 132 (disposal or acquisition outside a group) of Corporation Tax Act, 1976.
Amendment of Schedule 4 (administration) Principal Act.
Supplemental.
Repeals.
Short title, construction and commencement.
{b) at the time of the transfer both companies are resident in the State, and
(c) the first-mentioned company receives no part of the consideration for the transfer (otherwise than by the other company taking over the whole or part of the 5 liabilities of the business),
then so far as relates to corporation tax on chargeable gains the two companies shall be treated as if any assets included in the transfer were acquired by the one company from the other company for a consideration of such amount as would secure that 10 on the disposal by way of transfer neither a gain nor a loss would accrue to the company making the disposal, and for the purposes of section 3 of the Capital Gains Tax (Amendment) Act, 1978, the acquiring company shall be treated as if the respective acquisitions of the assets by the other company had 15 been the acquiring company’s acquisition of them.
14. —Section 132 (2) of the Corporation Tax Act, 1976, is hereby amended by the substitution of “ Section 3 of the Capital Gains Tax {Amendment) Act, 1978,” for “ Part II of Schedule 1 to the Capital Gains Tax Act, 1975,” and the said section 132 (2), as so amended, 20 is set out in the Table to this section.
TABLE
(2) Section 3 of the Capital Gains Tax {Amendment) Act, 1978, shall apply in relation to a disposal of an asset by a company which is or has been a member of a group of companies, 25 and which acquired the asset from another member of the group at a time when both were members of the group, as if all members of the group for the time being were the same person, and as if the acquisition or provision of the asset by the group, so taken as a single person, had been the acquisition or provision 30 of it by the member disposing of it.
15. —Paragraph 8 (appeals) of Schedule 4 to the Principal Act is hereby amended, as respects assessments made on or after the passing of this Act, by the substitution in subparagraph (1) of “ thirty days ” for “ twenty-one days ” and the said subparagraph, as so amended, 35 is set out in the Table to this section.
TABLE
(1) A person aggrieved by any assessment under this Act made upon him by the inspector or such other officer as is mentioned in paragraph 1 (2) shall be entitled to appeal to the 40 Appeal Commissioners on giving, within thirty days after the date of the notice of assessment, notice in writing to the inspector or other officer, and in default of notice of appeal by a person to whom notice of assessment has been given or in case of the neglect or refusal of a person, who has given notice of appeal, to 45 attend before the Appeal Commissioners at the time and place appointed for the purpose of hearing appeals, the assessment made on him shall be final and conclusive.
16.—Schedule 1 shall have effect for the purposes of this Act.
17.—Each enactment mentioned in column (2) of Schedule 2 is 50 hereby repealed to the extent specified in column (5) of that Schedule, subject to the provision made at the end of that Schedule.
18.—(1) This Act may be cited as the Capital Gains Tax (Amendment) Act, 1978.
10
(2) This Act shall be construed together with the Capital Gains Tax Acts.
(3) This Act shall, save as is otherwise expressly provided therein, be deemed to have come into force and shall take effect as on and
5 from the 6th day of April, 1978.
SCHEDULE 1
Supplementary Provisions
Compensation applied in restoring assets; deduction of grantsfrom market value of assets held on the 6th day of April, 1974
10 1. (1) A capital sum which, under subsection (1) of section 29(compensation and insurance money) of the Principal Act, falls to be deducted from any expenditure allowable under Schedule 1 to that Act 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
15 the provisions of section 3 (/) are applied to the residue, if any, of the said sum.
(2) An amount determined in accordance with section 3 (2) in respect of an asset shall be reduced by any expenditure within paragraph 3 (7) of Schedule 1 to the Principal Act which relates to the
20 asset and which was incurred before the 6th day of April, 1974, and the provisions of section 3 (/) shall apply to the residue of the said amount.
Enhancement, etc. expenditure
2. (1) Where any of the expenditure which is allowable as a de- 25 duction under Schedule 1 to the Principal Act in the computation of
a gain accruing on the disposal of an asset is within paragraph 3 (1) (b) of that Schedule, the chargeable gain determined in accordance with section 3 shall, for the purposes of applying section 4, be apportioned as provided for in this paragraph.
30 (2) The chargeable gain referred to in subparagraph (1) shall beattributed to the expenditure, if any, within paragraph 3 (1) (a) of the said Schedule as one item of expenditure and to each item of expenditure within the said paragraph 3 (1) (b) in proportion to the respective amounts of those items of expenditure, and each part of
35 the gain as so attributed to an item of expenditure within the said paragraph 3 (1) (b) shall be treated for the purposes of the said section 4 as a chargeable gain accruing on the disposal of a separate asset the period of ownership of which commenced at the time such item of expenditure was first reflected in the state or nature of the
40 asset disposed of or (if it is an item of expenditure incurred by the person making the disposal in establishing, preserving or defending his title to, or to a right over, the asset) at the time such item of expenditure was incurred.
(3) Where, in a case within subparagraph (2), there is no expendi- 45 ture within the said paragraph 3 (1) (a) or such expenditure is, com
pared with any item of expenditure within the said paragraph 3 (1) (b), disproportionately small having regard to the value of the asset immediately before the subsequent item of expenditure was incurred, the part of the gain which is not attributable to the enhance-
50 ment of the value of the asset due to any item of expenditure within the said paragraph 3 (1) (b) shall be deemed to be attributed to expenditure within the said paragraph 3 (1) fa), and the part or parts of the gain attributable to expenditure within the said paragraph 3 (1) (b) shall be reduced accordingly.
55 (4) Where subsection (7) of section 3 applies in the computationof the chargeable gain referred to in subparagraph (/), this paragraph shall have effect as if any reference to expenditure were a reference to expenditure as determined after applying the provisions of that section.
Section
11
Calls on shares
3. 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 twelve months after the date on which the shares or debentures were allotted, the consideration shall, in the computation of a gain accruing to him on a disposal of the shares or debentures, be deemed, for the purposes of section 3, to be expenditure incurred on the date on which the consideration was given, and section 4 and paragraph 2 shall apply as if the consideration were expenditure within paragraph 3 (1) (b), and not within paragraph 3 (1) (a), of Schedule 1 to the Principal Act.
Shares, commodities, etc.: identification
4. (1) For the purpose of identifying shares acquired with shares subsequently disposed of, so far as the shares are of the same class, shares acquired at an earlier time shall 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 paragraph 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 paragraph notwithstanding that they are identified in a different way by a disposal or by the transfer or delivery giving effect to it.
(3) This paragraph applies to securities as it applies to shares.
(4) This paragraph, without subparagraph (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 subparagraph applies in relation to the disposal, onor after the 6th day of April, 1978, of any assets to which paragraph 13 of Schedule 1 to the Principal Act 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, and
(ii) the holding consisted of assets acquired on differentdates, and
(iii) before the 6th day of April, 1978, there had been adisposal 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 subparagraph (/) in relation to each disposal to which this subparagraph applies—
(i) shares acquired on different dates shall, notwithstanding paragraph 13 of Schedule 1 to the Principal Act, be treated as if they were distinguishable parts of a single asset (in this subparagraph 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 prior to the6th 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 prior to the disposal was reduced, both as regards the number of shares comprised in that part and the expenditure attributable to that part under clauses(a) and (b) of paragraph 3 (1) of Schedule 1 to the Principal Act, in the same proportion as the number
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of shares so disposed of bears to the number of shares comprised in the holding immediately prior to that disposal, and
(iii) the number of shares comprised in each such part 5 on the 6th day of April, 1978, and the expenditure
attributable (apart from section 3) to that part under clauses (a) and (b) of paragraph 3 (1) of Schedule 1 to the Principal Act shall, in relation to a disposal made on or after that date, be the number and
10 expenditure, respectively, determined in accordancewith this subparagraph.
(c) Nothing in this subparagraph 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,
15 1978.
(6) This paragraph shall apply subject to paragraph 14 of Schedule 1 to the Principal Act.
Reorganisation or reduction of share capital
5. Paragraph 2 of Schedule 2 to the Principal Act is hereby 20 amended by the substitution for subparagraph (3) of the following
subparagraph:
“ (3) Where, on a reorganisation or reduction of a company’s share capital, a person gives or becomes liable to give any consideration for his new holding or any part of it, that consideration
25 shall, in the computation of a gain accruing to him on a disposal of the new holding or any part of it, be deemed for the purposes of section 3 of the Capital Gains Tax (.Amendment) Act, 1978, to be expenditure incurred on the date the consideration was given, and section 4 of that Act and paragraph 2 of Schedule 1
30 to that Act shall apply as if the consideration were expenditure within paragraph 3 (1) (b), and not within paragraph 3 (1) (a), of Schedule 1, 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 accord-
35 ingly:
Provided that there shall not be treated as consideration given for such acquisition—
(a) any surrender, cancellation or other alteration of the original shares or of the rights attached thereto, or
40 (6) any consideration consisting of any application, in payingup 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,
45 but, if section 56 (taxation of shares in lieu of cash dividends) of the Finance Act, 1974, applies in relation to the issue of any of the shares, the sum in cash which the person would have received if he had not exercised the option to receive additional share capital instead of a sum in cash shall be treated, for the purposes
50 of this subparagraph, as consideration given for those shares.**.
Disposals of shares in close companies
6. (1) Subject to subparagraphs (5) and (6), this paragraph has effect where—
(a) (i) at any time, including a time before the 6th day of 55 April, 1978, any of the persons having control of a
13
close company, or any person who, in the terms of section 33 of the Principal Act, is connected with a person having control of a close company, has transferred assets to the company, or
(ii) at any time after the 5th day of April, 1978, a close company acquires any assets,
(b) shares or securities in the company are disposed of on orafter the 6th day of April, 1978, by a person—
(i) to whom section 4 (7) applies, and
(ii) who has control of the company,
(c) there is, apart from section 4 (2), a chargeable gain on thatdisposal, and
(d) the shares or securities, or any of them, were held by theperson for a period of ownership of more than three years.
(2) Assets referred to in clauses (i) and (ii) of subparagraph (7) (a), or assets representing such assets, are referred to subsequently in this paragraph as “ relevant assets ”, but, in relation to the said clause (ii), shall not include cash, plant or machinery on which capital allowances have or could have been claimed under the Tax Acts, trade debtors or trading stock.
(3) (a) In a case where this paragraph has effect—
(i) it shall be assumed for the purposes of this subparagraph that the company concerned sold all of its chargeable assets at their market value on the date of the disposal of the shares or securities and that thereupon, in case those assets were used for the purposes of the company’s trade, they ceased to be so used,
(ii) if all of the relevant assets in respect of which chargeable gains would accrue on the assumption made in the immediately preceding subclause were acquired by the company on the same date, an amount of the chargeable gain (being the whole or a portion thereof) referred to in subparagraph (I) (c) represented by
Athe fraction — of that chargeable gain shall be
Bdeemed, for the purposes of section 4, to accrue on assets owned by the person referred to in subparagraph (1) (b) for a period of ownership commencing on that date, where—
A is the amount (but not exceeding B) secondly referred to in clause (b) (ii), and
B is the amount referred to in clause (b) (i),
and
(iii) if the relevant assets of the kind referred to in theimmediately preceding subclause were acquired on different dates, the amount (referred to subsequently in this clause as “ C ”) which would be obtained by multiplying the amount of the chargeable gain re-
Aferred to in subparagraph (I) (c) by the fraction —
Bin the subclause aforesaid if all of those relevant
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assets had been acquired on the same date shall be ascertained and, if no allowable losses fall to be taken into account under clause (b) (ii), C shall be apportioned among the said relevant assets acquired
5 on each separate date in the same proportion thatthe amount of the chargeable gain attributable to such assets acquired on each such date bears to the entire chargeable gains referred to in the said clause and each such part of C as so ascertained shall be
10 deemed, for the purposes of section 4, to be anamount of the chargeable gain referred to in sub- paragraph (/) (c) accruing on assets owned by the person referred to in subparagraph (1) (b) for a period of ownership commencing on the date of
15 acquisition of the assets to which that part is apportioned as aforesaid:
Provided that if allowable losses fall to be taken into account under clause (b) (ii), the preceding provisions of this subclause shall apply with the
20 modification that the amount of the chargeablegain attributable to relevant assets acquired on each separate date shall be ascertained by applying the provisions of paragraph 7 (deduction of losses) as if the company concerned were a person to whom that
25 paragraph applies and as if the gains attributable torelevant assets acquired on a later date were chargeable to capital gains tax at a rate higher than the rate appropriate to gains attributable to relevant assets acquired on an earlier date.
30 (b) This subparagraph shall have effect if but only if—
(i) an amount of chargeable gains would accrue to thecompany concerned on the assumption referred to in clause (a) (i), after deducting any allowable losses arrived at on the same assumption (but without
35 deducting any other allowable losses available tothe company), and
(ii) in arriving at the said amount, account was taken ofan amount of chargeable gains attributable to relevant assets after deducting allowable losses attribut-
40 able to such assets.
(4) Where tax falls to be charged on a portion only of a chargeable gain under the provisions of subparagraph (3), the balance of that chargeable gain shall be charged to tax in accordance with the provisions, other than that subparagraph, of the Capital Gains Tax
45 Acts.
(5) This paragraph shall not have effect in relation to a disposal of shares or securities in a close company by a person who was not, at the date of the disposal or at any time within three years prior to that date, entitled to more than fifty per cent, of the voting power in
50 the company or would not, on a winding up of the company on that date or at any such time, have been entitled to more than fifty per cent, of the assets of the company, unless—
(a) the disposal by that person (or, if there is a series of suchdisposals made by him to the same person, any such
55 disposal) is to another person who, in consequence ofthat disposal (or of all or any of those disposals) would become entitled to more than fifty per cent, of the voting power in the company or, on a winding up of the company, to more than fifty per cent, of the assets of the
60 company, or(b) the disposal by that person is part of a series of disposals
of shares or securities in the company, made by him and by persons who, in the terms of section 33 of the Principal
15
Act, are connected with him, to another person who, in consequence of all or any of those disposals would become entitled to more than fifty per cent, of the voting power in the company or, on a winding up of the company, to more than fifty per cent, of the assets of the company.
(6) This paragraph shall not have effect in relation to a disposal if the amount of capital gains tax chargeable apart from this paragraph on the person referred to in subparagraph (/) (b) for the year of assessment in which the disposal takes place would be greater than the amount of tax chargeable on the person for the year if this paragraph did apply.
(7) (a) The reference in subparagraph (/) (a) (ii) and in sub-paragraph (3) (a) (i) to a company shall include a reference to a subsidiary of that company.
(6) The provisions of subparagraph (3) (a) shall apply for the purpose of determining the period of ownership of shares or securities in a subsidiary as they apply for the purpose of determining the period of ownership of assets owned by the person referred to in subparagraph (/) (b), and so much (if any) of those shares or securities as are shares or securities in relation to which those provisions determine the period of ownership shall be relevant assets; and the provisions of this clause shall apply where the shares or securities in the subsidiary are owned by another subsidiary of the company and so on through any number of subsidiaries of that company.
(c) In this subparagraph ‘subsidiary*, in relation to a company, means a 75 per cent, subsidiary of that company within the meaning of section 156 of the Corporation Tax Act, 1976.
Deduction of losses
7. For the purposes of subsection (1) of section 5 (amount chargeable and time of payment) of the Principal Act, where, on the assumption that there were no allowable losses to be deducted under that subsection, a person would be chargeable under the Capital Gains Tax Acts at more than one rate of tax for a year of assessment, any allowable losses falling to be deducted under that subsection shall be deducted—
(a) if he would be so chargeable at two different rates, from thechargeable gains which would be so chargeable at the higher of those rates and, so far as they cannot be so deducted, from the chargeable gains which would be so chargeable at the lower of those rates, and
(b) if he would be so chargeable at three or more rates, fromthe chargeable gains which would be so chargeable at the highest of those rates and, so far as they cannot be so deducted, from the chargeable gains which would be so chargeable at the next highest of those rates, and so on.
Exemption of first £500 of gains
8. For the purposes of subsection (2) of section 16 (gains of £500 and under) of the Principal Act, where, on the assumption that that subsection did not apply, an individual would be chargeable under the Capital Gains Tax Acts at more than one rate of tax for a year of assessment, the relief to be given under that subsection in respect of the first £500 of chargeable gains shall be given—
(a) if he would be so chargeable at two different rates, in respect of the chargeable gains which would be so chargeable at the higher of those rates and, so far as relief cannot
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be so given, in respect of the chargeable gains which would be so chargeable at the lower of those rates, and
(6) if he would be so chargeable at three or more rates, in respect of the chargeable gains which would be so chargeable at
5 the highest of those rates and, so far as relief cannot beso given, in respect of the chargeable gains which would be so chargeable at the next highest of those rates, and so on.
Rate of capital gains tax applicable to chargeable gains accruing 10 on the disposal of qualifying units
9. Section 32 (inserted by the Finance Act, 1977) of the Capital Gains Tax Act, 1975, is hereby amended, for the year 1978-79 and each subsequent year of assessment, by the substitution for subsection (3) of the following subsection:
15 “ (3) Chargeable gains which derive from the disposal erfqualifying units and which accrue to a person who is chargeable to capital gains tax shall be chargeable to tax at one-half of the rate at which they would be chargeable under the Capital Gains Tax Acts apart from this subsection.”.
20 Port disposal before the 6th day of A pril, 197810. (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 the provisions of paragraph 6 of Schedule 1 to the Principal Act applied, of an asset which was held by him on the 6th day of April, 1974,
25 and—(a) the amount of the chargeable gain which accrued on that
disposal was determined under the provisions of paragraph 18 of that Schedule, and
(b) any property derived from that asset remained undisposed30 of on the 6th day of April, 1978,
then, for the purpose of determining the balance of the expenditure which, under the said paragraph 6, 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 clause (a) had
35 been determined, not under the provisions of the said paragraph 18, but on the assumption that the asset was disposed of and immediately re-acquired 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 the pro-
40 visions of paragraph 6 of Schedule l to the Principal Act applied, of an asset which was acquired by him 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 thatdisposal was determined on the basis that the asset had
45 been acquired by him on a date earlier than the date ofthat death, and
(b) any property derived from that asset remained undisposedof on the 6th day of April, 1978,
then, notwithstanding the provisions of subparagraph (/), for the 50 purpose of determining the balance of the expenditure which, under
the said paragraph 6, 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 clause (a) had been determined as if section 14 (1) of the Principal Act, as amended by
55 section 6, or, as the case may be, section 15 (4) (b) of that Act, as amended by section 7, had applied at the date of that disposal.
(3) Nothing in this paragraph shall affect any liability to capital gains tax or to corporation tax in respect of a disposal made prior to the 6th day of April, 1978.
17
SCHEDULE 2 Section 17.
Enactments Repealed
Number and Year
(1)Short Title
(2)Extent of Repeal
(3)
No. 20 of 1975
|
Capital Gains Tax Act, 1975
Section 6.
In section 11, in subsection (1), the words “Part II of Schedule 1 and in’* and, in subsection (2), the words “, but subject to the provisions of Part II of Schedule 1 (which restrict the amount of chargeable gains accruing on the disposal of assets owned on the 6th day of April, 1974)”.
In section 16 (4), the words “an adjustment is allowed under section 6 (alternative charge by reference to income tax), or”.
Section 26 (7).
Section 29 (4).
Section 47 (7).
In section 51 (2), the words “as modified by Part II of Schedule 1”.
Paragraphs 13 and 14 (6) of Part I and Part II of Schedule 1.
Paragraph 2 (8) of Schedule 2.
Paragraph 8 (2) (/) of Schedule 4.
In paragraph 13 of Schedule 4, the words “section 6 or”.
No. 7 of 1976 Corporation Tax Act, 1976
Section 13 (3) (b).
No. 18 of 1977 Finance Act, 1977 In section 16 (3), the words “as amended by the preceding subsections,”.
The repeals in this Schedule shall not affect the liability to capital gains tax for years of assessment ending on or before the 5th day of April, 1978, or the liability to corporation tax for accounting periods or parts of accounting periods falling on or before that date, or the assessment, collection or recovery of either of those taxes or of interest thereon or other proceedings relating to those taxes or that interest.
18
AN BILLE UM CHAIN GHNOCHAN CAIPITIUIL (LEASU), 1978
CAPITAL GAINS TAX (AMENDMENT) BELL, 1978
BILLE BILL(mar a leasaiodh i gCoiste) (as amended in Committee)
dd ngairtear entitled
Acht do leasu agus do leathnu na nAchtanna um Chdin Ghn6chan Caipitiuil.
An Act to amend and extend the Capital Gains Tax Acts.
An tAire Airgeadais a thiolaic Presented by the Minister for Finance.
Ordaiodh ag Ddil fiireann a chlobhualadh,22 Samhain, 1978
Ordered by Dail fiireann to be printed, 22nd November, 1978
BAILE ATHA CLIATH :ARNA FHOILSI0 AO OIFIQ AN tSOLATHAIR.
DUBLIN:PUBLISHED BY THE STATIONERY OFFICE.
Le oeaanaoh direach 6u Oifig Dhiolta FoilseachAn RiaJtais, An Staara, Ard Oifig an Phoist, Bails Ath* C'liath, u6 trl
aon dioltdir leabhar.
To be pure hewed through any bookseller, or directly from the Government Publications Sale Office,
G.P.O., Arcade. Dublin.
Clobhuailte ag Cahill Printers Ltd. Printed by Cajitta Printers Ltd.
40p 40p
Wt. 122096/F/ll. 950. 11/78. Cahill. (6845). G. 16.