Transcript
8/8/2019 Revenue CGT Guide Oct2010
1/52
Guide to
Capital Gains Tax
8/8/2019 Revenue CGT Guide Oct2010
2/52
Contents
Chapter Page
Introduction 3
1. ScopeofCapitalGainsTax 4
2. CapitalGainsTax-Self-Assessment 8
3. CalculationofGainorLoss 10
4. DevelopmentLand 12
5. MainExemptionsandReliefs 14
6. SpecialCategories 19
7. Companies 21
8. Taxationofshares-FIFOrules/BonusandRightsIssues 22
9. Returns,AppealsandPayment-Self-Assessment 25
10. Obligationonpersonsacquiringcertainassetstodeducttax 26
11. Examples 28
Appendix 1 - TableofInation/indexationMultipliers 38
Appendix 2 - CapitalGainsTaxComputationSheets 39
for Self-Assessment
Appendix 3 - GuidanceNotesonCompletionof 42
ComputationSheets
Appendix 4 - ListofRevenueOfcesand 45
OtherInformationSources
Index 47
Guide to Capital Gains Tax
2
8/8/2019 Revenue CGT Guide Oct2010
3/52
Introduction
1. ThisGuidereectsthelegislationinplaceasat1September2010.Anyrequestsforfurtherinformation,including
informationaboutthetaxationofdisposalsinearlieryears,canbemadetoyourRevenueofceoryoucanview
informationonRevenueswebsitewww.revenue.ie.
AlistofthemainRevenueofces,withaddresses,telephonenumbersande-mailcontactaddressesandsources
ofadditionalinformationissetoutinAppendix 4ofthisGuide.
2. CapitalGainsarisingonthedisposalofawiderangeofassetsarechargeabletoCapitalGainsTax.Thestandard
rateoftaxonCapitalGainsmadeonorafter8April2009is25%.Forcertainwindfallgainsthewindfallgainstax
rateis80%.ForCapitalGainsmadebetween15October2008and7April2009inclusivethestandardrateoftax
onCapitalGainsis22%.ForCapitalGainsmadeonorbefore14October2008thestandardrateoftaxis20%.
However,differentratesapplytodisposalsofcertainforeignlifeassurancepolicies,foreigninvestmentproducts andcertaingainsofventurecapitalfundmanagers.SomeassetsareexcludedfromCapitalGainsTaxandsome
gainsarerelievedfromCapitalGainsTax.
3. CapitalGainsaccruingtopersonsotherthancompaniesarechargeabletoCapitalGainsTax.CapitalGains
accruingtocompaniesarechargeabletoCorporationTax(withsomeexceptions).
4. ThetaxationofcapitalgainsisincorporatedintotheTaxesConsolidationAct1997asamendedbysubsequent
FinanceActs.PreviouslyitwasgovernedbytheCapitalGainsTaxAct1975andtheCorporationTaxAct1976as
amendedbytheCapitalGainsTax(Amendment)Act1978andsubsequentannualFinanceActs.
5. Self-AssessmentrulesapplytoCapitalGainsTax.
6. AllamountsinthisGuideareinEuro.TheconversionratebetweentheEuroandtheIRis1=0.787564.
Guide to Capital Gains Tax
3
8/8/2019 Revenue CGT Guide Oct2010
4/52
Chapter 1
Scope of Capital Gains Tax
For Capital Gains Tax purposes a person can mean a body corporate, an unincorporated body as well as an
individual.
1. Persons chargeable
Person resident or ordinarily resident
AnypersonwhoisresidentorordinarilyresidentintheStateforayearofassessmentisliabletotaxonworldwide
chargeablegainsaccruingonthedisposalofchargeableassetsmadeduringthatyear.
InthecaseofanindividualwhoisresidentorordinarilyresidentbutnotdomiciledintheState,gainsrealisedon
disposalsofassetssituatedoutsidetheStateareliabletotaxonlytotheextentthattheyareremittedtothiscountry.
Suchgainsarenotchargeabletotaxuntilsoremitted.Fordisposalspriorto20November2008,gainsonassets
situatedintheUKarechargeableinfull.
Person neither resident or ordinarily resident
ApersonwhoisneitherresidentnorordinarilyresidentintheStateisliabletotaxonlyinrespectofgainsondisposals
ofthefollowingcategoriesofassets-
(a) landandbuildingsintheState,
(b) mineralsintheStateoranyrights,interestsorotherassetsrelatedtoexplorationfor
orexploitationofsuchminerals,
(c) explorationorexploitationrightsinadesignatedareaoftheIrishContinentalShelf,
(d) shares,otherthansharesquotedonaStockExchange,derivingtheirvalueorthe
greaterpartoftheirvaluedirectlyorindirectlyfromassetsin(a),(b)or(c),and
(e) assetsintheStateusedforthepurposesofabusinesscarriedonintheState.
Temporary Non-Residence
Gainsaccruingtoanindividualonthedisposalofcertainshares,orrightstoacquirecertainshares,duringaperiodof
temporarynon-residencemaybechargeabletoCapitalGainsTaxwherethatindividualwasresidentanddomiciledin
theStateatsomestagepriortodeparturefromtheState.
Guide to Capital Gains Tax
4
8/8/2019 Revenue CGT Guide Oct2010
5/52
Explanation of the terms Residence, Ordinary Residence and Domicile
1.1 How do I know if I am resident in Ireland for a tax year?
YourresidencestatusforIrishtaxpurposesisdeterminedbythenumberofdaysyouarepresentinIrelandduringa
giventaxyear(1Januarytothefollowing31December).YouwillthereforebearesidentofIrelandineitherofthe
followingcircumstances:
w ifyouspend183daysormoreinIrelandforanypurposeinthetaxyearinquestion
or
w ifyouspend280daysormoreinIrelandforanypurposeoveraperiodoftwoconsecutive
taxyearsyouwillberegardedasresidentinIrelandforthesecondtaxyear.Forexample,ifyou
spend140dayshereinyear1and150dayshereinyear2youwillberesidentinIrelandfor
year2.
(However, if you spend 30 days or less in total in Ireland in either tax year those days will not be reckoned for the
purposes of applying this test.) A day for residence purposes is one on which you are present in Ireland at any time
during the day. For 2008 and previous years a day is one on which you are present in Ireland at midnight.
1.2 What is Ordinary Residence?
ThetermOrdinary Residenceasdistinctfromresidencereferstoanindividualspatternofresidenceoveranumberof
taxyears.IfyouhavebeenresidentinIrelandforthreeconsecutivetaxyearsyouareregardedasordinarilyresident
fromthebeginningofthefourthtaxyear.ConverselyyouwillceasetobeordinarilyresidentinIrelandhavingbeen
nonresidentforthreeconsecutivetaxyears.
1.3 What is Domicile?
Domicileisaconceptofgenerallaw.Itisbroadlyinterpretedasmeaningresidenceinaparticularcountrywiththe
intentionofresidingpermanentlyinthatcountry.Everyindividualacquiresadomicileoforiginatbirth.AnIrish
domicileoforiginwillremainwithanindividualuntilsuchtimeasanewdomicileofchoiceisacquired.However,
beforethatdomicileoforigincanbeshedtherehastobeclearevidencethattheindividualhasdemonstrateda
positiveintentionofpermanentresidenceinthenewcountryandhasabandonedtheideaofeverreturningtolivein
Ireland.AnindividualsdomicilestatuscaninuencetheextenttowhichforeignsourcedgainsaretaxableinIreland.
2. Assets
Allformsofproperty,whereversituated,areassetsforthepurposesofCapitalGainsTax.Assetsincludeforeignland
andbuildings(forexample,holidayhomesandapartments)incorporealproperty(forexample,goodwilloranoption)
andanyinterestinproperty(forexample,alease)butdonotincludeIrishcurrency.However,certainassetsarenot
chargeableassetsandcertaingainsarenotchargeablegains(seeChapter5,paragraphs3and4).
3. Disposal
Disposalofanassetincludesanytransferofownershipoftheassetbywayofsale,exchange,gift,orsettlement
ontrustees.Apartdisposaloccurswherelessthanthewholeofanassetisdisposedoforaninterestinanasset
istransferred(forexample,grantingofaleaseatapremium).Thereceiptofacapitalsumderivedfromanassetis
treatedasadisposalorpartdisposaloftheasset,forexample,compensationorinsurancemoneyforthelossofan
asset,orcompensationforforfeitureorsurrenderofrightsinanasset.Inthecaseofsharesinacompanyormutual
societythereisadisposalforCapitalGainsTaxpurposeswhereapersonreceivescapitalpaymentsinrespectoftheir
shareholding/interestheldinthepayingcompany.
Disposalswhicharenotmadeatarmslength,e.g.gifts,aredeemedtohavebeenmadeatmarketvalue(see
Chapter3,paragraph2).
Guide to Capital Gains Tax
5
8/8/2019 Revenue CGT Guide Oct2010
6/52
8/8/2019 Revenue CGT Guide Oct2010
7/52
10. Time of Disposal and Acquisition
ThemainrulesfordeterminingthetimeofdisposalandacquisitionforCapitalGainsTaxpurposesareasfollows:
w Foradisposalunderanunconditionalcontractthetimeofdisposalandacquisitionisthedatethecontractis
made,notthecompletiondate.
w Wherethecontractissubjecttoacondition,thetimeofdisposalandacquisitionisthedatetheconditionis
satised,notthecompletiondate.Acontractisconditionalifaconditionmustbesatisedbeforeanobligationto performthecontractarises.Forexample,wheretheacquisitionoflandissubjecttothepurchaserobtaining
planningpermission,thetimeofdisposalandacquisitionisthedatethepermissionisobtained.
w Onacompulsoryacquisitionoflandbyanauthoritypossessingtherelevantpowers,typicallybymeansofa
CompulsoryPurchaseOrder(CPO),thetimeofdisposalandacquisitionisthedatethecompensationisagreed
ordeterminedor,ifearlier,thetimeofentrybytheauthorityontheland.Thegainwillnotbetreatedasarisinguntil
theyearinwhichthecompensationisreceived.However,insuchcircumstancesthedatethedisposalismadewill
determinetherateofCGT.
11. Payment of Tax
ThetaxyearisdividedintotwoperiodsforCapitalGainsTaxpaymentpurposes:
w InitialPeriod-1Januaryto30November,bothinclusive
w LaterPeriod-1Decemberto31December,bothinclusive.TheduedatesforCapitalGainsTaxareasfollows:
Disposal Tax Due by
Onorbefore30Novemberinthetaxyear-
Initial Period
15Decemberinthattaxyear
From1Decemberto31Decemberinthetax
year-Later Period
31Januaryinthefollowingtaxyear
Theduedatesforpaymentondisposalspriorto2009weredifferentfromthecurrentdates,thesewere:
Disposal Tax Due by
Onorbefore30Septemberinthetaxyear-
Initial Period
31Octoberinthattaxyear
From1Octoberto31Decemberinthetaxyear-Later Period 31Januaryinthefollowingtaxyear
w WheregainsarechargeabletoCorporationTax(seeparagraph8),theduedateforpaymentisdeterminedby
referencetotheaccountingperiodinwhichthegainsaccrue.
Guide to Capital Gains Tax
7
8/8/2019 Revenue CGT Guide Oct2010
8/52
Chapter 2
Capital Gains Tax - Self-Assessment
1. Principal Features
w Self-AssessmentappliestoallCapitalGainsTaxliabilitiesforallpersons,i.e.theself-employedandothersdirectly
assessedtotax,individualsonPAYEandpersonsnotalreadywithinthetaxsystem.
w ReturnsofCapitalGainsmustbemadebytaxpayerswithoutbeingrequiredtodosobyRevenue.
2. Capital Gains Tax -Payment
PaymentofCapitalGainsTaxshouldbeaccompaniedbyaCGTpayslipandshouldbesubmittedto:
OfceoftheRevenueCommissioners, Collector-GeneralsDivision,
SarseldHouse,
FrancisStreet,
Limerick.
BlankpayslipsareavailableonrequestfromtheCollector-GeneralsDivisionbyphoning1890203070,from
Revenueswebsitewww.revenue.ie,orfromanyrevenueofce.IfyouareSelf-Assessedyouwillhaveapayslipon
yourpersonalisedtaxreturn.
3. Return Filing
Areturnofallchargeablegainsandallowablelossesmustbemadeonorbefore31Octoberintheyearfollowingtheyearofdisposal(asforIncomeTaxSelf-Assessment).Theobligationtomakeareturnexistsevenwhereaperson
hasnotbeenissuedwithareturnformbyRevenue,orwherenotaxisduebecauseoftheuseofreliefs,lossesetc.
w PAYEtaxpayersshouldmakethereturnonaForm12
w Self-AssessedindividualsshouldmakethereturnonaForm11EorForm11,
w TrustsandEstatesshouldmakethereturnonaForm1,
w PartnershipsshouldmakethereturnonaForm1(Firms),
w CompaniesshouldmakethereturnonaFormCT1,
w PersonswhoarenotrequiredtomakeanIncomeTaxreturn,includingnon-residents,shouldmakethereturn
onaFormCG1.
TheseformscanbeobtainedfromRevenueswebsitewww.revenue.ie,orfromRevenuesFormsandLeaetsservice
byphoningLoCall1890306706orfromanyRevenueofce.
Alternatively,ifyouwishyoucanleaForm11,Form1,Form1(Firms)orFormCT1electronicallyusingtheRevenue
On-LineService(ROS)andyoumayalsosubmityourreturnofchargeablegainselectronicallyaspartofthe
electronicversionofthereturn.AccessROSatwww.revenue.ie
Guide to Capital Gains Tax
8
8/8/2019 Revenue CGT Guide Oct2010
9/52
4. Surcharge
FailuretosubmitareturnontimewillresultinasurchargebeingaddedtothebasicCapitalGainsTaxliability.The
surchargeiseither:
(a) 5%oftheamountofthetaxduesubjecttoamaximumof12,695wherethereturnisdeliveredbefore
31Decemberintheyearfollowingtheendoftheyearofassessment
or
(b) 10%oftheamountofthetaxduesubjecttoamaximumof63,485wherethereturnisnotdeliveredbefore
31Decemberintheyearfollowingtheendoftheyearofassessment.
5. Assessments
ACapitalGainsTaxassessmentwillnormallybemadefollowingthereceiptofareturnofchargeablegains.
Thereisprovisionforthemakingofassessmentsbeforetheendofayearofassessmentincertaincircumstances,for
example,inthecaseofdisposalsbynon-residentpersons.
6. Companies Capital Gains
CompaniesarechargeabletoCapitalGainsTaxonchargeablegainsfromdisposalsofdevelopmentland.The
Self-Assessmentprovisionsoutlinedabovewillaccordinglyapplytocompaniesinrespectofchargeablegainsfromdisposalsofdevelopmentland.
(CompaniesarealreadysubjecttoSelf-AssessmentunderCorporationTaxinrespectofallotherchargeablegains
(seeChapter7))
Guide to Capital Gains Tax
9
8/8/2019 Revenue CGT Guide Oct2010
10/52
Chapter 3
Calculation of Gain or Loss
1. Deductible expenditure
Theamountofachargeablegainoranallowablelossisdeterminedbydeductinganyallowableexpenditurefromthe
considerationreceivedforthedisposal.Theallowableexpendituremayinclude:
(a) thecostofacquisitionoftheassetandanyincidentalcostofacquisitionsuchasagentscommissionandcosts
oftransferorconveyance,
(b) expenditureincurredforthepurposeofenhancingthevalueoftheassetwhichisreectedinthestateofthe
assetatthetimeofdisposal;expendituretoestablish,preserveordefendlegaltitle,
and
(c) theincidentalcostsofmakingthedisposal,suchaslegalandsellingcosts.Theamountsunder(a)or(b)abovemaybeadjustedtotakeaccountofination(seeparagraph4below).
Ifanypartoftheconsiderationreceived,ortheexpenditurewithin(a),(b)or(c)above,istakenintoaccountin
computinganyincomeorlossforthepurposesofIncomeTaxorCorporationTaxonincome,itmustbeexcludedfrom
thecalculationofachargeablegainoranallowablelossonthedisposal.Anexceptionismadeinthecaseof
expenditureontheacquisitionofcertainshareswhich,eventhoughtheexpenditurequaliesforrelieffromIncome
Tax,maybedeductedincomputingachargeablegain(butnotanallowableloss)onadisposaloftheshares(see
Chapter6,paragraph4).
2. Acquisition or disposal not at arms length
Whenanassetisacquired,ordisposedof,otherwisethanbywayofabargainmadeatarmslength,e.g.gift,itis
treatedasanacquisitionoradisposaloftheassetforaconsiderationequaltoitsmarketvalueatthattime.Thismeansthatwhereapersondisposesofanasseteitherbysaleorbygiftforanamountlessthanitsmarketvalue
theywillbeliabletoCapitalGainsTaxonthedeemedgain.
InstanceswhereCGTisdueonadeemedgainwouldusuallyinvolveconnectedpersons,forexampleaparent
whotransfersassetstotheirchildrenforlittleornopayment.Therecipientoftheseassetsthemselvesmay,
dependingonthecircumstances,havealiabilitytoCapitalAcquisitionsTax(GiftTax)and/orStampDuty.
3. Assets held prior to 6 April 1974
Inthecaseofexpenditureincurredbefore6April1974,theassetisdeemedtohavebeensoldandre-acquiredatits
marketvalueonthatdateandthatmarketvalueistheallowableexpenditureforthepurposeofthecalculationandfor
thepurposeofindexationrelief-seeparagraph4hereunder.
Guide to Capital Gains Tax
10
8/8/2019 Revenue CGT Guide Oct2010
11/52
4. Adjustments for ination (indexation relief)
Fordisposalsmadeonorafter1January2003indexationreliefwillonlyapplyfortheperiodofownershipoftheasset
upto31December2002.
Whereindexationreliefdoesapply,youshouldnotethefollowing:
a Iftheexpenditureincurredonacquiringorenhancing((a)or(b)inparagraph1above)anasset,wasincurred
morethantwelvemonthsbeforethedateofitsdisposal,theamountofthatexpendituremaybeadjustedtotake accountofination(subjecttocertainlimitationsinthecaseofdevelopmentland-seeChapter4,paragraph4(i)).
a Theadjustmentismadebymultiplyingtherelevantitemofallowableexpenditurebyafactor,themultiplier,which
reectsthechangeintheAllItemsConsumerPriceIndexduringtheperiodsincetheassetwasacquired.The
multipliertobeapplieddependsontheyearofassessmentinwhichtheexpenditurewasincurredandtheyearof
assessmentinwhichthedisposalismade.
a Ascheduleofmultipliersfortheyears1995/96etseq.issetoutinAppendix 1onpage38ofthisGuide.
a Theadjustmentforinationcannotoperatetochargeanamountinexcessofthemonetarygain,ortotransforma
monetarylossintoagain;neithercanitincreaseamonetarylossortransformamonetarygainintoanallowable
loss.If,asaresultoftheadjustmentforination,alosswouldbesubstitutedforamonetarygain,oragainfora monetaryloss,thedisposaloftheassetistreatedasgivingrisetoneitheragainnoraloss.
5. Assets acquired and/or disposed of in Foreign Currencies
Whereacquisitionsanddisposalsaremadeinforeigncurrenciesthecostofacquisitionandthedisposalproceeds
shouldbeconvertedtoEuroatthedatesofacquisitionanddisposalrespectively.RefertoExample 10,Chapter
11,forapracticalexampleofhowtocalculateachargeablegainandtaxpayablewhereassetsareacquiredand
disposedofinaforeigncurrency.
6. Rate of Tax
ThestandardrateofCapitalGainsTaxfordisposalsmadeonorafter8April2009,includingdisposalsofdevelopment
land,is25%.Forcertainwindfallgainsthewindfallgainsrateoftaxis80%.Therateoftaxfordisposalsmadebetween15October2008and7April2009is22%.ForCapitalGainsmadeonorbefore14October2008the
standardrateoftaxwas20%.However,arateof40%appliestodisposalsofcertainforeignlifeassurancepolicies
andforeigninvestmentproducts,whileratesof12.5%and15%applytocertainventurecapitalfundmanagers.
WherelandhasbeenacquiredunderaCPOforroadbuildingpurposestheappropriaterateoftaxmaybethatin
effectwhenthecompensationpaymentisreceived(seeChapter4,paragraph5formoredetailsofthis).
7. Example
RefertoExample 1,Chapter11,forapracticalexampleofhowtocalculateachargeablegainandtaxpayable.
Guide to Capital Gains Tax
11
8/8/2019 Revenue CGT Guide Oct2010
12/52
Chapter 4
Development Land/Windfall Gains
1. Scope of special provisions
Specialprovisions,whicharecontainedinSections648to653TaxesConsolidationAct1997,applytochargeable
gainsfromdisposalsofdevelopmentland,includingshares(otherthansharesquotedonaStockExchange)
derivingtheirvalue,orthegreaterpartoftheirvalue,directlyorindirectlyfromsuchland.Broadly,developmentland
meansland(includingbuildings)intheStatewhichisdisposedofforapricehigherthanitscurrentusevaluei.e.the
valueitwouldhaveifnodevelopmentotherthandevelopmentofaminornaturecouldbecarriedoutinrelationtothe
land.Thespecialprovisionsincluderestrictionsonindexation,roll-overreliefandreliefforlosses(seeparagraph4
below).
2. Consideration not exceeding 19,050
Wherethetotalconsiderationreceivablebyanindividualfordisposalsofdevelopmentlandinanyyearofassessment
doesnotexceed19,050,thegainsonthosedisposalsarenotsubjecttothespecialprovisionsbutaretaxedasif
theyweregainsondisposalsofnon-developmentland.Thisprovisiondoesnotapplytocompanies,trusteesorother
non-corporatebodies.
3. Rate of Tax
Therateoftaxondisposalsofalldevelopmentlandis25%.Forwindfallgainsarateof80%applies(seeparagraph
6formoreinformationonwindfallgains).Fordisposalsbetween15October2008and7April2009theratewas22%.
Fordisposalspriorto15October2008theratewas20%(seeparagraph5forthetreatmentofdisposalsofcertain
farmlandbyCPO).
4. Restriction of reliefs, etc.
Thefollowingrestrictionsapplytothedisposalofdevelopmentland:
(i) Indexationrelief(seeChapter3,paragraph4)isconnedtotheamountofthecurrentusevalueoftheland
atitstimeofacquisitionorat6April1974,ifacquiredpriortothatdate(seeExample 2inChapter11).Also,
indexationreliefisnotavailableonenhancementexpenditure(seeChapter3,paragraph1(b)).
(ii) Roll-overreliefwhich,subjecttoshorttermtransitionalarrangements,wasdiscontinuedfordisposalsafter
3/12/2002appliedtodisposalsofdevelopmentlandonlyinverylimitedcircumstances(furtherdetailsare
availableinearlierGuidestoCapitalGainsTaxavailableonRevenueswebsitewww.revenue.ie).
(iii) Lossesaccruingonthedisposalofassetswhicharenotdevelopmentlandmaynotbeoffsetagainst
developmentlandgains.
(iv) GainsaccruingtocompaniesondisposalsofdevelopmentlandarechargedtoCapitalGainsTaxinsteadof
CorporationTax(seeChapter7,paragraph1).
(v) Whereanindividualdisposesofhis/herprivateresidenceand/oritsgardensorgroundstheprivateresidence
relief(seeChapter5,paragraph5)isrestrictedifthepropertyisdevelopmentland.Thereliefisconnedto
whatitwouldbeifthepropertydidnothavedevelopmentvalue(seeExamples 3 & 4inChapter11).
Guide to Capital Gains Tax
12
8/8/2019 Revenue CGT Guide Oct2010
13/52
5. Land disposed of under Compulsory Purchase Order (CPO)
Onacompulsoryacquisitionoflandbyanauthoritypossessingtherelevantpowers,typicallybymeansofaCPO,the
timeofdisposalandacquisitionisthedatethecompensationisagreedordeterminedor,ifearlier,thetimeofentryby
theauthorityontheland.Thegainwillnotbetreatedasarisinguntiltheyearinwhichthecompensationisreceived.
However,insuchcircumstancesthedatethedisposalismadewilldeterminetherateofCGT.
6. Windfall Gains Tax
TheNationalAssetsManagementAgencyActintroducedawindfallgainstaxoncertaincapitalgains.Thistaxis
chargedatarateof80%inrespectofadisposalofdevelopmentlandwherebotharezoningandadisposaltook
placeonorafter30October2009.FinanceAct2010widenedthescopeoftheprovisionbyintroducingaRelevant
PlanningDecision,whichincludesbotharezoningandamaterialcontraventionofadevelopmentplan.Thischange
appliestodecisionsmadeonorafter4February2010.
Arelevantplanningdecisionwill,ingeneralterms,meanachangeinthezoningoflandfromnon-development
land-usetodevelopmentland-useorfromonedevelopmentland-usetoanotherdevelopmentland-use,including
amixtureofsuchuses.Italsoappliestoadecisiontograntpermissionforadevelopmentthatwouldmaterially
contraveneadevelopmentplan.WhiletheOfceoftheRevenueCommissionerscanbecontactedinordertoprovide
fullinformationastothesedenitions,itmaybenecessarytoconsultwiththerelevantlocalauthoritytoestablishifarelevantplanningdecisionhastakenplaceinanyparticularinstance.
The80%rateischargedontheamountbywhichthelandincreasedinvalueasaresultoftherelevantplanning
decision.Theremainderofthegainwillbetaxedatthenormal25%rate.
Thewindfalltaxwillnotapplyinrelationtogainsderivedfromrelevantplanningdecisionswhere:
ThedisposaloflandoccursasaresultofaCPO.
ThedisposalisbyacompanyinwhichtheNationalAssetManagementAgencyownsanypartoftheordinary
sharecapital,orbyacompanywhichisaneffective75%subsidiaryofsuchacompany.
Thedisposalisofasiteof0.4047hectaresorless,whosemarketvalueatdateofdisposaldoesnotexceed 250,000,otherthanwherethedisposalformspartofalargertransactionorseriesoftransactions.This
exemptionappliesregardlessofwhetherplanningpermissionhasbeengrantedforthedisposal.
Awindfallgainmayonlyberelievedbyalossondevelopmentlandtotheextenttowhichthelossisattributabletoa
RelevantPlanningDecision.
Thereareprovisionsincludedtoensurethatthe80%chargecannotbeside-steppedbyatransferbetweenconnected
persons.
Guide to Capital Gains Tax
13
8/8/2019 Revenue CGT Guide Oct2010
14/52
Chapter 5
Main Exemptions and Reliefs
1. Indexation
Theexpenditureallowableincomputingthechargeablegainarisingonthedisposalofanassetcanbeincreasedto
takeaccountofinationfortheperiodofownershipofanassetuptothe31December2002(seeChapter3,para-
graph4).Theincreaseis,however,subjecttolimitationinthecaseofadisposalofdevelopmentland(seeChapter
4,paragraph4).Ascheduleoftheination/indexationmultiplierscoveringtheyearsofassessment1995/96etseq.is
setoutinAppendix 1.
2. Personal exemption
Therst1,270ofanindividualsnetgains(i.e.gainslesslosses,includinglossesbroughtforwardfromearlieryears)
arenotchargeable.Thisexemptionisnottransferable,eitherwhollyorpartly,betweenspouses.
Theexemptionappliestoindividualsonly.Itdoesnotapplytocompanies,trusteesorothernon-corporatebodies.
Anon-residentindividualisentitledtotheexemption.
3. Non - chargeable assets
Thefollowingassetsarenotchargeableassetsandnochargeablegainorallowablelosscanariseontheirdisposal-
(i) securities(includingsavingscerticates)issuedundertheauthorityoftheMinisterforFinance,
(ii) landbondsissuedundertheLandPurchaseActs,
(iii) stockissuedbyalocalauthorityoraharbourauthoritymentionedintheFirstScheduletotheHarboursAct,
1946,
(iv) securitiesissuedbytheHousingFinanceAgencyundersection10oftheHousingFinanceAgencyAct,1981,
(v) debentures,debenturestock,certicatesofchargeorotherformsofsecurityissuedbytheESB,BordGis,
RTE,CIE,BordnaMonaorDublinAirportAuthority.Securitiesofthefollowingbodiesarenotchargeableas
setsiftheyissuedbeforetherelevantdateassetoutbelow:
Name of Body Relevant Date
ICCBank 12/2/2001
BordTelecomEireann 15/2/2001 IrishTelecommunicationsInvestments 15/2/2001
ACCBank 28/2/2002
(vi) securitiesissuedbyabodydesignatedundersection4(1)oftheSecuritisation(ProceedsofCertain
Mortgages)Act,1995,
(vii) securitiesissuedintheState,withtheapprovaloftheMinisterforFinance,bytheEuropeanCommunity,the
EuropeanCoalandSteelCommunity,theInternationalBankforReconstructionandDevelopment,the
EuropeanAtomicEnergyCommunityortheEuropeanInvestmentBank,
Guide to Capital Gains Tax
14
8/8/2019 Revenue CGT Guide Oct2010
15/52
(viii) securitiesissuedbyAnPostandguaranteedbytheMinisterforFinance,
(ix) securitiesissuedbytheNationalDevelopmentFinanceAgencyundersection6oftheNationalDevelopment
FinanceAgencyAct2002,
(x) certainfuturecontractswhicharebasedontheexemptedassetsmentionedin(i)to(ix).
4. Non - chargeable gains
Certaingainsarenotchargeable,including:
(i) bonusespayableundertheNationalInstalmentSavingsSchemeandPrizeBondwinnings,
(ii) gainsrealisedfromlifeassurancepoliciesanddeferredannuitycontracts,unlesspurchasedfromanother
personortakenoutwithcertainforeigninsurersonorafter20/5/1993,
(iii) gainsonthedisposal,byanindividual,oftangiblemovableproperty(i.e.chattels)worth2,540orlessatthe
timeofdisposal;butthedisposalofasetofarticlestothesameperson,ortoconnectedpersons,orto
personsactinginconcert,istreatedasasingledisposalofoneassetforthepurposesofthe2,450limit,
(iv) gainsonthedisposalofwastingchattelsofwhatevervalue,forexampleanimals,includingbloodstock,and
privatemotorcars,
(v) gainsaccruingtolocalauthoritiesandotherbodies,andcertaingainsaccruingtosportsclubs,
superannuationfunds,tradeunionsandcharities,
(vi) gainsfrombetting,lotteriesandsweepstakes.
5. Principal Private Residence
Full relief
Againonthedisposalbyan individualofadwelling-house(includinggroundsofuptooneacre)isexemptincertain
circumstances.Theexemptionisavailableif,throughouttheindividualsperiodofownership,thehousehadbeen
occupiedbytheindividualashis/heronlyormainresidenceor,undercertaincircumstances,asthesoleresidenceof
adependentrelative.Inthecaseofamarriedcouplelivingtogetheronlyonehousecanqualifyastheonlyormain
residenceofbothspouses.Thisexemptionisnotaffectedbythegrantingofreliefundertherent-a-roomscheme
(Section216ATCA1997).Pleasenotetheconditionsbelowwherepartialreliefmayapply.
Partial Relief
w Fullexemptionmaynotbedueifonlypartofthehousehasbeenusedastheindividualsresidence,inwhichcase
anapportionmentismadetoarriveattheexemptportionofthetotalgain.Thismayhappenwherethehouseis
usedpartlyforbusinesspurposesorwhereroomsinthehousehavebeenlet.
w Theexemptionisalsorestrictedwherethetaxpayerhasnotlivedinthehouseforlongperiods.However,aperiod
ofuptotwelvemonthsimmediatelybeforetheendoftheperiodofownershipistreatedasaperiodofoccupation
eventhoughtheownermaynothavebeenactuallylivinginitduringthatperiod.(seeExample 5inChapter11).
w Whentheprivateresidencecomprisesdevelopmentlandandtheconsiderationexceeds19,050,theprivate
residencereliefisrestricted.Thisincludesthedisposalofagardenorpartofagardenofaprincipalprivate
residenceasdevelopmentland,e.g.ifsoldasasite,orforaccess,rightofwayetc.Norestrictionappliesifthe
consideration(oropenmarketvalue,ifitistransferredinanonarmslengthtransactione.g.gift)doesnotexceed
19,050.
Guide to Capital Gains Tax
15
8/8/2019 Revenue CGT Guide Oct2010
16/52
Inadditiontotheabovethefollowingperiodsofabsencefromthehousearealsoregardedasperiodsofoccupation:
(a)
(i) anyperiodthroughoutwhichtheindividualwasemployedoutsidetheState,and
(ii) aperiodofuptofouryearsduringwhichtheindividualwasrequiredbytheconditionsofhis/heremployment
toresideelsewhere.
providingthat,bothbeforeandafterthoseperiods,thehousewastheownersonlyormainresidenceand throughoutthoseperiodshe/shehadnootherhouseeligibleforexemption.
(b)anyperiodofabsenceduringwhichbothofthefollowingcircumstancesapply:
(i) theclaimant(whowouldnormallylivealone)wasreceivingcareinahospital,nursinghomeorconvalescent
home,orwasresidentinaretirementhomeonafeepayingbasis,and
(ii) theprivateresidenceremainedunoccupied.
(c) aperiodofabsenceasin(b)(i)aboveduringwhichtheresidencewasoccupiedrentfreebyarelativeofthe
claimant,forthepurposeofsecurityormaintainingitinahabitablecondition.
6. Transfer of a site from parent to child
ThereisanexemptionfromCapitalGainsTaxonthedisposalofasitefromaparenttoachild(includingcertainfosterchildren)wherethetransferistoenablethechildconstructaprincipalprivateresidenceonthesite.Themarketvalue
ofthesitemustnotexceed500,000(254,000fordisposalspriorto5December2007).Fortransfersonorafter
1February2007theareaofthesite(exclusiveoftheareaonwhichthehouseistobebuilt)mustnotexceed
0.4047hectare,i.e.oneacre.
Thetermdisposalincludesasimultaneousdisposalbybothparentstotheirchild.
Ifthechildsubsequentlydisposesofthesitewithouthavingoccupiedaprincipalprivateresidenceonthesiteforat
leastthreeyears,thenthecapitalgainwhichwouldhaveaccruedtotheparentontheinitialtransferwillaccrueto
thechildinadditiontohis/herowngain.However,thegainwillnotaccruetothechildwhereheorshetransfersan
interestinthesitetoaspouse.
7. Disposal of a business or farm (other than to ones child - see Paragraph 8)
Summary of relief
RelieffromCapitalGainsTaxmayapplywhereanindividual,whoisatleast55yearsofageatthetimeofdisposal,
disposesofthewholeorpartofhis/herqualifyingassets.
Wheretheconsiderationdoesnotexceed750,000(500,000fordisposalspriorto1January2007)reliefisgivenin
respectofthefullamountoftaxchargeableonthedisposal.
Wheretheconsiderationexceeds750,000,marginalreliefappliessoastolimittheamountoftaxchargeableto
one-halfofthedifferencebetweentheamountoftheconsiderationand750,000.
Althoughthereliefiscommonlyknownasretirementreliefaclaimantdoesnothavetoretire(inthepopularsenseof
theword)inordertoqualify.
Lifetime Limit
Itshouldbenotedthatthethresholdof750,000isalifetimelimitfordisposalsofqualifyingassetsonorafter6April
1974madeatatimewhentheindividualwasatleast55yearsofage.Thus,reliefforanyyearistobecomputed
asifallsuchdisposalsforthatyearandearlieryearshadallbeenmadeinthelateryear.Wherethethresholdis
exceeded,anyearlierreliefgivenmaybewithdrawnbymeansofassessmentoradditionalassessment.
Guide to Capital Gains Tax
16
8/8/2019 Revenue CGT Guide Oct2010
17/52
Meaning of Qualifying Assets
Thefollowingarequalifyingassetsforthepurposesofthisparagraphandparagraph8.Pleasenotethatsomeof
thetermsusedhavespecicmeaningsforthepurposeoftherelief.Wherenecessaryyoushouldcontactyourlocal
RevenueofceoryourTaxAdvisor.
w thechargeablebusinessassetoftheindividualwhich(apartfromtangiblemovableproperty)he/shehasowned
foraperiodofatleast10yearsendingonthedateofthedisposalandwhichhavebeenhisorherchargeable businessassetsthroughoutthat10yearperiod,
w sharesorsecuritiesheldforatleastthe10yearperiodendingwiththeirdisposalinacompanywhichhasbeen-
atradingorfarmingcompanyandtheindividualsfamilycompany,or
amemberofatradinggroupofwhichtheholdingcompanyistheindividualsfamilycompanyduringatleast
the10yearperiodendingwiththedisposal,andtheindividualhasbeenaworkingdirectorofthecompany
foratleast10yearsduringwhichhe/shehasbeenafull-timeworkingdirectorforatleast5years,
w paymententitlements(seeCouncilRegulation(EC)No.101782/2003of29September2003)where
theyaredisposedofatthesametimeandtothesamepersonasland,totheextentthatthelandwouldsupporta
claimtopaymentinrespectofthosepaymententitlements,
w landandmachineryorplantownedbytheindividualforatleast10yearsendingwiththedisposalwhichland-
wasusedthroughoutthatperiodforthepurposesoftheindividualsfamilycompany(ormemberofthe
tradinggroup),and
isdisposedofatthesametimeandtothesamepersonasthesharesconcerned,
w landleasedunderSchemeofEarlyRetirementfromFarming,whereforaperiodofnotlessthan10yearspriorto
thelandbeingleaseditwasownedbytheindividualclaimingreliefandusedbyhimorherforthepurposesof
farmingthroughoutthatperiod,
w landwhichwasletduringthe5yearperiodpriortoitsdisposalunderacompulsorypurchaseorderforthepurpose
ofroadconstructionandcertainrelatedactivitiesbut,priortoitsrstletting,wasfarmedfor10yearsbytheperson
makingthedisposal,and
w landwhichwasletatanytimeduringthe15yearperiodpriortoitsdisposalbut,priortoitsrstletting,wasfarmed
for10yearsbytheindividualmakingthedisposalandthedisposalistoachild(withinthemeaningofparagraph8
below)oftheindividualconcerned.
Disposal prior to 55th birthday
Whereanindividualdisposesofqualifyingassetsbeforehis/her55thbirthday,Revenuewillconsiderclaimsforrelief
whereallthefollowingconditionsarepresent:
w Theclaimantis,duetosevereorchronicillhealth,unabletocontinuefarming,orinhis/hertrade,profession,
ofceoremploymentorasaworkingdirectorinarelevantcompany,
w Oncessationtheclaimantdisposesofqualifyingassetsandatthattimetheconditionsforrelief,otherthanthe agerequirement,aresatised,
w Atthetimeofdisposaltheclaimantiswithintwelvemonthsofhis/her55thbirthday.
Anindividualclaimingretirementreliefonthesegroundsshouldprovidemedicalevidenceoftheillnessandoutlinethe
circumstancesinwhichthereliefisbeingclaimed.
Thisappliestodisposalsoccurringonorafter14May2004
8. Disposal of a business or farm (to a child)
Irrespectiveoftheamountofconsiderationforthedisposal,fullreliefmaybeclaimedbyanindividualaged55years
oroveronthedisposaltohis/herchild,ofthewholeorpartofhis/herqualifyingassets(seeparagraph7above).
Guide to Capital Gains Tax
17
8/8/2019 Revenue CGT Guide Oct2010
18/52
Meaning of child
Forthepurposesofthisparagraphandparagraph7achildincludes
w achildofadeceasedchild,
w anephewornieceoftheindividualmakingthedisposalwhohasworkedfull-timeinrunningorassistinginthe
runningofthebusinessorfarmconcernedforminimumof5yearsendingonthedateofthedisposal.
w afosterchildwhowasunderthecareof,andwasmaintainedattheexpenseof,theindividualmakingthedisposal
foraperiodof5years(orperiodswhichtogetheramountedto5years)uptothetimethatsuchfosterchild
attainedtheageof18years,butonlyiftheclaimforreliefisnotbasedontheuncorroboratedtestimonyofone
witness.
Clawback of relief
Thereliefisclawedbackwherethechilddisposesofanassetwithinsixyearsofthedateofacquisitionfromhis/her
parent.Thereliefiswithdrawnbywayofanassessmentonthechild.Ineffect,thetaxwhichwouldhavebeen
chargedontheparentifthereliefhadnotappliedischargedonthechild,inadditiontoanytaxchargeableonthegain
accruingonthechildsdisposaloftheasset.
9. Roll-over Relief
Thefollowingreliefswerediscontinuedfordisposalsafter3/12/2002;
w Replacementofbusinessandotherassets
w Reliefoncertaininvestmentproperty
w Reliefforindividualsoncertainsharere-investment
w Compulsoryacquisitionrelief
Transitionalprovisionsappliedto31/12/2003(furtherdetailsareavailableinearlierGuidestoCapitalGainsTax
availableonRevenueswebsite www.revenue.ie).
10. Compensation and Insurance Money
Thereceiptofcompensationorinsurancemoneyfordamagetoordestructionofassets,orofsumsfortheforfeiture
orsurrenderofrightsorfortheuseorexploitationofassetsmay,incertaincircumstances,betreatedasadisposal
forCGTpurposes.Theresultantchargetotaxmaybedeferredifthemoneyreceivedisusedinrestoringorreplacing
theasset.Theamountreceivedistreatedasreducingthecostoftheasset(or,inthecaseofthelossordestruction
oftheasset,thecostofreplacingit),andthechargeonthecompensationmoneyisnotimposeduntiltheassetorthe
assetreplacingithasbeendisposedof.Thereliefmustbeclaimeditdoesnotapplyautomatically.
11. Dissolution of farming partnerships
RelieffromCapitalGainsTaxmaybeduewherepartnersinafarmingpartnershipdisposeofassetsonthedissolution
ofthepartnership.Ingeneraltheassetsmusthavebeenownedandusedbythepartnershipforaperiodof10years
priortoitsdissolution.
Wherereliefapplies,anygainonthedisposalwillbetreatedasnotaccruingandthepersonacquiringtheassetwill
betreatedashavingacquireditatthesametimeandforthesameconsiderationasitwasacquiredbythedisponer.
Thereliefdoesnotapplytotradingstock.
Thisappliestodisposalsmadeonorafter13March2008andwillceaseon31December2013.
12. Return of Capital Gains / Losses
Areturnofallchargeablegainsandallowablelossesmustbemadeonorbefore31Octoberintheyearfollowingthe
yearofdisposal(asforIncomeTaxSelf-Assessment).Theobligationtomakeareturnexistsevenwhereaperson
hasnotbeenissuedwithareturnformbyRevenue,orwherenotaxisduebecauseoftheuseofreliefs,lossesetc(seeChapter9).
Guide to Capital Gains Tax
18
8/8/2019 Revenue CGT Guide Oct2010
19/52
Chapter 6
1. Married Persons
Thenetgainswhichaccrueinayearofassessmenttoahusbandandwifelivingtogetherarechargedonthe
assessablespouseunlesseitherthehusbandorthewifehasappliedtobechargedseparately.Applicationsfor
separateassessmentmustbemadebefore1Aprilintheyearfollowingtheyearofassessment.
Ingeneral,transfersofassetsbetweenspouseslivingtogetherinayearofassessmentarenottreatedasdisposals
forCapitalGainsTaxpurposes.Instead,thespousereceivingtheassetistreatedashavingacquireditatthesame
timeandforthesameconsiderationasthetransferringspouseoriginallyacquiredit.
Thisgeneraltreatmentdoesnotapplytodisposalsonorafter7December2005wherethespouseacquiringtheasset
wouldnotbewithinchargetoIrishCapitalGainsTaxifheorshedisposedofitintheyearofacquisitionfromtheother
spouse(forexampleifheorshewasresidentoutsidetheStateandbyvirtueofaDoubleTaxationAgreementthegain
couldnotbetaxedhere).
Inadditionthegeneraltreatmentdoesnotapplytothedisposaloftradingstockbetweenspouses.
2. Separated/Divorced Spouses: Transfer of Assets
Whereassetsaretransferredbetweenseparatedordivorcedspousesincertainspeciedcircumstances,e.g.by
virtueorinconsequenceofadeedofseparationoranordermadeonorfollowingjudicialseparationoranorder
madeunderPartIIIoftheFamilyLaw(Divorce)Act1996,thetransferwillnotgiverisetoaCapitalGainsTaxliability.
Instead,thespousereceivingtheassetistreatedashavingacquireditatthetimeandforthesameconsiderationas
thetransferringspouseoriginallyacquiredit(similartoassetstransferredbetweenmarriedpersonsasinparagraph1
above).
Aswithmarriedpersonsthistreatmentdoesnotapplytothetransferofcertainassetsonorafter7December2005or
totradingstockatanytime(seeparagraph1above).
3. Trustees
AtrusteeofasettlementisresponsibleformakinganannualreturnoftheCapitalGainswhichaccruetothetruston
thedisposaloftrustassets.Certainchangesinthebenecialinterestsunderasettlement(e.g.apersonbecoming
absolutelyentitledtosettledproperty)mayalsogiverisetoachargetoCapitalGainsTax.
4. Certain shares
SpecialrulesapplytosharesacquiredundertheincometaxschemesforReliefforInvestmentinCorporateTrades
(BES)andreliefforInvestmentinResearchandDevelopment.Theincometaxreliefgivenforthepurchaseofthesesharesisignoredincomputingataxablegain(but not a loss)ontheirdisposalsothatthegrosscostisdeductible.
5. Partnerships
Partnershipdealingsinassetsaretreatedasdealingsbythepartnersintheirrespectivesharesofthoseassets.
Guide to Capital Gains Tax
19
8/8/2019 Revenue CGT Guide Oct2010
20/52
6. Other Special Categories
Special rules apply in the following categories -
(a) disposalstotheState,charitiesandotherbodies.
(b) disposalsofworksofartwhichhadbeenlenttotheIrishHeritageTrustoranapprovedmuseumorgalleryfor
exhibitionfor10years(6yearsiflentbefore2February2006).InrelationtotheIrishHeritageTrustonly loansonorafter1January2006willqualifyforrelief.
(c) disposalsofleaseholdpropertyandthegrantofaleaseatapremium.
(d) transferofabusinesstoacompany.
(e) partdisposalsofassets,and
(f) disposalsbyaliquidatorofacompany,areceiveroramortgagee.
(g) disposalsbysportingbodies.
(h) non-competitionagreements.
InformationonthetreatmentinsuchcasescanbeobtainedfromyourRevenueofce.
Guide to Capital Gains Tax
20
8/8/2019 Revenue CGT Guide Oct2010
21/52
Chapter 7
Companies
Taxation of chargeable gains
1. Chargeable gains accruing to companies may be charged either to Capital Gains Tax or
to Corporation Tax as follows -
(a) Capital Gains Tax:
GainsaccruingondisposalsofdevelopmentlandarechargedtoCapitalGainsTax(seeChapter4).Gains
accruingtoanon-residentcompanyonthedisposalofcertainnon-tradingassetssituatedintheStateare
alsochargedtoCapitalGainsTax(seeChapter1,paragraph1).
(b) Corporation Tax:
AllothergainsarechargedtoCorporationTax.Theseincludegainsaccruingtoanon-residentcompanyon thedisposalofassetssituatedintheStateandusedforthepurposeofatradecarriedonbyitintheState
throughabranchoragency.
2. Where the Capital Gains of a company are chargeable to Corporation Tax, thecomputation of the gain is made in accordance with the Capital Gains Tax provisions butthe following special provisions also apply:
(i) TheamountoftheliabilityiscomputedaccordingtotheappropriaterateofCapitalGainsTax.Wherethe
rateofCorporationTaxandtherateofCapitalGainsTaxaredifferentanotionalamountofgainiscalculated
sothatwhenitischargedatthe(different)rateofCorporationTax,thecorrectamountofliabilityisassessed.
Forexample,iftheCapitalGainin2009is10,000@25%=2,500and,say,theappropriaterateof
CorporationTaxfortherelevantaccountingperiodis12.5%,theamounttobebroughtintotheCorporation
Taxassessmentis20,000which,whentaxedataCorporationTaxrateof12.5%,equals2,500.
(ii) Theliabilityisassessedfortheaccountingperiodinwhichthegainaccruedandisincludedwithanyother
protsoftheaccountingperiod.
(iii) Tradinglossesmayonlybeoffsetagainsttradingincomeforthesameandimmediatelyprecedingaccounting
periodonaeuroforeurobasis.Anyunusedtradinglossmaybeoffsetagainstnon-tradingincome,including
chargeablegains,butonlyonavaluebasis.Forexample,ifthecompanyhasanunusedtradinglossin
2009of,say,100,000andachargeablegainof100,000thecompanycangetreliefforthelossattherate
of12.5%againsttheliabilityonthechargeablegain.Taxdueonthechargeablegainis22,000andthe
companycangetlossreliefof12,500leavinganetliabilityof9,500.
(iv) Lossesofacompanyonnon-developmentlandassetsmaybeoffsetagainstchargeablegains-otherthan developmentlandgains-ofthatcompanyonly,inthecurrentaccountingperiodandanyunusedbalancecan
becarriedforward.Lossesonthedisposalofdevelopmentlandcan,however,beoffsetagainstgainsarising
onotherassets.
Guide to Capital Gains Tax
21
8/8/2019 Revenue CGT Guide Oct2010
22/52
Chapter 8
Taxation of shares - FIFO rules / Bonus and Rights Issues
1. General
LikeanyotherCapitalGainsTaxcomputation,achargeablegainonthedisposalofcompanysharesisarrivedat
bydeductingthecostoftheshares(adjustedforinationasappropriate)fromthenetconsiderationreceivedforthe
disposaloftheshares-(seeChapter3).
Thecalculationisrelativelystraightforwardwhereapersonacquiresoneblockofsharesandatalaterdate,without
therehavingbeenanychangesinthenumberortype,etc.ofthesharesheld,sellsallorpartofthatholding:
Calculation of gain*
Bought100Ordinary1sharesfor2persharein2004
Sold50Ordinary1sharesfor3persharein2006
Gainis:Proceeds150,lesscost100(50x2)=Gainof50.
*(ignoringindexation,expensesofsaleandpersonalexemptionforeaseofillustration)
Often,however,therewillbeincreasesintheshareholding,eitherbecauseapersonpurchasesadditionalsharesof
thesametypeortheyreceiveadditionalsharesunderbonusorrightsissues.TherearespecialCapitalGainsTax
rulesforthesesituations.
2. First In - First Out (or FIFO rule)
Whereapersonholdssharesofthesameclasswhichhavebeenacquiredatdifferentdates,thesharesacquiredat
theearliertimearedeemedtobedisposedofrst.Forexample:
2001bought1,000Ordinary1sharesinXLtd.for1pershare
2003bought200Ordinary1sharesinXLtd.for1.50pershare
2005bought500Ordinary1sharesinXLtd.for2pershare
2006sold1,500Ordinary1sharesinXLtd.for3pershare
Sold1,500sharesfor4,500in2006
Allowablecost-(ignoringindexationupto31/12/2002)
Using FIFO Rule:
1,000 @ 1.00 = 1,000
200 @ 1.50 = 300
300 @ 2.00 = 600
1,500
Remainingshares2001Ord.inXLtd.acquiredin2005cost2pershare.
(See Example 6, Chapter 11).
Guide to Capital Gains Tax
22
8/8/2019 Revenue CGT Guide Oct2010
23/52
Disposal of shares within four weeks of acquisition
TheFIFOrulesaremodiedinanycasewheresharesofthesameclassareboughtandsoldwithinaperiodoffour
weeks.Wheresharesaresoldwithinfourweeksofacquisitionthesharessoldareidentiedwiththeshares
acquiredwithinthatperiod.Furthermore,wherealossaccruesonthedisposalofsharesandsharesofthesame
classareacquiredwithinafourweekperiod,thelossisnotavailableforoffsetagainstanyothergainsarising.
Insteadthelossisonlyavailableforsetoffagainstanygainthatmightariseonthesubsequentdisposaloftheshares
soacquiredinthefourweekperiod-thisprovisiondoesnotapplywherethereisagainonthedisposal.
3. Bonus / Rights issues
Sometimestheholderofaclassofshareswillreceiveadditionalshares,beingeitherabonusissue(noadditional
cost)orarightsissue(foracostwhichisusuallylessthanopenmarketvalue),inrespectoftheirholding.Inthese
situations,despitethefactthatthenewsharesareactuallyacquiredatalaterdate,theyaredeemedtohavebeen
acquiredatthedatetheoriginalsharesgivingrisetothebonusorrightsissuewereacquired.Thus,ifaperson
acquired,say100sharesincompanyXLtd.in2003andin2005received50sharesaspartofabonusorrightsissue
theywillbedeemedtohaveheldtheentireholdingof150sharesfrom2003.
Furthermore,thereisnoquestionofimputinganotionalcostorvalueforthenewsharesacquiredbuttheactualprice
paidtoacquirethesharesunderarightsissueisallowedasenhancementexpenditure-(seeChapter3,paragraph
1(b)).
Bonus Issue
Theeffectoftheaboveonabonusissueisthattheoriginalcostisdilutedbetweentheoriginalsharesandthenew
sharesacquired,forexample:
2003acquired100Ordinary1sharesinXLtd.forsay300(or3pershare)
2005acquired50Ordinary1sharesinXLtd.fornocost(bonusissue1for2)
All150sharesaredeemedtohavebeenacquiredin2003foratotalcostof300.
Therevisedcostpershareis2(i.e.all150sharesaredeemedtohavebeenacquiredin2003foratotalcost
of300whichdilutestheallowablecostpershareto2,300allowablecost150shares).
(See Example 7, Chapter 11).
Rights Issue
Thetreatmentforsharesacquiredunderarightsissueisthesameasforabonusissueexceptthatanallowance
hastobemadefortheamountpaidtoacquiretheadditionalshares.Suchpaymentsaretreatedasenhancement
expenditure,sothatonthesubsequentdisposalofanyoftheshares,partofthecostoftherightsissuewillbe
attributedtothesharessold.Thus,usingthesameguresfromtheexampleimmediatelyabove,butassumingthe
additionalsharesacquiredrepresentedarightsissueforwhichapaymentofsay,150wasmade(3persharein
rightsissue)theresultingpositionwouldbeasfollows:
Again,all150sharesaredeemedtohavebeenacquiredin2003foracostof300,i.e.costof2pershare in2003.Theyarealsodeemedtohaveafurtheradditionalcost(enhancementexpenditure)of150in2005.
Thisenhancementexpenditure(EE)isagaindividedequallybetweenthetotalnumberofsharesheld
(i.e.150150sharesor1pershareEE).Insimpleterms,then,eachshareisdeemedtohavebeenheld
since2004andeachhasanallowablecostof2paidin2003andfurtherenhancementexpenditureof1
paidin2005.
(See Example 8, Chapter 11).
Guide to Capital Gains Tax
23
8/8/2019 Revenue CGT Guide Oct2010
24/52
Shares of a different class
Occasionallythesharesreceivedinabonusorrightsissuewillbesharesofadifferentclasstothesharesheld,
e.g.onenewPreferenceshareforeverytwoOrdinarysharesheldandsoon.Wherethishappensthepositionis
essentiallythesameasaboveexceptthatitisnecessarytoapportiontheallowablecost-includingenhancement
expenditureinthecaseofrightsissues-betweenthedifferentclassesofshares.Inthecaseofquotedsharesthis
apportionmentisdoneonthebasisoftherstdaypriceoftherespectiveshareholdingsafterthebonus/rightsissueis
made(forunquotedsharesthisapportionmentisdonebyreferencetotherespectivevaluesofthesharesatthedateofdisposal).
(See Example 9, Chapter 11).
Guide to Capital Gains Tax
24
8/8/2019 Revenue CGT Guide Oct2010
25/52
Chapter 9
Returns, Appeals and Payment -Self-Assessment
1. Returns
Areturnofchargeablegainsandallowablelossesmustbemadeonorbefore31Octoberintheyearfollowingthe
yearofassessmentinwhichthedisposaloccurs.TheobligationtomakeaCapitalGainsTaxreturnexistseven
whereapersonhasnotbeenissuedwithareturnformbyRevenue,wherethepersonhasbeenrelievedofthe
obligationtomakeanIncomeTaxreturnorwherenotaxisduebecauseoftheavailabilityofreliefs,lossesetc.
Thereisnoneedtogivedetailsofdisposalsofassetswhicharenotchargeableassets(seeChapter5,paragraph3).
Thereturnshouldincludegainsofthetaxpayersspouseunlessaseparatereturnisbeingsubmittedbyhim/her(see
Chapter6,paragraph1).
Generally,detailsofchargeablegainsarereturnedontheIncomeTaxorCorporationTaxreturnforms(seeChapter2,paragraph3formoredetailsonreturnforms).
IfyouhavenotreceivedaTaxReturnformyoucanobtainonefromRevenueswebsite www.revenue.ie,orfrom
RevenuesFormsandLeaetsservicebyphoningLoCall1890306706,or0035316744050forcallersoutsidethe
RepublicofIreland,orfromyourlocalRevenueofce.
Alternatively,ifyouwishyoucanleaTaxReturnelectronicallyusingthe Revenue On-Line Service (ROS)andyou
mayalsosubmityourreturnofchargeablegainselectronicallyaspartoftheelectronicversionofthereturn.Access
ROSatwww.revenue.ie
2. Appeals
ApersoncanappealaCapitalGainsTaxassessmenttotheAppealCommissionerswithin30daysofthenoticeoftheassessment.TheproceduresrelatingtoIncomeTaxappealsalsoapplyforCapitalGainsTax.
3. Payment of the Tax -Self-Assessment
CapitalGainsTaxisaSelf-Assessmenttax,themainfeaturesofwhichareoutlinedinChapter2.Individuals,
TrustsandCompaniesinsomeinstances(seeChapter7,paragraph1(a))must:-for2009andfollowingyearsof
assessment:
w payCapitalGainsTaxasfollows:
ongainsaccruingintheperiod1Januaryto30Novemberinclusive(InitialPeriod)payonorbefore15
Decemberinthatyear,
ongainsaccruingintheperiod1Decemberto31Decemberinclusive(LaterPeriod)payonorbefore31 Januaryfollowingtheendoftheyearofassessment.
w makeareturnofchargeablegainsandallowablelossesonorbefore31Octoberintheyearfollowingtheyearof
assessmentinwhichthedisposaloccurred,
Ifthepaymentislateorinadequate,interestchargesmayarise.Ifthereturnisnotmadeontime,asurchargewillbe
payable(seeChapter2,paragraph4).
Differentduedateswereinplacefordisposalspriorto2009,pleaseseeChapter1paragraph11forthesituation
before2009.
Guide to Capital Gains Tax
25
8/8/2019 Revenue CGT Guide Oct2010
26/52
Chapter 10
Obligation on persons acquiring certain assets to deduct tax
1. General
Wheretheconsiderationforthedisposalofcertainassets(seeparagraph2below)exceeds500,000theperson
acquiringtheassetmustdeduct15%ofthepaymentandremitittotheCollector-Generalwithin30days.This
deductionisnotrequiredifthevendorproducesaclearancecerticateForm CG50A,or,inthecaseofnewly
constructedhouses,oneofthecerticatesmentionedinparagraph4below.
TheobligationtodeducttaxdoesnotapplywherethevendorisabodyspeciedinSchedule15TaxesConsolidation
Act1997.Consequently,thosebodiesarenotrequiredtoobtainaclearancecerticate.
2. Relevant assets
Thefollowingaretheassetswhichfallwithinthisprovision:
(a) land(includingbuildings)intheState
(b) mineralsintheStateoranyrights,interestsorotherassetsinrelationtominingormineralsorthesearching
forminerals
(c) explorationorexploitationrightsinadesignatedareaoftheIrishContinentalShelf
(d) unquotedsharesderivingtheirvalueorthegreaterpartoftheirvaluedirectlyorindirectlyfromassetsin
(a),(b)or(c)
(e) unquotedsharesreceivedinexchangeforsharesin(d)wheretheprovisionsofSection584TCA1997apply
totheexchangebyvirtueofthat,oranother,Section
(f) goodwillofatradecarriedonintheState.
Inaddition,theprovisionsalsoapplytocertaintransactionswhichdonotinvolvethepurchaseracquiringanasset
(forexample,theredemptionofloannotesbytheissuingcompanyinvolvesthedisposal,butnottheacquisition,
ofassets).Insuchcircumstancesthepersonpayingthecapitalsumisdeemedtohaveacquiredtheassetfora
considerationequaltothecapitalsum.Capitalsumsmadeunderinsurancepoliciesarespecicallyexcludedfrom
thisprovision.
3. Clearance Certicate -Form CG50A
ThepersonmakingthedisposalmayapplytotheirlocalRevenueofceforaclearancecerticate.Theapplication
shouldbemadeonForm CG50whichisavailableonRevenueswebsitewww.revenue.ieorfromRevenuesForms
andLeaetsServicebyphoningLoCall1890306706.Applicationsmaybemadebythevendorsagent.Anapplication
byanagentmustincludethevendorsnameandaddressand,wherethevendorisresidentintheState,his/her
PersonalandPublicService(PPS)number.Thecerticatewillissueifanyofthefollowingconditionsissatised:
(a) thepersonmakingthedisposalisresidentintheState,or
(b) noCapitalGainsTaxispayableinrespectofthedisposal,or
(c) theCapitalGainsTaxchargeableinrespectofthedisposal(andanypreviousdisposal)oftheassethasbeen
paid.
Ifthevendordoesnothavesufcientfundstopaythetaxat(c)inadvanceofthedisposalRevenuewill,incertain
circumstances,acceptawrittenundertakingfromthevendorssolicitor(seeTaxBrieng62forfurtherinformation).
TheClearanceisgivenonaFormCG50A.
Guide to Capital Gains Tax
26
8/8/2019 Revenue CGT Guide Oct2010
27/52
4. Clearance Certicates -New Houses
AsanalternativetoobtainingaFormCG50A(seeparagraph3)wherethevendor,e.g.builder,isdisposingoflandon
whichanewhousehasbeenbuiltorisinthecourseofbeingbuilt,productionofanyoneofthefollowingcerticates
willexemptthepersonpayingtheconsiderationfromdeductingthe15%:
w currentcerticateofauthorisationissuedtothevendorunderSection531TaxesConsolidationAct1997,or
w currenttaxclearancecerticatesissuedtothevendorunderSections1094and1095TaxesConsolidationAct 1997,or
w currenttaxclearancecerticateissuedtothevendorfortheparticularpurposesofSection980TaxesConsolidation
Act1997.
Forthepurposesofthischapter:
houseincludesanybuilding/partofabuildingusedorsuitableforuseasadwelling,andanyoutyard,gardenor
otherlandpertainingtoorusuallyenjoyedwiththatbuilding/partofabuildingand
newhousemeansahousewhichhasbeendeveloped/isbeingdevelopedbyoronbehalfofthevendorbutwhich
hasnotbeenusedatanytimebeforeitsdisposal.
5. Obligation to deduct and remit tax
Ifthevendordoesnotproducetheappropriatecerticatethepurchasermustdeduct15%oftheconsiderationas
capitalgainstaxandtransmittheamountdeductedtotheCollector-Generalwithin30days.Thevendorisentitledto
reliefforthetaxdeducted(seeTaxBrieng56foradviceonhowtoobtainthisrelief).
6. Procedure where consideration is in a non-monetary form
Iftheconsiderationissuchthatthe15%deductioncannotbemade(e.g.whereoneassetisexchangedforanother,
orsharesareissuedasconsideration),andthepersonacquiringtheassetdoesnothaveaclearancecerticate
thatpersonisobliged(withinsevendaysoftheacquisition)togivenoticetotheRevenueCommissionerscontaining
detailsoftheacquisitionandremittotheRevenueCommissionersanamountequalto15%ofthemarketvalueofthe
consideration.
Guide to Capital Gains Tax
27
8/8/2019 Revenue CGT Guide Oct2010
28/52
Chapter 11
Examples
ThisChaptercontainsanumberofworkedexamplesforyourassistance.AllamountsareinEuro.Thesituations
coveredareasfollows:
a Example1: Saleofinvestmentproperty
a Example2: Saleofdevelopmentland
a Example3: Saleofprincipalprivateresidencewhichisdevelopmentland
a Example4: Saleofpartofgardenattachingtomainresidence
a Example5: PrincipalPrivateResidencereliefwhereownerhasnotspentallofperiodofownershipindwelling
house
a Example6: SaleofsharesincludingFIFOrule
a Example7: SaleofsharesincludingBonusIssueofshares
a Example8: SaleofsharesincludingRightsIssueofshares
a Example9: SaleofsharesincludingRightsIssue/Sharesofadifferentclass
a Example10: PurchaseandsaleofanassetinForeignCurrency
1. Sale of investment property
InMay2009amarriedcouplesoldahousefor250,000.Thecostofsaleamountedto7,000.Theyboughtthe
houseinJune1973for5,600.Themarketvalueofthehouseat6April1974was6,000.Thecouplehadaddedanextensioncosting4,000tothehouseinMarch1980.
ThehousewasnottheirPrincipalPrivateResidenceanditwasnotDevelopmentLand(seeChapter4).Thecouple
hadotherchargeablegainsinthetaxyear2009whichuseduptheirrespectiveannualcapitalgainsexemption*.
Calculation of gain 2009:
DisposalConsideration 250,000
Less:IncidentalCosts 7,000
NetDisposalConsideration 243,000
Deduct:
Valueon6April1974adjustedforination
i.e.6,000x7.258= 45,168
1980EnhancementExpenditure,adjustedforination:
i.e.4,000x3.742= 14,968 60,136
Chargeable Gain 182,864
*(PersonalExemptionuseduponothergains)
Taxdue,onorbefore,15December2009@25% 45,716.00
Guide to Capital Gains Tax
28
8/8/2019 Revenue CGT Guide Oct2010
29/52
Examples (continued)
2. Sale of development land (see Chapter 4)
Aholdingoftenacresofland,whichwasacquiredin1968,wassoldinJune2009forcommercialdevelopment.The
salepricewas300,000andthecostsofdisposalwere10,000.
At6April1974itsmarketvaluewas50,000anditscurrentusevalueatthatdatewas8,000.Thevendorissingleandhadnootherchargeablegainsin2009.Thechargeablegainiscomputedasfollows-
Calculation of gain 2009:
DisposalConsideration 300,000
Less:IncidentalCosts 10,000
NetDisposalConsideration 290,000
Deduct:
Valueon6April1974:-
(i) Currentusevalue,adjustedbyindexation i.e.8,000x7.528= 60,224
(ii) Developmentvalue(marketvaluelesscurrentusevalue)
i.e.50,000-8,000= 42,000 102,224
CapitalGain 187,776
LessPersonalExemption 1,270
Chargeable Gain 186,506
Taxdue,onorbefore,15December2009@25% 46,626.50
Guide to Capital Gains Tax
29
8/8/2019 Revenue CGT Guide Oct2010
30/52
Examples (continued)
3. Sale of a principal private residence which is development land (see Chapter 4)
InMay1979amarriedcoupleboughtahouse,theirPrincipalPrivateResidence,foratotalof54,000includingcosts
ofacquisition.Subsequently,thepropertyacquiredcommercialdevelopmentpotentialandtheysellitfor400,000
inDecember2009whenitscurrentusevalueasaprivateresidenceis300,000.Theexpensesofsalewere
10,000.Thecouplehadotherchargeablegainsin2009whichabsorbedtheirrespectiveCapitalGainsTaxannualexemptions*.Thecapitalgainontheabovedisposalisasfollows-
Calculation of gain 2009:
NotionalGain
(Treatasifthehousehadbeensold
for300,000asaprivateresidence)
DisposalConsideration 400,000 (Currentusevalue) 300,000
(10,000x300,000)
400,000
LessIncidentalCosts 10,000 (Proportionofexpensesofsale) 7,500
NetDisposalConsideration 390,000 292,500 (a)
Deduct:
Costadjustedforination:
54,000x3.742 202,068 (adjustedcost) 202,068 (b)
CapitalGain 187,932 [(a)-(b)]=#PPRRelief= 90,432
Principal Private
Residence (PPR) relief # 90,432
Chargeable Gain 97,500
*(PersonalExemptionsuseduponothergains)
Taxdue,onorbefore,31January2010@25% 24,375.00
Guide to Capital Gains Tax
30
8/8/2019 Revenue CGT Guide Oct2010
31/52
Examples (continued)
4. Sale of part of garden attaching to main residence (see Chapter 4)
InMay2009anindividualsellspartofhergardenfor100,000.Thecostsofsaleare5,000.Inaddition,valuation
costsof500areincurredforthepurposesofcomputingthecapitalgain.Thenon-developmentvalueofthesiteis
5,000.Thepropertywasoriginallypurchasedon1May1996for250,000.Legalfeeswere4,000andStampDuty
was6,000.Themarketvalueofthepropertyafterthesaleofthesiteis900,000.Thevendorhadotherchargeablegainsin2009whichusedupherannualexemption.Thecapitalgainstax(CGT)payableiscalculatedasfollows-
Step 1:Calculatethegainontheactualproceeds.
Saleproceeds: 100,000
Lesscostsofsale&valuation: 5,500
Netsaleproceeds: 94,500
Lessallowablecostsofacquisition:(Note1) 32,526
Gain: 61,974
Step 2:Calculateanotionalgain,asifthesitewassoldforitsnon-developmentvalue.Thisgainisexemptunderthe
mainresidencereliefprovisions.
Notionalproceeds: 5,000
Lesscostsofsale&valuation:(Note2) 750
Netsaleproceeds: 4,250
Allowablecostsofacquisition:(Note3) 1,796
Gain: 2,454
Step 3:DeductthegainatStep2fromthatatStep1.Thisisthechargeablegain.
Totalgain: 61,974
Lessnotionalgain: 2,454
Chargeablegain: 59,520
Step 4:CalculatetheCGTpayable.
Chargeablegain: 59,520
Taxdue,onorbefore,15December2009@25% 14,880.00
Note 1:Theallowablecostsofacquisition,i.e.theaggregateofthepurchaseprice,legalfeesandStampDuty,are
apportioned,usingthepartdisposalformula*,betweenwhatisbeingsold&retained.
Allowablecostsofacquisition: 260,000x 100,000 =26,000
100,000+900,000
* A
A+B,whereAisthesalepriceoftheassetandBisthemarketvalueofthepartretained.
Expenditureincurredonorbefore31/12/2002maybeadjustedforindexationbyreferencetoamultiplierbasedon
theAllItemsConsumerPriceIndex.Themultiplierforanassetsoldin2009onexpenditureincurredinthe12monthsended5April1997is1.251.
Theallowablecostsofacquisition,afteradjustmentforindexationare32,526,i.e.26,000x1.251.
Note 2:Thecostsofsaleareapportionedbetweentheactualandnotionalsaleproceeds-
5,000 x 5,000 =250
100,000
Thevaluationcostsareallowableinfullastheywereincurredforthepurposeofcomputingthegainonthesale.
Note 3:Thepartdisposalformula(seeNote1)isnowappliedtothenon-developmentvalueofthesite.
260,000 x 5,000 =1,436
5,000+900,000
Theallowablecostsofacquisition,afteradjustmentforination(seeNote1),are1,796,i.e.1,436x1.251.
Guide to Capital Gains Tax
31
8/8/2019 Revenue CGT Guide Oct2010
32/52
Examples (continued)
5. Principal Private Residence relief where owner has not spent all of period of ownership
in dwelling house (see Chapter 5)
On1January2000anindividualboughtahousefor100,000,includingcosts.Heimmediatelyoccupieditashissole
residenceuntil31December2005whenhewenttoliveinanewapartment.Thehousewasthenrented,theowner
payingincometaxasappropriateontherentreceived.
On30September2009thehousewassoldfor300,000.PrincipalPrivateResidence(PPR)reliefcanbeclaimedfor
theperiodoftimetheownerlivedinthehouse.Ashehasoccupiedthehouseashismainresidence,thenaltwelve
monthsofownershipisalsotreatedasaperiodofoccupancy.Reliefiscalculatedonapro ratabasis.
Calculation of gain 2009
DisposalConsideration 300,000
Lessincidentalcostsofsale 10,000
Considerationaftercosts 290,000
Cost,adjustedforination: 100,000x1.193= 119,300
CapitalGain: 170,700
Calculate PPR relief:
Periodofownership:117months
Periodoftimeofoccupation(includinglasttwelvemonthsofownership)84months.
170,700 x 84=122,554
117
122,554ofthegrossgainisrelievedduetoPPRrelief.
CapitalGainamendedforPPRrelief-170,700-122,554= 48,146
LessPersonalExemption 1,270
Chargeable Gain 46,876
Taxdue,onorbefore15December2009@25% 11,719
Guide to Capital Gains Tax
32
8/8/2019 Revenue CGT Guide Oct2010
33/52
Examples (continued)
6. Sale of shares including FIFO rule (see Chapter 8)
InJuly1993anindividual(unmarried)bought2,000ordinarysharesinaquotedcompanyfor2,000(i.e.1.00per
share)
InMay2001heboughtafurther3,000ordinarysharesinthesamecompanyfor4,500(i.e.1.50pershare)
InAugust2005,2,500sharesweresoldandtheproceeds(afterexpensesofsale)amountedto6,500.Hehadno
otherchargeablegaininthetaxyear2005.
InMay2009hesoldtheremaining2,500sharesandtheproceeds(afterexpensesofsale)amountedto7,500.He
hadnootherchargeablegainsinthetaxyear2009.
Calculation of gain:
2005 2009
DisposalConsideration: 6,500 7,500
Deduct:
2000shares*
Costin1993/94adjustedforination
i.e.2,000x1.270= 2,540
500shares 2,500shares
Costin2001 Costin2001
adjustedforination adjustedforination
i.e500@1.50pershare i.e.2,500@1.50pershare
=750x1.087= 815 3,355 =3,750x1.087= 4,076
CapitalGain 3,145 3,424
LessPersonalExemption 1,270 1,270
Chargeable Gain 1,875 2,154
Taxdue@20%** 375.00 Taxdue@25%** 538.50
*Forthepurposeofidentifyingwhatsharesaresold,aFirstin-Firstoutruleapplies.Thismeansthattheshares
acquiredinJuly1993arealldeemedtohavebeensoldin2005inthisexample-seeChapter8,paragraph2.
**Theduedateforthe2009disposalis15December2009therateoftaxis25%.Theduedateforthe2006disposal
was31October,thetaxratewas20%.
Guide to Capital Gains Tax
33
8/8/2019 Revenue CGT Guide Oct2010
34/52
Examples (continued)
7. Sale of shares including Bonus Issue of shares (see Chapter 8)
Anindividualacquiredandsoldsharesasfollows:
January1993 Purchased1,000sharesinXLtd.at2pershare
February1994 BonusIssueofoneforve
July1996 BonusIssueoftwoforthree
October1998 Purchasedfurther500sharesinXLtd.at4pershare
August2001 BonusIssueofoneforve
May2009 Sold2,500sharesfor12,500(i.e.5pershare)
Theoriginalsharesandbonussharesaretreatedastheoneholdingandtheoriginalcostisspreadovertheentire
holding.
January 1993 October 1998
Number Cost Number Cost
SharesPurchased 1,000 2,000 500 2,000
BonusIssueFeb.1994[1:5] 200 - - -
1,200 2,000 - -
BonusIssueJuly1996[2:3] 800 - - -
2,000 2,000 500 2,000
BonusIssueAug.2001[1:5] 400 - 100 -
2,400 2,000 600 2,000
Disposal2007-FIFOrules 2,400 2,000 100 334*
Sharesretainedafterdisposal - - 500 1,666
(+remainingcost)
Calculation of gain 2009:
DisposalConsideration 12,500
Deduct:
2,400shares(alldeemedacquiredinJan.93);2,000x1.356= 2,712
100shares
(acquiredinOct.1998);2,000x100
600= 334*x 1.212= 405 3,117
CapitalGain 9,383
LessPersonalExemption 1,270
Chargeable Gain 8,113
Taxdue,onorbefore,15December2009@25% 2,028.25
Guide to Capital Gains Tax
34
8/8/2019 Revenue CGT Guide Oct2010
35/52
8/8/2019 Revenue CGT Guide Oct2010
36/52
Examples (continued)
9. Sale of shares including Rights Issue/Shares of a different class (see Chapter 8)
Anindividualacquiredandsoldsharesasfollows:
January1996 Acquired1,000sharesinXLtd.at5pershare(XLtd.isaquotedcompany)
February2000 RightsIssueofonenewPreferenceforeverytwoordinaryheldatcostof4pershare(market
valueoftheordinarysharesatthetimewas20persharewhilethemarketvalueofthePreference
shareswas10pershare.)
a alltheshares(Ord.andPref.)aredeemedtohavebeenacquiredinJan.1996
a thetotalallowablecostofthesharesis5,000(Jan.96)+2,000enhancementexpenditure(Feb.00)
a theallowablecosthastobedividedbetweentheOrdinaryandPreferenceshareshavingregardtotherespective
valuesofthesharesatthetimethenewshareswereacquiredasfollows:
1,000 Ordinary shares
- Originalcost 5,000x20,000 (m.v.ofOrd.atFeb.00)
25,000 (m.v.ofOrd.+Pref.atFeb.00)
=4,000
- Enhancementexpenditure 2,000x20,000
25,000
=1,600
500 Preference shares
- Originalcost 5,000x5,000 (m.v.ofPref.atFeb.00)
25,000 (m.v.ofPref.+Ord.atFeb.00)
=1,000
- Enhancementexpenditure 2,000x5,000 25,000
=400
Calculation of gain 2009:
DisposalConsiderationof400Preferenceshares 6,000
Deduct:
(1) Originalcost(Jan.96)
400
500x1,000=800x1.277= 1022
(2) EnhancementExpenditure(Feb.00)
400
500x400=320x1.193= 382 1,404
CapitalGain 4,596
LessPersonalExemption 1,270
Chargeable Gain 3,326
Taxdue,onorbefore,15December2009@25% 831.50
Guide to Capital Gains Tax
36
8/8/2019 Revenue CGT Guide Oct2010
37/52
Examples (continued)
10. Purchase and sale of an asset using Foreign Currency (see Chapter 3)
AshareholdinginU.K.Ltd.of12,000shareswasacquiredon6July1995atacostofstg24,000,i.e.stg2pershare.
InFebruary1997thebenecialholderofthesesharesmovedpermanentlytoIreland.
On19May2009theholdingof12,000shareswassoldandtheproceeds(afterexpensesofsale)amountedtostg50,755.
Step 1: Convert cost of acquisition
stg24,0000.9629=IR24,925
[Conversionrate,0.9629,dailyrateat6July1995]
Step 2: Convert Irish equivalent cost to Euro
IR24,9250.787564=31,648
[Conversionrate1=0.787564]
Step 3: Convert Disposal Consideration to Euro
Stg50,7550.87940=57,715
[Conversionrate,0.87940,dailyrateat19May2009]
Calculation of Gain 2009:
DisposalConsideration 57,715
Deduct:
Costofacquisition,indexedforination;
31,648x1.277= 40,414
CapitalGain 17,301
LessPersonalExemption 1,270
Chargeable Gain 16,031
Taxdue,onorbefore15December2009@25% 4,007.75
Guide to Capital Gains Tax
37
8/8/2019 Revenue CGT Guide Oct2010
38/52
Appendix 1
TableofInation/IndexationMultipliersSee reference in Chapter 3, paragraph 4
Multiplier for disposals in year ended Year
Expenditure 5April 5April 5April 5April 5April 5April ShortY/e 31Dec 31Dec 31Dec
Incurred 1996 1997 1998 1999 2000 2001 31Dec 2002 2003 2004
2001 et.seq.
1974/75 5.899 6.017 6.112 6.215 6.313 6.582 6.930 7.180 7.528 7.528
1975/76 4.764 4.860 4.936 5.020 5.099 5.316 5.597 5.799 6.080 6.080
1976/77 4.104 4.187 4.253 4.325 4.393 4.580 4.822 4.996 5.238 5.238
1977/78 3.518 3.589 3.646 3.707 3.766 3.926 4.133 4.283 4.490 4.490
1978/79 3.250 3.316 3.368 3.425 3.479 3.627 3.819 3.956 4.148 4.148
1979/80 2.933 2.992 3.039 3.090 3.139 3.272 3.445 3.570 3.742 3.742
1980/81 2.539 2.590 2.631 2.675 2.718 2.833 2.983 3.091 3.240 3.240
1981/82 2.099 2.141 2.174 2.211 2.246 2.342 2.465 2.554 2.678 2.678
1982/83 1.765 1.801 1.829 1.860 1.890 1.970 2.074 2.149 2.253 2.253
1983/84 1.570 1.601 1.627 1.654 1.680 1.752 1.844 1.911 2.003 2.003
1984/85 1.425 1.454 1.477 1.502 1.525 1.590 1.674 1.735 1.819 1.819
1985/86 1.342 1.369 1.390 1.414 1.436 1.497 1.577 1.633 1.713 1.713
1986/87 1.283 1.309 1.330 1.352 1.373 1.432 1.507 1.562 1.637 1.637
1987/88 1.241 1.266 1.285 1.307 1.328 1.384 1.457 1.510 1.583 1.583 1988/89 1.217 1.242 1.261 1.282 1.303 1.358 1.430 1.481 1.553 1.553
1989/90 1.178 1.202 1.221 1.241 1.261 1.314 1.384 1.434 1.503 1.503
1990/91 1.130 1.153 1.171 1.191 1.210 1.261 1.328 1.376 1.442 1.442
1991/92 1.102 1.124 1.142 1.161 1.179 1.229 1.294 1.341 1.406 1.406
1992/93 1.063 1.084 1.101 1.120 1.138 1.186 1.249 1.294 1.356 1.356
1993/94 1.043 1.064 1.081 1.099 1.117 1.164 1.226 1.270 1.331 1.331
1994/95 1.026 1.046 1.063 1.081 1.098 1.144 1.205 1.248 1.309 1.309
1995/96 - 1.021 1.037 1.054 1.071 1.116 1.175 1.218 1.277 1.277
1996/97 - - 1.016 1.033 1.050 1.094 1.152 1.194 1.251 1.251
1997/98 - - - 1.017 1.033 1.077 1.134 1.175 1.232 1.232
1998/99 - - - - 1.016 1.059 1.115 1.156 1.212 1.212
1999/00 - - - - - 1.043 1.098 1.138 1.193 1.193
2000/01 - - - - - - 1.053 1.091 1.144 1.144
2001 - - - - - - - 1.037 1.087 1.087
2002 - - - - - - - - 1.049 1.049
2003et.seq. - - - - - - - - - 1.000
Note:IntheYearExpenditureIncurredcolumn,forallyearsto2000/2001inclusive,ayearmeansa12month
periodcommencingon6Aprilandendingonthefollowing5April.TheShortyear2001coverstheperiod6/4/2001to31/12/2001.Witheffectfrom1/1/2002ayearisthecalendaryear,i.e.2002referstotheyearended31December
2002.Indexationreliefwillonlyapplyfortheperiodofownershipoftheassetupto31December2002forany
disposalsmadeonorafter1January2003.
Guide to Capital Gains Tax
38
8/8/2019 Revenue CGT Guide Oct2010
39/52
8/8/2019 Revenue CGT Guide Oct2010
40/52
ComputationsheetforDisposalofAssetsother
thanDevelopmentLand
Tax year end 31/12/20_ _
Note
1. DateofDisposal / /
2. Descriptionofasset
3. DateofAcquisition / /
Computation
4. DisposalConsideration
5. LessIncidentalCostsofDisposal(ifany)
6. NetDisposalConsideration(4-5)
Deduct Allowable Costs
7&8. CostofAcquisition xMultiplier( )=
9&10. EnhancementExpenditure (i) xMultiplier( )=
(ii) xMultiplier( )=
11. Totalindexedcost
12. CapitalGain/(Loss)afterindexation(6-11)
13. ActualMonetaryGainor(Loss)[usebrackets()todenoteloss]
14&15. Chargeable Gain
14&15. (Allowable loss) ( )
Ifthereareunusedlossesfrompreviousyearsinserttheamounthere ( )
Calculation of Capital Gains Tax Payable
16. TotalChargeableGainsnetofAllowableLosses
17. Less:PersonalExemption[1,270-ifdue]
NetChargeableGains
Chargeable@25% TaxDue=
Chargeable@40% TaxDue=
18. ForeignLifePolicies@40% TaxDue=
RemembertheCapitalGainsTaxduedatefordisposalsbetween:
w 1Januaryand30November (initial period)is15Decemberinthatyear
w 1Decemberand31December (later period)is31Januaryinthefollowingyear.
Guide to Capital Gains Tax
40
8/8/2019 Revenue CGT Guide Oct2010
41/52
ComputationsheetforDisposalofDevelopment
Land
Tax year end 31/12/20_ _
Note
1. DateofDisposal / /
2. Descriptionofasset
3. DateofAcquisition / /
Computation
4. DisposalConsideration
5. LessIncidentalCostsofDisposal(ifany)
6. NetDisposalConsideration(4-5)
Deduct Allowable Costs
7. CostofAcquisitions(enterinbox)
7A&8. CurrentUseValue xMultiplier( )=
8A. Cost(at7)lessCurrentUseValue(noindexation) =
9&10. EnhancementExpenditure (i)-noindexation =
(ii)-noindexation =
11. TotalindexedCosts
12. CapitalGain/(Loss)afterindexation(6-11)
13. ActualMonetaryGainor(Loss)[usebrackets()todenoteloss]
14&15. Chargeable Gain
14&15. (Allowable loss) ( )
Ifthereareunusedlossesfrompreviousyearsinserttheamounthere ( )
Calculation of Capital Gains Tax Payable
16. TotalChargeableGainsnetofAllowableLosses
17. Less:PersonalExemption[1,270-ifdue]
NetChargeableGains
Chargeable@25% TaxDue=
Chargeable@40% TaxDue=
19. WindfallGainsTax@80% TaxDue=
RemembertheCapitalGainsTaxduedatefordisposalsbetween:
w 1Januaryand30November (initial period)is15Decemberinthatyear
w 1Decemberand31December (later period)is31Januaryinthefollowingyear.
Guide to Capital Gains Tax
41
8/8/2019 Revenue CGT Guide Oct2010
42/52
Appendix 3
GuidanceNotesonCompletionofComputation
Sheets
Note
1. Date of Disposal
Generallyspeakingthisisthedatethecontractismade,notthecompletiondate(seeChapter1,paragraph10).
2. Description of Asset
Forexample:agriculturalland,developmentland,house,lease,shares,etc.Statearea,quantity,etc.as
appropriate.
3. Date of Acquisition
Generallyspeakingthisisthedatethecontractismade,notthecompletiondate(seeChapter1,paragraph10).
4. Disposal Consideration
Thisisthevalueoftheconsiderationreceivedondisposal,e.g.thesalepriceinthecaseofsaleatarmslength.
Ifthedisposalisnotmadebyabargainatarmslengththentheconsiderationisequaltoitsmarketvalueatthe
timeofdisposal.AnydisposalproceedsreceivedinforeigncurrencymustbeconvertedtoIrishcurrencyby
referencetotherateofexchangeatthetimeofdisposal.
5. Incidental Costs of Disposal
Thisisexpenditurewhollyandexclusivelyincurredbyyouforthepurposesofthedisposal,e.g.costofvaluing,
advertisingandlegalexpenses.
6. Net Disposal Consideration
Thisisthedisposalconsiderationlesstheincidentalcostsofdisposal.
7. Cost of Acquisition
w Incidentalcostsofacquisitionsuchaslegalfeesandstampdutyareallowableaspartofthecost.
w Iftheassetwasacquiredbywayofaninheritanceonadeath,bywayofagiftorontransferfromatrust,itis
themarketvalueatthedateofdeath,giftortransferthatistobeusedhere.
w Iftheassetwasacquiredpriorto6April1974theallowablecosttobeenteredhereisthemarketvalueofthe
assetat6April1974.
w Inthecaseofapartdisposalofanasset,onlypartoftheoriginalcostisallowedhereandacomputation
showinghowthatpartofthecosthasbeencalculatedshouldbeattached.
w Specialrulesapplytothedisposalofaleasewithlessthan50yearstorun,soastoreducetheallowablecost
oftheleasebyreferencetothenumberofyearsforwhichitwasheld.
w WheretheacquisitionwasmadeinforeigncurrencythecostsofacquisitionmustbeconvertedtoIrish
currencybyreferencetotherateofexchangeatthetimeofacquisition.
Guide to Capital Gains Tax
42
8/8/2019 Revenue CGT Guide Oct2010
43/52
7A. Current Use Value
Thisonlyappliesonthedisposalofdevelopmentland.Inthecomputationofgainsonthedisposalof
developmentlandonlythecurrentusevalueatdateofacquisition,orat6April1974ifacquiredearlier,maybe
indexedforination.
8. Multiplier
Theination/indexationmultiplierfordisposalsinvarioustaxyearsaresetoutinAppendix 1.Thechartin
Appendix 1contains,foreaseofreference,detailsoftherelevantinationfactorsfortheyearsofassessment
1995/96etseq.
Note: (a) See7Aaboveredevelopmentland.
(b) Fordisposalsmadeonorafter1January2003indexationreliefappliestoexpenditureincurredup
to31December2002.
8A. Cost Less Current Use Value
Inthecomputationofthegainonthedisposalofdevelopmentlandthecostor,ifacquiredearlier,themarket
valueat6April1974lessthecurrentusevalueatthatdate,isallowedwithoutindexation.
9. Enhancement Expenditure
Thisisthecostofadditionstotheasset,afterthedateofacquisition,whichaddstothevalueoftheassetandis
reectedinthestateoftheassetatthedateofsale.Exampleswouldbelandscaping,additionofagarage,
conservatory.Itdoesnotincluderoutinemaintenancesuchaspainting.
10. Multiplier
w ThemultipliertobeappliedheremustbebyreferencetotheyearinwhichtheEnhancementExpenditureat9
wasincurred.SeeAppendix 1forthetable.
w NoindexationofEnhancementExpenditureisallowedfordisposalsofdevelopmentland.
11. Total Indexed Cost
w Thisistheaggregateofthecostofacquisitionandenhancementexpendituredulyindexedforinationwhere
applicable.
w Inthecaseofdevelopmentlanditisthecurrentusevalueat7Amultipliedbytheappropriatemultiplierat8,
plustheallowablecostlesscurrentusevalue,at8A,plusenhancementexpenditure,ifany,at9.
12. Capital Gain (Loss) after indexation
Ordinarilythegainascalculatedhereisthechargeablegaintobeenteredonthereturnformbut,inthecaseof
anindexedlossorwheredeemedmarketvalueat6April1974hasbeenusedinthecomputation,the
chargeablegainorallowablelossmayrequiretobeadjustedbyreferencetotheactualmonetarygainorloss.
Seenotes14and15.
13. Actual Monetary Gain or Loss
Thisistheactualgainorlossoverallbyreferencetotheoriginalcostwithoutanyallowanceforination.
Guide to Capital Gains Tax
43
8/8/2019 Revenue CGT Guide Oct2010
44/52
14&15. Chargeable Gain or Allowable Loss
(a) Ifthereisagainshownat12enteritat14also,unless:
wthereisamonetarygainat13whichissmaller,inwhichcaseenterthesmallergure,or
wthereisamonetarylossat13,inwhichcasetreatthedisposalasgivinganogain/noloss
result.
(b) Ifthereisalossshownat12enteritat15also,unless:
wthereisamonetarylossat13whichissmaller,inwhichcaseenterthesmallergure,or
wthereismonetarygainat13,inwhichcasetreatthedisposalasgivinganogain/noloss
result.
16. Total Chargeable Gain
w Thisisthetotalchargeablegainsfrombothdevelopmentlandandnon-developmentlandgainsless
anyallowablelosses.
w Theallowablelossesincludelosses(ifany)broughtforwardasstillunusedfrompreviousyears.Note,
however,thattheonlylosseswhichmaybesetoffagainstgainsondevelopmentlandarelosses
whichhavebeenincurredondisposalsofotherdevelopmentland.
17. Personal Exemption
Therst1,270ofanindividualsnetgainsisnotchargeable.Thispersonalexemptionisnottransferable
betweenspousesandappliestoindividualsonly.Ifthereismorethanonedisposalduringtheyearandthe
personalexemptionhasbeenutilisedinfullintherstcomputationthennoentryisrequiredhere.A
non-residentindividualisentitledtothepersonalexemption.
18. Foreign Life Policies
Ifyousold,madewithdrawalsfromorreceivedanycashorotherbenetsfromaforeignlifeinsurance
policyasreferredtoinChapter6Part26oftheTCA1997,youmayhavemadeagainfromtheForeign
LifePolicytowhichthefollowingratesoftaxwillapply:
wIfthedisposalwasmadeonorafter8April2009anddetailsofthegainare correctlyincludedinareturn
andthepolicyisnotaPersonalPortfolioLifepolicywithinthemeaningofSection730BA(2)TCA1997,
thechargetoIncome Taxisat28%.
wIfthedisposalwasmadeonorafter1January2009andbefore8April2009anddetailsofthegain
arecorrectlyincludedinareturnandthepolicyisnotaPersonalPortfolioLifepolicywithinthemeaning
ofSection730BA(2)TCA1997,thechargetoIncome Taxisatthestandard rate of income tax + 6%.
wIfthedisposalwasmadeonorafter1January2001andbefore1January2009anddetailsofthegain
arenot correctlyincludedinareturn,thechargetoCapital Gains Taxwillbetheun-indexedrelevant
gain withinthemeaningofSection594TCA1997,taxedata Capital Gains Tax rate of 40%.
Forinformationonchargeablegainsandratesofchargefordisposalperiodspriorto1January2001as
wellastheratesofincometaxapplyingtogainsonPersonalPortfolioLifePolicieswithinthemeaningof
Section730BA(2)TCA1997,youshouldcontactyourRevenueofce.
19. Windfall Gains Tax
The80%rateischargedontheamountbywhichthelandincreasedinvalueasaresultoftherelevant
planningdecision.Theremainderofthegainwillbetaxedatthenormal25%rate(seeChapter4,
paragraph6).
Guide to Capital Gains Tax
44
8/8/2019 Revenue CGT Guide Oct2010
45/52
Appendix 4
ListofRevenueOfcesandOtherInformationSourcesAContactLocatoronRevenueswebsite www.revenue.ieenablescustomerstospeedilyascertainappropriate
Revenuecontactdetailsapplicabletothemselves.Theseincludetelephonenumber,e-mailandpostaladdress,fax
numberandtheappropriateofceforpersonalcallers.Thesedetailsmaybeeasilyaccessedbycustomerswhoare
onlyrequiredtokeyintheirPPSNumberorCompanyTaxReferenceNumber.
Revenue Regions & District Ofces Address Telephone
Dublin Region
CityCentre(Dublincitypostalareas1&2) 9/15UpperOConnellStreet,Dublin1 01-8655000
SouthCity(DublinCitysouthoftheLiffeyexcludingpos talarea2) 85-93LowerMountStreet,Dubl in2 01-6474000
NorthCity (DublinCity northoftheLiffeyex cludingpostalarea1) 9/15Upper OConnell Street,Dublin1 01-8655000
SouthCounty(LocalAuthorityarea) PlazaComplex,BelgardRoad,Tallaght,Dublin24 01-6470700
Fingal(LocalAuthorityarea) BlockD,AshtownGate,NavanRoad,Dublin15 1890678456
DunLaoghaire/Rathdown(LocalAuthorityarea) LansdowneHouse,LansdowneRoad,Dublin4 01-6329400
CentralRevenueInformationOfce CathedralStreet,OffUpr.OConnellStreet,Dublin1 Personalcallersonly
TallaghtRevenueInformationOfce Level2,TheSquare,Tallaght,Dublin24 Personalcallersonly
Dublin Regional PAYE LoCall Number for Employees 1890 333 425
South West Region
CorkEastincludingCorkCountyEast,CityNorth&CityCentre GovernmentOfces,SullivansQuay,Cork 021-4325000
CorkSouthWestincludingCorkCountySouthWest,
CitySouth&CityEast GovernmentOfces,SullivansQuay,Cork 021-4325000
CorkNorthWestincludingCorkCountyNorthWest&CityWest GovernmentOfces,SullivansQuay,Cork 021-4325000
Limerick RiverHouse,CharlottesQuay,Limerick 061-212700
Clare GovernmentOfces,KilrushRoad,Ennis,Co.Clare 065-6849000
Kerry GovernmentOfces,SpaRoad,Tralee,Co.Kerry 066-7161000
South West Regional PAYE LoCall Number for Employees 1890 222 425
Border Midlands West Region
GalwayCounty HibernianHouse,EyreSquare,Galway 091-536000
Galway/Roscommon(GalwayCityandCo.Roscommon) HibernianHouse,EyreSquare,Galway 091-536000
Mayo MichaelDavittHouse,Castlebar,Co.Mayo 094-9037000
Sligo(includingCountiesSligo,LeitrimandLongford) GovernmentOfces,CranmoreRoad,Sligo 071-9148600
Donegal GovernmentOfces,HighRoad,Letterkenny,Co.Donegal 074-9169400
Westmeath/Offaly GovernmentOfces,PearseStreet,Athlone,Co.Westmeath 090-6421800
Louth Gov.Ofces,MillenniumCentre,Dundalk,Co.Louth 042-9353700
Cavan/Monaghan Gov.Ofces,MillenniumCentre,Dundalk,Co.Louth 042-9353700
Border Midlands West Regional PAYE LoCall Number for Employees 1890 777 425
East South East Region
Tipperary(excludingClonmelarea) GovernmentOfces,Stradavoher,Thurles,Co.Tipperary 0504-59500
Kilkenny(includingCountiesCarlowandLaoisbutexcluding
top related