Capital Gains Tax (Amendment) Act, 1978

Capital Gains Tax (Amendment) Act, 1978 Skip to content Disclaimer Feedback Helpdesk Gaeilge Léim go dtí an t-ábhar Séanadh Aiseolas Deasc chabhrach English Gaeilge English Produced by the Office of the Attorney General Táirgthe ag Oifig an Ard-Aighne Home Legislation Acts of the Oireachtas Statutory Instruments Pre-1922 Legislation Constitution External Resources Bills (Houses of the Oireachtas) Iris Oifigiúil / Official Gazette Revised Acts (LRC) Classified List of Legislation (LRC) Translations (acts.ie) Translations (Houses of the Oireachtas) Government Publications for Sale EU Law (EUR-Lex) FAQ Disclaimer Feedback Helpdesk Search Baile Reachtaíocht Achtanna an Oireachtais Ionstraimí Reachtúla Reachtaíocht Réamh-1922 Bunreacht Acmhainní Seachtracha Billí (Tithe an Oireachtais) Iris Oifigiúil Achtanna Athbhreithnithe (CAD) (An Coimisiún um Athchóiriú an Dlí) Liosta Rangaithe Reachtaíochta Aistriúcháin (achtanna.ie) Aistriúcháin (Tithe an Oireachtais) Foilseacháin Rialtais ar Díol Dlí AE (EUR-Lex) CCanna (Ceisteanna Coitianta) Séanadh Aiseolas Deasc chabhrach Cuardach TitleTeideal Year(s) or rangeBliain nó blianta nó raon TypeCineál All Legislation Acts Statutory Instruments Advanced SearchCuardach Casta HomeBaile ActsAchtanna 1978 Capital Gains Tax (Amendment) Act, 1978 Capital Gains Tax (Amendment) Act, 1978 Permanent Page URL View by SectionAmharc de réir Ailt View Full ActAmharc ar an Acht Iomlán Bill History Stair Bille Commencement, Amendments, SIs made under the Act Tosach Feidhme, Leasuithe, IRí arna ndéanamh faoin Acht Print Full ActPriontáil an tAcht Iomlán Number 33 of 1978 CAPITAL GAINS TAX (AMENDMENT) ACT, 1978 ARRANGEMENT OF SECTIONS Section

Section 1

Interpretation.

Section 2

Amendment of section 3 (taxation of capital gains and rate of charge) of Principal Act.

Section 3

Computation of gains; adjustment of allowable expenditure by reference to consumer price index.

Section 4

Reduced rate of charge by reference to period of ownership.

Section 5

Compulsory acquisition: relief in certain cases.

Section 6

Amendment of section 14 (death) of Principal Act.

Section 7

Amendment of section 15 (settled property) of Principal Act.

Section 8

Disposal within the family of business or farm.

Section 9

Amendment of section 28 (replacement of business and other assets) of Principal Act.

Section 10

Amendment of section 39 (disposals to State, charities and other bodies) of Principal Act.

Section 11

Amendment of sections 13 (computation of chargeable gains) and 37 (chargeable gains reserved for policy holders) of Corporation Tax Act, 1976.

Section 12

Amendment of section 90 (distributions made out of capital profits of companies) of Corporation Tax Act, 1976.

Section 13

Amendment of section 127 (company reconstruction or amalgamation: transfer of assets) of Corporation Tax Act, 1976.

Section 14

Amendment of section 132 (disposal or acquisition outside a group) of Corporation Tax Act, 1976.

Section 15

Amendment of Schedule 4 (administration) to Principal Act.

Section 16

Supplemental.

Section 17

Repeals.

Section 18

Short title, construction and commencement.

SCHEDULE 1 Supplementary Provisions SCHEDULE 2 Enactments Repealed Number 33 of 1978 CAPITAL GAINS TAX (AMENDMENT) ACT, 1978 AN ACT TO AMEND AND EXTEND THE CAPITAL GAINS TAX ACTS. [20th December, 1978] BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:

Interpretation.

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 Acts” means the Capital Gains Tax Act, 1975 , and every other enactment relating to capital gains tax.

Amendment of section 3 (taxation of capital gains and rate of charge) of Principal Act.

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.”.

Computation of gains: adjustment of allowable expenditure by reference to consumer price index.

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 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 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):

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.

TABLE Year of assessment in which deductible expenditure incurred Multiplier

(1)

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 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 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 cent. more than 9 years and not more than 12 years 16.5 per cent. 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.

Compulsory acquisition: relief in certain cases.

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 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 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”), 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 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.

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 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.

Class 1 Assets 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 land, 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 building, 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 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;

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 relief under section 25 of the Principal Act.

Amendment of section 14 (death) of 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 deceased person was competent to dispose— (a) shall be deemed to be acquired on his death by the personal representatives or other person on whom they devolve for a consideration equal to their market value at the date of the death; but (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).”.

Amendment of section 15 (settled property) of Principal Act.

7.—(1) Section 15 of the Principal Act is hereby amended by the substitution for subsection (4) (b) of the following paragraph: “(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.”.

Disposal within the family of business or farm.

8.—The following section shall be substituted for section 27 of the Principal Act: “27.—(1) (a) 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 qualifying assets to a child of his, relief shall be given in respect of the capital gains tax chargeable on any gain accruing on the disposal. (b) For the purposes of paragraph (a), the capital gains tax chargeable in respect of the gain shall be the amount of tax which would not have been 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 period of five years ending with the disposal in carrying 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.

Amendment of section 28 (replacement of business and other assets) of Principal Act.

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 of the disposal on which it accrued shall not be so treated for the purposes of section 3 of the Capital Gains Tax (Amendment) Act, 1978, or for the purposes of determining the period of ownership under section 4 of that Act.”.

Amendment of section 39 (disposals to State, charities and other bodies) of Principal Act.

10.—Section 39 of the Principal Act is hereby amended by the substitution for subsection (1) of the following subsection: “(1) (a) Where a disposal of an asset is made otherwise 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 section 28 (3) of the Finance Act, 1931 (national 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 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 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 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 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 accruing to him on the later disposal. (b) Where relief was given under this subsection in respect of a disposal to a person of an asset, being a disposal made before the commencement of the Capital Gains Tax (Amendment) 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. (c) An assessment to give effect to the provisions of paragraph (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 disposal. (d) For the purposes of paragraph (a) (II), the amount of 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 would not have been chargeable but for that gain.”.

Amendment of sections 13 (computation of chargeable gains) and 37 (chargeable gains reserved for policy holders) of Corporation Tax Act, 1976 .

11.—(1) Sections 13

(2)

Section 37

Amendment of section 90 (distributions made out of capital profits of companies) of Corporation Tax Act, 1976 .

12.—(1)

Section 90

(2)

Section 90

TABLE

Amendment of section 127 (company reconstruction or amalgamation: transfer of assets) of Corporation Tax Act, 1976 .

13.—

Section 127

TABLE

Amendment of section 132 (disposal or acquisition outside a group) of Corporation Tax Act, 1976 .

14.—

Section 132

TABLE

Amendment of Schedule 4 (administration) to Principal Act.

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, is set out in the Table to this section.

TABLE

Supplemental.

16.—Schedule 1 shall have effect for the purposes of this Act.

Repeals.

17.—Each enactment mentioned in column (2) of Schedule 2 is hereby repealed to the extent specified in column (3) of that Schedule, subject to the provision made at the end of that Schedule.

Short title, construction and commencement.

18.—(1) This Act may be cited as the Capital Gains Tax (Amendment) Act, 1978.

SCHEDULE 1 Supplementary Provisions

Section 16

.

Compensation applied in restoring assets; deduction of grants from market value of assets held on the 6th day of April, 1974 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 the provisions of section 3 (1) are applied to the residue, if any, of the said sum.

Enhancement, etc. expenditure 2. (1) Where any of the expenditure which is allowable as a deduction 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.

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.

Reorganisation or reduction of share capital 5. Paragraph 2 of Schedule 2 to the Principal Act is hereby 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 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 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 accordingly:

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 (b) any consideration consisting of any application, in paying up 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, 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 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 April, 1978, any of the persons having control of a 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 or after the 6th day of April, 1978, by a person— (i) to whom section 4 (1) applies, and (ii) who has control of the company, (c) there is, apart from section 4 (2), a chargeable gain on that disposal, and (d) the shares or securities, or any of them, were held by the person for a period of ownership of more than three years.

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 modification that the amount of the chargeable gain 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 paragraph applies and as if the gains attributable to relevant 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. (b) This subparagraph shall have effect if but only if— (i) an amount of chargeable gains would accrue to the company concerned on the assumption referred to in clause (a) (i), after deducting any allowable losses arrived at on the same assumption (but without deducting any other allowable losses available to the company), and (ii) in arriving at the said amount, account was taken of an amount of chargeable gains attributable to relevant assets after deducting allowable losses attributable to such assets.

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 the chargeable 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, from the 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 be so given, in respect of 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, in respect of the chargeable gains which would be so chargeable at the highest of those rates and, so far as relief cannot be so 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 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: “(3) Chargeable gains which derive from the disposal of qualifying 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.”.

Part disposal before the 6th day of April, 1978 10. (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, 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 undisposed 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 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.

SCHEDULE 2 Enactments Repealed

Section 17

.

Number and Year Short Title Extent of Repeal

(1)

(2)

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) (j) of Schedule 4.

In paragraph 13 of Schedule 4, the words “section 6 or”.

No. 7 of 1976 Corporation Tax Act, 1976

Section 13

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.

Acts Referred to Capital Gains Tax Act, 1975 1975, No. 20 Corporation Tax Act, 1976 1976, No. 7 Finance Act, 1931 1931, No. 43 Finance Act, 1974 1974, No. 27 Finance Act, 1977 1977, No. 18 Local Government (Planning and Development) Act, 1963 1963, No. 28 Privacy Statement Accessibility European Legislation Identifier (PDF) Open Data License Ráiteas Príobháideachais Inrochtaineacht Aitheantóir Eorpach Reachtaíochta (ELI) Ceadúnas Sonraí Oscailte Liosta Fianán © Government of Ireland. Oireachtas Copyright Material is reproduced with the permission of the Houses of the Oireachtas © Rialtas na hÉireann. Atáirgtear ábhar faoi Chóipcheart le cead ó Thithe an Oireachtais