Capital Gains Tax
- Inflation Relief
- Roll-over Relief – Business Assets
- Roll-over Relief – Property
- Roll-Over Relief for Individuals –Shares
- Retirement Relief
- Exemptions and Relief
- Payment and Compliance
- Payment Dates for Capital Gains Tax
- Clearance Certificate
Individuals resident or ordinarily resident in Ireland are liable to capital gains tax on disposals.
Individuals resident or ordinarily resident but not domiciled in Ireland are liable on gains arising on the disposal of assets situated in Ireland and the United Kingdom and on all foreign gains to the extent that those gains are remitted to Ireland .
Individuals neither resident nor ordinarily resident are liable on gains made on the disposal of certain specified assets, viz:
- Land and buildings in Ireland .
- Minerals in Ireland including related rights, and exploration or exploitation rights in a designated area of the continental shelf.
- Unquoted shares deriving their value, or the greater part of their value, from such assets as mentioned above.
- Assets of a business carried on in Ireland through a branch or agency.
An anti avoidance section imposes CGT on individuals who dispose of shareholdings after 4 December 2002 during a period of temporary non-residence, a temporary period of non-residence is described as absences of less than 5 years.
The standard rate of Capital Gains Tax arising on disposals is 33%.
In arriving at the chargeable gain on the disposal of an asset held for over twelve months, the allowable cost is to be adjusted for inflation based on the Consumer Price Index (Indexation).
Indexation relief will only be available in respect of ownership of assets up to 31 December 2002. Expenditure incurred in 2003 and subsequent years of assessment will not qualify for indexation relief.
|Year||Year Factor for disposal for year ended 5 April/31December:|
A retirement relief is available for an individual aged 55 years or more on disposal of business assets owned and used for 10 or more years ending on the disposal date, it also applies to shares in a family trading company which have been held for at least 10 years. Periods of ownership of a deceased spouse may also be included in the calculation. This relief is limited to proceeds of €750,000 where the disposal is not to a child of the individual.
A disposal of a business to a child including a foster child supported by the donor for five years prior to the child turning eighteen years of age is not liable to capital gains tax regardless of the consideration provided the child retains the asset for 6 years. For the purposes of this exemption a child includes a nephew or niece who has worked in the business substantially on a full time basis for the period of five years ending with the disposal. Also, the definition of child may certain circumstances include a grandchild.
Assets that are held outside a family company and used by that company also qualify for retirement relief provided that certain conditions are met.
Relief will only apply where the disposal of qualifying assets is for bona fide commercial reasons and not as part of a tax avoidance scheme.
Special relief also applies to compensation payments for the decommissioning of fishing vessels.
Where a disposal is made after 1 January 2014 by an individual who has reached the age of 66, the relief is restricted to €500,000. Also, in the case of the disposal of assets to a child or certain other individuals, the relief for an individual aged 66 or over is restricted to qualifying assets with a market value of up to €3m with no relief for the excess. The €3m cap is an aggregate lifetime limit.
The following are a number of exemptions available to individuals:
- Annual gains of up to €1,270 for each individual. For married couples the exemption is €1,270 each, which is non-transferable.
- Sale of tangible moveable property not exceeding €2,540 (e.g. antiques)
- Sale of tangible moveable property, which is a wasting asset and does not qualify for a capital allowances claim
- Sale of principal private residence (except where sale proceeds reflect development value).
- Sale of dwelling house occupied rent-free by a dependent relative.
- Gains or profits on sales of Government Securities or Savings Certificates.
- Transfer of assets between spouses living together.
- Gains on the sale of Irish Government securities, where the security has been held for at least two years.
- Disposals of individual works of art which are valued at not less than €31,740 when loaned to an approved gallery or museum for public display for a minimum period of ten years from 2/2/2006 (for loans made prior to 2 February 2006 the loan period is six years).
- Transfer of a site from a parent to a child including a foster child supported by the donor for five years prior to the child turning eighteen years of age, provided it is for the construction of the child’s principle private residence. The maximum marketable value of the site is €500,000 . The relief is limited to one site per child (this is limited to 1 acre exclusive of the area where the house is to be built). The threshold applies where both parents make a simultaneous disposal of a site to a child.
- Gains arising from personal injury compensation payments to permanently incapacitated individuals, where the exempt income and gains are greater than 50% of an individual’s total income and gains.
- Disposal of certain shares (see corporation tax section).
A new CGT relief for individual’s who reinvest the proceeds of an asset disposed of on or after 1 January 2010 on which capital gains tax has been paid into a new business is available.
The relief takes the form of a tax credit equal to the lower of the capital gains tax paid or 50% of the capital gains tax due on the disposal of the new business asset.
The reinvestment must take place between 1 January 2014 and 31 December 2018.
The chargeable business asset must be held for three years.
The minimum reinvestment required is €10,000.
The maximum investment is €15m and must be provided within six months of commencing to trade.
Investment may be in goodwill or an interest in an asset used wholly in a new business.
This includes new ordinary shares in a qualifying company or holding company of a qualifying company which the individual owns a minimum of 15% and is a full time working director.
Further reinvestments in a future new business up to 31 December 2018 will also qualify for relief.
Relief is only given at the time of disposal of the second asset as opposed to at the time of the investment.
Relief applies from 1 January 2014
No Capital Gains Tax will apply to gains on the ultimate disposal of purchases made between midnight on 6 December 2011 and the end of 2014, where the property is held for at least seven years. This includes all EU and EEA located properties. Gains on properties held for longer than seven years will be time apportioned.
Revised Entrepreneur Rate
A reduced rate of CGT of 10% from 1 January 2017 (20% in 2016) will apply in respect of a chargeable gain or chargeable gains in the case of a disposal or disposals of chargeable business assets made by an individual on or after 1 January 2016 up to a lifetime limit of €1m. The chargeable business assets must have been owned by that individual for a minimum period of three years prior to the disposal of those assets.
The relief will not apply to disposals of chargeable business assets by companies or to disposals of development land or a business consisting of dealing in or developing land, a business consisting of the letting of land or buildings or
Where the business is carried on by a private company, individuals seeking to qualify for the relief must own not less
than 5% of the shares in the company or at least 5% of the shares in a holding company which owns 100% of the
company. The shareholder must have been a full-time working director of the company for a minimum period of three years prior to the disposal of the chargeable business assets
Turf-Cutting Compensation Scheme
No chargeable gain will be deemed to arise on compensation payments, whether in money or money’s worth made under the “Cessation of Turf Cutting Compensation Scheme”.
Capital Gains tax is a self-assessment tax. In summary, the following are the due payment and compliance dates:
There are two payment dates as follows:
|Period of Disposal||Date of Payment|
|1 January – 30 November 2016||15 December 2016|
|1 December – 31 December 2016||31 January 2017|
From 1 January 2014 any debt write off will not be allowed as a deduction in computing a chargeable gain if an asset is disposed of. If debt is written off after the asset is disposed of then the amount of debt write off is deemed to be a chargeable gain in the year that the debt is written off.
Where the proceeds of a sale of certain assets such as land and buildings are more than €500,000 a tax clearance certificate is required. In the absence of the certificate, the purchaser is obliged to deduct tax at 15% of the sale proceeds and pay the tax withheld to the Revenue within 30 days of making the deduction. This provision applies irrespective of the method of payment.
A credit will be available for the tax withheld against the purchasers CGT where the consideration for the disposal is in non-monetary format.
An agent may apply for a tax clearance certificate on behalf of a client.