REVENUE BRIEF ON CGT

/in ,

Following last month’s budget, and the recently planned clamp down on suspected tax evasion there has been some lingering confusion regarding what is required for various taxes. The main culprit of causing confusion is Capital Gains Tax (CGT). As a result, the revenue have recently released a brief which should clear up these lingering confusions and confirm for all when this tax and the associated documentation will be required.

The Revenue have stated that there were a number of requests for clarification from both tax practitioners and legal offices. It is hoped that this brief will shed some light on these lingering issues.

Please see the revenue brief below:

Clarification of circumstances where CGT clearance certificate not required

Arising from a number of requests for clarification from tax practitioners and legal offices, the purpose of this Brief is to set out particular circumstances in which the provisions of section 980 Taxes Consolidation Act 1997 (TCA) will not be applicable to disposals/sales of assets that are referred to in subsection (2) of that section.

Disposals of assets by bodies which carry an exemption from capital gains tax (CGT)

The section will not apply to a disposal of an asset by a person where any gain accruing on the disposal would not be a chargeable gain. Examples of such disposals in the TCA are:

  1. A disposal by a pension fund or arrangement carrying an exemption from CGT under section 608(2) or (2A).
  2. A disposal by an investment undertaking within section 739C.
  3. A disposal by a charity to which section 609(1) would be applicable.
  4. A disposal by the National Asset Management Agency (NAMA) or by any other body specified in Schedule 15.

Sales by financial institutions of loans secured on land in the State

The section will not apply to the sale by a financial institution of loans secured on land in the State where the sale arises in the ordinary course of the carrying out of its trading activities. In other words, the section will not apply to the sale of such a loan by a financial institution in circumstances where any profit on the sale would be treated as a trading receipt of its trade.

However, in regard to loans secured on land in the State, Revenue wishes to make clear its view that:

  1. In general, such loans are interests in land for the purposes of section 980, and
  2. In general, such loans are securities for the purposes of that section.

It follows, therefore, that the provisions of section 980 will have application where the sale of such a loan would be a disposal for CGT purposes.We hope that this will illuminate any grey areas of concern regarding the current rules of taxation, but should you require any further assistance, please don’t hesitate to get in touch with us here at DCA