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20 1975

CAPITAL GAINS TAX ACT, 1975

SCHEDULE 1

Computation Rules

Sections 11 and 51.

PART I

General

Preliminary

1.—(1) No deduction shall be allowable in a computation under this Act more than once from any sum or from more than one sum.

(2) References in this Schedule to sums taken into account as receipts or as expenditure in computing profits, gains or losses for the purposes of the Income Tax Acts shall include references to sums which would be so taken into account but for the fact that any profits or gains of a trade, profession or employment are not chargeable to income tax or that losses are not allowable for those purposes.

(3) In this Part references to income or profits charged or chargeable to tax include references to income or profits taxed or as the case may be taxable by deduction at source.

(4) For the purposes of any computation under this Schedule any necessary apportionments shall be made of any consideration or of any expenditure and the method of apportionment adopted shall, subject to the express provisions of this Schedule, be such method as appears to the inspector or on appeal the Appeal Commissioners to be just and reasonable.

(5) In this Schedule “renewals allowance” has the meaning assigned to it by paragraph 5 (3).

(6) Paragraph 6 and all other provisions for apportioning on a part disposal expenditure which is deductible in computing a gain, are to be operated before the operation of, and without regard to—

(a) section 13 (5) (married persons),

(b) section 28 (replacement of business and other assets),

(c) any other provision making an adjustment to secure that neither a gain nor a loss accrues on a disposal.

Exclusion from consideration for disposals of sums chargeable to income tax

2.—(1) There shall be excluded from the consideration for a disposal of assets taken into account in the computation under this Schedule of the gain accruing on that disposal any money or money's worth charged to income tax as income of, or taken into account as a receipt in computing income, profits, gains or losses for the purposes of the Income Tax Acts of, the person making the disposal:

Provided that the exclusion from consideration under this subparagraph shall not be taken as applying to a computation in accordance with the provisions of Case I of Schedule D for the purpose of restricting relief in respect of expenses of management under section 214 of the Income Tax Act, 1967 .

(2) Subparagraph (1) shall not be taken as excluding from the consideration so taken into account any money or money's worth which is taken into account in the making of a balancing charge under Part XVI of the Income Tax Act, 1967 .

(3) This paragraph shall not preclude the taking into account in a computation under this Schedule, as consideration for the disposal of an asset, of the capitalised value of a rent (as in a case where rent is exchanged for some other asset), or of a right of any other description to income or to payments in the nature of income over a period, or to a series of payments in the nature of income.

(4) In this paragraph “rent” includes any rent charge, fee farm rent and any payment in the nature of a rent.

Expenditure: general provisions

3.—(1) Subject to the provisions of this Act, the sums allowable as a deduction from the consideration in the computation under this Schedule of the gain accruing to a person on the disposal of an asset shall be restricted to—

(a) the amount or value of the consideration, in money or money's worth, given by him or on his behalf wholly and exclusively for the acquisition of the asset, together with the incidental costs to him of the acquisition or, if the asset was not acquired by him, any expenditure wholly and exclusively incurred by him in providing the asset,

(b) the amount of any expenditure wholly and exclusively incurred on the asset by him or on his behalf for the purpose of enhancing the value of the asset, being expenditure reflected in the state or nature of the asset at the time of the disposal, and any expenditure wholly and exclusively incurred by him in establishing, preserving or defending his title to, or to a right over, the asset,

(c) the incidental costs to him of making the disposal.

(2) For the purposes of this paragraph and for the purposes of all other provisions of this Act, as respects the person making the disposal, the incidental costs to him of the acquisition of the asset or of its disposal shall consist of expenditure wholly and exclusively incurred by him for the purposes of the acquisition or, as the case may be, the disposal, being fees, commission or remuneration paid for the professional services of any surveyor or valuer, or auctioneer, or accountant, or agent, or legal adviser and costs of transfer or conveyance (including stamp duty) together—

(a) in the case of the acquisition of an asset, with costs of advertising to find a seller, and

(b) in the case of a disposal, with costs of advertising to find a buyer and costs reasonably incurred in making any valuation or apportionment required for the purposes of the computation under this Schedule, including in particular expenses reasonably incurred in ascertaining market value where required by this Act.

(3) (a) Where—

(i) a company incurs expenditure on the construction of any building, structure or works, being expenditure allowable as a deduction under subparagraph (1) in computing a gain accruing to the company on the disposal of the building, structure or works, or of any asset comprising it,

(ii) that expenditure was defrayed out of borrowed money, and

(iii) the company charged to capital all or any part of the interest on that borrowed money referable to a period ending on or before the disposal,

the sums so allowable under the said subparagraph (1) shall include the amount of that interest charged to capital except in so far as such interest has been taken into account for the purposes of relief under the Income Tax Acts, or could have been so taken into account but for an insufficiency of income or profits or gains.

(b) Subject to clause (a), no payment of interest shall be allowable as a deduction under this paragraph.

(4) Without prejudice to the provisions of paragraph 4, there shall be excluded from the sums allowable as a deduction under this paragraph any premium or other payments made under a policy of insurance of the risk of any kind of damage or injury to, or loss or depreciation of, the asset.

(5) In the case of a gain accruing to a person on the disposal of, or of a right or interest in or over, an asset to which he became absolutely entitled as legatee or as against the trustees of settled property—

(a) any expenditure within subparagraph (2) incurred by him in relation to the transfer of the asset to him by the personal representatives or trustees, and

(b) any such expenditure incurred in relation to the transfer of the asset by the personal representatives or trustees,

shall be allowable as a deduction under this paragraph.

(6) Subject to the provisions of this Act as regards double taxation relief, the tax chargeable under the law of any country outside the State on the disposal of an asset which is borne by the person making the disposal shall be allowable as a deduction in the computation under this Schedule.

(7) There shall be excluded from the computation under this Schedule any expenditure which has been or is to be met directly or indirectly by any government, by any board established by statute or by any public or local authority whether in the State or elsewhere.

Exclusion of expenditure by reference to income tax

4.—(1) There shall be excluded from the sums allowable under paragraph 3 as a deduction any expenditure allowable as a deduction in computing the profits or gains or losses of a trade or profession for the purposes of income tax or allowable as a deduction in computing any other income or profits or gains or losses for the purposes of the Income Tax Acts and any expenditure which, although not so allowable as a deduction in computing any losses, would be so allowable but for an insufficiency of income or profits or gains; and this subparagraph applies irrespective of whether effect is or would be given to the deduction in computing the amount of tax chargeable or by discharge or repayment of tax or in any other way.

(2) Without prejudice to the provisions of subparagraph (1), there shall be excluded from the sums allowable under paragraph 3 as a deduction any expenditure which, if the assets, or all the assets to which the computation relates, were, and had at all times been, held or used as part of the fixed capital of a trade the profits or gains of which were chargeable to income tax would be allowable as a deduction in computing the profits or gains or losses of the trade for the purposes of the Income Tax Acts.

Restriction of losses by reference to capital allowances and renewals allowances

5.—(1) Paragraph 4 shall not require the exclusion from the sums allowable as a deduction under paragraph 3 of any expenditure as being expenditure in respect of which a capital allowance or renewals allowance is made, but in the computation under this Schedule of the amount of a loss accruing to the person making the disposal, there shall be excluded from the sums allowable as a deduction any expenditure to the extent to which any capital allowance or renewals allowance has been or may be made in respect of it.

(2) If the person making the disposal acquired the asset—

(a) by a transfer by way of sale in relation to which an election under section 299 (4) of the Income Tax Act, 1967 , was made, or

(b) by a transfer to which section 277 (5) or 278 of that Act applies,

(being provisions under which a transfer is treated for the purposes of capital allowances as being made at written down value), this paragraph shall apply as if any capital allowance made to the transferor in respect of the asset had (except so far as any loss to the transferor was restricted under those provisions) been made to the person making the disposal (that is, the transferee); and where the transferor acquired the asset by such a transfer, capital allowances which by virtue of this subparagraph can be taken into account in relation to the transferor shall also be taken into account in relation to the transferee (that is, the person making the disposal), and so on for any series of transfers before the disposal.

(3) In this paragraph “renewals allowance” means a deduction allowable in computing profits or gains or losses for the purposes of the Income Tax Acts by reference to the cost of acquiring an asset in replacement of another asset, and for the purposes of this Schedule a renewals allowance shall be regarded as a deduction allowable in respect of the expenditure incurred on the asset which is being replaced.

(4) The amount of capital allowances to be taken into account under this paragraph in relation to a disposal includes any allowances falling to be made by reference to the event which is the disposal, and there shall be deducted from the amount of the allowances the amount of any balancing charge to which effect has been or is to be given by reference to the event which is the disposal, or any earlier event, and of any balancing charge to which effect might have been so given but for the making of an election under section 273 of the Income Tax Act, 1967 (option in case of replacement of machinery or plant).

Part disposals

6.—(1) Where a person disposes of an interest or rights in or over an asset and, generally wherever on the disposal of an asset, any description of property derived from that asset remains undisposed of, the sums which under clauses (a) and (b) of paragraph 3 (1) are attributable to the asset shall, both for the purposes of the computation under this Schedule of the gain accruing on the disposal and for the purpose of applying this Schedule in relation to the property which remains undisposed of, be apportioned.

(2) Such portion of the expenditure shall be allowable as a deduction in computing under this Schedule the amount of the gain accruing on the disposal as bears the same proportion to the total of the said sums as the value of the consideration for the disposal bears to the aggregate of the said value and the market value of the property which remains and the balance of the expenditure shall be attributed to the property which remains undisposed of.

(3) Any apportionment to be made in pursuance of this paragraph shall be made before operating the provisions of paragraph 5, and if, after a part disposal, there is a subsequent disposal of an asset the capital allowances or renewals allowances to be taken into account in pursuance of that paragraph in relation to the subsequent disposal shall, subject to the next following subparagraph, be those referable to the sums which under clauses (a) and (b) of paragraph 3 (1) are attributable to the asset whether before or after the part disposal, but those allowances shall be reduced by the amount (if any) by which the loss on the earlier disposal was restricted under the provisions of that paragraph.

(4) This paragraph shall not be taken as requiring the apportionment of any expenditure which, on the facts, is wholly attributable to the asset or part of the asset which is disposed of, or wholly attributable to the asset or part of the asset which remains undisposed of.

Assets derived from other assets

7.—(1) If and so far as, in a case where assets have been merged or divided or have changed their nature or rights or interests in or over assets have been created or extinguished, the value of an asset is derived from any other asset in the same ownership, an appropriate proportion of the sums allowable as a deduction in respect of the other asset under clauses (a) and (b) of paragraph 3 (1) shall, both for the purpose of the computation of a gain accruing on the disposal of the first-mentioned asset and, if the other asset remains in existence, on a disposal of that other asset, be attributed to the first-mentioned asset.

(2) The appropriate proportion shall be computed by reference to the market value at the time of disposal, of the assets (including rights or interests in or over the assets) which have not been disposed of and the consideration received in respect of the assets (including rights or interests in or over the assets) disposed of.

Wasting assets

8.—(1) In this Schedule “wasting asset” means an asset with a predictable life not exceeding fifty years but so that—

(a) freehold land shall not be a wasting asset whatever its nature, and whatever the nature of the buildings or works on it,

(b) “life”, in relation to any tangible movable property, means useful life, having regard to the purpose for which the tangible assets were acquired or provided by the person making the disposal,

(c) plant and machinery shall in every case be regarded as having a predictable life of less than fifty years, and in estimating that life it shall be assumed that its life will end when it is finally put out of use as being unfit for further use, and that it is going to be used in the normal manner and to the normal extent and is going to be so used throughout its life as so estimated, and

(d) a life interest in settled property shall not be a wasting asset until the predictable expectation of life of the life tenant is fifty years or less, and the predictable life of life interests in settled property and of annuities shall be ascertained from actuarial tables approved by the Revenue Commissioners.

(2) In this Schedule “the residual or scrap value”, in relation to a wasting asset, means the predictable value, if any, which the wasting asset will have at the end of its predictable life as estimated in accordance with this paragraph.

(3) The question what is the predictable life of an asset, and the question what is its predictable residual or scrap value at the end of that life, if any, shall, so far as those questions are not immediately answered by the nature of the asset, be taken, in relation to any disposal of the asset, as they were known or ascertainable at the time when the asset was acquired or provided by the person making the disposal.

Wasting assets: restriction of allowable expenditure

9.—(1) In the computation under this Schedule of the gain accruing on the disposal of a wasting asset, it shall be assumed—

(a) that any expenditure attributable to the asset under paragraph 3 (1) (a), after deducting the residual or scrap value, if any, of the asset, is written off at a uniform rate from its full amount at the time when the asset is acquired or provided, to nothing at the end of its life, and

(b) that any expenditure attributable to the asset under paragraph 3 (1) (b) is written off at a uniform rate from the full amount of that expenditure at the time when that expenditure is first reflected in the state or nature of the asset to nothing at the end of its life.

(2) If any expenditure attributable to the asset under paragraph 3 (1) (b) creates or increases a residual or scrap value of the asset, the residual or scrap value to be deducted under subparagraph (1) (a) shall be the residual or scrap value so created or as so increased.

(3) Any expenditure written off under this paragraph shall not be allowable as a deduction under paragraph 3.

Wasting assets qualifying for capital allowances

10.—(1) Paragraph 9 shall not apply in relation to a disposal of an asset—

(a) which, from the beginning of the period of ownership of the person making the disposal to the time when the disposal is made, is used and used solely for the purposes of a trade or profession and in respect of which that person has claimed or could have claimed any capital allowance in respect of any expenditure attributable to the asset under clause (a) or (b) of paragraph 3 (1), or

(b) on which the person making the disposal has incurred any expenditure which has otherwise qualified in full for any capital allowance.

(2) In the case of the disposal of an asset which, in the period of ownership of the person making the disposal, has been used partly for the purposes of a trade or profession and partly for other purposes, or has been used for the purposes of a trade or profession for part of that period, or which has otherwise qualified in part only for capital allowances—

(a) the consideration for the disposal, and any expenditure attributable to the asset by clause (a) or (b) of paragraph 3 (1), shall be apportioned by reference to the extent to which that expenditure qualified for capital allowances,

(b) the computation under this Schedule shall be made separately in relation to the apportioned parts of the expenditure and consideration,

(c) paragraph 9 shall not apply for the purposes of the computation in relation to the part of the consideration apportioned to use for the purposes of the trade or profession, or to the expenditure qualifying for capital allowances,

(d) if an apportionment of the consideration for the disposal has been made for the purposes of making any capital allowance to the person making the disposal or for the purpose of making any balancing charge on him, that apportionment shall be employed for the purposes of this paragraph, and

(e) subject to clause (d), the consideration for the disposal shall be apportioned for the purposes of this paragraph in the same proportions as the expenditure attributable to the asset is apportioned under clause (a).

Contingent liabilities

11.—No allowance shall be made under paragraph 3—

(a) in the case of a disposal by way of assigning a lease of land or other property, for any liability remaining with, or assumed by, the person making the disposal by way of assigning the lease which is contingent on a default in respect of liabilities thereby or subsequently assumed by the assignee under the terms and conditions of the lease,

(b) for any contingent liability of the person making the disposal in respect of any covenant for quiet enjoyment or other obligation assumed—

(i) as vendor of land, or of any estate or interest in land,

(ii) as a lessor, or

(iii) as grantor of an option binding him to sell land or an interest in land or to grant a lease of land,

(c) for any contingent liability in respect of a warranty or representation made on a disposal by way of sale or lease of any property other than land:

Provided that if it is shown to the satisfaction of the inspector that any such contingent liability has become enforceable and is being or has been enforced, such adjustment, whether by way of discharge or repayment of tax or otherwise, shall be made as may be necessary.

Woodlands

12.—(1) In the computation under this Schedule of the gain accruing on the disposal by an individual of woodland, there shall be excluded—

(a) consideration for the disposal of trees growing on the land, and

(b) notwithstanding the provisions of section 8 (2), capital sums received under a policy of insurance in respect of the destruction of or damage or injury to trees by fire or other hazard on such land.

(2) In the computation under this Schedule so much of the cost of woodland shall be disregarded as is attributable to trees growing on the land.

(3) References in this paragraph to trees include references to saleable underwood.

Dealing in marketable securities, commodities, etc.: pooling

13.—(1) Any number of shares of the same class held by one person in one capacity shall for the purposes of this Act be regarded as indistinguishable parts of a single asset (in this paragraph referred to as a holding) growing or diminishing on the occasions on which additional shares of the class in question are acquired, or some of the shares of the class in question are disposed of.

(2) Without prejudice to the generality of subparagraph (1), a disposal of shares in a holding, other than the disposal outright of the entire holding, is a disposal of part of an asset and the provisions of this Act relating to the computation of a gain accruing on a disposal of part of an asset shall apply accordingly.

(3) Shares shall not be treated for the purposes of this paragraph as being of the same class unless they are so treated by the practice of a stock exchange in the State or elsewhere or would be so treated if dealt with on such a stock exchange, but shares shall be treated in accordance with this paragraph notwithstanding that they are identified in some other way by the disposal or by the transfer or delivery giving effect to it.

(4) This paragraph shall apply separately in relation to any shares of a company held by a person to whom they were issued as an employee of the company or of any other person on terms which restrict his rights to dispose of them, so long as those terms are in force, and, while applying separately to any such shares, shall have effect as if the owner held them in a capacity other than that in which he holds any other shares of the same class.

(5) Nothing in this paragraph shall be taken as affecting the manner in which the market value of any asset is to be ascertained.

(6) This paragraph, without subparagraph (3), shall apply in relation to a disposal of any assets as it applies in relation to a disposal of shares, where the assets are of a nature to be dealt in without identifying the particular assets disposed of or acquired.

(7) This paragraph shall not apply in relation to shares held by a person on the 6th day of April, 1974, while that person continues to hold them and, in particular, shall not apply in relation to a disposal of the shares by him.

(8) This paragraph applies in relation to securities as it applies in relation to shares.

(9) This paragraph shall apply subject to the provisions of paragraph 14.

Disposal within four weeks of acquisition

14.—(1) Where the same person in the same capacity disposes of shares of the same class as shares which he acquired within four weeks preceding the disposal, the shares disposed of shall be identified with the shares so acquired within that four weeks.

(2) Where the quantity of shares of the same class disposed of exceeds the quantity of shares of the same class acquired within the period of four weeks preceding the disposal, the excess shall be identified with shares of the same class acquired otherwise than within the period of four weeks.

(3) Where a loss accrues to a person on the disposal of shares and he re-acquires shares of the same class within four weeks after the disposal, that loss shall not be allowable under section 12 otherwise than by deduction from a chargeable gain accruing to him on the disposal of the shares re-acquired:

Provided that, if the quantity of shares so re-acquired is less than the quantity so disposed of, such proportion of the loss shall be allowable under section 12 as bears the same proportion to the loss on the disposal as the quantity not re-acquired bears to the quantity disposed of.

(4) In the case of a man and his wife living with him—

(a) subparagraphs (1) and (2) shall, with the necessary modifications, apply where shares are acquired by the one of them and shares of the same class are disposed of within four weeks by the other; and

(b) subparagraph (3) shall, with the necessary modifications, apply also where a loss on the disposal accrues to the one of them and the acquisition after the disposal is made by the other.

(5) This paragraph applies in relation to securities as it applies in relation to shares.

(6) Paragraphs 13, 16 and 20 shall apply subject to subparagraph (1).

Appropriations to and from stock in trade

15.—(1) Where an asset acquired by a person otherwise than as trading stock of a trade carried on by him is appropriated by him for the purposes of the trade as trading stock (whether on the commencement of the trade or otherwise) and, if he had then sold the asset for its market value, a chargeable gain or allowable loss would have accrued to him, he shall be treated as having thereby disposed of the asset by selling it for its then market value.

(2) If at any time an asset forming part of the trading stock of a person's trade is appropriated by him for any other purpose, or is retained by him on his ceasing to carry on the trade, he shall be treated as having acquired it at that time for a consideration equal to the amount brought into the accounts of the trade in respect of it for purposes of income tax on the appropriation or on his ceasing to carry on the trade, as the case may be.

(3) Subparagraph (1) shall not apply in relation to a person's appropriation of an asset for the purposes of a trade if he is chargeable to income tax in respect of the profits of the trade under Case I of Schedule D, and elects that instead the market value of the asset at the time of the appropriation shall, in computing the profits of the trade for purposes of income tax, be treated as reduced by the amount of the chargeable gain or increased by the amount of the allowable loss referred to in that subparagraph, and where the subparagraph does not apply by reason of such an election, the profits of the trade shall be computed accordingly:

Provided that if a person making an election under this subparagraph is at the time of the appropriation carrying on the trade in partnership with others, the election shall not have effect unless concurred in by the others.

PART II

Assets Held on the 6th day of April, 1974

Quoted securities

16.—(1) This paragraph applies—

(a) to shares and securities which on the 6th day of April, 1974, had quoted market values on a stock exchange in the State or elsewhere, or which had such quoted market values at any time in the period of six years ending on the 6th day of April, 1974, and

(b) to rights of unit holders in any unit trust (including any unit trust legally established outside the State) the prices of which are published regularly by the managers of the unit trust.

(2) For the purposes of this Act it shall be assumed, wherever relevant, that any assets to which this paragraph applies were sold, and immediately re-acquired, at their market value on the 6th day of April, 1974, by the person who held them on that date.

(3) Subparagraph (2) shall not apply in relation to a disposal of assets—

(a) if on the assumption in that subparagraph a gain would accrue on that disposal to the person making the disposal and either a smaller gain or a loss would so accrue (computed in accordance with the provisions of Part I of this Schedule) if subparagraph (2) did not apply, or

(b) if on the assumption in subparagraph (2) a loss would so accrue and either a smaller loss or a gain would accrue if subparagraph (2) did not apply,

and accordingly the amount of the gain or loss accruing on the disposal shall be computed without regard to the provisions of this Part except that in a case where this subparagraph would otherwise substitute a loss for a gain or a gain for a loss it shall be assumed, in relation to the disposal, that the relevant assets were acquired by the owner for a consideration such that, neither a gain nor a loss accrued to him on making the disposal.

(4) This paragraph shall not apply in relation to a disposal of shares or securities of a company by a person to whom those shares were issued as an employee either of the company or of some other person on terms which restrict his rights to dispose of them.

(5) For the purpose of—

(a) identifying shares or securities held on the 6th day of April, 1974, with shares previously acquired, and

(b) identifying the shares or securities held on that date with shares or securities subsequently disposed of, and distinguishing them from shares or securities acquired subsequently,

so far as that identification is needed for the purposes of subparagraph (3), and so far as the shares or securities are of the same class, shares or securities acquired at an earlier time shall be deemed to be disposed of before shares or securities acquired at a later time.

Sales of land in the State reflecting development value

17.—(1) This paragraph shall apply in relation to a disposal of an asset which is land in the State—

(a) if, but for this paragraph, the expenditure allowable as a deduction in computing under this Schedule the gain accruing on the disposal would include any expenditure incurred before the 6th day of April, 1974, and

(b) if the consideration for the disposal exceeds what the market value of the asset would be if, immediately before the disposal, it had become unlawful to carry out any development (within the meaning of section 3 (1) of the Local Government (Planning and Development) Act, 1963) in, on or over the land other than development of the kinds specified in section 4 (1) of the said Act.

(2) For the purposes of this Act, it shall be assumed in relation to the disposal and, if it is a part disposal, in relation to any subsequent disposal of the asset which is land in the State that the asset was sold by the person making the disposal, and immediately re-acquired by him, at its market value on the 6th day of April, 1974.

(3) Subparagraph (2) shall apply also in relation to any prior part disposal of the asset and, if tax has been charged, or relief allowed, by reference to that part disposal in accordance with any other provision of this Act, all such adjustments shall be made, whether by way of assessment or discharge or repayment of tax as are required to give effect to the provisions of this subparagraph.

(4) Subparagraph (2) shall not apply in relation to a disposal of assets—

(a) if on the assumption in that subparagraph a gain would accrue on that disposal to the person making the disposal and either a smaller gain or a loss would so accrue (computed in accordance with the provisions of Part I of this Schedule) if subparagraph (2) did not apply, or

(b) if on the assumption in subparagraph (2) a loss would so accrue and either a smaller loss or a gain would accrue if subparagraph (2) did not apply,

and accordingly the amount of the gain or loss accruing on the disposal shall be computed without regard to the provisions of this Part except that in a case where this subparagraph would otherwise substitute a loss for a gain or a gain for a loss it shall be assumed, in relation to the disposal, that the relevant assets were acquired by the owner, for a consideration such that neither a gain nor a loss accrued to him on making the disposal.

Apportionment of gain or loss by reference to uniform rate of growth over period of ownership

18.—(1) This paragraph applies subject to the provisions of paragraphs 16 and 17.

(2) On the disposal of assets by a person whose period of ownership began before the 6th day of April, 1974, only so much of any gain accruing on the disposal as is under this paragraph to be apportioned to the period beginning with the 6th day of April, 1974, shall be a chargeable gain.

(3) Subject to the following provisions of this Schedule, the gain shall be assumed to have grown at a uniform rate from nothing at the beginning of the period of ownership to its full amount at the time of the disposal and the portion attributable to the period beginning on the 6th day of April, 1974, shall be determined accordingly.

(4) If any of the expenditure which is allowable as a deduction in the computation under this Schedule of the gain is within paragraph 3 (1) (b)—

(a) the gain shall be attributed to the expenditure, if any, allowable under paragraph 3 (1) (a) as one item of expenditure, and to the respective items of expenditure under paragraph 3 (1) (b) in proportion to the respective amounts of those items of expenditure, taking into account the period which has elapsed between the time when each item of expenditure was first reflected in the value of the asset and the time of disposal,

(b) subparagraph (3) shall apply to the part of the gain attributed to the expenditure under paragraph 3 (1) (a),

(c) each part of the gain attributed to the items of expenditure under paragraph 3 (1) (b) shall be assumed to have grown at a uniform rate from nothing at the time when the relevant item of expenditure was first reflected in the value of the asset to the full amount of that part of the gain at the time of the disposal and the portion of each part of the gain so treated as growing before the 6th day of April, 1974, shall not be chargeable and each portion treated as growing on and after that date shall be chargeable.

(5) In a case within subparagraph (4) where there is no expenditure under paragraph 3 (1) (a) or such expenditure is, compared with any item of expenditure under paragraph 3 (1) (b), disproportionately small having regard to the value of the asset immediately before the subsequent item of expenditure was incurred, the part of the gain which is not attributable to the enhancement of the value of the asset due to any item of expenditure under paragraph 3 (1) (b) shall be deemed to be attributed to expenditure incurred at the beginning of the period of ownership and allowable under paragraph 3 (1) (a), and the part or parts of the gain attributable to expenditure under paragraph 3 (1) (b), shall be reduced accordingly.

(6) In the case of an asset the cost of which cannot be established or which was acquired otherwise than under a bargain at arm's length, the beginning of the period over which a gain, or a part of a gain, is, under subparagraphs (3) and (4), assumed to have grown shall not be earlier that the 6th day of April, 1964, and this subparagraph shall have effect notwithstanding any provision of this Act.

(7) If in pursuance of paragraph 6 the market value of an asset at a date before the 6th day of April, 1974, is to be ascertained, subparagraphs (3) to (6) shall have effect as if that asset had been on that date sold by the owner, and immediately re-acquired by him, at that market value.

(8) If in pursuance of paragraph 6 the market value of an asset at a date on or after the 6th day of April, 1974, is to be ascertained, subparagraphs (3) to (5) shall have effect as if the asset had been on that date sold by the owner, and immediately re-acquired by him, at that market value, and accordingly, the computation of any gain on a subsequent disposal of that asset shall be computed—

(a) by apportioning in accordance with this paragraph the gain or loss over a period ending on the said date (the date of the part disposal), and

(b) by bringing into account the entire gain or loss over the period from the date of the part disposal to the date of subsequent disposal.

(9) For the purposes of this paragraph, the period of ownership of an asset shall, where under paragraph 7 account is to be taken of expenditure in respect of an asset from which the asset disposed of was derived, or where it would so apply if there were any relevant expenditure in respect of that other asset, include the period of ownership of that other asset.

(10) If under this paragraph part only of a gain is a chargeable gain, the proportion in section 25 (3) (private residence) shall be applied to that part, instead of to the whole of the gain.

Election for valuation on the 6th day of April, 1974

19.—(1) If the person making a disposal so elects, paragraph 18 shall not apply in relation to that disposal and it shall be assumed, both for the purposes of computing under this Schedule the gain accruing to that person on the disposal, and for all other purposes both in relation to that person and other persons, that the assets disposed of, and any assets of which account is to be taken in relation to the disposal under paragraph 7, being assets which were in the ownership of the said person on the 6th day of April, 1974, were on that date sold, and immediately re-acquired, by him at their market value on the 6th day of April, 1974.

(2) Subparagraph (1) shall not apply in relation to a disposal of assets to the extent that on the assumption in that subparagraph a loss would accrue on that disposal to the person making the disposal and either a smaller loss or a gain would accrue if the said subparagraph (1) did not apply, but in a case where this subparagraph would otherwise substitute a gain for a loss it shall be assumed, in relation to the disposal, that the relevant assets were acquired by the owner, for a consideration such that, on the disposal, neither a gain nor a loss accrued to the person making the disposal:

Provided that nothing in this subparagraph shall be taken as bringing paragraph 18 into operation where an election under subparagraph (1) has been made.

(3) An election under this paragraph is irrevocable.

(4) An election may not be made under this paragraph as respects, or in relation to, an asset the market value of which at a date on or after the 6th day of April, 1974, and before the date of the disposal to which the election relates, is to be ascertained in pursuance of paragraph 6.

(5) An election under this paragraph shall be made by notice in writing to the inspector given within two years from the end of the year of assessment in which the disposal is made or such further time as the Revenue Commissioners may by notice in writing allow.

(6) This paragraph shall not apply to a disposal of an asset on which the person making the disposal has incurred any expenditure which has qualified for any capital allowance or renewals allowance.

Shares, commodities, etc.

20.—(1) This paragraph has effect as respects shares held by any person on the 6th day of April, 1974, other than shares which are to be treated under this Act as if disposed of and immediately re-acquired by him on that date.

(2) This paragraph applies to securities as it applies to shares.

(3) For the purpose of—

(a) identifying the shares so held on the 6th day of April, 1974, with shares previously acquired, and

(b) identifying the shares so held on that date with shares subsequently disposed of, and distinguishing them from shares acquired subsequently,

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.

(4) Shares shall not be treated for the purposes of this paragraph as being of the same class unless if dealt with on a stock exchange in the State or elsewhere they would be so treated, but shall be treated in accordance with this paragraph notwithstanding that they are identified in a different way by a disposal or by the transfer or delivery giving effect to it.

(5) This paragraph, without subparagraph (4), shall apply in relation to any assets, other than shares, which are of a nature to be dealt with without identifying the particular assets disposed of or acquired.

Reorganisation of share capital, conversion of securities, etc.

21.—(1) For the purposes of this Act, it shall be assumed that any shares or securities held by a person on the 6th day of April, 1974 (identified in accordance with paragraph 20), which, in accordance with paragraphs 2 to 5 of Schedule 2, are to be regarded as being or forming part of a new holding, were sold and immediately re-acquired by him on the 6th day of April, 1974, at their market value on that date.

(2) If the event which results in a new holding in accordance with the said paragraphs 2 to 5 occurs at a time after the 5th day of April, 1974, subparagraphs (3) to (5) of paragraph 18 shall have effect as if the new holding had at that time been sold by the owner, and immediately re-acquired by him, at its market value at that time, and accordingly, the amount of any gain on a disposal of the new holding or any part of it shall be computed—

(a) by apportioning in accordance with paragraph 18 the gain or loss over a period ending at the said time, and

(b) by bringing into account the entire gain or loss over the period from that time to the date of the disposal.

(3) This paragraph shall not apply in relation to a reorganisation of a company's share capital if the new holding differs only from the original shares in being a different number, whether greater or less, of shares of the same class as the original shares.

Assets transferred to controlled companies

22.—(1) This paragraph has effect where—

(a) at any time, including a time before the 6th day of April, 1974, any of the persons having control of a controlled company, or any person who (in the terms of section 33) is connected with a person having control of a controlled company, has transferred assets to the company, and

(b) paragraph 18 applies in relation to a disposal by one of the persons having control of the company of shares or securities in the company, or in relation to a disposal by a person having, up to the time of disposal, a holding of shares or securities in the company, being in either case a disposal after the transfer of the assets.

(2) So far as the gain accruing to the said person on the disposal of the shares is attributable to a profit on the assets so transferred, the period over which the gain is to be treated under paragraph 18 as growing at a uniform rate shall begin with the time when the assets were transferred to the company, and accordingly a part of a gain attributable to a profit on assets transferred on or after the 6th day of April, 1974, shall all be a chargeable gain.

(3) This paragraph shall not apply where a loss, and not a gain, accrues on the disposal.