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10 1990

FINANCE ACT, 1990

Chapter IX

Capital Gains Tax

Amendment of section 3 (taxation of capital gains and rate of charge) of Capital Gains Tax Act, 1975 .

82. —Subsection (3) (as amended by section 60 of the Finance Act, 1986 ) of section 3 of the Capital Gains Tax Act, 1975 , is hereby amended as respects chargeable gains accruing on any disposal made on or after the 6th day of April, 1990—

(a) by the deletion of paragraph (a), and

(b) by the deletion in paragraph (b) of “more than one year but”

and the said subsection, as so amended, is set out in the Table to this section.

TABLE

(3) Except as otherwise provided for by the Capital Gains Tax Acts, the rate of capital gains tax in respect of chargeable gains accruing to a person on the disposal of an asset shall be—

(b) 50 per cent. where his period of ownership of the asset is not more than three years,

(c) 35 per cent. where his period of ownership of the asset is more than three years but not more than six years, or

(d) in any other case, 30 per cent.,

and any reference in those Acts to the rate specified in this section shall be construed accordingly.

Amendment of section 36 (chargeable gains on disposals of development land) of Finance Act, 1982 .

83. Section 36 of the Finance Act, 1982 , is hereby amended—

(a) by the insertion in subsection (3) after “the 26th day of March, 1982,” of “and before the 6th day of April, 1990,”, and

(b) by the insertion of the following subsection after subsection (3):

“(3A) As respects chargeable gains accruing on relevant disposals made on or after the 6th day of April, 1990, section 3 (3) of the Principal Act (as amended by the Finance Act, 1990) shall have effect as if, in lieu of the rates of capital gains tax specified in paragraphs (b), (c) and (d) of that subsection, the following rates of capital gains tax applied:

(i) 50 per cent., or

(ii) in the case of such a relevant disposal which is a compulsory disposal by a person whose period of ownership of the asset is more than three years, 40 per cent.”,

and the said subsection (3), as so amended, is set out in the Table to this section.

TABLE

(3) As respects chargeable gains accruing on relevant disposals made on or after the 26th day of March, 1982, and before the 6th day of April, 1990, section 3 (3) of the Principal Act (as amended by this Act) shall have effect as if, in lieu of the rates of capital gains tax specified in paragraphs (a), (b) and (c) of that subsection, the following rates of capital gains tax applied:

(a) 60 per cent. where the period of ownership of the asset by the person making the disposal is not more than one year,

(b) (i) 50 per cent. where his period of ownership of the asset is more than one year, or

(ii) in the case of such a relevant disposal which is a compulsory disposal by a person whose period of ownership of the asset is more than three years, 40 per cent.

Amendment of section 26 (disposal of business or farm on retirement) of Capital Gains Tax Act, 1975 .

84. Section 26 of the Capital Gains Tax Act, 1975 , is hereby amended—

(a) by the insertion in subsection (3), after “family company”, of “other than a holding company,”,

(b) by the insertion of the following subsection after subsection (3):

“(3A) Where a disposal of qualifying assets includes a disposal of shares or securities of the individual's family company which is a holding company, the amount of the consideration to be taken into account for the purposes of subsection (1) in respect of those shares or securities shall be the proportion of the consideration for such shares or securities which is equal to the proportion which the part of the value of the assets (including cash) of the trading group (excluding shares or securities of one member of the group held by another member of the group) at the time of the disposal which is attributable to the value of the chargeable business assets of the trading group bears to the value of the total assets of the trading group.”,

and

(c) in subsection (6) (a)—

(i) by the insertion, before the definition of “chargeable business asset”, of the following:

“a company shall be deemed to be a ‘100 per cent. subsidiary’ of another company if and so long as not less than 100 per cent. of its ordinary share capital is owned directly or indirectly by that other company;”,

(ii) by the insertion, in the definition of “chargeable business asset”, after “family company” of “or by a company which is a member of a trading group of which the holding company is that individual's family company”,

(iii) by the insertion after the definition of “full-time working director” of the following:

“‘holding company’ means a company whose business (disregarding any trade carried on by it) consists wholly or mainly of the holding of shares or securities of one or more companies which are its 100 per cent. subsidiaries;”,

(iv) by the insertion, in the definition of “qualifying assets”, after “family company” of “or a member of a trading group of which the holding company is that individual's family company”, and

(v) by the insertion after the definition of “trading company” of the following:

“‘trading group’ means a group of companies consisting of the holding company and its 100 per cent. subsidiaries, the business of whose members, taken together, consists wholly or mainly of the carrying on of a trade or trades.”.

Amendment of section 27 (disposal within the family of business or farm) of Capital Gains Tax Act, 1975 .

85. —Section 27 (as amended by section 8 of the Capital Gains Tax (Amendment) Act, 1978 ) of the Capital Gains Tax Act, 1975 , is hereby amended by the substitution, in subsection (3), of “Subsection (3) or (3A), as the case may be, of section 26” for “Section 26 (3)”.

Amendment of Schedule 1 (computational rules) to Capital Gains Tax Act, 1975 .

86. —As respects appropriations to stock in trade on or after the passing of this Act, paragraph 15 of Schedule 1 to the Capital Gains Tax Act, 1975 , is hereby amended by the insertion, after the proviso to subparagraph (3), of the following additional proviso:

“Provided also that an election under this subparagraph shall not be made in any case where application of the provisions of subparagraph (1) would give rise to an allowable loss.”.

Application to unit trusts of paragraph 2 (reorganisation or reduction of share capital) of Schedule 2 to Capital Gains Tax Act, 1975 .

87. —Schedule 2 to the Capital Gains Tax Act, 1975 , is hereby amended by the insertion after paragraph 2 of the following paragraph:

“2A.— (1) In this paragraph, references to a reorganisation of units in a trust scheme include—

(a) any case where persons are, whether for payment or not, allotted units in the scheme in respect of and in proportion to (or as nearly as may be in proportion to) their holdings of units in the scheme or of any class of units in the scheme, and

(b) any case where there are more than one class of units and the rights attached to units of any class are altered.

(2) Paragraph 2 shall apply with any necessary adaptation in relation to a reorganisation or reduction of units in any unit trust scheme registered under the Unit Trusts Act, 1972 , or authorised under the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 1989 (S.I. No. 78 of 1989), as if (except as respects subparagraph (6) of that paragraph)—

(a) that scheme were a company, and

(b) the units in that scheme were shares in the company:

Provided that, where, but for this proviso, this paragraph would apply to any reorganisation or reduction, in a year of assessment, of units in a unit trust scheme so that units which are deemed not to be chargeable assets for that year for the purposes of this Act would be treated as ‘original shares’ or a ‘new holding’ within the meaning of paragraph 2 (1), then paragraph 2 shall not apply to that reorganisation or reduction of units in the unit trust scheme.

(3) The references in subparagraph (2) (including the proviso thereto) to paragraph 2 do not include references to that paragraph as applied by paragraph 3 or 4.”.