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FINANCE ACT, 1993
Residential Property Tax
Clearance on sale of certain residential property.
107. —Part VI of the Finance Act, 1983 , is hereby amended by the insertion after section 110 of the following section—
“110A.—(1) in this section—
‘consideration’ means the amount of consideration in a sale which is attributable to residential property;
‘prior owner’, in relation to the sale of an estate or interest in residential property, means a person who, in addition to being the owner of that property, occupied that property immediately prior to the contract for sale;
‘the purchaser’ has the meaning assigned to it by subsection (2);
‘relevant valuation date’ means—
(a) where the date of the contract for sale is the 5th day of April in a year, that date, and
(b) in any other case, the 5th day of April immediately preceding the date of the contract for sale;
‘sale’ includes a transaction whereby more than one estate or interest in a unit of residential property is sold to the same purchaser;
‘the specified amount’, in relation to the consideration in a sale of an estate or interest in residential property, means the amount of the money consideration in the sale, or, if less, the amount determined by the following formula—
B (1.5 per cent. × A)
A is the difference between the consideration and the general exemption limit on the relevant valuation date, and
B is 5 or, where the number of valuation dates concerned is less than 5, the number of valuation dates, after the 4th day of April, 1983, on which such beneficial ownership in possession in that property of which the purchaser would have notice, being notice within the meaning of section 3 (1) of the Conveyancing Act, 1882, is wholly or partly the beneficial ownership of a person who the purchaser has reason to believe may be a prior owner;
‘tax due and payable’ means tax and interest due and payable in respect of every valuation date occurring on or before the date of the contract for sale referred to in subsection (2);
‘the vendor’ has the meaning assigned to it by subsection (2).
(2) In the event of a sale of an estate or interest in residential property—
(a) the date of the contract for which is on or after the 1st day of August, 1993, and
(b) the consideration for which exceeds the general exemption limit applying on the relevant valuation date,
the person by or through whom such consideration falls to be paid (in this section referred to as ‘the purchaser’) shall, subject to subsection (6), deduct from that consideration an amount equal to the specified amount, and pay it to the Commissioners forthwith, and the person to whom the consideration falls to be paid (in this section referred to as ‘the vendor’) shall allow such deduction upon receipt of the residue of the consideration, and the purchaser shall, on proof of payment to the Commissioners of the amount so deducted, be acquitted and discharged of so much money as is represented by the deduction as if that sum had been actually paid to the vendor on the day on which payment was made to the Commissioners.
(3) Upon making a deduction under subsection (2), the purchaser shall forthwith deliver to the Commissioners, on a form provided by them, a return of the consideration and of the amount deducted therefrom.
(4) Any deduction to be made by a purchaser under subsection (2) may at any time, so far as it has not been paid to the Commissioners, be collected and recovered from the purchaser by the Commissioners as if it were tax and, accordingly, the provisions of section 110 shall apply to any such deduction.
(5) (a) Where, in the opinion of the Commissioners, the purchaser in a sale referred to in subsection (2) has failed in his obligation to pay in full to the Commissioners the amount to be deducted under that subsection, the Commissioners shall, to the best of their knowledge, information and belief, estimate the amount of the deduction which fell to be made under that subsection, and the amount of that estimate shall, for the purposes of subsection (4), be deemed to be the actual amount of the deduction which fell to be made under subsection (2).
(b) Any purchaser who is aggrieved by an estimate made by the Commissioners under this subsection may appeal to the Appeal Commissioners against that estimate, and the provisions of section 109 shall, with any necessary modifications, apply to an appeal under this subsection as if it were an appeal against an assessment to tax.
(6) (a) Where, before a specified amount falls to be deducted under subsection (2), application to the Commissioners on a form provided by them is made by a vendor, and the Commissioners are satisfied that there is no tax due and payable by that vendor in respect of any property, they shall issue a certificate that the appropriate proportion of the specified amount shall not be deducted under subsection (2), and for this purpose appropriate proportion means the proportion which that vendor's share of the total consideration bears to the total consideration.
(b) Where a certificate has issued in respect of any vendor under paragraph (a), no reduction in the interest of that vendor in the consideration shall be made by virtue of any balance of a specified amount falling to be deducted in respect of any other vendor.
(7) An appropriate proportion of any payment made to the Commissioners under subsection (2) shall be regarded as having come out of each appropriate vendor's interest in the total consideration, and where the Commissioners are satisfied in respect of any appropriate vendor that there is no tax due and payable by that vendor in respect of any property, they shall, save to the extent of any relief given under subsection (8) (b), repay to that vendor his appropriate proportion of the payment made, and for the purposes of this section an appropriate vendor shall be any vendor in respect of whom a certificate has not issued under subsection (6), and his appropriate proportion of the payment shall be the proportion which his share of the total consideration bears to the aggregate of his share and the shares of all other appropriate vendors (if any) in the total consideration, and the provisions of section 107 (2) shall apply, with any necessary modifications, to any repayment which so falls to be made.
(8) Where any estate or interest in residential property, the subject matter of a sale referred to in subsection (2), is held by a vendor—
(a) as trustee for another person absolutely entitled as against the trustee, or for any person who would be so entitled but for being an infant or other person under disability (or for two or more persons who are or would be jointly so entitled), this section shall apply as if the estate or interest were vested in, and the acts of the trustee in relation to the estate or interest were the acts of, the person or persons for whom he is the trustee, or
(b) as trustee for one or more prior owners not absolutely entitled as against the trustee, subsections (6) and (7) shall apply as if the reference to tax due and payable by a vendor were a reference to the tax due and payable by all of those prior owners, and, where a payment has been made to the Commissioners under subsection (2)—
(i) if the Commissioners are satisfied that there is no tax due and payable by any one or more of those prior owners, they shall, in relation to each prior owner in respect of whom they are so satisfied, give to that vendor, on an application to them in that behalf on a form provided by them, a certificate to that effect,
(ii) that vendor shall be entitled to recover an equal share of his appropriate proportion of the payment from each of those prior owners in respect of whom the Commissioners have refused to issue such a certificate and to so recover in any court of competent jurisdiction as if it were a simple contract debt, and
(iii) appropriate relief shall, on a claim being made in that behalf, be given to any prior owner in respect of whom the vendor has made recovery, or, where the Commissioners are satisfied that the vendor is unable to make full recovery, to that vendor, whether by discharge, or repayment or otherwise.
(9) Where, on or after the date of the passing of the Finance Act, 1993, a person (in this subsection referred to as ‘the transferor’) transfers to his spouse (in this subsection, and in subsection (10), referred to as ‘the transferee’) by sale or other inter vivos disposition, an estate or interest in residential property, any tax and interest due and outstanding from the transferor on the date of such transfer shall be and remain for 12 years from that date a first charge on that estate or interest, and such tax and interest shall have priority over all charges and interests created by the transferee or any person claiming in the right or on the behalf of the transferee:
(a) where, subsequent to the transfer, there is a bona fide sale for full consideration in money or money's worth or a mortgage of the estate or interest transferred, that estate or interest shall not remain charged as against the purchaser or mortgagee unless the amount of the consideration or the amount of the mortgage debt exceeds the general exemption limit applying on the valuation date immediately preceding the date of the agreement for sale or mortgage;
(b) tax or interest shall not be a charge on property as against a bona fide purchaser or mortgagee for full consideration in money or money's worth without notice, or a person deriving title from or under such a purchaser or mortgagee.
(10) Where the tax and interest charged on property under subsection (9) has been paid, the Commissioners shall, on request, give a certificate to that effect to the transferee or to a person deriving title from him, which shall discharge that property from such tax and interest.
Amendment of section 112 (penalties) of Finance Act, 1983.