Chapter 5

Capital Gains Tax

65. —(1) The Principal Act is hereby amended—

(a) in section 28, by the substitution in subsection (3) of “20 per cent” for “40 per cent”,

(b) in section 594, by the insertion after paragraph (e) of subsection (2) of the following paragraph:

“(f) Notwithstanding subsection (3) of section 28, the rate of capital gains tax in respect of a relevant gain accruing to a person shall be 40 per cent”,

and

(c) in Chapter 2 of Part 22, by the insertion after section 649 of the following section:

“Relevant disposals: rate of charge.

649A.—Notwithstanding subsection (3) of section 28, the rate of capital gains tax in respect of chargeable gains accruing to a person on relevant disposals, other than a relevant disposal to which section 650 refers, shall be 40 per cent.”.

(2) Subsection (1) shall apply—

(a) as respects paragraphs (a) and (c), in relation to disposals made on or after the 3rd day of December, 1997, and

(b) as respects paragraph (b), in relation to disposals made on or after the 12th day of February, 1998.

66. —The Principal Act is hereby amended in Part 27 by the insertion after Chapter 2 of the following Chapter:

“CHAPTER 3

Offshore funds: supplementary provisions

Capital gains tax: rate of charge.

747A.—(1) In this section ‘material interest’, ‘non-qualifying fund’ and ‘offshore fund’ shall have the same meaning as is assigned to them in Chapter 2 of this Part.

(2) This section shall apply to a disposal, on or after the 12th day of February, 1998, by a person of an asset, if at the time of the disposal—

(a) the asset constitutes a material interest in an offshore fund which is not nor was at any material time a non-qualifying offshore fund, or

(b) the asset constitutes an interest in a company resident in the State or in a unit trust scheme, the trustees of which are at that time resident in the State and at a material time on or after the 1st day of January, 1991, the company or unit trust scheme was an offshore fund other than a non-qualifying offshore fund and the asset constituted a material interest in that fund.

(3) Subsections (2) to (7) of section 741 shall apply for the purposes of this section as if references in those subsections to a non-qualifying offshore fund were references to an offshore fund.

(4) Notwithstanding subsection (3) of section 28, the rate of capital gains tax in respect of chargeable gains accruing to a person on the disposal of an asset to which this section applies shall be 40 per cent.”.

67. —(1) Section 538 of the Principal Act is hereby amended by the insertion after subsection (2) of the following subsection:

“(2A) (a) Where as a result of the dissolution of a body corporate, property of the body corporate becomes property of the State by virtue of Part III of the State Property Act, 1954 , and the Minister for Finance, in accordance with that Part of that Act, waives the right of the State to that property in favour of a person who holds or has held shares in the body corporate, then, notwithstanding section 31 and subject to paragraph (c), any allowable loss (in this subsection referred to as a ‘claimed loss’) accruing to the person by virtue of a claim made under subsection (2) in respect of those shares shall not be allowable as a deduction from chargeable gains in any year of assessment earlier than the year of assessment in which the property is disposed of by the person and any necessary adjustments may be made by way of assessment or additional assessment to give effect to this paragraph.

(b) Paragraph (a) shall apply in relation to a body corporate which has no share capital as if references to shares included references to any interest in the body corporate possessed by members of the body corporate.

(c) For the purposes of paragraph (a)—

(i) where in a year of assessment there is a part disposal (within the meaning of section 534) of property, only so much of the claimed loss shall be allowable as a deduction from chargeable gains in that year of assessment as bears to the amount of the claimed loss the same proportion as the market value, when acquired, of the part of the property which is disposed of bears to the market value of the whole of that property when acquired,

(ii) the year of assessment in which property is disposed of by a person, where the disposal, being a disposal to the husband or wife of the person, is a disposal to which section 1028(5) applies, shall mean the year of assessment in which the property is subsequently disposed of by the person's wife or husband, as the case may be, where the subsequent disposal is a disposal to which section 1028(5) does not apply.”.

(2) This section shall apply as respects a waiver of the right of the State to property on or after the 12th day of February, 1998.

68. —(1) Section 547 of the Principal Act is hereby amended by the insertion of the following subsection after subsection (1):

“(1A) (a) Notwithstanding subsection (1), where, by virtue of section 31 of the State Property Act, 1954 , the Minister for Finance waives, in favour of a person, the right of the State to property, the person's acquisition of the property shall for the purposes of the Capital Gains Tax Acts be deemed to be for a consideration equal to the amount (including a nil amount) of the payment of money made by the person as one of the terms of that waiver.”.

(2) This section shall apply as respects the acquisition of an asset on or after the 12th day of February, 1998.

69. —(1) Chapter 3 of Part 19 of the Principal Act is hereby amended, by the insertion of the following section after section 577 —

“Relinquishing of a life interest by the person entitled.

577A.—Where by virtue of section 576(1) the assets forming part of any settled property are deemed to be disposed of and immediately reacquired by the trustee on the occasion when a person becomes absolutely entitled to the assets as against the trustee, then, in case that occasion is the relinquishing of a life interest (within the meaning of section 577) by the person entitled to that interest, the trustee shall be given such relief as would be given under sections 598 and 599 to the person who relinquished the life interest—

(a) if the person had become absolutely entitled to the assets as against the trustee at the commencement of the life interest and had continued to be so entitled throughout the period (in this section referred to as the ‘life interest period’) that the life interest subsisted, and

(b) as if any expenditure of the kind referred to in paragraph (b) of section 552(1) that was incurred on the assets during the life interest period by the trustee had been incurred by the person.”.

(2) This section shall apply as respects a disposal deemed to be made on or after the 12th day of February, 1998.

70. —(1) Section 592 of the Principal Act is hereby repealed.

(2) This section shall apply as respects disposals made on or after the 3rd day of December, 1997.

71. —(1) Section 597 of the Principal Act is hereby amended, in subsection (3), by the substitution for paragraph (c) of the following paragraphs:

“(c) goodwill,

(d) any financial assets owned by a body of persons referred to in paragraph (f) of subsection (2); for the purposes of this paragraph ‘financial assets’ means shares of any company and stocks, bonds and obligations of any government, municipal corporation, company or other body corporate.”.

(2) This section shall apply as respects disposals made on or after the passing of this Act.

72. —(1) Section 598 of the Principal Act is hereby amended in subsection (1)—

(a) in the definition of “qualifying assets”—

(i) by the substitution for paragraph (i) of the following:

“(i) the chargeable business assets of the individual which apart from tangible moveable property he or she has owned for a period of not less than 10 years ending with the disposal and which have been his or her chargeable business assets throughout the period of 10 years ending with that disposal,”,

(ii) by the substitution, in paragraph (ii), of “for a period of not less than 5 years, and” for “for a period of not less than 5 years;”,

and

(iii) by the insertion after paragraph (ii) of the following:

“(iii) land used for the purposes of farming carried on by the individual which he or she owned and used for that purpose for a period of not less than 10 years ending with the transfer of an interest in that land for the purposes of complying with the terms of the Scheme;”,

and

(b) by the insertion after the definition of “qualifying assets” of the following:

“‘the Scheme’ means the scheme known as the Scheme of Early Retirement From Farming introduced by the Minister for Agriculture and Food for the purpose of implementing Council Regulation (EEC) No. 2079/92 of 30 June 1992* ;”.

(2) This section shall apply as respects a disposal of an asset on or after the 6th day of April, 1998.

73. —(1) Section 652 of the Principal Act is hereby amended by the insertion of the following subsections after subsection (3)—

“(3A) (a) In this subsection—

‘greyhound race’, ‘greyhound race track’ and ‘greyhound race track licence’ have the same meanings respectively as in section 2 of the Greyhound Industry Act, 1958 ;

‘assets of an authorised greyhound race track’ means assets of a greyhound race track which is an authorised greyhound race track where the assets are used for the provision of appropriate facilities or services to hold greyhound races or to accommodate persons associated with greyhound racing, including members of the public;

‘authorised greyhound race track’ means a greyhound race track in respect of which a greyhound race track licence has been granted, and that licence has not been revoked.

(b) Subject to paragraph (c), subsection (1) shall not apply to consideration obtained for a relevant disposal where—

(i) throughout a period of 5 years ending with the time of disposal the old assets, and

(ii) the new assets within the meaning of section 597,

are assets of an authorised greyhound race track.

(c) Section 597 shall apply in relation to assets of an authorised greyhound race track as if—

(i) references in subsections (4) and (5) of that section to new assets ceasing to be used for the purposes of a trade included a reference to new assets ceasing to be assets of an authorised greyhound race track, and

(ii) subsection (11)(b) had not been enacted.

(3B) Subsection (1) shall not apply to consideration obtained for a relevant disposal effected by an order made under section 28 (1) of the Dublin Docklands Development Authority Act, 1997 .”.

(2) This section shall apply in respect of relevant disposals made on or after the 6th day of April, 1998.

74. — Section 980 of the Principal Act is hereby amended, as respects disposals made on or after the passing of this Act, in subsection (3), by the substitution of “£150,000” for “£100,000”.

75. — Section 1028 of the Principal Act is hereby amended, as respects the year of assessment 1998-99 and subsequent years of assessment, by the deletion of subsection (4).

*O.J. No. L215 of 30.7.1992 p.91.