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9 1992

Finance Act, 1992

Chapter IV

Capital Gains Tax

Reduction in exemption for individuals.

59. —As respects the year 1992-93 and subsequent years of assessment—

(a) subsection (4) of section 13 , and subsections (1) and (2) of section 16 , of the Capital Gains Tax Act, 1975 , and

(b) paragraph 8 of Schedule 1 to the Capital Gains Tax (Amendment) Act, 1978 ,

are hereby amended by the substitution of “£1,000” for “£2,000” (inserted by the Finance Act, 1982 ) in each place where it occurs in those provisions, and the said provisions, as so amended, are set out in the Table to this section.

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(4) Where, apart from subsection (1), the amount on which an individual is chargeable to capital gains tax under section 5 (1) for a year of assessment (hereafter in this subsection referred to as “the first-mentioned amount”) is less than £1,000 and the spouse of the individual (being, at any time during that year of assessment, a married woman living with her husband, or that husband) is, apart from subsection (1), chargeable to capital gains tax on any amount for that year, section 16 (1) shall have effect in relation to the spouse as if the sum of £1,000 mentioned therein were increased by an amount equal to the difference between the first-mentioned amount and £1,000.

(1) An individual shall not be chargeable to capital gains tax for a year of assessment if the amount on which he is chargeable to capital gains tax under section 5 (1) for that year does not exceed £1,000.

(2) If the amount on which an individual is chargeable to capital gains tax under section 5 (1) for a year of assessment exceeds £1,000, only the excess of that amount over £1,000 shall be charged to capital gains tax for that year.

8. For the purposes of subsection (2) of section 16 (gains of £1,000 and under) of the Principal Act, where, on the assumption that that subsection did not apply, an individual would be chargeable under the Capital Gains Tax Acts at more than one rate of tax for a year of assessment, the relief to be given under that subsection in respect of the first £1,000 of chargeable gains shall be given—

(a) if he would be so chargeable at two different rates, in respect of the chargeable gains which would be so chargeable at the higher of those rates and, so far as relief cannot be so given, in respect of the chargeable gains which would be so chargeable at the lower of those rates, and

(b) if he would be so chargeable at three or more rates, in respect of the chargeable gains which would be so chargeable at the highest of those rates and, so far as relief cannot be so given, in respect of the chargeable gains which would be so chargeable at the next highest of those rates, and so on.

Alteration of rates of capital gains tax.

60. —(1) 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, 1992—

(a) by the substitution of the following subsection for subsection (3) (as amended by the Finance Act, 1990 ):

“(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 40 per cent., and any reference in those Acts to the rate specified in this section shall be construed accordingly.”,

and

(b) by the deletion of subsection (4) (inserted by the Finance Act, 1982 ).

(2) Section 36 (as amended by the Finance Act, 1990 ) of the Finance Act, 1982 , is hereby amended by the deletion of subsections (2), (3) and (3A).

Restriction of Schedule 2 (companies and shareholders) to Capital Gains Tax Act, 1975.

61. —In Schedule 2 to the Capital Gains Tax Act, 1975 , paragraph 6 shall not apply to the transfer by a person, on or after the 24th day of April, 1992, of a business to a company, wholly or partly in exchange for shares issued by the company, unless it is shown that the transfer is effected for bona fide commercial reasons and does not form part of any arrangement or scheme of which the main purpose, or one of the main purposes, is avoidance of liability to tax.

Amendment of section 9 (consideration) of Capital Gains Tax Act, 1975.

62. —(1) Section 9 of the Capital Gains Tax Act, 1975 , is hereby amended by the addition of the following subsection after subsection (4) (inserted by the Finance Act, 1982 ):

“(5) Subsection (1) shall not apply to the acquisition of an asset where—

(a) there is no corresponding disposal of the asset, and

(b) (i) there is no consideration in money or money's worth for the asset, or

(ii) the consideration for the asset is of an amount or value which is lower than the market value of the asset.”.

(2) This section shall apply and have effect in relation to disposals made on or after the 7th day of May, 1992.

Amendment of section 47 (options) of Capital Gains Tax Act, 1975.

63. Section 47 of the Capital Gains Tax Act, 1975 , is hereby amended, as on and from the 7th day of May, 1992—

(a) in subsection (3), by the deletion of “or abandonment”,

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

“(3A) (a) The abandonment of an option by the person for the time being entitled to exercise it shall constitute the disposal of an asset (namely, the option) by that person.

(b) Subject to subsection (5) and paragraph (a) of subsection (6), the abandonment of an option by the person for the time being entitled to exercise it shall not give rise to an allowable loss.”,

(c) in subsection (5), by the substitution of the following paragraph for paragraph (a):

“(a) if the option is abandoned, paragraph (b) of subsection (3A) shall not apply, and”,

(d) in subsection (6)—

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

(a) Where—

(i) a quoted option to subscribe for shares in a company, or

(ii) a traded option,

is disposed of or abandoned, then—

(I) if the option is abandoned, paragraph (b) of subsection (3A) shall not apply, and

(II) paragraph 9 of Schedule 1 (restriction of allowable expenditure for wasting asset) and subsection (4) shall not apply.”,

and

(ii) by the substitution in paragraph (b) of “Where a quoted option to subscribe for shares in a company” for “Where an option mentioned in paragraph (a)”,

and

(e) by the addition after subsection (10) of the following subsection:

“(11) In this section—

quoted option’ means an option which, at the time of abandonment or other disposal, is quoted, and, in the same manner as shares, dealt in on a stock exchange in the State or elsewhere;

traded option’ means an option which, at the time of abandonment or other disposal, is quoted on a stock exchange or a futures exchange in the State or elsewhere.”,

and the said paragraph (b) of the said subsection (6), as so amended, is set out in the Table to this section.

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(b) Where a quoted option to subscribe for shares in a company is dealt in within three months after the taking effect, with respect to the company granting the option, of any reorganisation, reduction, conversion or amalgamation to which paragraphs 2, 3, 4 or 5 of Schedule 2 applies (or within such longer period as the Revenue Commissioners may by notice in writing allow), the option shall, for the purposes of the said paragraphs 2, 3, 4 or 5, be regarded as the shares which could be acquired by exercising the option and section 49 (3) shall apply for determining its market value.