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9 1996

FINANCE ACT, 1996

PART V

Capital Acquisitions Tax

Interpretation ( Part V ).

120. —In this Part “the Principal Act” means the Capital Acquisitions Tax Act, 1976 .

Amendment of section 16 (market value of certain shares in private trading companies) of Principal Act.

121. —As respects gifts and inheritances taken on or after the 28th day of March, 1996, section 16 of the Principal Act is hereby amended in subsection (2) by the substitution of the following definition for the definition of “private company”:

“‘private company’ means a body corporate (wherever incorporated) which—

(a) is under the control of not more than five persons, and

(b) is not a company which would fall within section 95 of the Corporation Tax Act, 1976 , if the words ‘private company’ were substituted for the words ‘close company’ in subsection (1) of that section, and if the words ‘if beneficially held by a company which is not a private company’ were substituted for the words of paragraph (a) of subsection (4) of that section.”.

Amendment of section 19 (value of agricultural property) of Principal Act.

122. —(1) Section 19 of the Principal Act is hereby amended—

(a) by the substitution of the following definition for the definition of “agricultural value” in subsection (1) (inserted by the Finance Act, 1994 ):

“‘agricultural value’ means the market value of agricultural property reduced by 75 per cent. of that value:

Provided that the agricultural value of agricultural property, other than farm machinery, livestock and bloodstock, comprised in a gift shall not be greater than it would have been if section 122 of the Finance Act, 1996, had not been enacted;”,

(b) by the deletion of subsection (4) (inserted by the Finance Act, 1994 ), and

(c) in paragraph (a) (inserted by the Finance Act, 1994 ) of subsection (5)—

(i) by the substitution of “ten years” for “six years” in subparagraph (i),

(ii) by the substitution of the following proviso for the proviso to that paragraph:

“Provided that—

(I) this paragraph shall not have effect where the donee or successor dies before the property is sold or compulsorily acquired;

(II) where the event which causes the agricultural value to cease to be applicable occurs after the expiration of the period of six years commencing on the date of the gift or the date of the inheritance, the tax chargeable in respect of the gift or inheritance shall not be greater than it would have been if section 122 of the Finance Act, 1996, had not been enacted.”.

(2) This section shall have effect in relation to gifts or inheritances taken on or after the 23rd day of January, 1996.

Exemption relating to qualifying expenses of incapacitated persons.

123. —(1) The Principal Act is hereby amended by the insertion of the following section after section 59:

“59A.—(1) A gift or inheritance which is taken exclusively for the purpose of discharging qualifying expenses of an individual who is permanently incapacitated by reason of physical or mental infirmity shall, to the extent that the Commissioners are satisfied that it has been or will be applied to such purpose, be exempt from tax and shall not be taken into account in computing tax.

(2) In this section ‘qualifying expenses’ means expenses relating to medical care including the cost of maintenance in connection with such medical care.”.

(2) This section shall have effect in relation to gifts or inheritances taken on or after the 28th day of March, 1996.

Amendment of section 118 (application of section 60 (relief in respect of certain policies of insurance) of Finance Act, 1985) of Finance Act, 1991.

124. —(1) Section 118 of the Finance Act, 1991 , is hereby amended by the deletion of “under a disposition made by the spouse of the insured where the inheritance is taken”.

(2) This section shall apply to inheritances taken on or after the 28th day of March, 1996.

Amendment of section 126 (business relief) of Finance Act, 1994.

125. —(1) Section 126 (inserted by the Finance Act, 1995) of the Finance Act, 1994 , is hereby amended by the substitution of “75 per cent.” for “50 per cent.”.

(2) This section shall have effect in relation to gifts or inheritances taken on or after the 23rd day of January, 1996.

Amendment of section 127 (relevant business property) of Finance Act, 1994.

126. —(1) Section 127 of the Finance Act, 1994 , is hereby amended by the substitution of the following paragraph for paragraph (c) of subsection (1):

“(c) unquoted shares in or securities of a company incorporated in the State which is, on the valuation date (after the taking of the gift or inheritance), a company controlled by the donee or successor within the meaning of section 16 of the Principal Act;”.

(2) This section shall have effect in relation to gifts or inheritances taken on or after the 28th day of March, 1996.

Amendment of section 135 (withdrawal of relief) of Finance Act, 1994.

127. —(1) Section 135 of the Finance Act, 1994 , is hereby amended—

(a) by the substitution of “ten years” for “six years” in subsection (1) (as amended by the Finance Act, 1995), and

(b) by the substitution of the following proviso for the proviso (inserted by the Finance Act, 1995) to subsection (2):

“Provided that—

(i) any land, building, machinery or plant which are comprised in the gift or inheritance and which qualify as relevant business property by virtue of section 127 (1) (e) shall, together with any similar property which has replaced such property, continue to be relevant business property for the purposes of this section for so long as they are used for the purposes of the business concerned,

(ii) this section shall not have effect where the donee or successor dies before the event which would otherwise cause the reduction to cease to be applicable,

(iii) where the event which causes the reduction to cease to be applicable occurs after the expiration of the period of six years commencing on the valuation date, then only one-third of that reduction shall cease to be applicable.”.

(2) This section shall apply to gifts or inheritances taken on or after the 23rd day of January, 1996.

Amendment of section 146 (certificate relating to registration of title based on possession) of Finance Act, 1994.

128. Section 146 of the Finance Act, 1994 , is hereby amended by the insertion of the following subsections after subsection (4):

“(4A) In subsection (1), the reference to a certificate issued by the Commissioners shall be construed as including a reference to a certificate to which subsection (4B) relates, and the provisions of subsection (1) shall be construed accordingly.

(4B) (a) A certificate to which this subsection relates is a certificate by the solicitor for the applicant for registration in which it is certified, on a form provided by the Commissioners, that the solicitor—

(i) is satisfied—

(I) in a case where the applicant is a statutory authority within the definition of ‘statutory authority’ contained in section 3(1) of the Act of 1964, that the market value of the relevant property at the time of the application does not exceed £100,000, or

(II) in any other case, that—

(A) the area of the relevant property does not exceed five hectares, and

(B) the market value of the relevant property at the time of the application does not exceed £15,000,

and

(ii) having investigated the title to the relevant property, has no reason to believe that the relevant particulars, in so far as relating to the relevant property at any time during the relevant period, are particulars which related at that time to significant other real property, that is to say, real property which, if combined with the relevant property for the purposes of subparagraph (i), would cause a limit which applies to the relevant property by virtue of that subparagraph to be exceeded.

(b) In this subsection—

the relevant particulars’ means the particulars of title to the relevant property which are required to be produced to the Registrar for the purposes of paragraph 2 of Form 5 of the Schedule of Forms referred to in the definition of ‘Forms’ contained in rule 2(1) of the Rules of 1972;

the relevant property’ means the property in respect of which the application for registration is being made.

(4C) Notwithstanding the provisions of subsection (4B), a certificate by the solicitor for the applicant for registration shall be a certificate to which subsection (4B) relates if it certifies, on a form provided by the Commissioners, that the solicitor is satisfied that—

(a) the area of the property in respect of which the application for registration is being made does not exceed 500 square metres,

(b) the market value of the said property at the time of the application does not exceed £2,000, and

(c) the application is not part of a series of related applications covering a single piece of property the total area of which exceeds 500 square metres or the market value of which at the time of the application exceeds £2,000.”.

Amendment of section 164 (payment of tax on certain assets by instalments) of Finance Act, 1995.

129. —(1) Section 164 of the Finance Act, 1995, is hereby amended—

(a) by the substitution of the following paragraph for paragraph (a) of subsection (2):

“(a) section 43 of the Principal Act shall apply to that whole or part of the tax notwithstanding subsection (3) or (4) of that section:

Provided that where all or any part of that agricultural property or relevant business property, or any property which directly or indirectly replaces such property, is sold or compulsorily acquired and, by virtue of subsection (5) of section 19 of the Principal Act or section 135 of the Finance Act, 1994 , that sale or compulsory acquisition causes the taxable value of such a taxable gift or taxable inheritance to be increased, or would cause such increase if subsection (2) of section 19 of the Principal Act or section 126 of the Finance Act, 1994 , applied, all unpaid instalments referable to the property sold or compulsorily acquired shall, unless the interest of the donee or successor is a limited interest, be paid on completion of that sale or compulsory acquisition and, if not so paid, shall be tax in arrear,

and”,

and

(b) by the insertion of the following subsection after subsection (2):

“(2A) For the purposes of this section reference to an overdue instalment in the proviso to paragraph (b) of subsection (2) is a reference to an instalment which is overdue for the purposes of section 43 (as it applies to this section) of the Principal Act or for the purposes of the proviso to paragraph (a) of the said subsection (2).”.

(2) This section shall apply in relation to gifts or inheritances taken on or after the 8th day of February, 1995.