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Capital Acquisitions Tax Consolidation Act 2003
Annual levy on discretionary trusts
Interpretation (Chapter 3).
[FA 1986 s102]
19. —In this Chapter—
“chargeable date”, in relation to any year, means 5 April in that year;
“chargeable discretionary trust” means a discretionary trust in relation to which—
(a) the disponer is dead, and
(b) none of the principal objects of the trust, if any, is under the age of 21 years;
“object” and “principal objects”, in relation to a discretionary trust, have the meanings respectively assigned to them by section 14 .
Annual acquisitions by discretionary trusts.
[FA 1986 s103]
20. —(1) Where, in any year commencing with the year 2003, under or in consequence of any disposition, property is subject to a chargeable discretionary trust on the chargeable date, the trust is deemed on each such date to become beneficially entitled in possession to an absolute interest in that property, and to take on each such date an inheritance accordingly as if the trust, and the trustees as such for the time being of the trust, were together a person for the purposes of this Act, and each such chargeable date shall be the date of such inheritance.
(2) (a) In this subsection, “property” includes property representing such property.
(i) under or in consequence of any disposition, property was subject to a discretionary trust prior to a chargeable date,
(ii) that property is not on that chargeable date subject to that discretionary trust (being on that date a chargeable discretionary trust) because such property is on that date property to which for the time being a person is beneficially entitled for an interest in possession, and
(iii) on that chargeable date that property is property which is limited to become subject again to that chargeable discretionary trust, or will do so by the exercise of a power of revocation,
that property is deemed to be subject to that chargeable discretionary trust on that chargeable date if that interest in possession is an interest which is revocable or which is limited to cease on an event other than—
(I) the death of that person, or
(II) the expiration of a specified period, where that interest is taken by that person under a power of appointment contained in that disposition and is, at the time of the appointment of that interest, an interest for a period certain of 5 years or more.
(3) For the purposes of this section—
(a) an interest in expectancy is not property until an event happens whereby the interest ceases to be an interest in expectancy or is represented by property which is not an interest in expectancy;
(b) an interest in a policy of assurance on human life is not property until, and then only to the extent that, the interest becomes an interest in possession under the provisions of section 41 or is represented by property which is not an interest in expectancy.
(4) This section shall not apply in relation to property which is subject to a chargeable discretionary trust on a chargeable date if that property or property representing that property is subject to a charge for tax arising under or in consequence of the same disposition by reason of section 15 , or that provision of the repealed enactments which corresponds with section 15 , on that same date or within the year prior to that date.
Application of this Act.
[FA 1986 s104 (a) to (e) and (g)]
21. —In relation to a charge for tax arising by reason of section 20 —
(a) a reference in section 27 to a company controlled by the successor and the definition in that section of “group of shares” is construed as if (for the purpose of that reference) the list of persons contained in subsection (3) of that section and (for the purpose of that definition) the list of persons contained in that definition included the following, that is, the trustees of the discretionary trust, the living objects of the discretionary trust, the relatives of those objects, nominees of those trustees or of those objects or of the relatives of those objects, and the trustees of a settlement whose objects include the living objects of the discretionary trust or relatives of those living objects;
(b) (i) subject to the provisions of subparagraph (ii), the valuation date of the taxable inheritance is the relevant chargeable date;
(I) a charge for tax arises on a particular date by reason of section 15 , or that provision of the repealed enactments which corresponds with section 15 , giving rise to a taxable inheritance (in this subparagraph called the first taxable inheritance),
(II) on a later date, a charge for tax arises under or in consequence of the same disposition by reason of section 20 giving rise to a taxable inheritance (in this subparagraph called the second taxable inheritance) comprising the same property or property representing that property, and
(III) the valuation date of the first taxable inheritance is a date after the chargeable date of the second taxable inheritance,
the valuation date of the second taxable inheritance is the same date as the valuation date of the first taxable inheritance;
(c) a person who is a trustee of the discretionary trust concerned for the time being at the date of the inheritance or at any date subsequent to that date is a person primarily accountable for the payment of the tax;
(d) an object of the discretionary trust concerned to whom or for whose benefit any of the property subject to the trust is applied or appointed is also accountable for the payment of tax the charge in respect of which has arisen prior to the date of the application or appointment of the property to that object or for that object's benefit, and this Act shall apply, in its application to that charge for tax, as if that object of the discretionary trust were a person referred to in section 45 (2);
(e) any person who is primarily accountable for the payment of tax by virtue of paragraph (c) shall, within 3 months after the valuation date—
(i) deliver to the Commissioners a full and true return—
(I) of every inheritance in respect of which that person is so primarily accountable,
(II) of all the property comprised in such inheritance, and
(III) of an estimate of the market value of such property;
(ii) notwithstanding any other provision of this Act, make an assessment of such amount of tax as, to the best of that person's knowledge, information and belief, ought to be charged, levied and paid on that valuation date; and
(iii) pay the amount of such tax to the Collector;
(f) section 30 , section 45(1), section 46(2), (3), (4) and (5) and sections 50, 54, 56 and 81 and Schedule 2 shall not apply.
[FA 1986 s106]
Computation of tax.
[FA 1986 s106]
23. —The tax chargeable on the taxable value of a taxable inheritance which is charged to tax by reason of section 20 is computed at the rate of one per cent of that taxable value.
[FA 1986 s107]
24. —(1) Where—
(a) under or in consequence of any disposition, a charge for tax arises by reason of section 20 on a chargeable date (in this section called the first chargeable date),
(b) an accountable person has furnished all the information necessary to enable the Commissioners to ascertain the market value of—
(i) real property, or
(ii) shares which are not dealt in on a stock exchange,
comprised in the taxable inheritance so taken on the valuation date of that taxable inheritance,
(c) pursuant to an application in writing to the Commissioners on that behalf, the market value of such property on that valuation date is agreed on between that person and the Commissioners,
(d) under or in consequence of the same disposition, a charge for tax arises by reason of section 20 on either or both of the 2 chargeable dates in the years next following the year in which the first chargeable date occurs (in this section called the subsequent chargeable dates), and
(e) the same property at subparagraph (i) or (ii) of paragraph (b) is comprised in the taxable inheritances so taken on the subsequent chargeable dates,
the value so agreed on is treated for the purposes of this Chapter as the market value of such property on that valuation date and on the valuation dates of the taxable inheritances so taken on the subsequent chargeable dates.
(2) Notwithstanding subsection (1), the market value so agreed is not binding—
(a) in any case where there is failure to disclose material facts in relation to any part of the property comprised in the taxable inheritances taken on the first chargeable date or on the subsequent chargeable dates, or
(b) where, at any time after the first chargeable date and before the third of those chargeable dates—
(i) in the case of real property, there is any alteration in the tenure under which the property is held or let, or
(ii) in the case of shares, there is any alteration in the capital or the ownership of the capital of the company concerned or of the rights of the shareholders inter se,
(c) where, at any time after the first chargeable date and before the third of those chargeable dates—
(i) in the case of real property, there is any change whatever, whether affecting that or any other property, which would materially increase or decrease the market value over and above any increase or decrease which might normally be expected if such a change had not occurred, or
(ii) in the case of shares, there has been any material change in the assets of the company or in their market value over and above any such change which might normally be expected,
and in such cases the market value of the real property, or of the shares, may be ascertained again by the Commissioners for each of the relevant valuation dates, but in the case of any change referred to in paragraph (c), the market value may be ascertained again by the Commissioners only at the request of the person primarily accountable for the payment of the tax arising by reason of section 20 on that relevant valuation date.
(3) Any agreement made under this section shall be binding only on the persons who as such are accountable for the payment of the tax arising by reason of section 20 on the first chargeable date and on the subsequent chargeable dates.
[FA 1986 s108]
25. —Any person who contravenes or fails to comply with any requirement under paragraph (e) of section 21 is liable to a penalty of—
(a) €1,265, or
(b) twice the amount of tax payable in respect of the taxable inheritance to which the return relates,
whichever is the lesser.