PART V

Special Reliefs

25. —(1) This section applies to a gain accruing to an individual on the disposal of, or of an interest in—

(a) a dwelling-house or part of a dwelling-house which is, or has been occupied by him as his only or main residence, or

(b) land which he has for his own occupation and enjoyment with that residence as its garden or grounds up to an area (exclusive of the site of the dwelling-house) not exceeding one acre:

Provided that where part of the land occupied with a residence is and part is not within this subsection, then that part shall be taken to be within this subsection which, if the remainder were separately occupied, would be the most suitable for occupation and enjoyment with the residence.

(2) The gain shall not be a chargeable gain if the dwelling-house or the part of a dwelling-house has been occupied by the individual as his only or main residence throughout the period of ownership, or throughout the period of ownership except for all or any part of the last twelve months of that period.

(3) Where subsection (2) does not apply, such portion of the gain shall not be a chargeable gain as represents the same proportion of the gain as—

(a) the length of the part or parts of the period of ownership during which the dwelling-house or the part of a dwelling-house was occupied by the individual as his only or main residence, but inclusive of the last twelve months of the period of ownership in any event, bears to

(b) the length of the period of ownership.

(4) (a) For the purposes of subsections (2) and (3)—

(i) any period of absence throughout which the individual worked in an employment or office all the duties of which were performed outside the State, and in addition

(ii) any period of absence not exceeding four years (or periods of absence which together did not exceed four years) throughout which the individual was prevented from residing in the dwelling-house or the part of a dwelling-house in consequence of the situation of his place of work or in consequence of any condition imposed by his employer requiring him to reside elsewhere, being a condition reasonably imposed to secure the effective performance by the employee of his duties,

shall be treated as if in that period of absence the dwelling-house or the part of a dwelling-house was occupied by the individual as his only or main residence if both before and after the period the dwelling-house (or the part in question) was occupied by the individual as his only or main residence.

(b) In this subsection “period of absence” means a period during which the dwelling-house or the part of a dwelling-house was not the individual's only or main residence and throughout which he had no residence or main residence eligible for relief under this section.

(5) If the gain accrues from the disposal of a dwelling-house or part of a dwelling-house part of which is used exclusively for the purposes of a trade or business or of a profession, the gain shall be apportioned and the foregoing subsections shall apply in relation to the part of the gain apportioned to the part which is not exclusively used for those purposes.

(6) If at any time in the period of ownership there is a change in the dwelling-house or the part of it that is occupied as the individual's residence, whether on account of a reconstruction or conversion of a building or for any other reason, or there have been changes as regards the use of part of the dwelling-house for the purpose of a trade or business, or of a profession, or for any other purpose, the relief given by this section may be adjusted in such manner as the inspector and the individual may agree, or as the Appeal Commissioners may on an appeal, consider to be just and reasonable.

(7) For the purposes of this section an individual shall not be treated as having more than one main residence at any one time and so far as it is necessary to determine which of two or more residences is an individual's main residence for any period—

(a) that question may be concluded by agreement between the inspector and the individual on the latter giving notice in writing to the inspector within two years from the beginning of that period, or given by the end of the year 1975-76, if that is later, and

(b) failing such agreement, the question shall be concluded by the determination of the inspector, which determination may be as respects either the whole or specified parts of the period of ownership in question,

and notice of any determination of the inspector under paragraph (b) shall be given to the individual who may appeal to the Appeal Commissioners against that determination within twenty-one days of service of the notice.

(8) In the case of a man and his wife living with him—

(a) there can only be, for the purposes of this section, one residence or main residence for both, so long as living together, and, where a notice under subsection (7) (a) affects both the husband and his wife, it must be made by both, and

(b) if the one disposes of, or of his or her interest in, the dwelling-house or part of a dwelling-house which is their only or main residence to the other, or if it passes on death to the other as legatee, the other's period of ownership shall begin with the beginning of the period of ownership of the one making the disposal or from whom it passes on death, and

(c) if paragraph (b) applies, but the dwelling-house or part of a dwelling-house was not the only or main residence of both throughout the period of ownership of the one making the disposal, account shall be taken of any part of that period during which it was his only or main residence as if it was also that of the other, and

(d) any notice under subsection (7) (b) which affects a residence owned by the husband and a residence owned by the wife shall be given to each and either may appeal under that subsection.

(9) This section shall also apply in relation to a gain accruing to a trustee on a disposal of settled property being an asset within subsection (1) where during the period of ownership of the trustee the dwelling-house or the part of a dwelling-house mentioned in that subsection has been the only or main residence of an individual entitled to occupy it under the terms of the settlement and in this section as so applied—

(a) references to the individual shall be taken as references to the trustee except in relation to the occupation of the dwelling-house or the part of a dwelling-house, and

(b) the notice which may be given to the inspector under subsection (7) (a) shall be a joint notice by the trustee and the person entitled to occupy the dwelling-house or the part of a dwelling-house.

(10) This section shall not apply in relation to a gain if the acquisition of, or of the interest in, the dwelling-house or the part of a dwelling-house was made wholly or mainly for the purpose of realising a gain from the disposal of it, and shall not apply in relation to a gain so far as the gain is attributable to any expenditure which was incurred after the beginning of the period of ownership and was incurred wholly or mainly for the purpose of realising a gain from the disposal.

(11) Apportionments of consideration shall be made wherever required by this section and, in particular, where a person disposes of a dwelling-house only part of which is his only or main residence.

(12) In this section “the period of ownership”—

(a) where the individual has had different interests at different times, shall be taken to begin from the first acquisition taken into account in arriving at the expenditure which under Schedule 1 is allowable as a deduction in computing under that Schedule the amount of the gain to which this section applies, and

(b) for the purposes of subsections (2), (3) and (4), shall not include any period before the 6th day of April, 1974.

26. —(1) (a) Subject to the provisions of this section where an individual who has attained the age of fifty-five years disposes of the whole or part of his qualifying assets—

(i) if the amount or value of the consideration for the disposal does not exceed £50,000, relief shall be given in respect of the full amount of capital gains tax chargeable on any gain accruing on the disposal;

(ii) if the amount or value of the consideration for the disposal exceeds £50,000, the amount of capital gains tax chargeable on the gain accruing on the disposal shall not exceed half the difference between the amount of that consideration and £50,000.

(b) For the purposes of paragraph (a), the amount capital gains tax chargeable in respect of the gain shall be the amount of tax which would not have been chargeable but for that gain.

(2) For the purposes of subsection (1) the consideration on the disposal of qualifying assets by the individual shall be aggregated and nothing in this section shall affect the computation of gains accruing on the disposal of assets other than qualifying assets.

(3) Where a disposal of qualifying assets includes a disposal of shares or securities of the individual's family company, the amount of the consideration to be taken into account for the purposes of subsection (1) in respect of those shares or securities shall be the proportion of the consideration for such shares or securities which is equal to the proportion which the part of the value of the company's assets (including cash) at the time of the disposal which is attributable to the value of the company's chargeable business assets bears to the whole of that value:

Provided that nothing in this section shall affect liability on any gains calculated by reference to the balance of the consideration for the disposal of the shares or securities.

(4) (a) The total of the amounts of relief given under this section for any year of assessment, and all years of assessment before such year, shall not exceed such amount as would reduce the total amount of capital gains tax chargeable for all those years of assessment below the amount which would be chargeable if the disposals of qualifying assets had all been made in the year of assessment.

(b) Where at any time the relief given under this section exceeds the amount of relief which would be given if the disposals of qualifying assets for the year of assessment and all years of assessment before such year had been made in the year of assessment, any necessary adjustment may be made by way of assessment or additional assessment and such assessment may be made at any time not more than ten years after the end of the year of assessment in which the last of such disposals is made.

(c) For the purposes of this subsection, a disposal of qualifying assets other than a disposal of the whole of such assets, by a husband to a wife or by a wife to a husband shall, notwithstanding the provisions of section 13 (5), be taken into account at the market value of the assets.

(5) Subsection (1) shall apply where under paragraph 1 of Schedule 2 an individual is treated as disposing of interests in shares or securities of his family company in consideration of a capital distribution from the company (not being a distribution consisting of chargeable business assets) in the course of dissolving or winding up the company as it applies where he disposes of shares or securities of the company.

(6) (a) In this section and section 27—

“chargeable business asset” means an asset (including goodwill but not including shares or securities or other assets held as investments) which is, or is an interest in, an asset used for the purposes of a trade, farming, profession, office or employment carried on by the individual, or as the case may be by the individual's family company, other that a private residence to which section 25 applies;

“family company” means, in relation to an individual, a company the voting rights in which are—

(i) as to not less than 25 per cent., exercised by the individual, or

(ii) as to not less than 75 per cent., exercisable by the individual or a member of his family, and, as to not less than 10 per cent., exercisable by the individual himself;

“family” means, in relation to an individual, the husband or wife of the individual, and a relative of the individual or the individual's husband or wife, and “relative” means brother, sister, ancestor or lineal descendant;

“full time working director” means a director who is required to devote substantially the whole of his time to the service of the company in a managerial or technical capacity;

“qualifying assets”, in relation to a disposal, includes the chargeable business assets of the individual which, apart from tangible movable property, he has owned for a period of not less than ten years ending with the disposal and the shares or securities which he has owned for a period of not less than ten years ending with the disposal being shares or securities of a company which has been a trading or a farming company and his family company during a period of not less than ten years ending with the disposal and of which he has been a full time working director throughout that period:

Provided that there shall be taken into account for the purposes of this definition—

(i) the period of ownership of a spouse of the individual as if it were a period of ownership of the individual,

(ii) where the chargeable business assets are new assets, within the meaning of section 28, the period of ownership of the old assets as if it were a period of ownership of the new assets,

(iii) where the qualifying assets are shares or securities in a family company to which paragraph 6 of Schedule 2 applies, the period immediately before the transfer to the company of chargeable business assets during which those assets were owned by the individual as if it were a period of ownership of the individual of the qualifying assets or a period throughout which he was a full time working director, as may be appropriate, and

(iv) a period immediately before the death of the spouse of the individual throughout which the deceased spouse was a full time working director as if it were a period throughout which the individual was a full time working director;

“trade”, “farming”, “profession”, “office” and “employment” have the same meanings as in the Income Tax Acts;

“trading company” means a company whose business consists wholly or mainly of the carrying on of a trade or trades.

(b) In this section, references to the disposal of the whole or part of an individual's qualifying assets include references to the disposal of the whole or part of the assets provided or held for the purposes of an office or employment by the individual exercising that office or employment.

(7) An individual who has been granted relief under this section shall not be granted relief under section 27.

27. —(1) (a) Subject to the provisions of this section, where an individual who has attained the age of fifty-five years, disposes of the whole of his qualifying assets to one or more of his children—

(i) if the amount or value of the consideration for the disposal does not exceed £150,000, relief shall be given in respect of the full amount of capital gains tax chargeable on any gain accruing on the disposal;

(ii) if the amount or value of the consideration for the disposal exceeds £150,000, the amount of capital gains tax chargeable on the gain accruing on the disposal shall not exceed half the difference between the amount of that consideration and £150,000.

(b) For the purposes of paragraph (a), the amount of capital gains tax chargeable in respect of the gain shall be the amount of tax which would not have been chargeable but for that gain.

(c) In paragraph (a) “children”, in relation to a disposal, includes nephews and nieces who have worked substantially on a full-time basis for the period of 5 years ending with the disposal in carrying on, or assisting in the carrying on of, the trade, business or profession or the work of or connected with the office or employment.

(2) For the purposes of this section—

(a) subsections (2) and (3) of section 26 shall apply to a disposal falling within subsection (1) as they apply to a disposal falling within section 26 (1), and

(b) section 26 (4) shall have effect as if the disposal of qualifying assets in the year of assessment and all years of assessment before such year were disposals of assets owned by the individual at the time of the disposal falling within subsection (1).

(3) Where assets comprised in a disposal in respect of which relief has been granted under this section are disposed of within ten years of the earlier disposal, section 9 (acquisition and disposal deemed to be at market value) shall not apply to the earlier disposal and, notwithstanding any other provisions in this Act—

(a) the disposal and acquisition of the assets under that earlier disposal shall be deemed, for the purposes of this Act, to be for such consideration as would have secured that neither a gain nor a loss accrued on that disposal, and

(b) the acquisition of the assets by the individual making the earlier disposal shall be deemed, for the purposes of this Act, to be the acquisition of the individual making the later disposal:

Provided that nothing in this subsection shall affect the amount of capital gains tax chargeable in respect of the earlier disposal, but, to the extent that tax so chargeable has been paid, relief shall be granted by set-off against the amount of capital gains tax chargeable on the later disposal and not otherwise.

(4) An individual who has been granted relief under this section shall not be granted relief under section 26.

28. —(1) If the consideration which a person carrying on a trade obtains for the disposal of, or of his interest in, assets (in this section referred to as the old assets) used, and used only, for the purposes of the trade throughout the period of ownership is applied by him in acquiring other assets, or an interest in other assets (in this section referred to as the new assets) which on the acquisition are taken into use, and used only, for the purposes of the trade, and the old assets and the new assets are assets of a kind specified in subsection (5), then the person carrying on the trade shall, on making a claim in that behalf, be treated for the purposes of this Act as if the chargeable gain accruing on the old assets did not accrue until he ceases to use the new assets for the purposes of the trade:

Provided that if the consideration for the disposal of the new assets is applied in acquiring other new assets which on the acquisition are taken into use, and used only, for the purposes of the trade and are assets specified in subsection (5), the person carrying on the trade shall be treated as if the chargeable gain accruing on the disposal of the old assets did not accrue until he ceases to use the other new assets aforesaid and any further new assets which are acquired in a similar manner, taken into use, and used only, for the purposes of the trade and are assets specified in subsection (5).

(2) Subsection (1) shall not apply if part only of the amount or value of the consideration for the disposal of, or of the interest in, the old assets is applied as described in that subsection, but if all of the amount or value of the consideration except for a part which is less than the amount of the gain (whether all chargeable gain or not) accruing on the disposal of, or of the interest in, the old assets is so applied, then, the person carrying on the trade shall, on making a claim in that behalf, be treated, for the purposes of this Act, as if the amount of the gain accruing on the disposal of the old assets were reduced to the amount of consideration not applied in the acquisition of the new assets (and if not all chargeable gain with a proportionate reduction in the amount of the chargeable gain) and the balance of the gain (or chargeable gain) shall be treated as if it did not accrue until he ceases to use the new assets for the purposes of the trade.

(3) This section shall only apply if the acquisition of, or of the interest in, the new assets takes place, or an unconditional contract for the acquisition is entered into, in the period beginning twelve months before and ending three years after the disposal of, or of the interest in, the old assets, or at such earlier or later time as the Revenue Commissioners may by notice in writing allow:

Provided that, where an unconditional contract for the acquisition is so entered into, this section may be applied on a provisional basis without waiting to ascertain whether the new assets, or the interest in the new assets, is acquired in pursuance of the contract, and, when that fact is ascertained, all necessary adjustments shall be made by making assessments or by repayment or discharge of tax, and shall be so made notwithstanding any limitation in this Act on the time within which assessments may be made.

(4) This section shall not apply unless the acquisition of, or of the interest in, the new assets, was made for the purpose of their use in the trade, and not wholly or partly for the purpose of realising a gain from the disposal of, or of the interest in, the new assets.

(5) The following are assets for the purpose of this section—

(a) plant or machinery;

(b) except where the trade is a trade of dealing in or developing land, or of providing services for the occupier of land in which the person carrying on the trade has an estate or interest—

(i) any building or part of a building and any permanent or semi-permanent structure in the nature of a building, occupied (as well as used) only for the purposes of the trade,

(ii) any land occupied (as well as used) only for the purposes of the trade, provided that where the trade is a trade of dealing in or developing land, but a profit on the sale of any land held for the purposes of the trade would not form part of the trading profits, the trade shall be treated for the purposes of this subsection as if it were not a trade of dealing in or developing land;

(c) goodwill.

(6) If, over the period of ownership or any substantial part of the period of ownership, part of a building or structure is, and part is not, used for the purposes of a trade, this section shall apply as if the part so used, with any land occupied for purposes ancillary to the occupation and use of that part of the building or structure, were a separate asset, and subject to any necessary apportionments of consideration for an acquisition or disposal of, or of an interest in, the building or structure and other land.

(7) If the old assets were not used for the purposes of the trade throughout the period of ownership, this section shall apply as if a part of the asset representing its use for the purposes of the trade having regard to the time and extent to which it was, and was not, used for those purposes, were a separate asset which had been wholly used for the purposes of the trade, and this subsection shall apply in relation to that part subject to any necessary apportionment of consideration for an acquisition or disposal of, or of the interest in, the asset.

(8) (a) This section shall apply in relation to a person who carries on two or more trades which are in different localities, but which are concerned wholly or mainly with goods or services of the same kind, as if, in relation to the assets used for the purposes of the trades, the trades were the same trade.

(b) This section shall apply in relation to a person who ceases to carry on a trade or trades (the old trade or trades) which he has carried on for a period of ten years or more and commences to carry on another trade or trades (the new trade or trades) within a period of two years from the date on which he ceased to carry on the trade or trades as if, in relation to the old assets used for the purposes of one of the old trades and the new assets used for the purposes of the new trade, the two trades were the same trade.

(9) This section shall apply with the necessary modifications—

(a) in relation to the discharge of the functions of a public authority,

(b) in relation to the occupation of woodlands where the woodlands are managed by the occupier on a commercial basis and with a view to the realisation of profits,

(c) in relation to a profession, office or employment,

(d) in relation to such of the activities of a body of persons whose activities are carried on otherwise than for profit and are wholly or mainly directed to the protection or promotion of the interests of its members in the carrying on of their trade or profession as are so directed,

(e) in relation to the activities of a body of persons being a body not established for profit whose activities are wholly or mainly carried on otherwise than for profit but in the case of assets within subsection (5) (b) only if they are both occupied and used by the body and in the case of other specified assets only if they are used by the body,

(f) in relation to such of the activities of a body of persons established for the sole purpose of promoting athletic or amateur games or sports as are directed to that purpose, and

(g) in relation to farming,

as it applies in relation to a trade, and in this section “farming”, “trade”, “profession”, “office” and “employment” have the same meanings as in the Income Tax Acts, but not so as to apply the provisions of the Income Tax Acts as to the circumstances in which, on a change in the persons carrying on a trade, a trade is to be regarded as discontinued, or as set up and commenced and “a trade of dealing in or developing land” shall include a business of dealing in or developing land regarded as a trade under those Acts.

(10) Without prejudice to the provisions of this Act providing generally for apportionments, where consideration is given for the acquisition or disposal of assets some or part of which are assets in relation to which a claim under subsection (1) or (2) applies, and some or part of which are not, the consideration shall be apportioned in such manner as is just and reasonable.

29. —(1) If the recipient so claims, receipt of a capital sum within paragraph (i), (ii), (iii) or (iv) of section 8 (2) (a) derived from an asset which is not lost or destroyed shall not be treated as a disposal of the asset if—

(a) the capital sum is wholly applied in restoring the asset, or

(b) the capital sum is applied in restoring the asset except for a part of the capital sum which is not reasonably required for the purpose and which is small, as compared with the whole capital sum,

but, if the receipt is not treated as a disposal, all sums which would, if the receipt had been so treated, have been brought into account as consideration for that disposal in the computation of a gain accruing on the disposal shall be deducted from any expenditure allowable under Schedule 1 as a deduction in computing a gain on the subsequent disposal of the asset:

Provided that this subsection shall not apply to cases falling within paragraph (b) of this subsection if immediately before the receipt of the capital sum there is no expenditure attributable to the asset under clauses (a) and (b) of paragraph 3 (1) of Schedule 1 (deduction allowable in computing a gain) or if the consideration for the part disposal so deemed to be effected on receipt of the capital sum exceeds that expenditure.

(2) If an asset is lost or destroyed and a capital sum received by way of compensation for the loss or destruction, or under a policy of insurance of the risk of the loss or destruction, is, within one year of receipt, or such longer period as the inspector may allow, applied in acquiring an asset in replacement of the asset lost or destroyed, the owner shall if he so claims be treated for the purposes of this Act—

(a) as if the consideration for the disposal of the old asset were (if otherwise of a greater amount) of such amount as would secure that on the disposal neither a loss nor a gain accrued to him, and

(b) as if the amount of the consideration for the acquisition of the new asset were reduced by the excess of the amount of the capital sum received by way of compensation or under the policy of insurance, together with any residual or scrap value, over the amount of the consideration which he is treated as receiving under paragraph (a).

(3) A claim shall not be made under subsection (2) if part only of the capital sum is applied in acquiring the new asset but if all of that capital sum except for a part which is less than the amount of the gain (whether all chargeable gain or not) accruing on the disposal of the old asset is so applied, then the owner shall, if he so claims, be treated for the purposes of this Act—

(a) as if the amount of the gain so accruing were reduced to the amount of the said part not applied in acquiring the new assets (and, if not all chargeable gain, with a proportionate reduction in the amount of the chargeable gain), and

(b) as if the amount of the consideration for the acquisition of the new asset were reduced by the amount by which the gain is reduced under paragraph (a).

(4) Where subsection (2) (a) applies to exclude from charge to capital gains tax a gain which, in consequence of Part II of Schedule 1 (assets held on the 6th day of April, 1974), is not all chargeable gain, the amount of the reduction to be made under subsection (2) (b) shall be the amount of the chargeable gain and not the whole amount of the gain; and in subsection (3) (b) for the reference to the amount by which the gain is reduced under subsection (3) (a) there shall substituted a reference to the amount by which the chargeable gain is proportionately reduced under the said subsection (3) (a).

(5) This section shall not apply in relation to a wasting asset.

30. —For the purposes of this Act, an amount by way of capital sum or premium provided under the European Communities (Retirement of Farmers) Regulations, 1974, whether or not an annuity is granted in lieu thereof, shall not be deemed to form part of the consideration for the disposal in relation to which such capital sum or premium is provided.