Vol. 483 No. 1
156 Mr. N. Ahern asked the Minister for Finance the threshold for capital gains tax on shares in indigenous companies; if he will give details of the changes in this threshold over recent years; if he will confirm that the equivalent threshold in the United Kingdom is seven times higher; if he will improve this situation in the budget; and if he will make a statement on the matter. [19778/97]
I assume that the Deputy is referring to the annual small gains exemption limit which has always been part of the capital gains tax code. Chargeable gains, from whatever source, in excess of this exemption limit in a year of assessment are subject to capital gains tax at either the standard rate of 40 per cent or the reduced rate of 26 per cent. In general the effect of inflation, by way of indexation, is taken into account in arriving at a chargeable gain.
The annual small gains exemption limit for individuals is £1,000. For 1981-82 and previous years the exemption was £500, and for 1982-83 up to 1991-92 the annual exemption was £2,000 for each individual. Since 1992 the exemption limit was reduced to £1,000 per annum. It was reduced specifically to discourage the practice of "bed and breakfasting", a process whereby shares were sold and subsequently re-purchased solely to rebase their value and realise capital gains under the threshold, i.e. tax free. I understand that in the United Kingdom, every individual has an annual exemption amount of £6,500 (1997-98). As the Deputy is no doubt aware, all taxation areas are reviewed every year in the context of the annual budget.
