Vol. 519 No. 5
145 Mr. Farrelly asked the Minister for Finance if, in the event of a compulsory purchase order being served by the National Roads Authority for the provision of new motorways or by passes throughout the country, he will ensure that people will only pay a standard rate of capital gains tax of 20% regardless of when the agreement on the price is made or when payment would be issued; and if he will make a statement on the matter. [14163/00]
In budget 2000, I extended the 20% capital gains tax, CGT, rate to apply to disposals of non-residential development land. This rate applies to disposals of all development land made on or after 1 December 1999. For disposals of non-residential development land made before this date, a 40% CGT rate applied. It is long standing Government policy that on reduction of a tax rate, refunds of taxes paid at the higher rate before the date of the change do not apply. This policy remains in place.
The disposal date for compulsorily acquired land is the date the compensation is agreed, or if earlier, the date the authority enters on the land in pursuance of its powers. Where farmland is disposed of as a result of a compulsory purchase order by an authority for the purposes of road widening or road building, a relief applies for CGT purposes. Where the entire sale proceeds of the disposal are reinvested in replacement farm land, the CGT liability will be deferred until the disposal of the replacement asset occurs. If less than the full sale proceeds are reinvested, relief only applies to the part of the proceeds actually reinvested.
