Tuesday, 2 March 2004

Questions (149, 150, 151)

Róisín Shortall

Question:

229 Ms Shortall asked the Minister for Finance the tax liability of a pensioner who has been contributing to a social club associated with a place of work for many years and who receives a lump sum from the sale of the social club on the closure of the place of work. [6537/04]

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Written answers (Question to Minister for Finance)

I am advised by the Revenue Commissioners that the receipt of a lump sum by a club member in the circumstances outlined is chargeable to tax in the hands of the recipient. If the social club is an incorporated body which is liquidated, the distribution to members from the proceeds of the sale of club assets is a capital distribution chargeable to capital gains tax, CGT, in the members' hands. If, however, the proceeds of sale are distributed prior to liquidation, or if the company is not liquidated, the members are chargeable to income tax on the distributions received. If the social club is an unincorporated body, the members are liable for the CGT arising on the disposal of club assets. In practice, the chargeable gain is computed on the sale of the property and the lump sum payment received by each member represents their share of that chargeable gain.

Where CGT applies, each member is charged on his/her net chargeable gains for the relevant year. These are the aggregate of all gains, including the gain on the sale of the social club, less capital losses. The resultant gain is reduced by the personal exemption of €1,270, €2,540 in the case of a married couple where both had chargeable gains. The balance is taxable at 20%. Indexation relief will apply in respect of the annual contributions paid in the period 6 April 1974 to 31 December 2002.

Where income tax applies, each member is charged to tax on the aggregate of the distribution received and the dividend withholding tax of 20%. However, the dividend withholding tax may be set off against the income tax payable for the relevant tax year.

As will be seen from the foregoing, the issues are somewhat complicated. If the person or persons concerned require further advice on this matter, it is advised that they contact the Revenue Commissioners who will be pleased to assist.

Cecilia Keaveney

Question:

230 Cecilia Keaveney asked the Minister for Finance the supports which are available for a leisure centre development attached to hotels; and if he will make a statement on the matter. [6539/04]

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Capital allowances are available for buildings or structures used for the purposes of the trade of hotel-keeping and are available for an attached leisure centre if the premises in its entirety — that is, the hotel and the leisure centre — is used for the trade of hotel-keeping. In the Finance Act 2003, I increased the period over which the capital allowances can be claimed from seven years to 25 years. Under transitional arrangements, the seven-year write-off period will continue to apply for capital expenditure incurred after 4 December 2002 and before 31 July 2006, where the relevant planning authority receives a full and valid planning application on or before 31 May 2003.

Finian McGrath

Question:

231 Mr. F. McGrath asked the Minister for Finance if he will provide the best possible advice for a person (details supplied). [6546/04]

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I should explain that for the purpose of gift and inheritance tax, the relationship between the person who provided the gift or inheritance, that is, the disponer, and the person who received the gift or inheritance, that is the beneficiary, determines the maximum tax free threshold. The group thresholds are indexed by reference to the consumer price index. The current year thresholds are as follows:

Group

Relationship to Disponer

Group Threshold 2004

A

Son/Daughter

456,438

B

Parent/Brother/Sister /Niece/Nephew/Grandchild

45,644

C

Relationships other than Group A or B

22,822

Any other gift or inheritance received within the same group by an individual since 5 December 1991 will be taken into account when applying the thresholds for the purposes of calculating CAT. If the total value of all inheritances and gifts received since this date is above the relevant threshold, then a 20% CAT will apply on the difference.

As the Deputy will be aware, the Revenue Commissioners are responsible for the administration of tax, including inheritance tax. The capital acquisitions tax division of the Revenue Commissioners, which deals with issues related to inheritance tax, is based in the Stamping Building, Dublin Castle, Dublin 2. If the recipient of the particular inheritance wishes to write to this division, every assistance will be given by Revenue on this matter. If this individual would like to call to the Revenue office in person, there is a personal caller facility provided by the capital acquisitions taxpayer information unit in the Stamping Building providing advice to customers in relation to gift and inheritance tax and assistance in completing associated tax forms. They can also provide advice and assistance, in conjunction with the probate office, to persons acting in a personal capacity in relation to extracting grants of probate/administration for a deceased's estate.