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Tax Code.

Dáil Éireann Debate, Wednesday - 17 November 2004

Wednesday, 17 November 2004

Questions (165, 166, 167)

Jack Wall

Question:

205 Mr. Wall asked the Minister for Finance if he will address the concerns of a person (details supplied) in County Kildare in budget 2005; the mechanism available to them to address their concerns; and if he will make a statement on the matter. [29063/04]

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Jack Wall

Question:

206 Mr. Wall asked the Minister for Finance if he will address the concerns of a person (details supplied) in County Kildare in budget 2005; the mechanism available to them to address their concerns; and if he will make a statement on the matter. [29064/04]

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Written answers (Question to Minister for Finance)

I propose to take Questions Nos. 205 and 206 together.

Capital Gains Tax, CGT, is a tax on a capital gain arising on the disposal of assets. A 20% rate of CGT now applies on the gains arising on the disposal of assets, including land which is the subject of a compulsory purchase order, CPO. This is the lowest rate of CGT in recent history. Where compensation is received for land that is compulsorily acquired, any gains arising from the amount paid for the acquisition of land are chargeable to tax. In other words, if there is a sum paid by an authority for the compulsory acquisition of land, then irrespective of its components, for example, disturbance, injurious affection, etc., that total sum will be the amount to be assessed for tax. The CGT due on a disposal of land under a CPO is calculated in the same way as any other disposal of land. The consideration for the disposal will be the sum received for the land.

As the Deputy is aware, it is not the practice to comment in the lead up to the annual budget and Finance Bill on the intention or otherwise to make changes in taxation.

Tony Gregory

Question:

207 Mr. Gregory asked the Minister for Finance if he will review the amount of capital gains tax demanded from a person (details supplied) in Dublin 7. [29075/04]

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A charge to capital gains tax arises in respect of chargeable gains accruing on the disposal of assets. Such gains are computed in accordance with the provisions of the capital gains tax Acts. The charge extends to individuals, companies and unincorporated bodies of persons. CGT has no connection with income, which is the basis for income tax. The CGT liability of an individual is computed, irrespective of age, by reference to the chargeable gain on the disposal.

I have been advised by the Revenue Commissioners that as many shareholders might not ordinarily be expected to be familiar with capital gains tax provisions, they have written to First Active members who received payment from the Royal Bank of Scotland in respect of its acquisition of First Active. Revenue informed them of a potential CGT liability arising from the disposal of the shares and how to make a payment of any CGT liability. This was to ensure that people do not inadvertently incur interest which could arise if payment was not made on time. Any CGT liability on disposal of these shares was due for payment on or before 31 October 2004.

From the information supplied to the Revenue Commissioners, the person referred to by the Deputy received a payment of €3,069 from Royal Bank of Scotland and, provided she had no other gain or loss, her CGT liability is calculated as follows:

Cash Received

€3,069

Allowable Costs

Nil (as the shares were acquired at no cost they have a nil base)

Chargeable Gain

€3,069

Less Personal Exemption

(€1,270)

Net Chargeable Gain

€1,799 @ 20% = €359.80

The chargeable gain above can be reduced by any allowable losses arising in 2004 together with any unused allowable losses from disposals of assets chargeable to capital gains tax in any previous year. This is the standard method and was used in other disbursements of free shares in the past few years.

I have also been informed by the Revenue Commissioners that the Revenue documentation that the person received includes a computation sheet and a payslip. The payslip and payment should be sent to the Collector General's office. The documentation issued also includes a special Revenue helpline number for any further assistance required by the person referred to by the Deputy.

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