Dáil Éireann Debate, Thursday - 6 July 2006
251 Mr. Bruton asked the Minister for Finance the value of the capital gains tax exemption; the changes that have been made in this limit in the course of the past five years; and if he will make a statement on the matter. [27707/06]
View answerThe annual capital gains tax exemption for individuals is €1,270. Changes to the exemption have not been made in the last 5 years.
252 Mr. Bruton asked the Minister for Finance the changes in the tax treatment of share options that have been made since 2002; and if he will make a statement on the matter. [27708/06]
View answerSection 128 Taxes Consolidation Act 1997 (as amended) charges to income tax the gain made by directors of companies and employees on the exercise of rights granted to them to acquire shares or other assets. Section 128A, which was enacted in 2000, provided for the deferral, subject to conditions, of this tax charge for a period of up to seven years. Section 519 of, and Schedule 12 C to, the Taxes Consolidation Act 1997 provides for the waiving of the income tax charge in the case of approved share option schemes.
The law relating to share options has been amended on three occasions since 2002.
Section 11 of the Finance Act 2002 amended Section 128 to take account of the alignment of the tax and calendar years. The filing date for making a return of share options granted or exercised was changed from 30 June to 31 March. In addition, the amendment provided that where a company is not resident in the State but operates here through a branch or agency, the responsibility for making the return of share options granted or exercised will rest on the company's representative in the State.
Sections 7 & 8 of the Finance Act 2003 abolished, with effect from 6 February 2003, the right to defer payment of the income tax charged in respect of share options. Instead a new section — Section 128B — was introduced into the Taxes Consolidation Act to provide that, where an individual exercises an option on or after 30 June 2003, the income tax due under Section 128 in respect of any realised gain must be paid to the Collector-General within thirty days of that event.
Finally, Section 16(1) of Finance Act 2005 extended the charge to income tax under Section 128 to gains arising from the exercise of share options by individuals who are not resident in the State at the date the option is granted. The legislation is subject to a commencement order and will apply to options granted on or after the date the commencement order is signed. The reason for this is to allow time for consultation with a number of representative bodies with a view to the Revenue Commissioners issuing a Statement of Practice on how the legislation will be applied. I am advised by the Revenue Commissioners that these consultations are ongoing.
