I am informed by the Revenue Commissioners that income derived by an individual from the letting of a taxi licence is chargeable to income tax. The rate of income tax is dependent on the individual's total income from all sources. I am also informed by the Revenue Commissioners that a gain on the disposal of a taxi licence is liable to Capital Gains Tax (CGT) at a rate of 30%.
If it is the case that the individual disposing of the taxi licence is over 55 years of age and has owned and used that licence in the course of a business carried on by him for a period of at least ten years ending with the disposal, then the individual might be entitled to a relief known as "retirement relief" which has the effect of reducing CGT due on the disposal of the taxi licence. Details of CGT retirement relief is contained in Chapter 5 of Revenue's ”Guide to Capital Gains Tax” which is available from Revenue’s website (www.revenue.ie).
As to the "transfer" of a taxi licence, I am further informed by the Revenue Commissioners that where a taxi licence is transferred for an amount less than it could realistically be sold for on the open market, then, for the purposes of computing CGT, the disposal is deemed to have been for the "market value" of the licence instead of the amount actually paid for the transfer (if any).
Separately, the transfer of a taxi licence by way of a gift or by way of a partial gift to a person may give rise to a charge to Capital Acquisitions Tax (CAT). CAT includes both gift and inheritance tax. The beneficiary who receives the gift of the taxi licence is the person who is liable for any gift tax due on such a gift.
For CAT purposes the beneficiary is allocated a tax-free threshold depending on their relationship with the person making the gift. There are three CAT tax-free threshold Groups as follows:
Group A: €250,000 — applies where the beneficiary is a child (including adopted child, step-children and certain foster children) or minor child of a deceased child of the disponer.
Group B: €33,500 — applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.
Group C: €16,750 — applies in all other cases.
These are the tax free thresholds which will apply to gifts and inheritances taken after 7 December 2011 if Finance Bill 2012 is passed by the Oireachtas.
If the value of the gift received by a beneficiary exceeds his or her tax-free Group threshold, then a rate of CAT of 30% will apply on the excess value over the tax-free Group threshold figure.
When calculating whether a beneficiary has received benefits in excess of his or her Group tax-free threshold, any other gifts and inheritances received by that beneficiary since 5 December 1991 from within the same Group are also taken into account.
Any gift or inheritance received from a spouse or civil partner is exempt from CAT.
Finally, if the transfer of a taxi licence gives rise both to a charge to CGT on the person making the gift and to CAT on the person receiving the gift, then a credit is allowed for the CGT paid against the CAT payable in order to avoid the transfer of the licence from being doubly taxed to both CGT and CAT on the same event.