Retirement relief applies to a disposal of business or farming assets that have been owned and used for such purposes for a period of 10 years prior to the disposal. In order to qualify for the relief, an individual must be aged 55 years or over. The relief also applies to the disposal by an individual of all or part of the shares of a company which is a trading or farming company and the individual’s family company or a member of a trading group of which the holding company is the individual’s family company. It also applies to certain personally owned assets which are used by the company and to land which has been leased under the 1992, 1999 or 2005 EU Early Retirement From Farming Schemes, where the land was owned by an individual for a period of at least 10 years and used by him for the purposes of farming throughout that period.
Land which has been let for the period of 5 years prior to its disposal under a compulsory purchase order for the purposes of road-building or road-widening, but prior to its first letting was farmed for 10 years by the person making the disposal, also qualifies for retirement relief as does land which has been let at any time in the period of 15 years prior to its disposal but, prior to its first letting, was farmed for 10 years by the person making the disposal and the disposal is to a child. For this purpose, "child" includes certain nephews and nieces and foster children of the individual concerned.
The assets or shares in question must have been owned by the individual for a period of not less than 10 years ending on the date of the disposal and must have been chargeable business assets throughout the 10-year period ending with the disposal (subject to the variation mentioned above in relation to land that is let for part of the period of ownership).
In addition, where the disposal is of shares, the company in which the shares were held must have been a trading or farming company and the individual's family company, or a member of a trading company of which the holding company is the individual's family company, during a period of not less than 10 years ending on the date of disposal. Moreover, in any case, the individual must have been a working director of the company for a period of not less than 10 years during which he or she has been a full-time director for not less than 5 years.
In the case of disposals outside the family, the relief threshold is currently €750,000, that is to say, where the value of the consideration given for the disposal is less than or equal to €750,000, any gain accruing on disposal is fully relieved. Marginal relief may apply in certain situations. The current threshold of €750,000 that applies to disposals outside the family will be reduced to €500,000 for disposals of qualifying assets by individuals aged 66 or over on or after 1 January 2014.
In the case of disposals within the family, there is no restriction at present on the amount of relief that can be claimed but a cap of €3m will apply to disposals, on or after 1 January 2014, of qualifying assets by individuals aged 66 or over. If qualifying assets on which relief is granted are disposed of within 6 years, the relief granted is clawed back.
From information on personal tax returns for 2011, the most recent year available, 58 individuals claimed capital gains tax retirement relief within the family on disposals where the consideration exceeded €1.5million. The total aggregate consideration in respect of these 58 disposals was €292.8 million. The number of individuals that claimed capital gains tax retirement relief on disposals outside the family where the consideration exceeded €500,000 was 148. The total aggregate consideration in respect of these 148 disposals was €117.7 million.
However, as the amount entered on tax returns refer to the value of the consideration and not the actual capital gains, there is no dedicated basis for separately identifying an estimate of the yield that would have arisen in these cases if the lower cap had been in place for the 2011 tax year. Accordingly the specific information requested by the Deputy is not available.
