I propose to take Questions Nos. 260 to 262, inclusive, together.
Where compensation is received after land is compulsorily acquired, any gains arising from the one indivisible sum paid for the acquisition of land are chargeable for tax. In other words, if a sum is paid by an authority for the compulsory acquisition of land, irrespective of its components, for example, disturbance, injurious affection and so on, that total sum will be the amount to be assessed for tax.
The capital gains tax due on a disposal of land under a compulsory purchase order is calculated in the same way as for any other disposal of land. The consideration for the disposal will be the sum received for the land. From that consideration, the following may be deducted: any costs of disposal, for example, legal fees; the cost, including any incidental costs, of acquisition of the land, which may be indexed either from 6 April 1974, or, if later, the date of acquisition of the land, up to 31 December 2002; any enhancement expenditure of a capital nature on the land during the period of ownership, which may also be indexed either from 6 April 1974, or, if later, the date of acquisition of the land, up to 31 December 2002; and the vendor's annual personal exemption of €1,270, if not already used in full on a previous disposal of an asset or assets in that year of assessment. The amount remaining after those deductions is then taxable at 20%.
However, depending on the sum paid by the authority, a disposal of land under a compulsory purchase order may constitute a disposal of development land. Development land is land disposed of for a higher sum than its "current use value", that being the value that the land would have if no development other than development of a minor nature could be carried out in relation to it. If the disposal is of development land and the total consideration receivable by an individual for disposals of development land in any year of assessment exceeds €19,050, certain restrictions apply. Those are that: indexation relief for the cost of acquisition of the land only applies to the "current use value" of the land on 6 April 1974, or, if later, the date of acquisition of the land; indexation relief is not available for enhancement expenditure on the land during the period of ownership; and the only losses which may be offset against gains on development land are losses which have been incurred on disposals of other development land.
There are no plans to change the methods by which capital gains tax is calculated on land that has been compulsorily purchased.