Dáil Éireann Debate, Tuesday - 10 February 2009
257 Deputy Denis Naughten asked the Minister for Finance the rate of capital gains tax under a compulsory purchase order for road building or road widening, in which the compensation was received in 2008 for farmland acquired in 2007; the position in respect of compensation is paid in 2009; and if he will make a statement on the matter. [4806/09]
Amharc ar fhreagraI am advised by the Revenue Commissioners that the rate of capital gains tax (CGT) payable for the disposal of an asset is the rate on the date of disposal of that asset. For CGT purposes, the date of disposal of land acquired under a compulsory purchase order is the earlier of the date the authority enters on the land, and the date on which the compensation is agreed.
This general rule does not apply, however, where the disposal is under a compulsory purchase order and is for the purposes of, or ancillary to, road construction, widening or extension, the person making the disposal is engaged in farming, and immediately before the disposal, the land was used for the purposes of farming. In these circumstances, the date of disposal for CGT purposes is not until the date the compensation is received.
As the Deputy may be aware, I have made a number of changes to the CGT code in my recent Budget and Finance Act. These include changes to the payment dates and also an increase in the rate of CGT from 20% to 22% for disposals made on or after 14 October 2008. Therefore, in the circumstances outlined by the Deputy, the rate of CGT on a disposal of land acquired under a compulsory purchase order, where the compensation was received between 1 January and 13 October 2008, was 20%; and the rate of CGT for such a disposal, where the compensation was received after 14 October 2008, is 22%.
