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39 1997

TAXES CONSOLIDATION ACT, 1997

CHAPTER 2

Capital gains tax: disposals of development land

Interpretation ( Chapter 2 ).

[FA82 s36(1)]

648. —In this Chapter—

the Act of 1963” means the Local Government (Planning and Development) Act, 1963;

compulsory disposal” means a disposal to an authority possessing compulsory purchase powers, which is made pursuant to the exercise of those powers or the giving of formal notice of intention to exercise those powers, other than a disposal to which section 29 of the Act of 1963 applies;

“current use value”—

(a) in relation to land at any particular time, means the amount which would be the market value of the land at that time if the market value were calculated on the assumption that it was at that time and would remain unlawful to carry out any development (within the meaning of section 3 of the Act of 1963) in relation to the land other than development of a minor nature, and

(b) in relation to shares in a company (being shares deriving their value or the greater part of their value directly or indirectly from land, other than shares quoted on a stock exchange) at any particular time, means the amount which would be the market value of the shares at that time if the market value were calculated on the same assumption, in relation to the land from which the shares so derive value, as is mentioned in paragraph (a);

development land” means land in the State the consideration for the disposal of which, or the market value of which at the time at which the disposal is made, exceeds the current use value of that land at the time at which the disposal is made, and includes shares deriving their value or the greater part of their value directly or indirectly from such land, other than shares quoted on a Stock Exchange;

development of a minor nature” means development (not being development by a local authority or a statutory undertaker within the meaning of section 2 of the Act of 1963) which, under or by virtue of section 4 of the Act of 1963, is exempted development for the purposes of the Local Government (Planning and Development) Acts, 1963 to 1993;

relevant disposal” means a disposal of development land made on or after the 28th day of January, 1982.

Companies chargeable to capital gains tax in respect of chargeable gains accruing on relevant disposals.

[FA82 s36(4) to (6); FA92 s68(a)]

649. —(1) Notwithstanding any provision to the contrary in the Corporation Tax Acts, a company shall not be chargeable to corporation tax in respect of chargeable gains accruing to it on relevant disposals, and accordingly—

(a) such gains shall not be regarded as profits of the company for the purposes of corporation tax, and

(b) the company shall be chargeable to capital gains tax under the Capital Gains Tax Acts in respect of those gains.

(2) Sections 617 and 621 to 626 shall apply with any necessary modifications in relation to capital gains tax to which a company is chargeable on chargeable gains accruing to the company on a relevant disposal as they apply in relation to corporation tax on chargeable gains, and references in those sections to corporation tax shall be construed as including references to capital gains tax.

(3) (a) Where a company which is or has been a member of a group of companies (within the meaning of section 616 ) makes a relevant disposal of an asset which, as a result of a disposal which was not a relevant disposal, the company had acquired from another member of that group at a time when both were members of the group, the amount of the chargeable gain accruing on the relevant disposal and the capital gains tax on that gain shall be computed as if all members of the group for the time being were the same person and as if the acquisition or provision of the asset by the group, so taken as a single person, had been the acquisition or provision of the asset by the member disposing of the asset.

(b) Notwithstanding paragraph (a), where under section 618 (2) or 623 a member of the group (in this paragraph referred to as “the first-mentioned member”) had been treated as having acquired or reacquired the asset at a time later than the original acquisition or provision of the asset by the first-mentioned member or by another member of the group, as the case may be, paragraph (a) shall apply as if the reference in that paragraph to the acquisition or provision of the asset by the group were a reference to its acquisition or reacquisition so treated as having been made by the first-mentioned member.

Exclusion of certain disposals.

[FA82 s37]

650. Sections 651 to 654 shall not apply to a relevant disposal made by an individual in any year of assessment if the total consideration in respect of all relevant disposals made by that individual in that year does not exceed £15,000.

Restriction of indexation relief in relation to relevant disposals.

[FA82 s38]

651. —For the purposes of computing the chargeable gain accruing to a person on a relevant disposal, the adjustment of sums allowable as deductions from the consideration for the disposal which under section 556 (2) would otherwise be made shall be made only to—

(a) such part of the amount or value of the consideration in money or money's worth given by the person or on the person's behalf wholly and exclusively for the acquisition of the asset, together with the incidental costs to the person of the acquisition, as is equal to the current use value of the asset at the date of the acquisition together with such proportion of the incidental costs to the person of the acquisition as would be referable to such value, or

(b) in the case of an asset to which section 556 (3) applies, such part of the market value of the asset on the 6th day of April, 1974, as is equal to the current use value of the asset on that date.

Non-application of reliefs on replacement of assets in case of relevant disposals.

[FA82 s39; FA95 s73(1); FA97 s77(1)]

652. —(1) Consideration obtained for a relevant disposal shall not be regarded for the purposes of relief under section 597 as having been obtained for the disposal of old assets within the meaning of that section.

(2) (a) In this subsection, “the relevant local authority”, in relation to a relevant disposal, means the council of a county or the corporation of a county or other borough or, where appropriate, the urban district council, in whose functional area the land being disposed of is situated.

(b) Subsection (1) shall not apply to a relevant disposal where the relevant local authority gives a certificate in writing to the person making the disposal stating that the land being disposed of is subject to a use which, on the basis of guidelines issued by the Minister for the Environment and Local Government, is inconsistent with the protection and improvement of the amenities of the general area within which that land is situated or is otherwise damaging to the local environment.

(3) (a) In this subsection—

assets of an authorised racecourse” means assets of a racecourse which is an authorised racecourse where the assets are used for the provision of appropriate facilities or services to carry on horseracing at race meetings or to accommodate persons associated with horseracing, including members of the public;

authorised racecourse” has the same meaning as in section 2 of the Irish Horseracing Industry Act, 1994.

(b) Subject to paragraph (c), subsection (1) shall not apply to consideration obtained for a relevant disposal where—

(i) throughout a period of 5 years ending with the time of disposal the old assets, and

(ii) the new assets within the meaning of section 597 ,

are assets of an authorised racecourse.

(c) Section 597 shall apply in relation to assets of an authorised racecourse as if—

(i) references in subsection (4) and (5) of that section to new assets ceasing to be used for the purposes of a trade included a reference to new assets ceasing to be assets of an authorised racecourse, and

(ii) subsection (11)(b) had not been enacted.

(4) Section 605 shall not apply to a relevant disposal.

(5) (a) In this subsection, “farming” has the same meaning as in section 654 .

(b) Subsection (4) shall not apply to a relevant disposal made to an authority possessing compulsory purchase powers where—

(i) at the time of the disposal the original assets (within the meaning of section 605 ) consist of land occupied and used only for the purposes of farming, and

(ii) the disposal is made—

(I) for the purposes of enabling the authority to construct, widen or extend a road or part of a road, or

(II) for a purpose connected with or ancillary to the construction, widening or extension of a road or part of a road by the authority.

(6) Subsections (1) and (4) shall not apply to a relevant disposal made by a body of persons established for the sole purpose of promoting athletic or amateur games or sports, being a disposal which is made in relation to such of the activities of that body as are directed to that purpose.

Restriction of relief for losses, etc. in relation to relevant disposals.

[FA82 s40(1) and (2)]

653. —(1) Notwithstanding any provision to the contrary in the Capital Gains Tax Acts, any losses accruing on disposals which are not relevant disposals shall not, in the computation of a person's liability to capital gains tax in respect of chargeable gains accruing on relevant disposals, be deducted from the amount of those chargeable gains.

(2) In the computation of the amount on which under section 31 capital gains tax is to be charged on chargeable gains accruing on relevant disposals, any allowable losses accruing on relevant disposals may be deducted in accordance with that section but, in so far as they are so deducted, they shall not be treated as relevant allowable losses within the meaning of section 78 (4) for the purposes of the calculation required to be made under section 78 (2), and for the purposes of this subsection any necessary assessments or additional assessments, as may be appropriate, may be made.