Capital Gains Tax - Disposals by virtue or in consequence of separation, divorce or dissolution of civil partnerships and the remittance basis of Assessment

Section 29 TCA 1997 contains the general provisions regarding persons chargeable to Capital Gains Tax (CGT).

Section 29 TCA 1997 as amended by Section 45 Finance Act 2013 and Section 41 Finance (No. 2) Act 2013 counters a potential avoidance of CGT by a non-Irish domiciled individual transferring assets situated outside the State to his or her spouse or civil partner in order to avoid the remittance basis of assessment for CGT purposes.

Practitioners have enquired about the application of these provisions to disposals of assets situated outside the State made by individuals who are resident or ordinarily resident but non-domiciled in the State, by virtue or in consequence of a legal separation, divorce or dissolution of civil partnerships.

Where such an individual disposes of assets (the disponer) situated outside the State, by virtue or in consequence of a legal separation, divorce or dissolution of a civil partnership, whether by

• transferring the asset to his or her former spouse or civil partner who retains ownership of the asset,
• transferring the asset to his or her former spouse or civil partner who disposes of the asset to a third party,or
• disposing of the asset to a third party and paying the proceeds of the disposal to his or her former spouse,

the disponer is not subject to CGT on the disposal of the asset - even if the former spouse or civil partner remits the proceeds of any disposal to the State.

The remittance basis does not apply in these circumstances because any monies that might be remitted to the State in these circumstances are not remitted or treated as remitted for the benefit of the original disponer but for the benefit of the separated or divorced spouse or of the partner whose civil partnership is dissolved. See Paragraphs 3 and 4 of the IT-CGT-CT Manual 02.03.01 on the Revenue website for further details.

21 January 2015