733 Reorganisation of units in unit trust scheme

Summary

The provisions of section 584 (reorganisation or reduction of share capital) are extended to unit trusts so as to allow a switching of units from one sub-fund to another within an “umbrella” unit trust without giving rise to a disposal for capital gains tax purposes.

Details

(1) A reorganisation of units in a trust scheme includes —

• a situation where persons are, whether for payment or not, allotted units in the scheme in respect of and in proportion to their holding of units in the scheme or of any class of units in the scheme, and
• any case where there is more than one class of units and the rights attached to any units are altered.

(2)(a) Section 584 applies in relation to a reorganisation or reduction of units in any unit trust scheme registered under the Unit Trusts Act, 1972 or authorised under the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 1989.

(2)(b) However, section 584 is not to apply to a reorganisation of units in a scheme where the units are exempt from capital gains tax. [Units in a sub-fund of a unit trust scheme composed of exempt assets are themselves exempt].

(3) Section 584 as it is applied by section 585 (conversion of securities) and section 586 (company amalgamations by exchange of shares) do not have relevance for the reorganisation of units in unit trust schemes and are disapplied.

Relevant Date: Finance Act 2019