Finance Act 2002 – Capital Gains Tax

Section 61 amends Section 605 TCA 1997. That section provides for a deferral of capital gains tax liability on the disposal of assets under a CPO if the proceeds are reinvested in certain other assets. In general terms both the original assets and the replacement assets must either be fixed assets of a trade, or land or buildings, which are not assets of a trade. (It should be noted that under Section 652 where the asset disposed of is development land, the capital gains tax deferral is only available if the land is subject to the CPO for the purposes of road construction or widening). The amendment to Section 605 allows a person who is disposing of let land under a CPO for road-building or road-widening to qualify for roll-over relief if:

• In the 10 years ending with the time the land was first let, the person farmed the land
• The first letting took place within 5 years ending with the disposal, and
• The proceeds are re-invested in land, which the person will farm or in fixed assets of another trade.