55 Payment of tax on certain assets by instalments

Summary

This section allows payment of capital acquisitions tax on certain agricultural and business property by instalments at a more favourable rate of interest than would normally apply. Taxpayers have the option of spreading these payments over 5 years subject to simple interest at the rate or rates set out in Part 2 of the Table in section 51(2) (inserted by section 145 of the Finance Act 2005). The instalment facility for the payment of tax on agricultural and business property will continue to apply to a gift or an inheritance of such property which is sold or compulsorily acquired within the instalment period, provided that the proceeds of the sale or compulsory acquisition are re-invested in other qualifying property within 1 year of the sale or 6 years in the case of a compulsory acquisition of agricultural property. The section also gives the Minister power to vary the interest rate by Ministerial regulation.

Business property which would not, as a rule, qualify for business relief, because of the nature of the business or the size of the shareholding, is not qualifying business property for the purpose of this section.

Details

(1) “agricultural property” has the same meaning as it has in section 89; and

“relevant business property” has the same meaning as it has in section 93, other than quoted shares or securities. For the purposes of the definition, the minimum period of ownership provisions of section 94 and section 100(4) do not apply.

(2) Where the whole or part of the tax which is due and payable in respect of a taxable gift or taxable inheritance is attributable to either or both agricultural property and relevant business property, section 54 will apply to that whole or part of the tax notwithstanding subsections (3) and (4) of that section. [Section 54(3) provides that all unpaid instalments must be paid up on the occasion of a sale and section 54(4) provides that the instalment option applies, in general, to land and buildings.]

The instalment provisions will apply to business property (other than quoted shares or securities) notwithstanding the fact that the business property does not qualify for business relief by reason of not having been held (or used in the business concerned) for the minimum ownership period.

Where agricultural or business property is sold or compulsorily acquired within the 5 year instalment period, any unpaid instalments must be paid unless the proceeds of the sale or compulsory acquisition are re-invested in other qualifying property within a year of the sale or 6 years in the case of a compulsory acquisition of agricultural property.

The rate at which interest is payable on the whole or part of the tax will be the rate or rates set out in Part 2 of the Table in section 51(2) (inserted by section 145 of the Finance Act 2005), or such other rate (if any) as stands prescribed by the Minister for Finance by regulations, for each day or part of a day instead of the rate normally applying to such tax. However, the normal rate of interest will apply to an overdue instalment.

(3) An “overdue instalment” means an instalment which is overdue for the purposes of section 54 (as it applies to section 55) or for the purposes of paragraph (a) of subsection (2) i.e. where agricultural property or business property is sold or compulsorily acquired and not re-invested within 1 year of the sale or compulsory acquisition in other agricultural property or relevant business property (except where the interest of the donee or successor is a limited interest).

(4) The value of a business or an interest in a business for the purposes of the section is its net value ascertained in accordance with section 98.

(5) The section does not apply to the 6% or 1% taxes payable on certain discretionary trusts under sections 15 and 20.

(6) Every regulation made under the section to alter the rate of interest payable must be laid before Dáil Éireann as soon as possible after it is made. If a resolution annulling the regulation is passed by Dáil Éireann within 21 sitting days after the regulation is laid before it, the regulation will be annulled. However, this will not affect the validity of anything done under that regulation.

Relevant Date: Finance Act 2015