Revenue Note for Guidance

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Revenue Note for Guidance

104 Allowance for capital gains tax on the same event

Summary

This section provides that where both capital gains tax and capital acquisitions tax are chargeable on the same property in connection with the same event, the capital gains tax paid is allowable as a credit against the capital acquisitions tax. The credit given will be clawed back to the extent that the asset is disposed of within 2 years after the date of the gift or inheritance.

Details

(1) Where either gift tax or inheritance tax and capital gains tax are charged on the happening of the same event in connection with the same property, the capital gains tax will not be allowed as a deduction in ascertaining the taxable value of the taxable gift or the taxable inheritance, but, provided it has been paid, will be allowed as a credit against the gift tax or inheritance tax. In relation to each asset, or part of each asset, disposed of, the amount deducted is the lesser of—

  • an amount equal to the amount of the capital gains tax attributable to such asset, or to part of such asset, or
  • an amount equal to the amount of gift tax or inheritance tax attributable to the property which is that asset, or that part of that asset.

Example

Where the same event gives rise to a claim for gift tax on company shares and cash, the company shares only are liable to capital gains tax. The tax position is, therefore, as follows:

Company shares

Cash

Total

CAT

€1,000

€800

€1,800

CGT

€1,500

—

€1,500

Only one asset (i.e. the company shares) is doubly taxed and the credit to be given against €1,000 is €1,000 (i.e. the lesser of the two taxes on the same property), leaving the net capital acquisitions tax on that asset at nil. The total capital acquisitions tax payable on the company shares and on the cash is €1,800. There would be no justification for giving a credit of €1,500 against €1,800, since the cash is not doubly taxed on the same event.

(2) In order to ascertain the capital gains tax attributable to the asset in question, it may be necessary to apportion certain items such as allowable losses or annual exemptions on a just and reasonable basis. Taxpayers have a right of appeal against any such apportionment made by the Revenue Commissioners.

(3) The credit granted under subsection (1) will cease to apply to the extent that the asset is disposed of within 2 years after the date of the gift or inheritance.

Relevant Date: Finance Act 2015