Chartered
Tax
Consultant
Stage 3 Module 6
Succession Planning
Presenter Name – Carol Hogan
24th & 25th August 2012
Chartered Accountants House
www.charteredaccountants.ie
EDUCATING
SUPPORTING
REPRESENTING
Learning Objectives
•
•
•
•
Tax reliefs on transfers of assets?
Succession Planning Structures
Marriage and marriage breakdown
Taxation of estates and post death planning
Friday Afternoon
•
•
•
•
•
•
•
•
Favourite
Business Relief
Nephew/Niece
Relief
Agricultural Relief
Dwelling House Relief
CAT/CGT Set Off
Retirement Relief
Transfer of site to child
Consanquinity Relief
Young Trained Farmer’s Relief
Saturday
• Share valuations
• Trusts
– Bare trusts
– Fixed Income trusts
– Discretionary trusts
•
•
•
•
Family Partnerships
Companies
Taxation of Estates
Marriage Breakdown
Introduction
• Transfer on wealth to next
generation/spouse gift/inheritance/marriage
break-up
• Personal Wealth v Business
• Role of family members in the business
• Building up fund outside the business
• Impact all tax heads
CAT – Key Point Refresher
Gift & Inheritance Tax @ 25%
Group Thresholds
Spouse transfers exempt
Beneficiary liable
Aggregate from 5th Dec1991
Annual exemption €3,000
Date of the gift =
Date of inheritance =
Sec 2 CATCA 2003
“On a death”
Beneficially entitled in possession
Date of death - disponer/LT
Relevant for certain reliefs
Valuation date relevant for:
Valuation date for gift =
Valuation date for inheritance =
Can have < 1 VD per estate
Agricultural and Business Reliefs
Date of gift
Earliest of three dates
•Date of retainer
•Date benefit retained
•Date of delivery/payment/discharge
CGT and SD Key Points
CGT
Stamp Duty
Tax on Vendor/Transferor
Tax on Purchaser/Beneficiary
25% Rate
SD paid on MV
Gain = Proceeds/MV – Cost
MV imposed on gifts
Shares 1%
Commercial Property 1%-6%
Annual exemption €1,270
Residential Property 1%/2%
No CGT on death
No SD on death –exceptions
CAT Business Relief
Business Relief
• S. 90 to102A CATCA 2003
• 90% reduction in taxable value
• Taxable Value = MV less liabilities, costs,
expenses, consideration
• Applies to gifts and inheritances
• Limited or remainder interests
• S. 91CATCA 2003 – no relief from DTT
Relevant Business Property
• S. 93(1) CATCA 2003
• Agricultural Relief has priority
• S. 93(1)(a):
Sole trader/partnership
“property consisting of a business or an interest
in a business”
• S. 93(1)(b)-(f): Shares and securities
• S. 93(1)(e): Land & buildings, P&M held
personally and used in business
Shares – Ownership Tests
Beneficiary must satisfy one test
Test 1 Beneficiary controls > 25% voting rights
Test 2. Beneficiary has s. 27 CATCA ‘03 control
a) Controls > 50% voting power
b) Controls (or could obtain capacity to
control) board of directors
c) Receives (or has right) >50% dividends
d) Owns >= 50% of nominal shares
Shares – Quoted and Unquoted
• Quoted shares – unquoted when acquired by
donor or 23rd May 1994 (later of)
• No requirement for company to be Irish
registered or incorporated
• Ownership tests to be satisfied by donee
Control – Aggregate Shares
• Beneficiaries shares aggregated with
• Shares of relatives
• Shares of his nominees and nominees of
relatives
• Shares of trustees of settlement where
beneficiary or his relatives are objects
Who is a relative of Beneficiary?
S. 2(4) CATCA 2003
a) Spouse
b) Parent, child, uncle or aunt
c) Children and grandchildren of above stepchildren, grandchildren, cousins,
siblings
d) Spouse of relative at (b) or (c)
e) Grandparent
f) Company controlled by beneficiary
Shares – Ownership Tests
Test 3. 10% and Full time working test:
• Beneficiary owns >=10% of nominal value
issues share capital and
• Has worked full time in the company (or
group) for 5 years ending on date of
gift/inheritance
Land, Buildings, P&M
• Owned personally by disponer
• Used wholly for purposes of business
controlled by disponer
• Used wholly in partnership if disponer a
partner
• Control = majority of voting power held by
disponer
• Assets must be transferred to same
beneficiary at same time as shares or
partnership interest
Qualifying Business
S. 93(3) CATCA 2003
• Non-qualifying business
• “..consists wholly or mainly of “
• Dealing in currencies, securities, stocks or
shares, land or buildings or
• Making or holding on investments
• “Wholly or mainly” = >50%
• 50% of what? Turnover, profits, assets?
Revenue CAT Manual
• Ratio of asset value and profit to trading and
investment
• Ratio of turnover to investment income
• Employees engaged on trading and
investment sides
• Commercial reason for low trading profits
• Use of investment income
• Description of activity in directors’ report
Business Relief
• Wholly or mainly test met if business not
excluded
• Taxable value of any relevant business
property relating to investment assets
excluded
• Holding company – wholly or mainly holding
non excluded subsidiaries
• Ignore value of any subsidiaries carrying on
excluded businesses
“Business”
S. 90 CATCA 2003
• Includes exercise of profession or vocation
• Does not include business not carried on
for a gain
• Broader meaning than trading
“Business”
• Smith v Anderson
– “anything which occupies the time and
attention and labour of a man for the
purpose of profit”
• Town Investments v DOE
– “denotes the carrying on of a serious
occupation”
“Business”
• Does the receipt of rental income consist
of a business?
• Case law – distinction between business
carried on by individual and company
• AE v Revenue Commissioners
• Conacre letting held to be a business
• Landowner obligations
Minimum Ownership Period
S.94 CATCA 2003
• Two years prior to date of inheritance taken
on death of disponer
• Five years prior to date of gift or inheritance
in other case
– Spouse period of ownership included
– S.96 CATCA 2003 – ownership period runs
from date of death for inheritance
– Include pre incorporation ownership S.600
TCA 97 CGT Relief
Example
Mary gifts 100% of shares in qualifying
company to her two children 50:50
The company was set up 10 years ago by Mary
and her husband 50:50
She inherited 50% of her shareholding from her
husband two years earlier
• What is Mary’s period of ownership?
• What shares meet the five year ownership
requirement for gift tax business relief?
Example
Julie inherited shares from her grandfather who
died in July 2009
Valuation date was March 2011 following
litigation
Julie died in August 2011 and left the shares to
her son
• What is the period of ownership of the shares
for business relief?
• Is the ownership period met for BR?
Replacement Property
S. 95 CATCA 2003
• Take period of both assets into account
where relevant business property replaces
other RBP
• RBP and replaced RBP – 5/6 years for gift
tax and 2/3 years inheritance tax
• Where value of replacement property
>property replaced then restrict value
Ownership – Successive benefits
•
•
•
•
Disposition
1st beneficiary who dies
Death < 2/5 years after first benefit
1st beneficiary
2nd beneficiary
2nd beneficiary will qualify if earlier benefit
qualified for BPR
• Restriction for 2nd benefit
• MV 2nd Benefit x Taxable value 1st Benefit
Market Value 1st Benefit
Calculation of Relief
• S.92 CATCA 2003 - 90% reduction of
taxable value of RBP
• Taxable Value = MV-Liabilities, Costs,
Expenses, Consideration
• S.100 CATCA 2003 - exclude excepted
assets
• Mandatory efiling - online Return calculates
tax
• Calculate tax manually too
BPR - Formula
1
MV of RBP – include excepted assets
2
Deduct Liabilities, Costs, Expenses and Consideration
3
Taxable Value
4
MV Excepted Assets
5
Value of RPB (3-4)
6
Replacement Property/Successive Benefits not eligible
7
RPB on which relief granted (5-6)
8
Calculate limited interest
9
10
BPR – 90% of 7 or 8
Taxable Value (7 /8 – 9)
11
Taxable value all assets (4+6+10)
12
Add 11 to non business property
13
Deduct small gain exemption
Calculation of Relief
• All assets owned/used wholly or mainly for
business
• All business liabilities
• Each account looked at
• Savings v Working Capital accounts
Partnership
• Partnership assets and liabilities
Liabilities
• Deduct business liabilities from business
&
assets
Consideration • Deduct general debts and consideration paid
IT 39
from non-business assets
• Mortgage on business property
• Surplus liabilities deducted as appropriate
from business/non-business assets
Sole Trader
Example
Non-Business Assets
€000 Business Assets
Deposit Account
House
20
250
MV
Liabilities/Costs
Incumbrance Free
Value
Consideration
Taxable Value
€000
270
(20)
250
Shop
Stock and Machinery
Goodwill
Business A/c
MV
Business Liabilities
Taxable Value
250
20
50
10
330
(180)
150
(50)
200
BPR @ 90 %
Taxable Value
(135)
15
Excepted Assets
•
•
•
•
•
•
•
S.100 CATCA 2003
Not used wholly & exclusively for business
For last 2 or 5 years
Used for personal benefit of disponer or relative
Deducted from qualifying RBP
Calculate Relief @ 90%
Added back to taxable value of RBP
Asset not wholly or mainly used
S. 100(5) CATCA 2003
• Relief only for part of land or building used
wholly or mainly for business
• IT 39 – apportion mortgage
• “Flat above shop”
• Part of building let
Example
• Non-business assets include flat €300,000
• Apportion mortgage - €30,000 to flat
• Reduce non-business assets by liabilities costs
and expenses of €20,000
• Reduce business assets by mortgage
€120,000 and debts to suppliers
Clawback of Relief No.1
• Sec 101 & 102A CATCA 2003
• Business ceases to qualify within 6 years and
not rectified within 1 year
• Notional gift test – s.101(2)(a)
• No clawback if bankruptcy or bona fide
winding up
Clawback of Relief No.2
• S. 101(2)(b) – sale, redemption or compulsory
acquisition of business within 6 years
• Unless business replaced within 1 year by
other RBP
• Proportionate clawback if MV RBP replaced
< MV original RBP
• No clawback on death of beneficiary or life
tenant but subsequent beneficiary may have
clawback
Clawback of Relief No. 3
S.102A TCA 1997
• Extension of clawback period from 6 to 10
years for development land
• Development value treated as not qualifying for
RBP
• Relief given on CUV only
• Includes shares in a company deriving value
from development land
• Only applies to a disposal
Clawback of Relief 3
•
•
•
•
•
Development Land @ date of
gift/inheritance and date of disposal
No provision for reinvestment
DL definition – MV > CUV
DL = MV - CUV
Applies to gifts or inheritances taken on
or after 2nd February 2006
CAT Agricultural
Relief
Agricultural Relief
S. 89 CATCA 2003
• MV of “agricultural property” reduced by 90%
• Benefit comprised of agricultural property at
date of gift/inheritance and valuation date
• Beneficiary is a “farmer” at valuation date
Agricultural Property
S. 89(1)(a) CATCA 2003
• Agricultural land, Pasture and Woodland in EU
State
• Crops, trees and underwood on land
• Farm Buildings, farm houses and mansions
• Farm machinery, livestock and bloodstock on
land
Farmer
S. 89(1) CATCA 2003
• An individual
• 80% of gross assets on valuation date
comprise agricultural property in EU State
• “Farmer” test is a financial test
• No “working farmer” test
• Off farm PPR – deduction for mortgage
Example
Farmhouse
€000 Non Agricultural
Prop
250 House (net)*
Farmlands
1,250 Car
Agricultural Prop
Stock & Machinery
Welsh Farm
Total
€000
345
10
70 Cash
15
300 Shares
30
1,870 Total
400
Farmer Test
1,870 x 1870/(1,870+400) = 82%
*Without deduction of mortgage on PPR, farmer test
would not be met
Farmer Test – Anti Avoidance
S. 89(1) CATCA 2003
• Interest in expectancy included
• DT settled by beneficiary - include MV of
property
• Deals with “temporary” transfer of assets by
beneficiary to another person
• Prevents transfer of assets by beneficiary to DT
Valuation Date
• Farmer test must be met on Valuation Date
• Acquire or dispose of assets prior to date of
gift?
• Scope for planning between date of death and
valuation date?
• Benefit must comprise AP at date of
gift/inheritance and valuation date
• S. 89(2) CATCA – conditional gifts “gift overs”
Calculation of Relief
1
Market Value of Agricultural Property
2
90% Reduction of 1
3
Agricultural Value (2-1)*
4
Liabilities, Costs and Expenses – apportioned *10%
5
Incumbrance Free Value (3-4)
6
5 x Limited Interest Factor
7
Deduction for consideration x 10%
8
Taxable Value
* Contrast with BPR – 90%* Taxable Value
Liabilities, Costs & Expenses
• Deductible first from residue
• Exception for debts charged on assets
• Apportion between agricultural and non
agricultural assets – residuary beneficiary
• Deduction for 10% against agricultural property
Example
Non-Agricultural
Assets
Deduction Allowed
NIL
Agricultural Assets Total
Deduction Allowed
No apportionment
90% Restriction
Farm Debt
€30,000
€30,000 x 10% =
€3,000
Apportionment
€15,000 x
€80,000/€1,940,000
= €619
Apportionment and Admin €10,000
90% Reduction
€15,000 x
€1,860,000/€1,940,0
00 x 10% = €1,438
Clawback of Relief No1
S. 89(4) and 102A CATCA 2003
• Disposal or compulsory acquisition within 6
years and no reinvestment within 1 year (6 for
comp acquisition)
• Partial clawback of full proceeds not reinvested
• Purchase of property from spouse/civil partner
not treated as reinvestment
Clawback of Relief No.2
•
•
•
•
•
•
Similar to BPR clawback for DL
Extension of 6 year period for development
land
Disposal after year 6 and before year 10
Taken on or after 2nd February 2006
CAT recalculated – AR only on CUV
Applies where DL on valuation date and sale
of that DL
Clawback of Relief No.3
•
Where beneficiary not resident in Ireland in
any of 3 years immediately following year of
assessment of VD
•
Beneficiary need not be resident in year of
gift/inheritance or VD
Trees and Underwood
• No need to meet “Farmer Test”
• Sale or compulsory acquisition does not trigger
a clawback of relief
• Timber can be sold without underwood - no
clawback
• No requirement to be resident in 3 years
following gift/inheritance
• Death of beneficiary - no clawback
BPR on Agricultural Property
•
•
•
•
•
•
Farmer Test not met
BPR applies if other tests met
Farmhouse – must be used W&E for business
Agricultural Relief takes precedence
Planning for BPR prior to valuation date
Why claim BPR?
BPR v Agricultural Relief
Business Relief
Agricultural Relief
Taxable Benefit x 90%
MV x 90% & Costs & Expenses x 90%
Liabilities, costs and expensesreduce non-business assets first
Liabilities, costs and expenses
apportioned
Minimum ownership period
No minimum ownership period
No business test for beneficiary
Test for shares in company
Farmer Test
Restrictions on letting
Land can be let
Farmhouse – relief only if W&E
“Character appropriate” farmhouse
Compulsory acquisition –
replacement within 1 year
Compulsory acquisition – replacement
within 6 years
Clawback if control of co broken
Clawback only on sale
No residence requirement
3 year resident requirement
Reinvest in any qual business
Reinvestment in Agricultural Property
Favourite Niece/Nephew
Relief
Favourite Nephew Relief
• Para 7, Part 1 Schedule 2 CATCA 2003
• Group A applies to BPR and Agricultural
Relief where favourite niece/nephew relief
applies
• Nephew/niece in blood
• Requirement to work substantially on a full
time basis for 5 years
Favourite Nephew Relief
• Requirement to work substantially on a full
time basis for 5 years
• Ending on date of cessation of donor’s
interest
• Carrying on trade, business or profession of
disponer or company controlled by disponer
– >24 hours per week or
– >15 hours per week – beneficiary, donor
and spouse carry on business
Favourite Nephew Relief
• Property used in connection with trade,
business, profession or employment/office
of disponer
• Shares in company owning such property
• Business property definition wider than
BPR
• Assets used in trade, business or
profession
Favourite Nephew Relief
• Shares must be in PTC controlled (s. 27)
by disponer who is a director
• Group A applies to business or agricultural
assets
• Group B for other assets
• Group A may apply with or without BPR/AR
– reliefs not interdependent
• Mandatory e-filing
Dwelling House Relief
Dwelling House Relief
•
•
•
•
•
•
S. 86 CATCA 2003
Dwelling house exempt where conditions met
3 year occupation prior to gift/inheritance
No entitlement to other dwelling house
Must occupy dwelling during “relevant period”
No deduction for liabilities, costs expenses
against other assets
Conditions for Gifts
S. 86(3A) CATCA 2003
1. Disponer must own dwelling house for 3
year period preceding gift and
2. Period during which donee occupies house
that was disponer’s PPR is disregarded
unless disponer depends on services of
donee due to old age or infirmity (>65)
Affects transfers where no tax avoidance is in
play i.e. siblings, co-habiting couples etc
Civil Partners entitled to CAT exemption
Clawback
•
•
•
•
Beneficiary must occupy property for 6 years
Not applicable to over 55s
Property sold during relevant period
No clawback where
– house sold due to long term medical care
– house sold and replaced within 1 year and
occupied for 6 years falling within 7 years
of date of gift/inheritances
CAT/CGT Set Off
CAT/CGT Set Off
S.104 CATCA 2003
• CAT and CGT arising on “same event”
• Disposal for CGT of “same property”
• Gift of asset
• Distribution of asset from trust
• Clawback of agricultural/business relief and
CGT retirement relief
CAT/CGT Set Off
•
•
•
•
•
•
•
CGT paid is credited against CAT
CGT paid by disponer
CAT payable by beneficiary where > CGT
Example - gift of shares
CGT €4,683
CAT €15,948 - €4,683
CAT due €11,265
CAT/CGT Set Off
• efiling
• Temporary credit for CGT allowed where CAT
due before CGT
Clawback
S.104(3) CATCA 2003
• Clawback if transferee sells asset within 2
years
• Introduced to counter tax use of set off
where land gifted by parents to children
with immediate sale to developer
• Impact on appointment of assets from
trusts
CGT Retirement Relief
CGT Retirement Relief
•
•
•
•
•
•
•
•
S. 598 and 599 TCA 1997
S. 599 - disposal to child
No limit on consideration
S. 598 - disposals to other persons
Limit of €750,000
Disposal of qualifying assets
Main purpose must not be to avoid tax
Anti avoidance S. 598(8) TCA 97
CGT Retirement Relief
• Annual exemption €1,270 cannot be claimed
• Disponer must be at least 55 years
• Qualifying assets must be held for 10 years
• TB 60 - disposals in 12 months to 55th
birthday considered where due to ill health
Qualifying Assets
• Chargeable business assets
• Certain shares and securities
• Certain agricultural assets
Chargeable Business Assets
• Owned by individual for 10 years
• Chargeable business assets throughout 10
years
• 10 year condition not applicable to tangible
moveable property eg plant and machinery
• Assets used for trade, profession, office or
employment
• Carried on by individual or his family
company - or member of trading group
Chargeable Business Assets?
•
•
•
•
Land & Buildings
Plant & Machinery
Goodwill
Shares and investment assets
• Stocks, Debtors, Cash





Family Company
Individual must hold:
• at least 25% of voting rights or
• at least 10% voting rights and together with
family hold at least 75% voting rights
Family = individual’s spouse, relatives of the
individual and his spouse
Relative = brother, sister, ancestor, lineal
descendant
Shares or Securities
• Shares in a trading or “family company”
• Shares in member of trading group of which
the holding company is the individual’s family
company (75% subs)
• Held for at least 10 years
Shares or Securities
• Working director for at least 10 years
• Full time director for at least 5 years –
devoting substantially whole of his time in
managerial or technical capacity
• 10 year ownership to include reconstruction
or amalgamations
Assets owned personally
• Lands, buildings, plant & machinery
• Owned personally for at least 10 years
• Used by family company throughout 10 year
period
• Disposed of to same person and at same time
as shares
• Treated as qualifying assets
Disposal by Sole Trader
Example
• Gain on qualifying business assets €480,090
• Sale proceeds €660,000 (<€750,000)
• CGT payable on warehouse not owned for 10
years
• CGT retirement relief €120,023
• CGT payable €2,955
Disposal of Shares
• Sale Proceeds x Chargeable Business Assets
Total Chargeable Assets
Example
Proceeds on CBA
€727,612
CGT on Shares
€134,775
CGT on CBA (Retirement Relief) €130,752
CGT payable
€4,023
€750,000 Limit
• No CGT where sale proceeds <= €750,000
• Aggregate limit
• Withdrawal of relief – assessment or
additional assessment
• Time limit of 10 years
• Proceeds from qualifying disposals to
children not aggregated
Marginal Relief
• Proceeds marginally above €750,000
• Tax limited to :
(Proceeds – €750,000) x 50%
(€800,000-€750,000)x 50% = €25,000
CGT payable
€175,456
Marginal Relief €150,456
Spouses/Civil Partners
•
•
•
•
•
•
•
Include spouse’s period of ownership
Include period of use of deceased spouse
S. 1028(5) TCA 97 - “no gain/no loss”
S. 598(6) TCA 97 - anti avoidance
Part disposals of asset by spouses @mv
Prevents both spouses availing of €750,000
Consider transfer of business assets between
spouses pre 55th birthday
S. 599 TCA – Disposal to Child
• “Child” includes foster children
• Includes nephew/niece working full time for 5
years prior to disposal in trade, business,
profession, employment
• No limit to sales proceeds
• Clawback – disposal within 6 years
• Child liable for CGT on both disposals
• No rollover provisions
Transfer of Site to Child
Transfer of Site to Child
•
•
•
•
•
•
•
CGT Relief
S. 603A TCA 97
Site ≤ 1 acre
MV site ≤ €500,000
Site used for child to build house for occupation
No CAT relief – Group A threshold
No Stamp Duty relief (abolished in FA 2011)
Transfer of Site to Child
• Clawback if land sold before house built or
house not occupied as PPR by child for 3
years
• CGT arises to child on disposal
• Where clawback, parent can claim relief on
another qualifying transfer
• Concession if site is subsequently transferred
to joint names of child & spouse
• CAT could arise under “gift splitting”
Consanguinity Relief
Consanguinity Relief
• Sch 1 Para 15 SDCA
• SD at half normal rate - excludes residential
property, shares, stocks, marketable securities
and leases
• Adjudication required
• All parties must be related
• No clawback of relief
• No SD on inter-spousal/CP transfers
Young Trained Farmer
Young Trained Farmer - SD
S. 81AA SDCA 1999
• Exempts transfers of agricultural land
• Farm buildings, farmhouses and mansions
• EU Single Farm Payment Supplements
• Applies to sales and gifts
• Right of residence support and maintenance
Young Trained Farmer - SD
• Power of revocation not allowed
• Aged < 35 years
• Completed qualifying course in qualifying
institution listed on form SD2B
• Application on Form SD2B
• Intention to own lands and working 50%
farming land for 5 years
Young Trained Farmer - SD
•
•
•
•
•
Relief extended to 2012
Qualifications obtained within 4 years
Clawback within 5 years if land sold
efiling mandatory
Penalties of 125% SD if false information
provided plus interest
Share Valuation
Share Valuation
•
•
•
•
•
Different methods – earnings, asset, turnover
Combination may be used
CGT and SD – Market Value
CAT – MV
CAT exception – controlling interest in
private company
CAT Share Valuation
• S. 26 CATCA 2003
• Market Value - including non controlling
interest in private company
• To obtain best price for vendor
• Unquoted shares - assumption of willing
vendor and arm’s length
• Revenue CAT manual Part 21
CAT Manual Part 21
Shareholdings ≤ 25%
Realistic dividends paid
Value by reference to
dividends
Shareholdings ≤ 25%
No dividends paid
Discounted earnings
Discount 50%-75%
Shareholdings 25%-50% Discount 35%-40%
Shareholdings > 50%
50%
51%-74%
>75%
Value of company less
discount
Discount 20/30%
Discount 10/15%
None – 5% at most
Controlling Interest Private Cos
S. 27 CATCA 2003
• Beneficiary “controls” company after taking
gift or inheritance
• Private Co – under control of not more than
5 persons
• Control – S.27(4) CATCA 2003
• Beneficiary’s shares aggregated with
relatives, nominees, trustees, controlled
companies
Private Company Shares
•
•
•
•
•
•
Company under “control” of beneficiary
Shares valued as part of group of shares
Shares of beneficiary and relatives/others
No discount for minority interest
Valued as proportion of group
Discount may be given – CAT Manual Part 21
Surcharge for Undervaluation
S.53 CATCA 2003
• Submitted Value v Agreed Value
• Right of appeal
• Interest due on surcharge
MV as % of
Ascertained Value
Surcharge
0% <40%
≥ 40% <50%
30%
20%
≥50% < 67%
10%
Stamp Duty Valuations
S. 30 SDCA 1999
• Voluntary Dispositions inter vivos
• MV - same rate as conveyances or transfers
on sale
• S 19 SDCA 1999 – Revenue valuation of
property as sec 26 CATCA 2003
• Same discounts as CAT
Stamp Duty Valuations
• No special rules for minority interests
• Different valuations for CAT, SD and CGT
• S.44(1) SDCA 1999 – conditional or deferred
consideration
• S. 15 SDCA 1999 undervaluation surcharge
MV as % of
Ascertained Value
≥15% <30%
≥ 30% <50%
≥50%
Surcharge
25%
50%
100%
Capital Gains Tax
• S. 547 TCA 1997 - MV where transaction not at
arm’s length
• S. 548 TCA 1997 - MV for transfers between
connected persons
• S. 547(1) TCA 1997- acquisitions
• S. 547(4) TCA 1997 - disposals
Capital Gains Tax
• S. 547(1) TCA 1997 – MV on acquisition
• Otherwise than arm’s length bargain –
includes gifts
• Distribution in respect of shares – includes
winding up
• Consideration wholly or partly
unascertainable, connected with loss of
office/employment, past services
Capital Gains Tax
•
•
•
•
S. 547(4) TCA 1997 – MV on disposal
Otherwise than at arm’s length including a gift
Where consideration is unascertainable
S. 547(3) TCA 1997 – MV not imposed on
acquisition
• No corresponding disposal & less than MV
paid
• Issue of shares by company, goodwill
Connected Parties - Anti Avoidance
• MV on connected parties – CGT
• No MV connected party rules for CAT/SD
• Anti avoidance – CAT and SD
CAT Anti Avoidance
• S. 8 CATCA 2003 - Connected Gifts
• Gift Splitting
• Gifts given through person to ultimate
beneficiary to gain higher thresholds
• Deems ultimate beneficiary to receive from
original disponer
• Applies where second gift happens 3 years
before or after first gift
CAT Anti Avoidance
S.38 CATCA 2003 - enlarging value
• Prevents valuable assets being split and
disposed of separately
• Property taken which increases value of
other property from same disponer
• Increase in value taxable at time of second
disposition
• Applies to gifts and sales
CAT Anti Avoidance
• Applies to all property
• Parties need not be connected
• Disposal by beneficiary of first benefit in 5
years prior to taking second benefit
• Deemed to be beneficially entitled in
possession if sold for less than full
consideration or disposal to private company
under control of beneficiary
CGT Anti Avoidance
• S.549 TCA 1997
• Connected persons – MV
• S.10 TCA 1997 – definition of connected
persons
• Meaning of control – S. 432 TCA 1997
Sec 10 TCA 97
Individual
Husband or wife, relative, husband or wife of relative of
individual or spouse;
Relative
Brother, sister, ancestor, lineal descendant, uncle, aunt,
niece or nephew
Sec 10(4) Trustees
Connected with settlor or persons connected with settlor
Connected with trustees if close co and shareholders
Include trustees or beneficiary of settlement
Sec 10(4) Company
Sec 10(5) Partners
Person connected with partners and partner’s relatives
unless bf transaction
Sec 10(6) Companies Same person has control of both
Person has control of one and connected persons have
control of other
Group controls each co – same persons or connected
persons
Sec 10(7) Companies Company connected with person controlling it
Persons acting to control of co connected
Sec 10(8)
Connected Persons
•
•
•
•
S. 549 TCA 97
Restrictive covenants imposed on assets
Disregard restriction – give little weight
Lower of MV of right/restriction or amount by
which extinction would enhance value
• Ignore rights/restrictions reducing value to nil
• Avoids artificial loss creation
• Exception – disponer indifferent to sale
proceeds
Series of Disposal
• S. 550 TCA 97
• Series of transactions between transferor
and same connected person or persons
• Assets deemed disposed for greater value
• S. 602 TCA 97 – exemption for tangible
moveable property eg chattels
• Anti avoidance
• Prevents breaking up of assets < €2,450
limit
Stamp Duty Anti Avoidance
• Deed must contain “transaction certificate”
or “finance act certificate” for lower rates
• Cert states that transaction no part of larger
or series of transactions
• Revenue guidance notes
• Interdependence
• Auction sales – AG v Cohen
Stamp Duty Anti Avoidance
•
•
•
•
S. 45 SDCA 1999
Apportionment of consideration
Property purchased in separate lots
Each deed stamped based on MV of
property
• Residential and non residential property
Succession Planning
Structures
Succession Planning Structures
• Trusts
– Bare trusts
– Fixed Income trusts
– Discretionary trusts
• Family Partnerships
• Companies
Bare Trust
• Bare or Simple Trust
• Trustee holds asset for beneficiary as
nominee
• Trustees do not have discretion
• Express instructions of beneficial owner
• Beneficiary has absolute entitlement to
asset
• Transparent for tax purposes
Bare Trust
•
•
•
•
Minors - no legal capacity
At 18 beneficiary has control
Privacy for owner – legal owner in CRO
Tax on transfer of assets in hope that value
will appreciate
• No tax at transfer when 18
Bare Trust Income Tax
• Absolute right to income - beneficiary
assessed directly on trust income
• S.795 TCA 1997 anti-avoidance
• Applies to all trusts - minor children
• Attribution of income of gains to settlor
• Irrevocable trusts with accumulate income
outside anti-avoidance
• 20% surcharge on undistributed income
Bare Trust CGT
• CGT on transfer of asset to trust if change in
beneficial ownership
• S. 567(2) TCA 1997 - acts of trustees treated
as acts of person entitled as against the
trustee
• Trustees deemed guardians - infant, under
disability
• Residence of beneficial owner
• No CGT on transfer of asset to beneficiaries
Bare Trust CAT
• CAT on beneficiary on transfer of asset to
bare trust
• Threshold – disponer and beneficiary
• No CAT on transfer of asset to beneficiary e.g
minor now 18
Bare Trust SD
• Beneficiary liable for SD on transfer of asset
to trust
• SD on value of asset on date of transfer
• Consanguinity Relief applies
• No SD on asset called on by minor at 18
Fixed Trust
• Interest in possession or life interest trust
• Entitlement to trust income/property for life
or period certain
• Interest in possession
• Life tenant or tenant for a period certain
• Remainderman
• Settlor has control of assets
Fixed Trust Income Tax
• Beneficiary assessed on income
• Appointments of income liable to IT on
trustee if not mandated to beneficiary
• IT at standard rate – Form R185
• Beneficiary liable at marginal rate under Sch
D Case IV
• Trustees cannot claim credits or allowance
for individuals only
• Capital payments more tax efficient?
Fixed Trust CGT
• CGT treatment the same as for other trusts
that are not bare trusts
• Discretionary Trusts
• S 5 TCA 1997 – settled property
• S 567 TCA 1997 property excluded (bare
trust)
• Property held by trustee in bankruptcy
excluded
CGT Settled Property
• S.10 TCA 97 – settled property
• Any disposition, trust, covenant, agreement,
arrangement, transfer of money or other
property
• Boothe v Ellard – retention of right to direct
trustees
• Tomlinson v Glynns Executor – interest
contingent on children reaching 21
CGT Settled Property
• S. 574(1) TCA 97
• Trustees are a single and continuing body of
persons
• Distinct from persons who are trustees
• Taxed as a body of persons
• Not individuals
• No entitlement to annual €1,270 exemption
Creation of Settlement
S. 575 TCA 97
• CGT on settlor when assets transferred into
trust
• Disposal of entire property – even where
donor has interest as a beneficiary or is a
trustee
• Applies where settlor settles property on
himself for life with reminder to others
• MV applies – bargain not at arm’s length
Administration of Settlement
S. 568(2)TCA 1997
• Trustees primary liable for CGT
• Appointment of asset to beneficiary
• Disposal to third party
• Base cost = MV at date acquired by
trustees
• Beneficiary liable to CAT/SD
• CAT/CGT set off
Life Interest
S. 576 TCA 1997
• CGT on trustees when beneficiary becomes
absolutely entitled as against the trustees to
trust property
• Trustees deemed to dispose and
immediately reacquire the asset
• No CGT if remainderman becomes entitled
to asset on death of life tenant and asset
passes out of trust
Deemed Disposal
• S. 576(1) TCA 1997
• A person becoming absolutely entitled as
against the trustee to trust assets
• Deemed disposal by trustee – asset
reacquired in capacity as trustee
• Minor becoming of age
• Exception for the same event on death of
life tenant
Reliefs and Exemptions - Trustees
• S. 604(10) TCA 97 – PPR Relief
• Main residence of individual entitled to
occupy it
• S. 577A TCA 97 – Retirement Relief
• Life tenant over 55 years and assets
in beneficial ownership of LT for 10
years
CAT Fixed Trust
• CAT on creation of fixed trust where
beneficiary has an interest in possession
• Settlor of trust is disponer - unless funds
provided by another person
• Life Interest
• Incumbrance Free Value - Table A First
Schedule CATCA 2003
• IFV = MV reduced by liabilities, costs and
expenses before consideration and BPT/AR
Life Interest
Market Value
Liabilities Costs and Expenses
€250,000
€4,000
Incumbrance Free Value
€246,000
Factor for Female age 45 = 0.8283
€203,762
Consideration
€5,000
Taxable Value
€198,762
Small Gift Exemption
Taxable Value
Group Threshold
€3,000
€195,762
€33,208
Life Interest
• Entitled to pay tax in 5 annual instalments
plus interest
• Remaining instalments waived on death of
LT within 5 years
• S. 54(5) CATCA 2003
• Deemed remaining instalments refunded
• Applies also where life interest relinquished
Interest for Period Certain
• Exclusive right to use asset or right to
income produced by asset
• Sch 1 Table B CATCA 2003
• Factor for period applied to IFV
• Contingencies – S. 29 CATCA 2003
• Asset subject to power of revocation
• Beneficiary initially liable under S. 40
CATCA 2003 – life interest tables
Interest for Period Certain
• Interest taken is not for a full number of
years
1. IFV x factor for higher number of
years
2. IFV x factor for lower number of
years
3. Subtract smaller value
4. Apportion difference to number of
days or months
Appointments of Income or Capital
• CAT payable on appointments of income and
capital
• CAT/CGT set off – CGT paid by trustees
available for beneficiary CAT
• No CAT/CGT set off for income
appointments
• Structure payment out of capital?
Appointments of Income or Capital
• Payments out of income account treated as
income for beneficiary
• Payment out of capital account or
accumulated capitalised income?
• Character of payment in beneficiary’s hands
• Regular v once off payments
• Brodie’s Will Trustees v IRC
• Stevenson v Wishart
Stamp Duty
•
•
•
•
•
SD payable on transfer of assets into trust
No consanguinity relief
Trustees liable to SD on acquisitions
No SD on cash appointments by trustees
No SD on transfers if no beneficial interest
passing - S. 30(5) SDCA 1999
• Assets appointed subject to mortgage - S 41
SDCA 1999
Discretionary Trust
•
•
•
•
•
•
Class of beneficiaries
Trustees have discretion to distribute
Letter of Wishes
Beneficiaries have no absolute right
Change in status of trust liable to CGT
Protection of minors, incapacitated persons
Discretionary Trust Income Tax
• Trustees liable to income tax on income
earned
• Standard rate tax - 20%
• No personal credits, allowances or reliefs
• S.802 TCA 97 - 20% surcharge on
accumulated income
• Distribute income within 18 months of end
of tax year
Discretionary Trust Income Tax
• Undistributed income grossed up @ 20%
• No deduction for tax already paid
• Regular income payment to particular
beneficiary?
• Revenue may argue interest in possession
created
• CAT and Income Tax exposure for
beneficiary
Discretionary Trust Income Tax
•
•
•
•
Beneficiary taxed on grossed up trust income
Form R185 – Sch D Case IV
Credit for tax paid by trust
Beneficiaries taxed directly if interest in
possession held eg Life Tenant
• Williams v Singer – divs paid directly
• Aikin v MacDonald’s Trustees – expenses out
of capital
Capital Gains Tax - DT
• Same treatment as for fixed trusts
• DT is settled property for CGT
CAT Discretionary Trust
• No CAT on settlement of asset to DT
• Beneficiary does not have entitlement in
possession
• CAT on appointments of trust assets
• Inheritance if benefit taken on death of
settlor
• Benefits from trust settled when settlor alive
liable to Gift Tax (2 year rule)
• No clawback of small gift exemption if settlor
dies within 2 years
Stamp Duty
• Stamp Duty for Discretionary Trust
• Same treatment as for Fixed Trusts
Discretionary Trust Tax
Covered in Stage 2
S. 2 CATCA 2003
• Broad definition - Trustees have power to
accumulate or no beneficiary has in interest
in possession in the income of the trust
• 6% initial charge and 1% annual levy
• Only applies to inheritances
Family Partnerships
•
•
•
•
•
Vehicle for holding investments
Partners generally parents and children
Transfer of assets at today’s MV by parents
Parents retain control of assets
Increase in assets attributable to partners,
including children
• Popular during property boom
• Less complex than trusts
Family Partnerships
• Similar to Bare Trust
• Partnership Agreement
• Parents retain control – assets/profit
distribution/power of veto
• CAT issues on transfer to children
• Low initial tax charge – future growth in
value accrues to children
• Paperwork – ensure trust not created
• Partnership Accounts
Family Partnerships
Income Tax
IT payable by individual partners
CGT
Disposal of asset to partnership
MV – connected parties
Individuals liable on partnership disposals
Retirement relief – business assets
CAT on transfer of assets
Small gift exemption
Group A threshold
CAT/CGT set off
SD payable by partners
No SD on cash
SD on further acquisitions
CAT
Stamp Duty
Companies
• Back in fashion as asset protection
mechanism
• Legal pitfalls - bankruptcy and other
legislation
• Transaction void if made to defraud creditors
• Facilitates faster debt repayment
• 12.5% CT v 52/53/55% IT/USC/PRSI
• Pension planning
Companies - CGT
• CGT on transfer of assets to company
• S. 600 TCA 1997
• Deferral of CGT until shares in company
disposed of
• Double charge on disposal of assets
– CGT on gain arising
– Extraction of sales proceeds to pay CGT
– Salary v Dividend v Liquidation ER 44%
Companies Tax on Profits
• Income and gains for company liable to
corporation tax
• Tax Rate on non-trading income is 25%
• Close company surcharge of 20% (Module 1)
Companies – Stamp Duty
Transfer to company
• SD on assets not passing by delivery
• Stock, P&M, cash and bank accounts
• Included in total consideration for SD rate
Transfer from company
• Purchase of company shares – 1%
• Assets transferred – higher rates
• No SD on distribution of assets in specie
Companies - CAT
• Subject to its Memo and Articles and Co
Law
• A company is a person and can make a gift
• S. 43 CATCA 2003 – “look through” private
company
• S. 43(5) – settlor of DT is disponer where
gift made
• Gifts or inheritances taken by company –
treated as separate DT
Taxation of Estates
Taxation of Estates
• Assets taken over by personal
representatives
• Appointed by will or under Succession Act
1965
• Estate or administration period ends when
all debts and liabilities paid and
• Beneficiaries have received entitlements
Taxation of Estates
• Personal Reps appointed under Succession
Act 1965
• Provision for minor children
• Sec 57 Succession Act 1965 – creation of
trusts in favour of minors
• Sec 58 Succession Act 1965 – general
powers on trustees under S 57
Taxation of Estates
•
•
•
•
Estate is separate legal entity for tax
Assets vested in personal reps
Personal reps responsible for tax
Administration period – date of death to time
estate administered
• VAT and CT issues if deceased was in
business
• Bare trustees where estate not wound up
and holding assets - CGT
Legal Issues
• Succession Act 1965
• Revenue Form CA 24 – Inland Revenue
Affidavit
• Lodged in duplicate with probate office
• Probate office liaise with Revenue
• Financial position of deceased at date of
death
• S. 48(4) CATCA 2003 – Corrective Affidavit
Legal Issues
• Grant of Representation = Grant of Probate
and Grant of Administration
• Testate and Intestate
• Personal reps can deal with assets with
Grant of Representation issued by Probate
Office
• Valuation date for CAT – not always
• S. 30 CATCA 2003 – benefit retained at
earlier date
Valuation Date
S. 30 CATCA 2003 earliest of:
1. Date personal reps entitle to retain assets
2. Date asset retained
3. Date of delivery, payment, satisfaction or
discharge
VD – fixes pay and file date
2011 – VD in 12 month period ending 31st
August has pay and file date of 30th
September
Estate Accounts
•
•
•
•
Fiduciary duty of care to beneficiaries
Detailed estate accounts to be kept
Chaine-Nixon v Bank of Ireland
Two sets of accounts – both Capital and
Income
• Pre death – up to date of death
• Estate Account – period of administration
• Includes income accrued to date of death
forming part of capital
Order of Entitlement
• S. 46 Succession Act 1965 – Sch 1
• Solvent Estate
• General costs and expenses firstly out of
residue
• Pro rata out of remaining assets
• Testator may direct otherwise
• Liability secured on asset
Order of Entitlement
S. 46 Succession Act 1965 – Sch 1
Insolvent Estate
• Priority for funeral, testamentary and
administration expenses, legal fees
• Bankruptcy order of entitlement
• Secured creditors
• Preferential debts – tax/PRSI
• Unsecured creditors – priority for pre death
Estates – Income Tax
• Residence Rules - Case Law
• If all personal reps resident in Ireland estate
taxable on worldwide income
• If all personal reps not resident in Ireland
estate liable on Irish source income
• Dual residence – place of effective
management to be determined
Pre-Death Income
S. 1047 TCA 1997
• Personal Reps can be held personally liable
S. 1048 TCA 1997 – time limit
• Grant of Representation extracted in year of
death – 3 years
• Grant of Representation extracted in year
after death – 2 years
Pre-Death Income
• S. 67(2) TCA 97 – cessation of trade or
profession
• Death is a cessation
• Revision of penultimate year?
• Revenue concession if surviving spouse
takes over business – absolute interest
• “Sec 23” property - death = clawback
Married Couples Sec 23 clawback
• Inheriting spouse assessable person
– No separate assessment in year of death
– No separate liability on transfer
• Deceased spouse assessable person
– Surviving spouse chargeable on income
from date of death
– Two IT assessments – sec 23 loss in post
death period – Revenue concession to allow
in pre-death period
• Tax Briefing No 8(2010) elect no clawback
Post Death Income
• Tax at 20% on estate income
• S. 66 TCA 1997 commencement rules for
business
• Income paid to beneficiary grossed up @ 20%
• Form R185 – credit for tax deducted
• Specific legatees – no tax credit
• Per Reps account for tax
• Pass income bearing assets to beneficiaries
as early as possible
Estates -CGT
S. 573(4) TCA 1997
• Personal reps take on deceased’s
residence, ord residence and domicile at
date of death
• No CGT on assets passing to per reps
• Per Reps are single continuing body of
persons
• Assets acquired at MV at date of death
Estates -CGT
• Personal Reps file and pay outstanding CGT
relating to pre death period
• €1,270 exemption available
• Losses can be carried back to 3 years of
assessment prior to year of death
• No carry forward of losses post death
• S. 573(5) TCA 97 – no CGT on asset
appointed to legatee
• Acquired by legatee at MV at date of death
Estates -CGT
• Sale of assets by personal reps
• CGT on Sale Proceeds less MV at date of
death
• Sale of property on behalf of no resident
beneficiary – secondary liability
• CG50 where consideration > €500,000
• Non resident vendor – payment of CGT
prior to issue of CGT clearance
Post Death Planning
• Deed of Family Arrangement
• Agreement by beneficiaries to vary
entitlements
• No tax provision - not tax efficient
• CAT and SD - variation treated as though
original beneficiary took benefit and made gift
• S. 573(6) TCA 1997 - CGT relief
– Deed of family arrangement made within 2
years
Post Death Planning
• Deed of Family Arrangement
• Agreement by beneficiaries to vary
entitlements
• No tax provision - not tax efficient
• CAT and SD - variation treated as though
original beneficiary took benefit and made
gift
Appropriation
S. 55 Succession Act 1965
• Personal reps can appropriate property to
a beneficiary
• Notice served on beneficiaries and consent
obtained
• “Substitution” of property of equal value
• Testator may expressly allow in will
Appropriation Stamp Duty
• SD applies unless express power of
appropriation in will
• No SD if between residuary legatees and no
additional benefit is given
• Include express power of appropriation in will
Appropriation CGT
• S. 573 TCA 97 and Revenue CGT Manual
• No CGT on transfer of estate asset to legatee
• No CGT on appropriation if express power in
will
• Personal reps liable to CGT if no express
power of appropriation and no agreement
with legatee
• Base cost for legatee is MV at date of
appropriation
Appropriation CAT
• Exercise of power of appropriation by
personal reps
• Asset treated as coming from deceased
• S. 89(5) CATCA 2003 – appropriation of
agricultural property
• Treated as bequest from deceased
• Maximises Agricultural Relief
Disclaimers
• A refusal to take an inheritance
• Only effective where no interest taken in the
relevant part of the estate
• Not possible to disclaim part of a benefit or
part of the residue
• Disclaimed benefit follows succession rules
• No direction can be given
• Great care is needed with disclaimers
Disclaimers
• Testate Estate
• Disclaimer of benefit falls into residue
• Disclaimer of interest in residue – rules of
intestacy
• Other residuary beneficiaries do not benefit
• Disclaimer of limited interest – accelerates
remainder interest
Disclaimers
• Intestate Estate - passing on intestacy
• Sec 72A Succession Act 1965
• Person disclaiming treated as dying
immediately before death of intestate and
• If that person is not spouse or direct lineal
ancestor of intestate – as if he had died
leaving no issue
• Legal advice before disclaiming
Disclaimers and CAT
• S. 12 CATCA 2003
• Pure disclaimers with no direction
• Person benefitting from disclaimer treated as
taking benefit from original disponer
• No CAT liability for person who made
disclaimer
• S. 12(3) CATCA 2003 – consideration for
disclaimer
• Consideration from disponer
Marriage Breakdown
Marriage Breakdown
•
•
•
•
•
Separation Agreement
Judicial Separation
Court Proceedings
No separation agreement
Divorce – living apart for 4 of last 5 years
Marriage Breakdown
• “Living apart” not defined Divorce Act 2006
• McA(M) v Mc(A)S 2000
– Living arrangements, holidays, financial
– Services provided, other arrangements
Income Tax Assessments
• Joint Assessment – unless election for
separate of single treatment
• Single Assessment – either spouse can
elect
• Separate Assessment – must be claimed
Independent assessment with right to share
credits and rate bands on joint basis
Marriage Breakdown
• “Living together” unless
• Separated under Court order or Deed of
Separation or
• Separated in such circumstances that
separation is likely to be permanent
Marriage Breakdown
• Year of separation – deduction for legally
enforceable maintenance payments and
married credit
• No married credit in subsequent years
where maintenance payments claimed
Marriage Breakdown
• Year of separation
• Where jointly or separately assessed
• Assessable spouse taxed on joint income to
date of separation – married SRB and credit
• Non assessable spouse treated as single
person from date of separation – single SRB
and credit
Election for Joint Assessment
S. 1026 TCA 1997
• Both Irish resident
• Divorced couple can elect
• Divorce recognised as valid in Ireland
• Neither spouse remarried
• No single parent credit* if joint assessment
claimed
S. 462 TCA 1997 - €1,650
Maintain child under 18/over 18 full time education
Maintenance Payments
•
•
•
•
•
S.1025 TCA 1997
Legally enforceable arrangement
Separation or divorce
Annual or periodic payments
Payments to spouse – tax deductible for
payor and taxable on receiving spouse
• Payment for benefit of child – amount
quantified – not tax deductible and not
taxable
Transfer of Assets
• CGT exemption for transfer of assets
between spouses living together
• No CGT exemption for separated or divorced
couples
• S.1030 & 1031 TCA 1997 - CGT exemption
for transfers on foot of:
–
–
–
–
Deed of Separation
Decree of Judicial Separation
Family Law Act 1995 relief following dissolution
Part of a divorce decree order
Anti Avoidance Sec 1028(6H)
• No spousal exemption where assets
transferred to non resident spouse and
• Non resident spouse not liable to Irish CGT
on disposal of assets in same year
• Kinsella v Revenue Commissioners
• CGT exemption in Ireland/Italy DTA
• Assets acquired from husband in same year
CAT
•
•
•
•
•
CAT exemption for spouses
Continues after separation
S. 70 and 71 CATCA 2003
S. 88 CATCA 2003 - divorce
Exemptions for gifts and inheritances only if
made on foot of Court Order
• Renunciation of succession rights - should be
dealt with on separation
Stamp Duty
• Deed of separation or decree of judicial
separation – no impact on SD exemption
under Sec 96 SDCA 1999
• S. 97 SDCA 1999 – exemption not applicable
where divorce, unless on foot of court order
and no other party to deed
Civil Partners and Cohabitants
• F(no 3) A 2011
• Taxation measures of CPCROC Act 2010
• Civil Partnership Registration for same sex
couples
• Redress scheme for long-term opposite
sex and same sex couples not married and
not in CP
Civil Partners – Income Tax
•
•
•
•
Same as married couples
Year of Registration Relief
Income Tax on dissolution of CP
Income Tax in Year of death
Civil Partners – CGT
•
•
•
•
•
Same as married couples
Joint Asst if living together
CGT Losses allowed to other CP
Assets transferred at “no gain/no loss”
Dissolution of CP – same as marriage
dissolution relief
• Ownership and occupation of PPR passed
from one CP to other
Civil Partners – CAT
•
•
•
•
S. 70/71 CATA 2003
Exemptions same as for spouses
Exemption on dissolution of CP
Group A threshold extended to child etc of
CP
• Group B threshold includes child of CP of
brother/sister
Civil Partners – CAT
• CPs and children of CPs included in
relatives - sec 27 CATCA 2003
• Surviving Spouse applies to surviving CP
• Favourite nephew/niece relief includes child
of a CP of a brother or sister
Discretionary Trust Tax
•
•
•
•
•
•
Principal Objects extended
Disponer’s CP
Children of CP
Children of a predeceased child of CP
Predeceased child’s CP’s children
Children of CP of a deceased child of
disponer’s CP
Stamp Duty
•
•
•
•
•
S 96 SDCA 1999 spouse relief
Applies to transfers between CP
No other party to deed
S. 97 SDCA 1999 – CP dissolution
Consanguinity Relief – Sch 1 Para 15 SDCA
1999
• Transfer of non residential property
• Transfer to CP, CP of parent or CP of lineal
descendant
Qualifying Cohabitants
• Redress scheme for long-term cohabitants
• Right to apply for financial provision from ex
after relationship breaks down
• 5/2 year period
• Application to Court for maintenance order
• Relief for maintenance payments and
property transfers
Qualifying Cohabitants
• Income Tax – no similar marriage/CP
treatment
• Capital Gains Tax
– S. 1031Q TCA 1997
– Court Order Sec 174 CPCROCA 2010
– Dissolution of relationship
– No CGT on disposal of asset to ex
– Ex acquires at original cost
Qualifying Cohabitants
Stamp Duty
• S.97A SDCA 1999
• Exemption from SD on property transfers
under S.174 CPCROCA 2010
CAT
• S. 88A CATCA 2003
• Gift/Inheritance taken under Part 15 Order
• Exempt from CAT
• No change to thresholds
Roundup
• CAT – Business Property Relief and
Agricultural Relief
• 90% Reliefs
• Conditions
• Shares in company
• Clawback
• Dwelling House Relief
• Favourite Nephew/Niece
Roundup
•
•
•
•
•
•
•
CAT/CGT Set Off
Clawback
Retirement Relief
PPR Relief
Transfer of site to child – SD and CGT
Consanguinity Relief – SD
Young Trained Farmer Relief
Roundup
•
•
•
•
•
•
•
•
Share Valuation
CAT, CGT SD
CAT – exception to MV rule
Control
Private companies
CAT anti avoidance
Gift Splitting
Splitting of property – increase in value
Roundup
• CGT – MV and connected person
• Series of disposals – CGT anti avoidance
• SD – Certificate re larger transaction or
series of transactions
Roundup
•
•
•
•
•
•
•
Succession Planning
Trusts
Family Partnerships
Companies
Taxation of Estates
Marriage breakdown/CPCROC Act
Post death planning
– Deed of family arrangement
– Appropriations
– Disclaimers