The Gazette 1989

SEPTEMBER 1989

GAZETTE.

latter assets would not qualify for the relief. The non-qualifying assets would be treated as being taken from an uncle, rather than from a father, wi th the normal exemption of £20,000. These assets would then be aggregated wi th the other assets deemed to be taken from a father, in the normal way, for the purposes of calculating tax. Shares are defined in Section 2 of the Act as "any interest what- soever in the company which is analogous to a share in the company". This would include preference shares. It would also appear that, provided the company is a private trading company within the meaning of Section 16, CATA 1976, the company may own assets wh i ch wo u ld not be regarded as assets of the trade, for example, the proceeds of insurance on executives or shares in other companies. 3. Anti-avoidance Under Paragraph 9, as newly enacted, the relief is not available to benefits taken under a dis- cretionary trust. Where there is a discretionary trust, a person does not receive a taxable inheritance until property is appointed to him by the trustees. The date of the

disposition is the date of the trust. Accordingly it would be open to a nephew to work for five years up to the creation of a discretionary trust and then to put the property in "cold storage" for some time, to be appointed out to him subse- quently wi th the benefit of the relief. The anti-avoidance provision prevents this. 4. Capital Gains Tax Section 26, Capital Gains Tax Act 1975, contains a relief similar to Paragraph 9 as originally enacted. This relief has not been changed by Section 83 FA 1989. Generally speaking, there is no charge to Capital Gains Tax on property passing on death. A gift is deemed to be a disposal of assets which is liable to tax in the normal way. However, if a disponer gifts property to a child during his life- time, the charge to tax which would otherwise arise may be avoided in certain circumstances. Relief is granted if the gift is of business assets and the individual is aged 55 years or more, provided that certain conditions are fulfilled. This is known as "Retirement Relief". If the disposal is to a child as defined, there is no charge to Capital Gains Tax.

For the purpose of "Retirement Relief", Child is defined as includ- ing: " . . . a nephew or a niece who has worked sustantially on a full- time basis for the period of five years ending wi th the disposal in carrying on or assisting in the carrying on of the trade, business or profession concerned or the work of or connected wi th the office or employment concerned". Business assets are defined as assets used in the course of a trade, farming, a profession, an office or an employment which the person making the disposal has owned for a period of not less that ten years ending on the date of the disposal. The conditions of "Retirement Relief" are the same as those under the old Paragraph 9, except that the period of five years must, in the case of "Retirement Relief", end on the date of disposal. The assets must also have been owned by the uncle for a period of ten years.

Accordingly, a nephew may in certain circumstances, qualify for both reliefs. The interaction of the new Paragraph 9 and Section 26 CGTA 1975 remains to be seen and it may be that a person might Contd. on page 330. Reduce your taxbill by increasing tourism.

annum in each tax year for the duration of the scheme. Relief is available at your highest rate of income tax. If you can't get tax relief for all your investment in a year of assessment, either because your investment exceeds the maximum £25,000 or because your income in that year is insufficient to absorb all of it, you can carry forward the unrelieved amount into subsequent years, up to 1990-91.

Experts predict that the potential for growth in Irish tourism is enormous. To help optimise this opportunity, special legislation has been introduced to allow substantial tax relief on investments in qualified tourism projects, up to 1991. Particularly for those in the higher tax brackets, this is a unique opportunity to benefit both themselves and the country. You can enjoy tax relief up to £25,000 per

Contact Bord Failte for an explanatory booklet. Bord Fáilte Irish lourist Board Baggot Street Bridge, Dublin 2. Tel: (01) 765871.

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