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GAZETTE
APRIL 1989
on any rights reserved to
the Transferor. Rights
reserved to persons other
than the Transferor would
not be a good deduction for
Stamp Duty purposes. For
Gift Tax purposes rights
reserved by the Transferor
for himself would be a valid
deduction in taxing the
Donee, as also would rights
reserved to persons other
than the Transferor. Such
rights given to persons
other than the Transferor
would constitute benefits
taken by them from the
Transferor for Gift Tax
purposes.
In relation to Capital
Gains Tax, the position is
not as clear cut regarding
allowing rights reserved by
the Transferor for himself or
for others in arriving at the
chargeable gain. Section 33
Capital Gains Tax Act 1975
deals with transfers where
the person disposing and
the person acquiring are
connected persons as
defined". Sub Section 5 of
that section allows a de-
duction from the market
value of the property in
respect of any right or res-
triction enforceable by the
Transferor or by any person
connected with him.
However, a proviso to the
sub section states that
certain types of rights are
not deductible. As regards
rights reserved by the Trans-
feror for himself, regard
must be had to the pro-
visions of Section 8 (1)(b)
Capital Gains Tax Act 1975,
which deals with part dis-
posal. There is a part
disposal of an asset where,
on a person making a dis-
posal, any description of
property derived from the
asset remains undisposed
of. In the case of a gift
therefore, with some
interest reserved to the
Transferor, the gain will only
be related to the interest
given away. However, if the
gift results in a gift in settle-
ment, as referred to in
Section 15 (2) of the Act,
any gain will be related to
the whole asset settled.
(v) Does the Transferor
wish to reserve a Power
of Revocation to himself?
The Transferor may have
very good social reasons for
retaining such a power. The
. fiscal implications should be
explained fully to him.
Reference should be made:
(a) As regards Stamp
Duty, to Section 34 (5)
Finance Act 1978.
(b) As regards Capital Ac-
quisitions Tax, to Sections
30 and 31 Capital Acquisi-
tions Tax Act 1976.
(c) As regards Capital
Gains Tax, to Section 33 (5)
and Section 45 (4) Capital
Gains Tax Act 1975.
(vi) Has the Transferor
received any gifts from
any Disponer within three
years of the present gift?
This is very relevant in the
light of the anti-avoidance
provisions of Section 8
Capital Acquisitions Tax Act
1976.
(vii) Keeping in mind that
Capital Gains Tax is refer-
rable to a particular tax
year, it will be necessary to
ascertain if the Transferor
had disposed or intends to
dispose of any other pro-
perty during that particular
tax year. The question of
allowable losses will also
need to be looked at.
(C) Regarding the Transferee
(Donee)
(i) The consanguinity be-
tween the Transferee and
the Transferor has already
been dealt with at B(i).
(ii) The age of the Trans-
feree may be relevant for
Gift Tax purposes, for
example, the minor child of
a deceased child of the
Transferor would be entitled
to a class threshold of
£150,000 and not £20,000.
(iii) For Gift Tax purposes it
is essential that full parti-
culars of any other benefits
taken by the Transferee
from any persons since 2nd
June, 1982 should be as-
certained. The presence of
such benefits can have a
profound effect on the tax
liability of the current benefit.
(iv) In the case of agricul-
tural property it will be
necessary, in order to ascer-
tain whether the Transferee
is a "farmer" within the
meaning of Section 19
Capital Acquisitions Tax
1976, to obtain particulars,
including the value, of all
the assets held by the
Transferee at the date of the
transfer.
(v) Is any consideration
moving
f rom
the
Transferee? For Stamp
Duty purposes, inadequate
consideration is ignored and
Duty is charged on the
market value of the
property being transferred
(Section 74 (5) Finance
(1909/10) Act, 1910).
Where the property being
transferred is subject to a
mortgage which is being
taken over by the Trans-
feree, the practice of the
Revenue Commissioners, it
is understood, is to charge
Stamp Duty on the equity
of redemption only. This
practice is probably based
on the fact that the equity
of redemption was all that
the Transferor had to give
away. The Revenue Com-
missioners may also charge
Stamp Duty on the basis of
a sale made in considera-
tion of the amount of the
mortgage if this resulted in
more duty (Section 57
Stamp Act 1891).
For Gift Tax purposes,
partial consideration, as al-
ready stated, is allowable as
a deduction in arriving at
the taxable value of the gift
(Section 18 (2) Capital Ac-
quisitions Tax Act 1976).
The consideration must
move from the Transferee
but not necessarily to the
Transferor.
In Capital Gains Tax, the
legislation appears to make
a distinction between the
word "gift" and a trans-
action which is not a
bargajn made at arm's
length. The word "gift"
appears to mean a transfer
of an asset where the Trans-
feror receives no considera-
tion, while a transfer which
is not a bargain made at
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