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GAZETTE
DECEMBER 1989
Statutory Self Assessment
for Capital Acquisitions Tax
INTRODUCT ION
Since 1 September, 1989, self assessment has been mandatory for
capital acquisitions tax. For solicitors, this means that, when a
return of a gift or an inheritance is being made on behalf of a client,
they must ensure that
- the return is made on a special self assessment form (form
I.T.38);
- the tax, and any interest on tax, is assessed on that return;
- the amount of the tax, and any interest, is forwarded with the
return to the Revenue Commissioners.
An important point to note is that self assessment is mandatory
for
all cases where a return has not yet been made.
The introduction of mandatory
self assessment follows an ex-
t r eme ly success f ul vo l un t ary
scheme which had been adminis-
tered by the Capital Taxes Branch
in co-operation w i th the Law
Society and local Bar Associations.
As part of the voluntary scheme
the Capital Taxes Branch, in co-
operation with the professional
bodies, provided training seminars
on self assessment throughout the
country. Over 1,000 solicitors have
now attended these seminars. This
suggests that solicitors as a pro-
fession are well prepared to meet
the challenge of self assessment,
and to benefit from the speedier
and more streamlined administra-
tion which self assessment offers.
This is borne out by a very en-
couraging feature of the voluntary
scheme - self assessments made
by solicitors were mostly error-free.
This contrasts strongly with the ex-
perience in other tax jurisdictions
such as Australia where, during the
introductory phase of self assess-
ment, assessments were incorrect-
ly made in a very high proportion of
cases.
This article provides an overview
of the new statutory arrangements
- in respect of legislation, admin-
istration and compliance.
LEGISLATION
The relevant legislation is con-
tained in Chapter II of Part V of the
Finance Act. 1989 (sections 74 to
79 inclusive). The key sections
from a solicitor's point of view are
as follows:
by
J o hn Reid
and
Tony F i t zpa t r i ck
Cap i t al Taxes Br anch
Section
74
is the principal
section involved. It is largely a re-
draft of Section 36 of the Capital
Acqu i s i t i ons Tax Act
1976
("delivery of returns"). It incorpor-
ates amendments to that secion
contained in the 1982 and 1984
Finance Acts which were necessit-
ated by the amendments in these
Acts to the method of computing
tax. Broadly speaking, a person
who is primarily accountable for
the payment of gift tax or inherit-
ance tax (usually the donee or the
successor) must, w i t h in four
months of the valuation date or 1
September, 1989, whichever is the
later,
and without being notified to
do so,
- deliver a return to the Revenue
Commissioners;
- make on that return an assess-
ment of the tax and interest due
by him;
- forward the amount of the
assessment to the Revenue
Commissioners.
The return needs to be delivered
only when the taxable value of the
gift or inheritance involved by itself,
or when aggregated with the tax-
able values of other gifts or in-
heritances taken by the donee or
successor, exceeds 80% of an
amount which is tax-free in the
computation of tax on the gift or
inheritance involved. However,
irrespective of this 80% rule, the
donee or successor must comply
with the self assessment provis-
ions in respect of a gift or in-
heritance, if required by notice in
writing by the Revenue Commiss-
ioners, within four months of such
notice being given.
Section 36 of t he Capital
Acquisitions Tax Act, 1976, as
originally enacted, contained pro-
visions requiring
- accountable persons other than
donees or successors (for
example, personal representa-
tives or trustees) to deliver a
return on request from the
Revenue Commissioners;
- any accountable person to
deliver, on request from the
Revenue Commissioners, an
CAPITAL ACQUISITION TAX
SELF ASSESSMENT
KEY FEATURES
- tax must be self assessed;
- payment of the tax any any interest must accompany the return;
- interest is payable on all tax not paid within four months of the
valuation date;
- training seminars for solicitors have been run by the Capital Taxes
Branch; further seminars will be provided on demand;
- a Tax Advisory Service has been established in the Capital Taxes
Branch; staff are available to provide advice - by telephone or
by interview;
- assessment workshops will be organised on demand.
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