The Gazette 1978

JANUARY/FEBRUARY 1978

GAZETTE

It is important to note that a Certificate must be obtained in all cases where the consideration exceeds £50,000, regardless of whether the vendor is or is not resident in the State. A Certificate that the deduction need not be made will be readily forthcoming in a case where the vendor is resident in the State, and the Certificate can usually be obtained in a matter of days. However, it is for the vendor to satisfy the Inspector of Taxes that he is in fact resident in the State. Unless a Certificate is produced by the vendor, the purchaser must make the 13% deduction and account for it to the Revenue, notwithstanding that he may be aware that the vendor is in fact resident in the State. The vendor obtains a Certificate by applying on form CG50 to the Inspector of Taxes who normally deals with his tax returns. The application gives details of the assets disposed of, the date of the contract for sale, the tax reference number of the person making the disposal and the grounds of the application, e.g., that the person is ordinarily resident in the State. If the Inspector of Taxes is satisfied, he will then issue a form CG50A certifying that the deduction need not be made. Summary The following Taxation Requisitions are necessary: 1. Where there is a death or other event giving rise to a claim for Death Duties on the title prior to the 1st April 1975 and within twelve years preceding the sale — Furnish Certificate of Discharge from Death Duties. 2. Where there is a death on the title on or after 1st April 1975 and within twelve years preceding the sale — Furnish Certificate of Discharge from Capital Acquisitions Tax (Inheritance Tax). 3. Where there is a Voluntary Disposition or a transfer for less than full consideration on the title on or after 28th February 1974 and within twelve years preceding the sale — Furnish Certificate of Discharge from Capital Acquisitions Tax (Gift Tax/Inheritance Tax). 4. Where (i) the property was on 5th April 1975, 1976 or 1977 owned by an individual, Discretionary Trust or Private Non-trading Company and (ii) the sale or mortgage takes place within six years after the relevant 5th April and (iii) the consideration for the sale or the mortgage debt (together with the consideration or mortgage debt for any other such sale or mortgage between the same parties within the two preceding years) exceeds £50,000 — Furnish Certificate of Discharge from Wealth Tax. 5. Where the consideration for the sale (together with the consideration for the sale of other parts of the same asset by the same vendor to the same purchaser or to persons who are connected or are acting in concert) exceeds £50,000 — Furnish Certificate that Capital Gains Tax should not be deducted under paragraph 11 of Schedule 4 to the Capital Gains Tax Act 1975.

assets specified in paragraphs (a), (b) or (c) above other than shares quoted on a stock exchange. (e) Goodwill of a trade carried on in the State. Paragraph 11 provides that upon payment of the consideration for acquiring an asset to which the paragraph applies "the person by or through whom any such payment is made shall deduct thereout a sum representing an amount of Capital Gains Tax on one-half of the said payment at the rate of such tax in force at the time the payment is made". As the rate of tax at present is 26%, the deduction required to be made is therefore 13% of the total sum paid for acquiring the asset. The obligation to make the deduction falls on any person making the payment. The deduction will normally be made by the purchaser's solicitor and if he fails to make the deduction in a case where it ought to be made, he will be personally liable for the amount which should have been deducted. The person making the deduction must forthwith deliver to the Revenue Commissioners an account of the payment and of the sum deducted therefrom, and the Inspector of Taxes will then assess and charge that person to Capital Gains Tax on an amount equal to one-half of the payment. Payment to the Revenue Commissioners of the sum deducted is a full discharge to the purchaser as if the sum deducted had been actually paid to the person making the disposal Paragraph 11 does not apply, and the 13% deduction need not be made, where the consideration on a disposal does not exceed £50,000. However, where an asset was at any one time owned by the one person and that person disposes of it in parts either to die same person or to persons who are acting in concert or who are connected persons within the meaning of Section 33 of the Capital Gains Tax Act, whether on the same or different occasions, the several disposals are aggregated for the purpose of determining whether the consideration exceeds £50,000 and the deduction should be made. Sub-paragraph (6) of paragraph 11 provides that a person chargeable to Capital Gains Tax on the disposal of an asset to which paragraph 11 applies may apply to the Inspector of Taxes for a Certificate that tax should not be deducted from the consideration. The Inspector is obliged to issue the Certificate if he is satisfied that the applicant is the person making the disposal and that — (a) He is ordinarily resident in the State or (b) No amount of Capital Gains Tax is payable in respect of the disposal or (c) The Capital Gains Tax chargeable for the year of assessment in which the disposal is made and the tax chargeable on any gain accruing in any earlier year of assessment on a previous disposal of the asset has been paid. Unlike the other taxes described above, unpaid Capital Gains Tax is not a charge on the property of the vendor. Accordingly, where the consideration on a disposal does not exceed £50,000 and there have been no other disposals of part of the same asset to the same person or to connected persons or persons acting in concert, then the purchaser is not concerned at all with the vendor's Capital Gains Tax or with the Capital Gains Tax of any previous owner of the property. However, where the consideration exceeds £50,000, the solicitor for the purchaser should requisition a certificate that tax need not be deducted from the payment of the consideration under paragraph 11 of Schedule 4 to the Capital Gains Tax Act.

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