The Gazette 1989

APRIL 1989

GAZETTE

the Transferee is very relevant; (a) The amount of Stamp Duty chargeable may be reduced by one-half if the appropriate consanguinity certificate is included in the transfer. (See Paragraph 4 of the Head of Charge 'con- veyance or transfer on sale' in the First Schedule as amended to the Stamp Act 1891). In this connection a common problem must be high-lighted. Where, for example, the Transferor transfers property to his son and to the son's wife, the provisions of Paragraph 4 do not apply, as the son's wife has no consanguinity to the Transferor. This prob- lem cannot be overcome by two transfers, that is, one from the Transferor to his son of the entire property followed by a transfer by the son of that property into the joint names of himself and his wife because, in that case, the overall duty

sioners are more likely to agree a market value in res- pect of a tax liability charge- able maybe at 3% for Stamp Duty purposes than in respect of a Gift Tax or a Capital Gains Tax liability, which may be charged at a rate of maybe 30%. No problem should arise if a practitioner makes it quite clear to the Revenue Com- missioners that he requires a market value agreed for all tax purposes. It should be noted that we are speaking here of the open market value of im- movable property. Different considerations would apply in the case of a transfer of private company shares where differing legislative provisions might apply for valuation purposes. (ii) The market value of the property when it was acquired by A is necessary for Cap- ital Gains Tax purposes. If the property was acquired prior to 6th April, 1974 the market value at that latter date is also necessary. (iii) The question of whether the property has develop- ment value can be important. This is particularly so for Capital Gains Tax purposes, where the rate of tax and indexation may be affected. It should be noted that de- velopment value has no relevance for Capital Ac- quisitions Tax purposes in the sense that lands that have development value are still agricultural property and, as such, are entitled to agricultural relief if applic- able in the circumstances of the particular case. (iv) If the property to be transferred includes a dwel- ling house it may be exempt from Capital Gains Tax under Section 25 Capital Gains Tax Act 1975 if it is A's main residence. In such a case an apportionment of market value would be nec- essary for Capital Gains Tax. (B) Regarding the Transferor (Disponer): (i) The consanguinity between the Transferor and

payable would be the same. However, if the family home is involved, the second transfer would be exempt to that extent and therefore a Stamp Duty saving might be obtained. If two transfers are used, the anti-avoidance provisions of Section 8 Capital Acquisitions Tax Act 1976 should be kept in mind. (b) For Capital Acquisi- tions Tax purposes the class thresholds and the "favour- ite nephew" relief are based on consanguinity. (c) For Capital Gains Tax purposes the relief afforded by Section 27 Capital Gains Tax Act 1975, as amended by Section 8 Capital Gains (Amendment) Act 1978 is confined to children, includ- ing favourite nephews and nieces of the Transferor. (d) The provisions of the Status of Children Act 1987 may be relevant (see Sections 3 and 27 of that Act). (ii) The Age of the Trans- feror: This is relevant for Capital Gains Tax purposes. The reliefs provided by Section 26 Capital Gains Tax Act 1975 and also Section 27 as already men- tioned apply only where the Transferor is over 55 years of age at the date of the transfer. (iii) How long hes the Transferor owned the Property? This is relevant for Capital Gains Tax pur- poses as the rate of tax and indexation may be affected. Furthermore, the reliefs under Section 26 and 27 of the Capital Gains Tax Act already mentioned are not available unless the qualify- ing assets have been owned by the Transferor for the period of not less than 10 years ending with the date of the disposal. (iv) Does the Transferor wish to reserve rights to himself or to others? Such a provision would affect Stamp Duty and Gift Tax. A deduction could be claimed for Stamp Duty purposes 179

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