Finance Act, 1982

Chargeable gains on disposals of development land.

36.—(1) In this section and in sections 37 to 40

“compulsory disposal” means a disposal to an authority possessing compulsory purchase powers, which is made pursuant to the exercise of those powers or the giving of formal notice of intention to exercise those powers, other than a disposal to which the provisions of section 29 of the Local Government (Planning and Development) Act, 1963 , apply;

“current use value”—

(a) in relation to land at any particular time, means the amount which would be the market value of the land at that time if the market value were calculated on the assumption that it was at that time, and would remain, unlawful to carry out any development (within the meaning of section 3 of the Act of 1963) in relation to the land other than development of a minor nature, and

(b) in relation to shares in a company (being shares deriving their value or the greater part of their value directly or indirectly from land, other than shares quoted on a stock exchange) at any particular time, means the amount which would be the market value of the shares at that time if the market value were calculated on the same assumption, in relation to the land from which the shares derive value as aforesaid, as is mentioned in paragraph (a),

and, in this definition—

(i) “the Act of 1963” means the Local Government (Planning and Development) Act, 1963 ,

(ii) “development of a minor nature” means development (not being development by a local authority or a statutory undertaker) which, under or by virtue of section 4 of the Act of 1963, is exempted development for the purposes of the Local Government (Planning and Development) Acts, 1963 and 1976, and

(iii) “statutory undertaker” has the meaning assigned to it by section 2 of the Act of 1963;

“development land” means land in the State the consideration for the disposal of which, or the market value of which at the time at which the disposal is made, exceeds the current use value of that land at the time at which the disposal is made, and includes shares deriving their value or the greater part of their value directly or indirectly from such land, other than shares quoted on a Stock Exchange;

“relevant disposal” means a disposal of development land made on or after the 28th day of January, 1982.

(2) As respects chargeable gains accruing on relevant disposals made before the 26th day of March, 1982, section 3(3) of the Principal Act shall have effect as if the rate of capital gains tax specified therein were 45 per cent. or, in the case of such a relevant disposal which is a compulsory disposal, as if that rate were 40 per cent.

(3) As respects chargeable gains accruing on relevant disposals made on or after the 26th day of March, 1982, section 3(3) of the Principal Act (as amended by this Act) shall have effect as if, in lieu of the rates of capital gains tax specified in paragraphs (a), (b) and (c) of that subsection, the following rates of capital gains tax applied:

(a) 60 per cent. where the period of ownership of the asset by the person making the disposal is not more than one year,

(b) (i) 50 per cent. where his period of ownership of the asset is more than one year, or

(ii) in the case of such a relevant disposal which is a compulsory disposal by a person whose period of ownership of the asset is more than three years, 40 per cent.

(4) Notwithstanding any provision to the contrary in the Corporation Tax Acts, a company shall not be chargeable to corporation tax in respect of chargeable gains accruing to it on relevant disposals and, accordingly—

(a) such gains shall not be regarded as profits of the company for the purposes of corporation tax, and

(b) in respect of those gains, the company shall be chargeable to capital gains tax under the provisions of the Capital Gains Tax Acts.

(5) Sections 134 , 137 , 138 and 139 of the Corporation Tax Act, 1976 , shall apply, with any necessary modifications, in relation to capital gains tax to which a company is chargeable on chargeable gains accruing to it on a relevant disposal as they apply in relation to corporation tax on chargeable gains and references in those sections to corporation tax shall be construed as including references to capital gains tax.

(6) Where a company which is or has been a member of a group of companies within the meaning of section 129 of the Corporation Tax Act, 1976 , makes a relevant disposal of an asset which, as a result of a disposal which was not a relevant disposal, it had acquired from another member of that group at a time when both were members of the group, the amount of the chargeable gain accruing on the relevant disposal, and the capital gains tax thereon, shall be computed as if all members of the group for the time being were the same person, and as if the acquisition or provision of the asset by the group, so taken as a single person, had been the acquisition or provision of it by the member disposing of it:

Provided that, where, under section 131 (2) or 135 of the Corporation Tax Act, 1976 , a member of the group (hereafter in this proviso referred to as “the first-mentioned member”) had been treated as having acquired or reacquired the asset at a time later than the original acquisition or provision of the asset by the first-mentioned member or by another member of the group, as the case may be, this subsection shall have effect as if the reference therein to the acquisition or provision of the asset by the group were a reference to its acquisition or reacquisition so treated as having been made by the first-mentioned member.

(7) Section 132 of the Corporation Tax Act, 1976 , shall not apply in relation to a relevant disposal by a company which is a member of a group of companies where the company acquired the asset so disposed of from another member of the group as a result of a relevant disposal.