Capital Gains Tax (Amendment) Act, 1978

Amendment of section 39 (disposals to State, charities and other bodies) of Principal Act.

10.—Section 39 of the Principal Act is hereby amended by the substitution for subsection (1) of the following subsection:

“(1) (a) Where a disposal of an asset is made otherwise than under a bargain at arm's length—

(i) to the State,

(ii) to a charity, or

(iii) to any of the bodies falling within section 28 (3) of the Finance Act, 1931 (national institutions and other public bodies),

section 9 (consideration deemed to be equal to market value) shall not apply, but if the disposal is for no consideration or for a consideration not exceeding the sums which would be allowable as a deduction under paragraph 3 of Schedule 1 for the purposes of computing a chargeable gain, then—

(I) the disposal and acquisition shall be treated for the purposes of this Act as being made for such consideration as to secure that neither a gain nor a loss accrues on the disposal, and

(II) where the disposal is to a person within subparagraph (ii) or (iii) and the asset is later disposed of by that person in such circumstances that if a gain accrued on the later disposal it would be a chargeable gain, the capital gains tax which would have been chargeable in respect of the gain accruing on the earlier disposal if the said section 9 had applied in relation to it shall be assessed and charged on the person making the later disposal in addition to any capital gains tax chargeable in respect of the gain accruing to him on the later disposal.

(b) Where relief was given under this subsection in respect of a disposal to a person of an asset, being a disposal made before the commencement of the Capital Gains Tax (Amendment) Act, 1978, and there is a later disposal of the asset by the person after such commencement, paragraph (a) (II) shall have effect as if the first-mentioned disposal were the earlier disposal referred to in that paragraph.

(c) An assessment to give effect to the provisions of paragraph (a) (II) shall not be out of time if made within ten years after the end of the year of assessment in which the asset concerned is disposed of by the person making the later disposal.

(d) For the purposes of paragraph (a) (II), the amount of the capital gains tax which would have been chargeable in respect of the gain accruing on the earlier disposal shall be the amount of tax which would not have been chargeable but for that gain.”.