Finance Act, 1993

• Permanent Page URL

Taxation of unit holders in undertakings for collective investment.

18.—(1) Subject to subsection (4), any payment made on or after the 6th day of April, 1994, in money or money's worth, to a unit holder by an undertaking for collective investment by reason of rights conferred on the holder as a result of holding units in the undertaking, shall not be reckoned in computing—

(a) total income for the purposes of the Income Tax Acts, or

(b) total income brought into charge to corporation tax for the purposes of the Corporation Tax Acts,

of the holder.

(2) Subject to subsections (3) and (4), as respects a disposal on or after the 6th day of April, 1994, of units in an undertaking for collective investment—

(a) no chargeable gain shall accrue on the disposal if the person disposing of the units acquired them on or after that date, and

(b) if the person disposing of the units acquired them before that date the chargeable gains on the disposal shall be computed as if—

(i) the consideration for the disposal were the market value of the units on the 5th day of April, 1994:

Provided that subparagraph (i) shall not apply in relation to the disposal of units—

(I) if, as a consequence of the application of subparagraph (i), a gain would accrue on that disposal to the person making the disposal and either a smaller gain or loss would so accrue if that subparagraph did not apply, or

(II) if, as a consequence of the application of subparagraph (i), a loss would so accrue and either a smaller loss or a gain would accrue if that subparagraph did not apply,

and, accordingly, in a case to which paragraph (I) or (II) of this proviso applies, the amount of the gain or loss accruing on the disposal shall be computed without regard to the provisions of subparagraph (i) (other than this proviso) but, in a case where this proviso would otherwise substitute a loss for a gain or a gain for a loss, it shall be assumed, in relation to the disposal, that the units were acquired by the person disposing of them for a consideration such that neither a gain nor a loss accrued to him on making the disposal,

and

(ii) for the purposes of selecting the appropriate multiplier (within the meaning of section 3 of the Capital Gains Tax (Amendment) Act, 1978 ), the disposal were made in the year 1993-94,

and, for the purposes of this subsection, references to units shall be construed as including a reference to an interest in units and the provisions of the subsection shall have effect, with any necessary modification, accordingly.

(3) (a) Where a person disposing of units in an undertaking for collective investment acquired them—

(i) on or after the 6th day of April, 1994, and

(ii) in such circumstances that by virtue of any enactment other than section 3 (3) of the Capital Gains Tax (Amendment) Act, 1978 , he and the person from whom he acquired them (hereafter in this subsection referred to as “the previous owner”) fell to be treated for the purposes of the Capital Gains Tax Act, 1975 , as if his acquisition were for a consideration of such an amount as would secure that, on the disposal under which he acquired it, neither a gain nor a loss accrued to the previous owner,

then, the previous owner's acquisition of the interest shall be treated as his acquisition of it.

(b) If the previous owner acquired the units disposed of on or after the 6th day of April, 1994, and in circumstances similar to those referred to in paragraph (a), then, his predecessor's acquisition of the units shall be treated for the purposes of this section as the previous owner's acquistion, and so on back through previous acquisitions in similar circumstances until the first such acquisition before the 6th day of April, 1994, or, as the case may be, until an acquisition on a disposal on or after that date.

(4) If an undertaking for collective investment was not carrying on a collective investment business on the 25th day of May, 1993, this section shall apply as respects payments by, or disposals of units in, that undertaking as if—

(a) “on or after the 6th day of April, 1994,” were deleted from subsections (1) and (2), and

(b) paragraph (b) were deleted from subsection (2).