Capital Taxes Fundamentals (CTA manual)

1. Introduction to capital gains tax

1.1 Identify profits or gains that are taxable under CGT

1.2 Outline the key aspects of a CGT computation – disposal, consideration, base cost, chargeable gain and tax payable

1.3 Explain the basis of assessment for CGT

1.4 Outline the territorial scope of the charge to CGT

1.5 Outline the main sources of law

1.6 Explain and identify the different types of ownership which exist

1.7 Outline the tax rates applicable

1.8 Compare and contrast the tax base for CGT and income tax

2. Residence, ordinary residence and domicile (CGT)

2.1 Interpret legislation to define an individual’s residence and ordinary residence

2.2 Define the legal concept of “domicile” from a tax perspective

2.3 Apply legislation and the principles from established case law to determine an individual’s residence and domicile for a tax year

2.4 Explain an individual’s right of appeal against Revenue’s decision on their domicile

2.5 Outline the CGT implications of an individual’s residence, ordinary residence and domicile

2.6 Explain when non-residents can be charged to Irish CGT

2.7 Compare the effect of residence, ordinary residence and domicile on the scope of the charge to CGT and to income tax

3. Assets

3.1 Define the meaning of “asset” for CGT purposes

3.2 Describe and apply the rules regarding the location of assets

3.3 Describe and apply the rules regarding wasting assets

3.4 Apply the CGT rules to analyse whether items are assets or not

4. Disposals

4.1 Define the disposal of assets for CGT purposes

4.2 Apply the rules to determine whether a disposal has been made in practical cases

4.3 Apply the tax treatment of insurance and compensation monies

4.4 Apply the tax treatment of assets used as security

4.5 Apply the tax treatment of disposals by nominees and trustees

4.6 Interpret legislation to identify when a disposal is made

5. Valuation and consideration

5.1 Explain how to deal with consideration that is partly capital and partly revenue in nature

5.2 Explain and apply the interaction of CGT with balancing charges

5.3 Explain and apply how and why market value is sometimes imposed and identify occasions when this will happen on disposals

5.4 Illustrate how consideration denominated in a foreign currency is treated for CGT purposes

5.5 Interpret legislation to identify the value of an acquisition or disposal

6. Costs of acquisition

6.1 Interpret legislation to define the cost of an asset

6.2 Explain and apply how incidental costs are treated for CGT purposes

6.3 Explain and apply the treatment of enhancement expenditure

6.4 Explain why market value is sometimes imposed, identify occasions when this will happen on acquisitions and compare this to the position for disposals

6.5 Explain and apply how the costs of acquisition are arrived at in the case of assets derived from other assets

6.6 Explain how the costs of acquisition are arrived at in the case of wasting assets

6.7 Illustrate how costs of acquisition denominated in a foreign currency are treated for CGT purposes

7. Losses

7.1 Interpret legislation to explain how loss relief is granted for CGT purposes

7.2 Outline how relief is granted for losses on chattels (both those that qualify for capital allowances and those for personal use)

7.3 Outline the timing of loss relief with respect to other reliefs and exemptions

7.4 Explain and apply how the market value rules on transactions between connected persons interact with loss relief

7.5 Interpret legislation to explain the basis for negligible value claims

7.6 Compute the relief available for losses in a practical case

8. Indexation relief and the annual exemption

8.1 Describe indexation relief and how it applies to assets acquired both before and after 6 April 1974

8.2 Describe the restrictions on indexation relief

8.3 Outline an individual’s entitlement to the annual exemption

8.4 Apply indexation relief and the annual exemption to a disposal chargeable to CGT

9. Other exemptions

9.1 Outline the main exemptions from CGT, comparing these to the equivalent exemption from income tax where relevant

9.2 Identify when an asset is a chattel and apply the relevant exemptions

10. Reliefs

10.1 Interpret legislation to explain Principal Private Residence (“PPR”) relief from CGT

10.2 Compute PPR relief available in practical cases

10.3 Explain the interaction of PPR relief with rent-a-room relief

10.4 Interpret legislation to explain the relief available on the disposal of a site to a child

10.5 Interpret legislation to explain the seven-year/four year CGT relief for certain disposals of land or buildings

10.6 Compute the relief available in practical cases on the disposal of certain land or buildings

10.7 Summarise the special rules that apply to transfers to or from personal insolvency practitioners who hold assets in trust for the benefit of creditors

10.8 Interpret legislation to explain and apply entrepreneur relief from CGT

11. Taxation of married couples and civil partnerships

11.1 Explain the methods of assessment to CGT for married couples/civil partners

11.2 Outline how certain reliefs apply for married couples/civil partners

11.3 Outline the specific reliefs available on the transfer of assets between spouses/civil partners

11.4 Compare this to the treatment of the transfer of assets between spouses/civil partners on separation

11.5 Compare this to the treatment of the transfer of assets between spouses/civil partners on divorce/dissolution of civil partnership

11.6 Compute the CGT liability for a married couple/civil partners

11.7 Conclude, based on tax law, whether a couple are entitled to claim reliefs for spouses/civil partners

11.8 Compare the CGT treatment to the treatment of married couples/civil partners, separated couples and divorced couples/dissolved civil partnerships for income tax

12. Taxation on death

12.1 Interpret legislation to assess the CGT implications of the transfer of assets on death

12.2 Understand and outline how gains arising to the deceased up to the date of death are treated

12.3 Understand and outline how losses in the year of death are treated

12.4 Calculate any CGT implications of the transfer of assets on death

13. Companies and their shareholders

13.1 Outline the basic rules relating to the disposal of shares for CGT purposes

13.2 Applying first principles, determine the taxation implications of share transactions

13.3 Describe how share-for-share exchanges are treated for tax purposes, comparing the implications of the inclusion of cash to straight share-for-share exchanges

13.4 Explain the reason for the introduction of the “four-week rule” on share disposals

13.5 Interpret legislation to explain the application of the “four-week rule”

13.6 Prepare a pro-forma share history

13.7 Compute the CGT arising on share transactions

14. The CGT treatment of leases of land and property

14.1 Apply first principles of CGT to calculate the CGT arising on leases

14.2 Interpret legislation to determine the CGT arising on granting a lease

14.3 Outline how the sale of a lease differs from its grant

14.4 Compare the CGT treatment of short leases to the income tax treatment

15. Development land

15.1 Interpret tax law to define development land for CGT purposes

15.2 Interpret legislation to explain how disposals of development land are taxed

15.3 Judge whether a disposal involves development land and calculate any arising tax or restriction of reliefs

16. Withholding tax provisions

16.1 Interpret legislation to identify the occasions when withholding tax applies to CGT transactions

16.2 Outline the procedures the purchaser must follow to account for and return this withholding tax

16.3 Outline the procedure for gaining a CGT clearance certificate

16.4 Complete a tax clearance CG50 application

16.5 Explain how withholding tax applies in situations where no cash changes hands

17. Self-assessment

17.1 Using legislation, outline the self-assessment system for the collection of tax and filing of returns for individuals

17.2 Prepare the CGT entries on an individual tax return

17.3 Compare self-assessment for CGT and self-assessment for income tax

18. Case study

19. Introduction to Capital Acquisitions Tax (CAT)

19.1 Identify gifts and inheritances which are taxable under CAT

19.2 Outline the key aspects of a CAT computation

19.3 Outline the tax rates applicable to CAT

19.4 Compare and contrast CAT with CGT and income tax

20. Residence, ordinary residence and domicile (CAT)

20.1 Outline the impact that residence and domicile have on a person’s liability to CAT

21. Arriving at the taxable value

21.1 Summarise how to calculate the taxable value of a gift or inheritance

21.2 Determine the incumbrance free value of a benefit for CAT purposes

21.3 Judge whether a deduction is allowable or non-allowable for CAT purposes

21.4 Compute the taxable value of a gift or inheritance

21.5 Contrast the taxable value rules for CAT purposes to those for CGT and income tax purposes

22. Calculating the tax

22.1 Outline how aggregation applies, using illustrative examples

22.2 Outline how to determine the rate of CAT applicable

22.3 Explain how a credit for CGT paid on the same event is granted

22.4 Explain the taxation of same day benefits

22.5 Describe how the benefit of freedom from tax is subject to CAT

22.6 Interpret legislation to ascertain the valuation date for gifts or inheritances

22.7 Contrast the valuation date of gifts and inheritances with the date a gift or inheritance is deemed to be taken and explain the significance of each

23. The taxation of married couples and civil partners

23.1 Outline any reliefs available on the transfer of assets between spouses and civil partners

23.2 Compare how transfers between separated and divorced couples and transfers following the dissolution of a civil partnership are treated for CAT purposes

23.3 Outline how transfers to a surviving spouse/civil partner on death are treated

23.4 Calculate any CAT arising on transfers between spouses/civil partners

24. Exemptions

24.1 Identify if a gift or inheritance is exempt from CAT

24.2 Identify if a donee/successor is exempt from CAT

Appendix I — Indexation factors for Capital Gains Tax