Finance Bill 2014 capital taxes provisions 26 November 2014 Presented by Ann Williams

Finance Bill 2014 Capital gains tax Stamp duty Capital acquisitions tax Pensions Miscellaneous – GAAR & records Ann Williams williamsann@eircom.net

Finance Bill 2014 - Trust for permanently incapacitated Exemption under s189A TCA 1997 for public funded trusts for permanently incapacitated individual On death of individual – remaining assets had to pass to charity From 1 Jan 2015, if individual is survived by a spouse, civil partner or child, the remaining assets can pass to estate (not necessarily to the spouse, civil partner or child) Ann Williams williamsann@eircom.net

Finance Bill 2014 – Capital gains tax – temporary non-resident S29A TCA 1997 anti-avoidance provision applying to interests in shares Where sold in a period of non-residence CGT in year of return based on market value of assets at date of departure regardless of sale price For disposal on or after passing of FA 2014, the market value at date of disposal will be used for CGT in year of return, where it differs from market value at date of departure No distinction where individual is resident at disposal Differs from EU exit tax cases Ann Williams williamsann@eircom.net

Finance Bill 2014 – Capital gains tax – wasting assets exemption UK case “HMRC v the Executors of Lord Howard of Henderskelfe decd” (2014) where CGT exemption for wasting asset was claimed on a painting sold for £9.4m For disposals on or after passing of FA 2014, plant in s560 TCA 1997 now redefined to exclude work of art Work of art includes a picture, print, book, manuscript, sculpture, jewellery, furniture or similar object Ann Williams williamsann@eircom.net

Finance Bill 2014 – CGT Vodafone Return of value payment of €1,000 or less by Vodafone plc in early 2014 Treated as capital receipt unless shareholder opts to have payment treated as income Will limit the number of small income tax underpayments Ann Williams williamsann@eircom.net

Finance Bill 2014 – CGT farmers Farm restructuring relief deadline extended from 31 Dec 2015 to 2016 CGT retirement relief currently applies on disposal of land let for up to 15 years provided other conditions are met From 1 Jan 2015, this will be extended to 25 years CGT exemption for disposal by farmers of leased Single Farm Payment entitlements during Scheme year 2014 Ann Williams williamsann@eircom.net

Finance Bill 2014 – Stamp duty farmers Exemption from SD for certain leases of farmland Lease period between 6 and 35 years Farmland used exclusively for farming by lessee on commercial basis and with view to profit Lessee is a farmer who holds an appropriate qualification (or does so within 4 years), or spends at least 50% of normal working time farming Doesn’t apply to corporate lessees SD exemption clawed-back within 6 years if conditions ceased to be satisfied (except on death/incapacity of lessee) Ann Williams williamsann@eircom.net

Finance Bill 2014 – Stamp duty farmers Extension of consanguinity relief on certain transfers of non-residential land Between 1 Jan 2015 and 31 Dec 2015 or Between 1 Jan 2016 and 31 Dec 2017 by a transferor who is 66 or younger To an individual who farms the land for 6 years and has the appropriate qualification (or obtains it within 4 years) or spends 50% of his/her normal working time farming, or To an individual who leases the land for 6 years to a qualified farmer The land must be farmed on a commercial basis and with a view to making a profit Appropriate relationship and certificate required Ann Williams williamsann@eircom.net

Finance Bill 2014 – CAT BPR BPR on transfers of land, building, machinery or plant owned by an individual and used by company controlled by him/her at the same time as shares in qualifying company Meaning of control amended so that shares of spouse/civil partner added together for the purpose of the test Applies to gifts/inheritances on or after 23 Oct 2014 Ann Williams williamsann@eircom.net

Finance Bill 2014 – CAT DTT Exemption from DTT for discretionary trust created exclusively for public or charitable purposes in Ireland From date of passing of FA 2014 restriction to Ireland eliminated This is in line with the general CAT exemption for charities and EU compliant Anti- abuse provision added to ensure that the exemption cannot be used where the main purpose is “to secure a tax advantage” as defined in s811 TCA 1997 Ann Williams williamsann@eircom.net

Finance Bill 2014 – CAT exemption for support, maintenance & education Section 82(2) CATCA 2003 exemption restricted from date of passing of FA 2014 Up to this support etc payments could be made tax free during lifetime to all children regardless of child’s age Payments had to be part of the normal expenditure of a person and be reasonable in his/her financial circumstances Widely interpreted to allow long-term support Ann Williams williamsann@eircom.net

Finance Bill 2014 – CAT exemption for support, maintenance & education Restricted to payments for support, maintenance or education to child of the donor or his/her civil partner who is Minor child or Child between 18 & 25 in full time education/training or Permanently incapacitated child regardless of age or Person to whom the donor stands in loco parentis regardless of age Also amended the provision for orphans to extend it from minor children only to 18 -25 year olds in full time education/training or permanently incapacitated regardless of age Revenue to publish detailed statement Ann Williams williamsann@eircom.net

Finance Bill 2014 – CAT agricultural property relief For gifts & inheritance on or after 1 Jan 2015, in addition to the 80% agricultural assets test a farmer has to Hold a farming qualification, or obtain one within 4 years of the date of the gift/inheritance and farm the land on a commercial basis and with a view to profit for 6 years from the valuation date or For 6 years from the valuation date spend not less than 50% of his/her normal working time farming the land on a commercial basis and with a view to profit or Lease the gifted/inherited agricultural property to a qualifying individual farmer for at least 6 years from the valuation date (lease to a company not permitted) Ann Williams williamsann@eircom.net

Finance Bill 2014 – CAT agricultural property relief Additional claw-back provision where beneficiary or lessee ceases to qualify as a farmer Within 6 years of the valuation date APR with-drawn and CAT recalculated No claw-back of relief if beneficiary or lessee dies within 6 years of the valuation date Ann Williams williamsann@eircom.net

Finance Bill 2014 - Pensions From 1 Jan 2015 changes to deemed draw- down in ARFs Fund less than €2m rate of 4%, or 5% for over 70’s Fund over €2m rate of 6% regardless of age AMRF change will allow a holder draw down 4% pa of the value of AMRF assets at 1 February AMRF draw down will be taxed as normal Ann Williams williamsann@eircom.net

Finance Bill 2014 – Pensions ARF anti-avoidance Distribution from ARF = withholding tax by QFM Assignment of the ARF not a distribution ? = no withholding tax by QFM FB amends s784A to Confirm an assignment is a distribution Made by QFM and liable to withholding tax New category of distribution where Acquisition by ARF of units, and Another pension arrangement of a person connected to the ARF owner acquires units and Increase in pension units attributable to ARF owners units Ann Williams williamsann@eircom.net

Finance Bill 2014 – s811 general anti-avoidance rule Reclassification of transactions determined to be tax avoidance transactions Notice issued by an authorised Revenue officer Notices & procedures challenged FB provisions - Incentive to settle on transactions commenced on or before 23 Oct 2014 by making a qualifying avoidance disclosure by 30 June 2015 Ann Williams williamsann@eircom.net

Finance Bill 2014 – s811 GAAR For transactions commencing after 23 Oct 2014 New approach with no Revenue officer required to “form an opinion” and issue a notice Original definitions of “tax advantage”, “tax avoidance”, “bona fide commercial purposes” unchanged A Revenue officer may at any time deny or withdraw the tax advantage, make enquiries, raise or amend an assessment Changes to protective notice requirements – all documentation and taxpayer’s reasons why not within GAAR Ann Williams williamsann@eircom.net

Finance Bill 2014 – GAAR New Schedule 33 with a list of specific anti-avoidance sections with increased surcharge exposure Includes s590, s806, s807A, s817 etc Consequences of being within GAAR are greater Mandatory disclosure changes include Incorporating the Regulations into TCA Widening the scope of transactions to be disclosed to include “any part of a transaction ..” Additional obligations for all parties Ann Williams williamsann@eircom.net

Finance Bill 2014 - Records Obligation to retain records & linking documents for income & capital gains for 6 years Extension of period of retention where an enquiry, investigation, appeal, judicial process or claim is ongoing until completed Executor or administrator of a deceased person is required to keep documents & records of the deceased for the appropriate period Ann Williams williamsann@eircom.net

Finance Bill 2014 Ann Williams williamsann@eircom.net

Contact details Email: williamsann@eircom.net Phone: 087 2800405 or 045 876579 Web: www.annwilliams.ie Ann Williams williamsann@eircom.net