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Tax 2 > Introduction to Capital Gains Tax > Flashcards

Introduction to Capital Gains Tax Flashcards

1
Q

what is the rate of capital gains tax

A

33%

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2
Q

when was cgt introduce

A

1974/75

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3
Q

define disposal of an asset

A

transfer of ownership from one person to another

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4
Q

examples of assets

A

shares
buildings
land
paintings

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5
Q

define a chargable gain

A

consideration (ie selling price)

market value of the asset in the case of a gift/ transfer to connected person

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6
Q

example of part disposal

A

selling half of your acres of land

selling one apartment out of a block

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7
Q

in what year was tax year changed to calendar basis

A

2001

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8
Q

what was the short tax year

A

6/4/01-31/12/01

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9
Q

how to compute gain

A

sales proceeds - cost

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10
Q

when do we use market value for computation

A

when asset was gifted/inherited

transferring assets between connected people

acquired before 6 April 74

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11
Q

examples of connected people

A

relatives
relatives of spouses
business partners

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12
Q

what can be used to reduce gain

A

incidental costs
enhancement costs

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13
Q

examples of incidental costs

A

legal fees

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14
Q

example of enhanced expenditure

A

extension to house

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15
Q

define enhancement expenditure

A

increases the value of the asset and is reflected in the value of the asset at the date of disposal

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16
Q

are grants received allowable deduction

A

yes

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17
Q

is interest paid on acquisition allowable deductions

A

no

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18
Q

up to what date is indexation incurred

A

1 Jan 2003

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19
Q

what is indexation

A

allows for inflation from the date expenditure is incurred to the date of disposal

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20
Q

should CGT be calculated for each asset or for total value of all assets

A

for each asset

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21
Q

what do the columns in the index tables represent

A

tax year the asset was disposed

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22
Q

what do the rows in the index tables represent

A

tax year asset was acquired or expenditure incurred

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23
Q

what are the restrictions on the use of indexation

A

cannot increase a loss

cannot convert a gain into a loss -> no gain no loss

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24
Q

where the indexation increases a loss, what should happen

A

use actual loss (lower of the two)

ie the person cannot benefit from extra losses

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25
Q

where the indexation turns a gain into a loss, what should happen

A

no gain no loss

26
Q

where the indexation increases a gain what happens

A

use actual gain (lower of the two)

27
Q

how much is the annual exemption

A

€1270

28
Q

is annual exemption taken before or after cgt calculated

A

before

then cgt is calculated on the balance

29
Q

what gains can be taxed on residents and ordinary residents, domiciled to the state

A

worldwide gain

30
Q

what gains can be taxed on residents and ordinary residents, NOT domiciled to the state

A

irish gains and remittances

31
Q

what gains can be taxed on NON residents and NON ordinary residents, domiciled to the state or not

A

irish specified assets

32
Q

examples of irish specified assets

A

irish shares
land and buildings in the state
assets in the state used for the purpose of trade carried out inireland

33
Q

what is a remittance to ireland

A

transfer of the sale proceeds to ireland from the country in which the asset was solf

34
Q

if only part is remitted to ireland, how much is taxable

A

only the part remitted

35
Q

is there relief available on foreign losses from disposal

A

no

36
Q

can losses gain be used to reduce gain before or after annual exemption?

A

before

37
Q

where can extra loss go

A

be carried over into the next year and carried forward indefinitely

38
Q

where can loss go the year of death

A

be used to set against gains in three previous yeats

39
Q

what happens to losses related to a connected person

A

can only be used to set against gain on disposal to same connected person

40
Q

date of disposal in case of a contract

A

date contract is signed

regardless of when money changes hands

unless conditional contract eg when planning permission obtained

41
Q

date of disposal for gifts

A

date of gift

42
Q

date of disposal for inheritance

A

date of death

43
Q

initial period for cgt gain

A

1 Jan to 30 Nov inclusive

44
Q

when does CGT for initial period have to be paid

A

15 december in the same year

45
Q

what is the later period for cgt gains

A

1 december to 31 december

46
Q

when does cgt for later period have to be paid

A

31 jan following year

47
Q

when does cgt return have to be filed by

A

31 october following year

48
Q

what are repercussions for not paying tax on time

A

interest

49
Q

what is repercussion for not filing on time

A

surcharge

50
Q

gains exempt from cgt

A

woodlands
work of art previously loaned to approved museum
government securities
winnings from lottery
pension lump sums

51
Q

exempt persons and bodies

A

pension funds
charities
local authorities
HSE

52
Q

do married couples living together get charged CGT on gifts they give each other/inheritance left for each other

A

no

53
Q

if spouses must transfer assets by way of deed of separation court charge, is cgt charged

A

no

54
Q

if couples transfer assets on their own behalf after separation, is cgt charged

A

yes

55
Q

are annual exemptions transferable between spouses

A

no

56
Q

are gains and losses transferable between spouses

A

yes

57
Q

formula for original acquisition cost for part disposal

A

original cost of asset x (a/(a+b))

a = market value of part solds
b = market value of part retained

58
Q

how to apportion enhancement expenditure for part disposal

A

enhancement cost x a/a+b

59
Q

what is a wasting asset

A

an asset with a predictable usefullife < 50 years

60
Q

how to calculate cost on wasting asset

A

cost x years left/50

Tax 2 (6 decks)

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