Monday, Dec 30, 2024

17:52

C.G.T - REMITTANCE BASIS

Posted on: Tuesday, May 06, 2014

Regardless of which profesional qualification you're studying for, exam questions, especially Capital Gains Tax questions, often have sections that focus on areas that are frequently overlooked.

For example, if an individual is resident and ordinarily resident in the state but not Irish domiciled he/she is liable to Irish C.G.T. on the sale of foreign assets only if he/she remits the sales proceeds into Ireland.

Simple, right?

In order to accurately answer this questions you must:

• Calculate the gain when the asset is sold.
• The individual will only pay Irish Capital Gains Tax in the tax year in which he/she remits the gain into the state.
• Revenue will deem the individual to have remitted the gain first.
• If an individual sells a property in Spain for €200,000 making a gain of €50,000 then the first €50,000 of the €200,000 remitted by that individual will be deemed to be the chargeable gain and the appropriate rate of CGT will be levied.
• For example, an individual sells a property in Spain for €200,000 making a gain of €50,000 and decides to remit €30,000 into Ireland this year and €30,000 next year leaving €140,000 in a Spanish bank account.
• Irish C.G.T. of 33% is levied on the €30,000 remitted this year and 33% (assuming that's the correct rate next year) will be levied on €20,000 of the €30,000 next year being the balance of the chargeable gain.
• The maximum amount the individual will pay tax on is the gain of €50,000.

It may seem easy now but would you have remembered this in an exam situation?