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Business Property Relief

Posted on: Friday, March 08, 2013

Business Property Relief from Capital Acquisition Tax applies to the following business property:

  1. property consisting of a business or an interest in a business 
  2. unquoted shares or securities of a company subject to certain conditions.
  3. land, building, machinery or plant owned by the disponer but used by a company controlled by the disponer or by a partnership in which the disponer was a partner.

The relevant business property must have been owned by the disponer for at least 5 years prior to the transfer or for at least 2 years where the transfer gives rise to an inheritance taken on the disponer’s death.

Assets not used wholly or mainly for the business concerned are ignored in valuing the relevant business property.

How to tackle an exam question:

Always ask yourself the following questions:

  1. Is the business asset held outside the company (i.e. personally by the disponer) actually used by the company?
  2. Is the company controlled by the disponer?
  3. Is the asset transferred at the same time as the shares and to the same person? 
  4. Have the property and shares been owned for five years?

If the answer to the above four questions is yes then the 90% Business Relief will apply.



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