Capital Gains Tax (Amendment) Act, 1978

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Computation of gains: adjustment of allowable expenditure by reference to consumer price index.

3.—(1) For the purposes of computing the chargeable gain accruing to a person on the disposal of an asset, each sum (in this section referred to subsequently as “deductible expenditure”) allowable as a deduction from the consideration for the disposal under clauses (a) and (b) of paragraph 3 (1) of Schedule 1 to the Principal Act shall be adjusted by multiplying it by the figure (in this section referred to subsequently as the “multiplier”) specified in subsection (4) or determined under subsection (5), as may be appropriate (the multiplier being the quotient, rounded up to three decimal places, obtained by dividing the consumer price index number relevant to the year of assessment in which the disposal is made by the consumer price index number relevant to the year of assessment in which the deductible expenditure was incurred):

Provided that this subsection shall not apply in relation to deductible expenditure where the person making the disposal had incurred the expenditure within the period of twelve months ending with the date of the disposal.

(2) For the purposes of the Capital Gains Tax Acts it shall be assumed that an asset held by a person on the 6th day of April, 1974, was sold and immediately re-acquired by him on that date and there shall be deemed to have been given by him, as consideration for the re-acquisition, an amount equal to the market value of the asset at the said date.

(3) Subsections (1) and (2) shall not apply in relation to the disposal of an asset—

(a) if as a consequence of the application of the said subsections (1) and (2) a gain would accrue on that disposal to the person making the disposal and either a smaller gain or a loss would so accrue if the said subsections (1) and (2) did not apply, or

(b) if as a consequence of the application of the said subsections (1) and (2) a loss would so accrue and either a smaller loss or a gain would accrue if subsections (1) and (2) did not apply,

and, accordingly, in a case to which paragraph (a) or (b) applies, the amount of the gain or loss accruing on the disposal shall be computed without regard to the provisions of the preceding subsections of this section but, in a case where this subsection would otherwise substitute a loss for a gain or a gain for a loss, it shall be assumed, in relation to the disposal, that the relevant asset was acquired by the owner for a consideration such that neither a gain nor a loss accrued to him on making the disposal.

(4) In relation to the disposal of an asset made in the year 1978-79, the multiplier shall be the figure mentioned in column (2) of the Table to this subsection opposite the mention in column (1) of the said Table of the year of assessment in which the deductible expenditure was incurred.

TABLE

(5) The Revenue Commissioners shall make regulations specifying the multipliers, determined in accordance with subsection (1), in relation to the disposal of an asset made in the year 1979-80 and shall make corresponding regulations in relation to the disposal of an asset made in each subsequent year of assessment.

(6) Every regulation made under this section shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next twenty-one days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

(7) In this section “the consumer price index number” means the All Items Consumer Price Index Number compiled by the Central Statistics Office and the consumer price index number relevant to any year of assessment means the consumer price index number at the mid-February next before the commencement of that year expressed on the basis that the consumer price index number at mid-November, 1968, is 100.