Capital Acquisitions Tax Act, 1976

Taxable value of a taxable gift or taxable inheritance.

18.—(1) In this section, “incumbrance-free value”, in relation to a taxable gift or a taxable inheritance, means the market value at the valuation date of the property of which the taxable gift or taxable inheritance consists at that date, after deducting any liabilities, costs and expenses that are properly payable out of the taxable gift or taxable inheritance.

(2) Subject to the provisions of this section (but save as provided in section 19), the taxable value of a taxable gift or a taxable inheritance (where the interest taken by the donee or successor is not a limited interest) shall be ascertained by deducting from the incumbrance-free value thereof the market value of any bona fide consideration in money or money's worth, paid by the donee or successor for the gift or inheritance, including—

(a) any liability of the disponer which the donee or successor undertakes to discharge as his own personal liability; and

(b) any other liability to which the gift or inheritance is subject under the terms of the disposition under which it is taken,

and the amount so ascertained shall be the taxable value:

Provided that no deduction shall be made under this subsection in respect of any liability which falls to be deducted in ascertaining the incumbrance-free value.

(3) Where a liability (other than a liability within the meaning of subsection (9)) for which a deduction may be made under the provisions of subsection (1) or (2) falls to be discharged after the time at which it falls to be taken into account as a deduction under either of those subsections, it shall be valued for the purpose of making such a deduction at its current market value at the time at which it falls to be so taken into account.

(4) The taxable value of a taxable gift or a taxable inheritance, where the interest taken by the donee or the successor is a limited interest, shall be ascertained as follows—

(a) the value of the limited interest in a capital sum equal to the incumbrance-free value shall be ascertained in accordance with the Rules contained in the First Schedule; and

(b) from the value ascertained in accordance with paragraph (a) a deduction shall be made in respect of the market value of any bona fide consideration in money or money's worth paid by the donee or the successor for the gift or the inheritance and the amount remaining after such deduction shall be the taxable value:

Provided that no deduction shall be made under this paragraph in respect of any liability which falls to be deducted in ascertaining the incumbrance-free value.

(5) A deduction shall not be made under the provisions of this section—

(a) in respect of any liability the payment of which is contingent on the happening of some future event:

Provided that if the event on the happening of which the liability is contingent happens and the liability is paid, then, on a claim for relief being made to the Commissioners and subject to the other provisions of this section, a deduction shall be made in respect of the liability and such adjustment of tax as is appropriate shall be made; and such adjustment shall be made on the basis that the donee or successor had taken an interest in possession in the amount which falls to be deducted for the liability, for a period certain which was equal to the actual duration of the postponement of the payment of the liability;

(b) in respect of any liability, costs or expenses in so far as the donee or successor has a right of reimbursement from any source, unless such reimbursement cannot be obtained;

(c) in respect of any liability created by the donee or successor or any person claiming in right of the donee or successor or on his behalf;

(d) in respect of tax, interest or penalties chargeable under this Act in respect of the gift or inheritance, or of the costs, expenses or interest incurred in raising or paying the same;

(e) in respect of any liability in so far as such liability is an incumbrance on, or was created or incurred in acquiring, any property which is comprised in any gift or inheritance and which is exempt from tax under any provision of this Act or otherwise;

(f) in the case of any gift or inheritance referred to in section 6 (1) (c) or section 12 (1) (b) in respect of—

(i) any liability, costs or expenses due to a person resident outside the State (save in so far as such liability is required by contract to be paid in the State or is charged on the property which is situate in the State and which is comprised in the gift or inheritance); or

(ii) any liability, costs or expenses in so far as the same are charged on or secured by property which is comprised in the gift or inheritance and which is not situate in the State,

save to the extent that all the property situate outside the State and comprised in the gift or inheritance is insufficient for the payment of the liability, costs or expenses;

(g) for any tax in respect of which a credit is allowed under the provisions of section 66 or 67.

(6) In the case of a gift or inheritance referred to in subsection (5) (f), any deduction to be made under subsection (2) or (4) (b) shall be restricted to the proportion of the consideration which bears the same proportion to the whole of the consideration as the taxable gift or taxable inheritance bears to the whole of the gift or the whole of the inheritance.

(7) A deduction shall not be made under the provisions of this section—

(a) more than once for the same liability, costs, expenses or consideration, in respect of all gifts and inheritances taken by the donee or successor from the disponer; or

(b) for any liability, costs, expenses or consideration, a proportion of which falls to be allowed under the provisions of section 19 (2) (ii) or (iii) in respect of a gift or inheritance taken by the donee or successor from the disponer.

(8) Where a taxable gift or a taxable inheritance is subject to a liability within the meaning of subsection (9), the deduction to be made in respect thereof under this section shall be an amount equal to the market value of the whole or the appropriate part, as the case may be, of the property, within the meaning of section 5 (5).

(9) For the purpose of subsection (8), “liability”, in relation to a taxable gift or a taxable inheritance, means a liability which deprives the donee or successor, whether permanently or temporarily, of the use, enjoyment or income in whole or in part of the property, or of any part of the property, of which the taxable gift or taxable inheritance consists.

(10) Where—

(a) bona fide consideration in money or money's worth has been paid by a person for the granting to him, by a disposition, of an interest in expectancy in property; and

(b) at the coming into possession of the interest in expectancy, that person takes a gift or an inheritance of that property under that disposition,

the deduction to be made under subsection (2) or (4) (b) for consideration paid by that person shall be a sum equal to the same proportion of the taxable value of the taxable gift or taxable inheritance (as if no deduction had been made for such consideration) as the amount of the consideration so paid bore to the market value of the interest in expectancy at the date of the payment of the consideration.

(11) Any deduction, under the provisions of this section, in respect of a liability which is an incumbrance on any property shall so far as possible be made against that property.