Question re Form CG1: Capital Gains Returns

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Branz

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Item 4 reads as follows:
Insert X in the box(es) to indicate:

4. If the market value has been substituted for the cost of acquisition of any assets disposed of.
What does this mean?

Scenario is that parents transferred shares, at the then market price, to adult child under the euro 3,000 annual gift concept.

The parents treated the transfers as disposals and paid the CGT in 2012.

Adult child disposed of shares in 2013, so am confused by item 4.

Is the adult child CGT calculation:
net proceeds in 2013 less market price used by parents as their net proceeds in 2012?

[Item 3 The connected parties box will be ticked for the acquisitions.]

Thanks
 
Let me ask the question another way having thought about it overnight.

Is the euro 1,270 CGT Personal (annual) Exemption available for asset transfers at market price between connected parties?
Thanks.
 
ircoha said:
Item 4 reads as follows:
Insert X in the box(es) to indicate:

4. If the market value has been substituted for the cost of acquisition of any assets disposed of.
What does this mean?
Click to expand...

All this means is that in the case you've used, since the child has no actual cost of acquisition, having been gifted the shares, the deeming provision (of whatever the relevant section of the Act is) applies to the effect that the cost is treated as being the market value of the gift at the time it was taken.

Otherwise, they'd end up with no base cost.

The tick box is basically a way of informing Revenue that this is the basis of the calculation rather than it being based on the actual cost of acquisition, which is nil.
 
ircoha said:
Let me ask the question another way having thought about it overnight.

Is the euro 1,270 CGT Personal (annual) Exemption available for asset transfers at market price between connected parties?
Thanks.
Click to expand...

That's a completely different question, unless I really missed the point of your original one! :D

The answer is yes.


You have the following scenario:
  • Parents have shares that cost them €2k and are now worth €6k
  • They gift them to the child, thats €3k each so no CAT issue.
  • They pay CGT based on a deemed gain of €4k (€6k - €2k) - even though they didn't receive any consideration the market value is deemed consideration.
  • The child holds the shares for a while and they're then worth €10k so he flogs them for €10k.
  • His gain is €10k minus €6k (being the market value on acquisition rather than the actual cost of acquisition, which is nil).
  • The annual allowance is then deducted from the gain - it's no different than any other chargeable gain.
If the market value substitution didn't come into play for the child he'd have a gain of €10 minus Nil, since he was gifted the shares. He'd end up paying CGT on the same portion of gain that his parents did, it would be a kind of double taxation.
 
Many thanks for both answers, much obliged, as always, to you.

One, or two, for the road:)
What box on page 2 of the CG1 form should be used to show the Aggregate Consideration for the disposal of an apartment in Spain.
The choices seem to be
h: Residential premises
or
k: Other

Then, based on this
http://www.revenue.ie/en/personal/buy-sell/foreign-property/disposal-foreign-property.html
it seems the losses on the disposal can included in item
9. Net Losses in 2013
As the apt was owned jointly I trust the losses can be split 50/50 in line 9
Thanks
 
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