4 Tips For Filing Your CGT Return
Capital Gains Tax Ireland: Filing Your Return
Individuals must file a Capital Gains Tax (CGT) return if they have either:
• made gains from the disposal of an asset
• disposed of an asset where no tax is due because of the availability of reliefs or losses
They may also be liable to pay CGT on the income. Regardless of the amount gained, or whether the income is taxable, all profits made must be declared to the Revenue Commissioners. This is the case whether you sell, gift or exchange the asset.
Filing a CGT return can be a complicated process, particularly for first-timers. Our tax experts have over 20 years of experience helping people file their CGT returns in Ireland. We have an in-depth understanding of the Irish tax system.
Here are a few things you should know as a first-time CGT payer to help you file and pay correctly.
1) “Dispose” Doesn’t Always Mean “Sell”
In the context of CGT, the term “disposal” is often equated with the sale of an asset. In practice, the Revenue Commissioners actually use the term to refer to a wide range of methods. Any transfer of ownership of an asset is considered disposal. This includes giving a gift, exchanging one asset for another, or receiving compensation or insurance for an asset.
It is important to note that CGT is levied on the gain made from disposing of the asset. This means that if you paid €X for a piece of land and disposed of (sold) it for €Y, you are only liable to pay tax on the difference (Y-X).
While many of our clients come to us for assistance with the disposal of property or shares, these are not the only assets subject to Capital Gains Tax. An asset is any item of value, tangible or intangible, that can be converted into cash. This includes foreign currency, land, insurance policies, company shares, jewellery, patents and copyrights.
2) You Can Always Claim Reliefs/Exemptions
It is important to be aware of all the CGT exemptions and reliefs available to you, particularly if it’s your first time filing a CGT return.
While there are many CGT reliefs available, eligibility depends on individual taxpayer’s circumstances. The exception to this is the Personal Exemption which exempts the first €1,270 of income gained from CGT for each person, each tax year.
Being eligible for certain reliefs depends on when the asset was bought or owned. The Indexation Relief, for example, can be claimed if the asset was owned before 2003.
This relief accounts for inflation rates by assigning an “indexation factor” for each preceding year. Costs incurred up to 31 December 2002 are multiplied by the indexation factor. The total can be claimed against your CGT.
There is also a relief for gains made on property acquired between 7 December 2011 and 31 December 2014, then sold on or after 1 January 2018. You can claim full relief if you have owned this property for between four and seven years. If you have owned the property for more than seven years you can claim partial relief.
Other reliefs depend on the type of asset and the circumstances surrounding both ownership and disposal. For example, the Principal Private Residence (PPR) Relief can be claimed against gains made from the disposal of a property that you lived in as your main residence. If you also used the property as a place of business, you may receive partial relief, proportionate to the amount of the property used.
Similarly, you may be exempt from CGT on gains made from the transfer of a site from parent to child. That is if the house built on that site is the child’s only or primary residence. In this instance, the property must be one acre or less and be worth no more than €500,000.
Additional CGT reliefs include:
• Farm Restructuring Relief – if you dispose of farmland for restructuring purposes.
• Revised Entrepreneur Relief – if you (a qualifying business) dispose of qualifying business assets.
• Retirement Relief – if you are 55 years or older and dispose of business or farming assets.
3) The Payment And Return Deadlines Are Different
The CGT payment deadline varies depending on when the disposal was made. CGT on disposals between 1 January and 30 November must be paid by 15 December of the same year. Tax on disposals made between 1 December and 31 December must be paid by 31 January of the following year. Payment of CGT can be made using the Revenue Online Service.
The CGT return deadline is 31 October of the year following disposal. This means that if you sold shares in November 2021, you must declare it on your CGT return by 31 October 2022.
Remember! Before you can file and pay, you must first register for CGT by sending a request to your regional registration office.
4) Living or Earning Abroad Doesn’t Mean You’re Exempt
Living and/or earning in another country does not exempt you from filing a return and paying your Capital Gains Tax.
If you are not an Irish resident but you dispose of an asset in Ireland, you must file a CGT return and pay any relevant tax. This includes gains on the sale of property in Ireland, any share sale proceeds that are remitted to Ireland and any assets used for the purpose of trade carried out in Ireland. Non-resident individuals must complete the TR1(FT) form to register for CGT and can then file and pay where relevant.
If you are resident in Ireland making gains on the disposal of certain foreign assets, you must file a CGT return and may be liable to pay tax on the gain. CGT applies to the disposal of assets such as foreign life insurance policies, offshore funds and foreign currency. However, you may be able to claim a relief if you have paid foreign Capital Gains Tax on an asset such as a foreign property.
If you are unsure whether you fall into either of these categories, we recommend consulting a tax expert before filing. Particularly if this is your first time filing a CGT return, we are happy to assist. Our experts can help you identify the relevant income and uncover all the credits for which you are eligible. Complete our short form now to receive a quote and find out how our team can help you with your CGT return this year.