Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I move amendment No. 128:

In page 41, to delete lines 6 to 12 and substitute the following:

“ “(6A) (a) Notwithstanding subsection (6), where a debt owed by a bank which is not in the currency of the State, and which is represented by a sum standing to the credit of a person in an account in the bank, is transferred by the person in whole or in part to another account of that person in the bank concerned, or in any other bank,in the same currency, the transfer (referred to in paragraph (b) as a‘transfer to which paragraph (a) applies’) shall be treated as if it were made for a consideration of such amount as would secure that neither a gain nor a loss would accrue to that person on that transfer.

(b) On any disposal of the debt or part of the debt by the person who is the holder of the account referred to in paragraph (a), other than any further transfer to which paragraph (a) applies, the acquisition cost of the debt or part of the debt taken into account in computing the amount of any gain accruing to that person on the disposal shall be determined as if the transfer, or any further transfer, to which paragraph (a) applies had not occurred.”.

(2) This section applies to disposals made on or after the date of the passing of this Act.”.

This section makes a technical amendment to section 541 of the Taxes Consolidation Act to address the situation whereby the same foreign currency transfer between bank accounts held by the same person has the potential to crystallise a chargeable gain or an allowable loss without an accompanying economic capital gain or loss. The intention behind section 22 of the Bill is to provide that transfers between accounts of the same person in the same foreign currency do not give rise to a gain or loss where there is no corresponding economic gain or loss.

Section 22 took effect by way of a budget night resolution and applies to disposals made on or after 14 October in order to prevent tax avoidance opportunities before the Finance Bill becomes law. A further amendment is now required to section 22 in order to clarify that in relation to a subsequent disposal of the foreign currency, the base cost of that foreign currency for capital gains tax will be its original base cost, that is, the cost of the foreign currency before any transfers between bank accounts of the same person took place. By putting in place this amendment, the budget night resolution underpinning section 22 will cease to have effect. The original intention behind the amendment, that transfers between accounts of the same person in the same foreign currency do not give rise to a gain or a loss where there is no corresponding economic gain or loss, would take effect from the date of the passing of the Finance Act.