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

I move amendment No. 113:

In page 132, after line 30, to insert the following: “Amendment of section 82 of Principal Act (exemption of certain receipts)

64.Section 82 of the Principal Act is amended, in subsection (1), by the substitution of the following paragraph for paragraph (c):

"(c) the receipt by a person of any winnings bona fide, in money or money’s worth, from—

(i) betting (including pool betting), or

(ii) any lottery, sweepstake or game with prizes;".".

This amendment aims to address an anomaly between the way in which non-cash prizes are treated for the purposes of capital acquisitions tax, CAT, in legislation and the way in which they are treated for the purposes of the tax in practice. In the normal course of events, the receipt by a person of an asset which he or she has not paid for is a gift for the purposes of CAT. However, section 82 of the Capital Acquisitions Tax Consolidation Act 2003 provides for a CAT exemption for certain types of receipts. These include the receipt of compensation payments for personal injuries and the receipt by an incapacitated person of certain trust funds.

Where a person wins a sum of money from betting, a lottery, a sweepstake or a game with prizes, he or she benefits from this exemption by virtue of section 82(1)(c). Only sums received bona fide qualify. In the absence of this provision, a person could seek to avoid CAT by arranging with the disponer to bet on some event the outcome of which was certain, or which could be controlled by the disponer and donee.

Where a person participates in raffle or draw and wins a non-cash prize, however, the person is deemed to have received a gift for the purposes of CAT. As they are not cash prizes, they do not come within the scope of the exemption for certain receipts provided for by section 82. This means that, strictly speaking, a charge to gift tax arises on the value of the non-cash prize taken by the person in the raffle or draw. Notwithstanding this treatment of non-cash prizes in the legislation, non-cash prizes have, in practice, been given the benefit of the CAT exemption which applies to winnings from betting, lotteries, sweepstakes and games with prizes. This treatment is considered to be in line with the original intent of the exemption, if not the actual wording.

When section 82 was introduced in 1976, it would have been very unusual to see property such as a house or a car being offered as a prize from a game of chance, far more usual was the offer of a cash prize. In recent times, however, the increasingly popular use of raffles and draws for assets such as houses and cars as a means of fund-raising by community-based organisations such as GAA clubs and local schools has highlighted the difference between the legislation and the practice on the ground. This amendment brings the legislation up to date, so that it reflects the current practice whereby non-cash prizes from bona fide raffles and draws are also exempt from CAT.