Bernard Durkan (Kildare North, Fine Gael)
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To ask the Minister for Finance the extent to which capital acquisitions tax and/or capital gains tax is payable on compensation received on foot of a compulsory purchase order and the operation thresholds of applicable; and if he will make a statement on the matter. [6873/13]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by the Revenue Commissioners that in the absence of specific details it is only possible to reply to your query in general terms as follows:

Capital Gains Tax

A chargeable gain arising on the disposal of an asset on foot of a compulsory purchase order is liable to capital gains tax in the same way as any other disposal, subject to a minor variation as to when the time of disposal is deemed to occur.

Under Section 542(1)(c) of the Taxes Consolidation Act 1997, the time of disposal in the case of a disposal made on foot of a compulsory purchase is the earlier of: (i) the time the authority possessing compulsory purchase powers enters on the land in pursuance of its powers, or, (ii) the time at which the compensation for the acquisition of the land is agreed or otherwise determined (variations on appeal being disregarded for this purpose).

While the time of disposal is fixed as above, where the date of receipt of the compensation from the authority is later than this, any chargeable gain is deemed to accrue at the time at which payment of the compensation is received by the property owner – and payment of any capital gains tax due is determined by reference to this later date. If in such cases the owner of the land dies before the compensation is received, the gain is deemed to accrue immediately before the person’s death.

The first €1,270 of total chargeable gains in any year of assessment is exempt.

Capital Acquisitions Tax

Capital acquisitions tax is payable on a taxable gift or inheritance. If the proceeds of a compulsory acquisition were gifted or inherited, then capital acquisitions tax would be payable by reference to the normal criteria and thresholds, depending on the relationship between the parties. If on a gift or inheritance of agricultural property CAT agricultural relief is claimed by a farmer donee/successor (such that the value of the land is reduced by 90% for the purposes of calculating any CAT payable) and that land is subsequently acquired by compulsory purchase within 6 years of the gift or inheritance, the agricultural relief claimed on the gift or inheritance will be withdrawn unless the proceeds of the compulsory purchase are reinvested in other agricultural property within 6 years of the compulsory purchase (there is provision for partial withdrawal where only part of the proceeds are reinvested).

The first €3,000 of the total taxable value of all taxable gifts taken by a donee in any calendar year is exempt.