Revenue Note for Guidance

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Revenue Note for Guidance

613 Miscellaneous exemptions for certain kinds of property

Summary

This section provides that the following are not chargeable gains —

  • any bonus payable under the national instalment savings scheme
  • prize bond winnings
  • compensation for personal injury
  • gains from betting, lotteries and sweepstakes
  • lump sums paid under the terms of pension schemes
  • annuities under deeds of covenant not secured on property, and
  • gains on the disposal of certain interests arising under a settlement.

In addition to the above, compensation received by turf cutters for ceasing to cut turf is not a chargeable gain.

Details

(1) The following are not chargeable gains and, thus, are exempt from capital gains tax —

  • any bonus payable under the national instalment savings scheme
  • prize bond winnings
  • compensation for personal injury or for damage to an individual in his/her profession
  • compensation under the 2017 Voluntary Homeowners Relocation Scheme
  • any payment to which section 205A (Magdalen laundry payments) applies.

(2) Winnings from betting, lotteries, sweepstakes or games with prizes are exempt from capital gains tax as are rights to winnings from those sources (for example, the sale of a bet).

(3) Annuities or lump sum paid to individuals under the terms of a pension scheme or of a contract (other than for a deferred annuity) with an assurance company are exempt from capital gains tax. Any annuity not secured on property which is payable under a covenant is similarly exempt.

(4)(a) Subject to the exclusion below for non-resident settlements, where there is a disposal of an interest created by or arising under a settlement, no chargeable gain accrues if the disposal was made —

  • by an original beneficiary under the terms of the settlement, or
  • by any other person except one who acquired, or derived his or her title from, one who acquired the interest for a consideration in money or money’s worth, other than consideration consisting of another interest under the settlement.

(4)(b) The purchaser of an interest (or a person deriving an interest from a purchaser) is chargeable on a gain made —

  • on disposal of the interest by him/her, or
  • on his/her becoming absolutely entitled as against the trustee to the property, the consideration for the disposal being the market value of the property as diminished by any capital gains tax charged on the trustee under section 576(1) in respect of the property.

In the latter case the trustee is also chargeable under section 576(1) except where the absolute entitlement arises from the termination of a life interest due to the death of the person entitled to that interest.

(5) The exemption afforded by subsection (4) does not apply to disposals of interests in settled property if —

  • at the time of disposal, being on or after 11 February, 1999, the trustees of the settlement are neither resident nor ordinarily resident in the State,
  • if the settlement falls within subsection (6), or
  • the property comprised in the settlement is or includes property that is derived directly or indirectly from a settlement falling within that subsection.

(6) A settlement falls within subsection (6) if there has been a time when the trustees of the settlement were either not resident and ordinarily resident in the State or fell to be regarded as resident in a territory outside of the State by virtue of a double taxation relief agreement.

(7) A chargeable gain does not arise in respect of compensation received by turf cutters under the Turf Cutting Compensation Scheme or the Protected Raised Bog Restoration Incentive Scheme administered by the Minister for Culture, Heritage and the Gaeltacht relating to a European Site, a Natural Heritage Area or any other land which, in the opinion of the Minister, is necessary to achieve the restoration of such Site or Area. In addition, a chargeable gain does not arise on a disposal of land to the Minister for Culture, Heritage and the Gaeltacht where that land has been acquired by the Minister for the purposes of granting a right of turbary to an individual who:

  • is entitled to compensation under one of the schemes referred to, and
  • enters into an agreement with the Minister in respect of that land.

Relevant Date: Finance Act 2021