683 Charge to tax on sums received from sale of scheduled mineral assets

Summary

This section imposes a charge to tax under Case IV of Schedule D on sums received from the sale, after 31 March 1974, of a scheduled mineral asset (which includes not only mineral deposits but also land comprising such a deposit or an interest or right over such a deposit or land). The taxable amount is the consideration less any capital sum paid by the vendor to acquire the scheduled mineral asset. The rules applicable are similar to those applying to the sale of patent rights (see section 757).

Details

Definitions and construction

(1) “chargeable period” is a company’s accounting period or a year of assessment, as may be appropriate.

References to the sale of scheduled minerals include references to the grant of a licence to work scheduled minerals.

Charge on residents

(2) Persons (individuals and companies) resident in the State are to be charged to tax under Case IV of Schedule D on the net proceeds of the sale of scheduled mineral assets for the chargeable period in which the sum is received. However, an individual may elect (within 24 months of the end of the year of assessment) to have the charge spread equally over 6 years, starting with the tax year in which the payment is received.

Charge on non-residents

(3) There is special provision to meet the case where a person resident outside the State sells scheduled mineral assets. Since the seller is non-resident, proceedings for recovery of tax might be ineffective. It is provided, therefore, that tax on the whole sum is to be charged under Case IV of Schedule D and that the purchaser must deduct income tax at the standard rate from the payment as if it were an annual payment under section 238.

The seller, if an individual, may, by notice in writing to the inspector within 24 months of the end of the year of assessment in which the capital sum is paid, elect to be charged on one-sixth of that sum for that year and for each of the 5 succeeding years. This option for a 6-year spread of the charge does not, however, affect the obligation of the purchaser to deduct income tax at source under section 238 but the seller may claim repayment subsequently year by year, as and when his/her revised liability can be worked out on the basis of the charge being spread over 6 years.

Allowance for acquisition costs

(4) Due account can be taken of the fact that the seller of scheduled mineral assets may have incurred capital expenditure on their acquisition at an earlier date. The capital gain which the seller makes and for which the seller is to be charged with tax under the section is the difference between what was paid and what is received. Where part of the scheduled mineral assets have already been sold, the amount received from that sale must be reflected in an equivalent lowering of the acquisition costs to be deducted from the final sale proceeds. These adjustments cannot, however, influence the amount of tax to be deducted at source under section 238. Thus, where a non-resident seller of scheduled mineral assets acquired those assets by purchase, the person to whom the minerals are being sold may have no knowledge of the original cost of acquisition to the seller. It is provided, therefore, that the purchaser (who is to account for tax to the Revenue) is to treat the whole sum which he/she pays as liable to deduction of tax, without any enquiry into the possible reduction in the seller’s liability which might otherwise apply by the application of this provision. Any relief due to the seller is to be given by way of repayment of tax.

Compulsory acquisitions

(5) Where the Minister for Communications, Energy and Natural Resources compulsorily acquires the mineral rights and pays compensation for those rights, such compensation is deemed to be receipts of a sale and is brought into charge in the same way.

Relevant Date: Finance Act 2021