Revenue Note for Guidance

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Revenue Note for Guidance

Part 31

Taxation of Settlors, etc in Respect of Settled or Transferred Income

CHAPTER 1

Revocable dispositions for short periods and certain dispositions in favour of children

Overview

This Chapter provides generally that income which is disposed of by a person under revocable dispositions or irrevocable dispositions which operate for short periods is to remain, for income tax purposes, the income of that person.

Income under revocable dispositions

(1) For the purposes of the Chapter, “disposition” includes any trust, covenant, agreement or arrangement.

(2) This section provides that where any person makes a disposition of income by virtue of which that person may, by power of appointment, power of revocation or any other means and without the consent of another person, retain the beneficial enjoyment of that income, the income is to be treated, for income tax purposes, as the income of that person and not of any other person.

(3) Where any power of appointment or revocation, etc may be exercised with the consent of a person’s spouse, the power is deemed to be exercisable without the consent of another person unless the couple are living apart either by agreement or under an order of Court.

(4) In addition, where the power may be exercised by the spouse of the disponer, the power is deemed to be exercisable by the disponer.

Relevant Date: Finance Act 2021