653AHA Sites subject to a relevant contract

Summary

This section provides for an exemption from residential zoned land tax for land that is within the scope of the tax, but which is subject to contractual obligations, entered into prior to 1 January 2022 (being the date from which Part 22A of the Taxes Consolidation Act 1997 came into effect), the terms of which preclude the owner from developing the land.

Details

(1) Subsection (1) defines a ‘lease’ and a ‘relevant contract’ for the purposes of the section. A lease has the same meaning as that within the Capital Gains Tax Acts.

A relevant contract means a written lease which does not exceed 35 years, that was entered into prior to 1 January 2022 and that, it is reasonable to consider, prevents the owner from developing the site.

(2) Subject to subsections (3) and (5), on the making of a claim by the liable person, any tax that would otherwise have been payable in respect of the relevant site, or part of the relevant site, to which the contract relates, shall not be due and payable for the duration of the relevant contract.

(3) Where the relevant contract refers to only part of the relevant site, the amount of tax that is due is determined by the following formula:

                C = T × (A_part/A_total)

where—

C is the amount of tax which is due,

T is the total amount of residential zoned land tax in respect of the site that would be due, but for this section,

A_part is the area of the part of the site, in square metres, site not subject to the relevant contract, and

A_total is the total area of the site in square metres.

(4) A claim referred to in subsection (2) shall be made in such form and contain such particulars as the Revenue Commissioners may prescribe.

(5) A liable person may only rely on the provisions of this section where a return is filed in respect of each liability date falling within the period to which this section applies.

(6) This section shall not apply where the parties to the relevant contract include the owner of the relevant site and a person connected (within the meaning of section 10) with the owner.

(7) This section shall not apply to a relevant site subject to a relevant contract, where it would be reasonable to consider that the relevant contract is not entered into for bona fide commercial reasons and forms part of any arrangement or scheme the main purpose or one of the main purposes of which is the avoidance of a liability to tax.

(8) For the purposes of subsections (2) and (3), where a relevant contract precludes the owner from carrying out development for part only of the term of the contract, the period of the relevant contract is deemed to be the period during which such development is precluded under the contract.

Relevant Date: Finance Act 2024