Revenue Tax Briefing

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Revenue Tax Briefing Issue 57, October 2004

First Active Shares CGT

Personal Exemption on the disposal of Free Shares

This note is intended to clarify the position regarding the annual personal exemption where joint investors or borrowers received free and loyalty shares in First Active in the name of one account holder only.

Under the provisions of the Building Societies Act 1989, only the first named on a share account or a housing loan is treated as a member for de-mutualisation purposes. That person is usually the only one entitled to an allotment of free shares.

For CGT purposes, however, this does not necessarily mean that the first named account holder or borrower is treated as being the recipient, or only recipient, of the shares. It can happen that the first named will have received free shares wholly or partly on behalf of others and, if so, it will be necessary to determine who has beneficial ownership.

Each beneficial owner of First Active shares is treated as disposing of his/her interest and is entitled to the annual personal exemption against the resultant gain. Thus, for example, in the case of a married couple who held a joint account in the First National Building Society, each is entitled to the annual personal exemption on gains arising on the disposal of their respective beneficial interests in the First Active shares notwithstanding that the shares were held in one name only.