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For the purposes of capital gains tax, market value is in certain situations substituted for the consideration, if any, given or received on the transfer of an asset.
REQUIRED Outline the circumstances where this rule applies.
Esther bought a two acre site in Co. Dublin in January 1990. She obtained planning permission in January 1996. However, she did not develop the land. Now in July 2016, she has been made a very attractive offer for the land by a local developer who plans to build apartments on the site. Also, in June 2016, she sold shares at a loss and is planning to offset this loss against the gain on the land in Wicklow.
REQUIRED Write to Esther explaining what is meant by development land and describe the CGT restrictions that will apply to Esther should she sell the site to the developer and whether she will be able to offset the losses from the sale of the shares in June 2016 against the gain on the land. (10 marks) PART C
Bertie Dunne, aged 50, worked for Twilight Ltd for many years but was made redundant two years ago. He received a substantial payment of €200,000 when he left Twilight Ltd. Since losing his job Bertie has tried to secure another job but with no success. He has now decided to set up a company in the area of Online Learning, selling courses to various customers across the EU and will invest the money he received from his redundancy into the company. Bertie will own 100% of the share capital in his new company, BD’s Elearning Ltd.
He has contacted you for advice on the tax implications of setting up a company in Ireland. He needs advice on the best structure for his Irish operations and wishes to set it up in such a way that he may be able to sell the elearning business in 5 to 7 years’ time.
He is anxious to minimise his tax liabilities as far as possible and would like to avail of as many reliefs as possible.
REQUIRED 1. Advise Bertie on the tax implications of setting up a company in Ireland and advise him on any reliefs that are available for his start-up company. (50 marks)
2. Advise Bertie on any reliefs that may be available to him should he wish to sell the company in the future. (