By Gráinne McMahon

Tom Maguire on the changes and misconceptions around Capital Gains Tax

We sit down with Tom Maguire, author of the yearly publications of Irish Income Tax (formerly Judge), Taxation of Companies (formerly Feeney) and most recently Irish Capital Gains Tax. We discuss the most significant decisions from the Appeals Commissioner, the issues surrounding rising inflation, and Tom's writing process as a Bloomsbury Author.

Tom, congratulations on your new book. What are the changes made to CGT in the Finance Act 2021 that practitioners should watch out for?

Thank you for that, very much appreciated. It’s hard to believe that this is the fourth edition of this text especially when you think of all we’ve been through during those years. The Finance Act 2021 which was signed into law by the President on 21 December 2021 so the book contains amendments to TCA 1997, s 604 which looks at the disposal of principal private residences and indeed transfers arising from certain mergers under the Companies Act 2014. It also looks at recent decisions of the Tax Appeals Commission, as well as in the Irish and UK courts.


If you were to pick one significant decision from the Appeals Commissioner that practitioners should be aware of, what would it be, relating to Capital Gains Tax?

It’s very hard to pick one case given that they all have significant impact on the taxpayers concerned. However, the volume of published decisions is to be welcomed as that can only increase our understanding of the application of the tax.


Ireland still has one of the highest CGT rates in the world. Some thought it would be reduced in last year’s budget but it wasn’t meant to be. Do you think there is appetite to reduce it this year?

It is something that is being asked for in many pre-budget submissions. Michael McDowell SC said in the foreword to the first edition “When Minister Charlie McCreevy in 2002 halved the 40% CGT rate and quintupled the yield on CGT, it became very clear that the rate of CGT hugely influenced its yield in a manner quite different from other forms of taxation.”   It is a significant decision point when making any investment.

When it comes to the KEEP programme, can you outline where we stand on this and do you envisage any changes coming about?

I think given that many start-ups and scaling companies can be very focussed on cash-flow and may not have the resources to pay significant salaries, so giving employees some “skin in the game” is one way of attracting talent to those companies.   There are a number of changes to the scheme that were to be brought about by commencement order in the past that have yet to be commenced and would be beneficial. The exclusion of certain companies should be reviewed. The scheme should allow a company buy back of the shares from the employee and ensure that CGT treatment still applies.


Finally, as we deal with inflation, what changes to the tax regime in Ireland would be helpful for companies in Budget 2022?

I think the improvement to KEEP we discussed earlier would be significant in attracting talent for those companies. The R&D credit is one of our biggest tax expenditures and is a key relief in attracting such expenditure to Ireland. Improving that would be a key change and could be done by among others reducing the monetisation period of time for the credit would be significant.


What first attracted you to Tax?

I think it’s the constantly evolving nature of it, that what you know before budget day may no longer apply, the day after budget day. The sense of constant change brings an excitement to what you do as part of the day-job. So it’s never boring.


What do you think is a common misconception about Capital Gains Tax?

That it only applies to investment type transactions. If you have an asset and you sell it then Capital gain tax is in point. There are many reliefs from its application so that wasting assets like cars etc are not generally subject to its bite, but it is wide-ranging.


What developments do you foresee happening in CGT over the next few years?

One could hope that the rate will decrease in order to help stimulate further investment. There will probably be changes coming due to international tax developments.


You have authored a number of books for Bloomsbury Professional. Do you enjoy the writing process?

I do, but I have to say it is an honour to be associated with Bloomsbury’s leading titles. I still remember the email I got for from the publishers seven or eight years ago, out of the blue, asking whether I would want to take the helm on Irish Income Tax (formerly known as Judge). It was such an honour to be considered for such a title given that I grew up in tax terms, with it. So being asked to author it was something else. I then got the chance to write my own book in Capital Gains Tax before being asked to “take the wheel” of the Taxation of Companies (Formerly Feeney) which Minister Donohoe kindly wrote the foreword for. I have been allowed to stand on the shoulders of giants and I’m extremely grateful to Bloomsbury Professional to have been considered for the opportunity.


Tom Maguire's tax annuals, Irish Income Tax, Taxation of Companies, and Irish Capital Gains Tax, are available in hardback and eBook formats, as well as available as part of our Irish Tax online service on Bloomsbury Professional Ireland Online.

Click here to purchase the 2022 editions of Tom Maguire's tax annuals

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