To try and illustrate it by way of an far fetched example, Section 811 general anti avoidance would only apply if some clever tax adviser found a technical way to make the CGT rules on death apply to companies or pets or something equally as silly.
Such actions aren't illegal, as they adhere to the letter of the law, but are contrary to the spirit of the law.
I always thought that the Revenue could do nothing about tax avoidance
Example: sharing investment income for the purpose of availing of McCreevy's individualisation scheme which was motivated at making the treatment of joint earned income fairer....are contrary to the spirit of the law.
No.Example: sharing investment income for the purpose of availing of McCreevy's individualisation scheme which was motivated at making the treatment of joint earned income fairer.
It was of course the constitutionally offensive situation by which two teachers married to each other had a worse tax situation versus a similar couple who didn't bother getting tying the knot.
Apologies if I'm missing something (I am young enough that I wasn't in the workforce before the current status quo!), but it seems to me that you may be conflating the underlying motivation for the change, with the clear effect of the legislation that was enacted.Example: sharing investment income for the purpose of availing of McCreevy's individualisation scheme which was motivated at making the treatment of joint earned income fairer.
"greater workforce participation" or "earned income", call it what you like; reducing the tax burden on married couples living off investment income was not part of the script - or as you put it "within the spirit".My understanding (from a quick Google,) is that the motivation was to encourage greater workforce participation.
They then decide to sell all shares for current acquisition cost and value of €500k each.
Ah, yes of course. Thanks for clarification BrendanNo.
While there is no CGT now, the acquisition cost for the wife will be the cost her husband acquired the shares at.
The point of this thread is that gains disappear on death. So if the husband is dying, the wife should transfer all her shares with unrealised capital gains to him and they will disappear. Her acquisition cost will be the probate value.
Brendan
I don't understand the connotation of people "fiddling with the ownership" of assets - spouses are entitled to transfer assets between them tax free, it has always been the case AFAIK?Anyway, back on topic. Consider the situation of the Dev family: "breadwinner/stay at home partner". In a situation where the breadwinner earned all the money and they lived off her investment income Charlie gave a welcome but unintended bonus by allowing them double the standard rate cut-off, if they so fiddled the ownership of those assets.
Not so for the household living off the breadwinner's pension.
But fair play to advisors who draw their clients' attention to this unintended anomaly.
Oh dear! Picking on my terminology.There is no "fiddle" in transferring the beneficial ownership of an asset from one spouse to another - it then belongs to them and if they decide to up and leave, it'll continue to be their asset and their income until a formal divvying out of the assets is done.
As per Revenue guidelines and my understanding of reading this thread "If you are living with your spouse or civil partner and you transfer an asset to them, you will not have to pay Capital Gains Tax (CGT). Your partner will not have to pay Capital Acquisitions Tax (CAT) on the transfer, as it is treated as a gift.
However, for completion, should it not be recorded, that an experienced practising accountant believes that there may be ramifications for doing this?
No, because it was not relevant to the specific question asked.
Wasn’t individualisation more of a bad thing for married couples? My understanding is that, crudely, if the Standard Rate Cut Off Point was £25,000, a husband would have had a SRCOP of £50,000 because his wife was a stay at home Mum. Then McCreevy changed it. But if they were living off investment income, they could move the assets? So they ended up no better off, but importantly no worse off?Oh dear! Picking on my terminology.
I will excuse you that you weren't around when Charlie introduced his individualisation but, trust me, giving married couples living off investment income a tax break was an unintended outcome.
It could have been prevented, of course, by making unearned income taxable at marginal rate but that would have been a massive and unintended change in the tax system.
Yet they didn't allow switching of ownership of pensions between spouses.
They have no plans to sell these as they are otherwise very comfortable financially and have no known illnesses or plans of imminent demise.
For whatever reason they now decide to gift each others shares to the other thus disappearing all CGT liabilities to date and without CAT liability.
They then decide to sell all shares for current acquisition cost and value of €500k each.
I disagree - this was the essence of the debate in my opinion!
I forget the details. Married couples had less than twice the single person's SRCOP to reflect the economies of living together. Or indeed looking at it another way a taxpayer got an increased SRCOP to reflect the increased expenses, but not twice the individual SRCOP. This was ruled anti Dev as an unmarried couple could claim two individual SRCOPs. This was ended. It was a quite significant shift in taxation in favour of double income married couples. Married one earner couples and singles would be funding this big change in taxation. The double income married couples enjoyed an immediate windfall, the hit to other taxpayers was probably phased in over a number of years. My point is that the "spirit" of the change would not have included married couples living off investment income, but practically impossible to avoid.Wasn’t individualisation more of a bad thing for married couples? My understanding is that, crudely, if the Standard Rate Cut Off Point was £25,000, a husband would have had a SRCOP of £50,000 because his wife was a stay at home Mum. Then McCreevy changed it. But if they were living off investment income, they could move the assets? So they ended up no better off, but importantly no worse off?
I still don't see a point in what you're saying - if they didn't specifically legislate in such a way as to make it only apply to earned income, then it obviously applied to all income. It's not like some kind of eye-of-a-needle loophole through ill considered drafting; it's simply what was enacted..I forget the details. Married couples had less than twice the single person's SRCOP to reflect the economies of living together. This was ruled anti Dev as an unmarried couple could claim two individual SRCOPs. This was ended. It was a quite significant shift in taxation in favour of double income married couples. Married one earner couples and singles would be funding this big change in taxation. The double income married couples enjoyed an immediate windfall, the hit to other taxpayers was probably phased in over a number of years. My point is that the "spirit" of the change would not have included married couples living off investment income, but practically impossible to avoid.
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