Finance Bill 2008

Author:Mr Sean Murray
Profession:Dillon Eustace
 
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1. Investment Undertakings (Funds) - Key Amendments

The Finance Bill 2008 (as initiated) was released yesterday

31st January 2008 and there have been some welcome amendments

included to assist the funds industry in administering the 8

year deemed disposal rules.

2. 8 Year Deemed Disposals

Section 36 of the Finance Bill amends the operation of the

eight-year deemed disposal provisions for Irish resident or

ordinarily Irish resident investors ("Irish

Resident") as introduced by Section 50 of

the Finance Act 2006. While the legislation is quite complex,

in summary the new amendments provide that the administrative

burden of applying the onerous 8 year deemed disposal

provisions should for the most part lie with the Irish Resident

investors where they account for a small proportion of the

fund's (or the sub-fund's in the case of an umbrella

scheme) overall investments.

The main provisions are as follows:

1. De Minimis level Where taxable Irish

Residents hold less than 10% of the fund (calculated by value

of shares) or in the case of an umbrella fund, 10% of the

sub-fund (calculated by value of shares), then the obligation

to account for the tax on any gain arising on an 8 year

deemed disposal will be the responsibility of the investor on

a self assessment basis (as opposed to the fund or its

service providers) i.e. the investor will be required to

include the relevant details in their annual return and

account for the tax themselves. This however, will only apply

provided (i) the fund has made an appropriate election and

(ii) it provides in each year of assessment a statement to

the Revenue Commissioners in electronic format approved by

them, certain details for each unit holder (including a nil

return, where applicable) by the 31st of March in the year

following the year of assessment.

2. Repayment of Excess "first

tax" - Where taxable Irish Resident investors

hold less than 15% of the fund (calculated by value of

shares) and a refund of tax arises (e.g. subsequent loss on

an actual disposal) and the fund has made an appropriate

election, the amount of excess first tax over the

"second tax" will be repaid by the Revenue

Commissioners to the relevant investor rather than by the

fund (on receipt of a claim by the investor). This removes

the responsibility of the fund or its service providers

having to track the tax over the lifetime of the units and

puts the onus on the unit holder to claim the refund directly

from the Revenue Commissioners.

3. Valuation...

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