Section 106A Transfer of rent
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Amendments
Section 106A inserted by Finance Act 2003 section 36 in the case of subsection (2), as respects any capital sum received on or after 6 February 2003, and in the case of subsection (3), as respects amounts received on or after 6 February 2003.
(1)(a) In this section-
"relevant transaction" means any scheme, arrangement or understanding under which a person becomes entitled to receive a capital sum and the consideration given for the entitlement to receive the sum consists wholly or mainly of the direct or indirect transfer to another person of a right to receive rent which, in the absence of the scheme, arrangement or understanding, could reasonably have been expected to accrue to the first-mentioned person or to a person connected with that person;
"rent" includes any sum which-
(i) is chargeable to tax under Case V of Schedule D, or
(ii) would be so chargeable if the source of the sum were in the State.
(b) For the purposes of this section, a scheme, arrangement or understanding under which a person grants a lease in connection with which-
(i) the person is entitled to a capital sum,
(ii) rent is payable to another person, and
(iii) the consideration given for the entitlement to receive the capital sum consists wholly or mainly of the grant to the other person or a person connected with the other person of a right to rent under the lease,
shall be treated as a relevant transaction and this section applies as if the capital sum were a capital sum under the relevant transaction.
(2)(a) Subject to paragraph (b), where a person other than a company becomes entitled to receive a capital sum under a relevant transaction, the capital sum shall be treated for the purposes of the Tax Acts as being an amount of income of the person chargeable to tax under Case IV of Schedule D for the year of assessment-
(i) in which the person becomes entitled to the capital sum, or
(ii) if it is earlier, in which the sum was received.
(b) Paragraph (a) does not apply to a person, other than an individual, if the consideration for the capital sum-
(i) was given by the person, and
(ii) is a qualifying asset (within the meaning of section 110) acquired by a qualifying company (within the meaning of that section) in the course of its business.
Under what Schedule are the proceeds of sale of a future stream of rental income caught for tax?
(2) If you become entitled to receive a capital sum under a relevant transaction (see (1)), you must pay tax on the capital sum under Schedule D Case IV. The tax is payable in the tax year in which the entitlement arose, or if earlier, the tax year i...
(3) Any profits or gains arising by virtue of a relevant transaction to the person to whom the right to receive rent was transferred shall be computed in accordance with section 97, and shall, notwithstanding any other provision of the Tax Acts, be chargeable to tax under Case V of Schedule D: but this subsection does not apply in relation to a person if-
(a) the consideration received by the person for the capital sum is a qualifying asset (within the meaning of section 110) acquired by a qualifying company (within the meaning of that section) in the course of its business, and
(b) the asset was acquired from a person other than an individual.
Is the acquirer of a future stream of rental income caught for income tax on the rent?
(3) Yes. Except in the case of certain securitisation transactions (section 110), if you are the person to whom a stream of rental income has been transferred, you are taxed under Schedule D Case V on the rental income you subsequently receive.
