Capital Acquisitions Tax Consolidation Act 2003 section 36

Dispositions involving powers of appointment

Section 36 sets out how Capital Acquisitions Tax treats the exercise, failure to exercise, or release of general and special powers of appointment over property, and includes anti-avoidance rules targeting arrangements designed to avoid CAT.

• Where a person exercises, fails to exercise, or releases a general power of appointment, that person is treated as the disponer (not the person who originally created the power), because holding a general power is equivalent to being the absolute owner of the property.
• Anti-avoidance rules apply where the exercise, failure to exercise, or release of a general power forms part of an arrangement whose main purpose is the avoidance of CAT — in that case, the original settlor is treated as the disponer and the original settlement is treated as the disposition.
• The 6% and 1% discretionary trust charges continue to apply where the grant of a general power of appointment forms part of an arrangement whose main purpose is the avoidance of CAT.
• Where a person exercises, fails to exercise, or releases a special power of appointment, the person who originally created the power (not the person exercising or releasing it) is treated as the disponer.