Capital Acquisitions Tax Consolidation Act 2003 section 38

Disposition enlarging value of property

Section 38 deals with situations where a person receives property from a disponer and that receipt increases the value of other property already held by the same person from the same disponer. The increase in value of the original property is treated as a separate taxable gift or inheritance.

• Where a person takes an additional interest in property from a disponer and this increases the value of property already received from that disponer (the original property), the increase in value is treated as a gift or inheritance taken at the time the additional property was received.
• The increase in value is the difference between the market value of the original property if sold together with the additional property as an aggregate and its market value if sold on its own — the additional property is also valued as part of that aggregate.
• This revaluation rule applies even if the beneficiary disposed of the original property within the previous five years, either for less than full consideration or to a private company which the beneficiary controls.
• The section does not apply to property to which a beneficiary became beneficially entitled in possession before 28 February 1969, and "company" for this purpose means a private company within the meaning of section 27.