Valuation Date
Revenue Manual
8.1 Introduction
The valuation date is the date on which the market value of property comprised in a gift or inheritance is determined and the date by reference to which the return due date is established and tax becomes payable. The valuation date is not a fixed date and must be determined in accordance with the circumstances surrounding the transfer of a benefit. While ascertaining the valuation date of a gift is generally relatively straightforward, the valuation date of an inheritance can be more complex.
As well as being directly relevant in the context of calculating the liability to gift and inheritance tax and the appropriate pay and file date, the valuation date is significant in several other respects:
- to qualify for agricultural relief, the gift or inheritance must consist of ‘agricultural property’ (as defined in section 89(1)) and the beneficiary must pass the ‘80% agricultural property test’ on the valuation date;
- to qualify for business relief, the gift or inheritance must consist of ‘relevant business property’ (to be construed in accordance with section 93) on the valuation date;
- where tax is being paid by instalments (in accordance with section 54), the first instalment is payable on 31 October immediately after the valuation date;
- where tax is not paid within the allowed timeframe, interest on late payment is charged (under section 51) by reference to the valuation date.
8.2 Valuation date of an inheritance
In the case of property transferring from a deceased disponer, the valuation date is typically later than the date of the inheritance (date of death) and in most cases is the date of the grant of probate (or the date of the grant of administration for an intestacy). In certain circumstances, however, a benefit does not form part of the estate of the disponer but is acquired by the beneficiary immediately on the disponer’s death or on the ending of an intervening life interest.
- Benefit acquired as part of the administration of an estate
Section 30(4), which is relevant for most inheritances, determines the valuation date in the case of the administration of an estate. The valuation date in these circumstances is the earliest of the following three dates:
- the date on which a personal representative is entitled to retain assets for the benefit of a successor;
- the date on which an asset is retained; or
- the date of delivery of assets, payment to the successor.
‘Retainer’ is something analogous in character to actual delivery or payment. It is an essential feature of a retainer that the legatee should be entitled either to demand delivery or payment, or to have the beneficial enjoyment of the legacy.
Where an inheritance forms part of the estate of a deceased person, the valuation date is generally the date of the grant of probate (or letters of administration in the case of an intestacy). In the case of a specific bequest, however, where the beneficiary takes immediate possession of an asset, or already has possession, the valuation date can be as early as the date of death.
Example 1
John has left the following legacies in his will and a personal representative has been appointed. Due to the differing characteristics of each legacy, the valuation date is not the same in each case.
(a) Specific bequest of jewellery to Mary
Mary has received a specific bequest of a watch of which she has already taken possession. In this instance, the valuation date is the date of John’s death.
(b) Pecuniary legacy of €5,000 to Tom
Tom has been left €5,000 to be provided from John’s bank account. The valuation date is the date of the grant of probate. Were Tom to be given this money in advance of probate being granted then the valuation date would be the date of payment.
(c) Residue to Anne
The valuation date is the date of the grant of probate as the content of the residue cannot be established until the full debts, costs and liabilities of John’s estate have been established.
- Benefit acquired immediately on a death
Where inheritances transfer outside of the administration of an estate, the valuation date of an inheritance is generally the date of the inheritance (or the date of the gift where a gift becomes an inheritance). In such circumstances a beneficiary gains an immediate interest in a benefit on the death of a disponer or the death of a person holding an intervening life interest.
There are several circumstances in which this can happen:
Jointly held benefits passing by survivorship
Where property is jointly held by two or more persons, the death of one of them will result in a re-distribution of the benefit among the survivor(s). In the context of real property, section 13(1) provides that where joint tenants own property under a joint tenancy arrangement and one of them dies, the survivor(s) take an inheritance from the deceased joint tenant as disponer. Where one party to a joint tenancy agreement dies, that person’s interest in the property automatically transfers to the surviving joint tenant(s) without the need for any further act. The valuation date in this instance is the date of death of the disponer.
The cessation of an intervening life interest
Section 2(1) defines the date of an inheritance as including the happening of events set out in section 3(2). Such events include the cessation of a life interest as provided for in section 3((1)(d). Where an intervening life interest ceases, the valuation date is the date of the death of the life tenant. The benefit transfers to the remainderman on that same date.
Example 2
Peter inherited a life interest in a house on his father’s death 5 years previously. His father’s will stipulated that, on Peter’s death, the house would go to his granddaughter Christina. When Peter dies Christina, as remainderman, then receives an immediate interest in the house. The valuation date of that inheritance from her grandfather is the date of Peter’s death.
Failure to exercise a power of revocation
Section 30(2)(b) provides that where an inheritance passes to a beneficiary because of a failure to exercise a power of revocation, the valuation date is the date of the death of the disponer.
A similar issue arises with a donatio mortis causa whereby a successor takes a gift in contemplation of a death. This usually occurs where a disponer is suffering from a serious illness and is not expected to recover. The gift has already been delivered to the beneficiary but the disponer may reclaim the property at any time prior to his or her death. The inheritance is triggered by a failure to reclaim. Section 30(2)(a) provides that where such an inheritance is taken, the valuation date is the date of the death of the disponer.
Example 3
Mark gifts a holiday home to his son Liam subject to a power of revocation exercisable by Mark. On Mark’s death some years later, Liam takes an immediate benefit of the holiday home as Mark never exercised his power to revoke the gift. The valuation date for this inheritance is the date of Mark’s death.
Gift becomes an Inheritance
Section 30(3) provides that where a gift becomes an inheritance as a result of the death of the disponer within 2 years of making the gift, the valuation date is the date of the gift.
8.3 Valuation date of a gift
The Valuation date of a gift is, as a general rule, the date of the gift. The exceptions to this general rule are set out below.
- Gifting on of an interest in an estate not yet received
Section 30(7) provides that where a person makes a gift of his or her share in a deceased person’s estate before the estate is distributed, the valuation date of this gift will be the same as the valuation date of the inheritance.
Example 4
Kate inherits the residue of her mother Pamela’s estate. Before the estate is administered and Kate’s interest in it is established, she gifts that interest to her son Shane. While the date of the gift is the date on which Shane receives the interest in the residue from his mother Kate, the valuation date of this gift is the valuation date of the inheritance taken by Kate.
- Free use of property
Section 40(3) provides that where the benefit received is the free use of property, the valuation date is deemed to be 31 December in each year in which the free use is enjoyed.
CAT Act
PART 4
Value of Property for Tax
26
Market value of property.
[CATA 1976 s15]
(1)In subsection (6), “unquoted shares or securities” means shares or securities which are not dealt in on a stock exchange.
(2)Subject to this Act, the market value of any property for the purposes of this Act is estimated to be the price which, in the opinion of the Commissioners, such property would fetch if sold in the open market on the date on which the property is to be valued in such manner and subject to such conditions as might reasonably be calculated to obtain for the vendor the best price for the property.
(3)In estimating the market value of any property, the Commissioners shall not make any reduction in the estimate on account of the estimate being made on the assumption that the whole property is to be placed on the market at one and the same time.
(4)The market value of any property shall be ascertained by the Commissioners in such manner and by such means as they think fit, and they may authorise a person to inspect any property and report to them the value of such property for the purposes of this Act, and the person having the custody or possession of that property shall permit the person so authorised to inspect it at such reasonable times as the Commissioners consider necessary.
(5)Where the Commissioners require a valuation to be made by a person named by them, the costs of such valuation shall be defrayed by the Commissioners.
(6)Subject to this Act, in estimating the price which unquoted shares or securities might be expected to fetch if sold in the open market, it shall be assumed that in that market there is available to any prospective purchaser of the shares or securities all the information which a prudent prospective purchaser might reasonably require if that prudent prospective purchaser were proposing to purchase them from a willing vendor by private treaty and at arm’s length.
27
Market value of certain shares in private companies.
[CATA 1976 s16]
(1)In this section—
“group of shares”, in relation to a private company, means the aggregate of the shares in the company of—
(a)the donee or successor,
(b)the relatives, civil partner, children, or children of the children of the civil partner, of the donee or successor,
(c)the civil partners of persons who are by virtue of section 2(4)(b) or (c) relatives of the donee or successor,
(d)the civil partners of any children or any children of the children of the civil partner of the donee or successor,
(e)nominees of the donee or successor,
(f)nominees of—
(i)relatives of the donee or successor,
(ii)the civil partner of the donee or successor,
(iii)children or children of the children of the civil partner of the donee or successor,
(iv)the civil partners of persons who are by virtue of section 2(4)(b) or (c) relatives of the donee or successor, or
(v)the civil partners of any children or any children of the children of the civil partner of the donee or successor,
and
(g)the trustees of a settlement whose objects include—
(i)the donee or successor,
(ii)relatives of the donee or successor,
(iii)the civil partner of the donee or successor,
(iv)the children or children of the children of the civil partner of the donee or successor,
(v)the civil partners of persons who are by virtue of section 2(4)(b) or (c) relatives of the donee or successor, or
(vi)the civil partners of any children or any children of the children of the civil partner of the donee or successor;
“nominee” includes a person who may be required to exercise that person’s voting power on the directions of, or who holds shares directly or indirectly on behalf of, another person;
“private company” means a body corporate (wherever incorporated) which—
(a)is under the control of not more than 5 persons, and
(b)is not a company which would fall within section 431 of the Taxes Consolidation Act 1997 if the words “private company” were substituted for the words “close company” in subsection (3) of that section, and if the words “are beneficially held by a company which is not a private company” were substituted for the words of paragraph (a) of subsection (6) of that section;
“share”, in relation to a private company and in addition to the interpretation of “share” in section 2(1), includes every debenture, or loan stock, issued otherwise than as part of a transaction which is wholly and exclusively a bona fide commercial transaction.
(2)(a)The market value of each share in a private company which (after the taking of the gift or of the inheritance) is, on the date of the gift or on the date of the inheritance, a company controlled by the donee or successor, shall be ascertained by the Commissioners, for the purposes of tax, as if, on the date on which the market value is to be ascertained, it formed an apportioned part of the market value of a group of shares in that company, such apportionment, as between shares of a particular class, to be by reference to nominal amount, and, as between different classes of shares, to have due regard to the rights attaching to each of the different classes.
(b)For the purpose of ascertaining the market value of a share in a private company in the manner described in paragraph (a), the benefit to any private company (in this paragraph referred to as “the first-mentioned company”) by virtue of its ownership of an interest in shares in another private company (in this paragraph referred to as “the second-mentioned company”) is, where each of the companies so connected is a company which (after the taking of the gift or of the inheritance) is, on the date of the gift or on the date of the inheritance, a company controlled by the donee or successor, deemed to be—
(i)such benefit as would be appropriate to the ownership of that interest if the second-mentioned company were under the control of the first-mentioned company in the same manner as (on the date on which the market value is to be ascertained) the second-mentioned company is under the control of any of the following:
(I)the first-mentioned company;
(II)the donee or successor;
(III)the—
(A)relatives, civil partner, children or children of the children of the civil partner,
(B)civil partners of persons who are by virtue of section 2(4)(b) or (c) relatives, or
(C)civil partners of the children or the children of the children of the civil partner,
of the donee or successor;
(IV)nominees of the donee or successor;
(V)any nominees of—
(A)the relatives, the civil partner, children or children of the children of the civil partner,
(B)the civil partners of persons who are by virtue of section 2(4)(b) or (c) relatives, or
(C)the civil partners of the children or the children of the children of the civil partner,
of the donee or successor;
(VI)the trustees of a settlement whose objects include—
(A)the donee or successor, or
(B)any—
(ai)relatives, civil partner, children or children of the children of the civil partner,
(aii)civil partners of persons who are by virtue of section 2(4)(b) or (c) relatives, or
(aiii)civil partners of children or children of the children of the civil partner,
of the donee or successor,
or
(ii)the actual benefit appropriate to the ownership of that interest,
whichever is the greater.
(3)In this section, a reference to a company controlled by the donee or successor is a reference to a company that is under the control of any one or more of the following:
(a)the donee or successor;
(b)the—
(i)relatives, civil partner, children or children of the children of the civil partner,
(ii)civil partners of persons who are by virtue of section 2(4)(b) or (c) relatives, or
(iii)civil partners of the children or the children of the children of the civil partner,
of the donee or successor;
(c)nominees of the donee or successor;
(d)nominees of—
(i)the relatives, the civil partner, children or children of the children of the civil partner,
(ii)the civil partners of persons who are by virtue of section 2(4)(b) or (c) relatives, or
(iii)the civil partners of the children or the children of the children of the civil partner,
of the donee or successor;
(e)the trustees of a settlement whose objects include—
(i)the donee or successor, or
(ii)the—
(I)relatives, the civil partner, children or children of the children of the civil partner,
(II)civil partners of persons who are by virtue of section 2(4)(b) or (c) relatives, or
(III)civil partners of the children or the children of the children of the civil partner,
of the donee or successor,
and for the purposes of this section, a company which is so controlled by the donee or successor shall be regarded as being itself a relative of the donee or successor.
(4)For the purposes of this section—
(a)a company is deemed to be under the control of not more than 5 persons if any 5 or fewer persons together exercise, or are able to exercise, or are entitled to acquire control, whether direct or indirect, of the company and for this purpose—
(i)persons who are—
(I)relatives of any other person,
(II)the civil partner of any other person,
(III)children or children of the children of the civil partner of any other person,
(IV)the civil partners of persons who are by virtue of section 2(4)(b) or (c) relatives of any other person, or
(V)the civil partners of the children or the children of the children of the civil partner of any other person,
together with that other person,
(ii)persons who are nominees of any other person together with that other person,
(iii)persons in partnership, and
(iv)persons interested in any shares or obligations of the company which are subject to any trust or are part of the estate of a deceased person,
shall respectively be treated as a single person, and
(b)a person is deemed to have control of a company at any time if—
(i)that person then had control of the powers of voting on all questions, or on any particular question, affecting the company as a whole, which, if exercised, would have yielded a majority of the votes capable of being exercised on such questions or question, or could then have obtained such control by an exercise at that time of a power exercisable by that person or at that person’s direction or with that person’s consent,
(ii)that person then had the capacity, or could then by an exercise of a power exercisable by that person or at that person’s direction or with that person’s consent obtain the capacity, to exercise or to control the exercise of any of the following powers, that is:
(I)the powers of a board of directors of the company,
(II)powers of a governing director of the company,
(III)power to nominate a majority of the directors of the company or a governing director of the company,
(IV)the power to veto the appointment of a director of the company, or
(V)powers of a like nature;
(iii)that person then had a right to receive, or the receipt of, more than one-half of the total amount of the dividends of the company, whether declared or not, and for the purposes of this subparagraph, “dividend” is deemed to include interest on any debentures of the company, or
(iv)that person then had an interest in the shares of the company of an aggregate nominal value representing one-half or more of the aggregate nominal value of the shares of the company.
28
Taxable value of a taxable gift or inheritance.
[CATA 1976 s18]
(1)In this section, “incumbrance-free value”, in relation to a taxable gift or a taxable inheritance, means the market value at the valuation date of the property of which the taxable gift or taxable inheritance consists at that date, after deducting any liabilities, costs and expenses that are properly payable out of the taxable gift or taxable inheritance.
(2)Subject to this section (but except where provided in section 89), the taxable value of a taxable gift or a taxable inheritance (where the interest taken by the donee or successor is not a limited interest) is ascertained by deducting from the incumbrance-free value of such a taxable gift or a taxable inheritance the market value of any bona fide consideration in money or money’s worth, paid by the donee or successor for the gift or inheritance, including—
(a)any liability of the disponer which the donee or successor undertakes to discharge as that donee or successor’s own personal liability, and
(b)any other liability to which the gift or inheritance is subject under the terms of the disposition under which it is taken,
and the amount so ascertained is the taxable value, but no deduction shall be made under this subsection in respect of any liability which is to be deducted in ascertaining the incumbrance-free value.
(3)Where a liability (other than a liability within the meaning of subsection (9)) for which a deduction may be made under subsection (1) or (2) is to be discharged after the time when it is to be taken into account as a deduction under either of those subsections, it is valued for the purpose of making such a deduction at its current market value at the time when it is to be so taken into account.
(4)The taxable value of a taxable gift or a taxable inheritance, where the interest taken by the donee or the successor is a limited interest, is ascertained as follows—
(a)the value of the limited interest in a capital sum equal to the incumbrance-free value is ascertained in accordance with the Rules contained in Schedule 1, and
(b)from the value ascertained in accordance with paragraph (a) a deduction is made in respect of the market value of any bona fide consideration in money or money’s worth paid by the donee or the successor for the gift or the inheritance and the amount remaining after such deduction is the taxable value, but no deduction is made under this paragraph in respect of any liability which is to be deducted in ascertaining the incumbrance-free value.
(5)A deduction shall not be made under this section—
(a)in respect of any liability the payment of which is contingent on the happening of some future event, but if the event on the happening of which the liability is contingent happens and the liability is paid, then, on a claim for relief being made to the Commissioners and subject to the other provisions of this section, a deduction is made in respect of the liability and such adjustment of tax as is appropriate is made; and such adjustment is made on the basis that the donee or successor had taken an interest in possession in the amount which is to be deducted for the liability, for a period certain which was equal to the actual duration of the postponement of the payment of the liability,
(b)in respect of any liability, costs or expenses in so far as the donee or successor has a right of reimbursement from any source, unless such reimbursement can not be obtained,
(c)in respect of any liability created by the donee or successor or any person claiming in right of the donee or successor or on that donee or successor’s behalf,
(d)in respect of tax, interest or penalties chargeable under this Act in respect of the gift or inheritance, or of the costs, expenses or interest incurred in raising or paying the same,
(e)in respect of any liability in so far as such liability is an incumbrance on, or was created or incurred in acquiring, any property which is comprised in any gift or inheritance and which is exempt from tax under any provision of this Act or otherwise,
(f)in the case of any gift or inheritance referred to in section 6(1)(c), 6(2)(d), 11(1)(b) or 11(2)(c) in respect of—
(i)any liability, costs or expenses due to a person resident outside the State (except in so far as such liability is required by contract to be paid in the State or is charged on the property which is situate in the State and which is comprised in the gift or inheritance), or
(ii)any liability, costs or expenses in so far as the same are charged on or secured by property which is comprised in the gift or inheritance and which is not situate in the State,
except to the extent that all the property situate outside the State and comprised in the gift or inheritance is insufficient for the payment of the liability, costs or expenses,
(g)for any tax in respect of which a credit is allowed under section 106 or 107.
(5A)Notwithstanding section 57(3), relief shall be given under subsection (5)(a) on a claim which shall be made within 4 years after the liability referred to in that paragraph has been paid.
(6)In the case of a gift or inheritance referred to in subsection (5)(f), any deduction to be made under subsection (2) or (4)(b) is restricted to the proportion of the consideration which bears the same proportion to the whole of the consideration as the taxable gift or taxable inheritance bears to the whole of the gift or the whole of the inheritance.
(7)A deduction shall not be made under this section—
(a)more than once for the same liability, costs, expenses or consideration, in respect of all gifts and inheritances taken by the donee or successor from the disponer, or
(b)for any liability, costs, expenses or consideration, a proportion of which is to be allowed under section 89(2)(ii) or (iii) in respect of a gift or inheritance taken by the donee or successor from the disponer.
(8)Where a taxable gift or a taxable inheritance is subject to a liability within the meaning of subsection (9), the deduction to be made in respect of that liability under this section shall be an amount equal to the market value of the whole or the appropriate part, as the case may be, of the property, within the meaning of section 5(5).
(9)For the purpose of subsection (8), “liability”, in relation to a taxable gift or a taxable inheritance, means a liability which deprives the donee or successor, whether permanently or temporarily, of the use, enjoyment or income in whole or in part of the property, or of any part of the property, of which the taxable gift or taxable inheritance consists.
(10)Where—
(a)bona fide consideration in money or money’s worth has been paid by a person for the granting to that person, by a disposition, of an interest in expectancy in property, and
(b)at the coming into possession of the interest in expectancy, that person takes a gift or an inheritance of that property under that disposition,
the deduction to be made under subsection (2) or (4)(b) for consideration paid by that person is a sum equal to the same proportion of the taxable value of the taxable gift or taxable inheritance (as if no deduction had been made for such consideration) as the amount of the consideration so paid bore to the market value of the interest in expectancy at the date of the payment of the consideration.
(11)Any deduction, under this section, in respect of a liability which is an incumbrance on any property, is, so far as possible, made against that property.
29
Contingencies affecting gifts or inheritances.
[CATA 1976 s20]
(1)Where, under a disposition, a person becomes beneficially entitled in possession to any benefit and, under the terms of the disposition, the entitlement, or any part of the entitlement, may cease on the happening of a contingency (other than the revocation of the entitlement on the exercise by the disponer of such a power as is referred to in section 39), the taxable value of any taxable gift or taxable inheritance taken by that person on becoming so entitled to that benefit is ascertained as if no part of the entitlement were so to cease; but, in the event and to the extent that the entitlement so ceases, the tax payable by that person is, to that extent, adjusted (if, by so doing, a lesser amount of tax would be payable by such person) on the basis that such person had taken an interest in possession for a period certain which was equal to the actual duration of such person’s beneficial entitlement in possession.
(1A)Notwithstanding section 57(3), relief shall be given under subsection (1) on a claim which shall be made within 4 years after the entitlement referred to in that subsection ceases.
(2)Nothing in this section shall prejudice any charge for tax on the taking by such person of a substituted gift or inheritance on the happening of such a contingency.
Capital Acquisitions Tax Consolidation Act 2003 (Number 1 of 2003)
30
Valuation date for tax purposes.
[CATA 1976 s21]
(1)Subject to subsection (7), the valuation date of a taxable gift is the date of the gift.
(2)The valuation date of a taxable inheritance is the date of death of the deceased person on whose death the inheritance is taken if the successor or any person in right of the successor or on that successor’s behalf takes the inheritance—
(a)as a donatio mortis causa, or
(b)by reason of the failure to exercise a power of revocation.
(3)If a gift becomes an inheritance by reason of its being taken under a disposition where the date of the disposition is within 2 years prior to the death of the disponer, the valuation date of the inheritance is determined as if it were a gift.
(4)The valuation date of a taxable inheritance, other than a taxable inheritance referred to in subsection (2) or (3), is the earliest date of the following:
(a)the earliest date on which a personal representative or trustee or the successor or any other person is entitled to retain the subject matter of the inheritance for the benefit of the successor or of any person in right of the successor or on that successor’s behalf,
(b)the date on which the subject matter of the inheritance is so retained, or
(c)the date of delivery, payment or other satisfaction or discharge of the subject matter of the inheritance to the successor or for that successor’s benefit or to or for the benefit of any person in right of the successor or on that successor’s behalf.
(5)If any part of a taxable inheritance referred to in subsection (4) may be retained, or is retained, delivered, paid or otherwise satisfied, whether by means of part payment, advancement, payment on account or in any manner whatever, before any other part or parts of such inheritance, the appropriate valuation date for each part of the inheritance is determined in accordance with that subsection as if each such part respectively were a separate inheritance.
(6)The Commissioners may give to an accountable person a notice in writing of the date determined by them to be the valuation date in respect of the whole or any part of an inheritance, and, subject to the determination of an appeal made under subsection (9), the date so determined by the Commissioners is deemed to be the valuation date.
(7)If a taxable inheritance referred to in subsection (4) or (5) is disposed of, ceases or comes to an end before the valuation date referred to in those subsections in such circumstances as to give rise to a taxable gift, the valuation date in respect of such taxable gift is the same date as the valuation date of the taxable inheritance.
(8)Notwithstanding anything contained in this section, the Commissioners may, in case of doubt, with the agreement in writing of the accountable person or that person’s agent, determine the valuation date of the whole or any part of any taxable inheritance and the valuation date so determined is substituted for the valuation date which would otherwise be applicable by virtue of this section.
(9)An accountable person aggrieved by a determination of the Commissioners made under subsection (6) in respect of that person may appeal the determination to the Appeal Commissioners, in accordance with section 949