728. Deputy Conor Sheehan asked the Tánaiste and Minister for Finance if his Department is reviewing the tax treatment of cohabiting couples, to address the anomalies on the way in which cohabitants are treated in terms of capital gains tax; the legislative action he plans to take on capital gains tax to give cohabiting couples equal treatment to married couples; and if he will make a statement on the matter. [56059/26]

Capital gains tax (CGT) arises in respect of chargeable gains accruing on the disposal of an asset at the rate of 33%. The first €1,270 of chargeable gains of an individual in any year are exempt from CGT.

The CGT rules pertaining to married, separated and divorced individuals are set out in Chapter 2 of Part 44 of the Taxes Consolidation Act 1997 (TCA 1997); the CGT rules pertaining to civil partnerships are set out in Chapter 2 of Part 44A of that Act. In general, these rules provide that the disposal of an asset (other than trading stock) between spouses, or civil partners, who are living together is deemed to occur for such consideration as gives rise to neither a gain nor a loss for CGT purposes. The spouse or civil partner acquiring the asset is deemed to have acquired it at the same date and at the same cost as the spouse or civil partner disposing of the asset.

Gains and losses of each spouse or civil partner are calculated separately as if each spouse or civil partner was a single person. However, the couple (married or civil partners) will be jointly assessed on gains arising to them unless an election is made for separate assessment. Further, if both spouses or civil partners agree, losses which would normally be available to one spouse or civil partner can be used by the other spouse or civil partner against gains in a year of assessment. This rule applies not only to current year capital losses but also to unused capital losses coming forward from previous years.

Where an asset is transferred between former spouses or civil partners by virtue of certain types of orders made in accordance with the Family Law (Divorce) Act 1996, Family Law Act 1995 and/or the Judicial Separation and Family Law Reform Act 1989, the CGT treatment of such transfers will be as if the couple were still married and living together, i.e. no gain or loss arises on the transfer of the assets, and where the former spouse or civil partner who acquired the asset subsequently disposes of it, they are treated as if they had acquired it at the time and cost at which it was originally acquired by the other former spouse or civil partner.

Cohabiting couples are each subject to CGT as single persons, they cannot opt for joint assessment for CGT purposes. Any transfers between cohabiting couples will be liable to CGT in the normal way. The no gain/no loss treatment, as outlined above for spouses or civil partners, does not apply to cohabiting couples.

However, section 1031R TCA 1997 provides that, where an order is made under section 174 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010, on or following the ending of a relationship between cohabitants and, under that order, either of the former cohabitants disposes of an asset (other than trading stock) to the other former cohabitant, the former cohabitant disposing of the asset is treated as if no gain or loss arises on the disposal. Any subsequent disposal by the former cohabitant who acquires the asset will be treated as if they had acquired it at the same time and cost at which it was originally acquired by the other former cohabitant. For the purposes of section 1031R TCA 1997, a cohabitant has the same meaning as in section 172 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010.

As with all taxes, CGT is subject to ongoing review. This involves the consideration and assessment of the rate of CGT and the relevant reliefs and exemptions from CGT as part of the annual Budget and Finance Bill process, as well as consideration of CGT in the wider tax policy context.