Corporation Tax Act, 1976

Number 7 of 1976

CORPORATION TAX ACT, 1976

ARRANGEMENT OF SECTIONS

PART I

General System of Taxation

PART II

Corporation Tax.

PART III

Special Classes of Companies.

PART IV

Profits from Export of Certain Goods

PART V

Profits from Trading within Shannon Airport

PART VI

Associated Companies: Relief under Parts IV and V

PART VII

Special Exemptions

PART VIII

Distributions out of Certain Profits from Mining

PART IX

Schedule F and Company Distributions

PART X

Close Companies

PART XI

Group Relief

PART XII

Companies' Capital Gains

PART XIII

Application and Adaptation of Enactments

PART XIV

Administration

PART XV

Interpretation and Supplemental

PART XVI

Savings, Transitions, etc.

FIRST SCHEDULE

Adaptation of System of Capital Allowances

SECOND SCHEDULE

PART I

Application and Adaptation of Income Tax Acts

PART II

Application and Adaptation of Capital Gains Tax Act, 1975

THIRD SCHEDULE

Enactments Repealed

FOURTH SCHEDULE

PART I

Amendment of Enactments concerning Double Taxation Relief

PART II

Repeal of Enactments concerning Double Taxation Relief

FIFTH SCHEDULE

Transitional Relief in respect of Certain Payments and Management Expenses

Number 7 of 1976

CORPORATION TAX ACT, 1976

AN ACT TO CHARGE AND IMPOSE ON CERTAIN PROFITS A DUTY OF INLAND REVENUE TO BE KNOWN AS CORPORATION TAX, TO AMEND THE LAW RELATING TO INLAND REVENUE AND TO MAKE FURTHER PROVISIONS IN CONNECTION WITH FINANCE. [31st March, 1976]

BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:

PART I

General System of Taxation

Introduction for companies of corporation tax in place of income tax, corporation profits tax and capital gains tax.

1.—(1) For the financial year 1974 and each subsequent financial year there shall be charged on profits of companies a tax, to be called corporation tax, at the rate of 50 per cent.

(2) For years of assessment after the year 1975–76 the provisions of the Income Tax Acts relating to the charge of income tax shall not apply to income of a company (not arising to it in a fiduciary or representative capacity) if—

(a) the company is resident in the State; or

(b) the income is, in the case of a company not so resident, within the chargeable profits of the company as defined for the purposes of corporation tax.

(3) A company shall not be chargeable to capital gains tax in respect of gains accruing to it so that it is chargeable in respect of them to corporation tax.

(4) Corporation profits tax shall not be chargeable for accounting periods or parts of accounting periods falling after the 5th day of April, 1976.

(5) In this Act, unless the context otherwise requires—

(a) “company” means any body corporate but does not include—

(i) a health board,

(ii) a vocational education committee established under the Vocational Education Act, 1930 ,

(iii) a committee of agriculture established under the Agriculture Act, 1931 , or

(iv) a local authority, and for this purpose “local authority” has the meaning assigned to it by section 2 (2) of the Local Government Act, 1941 , and includes a body established under the Local Government Services (Corporate Bodies) Act, 1971 ;

(b) “the financial year 1974” means the period of nine months beginning on the 1st day of April, 1974;

(c) “profits” means income and chargeable gains, and “chargeable gains” has the same meaning as in the Capital Gains Tax Act, 1975 , but does not include gains accruing on disposals which were made before the 6th day of April, 1976;

(d) “trade” includes “vocation” and includes also an office or employment;

(e) such other words and expressions as are specified in section 155 (interpretation) have the meanings given by or indicated in that section.

Irish resident company distributions not chargeable to corporation tax.

2.—Except as otherwise provided by this Act, corporation tax shall not be chargeable on dividends and other distributions of a company resident in the State, nor shall any such dividends or distributions be taken into account in computing income for corporation tax.

Income tax on payments made or received by a company resident in the State.

3.—(1) No payment made after the 5th day of April, 1976, by a company resident in the State shall by virtue of this section or otherwise be treated for any purpose of the Income Tax Acts as paid out of profits or gains brought into charge to income tax; nor shall any right or obligation under the Income Tax Acts to deduct income tax from any payment be affected by the fact that the recipient is a company not chargeable to income tax in respect of the payment.

(2) Subject to the provisions of this Act, where after the 5th day of April, 1976, a company resident in the State receives any payment on which it bears income tax by deduction, the income tax thereon shall be set off against any corporation tax assessable on the company by an assessment made for the accounting period in which that payment falls to be taken into account for corporation tax (or would fall to be taken into account but for any exemption from corporation tax); and accordingly in respect of that payment the company, unless wholly exempt from corporation tax, shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due.

(3) References in this section to payments received by a company apply to any received by another person on behalf of or in trust for the company, but not to any received by the company on behalf of or in trust for another person.

Claims for repayment of income tax deducted from receipts.

4.—Effect shall be given—

(a) to section 1 (2), and to that section as modified by sections 3 (2) and 8 (3), and

(b) so far as the exemptions from income tax conferred by the Corporation Tax Acts call for repayment of tax, to those exemptions,

by means of a claim.

Explanation of tax credit to be annexed to interest and dividend warrants.

5.—(1) Every warrant or cheque or other order drawn or made, or purporting to be drawn or made, in payment by any company of any dividend, or of any interest which is a distribution, shall have annexed thereto or be accompanied by a statement in writing showing—

(a) the amount of the dividend (distinguishing a dividend or any part of it which is paid out of capital profits of the company) or interest paid,

(b) (whether or not the recipient is a person entitled to a tax credit in respect thereof) the amount of the tax credit to which a recipient who is such a person is entitled in respect thereof, and

(c) the period for which the dividend or interest is paid.

(2) If a company fails to comply with any of the provisions of this section the company shall incur a penalty of £10 in respect of each offence but the aggregate amount of the penalties imposed under this section on any company in respect of offences connected with any one distribution of dividends or interest shall not exceed £100.

PART II

Corporation Tax

General scheme of corporation tax.

6.—(1) Subject to any exceptions provided for by this Act, a company shall be chargeable to corporation tax on all its profits wherever arising.

(2) A company shall be chargeable to corporation tax on profits accruing for its benefit under any trust, or arising under any partnership, in any case in which it would be so chargeable if the profits accrued to it directly; and a company shall be chargeable to corporation tax on profits arising in the winding up of the company, but shall not otherwise be chargeable to corporation tax on profits accruing to it in a fiduciary or representative capacity except as respects its own beneficial interest (if any) in those profits.

(3) Corporation tax for any financial year shall be charged on profits arising in that year; but assessments to corporation tax shall be made on a company by reference to accounting periods, and the amount chargeable (after making all proper deductions) of the profits arising in an accounting period shall, where necessary, be apportioned between the financial years in which the accounting period falls.

(4) (a) Except as otherwise provided by this subsection, corporation tax assessed for an accounting period shall be paid in two equal instalments as follows—

(i) the first instalment within nine months from the end of the accounting period or, if it is later, within two months from the making of the assessment; and

(ii) the second instalment within fifteen months from the end of the accounting period or, if it is later, within two months from the making of the assessment.

(b) Where, in respect of a source of income, a company is within the charge to income tax under Schedule D for the year of assessment 1975-76, and in respect of that source of income comes within the charge to corporation tax on or before the 6th day of April, 1975, then (so long as the company continues to be within the charge to corporation tax in respect of that source of income) the second instalment of corporation tax assessed for an accounting period shall be paid as follows—

(i) in respect of the first accounting period for which the company is within the charge to corporation tax—

(I) where that accounting period is a period of twelve months, on or before the 1st day of January, 1977, and

(II) where that accounting period is a period of less than twelve months, within the like interval from the end of the accounting period as the 1st day of January, 1977, would have been from the end of the first accounting period if that accounting period had been a period of twelve months commencing on the date on which the company comes within the charge to corporation tax; and

(ii) in respect of any subsequent accounting period, within the like interval from the end of such accounting period as there was between the end of the first accounting period for which the company was within the charge to corporation tax and the date on or before which the second instalment of corporation tax for that first accounting period would have become payable if the assessment for that accounting period had been made on the day immediately following the end of that accounting period:

Provided that in no case shall the second instalment of corporation tax assessed for an accounting period become payable before the expiration of nine months from the end of the accounting period for which it is assessed or before the expiration of two months from the making of the assessment.

(5) Corporation tax shall be under the care and management of the Revenue Commissioners who may do all such acts as may be deemed necessary and expedient for raising, collecting, receiving and accounting for the tax in the like manner as they are authorised to do with relation to any other duties under their care and management.

(6) Section 1 of the Provisional Collection of Taxes Act, 1927 , is hereby amended by the insertion of “and corporation tax” before “but no other tax or duty”.

(7) Section 39 of the Inland Revenue Regulation Act, 1890, is hereby amended by the insertion of “corporation tax,” before “stamp duties”.

Tax on company in liquidation.

7.—An assessment on a company's profits for an accounting period which falls after the commencement of the winding up of the company shall not be invalid because made before the end of the accounting period.

Companies not resident in the State.

8.—(1) A company not resident in the State shall not be within the charge to corporation tax unless it carries on a trade in the State through a branch or agency but, if it does so, it shall, subject to any exceptions provided for by this Act, be chargeable to corporation tax on all its chargeable profits wherever arising.

(2) For purposes of corporation tax the chargeable profits of a company not resident in the State but carrying on a trade there through a branch or agency shall be—

(a) any trading income arising directly or indirectly through or from the branch or agency, and any income from property or rights used by, or held by or for, the branch or agency (but so that this paragraph shall not include distributions received from companies resident in the State); and

(b) such chargeable gains as, but for this Act, would be chargeable to capital gains tax in the case of a company which is not resident in the State:

Provided that such chargeable profits shall not include chargeable gains accruing to the company on the disposal of assets which, at or before the time when the chargeable gains accrued, were not used in or for the purposes of the trade and were not used or held or acquired for the purposes of the branch or agency.

(3) Subject to section 45 (overseas life assurance companies), where in the year 1976-77 or any later year of assessment, a company not resident in the State receives any payment on which it bears income tax by deduction, and the payment forms part of, or is to be taken into account in computing, the company's income chargeable to corporation tax, the income tax thereon shall be set off against any corporation tax assessable on that income by an assessment made for the accounting period in which the payment falls to be taken into account for corporation tax; and accordingly in respect of that payment the company shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due.

(4) Without prejudice to the general application of income tax procedure to corporation tax, the provisions of Chapter II of Part IX of the Income Tax Act, 1967 (Special Provisions as to Non-residents and Temporary Residents), and section 209 in Chapter III of the said Part (liability of trustees, etc.) relating to the assessment and charge of income tax on persons not resident in the State, so far as they are applicable to tax chargeable on a company, shall apply with any necessary adaptations in relation to corporation tax chargeable on companies not resident in the State.

Basis of, and periods for, assessment.

9.—(1) Except as otherwise provided by this Act, corporation tax shall be assessed and charged for any accounting period of a company on the full amount of the profits arising in the period (whether or not received in or remitted to the State) without any other deduction than is authorised by this Act.

(2) An accounting period of a company shall begin for purposes of corporation tax whenever—

(a) the company, not then being within the charge to corporation tax, comes within it whether by the coming into force of any provision of this Act, or by the company becoming resident in the State or acquiring a source of income, or otherwise; or

(b) an accounting period of the company ends without the company then ceasing to be within the charge to corporation tax.

(3) An accounting period of a company shall end for purposes of corporation tax on the first occurrence of any of the following—

(a) the expiration of twelve months from the beginning of the accounting period;

(b) an accounting date of the company or, if there is a period for which the company does not make up accounts, the end of that period;

(c) the company beginning or ceasing to trade or to be, in respect of the trade or (if more than one) of all the trades carried on by it, within the charge to corporation tax;

(d) the company beginning or ceasing to be resident in the State;

(e) the company ceasing to be within the charge to corporation tax.

(4) For the purposes of this section a company resident in the State, if not otherwise within the charge to corporation tax, shall be treated as coming within the charge to corporation tax on the 6th day of April, 1976, or at the time when it commences to carry on business, whichever is the later.

(5) If a company carrying on more than one trade makes up accounts of any of them to different dates, and does not make up general accounts for the whole of the company's activities, subsection (3) (b) shall apply with reference to the accounting date of such one of the trades as the Revenue Commissioners may determine.

(6) If, on or after the 6th day of April, 1976, a chargeable gain or allowable loss accrues to a company at a time not otherwise within an accounting period of the company, an accounting period of the company shall then begin for the purposes of corporation tax, and the gain or loss shall accrue in that accounting period.

(7) Notwithstanding anything in the preceding subsections, where a company is wound up, an accounting period shall end and a new one begin with the commencement of the winding up, and thereafter an accounting period shall not end otherwise than by the expiration of twelve months from its beginning or by the completion of the winding up.

For this purpose a winding up is to be taken to commence on the passing by the company of a resolution for the winding up of the company, or on the presentation of a winding up petition if no such resolution has previously been passed and a winding up order is made on the petition, or on the doing of any other act for a like purpose in the case of a winding up otherwise than under the Companies Act, 1963 .

(8) Where it appears to the inspector that the beginning or end of any accounting period of a company is uncertain, he may make an assessment on the company for such period, not exceeding twelve months, as appears to him appropriate, and that period shall be treated for all purposes as an accounting period of the company unless either the inspector on further facts coming to his knowledge sees fit to revise it or on an appeal against the assessment in respect of some other matter the company shows the true accounting periods; and if on an appeal against an assessment made by virtue of this subsection the company shows the true accounting periods the assessment appealed against shall, as regards the period to which it relates, have effect as an assessment or assessments for the true accounting periods, and there may be made such other assessments for any such periods or any of them as might have been made at the time when the assessment appealed against was made.

Allowance of charges on income.

10.—(1) In computing the corporation tax chargeable for any accounting period of a company any charges on income paid by the company in the accounting period, but not before the 6th day of April, 1976, so far as paid out of the company's profits brought into charge to corporation tax, shall be allowed as deductions against the total profits for the period as reduced by any other relief from tax other than group relief.

(2) Subject to the following subsections and to any other express exceptions, “charges on income” means for the purposes of corporation tax payments of any description mentioned in subsection (3), not being dividends or other distributions of the company, but no payment which is deductible in computing profits or any description of profits for purposes of corporation tax shall be treated as a charge on income.

(3) Subject to subsections (4) to (7), the payments referred to in subsection (2) are—

(a) any yearly interest, annuity or other annual payment and any such other payments as are mentioned in section 93 (taxation of rents under long leases and certain other payments) or section 433 (2) (yearly interest, etc., payable wholly out of taxed profits) of the Income Tax Act, 1967 , and

(b) any other interest payable in the State on an advance from a bank carrying on a bona fide banking business in the State, or from a person who in the opinion of the Revenue Commissioners is bona fide carrying on business as a member of a stock exchange in the State or bona fide carrying on the business of a discount house in the State;

and for the purposes of this section any interest payable by a company as mentioned in paragraph (b) shall be treated as paid on its being debited to the company's account in the books of the person to whom it is payable.

(4) No such payment as is mentioned in subsection (3) (a) made by a company to a person not resident in the State shall be treated as a charge on income unless the company is resident in the State and either—

(a) the company deducts income tax from the payment in accordance with section 434 of the Income Tax Act, 1967 (interest, etc., not payable out of taxed profits), or the provisions of that section as applied by section 31 of the Finance Act, 1974 , and accounts under section 151 (income tax on payments) for the tax so deducted; or

(b) the payment is one payable out of income which is brought into charge to tax under Case III of Schedule D and which arises from securities and possessions outside the State.

(5) No such payment made by a company as is mentioned in subsection (3) shall be treated as a charge on income if—

(a) the payment is charged to capital, or the payment is not ultimately borne by the company; or

(b) the payment is not made under a liability incurred for a valuable and sufficient consideration and, in the case of a company not resident in the State, incurred wholly and exclusively for the purposes of a trade carried on by it in the State through a branch or agency:

Provided that for the purposes of paragraph (b) a payment falling within section 439 (1) (ii) or (iia) of the Income Tax Act, 1967 (dispositions for short periods), shall be treated as incurred for valuable and sufficient consideration.

(6) Subject to subsection (7), any yearly or other interest such as is mentioned in subsection (3) shall be treated for the purposes of this section as a charge on income paid in any accounting period only to the extent that it does not exceed the lesser of—

(a) an amount calculated at the rate of £2,000 per annum, and

(b) in relation to a company which is connected with an individual or another company within the meaning of section 157 (connected persons), an amount determined by the formula

where—

A is the total amount of interest payable by the company in respect of the accounting period,

B is the aggregate amount of the interest payable in respect of the accounting period by the company and all the persons with whom it is connected, and

C is the number of months or fractions of months comprised in the accounting period;

and for this purpose all such apportionments and aggregations as may be necessary shall be made:

Provided that for the purposes of paragraph (b) interest shall be deemed not to include any amount which the company or any person with whom it is connected is entitled to deduct in computing income of any description, or any amount to which the provisions of subsection (7) or of section 32 , 34 or 36 of the Finance Act, 1974 (borrowings related to acquisition of interest in other companies, or recovery of, or replacement of capital), apply.

(7) Subject to subsection (8), the provisions of subsection (6) shall not apply to any payment of interest on a loan to a company to defray money applied for a purpose mentioned in section 33 (2) of the Finance Act, 1974 , if the conditions specified in subsection (3) of that section and in section 35 (4) of that Act are fulfilled.

(8) The provisions of section 35 of the Finance Act, 1974 , excluding subsection (5) thereof, shall have effect for corporation tax as for income tax; and references to section 33 of the Finance Act, 1974 , to the investing company and to the borrower, to interest eligible for relief, and to affording relief for interest shall have effect accordingly as if they were or included references to subsection (7) of this section, to such a company as is mentioned in the said subsection (7), to interest to be treated as a charge on income, and to treating part only of a payment of interest as a charge on income.

Computation of income: application of income tax principles.

11.—(1) Except as otherwise provided by this Act or any other enactment relating to income tax or corporation tax, the amount of any income shall for purposes of corporation tax be computed in accordance with income tax principles, all questions as to the amounts which are or are not to be taken into account as income, or in computing income, or charged to tax as a person's income, or as to the time when any such amount is to be treated as arising, being determined in accordance with income tax law and practice as if accounting periods were years of assessment.

(2) For the purposes of this section “income tax law” means, in relation to any accounting period, the law applying, for the year of assessment in which the period ends, to the charge on individuals of income tax, except that—

(a) it includes also all such enactments of the Income Tax Acts applying for the year 1975-76 as make special provision for companies in relation to matters referred to in subsection (1), and

(b) it does not include such of the enactments of the Income Tax Acts so applying as make special provision for individuals in relation to those matters.

(3) Accordingly for purposes of corporation tax income shall be computed, and the assessment shall be made, under the like Schedules and Cases as apply for purposes of income tax, and in accordance with the provisions applicable to those Schedules and Cases, but (subject to the provisions of this Act) the amounts so computed for the several sources of income, if more than one, together with any amounts to be included in respect of chargeable gains, shall be aggregated to arrive at the total profits.

(4) Nothing in this section shall be taken to mean that income arising in any period is to be computed by reference to any other period (except in so far as this results from apportioning to different parts of a period income of the whole period).

(5) Subject to section 12 and to any enactment applied by this section which expressly authorises such a deduction, no deduction shall be made in computing income from any source—

(a) in respect of dividends or other distributions; nor

(b) in respect of any yearly interest, annuity or other annual payment or any such other payments as are mentioned in section 93 or 433 (2) of the Income Tax Act, 1967 , but not including sums which are, or but for any exemption would be, chargeable under Case V of Schedule D.

(6) Without prejudice to the generality of subsection (1), any provision of the Income Tax Acts (excluding the provisions of Part XXV of the Income Tax Act, 1967 (Temporary Relief from Taxation)), or of any other statute, which confers an exemption from income tax, or which provides for the disregarding of a loss, or which provides for a person to be charged to income tax on any amount (whether expressed to be income or not, and whether an actual amount or not), shall, except as otherwise provided, have the like effect for purposes of corporation tax.

(7) This section shall not have effect so as to apply for the purposes of corporation tax anything in section 76 of the Income Tax Act, 1967 (foreign securities and possessions).

(8) Where, by virtue of this section or otherwise, any enactment applies both to income tax and to corporation tax, it shall not be affected in its operation by the fact that they are distinct taxes but, so far as is consistent with the Corporation Tax Acts, shall apply in relation to income tax and corporation tax as if they were one tax, so that, in particular, a matter which in a case involving two individuals is relevant for both of them in relation to income tax shall in a like case involving an individual and a company be relevant for him in relation to that tax and for it in relation to corporation tax; and for that purpose in any such enactment references to a relief from or charge to income tax, or to a specified provision of the Income Tax Acts shall, in the absence of or subject to any express adaptation, be construed as being or including a reference to any corresponding relief from or charge to corporation tax, or to any corresponding provision of the Corporation Tax Acts.

Miscellaneous special rules for computation of income.

12.—(1) For purposes of corporation tax, income tax law as applied by section 11 shall have effect subject to the following subsections.

(2) Where a company begins or ceases to carry on a trade, or to be within the charge to corporation tax in respect of a trade, the company's income shall be computed as if that were the commencement or, as the case may be, discontinuance of the trade, whether or not the trade is in fact commenced or discontinued:

Provided that where any provision of the Income Tax Acts is applied for corporation tax by this Act, this subsection shall not have effect for any purpose of that provision if under any enactment a trade is not to be treated as permanently discontinued for the corresponding income tax purpose.

(3) In computing income from a trade section 11 (5) (b) shall not prevent the deduction of yearly interest.

(4) In computing a company's income for any accounting period from the letting of rights to work minerals in the State there may be deducted any sums disbursed by the company wholly, exclusively and necessarily as expenses of management or supervision of those minerals in that period:

Provided that any enactments restricting the relief from income tax that might be given under section 553 of the Income Tax Act, 1967 (allowance to owner of mineral rights for expenses), shall apply to restrict in like manner the deductions that may be made under this subsection.

(5) Where a company is chargeable to corporation tax in respect of a trade under Case III of Schedule D, the income from the trade shall be computed in accordance with the provisions applicable to Case I of Schedule D.

(6) The amount of any income arising from securities and possessions in any place outside the State shall be treated as reduced (where such a deduction cannot be made under, and is not forbidden by, any provision of the Income Tax Acts applied by this Act) by any sum which has been paid in respect of income tax in the place where the income has arisen.

(7) Paragraphs (e) and (f) of Case III of Schedule D in section 53 (1) of the Income Tax Act, 1967 , shall for purposes of corporation tax extend to companies not resident in the State, so far as those companies are chargeable to tax on income of descriptions which, in the case of companies resident in the State, fall within those paragraphs (but without prejudice to any provision of the Income Tax Acts specially exempting non-residents from income tax on any particular description of income).

(8) The provisions of section 64 (1) of the Income Tax Act, 1967 , shall not apply in computing income from a trade.

Computation of chargeable gains.

13.—(1) Subject to the provisions of this section, the amount to be included in respect of chargeable gains in a company's total profits for any accounting period shall be the following amount reduced by 48 per cent. thereof, namely, the total amount of chargeable gains accruing to the company in the accounting period after deducting (a) any allowable losses accruing to the company in the accounting period and (b) any allowable losses previously accruing to the company while it has been within the charge to corporation tax so far as they have not been allowed as a deduction from chargeable gains accruing in any previous accounting period.

(2) Except as otherwise provided by this Act, the chargeable gains and allowable losses shall for purposes of corporation tax be computed in accordance with the principles applying for capital gains tax, all questions as to the amounts which are or are not to be taken into account as chargeable gains or as allowable losses, or in computing gains or losses, or charged to tax as a person's gain, or as to the time when any such amount is to be treated as accruing being determined in accordance with the provisions relating to capital gains tax as if accounting periods were years of assessment.

(3) Subject to subsection (5), where the enactments relating to capital gains tax contain any reference to income tax or to the Income Tax Acts the reference shall, in relation to a company be construed as a reference to corporation tax or to the Corporation Tax Acts; but—

(a) this subsection shall not affect the reference to income tax in paragraph 4 (2) of Schedule 1 to the Capital Gains Tax Act, 1975 (exclusion of expenditure by reference to hypothetical income tax),

(b) nothing in this section shall be taken as applying for corporation tax section 6 of the said Act (capital gains accruing to an individual: alternative charge), and

(c) in so far as the said provisions operate by reference to matters of any specified description, account shall for corporation tax be taken of matters of that description which are confined to companies, but not of any which are confined to individuals.

(4) The Capital Gains Tax Act, 1975 , as extended by this section shall not be affected in its operation by the fact that capital gains tax and corporation tax are distinct taxes but, so far as is consistent with this Act, shall apply in relation to capital gains tax and corporation tax on chargeable gains as if they were one tax, so that, in particular, a matter which in a case involving two individuals is relevant for both of them in relation to capital gains tax shall in a like case involving an individual and a company be relevant for him in relation to that tax and for it in relation to corporation tax.

(5) Where assets of a company are vested in a liquidator, this section and the enactments applied by this section shall apply as if the assets were vested in, and the acts of the liquidator in relation to the assets were the acts of, the company (acquisitions from or disposals to him by the company being disregarded accordingly).

Deductions and additions in computation of profits for capital allowances and related charges.

14.—(1) In computing for purposes of corporation tax a company's profits for any accounting period there shall be made in accordance with this section all such deductions and additions as are required to give effect to the provisions of the Income Tax Acts which relate to allowances (including investment allowances) and charges in respect of capital expenditure, as those provisions are applied by this Act.

(2) (a) Allowances and charges which fall to be made for any accounting period in taxing a trade shall be given effect by treating the amount of any allowance as a trading expense of the trade in that period and by treating the amount on which any such charge is to be made as a trading receipt of the trade in that period.

(b) (i) A company to which an allowance under Part XV of the Income Tax Act, 1967 (Initial Allowances for Certain Capital Expenditure on Machinery and Plant and on Industrial Buildings and Structures), or under section 294 (1) (a) of the said Act (allowances for expenditure on dredging) as applied to corporation tax by this Act, falls to be made in taxing a trade for any accounting period may disclaim the allowance by notice in writing given to the inspector not later than two years after the end of that period.

(ii) Any such notice shall be accompanied by a certificate signed by the person by whom the notice is given giving such particulars as show that the allowance would fall to be made if no such notice were given and the amount which would so fall to be made.

(iii) Where notice is given under subparagraph (i) for any accounting period the inspector may make an assessment to corporation tax on the company for that accounting period on the amount, or the further amount, which in his opinion ought to be charged.

(3) Where an allowance falls to be made to a company for any accounting period which is to be given by discharge or repayment of tax or in charging its income under Case V of Schedule D, and is to be available primarily against a specified class of income, it shall, as far as may be, be given effect by deducting the amount of the allowance from any income of the period, being income of the specified class.

(4) Balancing charges for any accounting period not falling to be made in taxing a trade shall, notwithstanding any provision for them to be made under Case IV or V of Schedule D, as the case may be, be given effect by treating the amount on which the charge is to be made as income of the same class as that against which the corresponding allowances are available or primarily available.

(5) Where an allowance which is to be made for any accounting period by way of discharge or repayment of tax, or in charging income under Case V of Schedule D, as the case may be, cannot be given full effect under subsection (3) in that period by reason of a want or deficiency of income of the relevant class, then (so long as the company remains within the charge to tax) the amount unallowed shall be carried forward to the succeeding accounting period, except in so far as effect is given to it under subsection (6); and the amount so carried forward shall be treated for purposes of this section, including any further application of this subsection, as the amount of a corresponding allowance for that period.

(6) Where an allowance (other than an allowance which is carried forward from an earlier accounting period) which is to be made for any accounting period by way of discharge or repayment of tax, or in charging income under Case V of Schedule D as the case may be, and which is available primarily against income of a specified class cannot be given full effect under subsection (3) in that period by reason of a want or deficiency of income of that class, the company may claim that effect shall be given to the allowance against the profits (of whatever description) of that accounting period and, if the company was then within the charge to tax, of preceding accounting periods ending within the time specified in subsection (7); and, subject to that subsection and to any relief for earlier allowances or for losses, the profits of any of those accounting periods shall then be treated as reduced by the amount unallowed under subsection (3), or by so much of that amount as cannot be given effect under this subsection against profits of a later accounting period.

(7) The time referred to in subsection (6) is a time immediately preceding the accounting period first mentioned in subsection (6) equal in length to the accounting period for which the allowance falls to be made; but the amount or aggregate amount of the reduction which may be made under that subsection in the profits of an accounting period falling partly before that time shall not, with the amount of any reduction falling to be made therein under any corresponding provision of this Act relating to losses, exceed a part of those profits proportionate to the part of the period falling within that time.

(8) A claim under subsection (6) shall be made by notice in writing given to the inspector not later than two years from the end of the accounting period in which an allowance cannot be given full effect under subsection (3).

Deduction of management expenses of Investment companies (including savings banks).

15.—(1) In computing for purposes of corporation tax the total profits for any accounting period of an investment company resident in the State there shall be deducted any sums disbursed on or after the 6th day of April, 1976, as expenses of management (including commissions) for that period, except any such expenses as are deductible in computing income for the purposes of Case V of Schedule D:

Provided that there shall be deducted from the amount treated as expenses of management the amount of any income derived from sources not charged to tax, other than franked investment income.

(2) Where in any accounting period of an investment company the expenses of management deductible under subsection (1), together with any charges on income paid in the accounting period wholly and exclusively for purposes of the company's business, exceed the amount of the profits from which they are deductible, the excess shall be carried forward to the succeeding accounting period; and the amount so carried forward shall be treated for purposes of this section (other than subsection (4)), including any further application of this subsection, as if it had been disbursed as expenses of management for that accounting period.

(3) For the purposes of subsections (1) and (2) there shall be added to a company's expenses of management in any accounting period the amount of any allowances falling to be made to the company for that period by virtue of section 37 of the Finance Act, 1968 (relief for payments in respect of redundancy), or section 16 of the Finance Act, 1972 (certain approved occupational pension schemes: exemptions and reliefs).

(4) Where an investment company proves that, in any accounting period, it has received franked investment income, it shall be entitled to claim payment of the amount of the tax credit comprised in so much of that income as is equal to the amount of any excess for the accounting period computed under subsection (2) but excluding any amount carried forward from a previous accounting period:

Provided that any excess in respect of which relief is given under this subsection shall not be carried forward under subsection (2).

(5) Notice of any claim under subsection (4), together with the particulars thereof, shall be given in writing to the inspector within two years after the end of the accounting period in respect of which the claim is made, and where the inspector objects to such claim the Appeal Commissioners shall hear and determine the same in like manner as in the case of an appeal to them against an assessment under Schedule D, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

(6) For purposes of this section and of other provisions of this Act relating to expenses of management “investment company” means any company whose business consists wholly or mainly in the making of investments, and the principal part of whose income is derived therefrom, but includes any savings bank or other bank for savings.

Relief for trading losses other than terminal losses.

16.—(1) Where in any accounting period a company carrying on a trade incurs a loss in the trade, the company may make a claim requiring that the loss be set off for purposes of corporation tax against any trading income from the trade in succeeding accounting periods; and (so long as the company continues to carry on the trade) its trading income from the trade in any succeeding accounting period shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot, on that claim or on a claim (if made) under subsection (2), be relieved against income or profits of an earlier accounting period.

(2) Where in any accounting period a company carrying on a trade incurs a loss in the trade, then (subject to subsection (4)) the company may make a claim requiring that the loss be set off for purposes of corporation tax against profits (of whatever description) of that accounting period and, if the company was then carrying on the trade and the claim so requires, of preceding accounting periods ending within the time specified in subsection (3); and, subject to that subsection and to any relief for an earlier loss, the profits of any of those periods shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection against profits of a later accounting period.

(3) The time referred to in subsection (2) is a time immediately preceding the accounting period first mentioned in subsection (2) equal in length to the accounting period in which the loss is incurred; but the amount of the reduction which may be made under that subsection in the profits of an accounting period falling partly before that time shall not exceed a part of those profits proportionate to the part of the period falling within that time.

(4) Subsection (2) shall not apply to trades falling within Case III of Schedule D.

(5) The amount of a loss incurred in a trade in an accounting period shall be computed for purposes of this section in like manner as trading income from the trade in that period would have been computed.

(6) For purposes of this section “trading income” means, in relation to any trade, the income which falls or would fall to be included in respect of the trade in the total profits of the company; but where in an accounting period a company incurs a loss in a trade in respect of which it is within the charge to corporation tax under Case I or III of Schedule D, and in any later accounting period to which the loss or any part of it is carried forward under subsection (1) relief in respect thereof cannot be given, or cannot wholly be given, because the amount of the trading income of the trade is insufficient, any interest or dividends on investments which would fall to be taken into account as trading receipts in computing that trading income but for the fact that they have been subjected to tax under other provisions shall be treated for purposes of subsection (1) as if they were trading income of the trade.

(7) Where in an accounting period the charges on income paid by a company—

(a) exceed the amount of the profits against which they are deductible, and

(b) include payments made wholly and exclusively for the purposes of a trade carried on by the company,

then, up to the amount of that excess or of those payments, whichever is the less, the charges on income so paid shall in computing a loss for purposes of subsection (1) be deductible as if they were trading expenses of the trade.

(8) In this section references to a company carrying on a trade refer to the company carrying it on so as to be within the charge to corporation tax in respect of it.

(9) Where—

(a) a claim is made under subsection (2), and

(b) the claim relates to a loss (arrived at by apportionment if necessary) incurred in a trade in the twelve months immediately preceding the date on which the company ceases to carry on such trade, and

(c) the claim is a claim to have any part of the loss set off against profits of an accounting period preceding the accounting period in which the loss was incurred,

then, such set-off shall not apply so as to reduce the amount on which the company is chargeable to corporation tax for such preceding accounting period to an amount less than an amount the corporation tax chargeable on which for that preceding accounting period is a sum equal to the excess of the tax credits comprised in the franked payments made by the company in that preceding accounting period over the tax credits comprised in the franked investment income received by the company in the said preceding accounting period.

(10) A claim under subsection (2) shall be made within two years from the end of the accounting period in which the loss is incurred.

Restriction of relief for losses in farming or market gardening.

17.—(1) In this section—

“prior three years” in relation to a loss incurred in an accounting period, means the last three years before the beginning of the accounting period;

“prior period of loss” means the prior three years, or, if losses were incurred in successive accounting periods amounting in all to a period longer than three years (and ending when the prior three years end), that longer period;

“farming” has the same meaning as in subsection (1) (inserted by the Finance Act, 1975 ) of section 13 of the Finance Act, 1974 (taxation of farming profits);

“market gardening” has the same meaning as in section 54 of the Income Tax Act, 1967 (market gardening).

(2) (a) Any loss incurred in a trade of farming or market gardening shall not be available for relief under section 16 (2) unless it is shown that, for the accounting period in which the loss is claimed to have been incurred, the trade was being carried on on a commercial basis and with a view to the realisation of profits in the trade.

(b) Without prejudice to paragraph (a), any loss incurred in any accounting period in a trade of farming or market gardening shall not be available for relief under section 16 (2), if a loss, computed without regard to capital allowances, was incurred in carrying on that trade in that accounting period, and in each of the accounting periods wholly or partly comprised in the prior three years; and for the purpose of this paragraph “loss computed without regard to capital allowances” means a loss ascertained in accordance with the rules of Case I of Schedule D, but so that, notwithstanding section 14, no account shall be taken of any allowance or charge which otherwise would be taken into account under that section.

(c) For the purposes of this section, the fact that a trade of farming or market gardening was being carried on at any time so as to afford a reasonable expectation of profit shall be conclusive evidence that it was then being carried on with a view to the realisation of profits.

(d) This subsection shall not restrict relief for any loss if it is shown by the claimant company that the whole of its farming or market gardening activities in the year next following the prior three years are of such a nature, and carried on in such a way, as would have justified a reasonable expectation of the realisation of profits in the future if they had been undertaken by a competent farmer or market gardener, but that, if that farmer or market gardener had undertaken those activities at the beginning of the prior period of loss, he could not reasonably have expected the activities to become profitable until after the end of the year next following the prior period of loss.

(e) This subsection shall not restrict relief where the carrying on of the trade forms part of and is ancillary to a larger trading undertaking.

(3) Subsection (2) shall not restrict relief for any loss if the trade was set up and commenced within the prior three years, and, for the purposes of this subsection, a trade shall be treated as discontinued, and a new trade set up, in any event which under any of the provisions of the Tax Acts is to be treated as equivalent to the permanent discontinuance or setting up of a trade:

Provided that a trade shall not be treated as discontinued if under section 20 (2) it is not to be treated as discontinued for the purpose of capital allowances and charges.

(4) Where a trade of farming or market gardening is or falls to be treated as being carried on for a part only of an accounting period by reason of its being set up and commenced, or discontinued, or both, in that accounting period, subsection (2) shall have effect in relation to that trade as regards that part of that accounting period.

(5) Where at any time there has been a change in the persons engaged in carrying on a trade of farming or market gardening, this section shall, notwithstanding subsection (3), apply to any person who was engaged in carrying on the trade immediately before and immediately after the change as if the trade were the same before and after without any discontinuance, and as if a person and another person with whom he is connected were the same person.

In this subsection any question as to whether persons are connected shall be determined in accordance with the provisions of section 157 and accordingly relief from corporation tax may be restricted under this section by reference to losses some of which are incurred in years of assessment and some, computed without regard to capital allowances, are incurred in a company's accounting periods.

Relief for terminal loss in a trade.

18.—(1) Where a company ceasing to carry on a trade has in any accounting period falling wholly or partly within the previous twelve months incurred a loss in the trade, the company may claim to set the loss off for purposes of corporation tax against trading income from the trade in accounting periods falling wholly or partly within the three years preceding those twelve months (or within any less period throughout which the company has carried on the trade); and, subject to the following subsections and to any relief for earlier losses, the trading income of any of those periods shall be then treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection against income of a later accounting period:

Provided that relief shall not be given under this subsection in respect of any loss in so far as the loss has been or can be otherwise taken into account so as to reduce or relieve any charge to tax.

(2) Where a loss is incurred in an accounting period falling partly outside the twelve months mentioned in subsection (1), relief shall be given under that subsection in respect of a part only of that loss proportionate to the part of the period falling within those twelve months; and the amount of the reduction which may be made under that subsection in the trading income of an accounting period falling partly outside the three years there mentioned shall not exceed a part of that income proportionate to the part of the period falling within those three years.

(3) Section 16 (5) to (8) shall apply for purposes of this section as they apply for purposes of section 16 (1); and relief shall not be given under this section in respect of a loss incurred in a trade so as to interfere with any relief under section 10 in respect of payments made wholly and exclusively for purposes of that trade.

(4) When the tax credits comprised in the total amount of the franked payments made by a company in an accounting period exceed the tax credits comprised in the total amount of the franked investment income received by the company in that accounting period, then, the set-off of loss provided for by subsection (1) shall not apply so as to reduce the amount on which the company is chargeable to corporation tax to an amount less than an amount the corporation tax chargeable on which for that period is a sum equal to the excess:

Provided that where the accounting period falls partly outside the three years mentioned in subsection (1) the excess of the tax credits to be taken into account for the purpose of this subsection shall be the part of the excess for the whole of the accounting period proportionate to the part of the accounting period which falls within the three years mentioned in subsection (1).

Losses in transactions from which income would be chargeable under Case IV or V of Schedule D.

19.—(1) Where in any accounting period a company incurs a loss in a transaction in respect of which the company is within the charge to corporation tax under Case IV of Schedule D, the company may claim to set the loss off against the amount of any income arising from transactions in respect of which the company is assessed to corporation tax under that Case for the same or any subsequent accounting period; and the company's income in any accounting period from such transactions shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this section against income of an earlier accounting period:

Provided that where a company sustains a loss in a transaction which, if profit had arisen from it, would be chargeable to tax by virtue of section 55 (1) or (2) of the Finance Act, 1974 (transactions in certificates of deposit), then, if the company is chargeable to tax in respect of the interest payable on the amount of money the right to which has been disposed of, the amount of that interest shall be included in the amounts against which the company may claim to set off the amount of its loss under this subsection.

(2) Where in any accounting period a company is within the charge to corporation tax under Case V of Schedule D and the aggregate of the deficiencies, computed in accordance with section 81 (4) of the Income Tax Act, 1967 (taxation of rents under short leases), exceeds the aggregate of the surpluses as so computed the excess may, on a claim being made in that behalf, be deducted from or set off, as far as may be, against the amount of any income in respect of which the company is assessed to corporation tax under the said Case V for previous accounting periods ending within the time specified in subsection (3); and, subject to that subsection and to any relief for an earlier excess of deficiencies, the said income of any of those periods shall then be treated as reduced, as far as may be, by the amount of the excess, and any portion of the excess for which relief is not so given shall be set off against the income in respect of which the company is assessed to corporation tax under Case V of Schedule D for any subsequent accounting period:

Provided that any relief under this subsection by way of carrying forward any portion of such excess shall be given as far as possible from the first subsequent assessment and, so far as it cannot be so given, then from the next assessment and so on.

(3) The time referred to in subsection (2) is a time immediately preceding the accounting period first mentioned in subsection (2) equal in length to the accounting period in which the excess of deficiencies occurred; but the amount of the reduction which may be made under that subsection in the income of an accounting period falling partly before that time shall not exceed a part of that income proportionate to the part of the period falling within that time.

(4) A claim under subsection (2) shall be made within two years from the end of the accounting period in which the excess of deficiencies was incurred.

Company reconstructions without change of ownership.

20.—(1) Where on or after the 6th day of April, 1976, on a company (“the predecessor”) ceasing to carry on a trade, another company (“the successor”) begins to carry it on, and—

(a) on or at any time within two years after that event the trade or an interest amounting to not less than a three-fourths share in it belongs to the same persons as the trade or such an interest belonged to at some time within a year before that event; and

(b) the trade is not, within the period taken for the comparison under paragraph (a), carried on otherwise than by a company which is within the charge to tax in respect of it;

then this Act shall have effect subject to subsections (2) to (5).

In paragraphs (a) and (b) references to the trade shall apply also to any other trade of which the activities comprise the activities of the first-mentioned trade.

(2) The trade shall not be treated as permanently discontinued nor a new trade as set up and commenced for the purpose of the allowances and charges provided for by section 14; but there shall be made to or on the successor in accordance with that section all such allowances and charges as would, if the predecessor had continued to carry on the trade, have fallen to be made to or on it, and the amount of any such allowance or charge shall be computed as if the successor had been carrying on the trade since the predecessor began to do so and as if everything done to or by the predecessor had been done to or by the successor (but so that no sale or transfer which on the transfer of the trade is made to the successor by the predecessor of any assets in use for the purpose of the trade shall be treated as giving rise to any such allowance or charge).

(3) The predecessor shall not be entitled to relief under section 18, except as provided by subsection (5) of this section; and, subject to any claim made by the predecessor under section 16 (2), the successor shall be entitled to relief under section 16 (1), as for a loss sustained by the successor in carrying on the trade, for any amount for which the predecessor would have been entitled to claim relief if it had continued to carry on the trade.

(4) Any securities within the meaning of section 367 of the Income Tax Act, 1967 (purchase and sale of securities), which at the time when the predecessor ceases to carry on the trade form part of the trading stock belonging to the trade shall be treated for purposes of that section as having been sold at that time in the open market by the predecessor and as having been purchased at that time in the open market by the successor.

(5) On the successor ceasing to carry on the trade—

(a) if the successor does so within four years of succeeding to it, any relief which might be given to the successor under section 18 on its ceasing to carry on the trade may, so far as it cannot be given to the successor, be given to the predecessor as if the predecessor had incurred the loss (including any amount treated as a loss under section 18 (3)); and

(b) if the successor ceases to carry on the trade within one year of succeeding to it, relief may be given to the predecessor under section 18 in respect of any loss incurred by it (or amount treated as such a loss under section 18 (3));

but for the purposes of section 18, as it applies by virtue of this subsection to the giving of relief to the predecessor, the predecessor shall be treated as ceasing to carry on the trade when the successor does so.

(6) Where the successor ceases to carry on the trade within the period taken for the comparison under subsection (1) (a) and, on its doing so a third company begins to carry on the trade, then no relief shall be given to the predecessor by virtue of subsection (5) by reference to that event, but subject to that subsections (2) to (5) shall apply both in relation to that event (together with the new predecessor and successor) and to the earlier event (together with the original predecessor and successor), but so that—

(a) in relation to the earlier event “successor” shall include the successor at either event; and

(b) in relation to the later event “predecessor” shall include the predecessor at either event;

and if the conditions of this subsection are thereafter again satisfied, it shall apply again in like manner.

(7) Where, on a company ceasing to carry on a trade, another company begins to carry on the activities of the trade as part of its trade, then that part of the trade carried on by the successor shall be treated for the purposes of this section as a separate trade, if the effect of so treating it is that subsection (1) or (6) has effect on that event in relation to that separate trade; and where, on a company ceasing to carry on part of a trade, another company begins to carry on the activities of that part as its trade or part of its trade, the predecessor shall for purposes of this section be treated as having carried on that part of its trade as a separate trade if the effect of so treating it is that subsection (1) or (6) has effect on that event in relation to that separate trade.

(8) Where under subsection (7) any activities of a company's trade fall, on the company ceasing or beginning to carry them on, to be treated as a separate trade, any necessary apportionment shall be made of receipts or expenses.

(9) Where, by virtue of subsection (8), any sum falls to be apportioned and, at the time of the apportionment, it appears that it is material as respects the liability to tax (for whatever period) of two or more companies, any question which arises as to the manner in which the sum is to be apportioned shall be determined, for the purposes of the tax of all those companies, by the Appeal Commissioners, who shall determine the question in like manner as if it were an appeal against an assessment, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications:

Provided that all the said companies shall be entitled to appear and be heard by the Appeal Commissioners or to make representations to them in writing.

(10) Any relief obtainable under this section by way of discharge or repayment of tax shall be given on the making of a claim.

(11) For the purposes of this section—

(a) a trade carried on by two or more persons shall be treated as belonging to them in the shares in which they are entitled to the profits of the trade;

(b) a trade or interest therein belonging to any person as trustee (otherwise than for charitable or public purposes) shall be treated as belonging to the persons for the time being entitled to the income under the trust;

(c) a trade or interest therein belonging to a company shall, where the result of so doing is that subsection (1) or (6) has effect in relation to an event, be treated in any of the ways permitted by subsection (12).

(12) For the purposes of this section, a trade or interest therein which belongs to a company engaged in carrying it on may be regarded—

(a) as belonging to the persons owning the ordinary share capital of the company and as belonging to them in proportion to the amount of their holdings of that capital, or

(b) in the case of a company which is a subsidiary company, as belonging to a company which is its parent company, or as belonging to the persons owning the ordinary share capital of that parent company, and as belonging to them in proportion to the amount of their holdings of that capital,

and any ordinary share capital owned by a company may, if any person or body of persons has the power to secure by means of the holding of shares or the possession of voting power in or in relation to any company, or by virtue of any power conferred by the articles of association or other document regulating any company, that the affairs of the company owning the share capital are conducted in accordance with his or their wishes, be regarded as owned by the person or body of persons having that power.

(13) For the purposes of subsection (12)—

(a) references to ownership shall be construed as references to beneficial ownership;

(b) a company shall be deemed to be a subsidiary of another company if and so long as not less than 75 per cent. of its ordinary share capital is owned by that other company, whether directly or through another company or other companies, or partly directly and partly through another company or other companies;

(c) the amount of ordinary share capital of one company owned by a second company through another company or other companies, or partly directly and partly through another company or other companies, shall be determined in accordance with section 156 (5) to (10) (subsidiaries); and

(d) where any company is a subsidiary of another company, that other company shall be considered as its parent company unless both are subsidiaries of a third company.

(14) In determining, for the purposes of this section, whether or to what extent a trade belongs at different times to the same persons, persons who are relatives of one another and the persons from time to time entitled to the income under any trust shall respectively be treated as a single person, and for this purpose “relative” means husband, wife, ancestor, lineal descendant, brother or sister.

Application and adaptation of Income Tax Acts as to capital allowances.

21.—(1) Except in so far as this Act otherwise provides—

(a) Parts XIII to XVIII of the Income Tax Act, 1967 .

(b) section 11 of the Finance Act, 1967 ,

(c) section 4 of the Finance Act, 1968 ,

(d) section 4 of the Finance Act, 1969 ,

(e) section 14 of the Finance Act, 1970 ,

(f) sections 22 , 23 , 24 and 26 of the Finance Act, 1971 ,

(g) sections 9 and 25 of the Finance Act, 1973 ,

(h) sections 1 to 7 of the Finance (Taxation of Profits of Certain Mines) Act, 1974 ,

(i) sections 22 and 25 of the Finance Act, 1974 , and

(j) any other provisions of the Income Tax Acts relating to the making of allowances or charges under or in accordance with those Parts and sections,

shall apply equally for purposes of corporation tax and for purposes of income tax and to that intent those Parts and sections shall be amended in accordance with the First Schedule.

(2) Sections 241 (3) (4) (9), 246 (3), 249 , 251 (5), 254 (6), 262 , 295 , 296 , 297 and 305 (4) of the Income Tax Act, 1967 , sections 22 (4) and 23 of the Finance Act, 1971 , and section 22 (5) (6) (7) of the Finance Act, 1974 , shall not apply for purposes of corporation tax.

(3) For purposes of corporation tax the right to an allowance or liability to a charge for an accounting period, and the rate or amount of any such allowance or charge, shall be determined under the provisions referred to in subsection (1) by applying the law in force for the year of assessment in which the accounting period ends.

(4) Where a company not resident in the State is within the charge to corporation tax in respect of one source of income and to income tax in respect of another source, then in applying the provisions referred to in subsection (1) allowances related to any source of income shall be given effect against income chargeable to the same tax as is chargeable on income from that source.

Double taxation relief.

22.—(1) Subject to any express amendments made by this Act, Part XXII of the Income Tax Act, 1967 (Relief from Double Taxation), together with any other enactment relating or referring to double taxation relief, and (except in so far as arrangements made after the passing of this Act provide otherwise) any arrangements made under section 361 of the Income Tax Act, 1967 (agreements for relief from double taxation), in relation to corporation profits tax, shall have effect in relation to corporation tax and income chargeable thereto as they are expressed to have effect in relation to corporation profits tax and profits chargeable thereto, and not as they have effect in relation to income tax:

Provided that this section shall not affect the operation, as they are applied to corporation tax by this Act, of section 361 (7) of the Income Tax Act, 1967 , and paragraph 13 of Schedule 10 to that Act (claims for credit for foreign tax).

(2) The necessary apportionments as respects corporation tax shall be made where arrangements having the force of law by virtue of section 361 of the Income Tax Act, 1967 (as applied to corporation tax by subsection (1)) apply to the unexpired portion of an accounting period current at a date specified by the arrangements, and any such apportionment shall be made in proportion to the number of months or fractions of months in the part of the relevant accounting period before the said date and in the remaining part thereof respectively.

Double taxation relief: supplementary.

23.—(1) The provisions applied to corporation tax in respect of income by section 22 shall apply also to corporation tax in respect of chargeable gains, and for that purpose—

(a) references in those provisions to income shall be construed as references to chargeable gains; and

(b) references in those provisions to taxes of a similar character, or corresponding, to corporation tax shall be construed as references to taxes on chargeable gains;

and section 361 (7) (8) of the Income Tax Act, 1967 , shall have effect accordingly.

(2) For the purposes of paragraph 4 of Schedule 10 to the Income Tax Act, 1967 (which, as applied to corporation tax by section 22, limits the credit for foreign tax allowable against corporation tax in respect of any income to the corporation tax attributable to that income and, by virtue of subsection (1), applies similarly in relation to chargeable gains), the corporation tax attributable to any income or gain (“the relevant income or gain”) shall be determined in accordance with subsections (3) and (4).

(3) Subject to subsection (4), the amount of corporation tax attributable to the relevant income or gain shall be treated as equal to such proportion of the amount of that income or gain as corresponds to the rate of corporation tax payable by the company (before any credit for double taxation relief) on its income or chargeable gains for the accounting period in which the income arises or the gain accrues (“the relevant accounting period”).

(4) Where in the relevant accounting period there is any deduction to be made for charges on income, expenses of management or other amounts which can be deducted from or set off against or treated as reducing profits of more than one description—

(a) the company may for the purposes of this section allocate the deduction in such amounts and to such of its profits for that period as it thinks fit; and

(b) the amount of the relevant income or gain shall be treated for the purposes of subsection (3) as reduced or, as the case may be, extinguished by so much (if any) of the deduction as is allocated to it.

Franked investment income and franked payment.

24.—(1) Income of a company resident in the State which consists of a distribution in respect of which the company is entitled to a tax credit (and which accordingly represents income equal to the aggregate of the amount or value of the distribution and the amount of that credit) is in this Act referred to as “franked investment income” of the company.

(2) The sum of the amount or value of a distribution made by a company resident in the State and the amount of the tax credit in respect of it is in this Act referred to as “a franked payment”, and references to any accounting or other period in which a franked payment is made are references to the period in which the distribution in question is made.

Set-off of losses etc. against franked investment income.

25.—(1) Where in any accounting period a company receives franked investment income the company may on making a claim for the purpose require that the franked investment income or part thereof shall for all or any of the purposes mentioned in subsection (2) be treated as if it were a like amount of profits chargeable to corporation tax, and subject to subsections (4) and (5) it shall be entitled to have paid to it the value of the tax credit comprised in the income or in the part thereof so treated.

(2) The purposes for which a claim may be made under subsection (1) are those of—

(a) the setting of trading losses against total profits under section 16 (2);

(b) the deduction of charges on income under section 10;

(c) the setting of certain capital allowances against total profits under section 14 (6).

(3) Where a company makes a claim under this section for any accounting period, the reduction falling to be made in profits of that accounting period shall be made as far as may be in profits chargeable to corporation tax rather than in the amount treated as profits so chargeable under this section.

(4) Where a claim under this section relates to section 16 (2) or 14 (6) and an accounting period of the company falls partly before and partly within the time mentioned in that subsection, then—

(a) the restriction imposed by section 16 (3) or by section 14 (6) on the amount of the relief shall be applied only to any relief to be given apart from this section, and shall be applied without regard to any amount treated as profits of the accounting period under this section; but

(b) relief under this section shall be given only against a part of the amount so treated proportionate to the part of the accounting period falling within the said time.

(5) Where a company has obtained payment of a tax credit on a claim under this section or under section 15 (4) and apart from such a claim any amount could be set off against or deducted from profits of a subsequent accounting period, then the company may claim that the amount shall be so set off or deducted but in that case to the extent to which the amount was used to obtain payment of a tax credit, such tax credit shall be recoverable from the company by an assessment on it to income tax under Case IV of Schedule D for the year of assessment in which the subsequent accounting period ends on an amount the income tax on which at the standard rate for the said year of assessment is equal to the amount of the said tax credit and this assessment shall be made not later than two years from the end of the subsequent accounting period:

Provided that relief under this subsection shall not be given against the profits of an accounting period if such relief could be given against the profits of an earlier accounting period.

(6) The time limits for claims under this section shall be as follows—

(a) if and so far as the purpose for which the claim is made is the setting of trading losses against total profits under section 16 (2), two years from the end of the accounting period in which the trading loss is incurred;

(b) if and so far as the purpose for which the claim is made is the deduction of charges on income under section 10 or the setting of capital allowances against total profits under section 14 (6), two years from the end of the accounting period in which the charges were paid or the capital allowances fell to be made;

(c) if the claim is a claim under subsection (5), two years from the end of the accounting period in respect of which the claim is made.

(7) Any amount on which by virtue of this section income tax is charged on a company by an assessment under Case IV of Schedule D shall not be regarded as income of the company for any purpose of the Tax Acts.

Set-off of loss brought forward or terminal loss against franked investment income in the case of financial concerns.

26.—(1) Where in any accounting period a company receives franked investment income, the company, instead of or in addition to making a claim under section 25, may on making a claim for the purpose require that the franked investment income shall be taken into account for relief under section 16 (1) or 18, up to the amount of such income received in the accounting period which, if chargeable to corporation tax, would have been so taken into account by virtue of section 16 (6); and (subject to the restriction to the said amount of franked investment income) the following subsections shall have effect where the company makes a claim under this section for any accounting period.

(2) The amount to which the claim relates shall for the purposes of the claim be treated as trading income of the accounting period.

(3) The reduction falling to be made in trading income of an accounting period shall be made as far as may be in trading income chargeable to corporation tax rather than in the amount treated as trading income so chargeable under this section:

Provided that where the claim is made under section 18—

(a) the loss in trade shall be set primarily against income chargeable to corporation tax (exclusive of income so treated as chargeable by this section) for the accounting periods referred to in section 18 (1) and the set-off of loss against franked investment income provided for by this section shall apply to the balance only of such loss which has not been set off under the provisions of section 18 (1); so that the set-off against franked investment income of such balance of loss as is referred to above shall be effected in a later rather than an earlier accounting period falling within the three years mentioned in section 18 (1); and

(b) where the aggregate of the tax credits comprised in the total amount of the franked investment income of an accounting period exceeds the aggregate of the tax credits comprised in the franked payments made in that accounting period, then the payment of tax credit to the company shall not exceed a sum equal to the excess; and for this purpose when the accounting period falls partly outside the three years mentioned in section 18 (1) the said excess shall be the part of the excess for the whole of the accounting period proportionate to the part of the accounting period which falls within the said three years.

(4) Where a company has obtained payment to it of a tax credit by virtue of this section on a claim under section 16 (1) and apart from such a claim a loss could be set off against or deducted from profits of a subsequent accounting period, then the company may claim that the loss shall be so set off or deducted but, in that case, to the extent to which the loss was used to obtain payment of a tax credit, such tax credit shall be recovered from the company by an assessment on it to income tax under Case IV of Schedule D for the year of assessment in which the subsequent accounting period ends on an amount the income tax on which at the standard rate for the said year of assessment is equal to the amount of the said tax credit and this assessment shall be made not later than two years from the end of the subsequent accounting period.

(5) If the claim relates to section 18 and an accounting period of the company falls partly outside the three years mentioned in subsection (1) of that section, then—

(a) the restriction imposed by subsection (2) of that section on the amount of the reduction that may be made in the trading income of that period shall be applied only to any relief to be given apart from this section, and shall be applied without regard to any amount treated as trading income of the period by virtue of this section, but

(b) relief under this section shall be given only against a part of the amount so treated proportionate to the part of the accounting period falling within the three years in question.

(6) Any amount on which by virtue of this section income tax is charged on a company by an assessment under Case IV of Schedule D shall not be regarded as income of the company for any purpose of the Tax Acts.

Change in ownership of company: disallowance of trading losses.

27.—(1) If—

(a) within any period of three years there is both a change in the ownership of a company and (either earlier or later in that period, or at the same time) a major change in the nature or conduct of a trade carried on by the company, or

(b) at any time after the scale of the activities in a trade carried on by a company has become small or negligible, and before any considerable revival of the trade, there is a change in the ownership of the company,

no relief shall be given—

(i) under section 16 by setting a loss incurred by the company in an accounting period beginning before the change of ownership against any income or other profits of an accounting period ending after the change of ownership; nor

(ii) under section 182 (relief in respect of unrelieved losses etc. carried forward from the year 1975-76) or 184 (relief in respect of corporation profits tax losses) against corporation tax payable for any accounting period ending after the change of ownership.

(2) In applying this section to the accounting period in which the change of ownership occurs, the part ending with the change of ownership, and the part after, shall be treated as two separate accounting periods, and the profits or losses of the accounting period shall be apportioned to the two parts.

The apportionment shall be on a time basis according to the respective lengths of those parts except that, if it appears that that method would work unreasonably or unjustly, such other method shall be used as appears just and reasonable.

(3) In subsection (1) “major change in the nature or conduct of a trade” includes—

(a) a major change in the type of property dealt in, or services or facilities provided, in the trade, or

(b) a major change in customers, outlets or markets of the trade,

and this section applies even if the change is the result of a gradual process which began outside the period of three years mentioned in subsection (1) (a).

(4) In relation to any relief available under section 20, subsection (1) shall apply as if any loss sustained by a predecessor company had been sustained by a successor company and as if the references to a trade included references to the trade as carried on by a predecessor company.

(5) Where relief in respect of a company's losses has been restricted under this section then, notwithstanding section 304 (6) of the Income Tax Act, 1967 (provisions as to interpretation for purposes of Part XVI of that Act), in applying the provisions of Part XVI of that Act (Annual Allowances for Certain Capital Expenditure) in relation to balancing charges to the company by reference to any event after the change of ownership of the company, any allowance or deduction falling to be made in taxing the company's trade for any chargeable period before the change of ownership shall be disregarded unless the profits or gains of that chargeable period or of any subsequent chargeable period before the change of ownership were sufficient to give effect to the allowance or deduction.

In applying this subsection it shall be assumed that any profits or gains are applied in giving effect to any such allowance or deduction in preference to being set off against any loss which is not attributable to such an allowance or deduction.

(6) Where the operation of this section depends on circumstances or events at a time after the change of ownership (but not more than three years after), an assessment to give effect to the provisions of this section shall not be out of time if made within ten years from that time, or the latest of those times.

(7) Notwithstanding the repeal by this Act of section 39 of the Finance Act, 1973 , the provisions of the Fifth Schedule to that Act (Disallowance of Trading Losses and Restriction of Capital Allowances), except paragraphs 8 and 10 of Part I thereof, shall have effect, as if enacted in this Act, for the purpose of supplementing this section with the substitution, for references to section 39 of that Act, of references to this section.

(8) This section shall not apply if the change of ownership took place before the 16th day of May, 1973, and subsection (1) (a) shall not apply if the major change in the nature or conduct of the trade was completed before that date; but in other respects this section shall have effect by reference to circumstances and events before that date, as well as by reference to later circumstances and events.

PART III

Special Classes of Companies

Reduction of corporation tax liability of small companies.

28.—(1) Where in any accounting period the profits of a company resident in the State do not exceed the lower relevant maximum amount, the company may claim that the corporation tax charged on its income for that period shall be calculated as if the rate of corporation tax for the financial year 1974 and each subsequent financial year were 40 per cent. (instead of being the rate fixed for companies generally).

(2) Where in any accounting period the profits of any such company exceed the lower relevant maximum amount but do not exceed the upper relevant maximum amount, the company may claim that the corporation tax charged on its income for that period shall be reduced by a sum equal to 10 per cent. of the following amount—

where M is the upper relevant maximum amount, P is the amount of the profits and I is the amount of the income.

(3) The lower and upper relevant maximum amounts mentioned in the foregoing subsections shall be determined as follows—

(a) where the company has no associated company in the accounting period those amounts are £5,000 and £10,000 respectively;

(b) where the company has one or more associated companies in the accounting period, the lower relevant maximum amount is £5,000 divided by one plus the number of those associated companies and the upper relevant maximum amount is £10,000 divided by one plus the number of those associated companies.

(4) In applying subsection (3) to any accounting period of a company, an associated company which has not carried on any trade or business at any time in that accounting period (or, if an associated company during part only of that accounting period, at any time in that part of that accounting period) shall be disregarded and for the purposes of this section a company is to be treated as an “associated company” of another at a given time if at that time one of the two has control of the other or both are under the control of the same person or persons.

In this subsection “control” shall be construed in accordance with section 102 (meaning of “associated company” and “control”).

(5) In determining how many associated companies a company has in an accounting period or whether a company has an associated company in an accounting period, an associated company shall be counted even if it was an associated company for part only of the accounting period, and two or more associated companies shall be counted even if they were associated companies for different parts of the accounting period.

(6) For an accounting period of less than twelve months the relevant maximum amounts determined in accordance with subsection (3) shall be proportionately reduced.

(7) For the purposes of the foregoing subsections the profits of a company for an accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne, with the addition of franked investment income other than franked investment income which the company (if a member of a group) receives from companies within the group.

(8) For the purposes of this section the income of a company for an accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne exclusive of the part of the profits attributable to chargeable gains; and that part shall be taken to be the amount brought into the company's profits for that period for the purposes of corporation tax in respect of chargeable gains before any deduction for charges on income, expenses of management or other amounts which can be deducted from or set against or treated as reducing profits of more than one description.

Companies carrying on mutual business, or not carrying on a business.

29.—(1) Subject to subsection (2), where a company carries on any business of mutual trading or mutual insurance or other mutual business, the provisions of this Act relating to distributions shall apply to distributions made by the company notwithstanding that they are made to persons participating in the mutual activities of that business and derive from those activities, but shall so apply only to the extent to which the distributions are made out of profits of the company which are brought into charge to corporation tax or out of franked investment income.

(2) In the case of a company carrying on any mutual life assurance business, the provisions of this Act relating to distributions shall not apply to distributions made to persons participating in the mutual activities of that business and derived from those activities; but if the business includes annuity business, the annuities payable in the course of that business shall not be treated as charges on the income of the company to any greater extent than if the business were not mutual but were being carried on by the company with a view to the realisation of profits for the company.

(3) Subject to the preceding subsections, the fact that a distribution made by a company carrying on any such business is derived from the mutual activities of that business and the recipient is a person participating in those activities shall not affect the character which the payment or other receipt has for purposes of corporation tax or income tax in the hands of the recipient.

(4) Where a company does not carry on, and never has carried on, a trade or a business of holding investments, and is not established for purposes which include the carrying on of a trade or of such a business, the provisions of this Act relating to distributions shall apply to distributions made by the company only to the extent to which the distributions are made out of profits of the company which are brought into charge to corporation tax or out of franked investment income.

Industrial and provident societies.

30.—(1) The provisions of section 218 of the Income Tax Act, 1967 (industrial and provident societies: interpretation), shall have effect for the interpretation of this section.

(2) Notwithstanding anything in the Tax Acts, any share or loan interest paid by a society—

(a) shall be paid without deduction of income tax and shall be charged under Case III of Schedule D, and

(b) shall not be treated as a distribution:

Provided that paragraph (a) shall not apply to any share interest or loan interest payable to a person whose usual place of abode is not within the State.

(3) In computing the corporation tax payable for any accounting period of a society, section 10 (allowance of charges on income) shall have effect subject to—

(a) the insertion of “the appropriate proportion of” in subsection (1) after the word “company” where it first occurs, and

(b) the deletion of the word “yearly” from subsection (3) (a).

(4) For the purposes of section 10 as modified by subsection (3) of this section, “the appropriate proportion” of any amount of charges on income paid by a society in an accounting period means the portion of that amount which bears to the whole the same proportion as the aggregate amount of the society's income and franked investment income for the accounting period bears to what would, but for section 220 of the Income Tax Act, 1967 (disregard of profits or losses attributable to certain transactions), have been the aggregate amount of the society's income and franked investment income for that accounting period:

Provided that in relation to the aggregate amount of interest paid in any accounting period the appropriate proportion of that interest shall not exceed £2,000 if the accounting period is a period of twelve months, and shall not exceed a proportionate part of £2,000 if the accounting period is a period of less than twelve months.

(5) In section 219 of the Income Tax Act, 1967 (deduction as expenses of certain sums, etc.)—

(a) in subsection (4) (b) for “any annual allowance” there shall be substituted “any writing-down allowance”, and for “any year of assessment” there shall be substituted “any chargeable period”, and

(b) in subsection (4) (c) for “any year of assessment” there shall be substituted “any chargeable period”.

(6) Section 220 of the Income Tax Act, 1967 (disregard of profits or losses attributable to certain transactions), is hereby amended by the substitution of the following subsection for subsection (5)—

“(5) Where for any chargeable period any capital allowances or any balancing charges under Part XVI fall to be made in taxing the trade of a society and a proportion of the profits, or as the case may be, the loss of that period is disregarded under this section, the amount of allowances or the amount of charges which, but for this subsection, would have been made shall be diminished in like proportion.”.

(7) All amounts receivable by an agricultural society or a fishery society from the sale of goods, being amounts which are so receivable by virtue of exempted transactions, shall be disregarded for the purposes of section 58 (export sales relief: basis of relief from corporation tax) and in this subsection “agricultural society” and “fishery society” have the same meaning as in section 220 of the Income Tax Act, 1967 .

(8) Section 220 (7) of the Income Tax Act, 1967 , shall apply in relation to corporation tax as it applies in relation to income tax.

(9) On or before the 1st day of May in each year, every society shall deliver to the inspector a return in such form as the Revenue Commissioners may prescribe, showing—

(a) the name and place of residence of every person to whom share interest or loan interest amounting to the sum of £70 or more has been paid by the society in the year of assessment which ended next before the said 1st day of May, and

(b) the amount of such share interest or loan interest paid in that year to each of those persons,

and if such a return is not duly made as respects any year of assessment the society shall not be entitled to any deduction under section 219 (1) (deduction as expenses of certain sums etc.) or 81 (5) (e) of the Income Tax Act, 1967 (taxation of rents under short leases: deduction of loan interest), or section 10 (allowance of charges on income) in respect of any payments of share interest or loan interest which it was required to include in the return, and all such assessments and additional assessments shall be made as may be necessary to give effect to this subsection.

(10) The amendments made by subsections (5) and (6) shall not have effect in relation to income tax for the year 1975-76 or any earlier year of assessment.

Building societies.

31.—(1) The Revenue Commissioners and any building society may, as respects 1976-77 and any later year of assessment, enter into arrangements whereby—

(a) on such sums as may be determined in accordance with the arrangements the society is liable to account for and pay an amount representing income tax calculated in part at the standard rate and in part at a reduced rate which takes into account the operation of the subsequent provisions of this section; and

(b) provision is made for any incidental or consequential matters,

and any such arrangements shall have effect notwithstanding anything in this Act:

Provided that in exercising their powers of entering into arrangements under this section, the Revenue Commissioners shall, subject to subsection (3) (c) and paragraph (i) of the proviso to the said subsection, at all times aim at securing that (if the amount so payable by the society under the arrangements is regarded as income tax for the year of assessment) the total income tax becoming payable to, and not becoming repayable by, the State is, when regard is had to the operation of the subsequent provisions of this section, as nearly as may be the same in the aggregate as it would have been if those powers had never been exercised.

(2) Where for any year of assessment a building society enters into arrangements under this section, dividends or interest payable in respect of shares in, or deposits with or loans to, the society shall be dealt with for the purposes of corporation tax as follows—

(a) in computing for any accounting period ending in the year of assessment the total profits of the society there shall be allowed as a deduction the actual amount paid or credited in the accounting period of any such dividends or interest, together with the amount accounted for and paid by the society in respect thereof as representing income tax,

(b) in computing the income of a company which is paid or credited in the year of assessment with any such dividends or interest, the company shall be treated as having received an amount which, after deduction of income tax at the standard rate for the year of assessment, is equal to the amount paid or credited, and shall be entitled to a set-off or repayment of income tax accordingly,

(c) no part of any such dividends or interest paid or credited in the year of assessment shall be treated as a distribution of the society or as franked investment income of any company resident in the State.

(3) Notwithstanding anything in the Tax Acts, where any arrangements under this section are in force in the case of any society as respects any year of assessment—

(a) income tax shall not be deducted from any dividends or interest payable in that year in respect of shares in or deposits with or loans to that society,

(b) subject to subsection (2) (b), no repayment of income tax and, subject to paragraph (i) of the proviso to this subsection, no assessment to income tax shall be made in respect of any such dividends or interest to or on the person receiving or entitled to the dividends or interest,

(c) any amounts paid or credited in respect of any such dividends or interest, and no more, shall be treated as income in computing the total income of an individual entitled to those amounts, and

(d) subject to section 3 (1) (income tax on payments made or received by a company resident in the State), the amounts so paid or credited (and no more) shall, in applying section 433 (yearly interest, etc., payable wholly out of taxed profits) of the Income Tax Act, 1967 , to other payments, be treated as profits or gains which have been brought into charge to income tax:

Provided that—

(i) paragraph (b) shall not prevent an assessment in respect of income tax at the higher rates and for the purpose of charging to tax at the higher rates any amounts treated as income in accordance with paragraph (c), credit under section 4 (e) of the Finance Act, 1974 (charge to tax of income from which tax has been deducted), shall be given as if, by virtue of the provisions of Schedule D, tax had been deducted (at the standard rate for the year of assessment in which those amounts were paid or credited) from the amounts charged to tax at the higher rates:

(ii) the provisions of this subsection shall not apply in relation to interest on any bank loan; and

(iii) the provisions of this subsection shall not apply in relation to any interest which is payable in respect of a loan to the society under a contract made before the beginning of the first year of assessment as respects which the society enters into arrangements under subsection (1), if and to the extent that, both at the time of the making of the contract and at the time when the interest becomes payable, it is contemplated by the parties that tax shall be deducted on payment of the interest.

(4) Where any arrangements made under this section are in force in the case of any society as respects any year of assessment then, notwithstanding anything in the Tax Acts, income tax shall not be deducted upon payment to the society of any interest on advances, being interest payable in that year.

(5) If in the course of, or as part of, a union or amalgamation of two or more building societies, or a transfer of engagements from one building society to another, there is a disposal of an asset by one society to another, both shall be treated for purposes of corporation tax in respect of chargeable gains as if the asset were acquired from the one making the disposal for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to the one making the disposal.

(6) Any arrangements made under this section as respects any year of assessment shall, if made after the beginning of that year, be deemed to have come into force at the beginning thereof, and any necessary adjustments shall be made in relation to any sums paid or credited before the date of the making of the arrangements.

(7) In this section “dividend” includes any distribution as defined for the purposes of this Act whether described as a dividend or otherwise.

(8) In this section “building society” means a building society within the meaning of the Building Societies Acts, 1874 to 1974.

(9) Notwithstanding anything in this Act, where for any year of assessment a building society enters into any arrangement under this section, the profits of the society in so far as they consist of income, shall, for any accounting period ending in the year of assessment be charged to corporation tax at the reduced rate provided for by section 79 (reduced rate of corporation tax for certain income), and, for the purposes of this subsection, the income of a society for an accounting period is its income for that period as defined in section 28 (8) for the purposes of that section.

(10) Where, under this section, a building society enters into arrangements for the year of assessment 1976-77 and is within the charge to corporation tax in respect of an accounting period which ends before the 6th day of April, 1976, subsection (2) (a) shall have effect in relation to such accounting period with the substitution for the reference to the amount accounted for and paid by the society in respect of the dividends and interest as representing income tax of a reference to the amount computed by reference to the dividends or interest in accordance with the provision made by any arrangements subsisting between such society and the Revenue Commissioners for the year 1975-76 with reference to dividends and interest for charging the society to income tax for that year.

Partnerships involving companies.

32.—(1) Subject to this section, the provisions of section 71 (1) (2) (a) (3) of the Income Tax Act, 1967 (separate assessment of partners), shall have effect for purposes of corporation tax as they have effect for purposes of income tax.

(2) Where the whole or part of an accounting period of a company is, or is part of, a period for which an account of a partnership trade has been made up, any necessary apportionments shall be made in computing the profits from or loss sustained in the company's several trade for the accounting period of the company.

(3) (a) Where a capital allowance equal to an appropriate share of a joint allowance would be made, if section 1 (2) (introduction for companies of corporation tax in place of income tax and corporation profits tax) had not been enacted, in charging to income tax the profits of a company's several trade for any year of assessment, the relevant amount shall for corporation tax purposes be treated as a trading expense of the company's several trade for any accounting period of the company any part of which falls within that year of assessment.

(b) Where a balancing charge equal to an appropriate share of a joint charge would be made, if section 1 (2) had not been enacted, in charging to income tax the profits of a company's several trade for any year of assessment, the relevant amount shall for corporation tax purposes be treated as a trading receipt of the company's several trade for any accounting period of the company any part of which falls within that year of assessment.

(c) In this subsection the “relevant amount” means—

(i) where the year of assessment and the accounting period coincide, the whole amount of the appropriate share of the joint allowance, or, as the case may be, the whole amount of the appropriate share of the joint charge, and

(ii) where part only of the year of assessment falls within the accounting period, such portion of the appropriate share of the joint allowance, or, as the case may be, such portion of the appropriate share of the joint charge as is apportioned to that part of the year of assessment which falls within the accounting period:

Provided that the relevant amount shall not include any part of the appropriate share of a joint allowance, or, as the case may be, any part of the appropriate share of a joint charge which was made in charging the profits of the company's several trade for the year 1974-75 or 1975-76.

(d) Notwithstanding the provisions of section 72 (8) of the Income Tax Act, 1967 (capital allowances and balancing charges in partnership cases), any reference in this subsection to a joint allowance for a year of assessment does not include a reference to any capital allowance which is or could be brought forward from a previous year of assessment.

(4) Where, under this section, an amount falls to be apportioned to a part of an accounting period of a company, to a part of a period for which an account of a partnership trade has been made up or to a part of a year of assessment, the apportionment shall be made by reference to the number of months or fractions of months contained in that part, and in the remainder of that period or year.

(5) In this section profits shall not be taken as including chargeable gains.

Expenses of management of assurance companies.

33.—(1) Subject to the provisions of sections 34 and 35, section 15 (deduction of management expenses of investment companies) shall apply for computing the profits of a company carrying on life business, whether mutual or proprietary, (and not charged to corporation tax in respect of it under Case I of Schedule D), whether or not the company is resident in the State, as that section applies in relation to an investment company except that—

(a) there shall be deducted from the amount treated as expenses of management for any accounting period the amount of any fines, fees or profits arising from reversions and in calculating profits arising from reversions the company may set off against those profits any losses arising from reversions in any previous accounting period during which any enactment granting this relief was in operation so far as they have not already been so set off, and

(b) no deduction shall be made under the proviso to section 15 (1).

(2) Relief under subsection (1) shall not be given to any such company, so far as it would, if given in addition to all other reliefs to which the company is entitled, reduce the corporation tax borne by the company on the income and gains of its life business for any accounting period to less than would have been paid if the company had been charged to tax in respect of that business under Case I of Schedule D; and where relief has been withheld in respect of any accounting period by virtue of this subsection, the excess to be carried forward by virtue of section 15 (2) shall be increased accordingly.

For the purposes of this subsection—

(a) any tax credit to which the company is entitled in respect of a distribution received by it shall be treated as an equivalent amount of corporation tax borne or paid in respect of that distribution; and

(b) any payment in respect of that credit under section 15 (4), 25 (set-off of losses etc. against franked investment income) or 26 (set-off of loss brought forward or terminal loss against franked investment income of financial concerns) shall be treated as reducing the tax so treated as borne or paid; and

(c) section 38 shall apply for the purposes of computing the profits of the life assurance business or the industrial assurance business, as the case may be, which would have been charged to tax under Case I of Schedule D.

The reference in paragraph 2 (1) of Schedule 1 to the Capital Gains Tax Act, 1975 (exclusion from consideration for disposals of sums chargeable to income tax), to computing income or profits or gains or losses shall not be taken as applying to a computation of a company's income for the purposes of this subsection.

Companies carrying on life business.

34.—(1) Where an assurance company carries on life business in conjunction with insurance business of any other class, the life business shall, for the purposes of corporation tax, be treated as a separate business from any other class of business carried on by the company.

(2) In ascertaining for the purposes of section 16 or 18 (relief for losses) whether and to what extent a company has incurred a loss on its life business any profits derived from the investments of its life assurance fund (including franked investment income of a company resident in the State) shall be treated as part of the profits of that business.

Profits of life business.

35.—(1) Where the profits of an assurance company in respect of its life business are, for the purposes of this Act, computed in accordance with the provisions applicable to Case I of Schedule D, the following provisions shall have effect—

(a) such part of those profits as belongs or is allocated to, or is expended on behalf of, policy holders or annuitants shall be excluded in making the computation;

(b) such part of those profits as is reserved for policy holders or annuitants shall also be excluded in making the computation, but if any profits so excluded as being so reserved cease at any time to be so reserved and are not allocated to, or expended on behalf of, policy holders or annuitants then those profits shall be treated as profits of the company for the accounting period in which they ceased to be so reserved.

(2) Where an assurance company carries on both life assurance business and industrial assurance business, the business of each such class shall, for the purposes of this Act, be treated as though it were a separate business and section 33 shall apply separately to each such class of business.

Investment income reserved for policy holders.

36.—(1) A claim may be made under this section by an assurance company carrying on life business in respect of unrelieved income from investments held in connection with that business.

(2) If on the claim the company proves that it has, for any financial year for which the rate of corporation tax exceeds the standard rate of income tax for the year of assessment in which that year ends, borne corporation tax in respect of any of the said unrelieved income, the company shall be entitled to repayment of so much of that tax borne by it for that year as is equal to the amount by which—

(a) the corporation tax borne by the company for that year in respect of the part specified in subsection (5) of the said unrelieved income,

exceeds—

(b) the corporation tax which would have been so borne in respect of that part of that income if the rate of corporation tax for that year had been equal to the standard rate of income tax for the said year of assessment.

(3) For the purposes of this section and section 37—

(a) “unrelieved income” means income which has not been excluded from charge to tax by virtue of any provision and against which no relief has been allowed by deduction or set-off;

(b) the amount of tax which has been or would be borne by a company shall be taken to be the amount of tax which has been or would be so borne after allowance of any relief to which the company is or would be entitled otherwise than under the provisions of this section.

(4) The franked investment income from investments held in connection with a company's life business shall be apportioned between policy holders or annuitants and shareholders by attributing to policy holders or annuitants such fraction of the said income as the fraction of the profits of the company's life business which, on a computation of such profits in accordance with the provisions applicable to Case I of Schedule D (whether or not the company is in fact charged to tax under that Case for the relevant accounting period or periods) would be excluded under section 35 (1) (a) (b):

Provided that, if the franked investment income exceeds the profits as computed in accordance with those provisions other than section 35, the part attributable to policy holders or annuitants shall be that fraction of the income so far as not exceeding the profits, together with the amount of the excess.

(5) (a) Where the aggregate of the said unrelieved income and the shareholders' part of the franked investment income exceeds the profits of the company in respect of its life business for the relevant accounting periods computed in accordance with the provisions of Case I of Schedule D as extended by sections 35 and 38 (whether or not the company is charged to tax under that Case) the said part shall be the amount of that excess or the unrelieved income whichever is the less, and

(b) where the said aggregate is less than the profits of the company's life business as so computed the provisions of subsection (2) shall not apply.

Chargeable gain reserved for policy holders.

37.—(1) The policy holders' share of the life assurance gains shall not be reduced under section 13 (computation of chargeable gains) but corporation tax charged on so much of that share as remains after setting against it the amounts referred to in subsection (2) (c) shall be calculated as if the rate of corporation tax were 26 per cent.

(2) For the purposes of this section there shall be ascertained the policy holders' share and the remainder (in this section referred to as the residual part) of the life assurance gains and of the relevant reliefs; and—

(a) the residual part of the relevant reliefs shall be set against so much of the residual part of those gains as remains after reducing it in accordance with section 13; and

(b) if the residual part of the relevant reliefs exceeds the residual part, as so reduced, of those gains, the excess (or so much of it as does not, together with the policy holders' share of the relevant reliefs, exceed the policy holders' share of those gains) shall be added to the policy holders' share of the relevant reliefs; and—

(c) the policy holders' share of the relevant reliefs, with any addition made under paragraph (b), shall be set against the policy holders' share of the life assurance gains.

(3) For the purposes of this section—

(a) the life assurance gains are such part of the amount which, if the words “reduced by 48 per cent. thereof” in section 13 (1) were deleted, would be included in the company's total profits as is attributable to gains from investments held in connection with the company's life business;

(b) the relevant reliefs are such of the sums to be deducted from or set off against the company's profits as are deducted from or set off against the life assurance gains;

(c) (i) where paragraph (a) of section 36 (5) applies to unrelieved income, the amount of the policy holders' share of the life assurance gains or of the relevant reliefs is the full amount; and

(ii) where paragraph (b) of section 36 (5) applies to unrelieved income, all the life assurance gains and relevant reliefs shall be included in the residual part.

Life business: computation of profits.

38.—For the purposes of sections 33, 36 and 37 the exclusion by section 2 from the charge to corporation tax of franked investment income shall not prevent such income of a company resident in the State which is attributable to the investments of the company's life assurance fund from being taken into account as part of the profits in computing trading income in accordance with the provisions applicable to Case I of Schedule D.

Annuity business: separate charge on profits.

39.—(1) Except in the case of an assurance company charged to tax in accordance with the provisions applicable to Case I of Schedule D in respect of the profits of its life assurance business, profits arising to an assurance company from pension business or from general annuity business, shall be treated as annual profits or gains within Schedule D, and be chargeable to corporation tax under Case IV of that Schedule, and for that purpose—

(a) the business of each such class shall be treated separately, and

(b) subject to the foregoing paragraph and subsection (2), the profits therefrom shall be computed in accordance with the provisions applicable to Case I of Schedule D.

(2) In making the said computation—

(a) section 35 (1) shall apply with the necessary modifications and, in particular, with the omission therefrom of all references to policy holders other than holders of policies referable to pension business, and

(b) no deduction shall be allowed in respect of any expense being an expense of management referred to in section 33 or 47, and

(c) there may be set off against the profits of pension business or general annuity business any loss, to be computed on the same basis as the profits, which was sustained in the same class of business in any previous accounting period while the company was within the charge to corporation tax in respect of that class of business so far as it has not already been so set off.

(3) Section 19 (losses in transactions from which income would be chargeable under Case IV or V of Schedule D) shall not be taken as applying to a loss sustained by a company on its general annuity business or pension business.

(4) The treatment of an annuity as containing a capital element for the purposes of section 239 of the Income Tax Act, 1967 (capital element in certain purchased annuities), shall not prevent the full amount of the annuity from being deductible in computing profits or from being treated as a charge on income for the purposes of the Corporation Tax Acts.

General annuity business.

40.—(1) In the case of a company carrying on general annuity business, the annuities paid by the company, so far as referable to that business and so far as they do not exceed the taxed income of the part of the annuity fund so referable, shall be treated as charges on income.

(2) In computing under section 39 the profits arising to an assurance company from general annuity business—

(a) taxed income shall not be taken into account as part of those profits, and

(b) of the annuities paid by the company and referable to general annuity business—

(i) those which under subsection (1) are treated as charges on income shall not be deductible, and

(ii) those which are not so treated shall, notwithstanding section 11 (computation of income: application of income tax principles), be deductible.

(3) In this section “taxed income” means income charged to corporation tax otherwise than under section 39, and franked investment income.

(4) A company which is not resident in the State but carries on through a branch or agency there any general annuity business shall not be entitled to treat any part of the annuities paid by it which are referable to that business as paid out of profits or gains brought into charge to income tax.

Pension business.

41.—(1) Exemption from corporation tax shall be allowed in respect of income from, and chargeable gains in respect of, investments and deposits of so much of an assurance company's life assurance fund and separate annuity fund, if any, as is referable to pension business.

(2) The exemption from tax conferred by subsection (1) shall not exclude any sums from being taken into account as receipts in computing profits or losses for any purpose of the Corporation Tax Acts.

(3) Subject to subsection (4) the exclusion by section 2 from the charge to corporation tax of franked investment income shall not prevent such income being taken into account as part of the profits in computing under section 39 income from pension business.

(4) If for any accounting period there is, apart from this subsection, a profit arising to an assurance company from pension business (computed in accordance with the provisions of section 39) and the company so elects as respects all or any part of its franked investment income arising in that period, being an amount of franked investment income not exceeding the amount of the said profit, subsections (1) and (3) shall not apply to the franked investment income to which the election relates.

An election under this subsection shall be made by notice in writing given to the inspector not later than two years after the end of the accounting period to which the election relates, or within such longer period as the Revenue Commissioners may by notice in writing allow.

(5) In computing under section 39 the profits from pension business, annuities shall be deductible notwithstanding section 11 (5) and a company shall not be entitled to treat as paid out of profits or gains brought into charge to income tax any part of the annuities paid by the company which is referable to pension business.

Foreign life assurance funds.

42.—(1) Corporation tax under Case III of Schedule D on income arising from securities and possessions in any place outside the State which form part of the investments of the foreign life assurance fund of an assurance company shall be computed on the full amount of the actual sums received in the State from remittances payable in the State, or from property imported, or from money or value arising from property not imported, or from money or value so received on credit or on account in respect of such remittances, property, money or value brought into the State without any deduction or abatement.

(2) Where—

(a) any securities issued by the Minister for Finance with a condition in the terms specified in section 464 of the Income Tax Act, 1967 (issue of securities with exemption from tax), or

(b) any stocks or other securities to which section 474 (exemption of certain securities from tax) of the said Act applies and which are issued with either or both of the conditions specified in subsection (2) of that section,

for the time being form part of the investments of the foreign life assurance fund of an assurance company, the income arising from any of those stocks or securities, if applied for the purposes of that fund or reinvested so as to form part of that fund, shall not be liable to tax.

(3) Where the Revenue Commissioners are satisfied that any income arising from the investments of the foreign life assurance fund of an assurance company has been remitted to the State and invested, as part of the investments of that fund, in any stocks or securities issued as aforesaid, that income shall not be liable to tax and any tax paid thereon shall, if necessary, be repaid to the company on the making of a claim.

(4) Where income from the investments of the foreign life assurance fund of an assurance company has been relieved from tax in pursuance of the provisions of this section a corresponding reduction shall be made—

(a) in the relief granted under section 33 in respect of expenses of management, and

(b) in any amount on which the company is chargeable to tax by virtue of section 39—

(i) in respect of general annuity business, or

(ii) in respect of pension business,

in so far as the investment income relieved is referable to general annuity business or pension business as the case may be.

(5) In this section “foreign life assurance fund”—

(a) means any fund representing the amount of the liability of an assurance company in respect of its life business with policy holders and annuitants residing outside the State whose proposals were made to, or whose annuity contracts were granted by, the company at or through a branch or agency outside the State, and

(b) where such a fund is not kept separately from the life assurance fund of the company, means such part of the life assurance fund as represents the liability of the company under such policies and annuity contracts, such liability being estimated in the same manner as it is estimated for the purposes of the periodical returns of the company.

(6) While agreements mentioned in Part I of Schedule 6 to the Income Tax Act, 1967 , remain in force, subsection (5) shall have effect as if after “State” in each place where it occurs, there were inserted “, Northern Ireland and Great Britain”.

(7) Where an assurance company having its head office in the State carries on business in Northern Ireland or Great Britain and under provisions of the law therein corresponding with section 41 exemption from corporation tax is allowable in respect of income from investments and deposits referable to pension business, this section shall have effect in relation to the income so exempt in Northern Ireland and Great Britain with the omission of subsection (6).

(8) Where this section has effect in relation to income arising from investments of any part of an assurance company's life assurance fund, it shall have the like effect in relation to chargeable gains accruing from the disposal of any such investments, and losses so accruing shall not be allowable losses.

Overseas life assurance companies: investment income.

43.—(1) Any income of an overseas life assurance company from the investments of its life assurance fund (excluding the pension fund and general annuity fund, if any), wherever received, shall, to the extent provided in this section, be deemed to be profits comprised in Schedule D and shall be charged to corporation tax under Case III of Schedule D.

(2) Distributions received from companies resident in the State shall be brought into account under this section notwithstanding their exclusion from the charge to corporation tax.

(3) A portion only of the income from the investments of the life assurance fund (excluding the pension fund and general annuity fund, if any) shall be charged in accordance with subsection (1), and for any accounting period that portion shall be determined by the formula

where—

A is the total income from those investments for that period,

B is the average of the liabilities for that period to policy holders resident in the State and to policy holders resident outside the State whose proposals were made to the company at or through its branch or agency in the State, and

C is the average of the liabilities for that period to all the company's policy holders,

but any reference in this subsection to liabilities does not include liabilities in respect of general annuity and pension business.

(4) For the purposes of this section—

(a) the liabilities of an assurance company attributable to any business at any time shall be ascertained by reference to the net liabilities of the company as valued by an actuary for the purposes of the relevant periodical return, and

(b) the average of any liabilities for an accounting period shall be taken as one-half of the aggregate of the liabilities at the beginning and end of the valuation period which coincides with that accounting period or in which that accounting period falls.

(5) (a) Where the average of branch liabilities for an accounting period exceeds the mean value for the accounting period of the assets to which this subsection applies, the amount to be included in profits under section 13 (1), or that subsection as modified by section 37, shall be an amount determined by the formula

where—

A is the amount which apart from this subsection would be so included in profits,

B is the average of branch liabilities for the accounting period, and

C is the mean value for the accounting period of the assets to which this subsection applies.

(b) For the purposes of this subsection—

(i) “the average of branch liabilities for an accounting period” means the aggregate of the amounts represented by B in subsection (3), B in section 44 (2) and the average of the liabilities attributable to pension business for the accounting period, and

(ii) “the assets to which this subsection applies” are assets the gains from the disposal of which are chargeable to corporation tax by virtue of section 4 (2) (6) (8) (a) of the Capital Gains Tax Act, 1975 , with the addition of assets the gains from the disposal of which would, but for sections 19 and 24 of, and paragraph 2 of Schedule 1 to, that Act, be so chargeable.

(6) Section 75 (1) of the Income Tax Act, 1967 (income chargeable under Case III), as applied to corporation tax, shall not apply to income to which subsection (1) applies.

Overseas life assurance companies: general annuity and pension businesses.

44.—(1) Nothing in the Corporation Tax Acts shall prevent the distributions of companies resident in the State from being taken into account as part of the profits in computing, under section 39, the profits arising from pension business and general annuity business to an overseas life assurance company.

(2) Any charge to tax under section 39 for any accounting period on profits arising to an overseas life assurance company from general annuity business shall extend only to a portion of the profits arising from that business and that portion shall be determined by the formula

where—

A is the total amount of those profits,

B is the average of the liabilities attributable to that business for the relevant accounting period in respect of contracts with persons resident in the State or contracts with persons resident outside the State whose proposals were made to the company at or through its branch or agency in the State, and

C is the average of the liabilities attributable to that business for that accounting period in respect of all contracts.

(3) For the purposes of this section—

(a) the liabilities of an assurance company attributable to general annuity business at any time shall be ascertained by reference to the net liabilities of the company as valued by an actuary for the purposes of the relevant periodical return, and

(b) the average of any liabilities for an accounting period shall be taken as one-half of the aggregate of the liabilities at the beginning and end of the valuation period which coincides with that accounting period or in which that accounting period falls.

Overseas life assurance companies: income tax, foreign tax and tax credit.

45.—(1) Section 12 (6) (miscellaneous special rules for computation of income) shall not affect the liability to tax of an overseas life assurance company in respect of the investment income of its life assurance fund under section 43 or in respect of the profits of its annuity business under the provisions of sections 39, 41 and 44.

(2) For the purposes of section 8 (3) (set-off by non-resident companies of income tax deducted from payments received against corporation tax), as it applies to life business, the amount of the income tax referred to in that subsection which shall be available for set-off under that subsection in an accounting period shall be limited in accordance with subsections (3) and (4).

(3) If the company is chargeable to corporation tax for an accounting period in accordance with section 43 in respect of the income from the investments of its life assurance fund, the amount of income tax available for set-off against any corporation tax assessed for that period on that income shall not exceed an amount equal to income tax at the standard rate on the portion of income from investments which is chargeable to corporation tax by virtue of subsection (3) of that section.

(4) If the company is chargeable to corporation tax for an accounting period in accordance with section 44 on a proportion of the total amount of the profits arising from its general annuity business, the amount of income tax available for set-off against any corporation tax assessed for that period on those profits shall not exceed an amount equal to income tax at the standard rate on the like proportion of the income from investments included in computing those profits.

(5) Where an overseas life assurance company receives a distribution in respect of which it is entitled to a tax credit the company may claim to have that credit set off against any corporation tax assessed on the company under section 43 or 44 for the accounting period in which the distribution is received, but the restriction in subsections (3) and (4) on the amount of income tax that may be set off against corporation tax assessed under the said section 43 or 44 shall apply to the aggregate of that income tax and of the tax credit that can be so set off by virtue of this subsection.

(6) Paragraph 3 (6) of Schedule 1 to the Capital Gains Tax Act, 1975 (rules for computation of capital gains), shall not affect the liability to tax under section 43 of an overseas life assurance company in respect of gains from the disposal of investments held in connection with its life business.

Overseas life assurance companies: distributions set off against income.

46.—(1) Where an overseas life assurance company receives a distribution from a company resident in the State and relief in respect of the distribution is not available or is not claimed under arrangements made under section 361 of the Income Tax Act, 1967 (agreements for relief from double taxation of income), as applied for purposes of corporation tax, the overseas life assurance company shall be deemed for the purposes of sections 39, 41, 43, 44 and 45 to be entitled to such a tax credit in respect of the distribution as it would be entitled to if it were a company resident in the State; and accordingly for the purposes of those provisions the income represented by the distribution shall be the aggregate of the distribution and the tax credit.

(2) Where under subsection (1) an overseas life assurance company is deemed to be entitled to a tax credit in respect of a distribution, it may claim to have the income represented by the distribution set off, subject to subsection (3), against its profits chargeable to tax under section 39 or against its income chargeable to tax in accordance with section 43 or partly against the one and partly against the other; but to the extent that any income is so set off the tax credit included in it shall not be payable and shall not be set off against corporation tax under section 45 (5).

(3) The amounts that an overseas life assurance company may by virtue of this section set off against profits or income of any description shall not exceed the amount of the profits or income of that description and shall be further limited as follows—

(a) the amount set off against profits arising from general annuity business shall not exceed a portion of the company's income from investments referable to that business, and that portion shall be determined by the same formula as determines under section 44 the portion of those profits which is chargeable to tax; and

(b) the amount set off against profits from pension business shall not exceed such of its income referable to that business as is represented by distributions in respect of which the company is deemed to be entitled to a tax credit by virtue of this section, and shall not reduce any other income.

(4) Where by virtue of a set-off under this section income or profits of any description are reduced by any amount, that amount shall be left out of account in determining the amount of income tax which is available for set-off against corporation tax under section 8 (3).

(5) A claim under this section in respect of a distribution shall not prevent the making of a subsequent claim for relief in respect of that distribution under arrangements made under the said section 361; but where such a subsequent claim is made the claim under this section shall be deemed never to have been made, and no adjustment (whether by additional assessments or otherwise) to which the subsequent claim gives rise shall be out of time if it is made within twelve months after the making of the subsequent claim.

Overseas life assurance companies: expenses of management.

47.—(1) For the purposes of relief under section 33, the expenses of management of an overseas life assurance company shall be apportioned between its pension business, its general annuity business and its life assurance business (excluding such pension business and general annuity business) and the amount referable to each such class of business shall be such amount as bears to the total expenses of management the same proportion as the average of the liabilities for the accounting period attributable to that class in respect of policies and contracts bears to the average of liabilities of the company for that period in respect of all policies and contracts of its life assurance business.

(2) Where an overseas life assurance company is charged to corporation tax under Case III of Schedule D on a proportion of the income from investments of its life assurance fund in accordance with section 43, relief under section 33 in respect of the expenses of management referable to that class of business under subsection (1) shall be computed by reference to a like proportion of the expenses so referable.

(3) Where an overseas life assurance company is charged to corporation tax under Case IV of Schedule D on a proportion of the profits of its general annuity business in accordance with section 44, the relief under section 33 in respect of expenses of management referable to that class of business under subsection (1) shall be computed by reference to a like proportion of such expenses so referable.

(4) Where an overseas life assurance company is charged to corporation tax under Case IV of Schedule D in respect of pension business, relief under section 33 in respect of the expenses of management referable to that class of business under subsection (1) shall be computed by reference to the full amount of expenses so referable.

(5) For the purposes of this section the liabilities of an assurance company attributable to any business at any time shall be ascertained by reference to the net liabilities of the company as valued by an actuary for the purposes of the relevant periodical return.

(6) For the purposes of this section, the average of any liabilities for an accounting period shall be taken as one-half of the aggregate of the liabilities at the beginning and end of the valuation period which coincides with that accounting period or in which that accounting period falls.

Life policies carrying rights not in money.

48.—Where any investments or other assets are, in accordance with a policy issued in the course of life business carried on by an assurance company, transferred to the policy holder, the policy holder's acquisition of the assets, and the disposal of them to him, shall be deemed to be for a consideration equal to the market value of the assets—

(a) for the purposes of the Capital Gains Tax Act, 1975 , and

(b) for the purposes of computing income in accordance with Case I or IV of Schedule D.

Benefits from life policies issued before 6th April, 1974.

49.—(1) This section applies in relation to policies of life assurance issued before the 6th day of April, 1974, by a company carrying on life business, being policies which—

(a) provide for benefits consisting to any extent of investments of a specified description or of a sum of money to be determined by reference to the value of such investments, but

(b) do not provide for the deduction from those benefits of any amount by reference to tax chargeable in respect of chargeable gains.

(2) Where—

(a) the investments of the company's life assurance fund, so far as referable to those policies, consist wholly or mainly of investments of the description so specified, and

(b) on the company becoming liable under any of those policies for any such benefits (including benefits to be provided on the surrender of a policy), a chargeable gain accrues to the company from the disposal, in meeting or for the purpose of meeting that liability, of investments of that description forming part of its life assurance fund, or would so accrue if the liability were met by or from the proceeds of such a disposal,

then the company shall be entitled as against the person receiving the benefits to retain thereout a part thereof not exceeding in amount or value corporation tax at the full rate in respect of the chargeable gain referred to in paragraph (b) computed without regard to any amount retained under this subsection and reduced in accordance with section 13 (1).

Interpretation.

50.—(1) This section has effect for the interpretation of sections 33 to 49 and this section.

(2) Unless the context otherwise requires—

“actuary” has the meaning assigned to it in section 3 of the Insurance Act, 1936 ;

“annuity business” means the business of granting annuities on human life;

“annuity fund” means, where an annuity fund is not kept separately from the life assurance fund of an assurance company, such part of the life assurance fund as represents the liability of the company under its annuity contracts, as stated in its periodical returns;

“assurance company” has the meaning assigned to it in section 3 of the Insurance Act, 1936 ;

“general annuity business” means any annuity business which is not pension business and “pension business” shall be construed in accordance with subsections (3) and (4);

“life business” includes “life assurance business” and “industrial assurance business” which have the meanings assigned to them in section 3 of the Insurance Act, 1936 , and where a company carries on both businesses may mean either;

“life assurance fund” and “industrial assurance fund” have the meanings assigned to them in the Insurance Acts, 1909 to 1969, and life assurance fund, in relation to industrial assurance business, means the industrial assurance fund;

“overseas life assurance company” means an assurance company having its head office outside the State but carrying on life assurance business through a branch or agency in the State;

“pension fund” and “general annuity fund” shall be construed in accordance with subsection (3);

“periodical return”, in relation to an assurance company, means a return deposited with the Minister for Industry and Commerce under the Assurance Companies Act, 1909, and the Insurance Act, 1936 ;

“policy” and “premium” have the meanings assigned to them in section 3 of the Insurance Act, 1936 ;

“valuation period” means the period in respect of which an actuarial report is made under section 5 of the Assurance Companies Act, 1909, as extended by section 55 of the Insurance Act, 1936 .

(3) Any division to be made between general annuity business, pension business and other life assurance business shall be made on the principle of—

(a) referring to pension business any premiums falling within subsection (4), together with the incomings, outgoings and liabilities referable to those premiums, and the policies and contracts under which they are or have been paid,

(b) allocating to general annuity business all other annuity business,

and references to “pension fund” and “general annuity fund” shall be construed accordingly whether or not such funds are kept separately from the assurance company's life assurance fund.

(4) The premiums to be referred to pension business are those payable under contracts falling (at the time when the premium is payable) within one or other of the following descriptions, that is to say—

(a) any contract with an individual who is, or would but for an insufficiency of profits or gains be, chargeable to tax in respect of relevant earnings (as defined in section 235 of the Income Tax Act, 1967 (retirement annuities: relief for premiums)) from a trade, profession, office or employment carried on or held by him, being a contract approved by the Revenue Commissioners under that section or section 235A (approval of contracts for dependants or for life assurance) of the Income Tax Act, 1967 (inserted by section 66 of the Finance Act, 1974 );

(b) any contract (including a contract of assurance) entered into for the purposes of, and made with the persons having the management of, an exempt approved scheme as defined in Chapter II of Part I of the Finance Act, 1972 , being a contract so framed that the liabilities undertaken by the assurance company under the contract correspond with liabilities against which the contract is intended to secure the scheme;

(c) any contract with the trustees or other persons having the management of a superannuation fund within the meaning of section 222 of the Income Tax Act, 1967 (exemption of superannuation funds), or of a scheme approved under section 235 or 235A of that Act or under both of those sections, being a contract which—

(i) was entered into for the purposes only of that fund or scheme or, in the case of a fund part only of which is approved under the said section 222, then for the purposes only of that part of that fund, and

(ii) (in the case of a contract entered into or varied on or after the 6th day of April, 1958) is so framed that the liabilities undertaken by the assurance company under the contract correspond with liabilities against which the contract is intended to secure the fund (or the relevant part of it) or the scheme,

and in this and the last preceding subsection “premium” includes any consideration for an annuity.

Treatment of tax-free income of non-resident banks, etc.

51.—(1) Where a banking business, an insurance business or a business consisting wholly or partly in dealing in securities is carried on in the State by a person not resident therein, then—

(a) in computing for the purposes of this Act the profits arising from, or loss sustained in, the business, and

(b) in the case of an insurance business, also in computing the profits or loss from pension business and general annuity business under section 39,

the provisions of section 11 shall not prevent the inclusion of interest, dividends and other payments to which section 50 (securities of foreign territories) or 462 (exemption of dividends of non-residents) of the Income Tax Act, 1967 , extends notwithstanding the exemption from tax conferred by those sections respectively.

(2) Where—

(a) any such business as aforesaid is carried on in the State by a person not ordinarily resident therein, and

(b) in making any such computation as aforesaid with respect to that business, interest on tax-free securities is excluded by virtue of a condition of the issue of such securities,

any expenses attributable to the acquisition or holding of, or to any transaction in, the securities (but not including in those expenses any interest on borrowed money), and any profits or losses so attributable, shall also be excluded in making that computation.

(3) In the case of an overseas life assurance company as defined in section 50—

(a) in computing for the purposes of section 43 the income from the investments of the life assurance fund of the company, any interest, dividends and other payments to which section 50 or 462 of the Income Tax Act, 1967 , extends shall be included notwithstanding the exemption from tax conferred by those sections respectively.

(b) where in computing the said income interest on any tax-free securities is excluded by virtue of a condition of the issue of such securities, the relief under section 47 (2) shall be reduced so as to bear to the amount of relief which would be granted but for this paragraph the same proportion as the amount of that income, excluding the said interest, bears to the amount of that income including that interest, and

(c) where subsection (2) applies to the pension business or general annuity business of the company the relief under section 47 (3) or (4), as the case may be, shall be reduced so as to bear to the amount of the relief which would be so granted but for this paragraph the same proportion as the amount of the income (excluding interest on tax-free securities) from investments and deposits of the company's life assurance fund and separate annuity fund, if any, referable to that business bears to the said income so referable including such interest.

(4) In this section and in section 52 “tax-free securities” means securities to which section 464 (issue of securities with exemption from tax), 470 (securities of Irish local authorities issued abroad) or 474 (exemption of certain securities from tax) of the Income Tax Act, 1967 , applies and which were issued with a condition regulating the treatment of the interest thereon for tax purposes such that interest on the securities is excluded in computing income or profits.

(5) In this section “insurance business” includes assurance business within the meaning of section 3 of the Insurance Act, 1936 .

(6) In subsection (1) “securities” includes stocks and shares.

Tax-free securities: exclusion of interest on borrowed money.

52.—(1) This section has effect where section 51 (2) applies to a business for any accounting period.

(2) Up to the amount determined under this section (called the amount ineligible for relief) interest becoming due for payment on or after the 6th day of April, 1976, on money borrowed for the purposes of the business—

(a) shall be excluded in any computation under this Act of the profits (or loss) arising from the business or, where subsection (5) applies, arising from any annuity business or pension business forming part of the life business, and

(b) shall be excluded from the definition of “charges on income” in section 10.

(3) In determining the amount ineligible for relief, account shall be taken of all money borrowed for the purposes of the business which is outstanding in the accounting period, up to the total cost of the tax-free securities held for the purposes of the business in that period:

Provided that account shall not be taken of any borrowed money carrying interest which, apart from subsection (2), does not fall to be included in the computations under paragraph (a) of that subsection, and is not to be treated as a charge on income for the purposes of this Act.

(4) Subject to subsection (5), the amount ineligible for relief shall be equal to a year's interest on the amount of money borrowed which is to be taken into account under subsection (3) at a rate equal to the average rate of interest in the accounting period on money borrowed for the purposes of the business, except that in the case of an accounting period of less than twelve months, interest shall be taken for that shorter period instead of for a year.

(5) Where relief for expenses of management is to be granted to an overseas life assurance company for any accounting period and that relief falls to be reduced under section 51 (3) (b) the amount ineligible for relief shall be a fraction of the amount of interest in the accounting period on money borrowed for the purposes of the life business (excluding pension business and general annuity business, if any) and that fraction shall be the fraction which is income from tax-free securities divided by total investment income of the life assurance fund.

(6) For the purposes of this section, the cost of a holding of tax-free securities which has fluctuated in the accounting period shall be the average cost of acquisition of the initial holding, and of any subsequent acquisitions in the accounting period, applied to the average amount of the holding in the accounting period, and this subsection shall be applied separately to securities of different classes.

PART IV

Profits from Export of Certain Goods

Definition of “relevant accounting period”.

53.—In this Part “relevant accounting period” means an accounting period or part of an accounting period of a company within the period of fifteen years from the later of the two following dates, that is to say—

(a) the 1st day of October, 1956, or

(b) the first day of the basis period for the year of assessment which was the company's first year of claim for the purposes of relief under Chapter IV of Part XXV of the Income Tax Act, 1967 (Profits from Export of Certain Goods), or, if there was no such first year of claim, the 6th day of April, 1975.

Meaning of “goods”.

54.—(1) In this Part “goods” means goods manufactured within the State by the person who exports them or some of them and who in relation to the relevant accounting period is the company claiming relief under this Part:

Provided that where there are two companies one of which manufactures goods and the other of which exports them in the course of its trade and where one of the companies holds more than 90 per cent. of the ordinary shares in the other company or where persons who have a controlling interest in one company hold, either directly or indirectly, more than 90 per cent. of the ordinary shares in the other company, the goods manufactured by one of the companies shall, when exported in the course of its trade by the other company, be deemed to be manufactured by that other company.

(2) The definition of “goods” contained in subsection (1) shall include—

(a) fish produced within the State on a fish farm; and

(b) cultivated mushrooms, cultivated within the State,

and, in a case in which books or greeting cards are printed within the State otherwise than by their publisher and they or some of them are exported by their publisher (not being a case to which the proviso to subsection (1) applies), the books or greeting cards, as the case may be, shall be regarded, for the purposes of subsection (1), as having been manufactured within the State by their publisher.

(3) (a) The definition of “goods” contained in subsection (1) shall include goods manufactured within the State which do not come within that definition and which are exported by the person who in relation to the relevant accounting period is the company claiming relief under this Part where the selling by such person of the goods so exported is selling by wholesale.

(b) “Selling by wholesale” in paragraph (a) means selling goods of any class to a person who carries on a business of selling goods of that class or who uses goods of that class for the purposes of a trade or undertaking carried on by him.

Ship building and repair.

55.—(1) In the case of a company carrying on the trade of building or repairing ships, the following provisions shall apply for the purposes of relief under this Part—

(a) repairs carried out within the State to a ship shall be regarded as the manufacture within the State of goods and, to the extent to which any such repairs have been carried out within the State to a ship which is wholly owned by persons who are not ordinarily resident in the State, the ship shall be regarded as goods which are manufactured within the State and exported by the person who manufactures them and any amount receivable in payment for repairs carried out within the State to a ship shall be regarded as an amount receivable from the sale of goods;

(b) where, as respects any relevant accounting period, the company, by notice in writing given to the inspector within twelve months after the end of that period, so elects, this Part shall apply in the case of that period—

(i) as if all ships built by the company within the State had been exported by the company,

(ii) as if all ships to which repairs were carried out by the company within the State were, to the extent of such repairs, goods exported by the company, and

(iii) as if amounts receivable by the company in payment for the building within the State or for the repair within the State of ships were amounts receivable from the sale of goods exported by the company out of the State.

(2) In subsection (1) (a) (b) any reference to repair or building includes a reference to repair or building effected at any time.

Export of certain goods.

56.—(1) In this section—

“the Board” means An Bord Bainne Co-operative Limited;

“the Commission” means the Pigs and Bacon Commission;

“milk product” means butter, whey-butter, cream, cheese, condensed milk, dried or powdered milk, dried or powdered skim-milk, dried or powdered whey, chocolate crumb, casein, butter-oil, lactose, and any other product which is made wholly or mainly from milk or from a by-product of milk and which is approved for the purposes of this section by the Minister for Finance after consultation with the Minister for Agriculture and Fisheries;

“pigmeat product” means bacon and cuts thereof including ham, pork carcases and pork sides and cuts thereof, unrendered pig fat and canned pigmeat products.

(2) Where—

(a) a company produces a pigmeat product and sells it to the Commission, and

(b) that product is exported out of the State by the Commission,

this Part shall apply as if the said product had been exported out of the State by the company, and any amount receivable by the company from the sale of the said product to the Commission shall be deemed for the purposes of this Part to be an amount receivable from the sale of goods so exported.

(3) Where—

(a) a company manufactures a milk product and sells it to the Board, and

(b) that product is exported out of the State by the Board,

this Part shall apply as if the said product had been exported out of the State by the company, and any amount receivable by the company from the sale of the said product to the Board shall be deemed for the purposes of this Part to be an amount receivable from the sale of goods so exported.

Standard period.

57.—The standard period in relation to a company's trade shall, for the purposes of this Part, be the period of one year ending on the 30th day of September, 1956, or, if the company so elects, the period of one year ending on the 30th day of September, 1955, and that standard period shall be applicable in relation to the trade whether or not, during the whole or part of that standard period, the trade was carried on by a person other than the company by which it is carried on in the relevant accounting period or separate parts of the trade were carried on by different persons, but that standard period shall not be applicable where the trade was not in existence before the end of that standard period.

Basis of relief from corporation tax.

58.—(1) Where a company claims and proves as respects a relevant accounting period—

(a) that, during the standard period in relation to the trade, goods were, in the course of the trade, exported out of the State,

(b) that, during the relevant accounting period, goods were, in the course of the trade, exported out of the State, and

(c) that the total amount receivable from the sale of the last mentioned goods was in excess of the total amount (in this section referred to as the standard amount) receivable from the sale of the goods exported during the standard period,

corporation tax payable by the company for the relevant accounting period, so far as it is referable to the income attributable to the said excess, shall be reduced to nil; and the corporation tax referable to the income attributable to the said excess shall be such an amount as bears to the relevant corporation tax, as defined in subsection (10), the same proportion as the income attributable to the said excess bears to the total income brought into charge to corporation tax.

(2) For the purposes of subsection (1) “the income attributable to the said excess” shall be taken to be such sum as bears to the amount of the company's income for the relevant accounting period, which is attributable to the sale of goods (whether exported or not), the same proportion as the amount of the said excess bears to the total amount receivable by the company from such sale in the relevant accounting period.

(3) Where a company claims and proves as respects a relevant accounting period—

(a) that, during the standard period in relation to the trade, no goods were, in the course of the trade, exported out of the State or that the standard period is not applicable, and

(b) that, during the relevant accounting period, goods were, in the course of the trade, exported out of the State,

corporation tax payable by the company for the relevant accounting period, so far as it is referable to the income from the sale of the goods so exported, shall be reduced to nil; and the corporation tax referable to the income from the sale of goods so exported shall be such an amount as bears to the relevant corporation tax the same proportion as the income from the sale of goods so exported bears to the total income brought into charge to corporation tax.

(4) For the purposes of subsection (3) “the income from the sale of the goods so exported” shall be taken to be such sum as bears to the amount of the company's income for the relevant accounting period, which is attributable to the sale of goods (whether exported or not), the same proportion as the amount receivable in the relevant accounting period from the sale of goods exported bears to the total amount receivable by the company from the sale of goods (whether exported or not) in the relevant accounting period.

(5) In a case in which the preceding provisions of this section apply, and the export out of the State in the relevant accounting period consisted of or included goods with respect to which section 54 (3) provides for the inclusion thereof in the definition of “goods”, this Part shall have effect subject to the insertion, in subsections (2) and (4), of “and of merchandise (whether exported or not) other than such goods” after “goods (whether exported or not)” wherever the latter words occur.

(6) In relation to a company which has obtained relief from corporation tax under subsection (1) or (3) of this section, from income tax under section 404 (1) or (3) of the Income Tax Act, 1967 (basis of relief from tax on profits from exports), or from corporation profits tax under section 13 (1) or (3) of the Finance (Miscellaneous Provisions) Act, 1956 (basis of relief from corporation profits tax), this section shall apply as respects any accounting period or part of an accounting period of the company within the period of five years commencing on the expiration of the period comprising the company's relevant accounting periods within the meaning of section 53 as if—

(a) “relevant accounting period”, wherever occurring in this Part, referred to it, and

(b) for “shall be reduced to nil” in subsections (1) and (3) of this section there were substituted—

(i) in case it is an accounting period or part of an accounting period within the first of those years, “shall be reduced by 80 per cent.”,

(ii) in case it is an accounting period or part of an accounting period within the second of those years, “shall be reduced by 65 per cent.”,

(iii) in case it is an accounting period or part of an accounting period within the third of those years, “shall be reduced by 50 per cent.”,

(iv) in case it is an accounting period or part of an accounting period within the fourth of those years, “shall be reduced by 35 per cent.”, and

(v) in case it is an accounting period or part of an accounting period within the fifth of those years, “shall be reduced by 15 per cent.”:

Provided that this subsection shall not apply to an accounting period or part of an accounting period falling after the 5th day of April, 1990.

(7) (a) Where a relevant accounting period is a period of less than twelve months, the standard amount shall, for the purpose of ascertaining the excess referred to in subsection (1), be taken to be such part thereof as bears to the whole of the said amount the same proportion as the relevant accounting period bears to twelve months.

(b) Where a relevant accounting period is part of an accounting period of a company, the total amount receivable from the sale of goods (whether exported or not), the total amount receivable from the sale of goods exported out of the State and the amount of the company's income which is attributable to the sale of goods (whether exported or not) shall be taken to be such part of each such amount as bears to the whole of each such amount the same proportion as the length of the relevant accounting period bears to the length of the accounting period of the company.

(8) Where, on or after the day on which the standard period commenced, any change takes place whereby a part of a trade becomes transferred to any person, the standard amount shall, as respects any relevant accounting period in which, or prior to which, the change occurs, be apportioned for the purposes of subsection (1), and every such apportionment shall be made in such manner as the Revenue Commissioners consider just, having regard to all the circumstances.

(9) A reduction shall not be made under this section in respect of corporation tax payable on income from any mining operations.

(10) For the purposes of this section “relevant corporation tax” means the corporation tax which, apart from this section and sections 184 (relief in respect of corporation profits tax losses) and 186 (transitional relief for certain payments and management expenses), would be chargeable for the relevant accounting period exclusive of the corporation tax charged on the company's chargeable gains for that period.

Certain manufacturing services.

59.—(1) Where a company carries on a trade which consists of or includes the rendering to another person of services by way of subjecting commodities or materials belonging to that person to any process of manufacturing, and all or some of such services are rendered to a person who is not resident in the State in relation to commodities or materials which have been imported into the State and, after the services have been rendered, the commodities or materials, or the products or articles into which they have been converted, are exported out of the State while continuing to belong to that person, the following provisions shall, if the company so elects, apply for the purposes of relief under this Part—

(a) the rendering in the State of such services shall be regarded as the manufacture of goods and any amount receivable in payment therefor shall be regarded as an amount receivable from the sale of goods, and

(b) the company shall be regarded in relation to any such services as are rendered to a person who is not resident in the State as having exported goods out of the State and any payment receivable by it for the services shall be regarded as an amount receivable from the sale of goods so exported.

(2) Any election under subsection (1) shall be made by notice in writing delivered to the inspector and shall have effect as respects every relevant accounting period for which relief under this Part is claimed by the company by which it is made and shall also have effect as if it were an election made under section 29 of the Finance Act, 1966 (profits from exports: relief from corporation profits tax), or section 406 of the Income Tax Act, 1967 (certain manufacturing services), or both of those sections:

Provided that where, before an election was made by it under this section, a company has made a distribution for an accounting period and the tax credit to which the recipient of that distribution is entitled exceeds the tax credit to which that recipient would have been entitled if the election had been made before the date of the distribution, any relief from corporation tax which would otherwise have been allowable to the company shall be reduced by the amount of the excess.

(3) Where for any year of assessment the income of any person consists of or includes a distribution in respect of which the proviso to subsection (2) has had effect, the person may claim to have the income tax chargeable on his income for that year reduced to the amount which would have been so chargeable if the election under subsection (1) had been made before the date of the distribution.

(4) Where for any accounting period the franked investment income of a company consists of or includes a distribution in respect of which the proviso to subsection (2) has had effect, the company may claim to have paid to it an amount equal to the excess of the tax credit to which it was entitled in respect of the distribution on the date on which the distribution was made over the tax credit to which it would have been entitled in respect of the distribution if the election under subsection (1) had been made before the date of the distribution:

Provided that for the purposes of section 15 (4) (management expenses: investment companies), section 25 (set-off of losses etc. against franked investment income) and section 26 (set-off of loss brought forward or terminal loss: financial concerns) any such distribution as aforesaid shall be treated as representing income equal to the aggregate of the amount of that distribution and the amount of the tax credit to which the company would have been entitled if the election under subsection (1) had been made before the date of the distribution.

(5) An election made under section 29 of the Finance Act, 1966 , or section 406 of the Income Tax Act, 1967 , shall have effect as if it were an election made under subsection (1).

(6) The inspector may by notice in writing require a company claiming relief from tax by virtue of subsection (1) to furnish him with such information or particulars as may be necessary for the purpose of giving effect to that subsection, and section 58 (1) (3) shall have effect as if the matters of which proof is required thereby included the information or particulars specified in a notice under this subsection.

Relief for engineering services in relation to works outside the State.

60.—(1) In this section “engineering services” means design and planning services the work on the rendering of which is carried out in the State in connection with chemical, civil, electrical or mechanical engineering works executed outside the State.

(2) Where a company carries on a trade which consists of or includes the rendering to another person of engineering services and all or some of such services are rendered to a person who is not resident in the State, the following provisions shall, if the company so elects, apply for the purposes of relief under this Part—

(a) the rendering of such services shall be regarded as the manufacture of goods and any amount receivable in payment therefor shall be regarded as an amount receivable from the sale of goods, and

(b) where such services are rendered to a person who is not resident in the State, the company shall be regarded as having exported goods out of the State and any payment receivable by it for the services shall be regarded as an amount receivable from the sale of goods so exported.

(3) Any election under subsection (2) shall be made by notice in writing delivered to the inspector and shall have effect as respects every relevant accounting period for which relief under this Part is claimed by the company by which it is made and shall also have effect as if it were an election made under section 34 of the Finance Act, 1968 (relief on engineering services in relation to works outside the State).

(4) An election made under section 34 of the Finance Act, 1968 , shall have effect as if it were an election made under subsection (2).

(5) The inspector may by notice in writing require a company claiming relief from tax by virtue of subsection (2) to furnish him with such information or particulars as may be necessary for the purpose of giving effect to that subsection, and section 58 (1) (3) shall have effect as if the matters of which proof is required thereby included the information or particulars specified in a notice under this subsection.

Adjustments of certain amounts.

61.—(1) Where a company claims relief pursuant to this Part and it appears to the inspector that, in the case of goods of a particular class, the relationship between the amount receivable from the sale in any period of goods exported and the amount receivable from the sale in that period of goods not exported is affected by the payment by the company of any duty in respect of the goods or the materials used in their manufacture, the inspector shall apply subsection (2) or (3), whichever appears to him to be appropriate, in arriving at an amount receivable from the sale in that period of such goods, and any relief to the company by reference to the sale of goods in that period shall be computed accordingly.

(2) (a) An amount receivable from the sale of goods exported out of the State shall be deemed to be increased by the amount of any drawback, rebate or repayment of duty, being duty payable in the State, received by the company in respect of such goods and to be reduced by the amount of any duty paid in any territory outside the State by the company in respect of the import of such goods into that territory.

(b) An amount receivable from the sale of goods not exported shall be deemed to be increased by the amount of any rebate or repayment of duty, being duty payable in the State, received by the company in respect of such goods.

(3) (a) An amount receivable from the sale of goods exported out of the State shall be deemed to be reduced by the amount of any duty paid in any territory outside the State by the company in respect of the import of such goods into that territory.

(b) An amount receivable from the sale of goods not exported shall be deemed to be reduced by the amount of any duty, being duty payable in the State, paid by the company in respect of such goods.

(4) The inspector may by notice in writing require the company to furnish him with such information or particulars as may be necessary for the purpose of giving effect to this section, and section 58 (1) (3) shall have effect as if the matters of which proof is required thereby included the information or particulars specified in a notice under this subsection.

(5) Where an accounting period of a company is part of a period of account of the company the amount of any duty and the amount of any drawback, rebate or repayment of duty shall for the purposes of this section be such sum as bears to these amounts for the period of account the same proportion as the length of the accounting period bears to the length of the period of account.

Transactions between associated persons and company succeeding to trade of another company.

62.—(1) Where a company claiming relief under this Part (here-after in this subsection referred to as the buyer) buys from another person (hereafter in this subsection referred to as the seller) and—

(a) the seller has control over the buyer or, the seller being a company or partnership, the buyer has control over the seller or some other person has control over both the seller and the buyer, and

(b) the price in the transaction is less than that which might have been expected to obtain if the parties to the transaction had been independent parties dealing at arm's length,

then, the income of the buyer which is attributable to sales shall, for the purposes of this Part, be computed as if the price in the transaction had been that which would have obtained if the transaction had been a transaction between independent persons dealing as aforesaid.

(2) In this section “control” has the meaning assigned to it by section 158.

(3) Where a company (hereafter in this subsection referred to as the succeeding company) succeeds to a trade or a part of a trade which, on or after the 6th day of April, 1960, was carried on by another company (hereafter in this subsection referred to as the original company) and the original company has or could have made a claim to relief under this Part or under Chapter IV of Part XXV of the Income Tax Act, 1967 , then relief in so far as such relief relates to the trade or the part of the trade in question shall be granted to the succeeding company only as respects the remaining relevant accounting periods for which such relief might have been claimed by the original company if it had continued to carry on the trade or the part of the trade in question.

(4) The inspector may by notice in writing require the company to furnish him with such information or particulars as may be necessary for the purposes of this section, and section 58 (1) (3) shall have effect as if the matters of which proof is required thereby included the information or particulars specified in a notice under this subsection.

(5) Where a company claims relief under this Part otherwise than by virtue of the provisions of section 54 (3), the foregoing provisions of this section shall have effect only in respect of transactions and successions occurring after the 19th day of April, 1961.

Production of documents and records.

63.—(1) Upon request made to him by an authorised officer at any premises of a company claiming relief under this Part, any person employed by the company at the premises shall produce to the authorised officer all such invoices, accounts, books and other documents and records whatsoever relating to purchase and sale of goods by the company as may be in such person's power, possession and procurement and, on production thereof, shall permit the authorised officer to examine them and take copies thereof or extracts therefrom.

(2) If a person requested under subsection (1) does not comply with the requirements of that subsection, he shall be liable to a penalty of £100.

(3) All penalties under this section may, without prejudice to any other method of recovery, be proceeded for and recovered summarily in the same manner as in summary proceedings for recovery of any fine or penalty under any Act relating to the excise.

(4) Where, in pursuance of this section, an authorised officer requests production of any documents or records, he shall, on request, show his authorisation for the purposes of this section to the person concerned.

(5) In this section “authorised officer” means an officer of the Revenue Commissioners authorised by them in writing for the purposes of this section.

Distributions.

64.—(1) This section applies to a distribution (hereafter in this section referred to as a relevant distribution) made, or deemed to have been made, by a company for an accounting period wholly or in part out of—

(a) the company's income for that accounting period the corporation tax in respect of which has been reduced under this Part, or

(b) a distribution or distributions received by the company in that accounting period in respect of which the tax credit is determined in accordance with this section.

(2) Where a relevant distribution is made or is deemed for the purposes of this section to have been made by a company for an accounting period, the tax credit to which the recipient of the relevant distribution is entitled in respect of it shall be an amount arrived at by applying a fraction determined by the formula to the amount of the relevant distribution

where—

A is an amount arrived at by applying to the amount of the company's distributable income for the accounting period, excluding distributions received by the company in that period, the fraction where D is the standard rate per cent. for the year of assessment in which the relevant distribution is made reduced in the same proportion as the company's liability to corporation tax on its income for the accounting period is reduced under section 58, subject to paragraph (c) of the proviso to section 182 (3) (transitional relief for income tax losses, etc.) and paragraph (iii) of the proviso to section 184 (3) (relief in respect of corporation profits tax losses),

B is the aggregate of the tax credits in respect of the amount referred to in subsection (4) (b), and

C is the amount of the company's distributable income for the accounting period.

(3) For the purposes of this section—

(a) where the total amount of the distributions made by a company for an accounting period exceeds the distributable income of the company for that accounting period, the excess shall be deemed for the purposes of this section to be a distribution for the immediately preceding accounting period;

(b) where the total amount of the distributions made or deemed under paragraph (a) to have been made by a company for the immediately preceding accounting period exceeds the distributable income of the company for that accounting period, the excess shall be deemed to be a distribution for the next immediately preceding accounting period and so on.

(c) where the total amount of the distributions made or deemed under this subsection to have been made for the first accounting period for which the company came within the charge to corporation tax exceeds the distributable income of the company for that accounting period—

(i) the excess shall be deemed to be a distribution for the company's period of account which ended on the accounting date last before the 6th day of April, 1975, or, if there was no such period of account, to be a distribution for the year which ended on the 5th day of April, 1976, and

(ii) the tax credit in respect of the excess which is so deemed shall be an amount equal to the amount of income tax which, under section 410 of the Income Tax Act, 1967 , the company would have been entitled to deduct from a dividend of such an amount as after deduction of that tax would equal the amount of the excess and for this purpose it shall be assumed that the dividend was paid on the 5th day of April, 1976, and was in respect of the said period of account or year which ended on the 5th day of April, 1976, as the case may be.

(4) For the purposes of this section the distributable income of a company for an accounting period shall be the aggregate of the following amounts—

(a) the income of the company charged to corporation tax for the accounting period as defined in section 28 (8) less the amount of corporation tax payable by the company for the accounting period which is attributable to that income, and

(b) an amount equal to the distributions received by the company in the accounting period which is comprised in its franked investment income of the accounting period, other than franked investment income against which relief is given under section 15 (4), 25 or 26, and which relief was not subsequently withdrawn under the provisions of those sections.

(5) Where a period of account for or in respect of which a company makes a distribution is not an accounting period and part of the period of account falls within an accounting period, the proportion of the distribution to be treated for the purposes of this section as being for or in respect of the accounting period shall be the same proportion as the said part of the period of account bears to the whole of that period.

(6) Where a company makes a distribution which is not expressed to be for or in respect of a specified period the distribution shall be treated for the purposes of this section as having been made for the accounting period in which it is made.

(7) Where the income of a company for an accounting period includes a dividend from which income tax was deducted under section 456 of the Income Tax Act, 1967 , then for the purposes of this section the amount of tax so deducted shall be deemed to be a tax credit in respect of a distribution of an amount equal to the amount of the dividend reduced by the amount of tax so deducted.

(8) In relation to a relevant distribution (other than a supplementary distribution under section 65), section 5 (dividend warrants) and section 83 (5) (Schedule F) shall apply so that the statements provided for by those sections shall show, in addition to the particulars to be given apart from this section, the amount of the tax credit which would apply in respect of the distribution if it were not a relevant distribution.

(9) The inspector may by notice in writing require a company to furnish him with such information or particulars as may be necessary for the purposes of this section and if the company does not comply with the requirements of the notice it shall be liable to a penalty of £100.

Dividends and other distributions at gross rate or of gross amount.

65.—(1) Where a company makes a distribution in respect of any right or obligation to which section 178 (dividends at gross rate or of gross amount) relates and the tax credit in respect of that distribution is calculated in accordance with section 64 then, the company shall make a supplementary distribution of an amount equal to the excess of the amount of the tax credit which would have applied to the distribution if section 64 had not been enacted over the amount of the tax credit which in accordance with the said section 64 applies to the distribution, and the person to whom the distribution and the supplementary distribution are made shall be regarded as having received one distribution consisting of the aggregate of the distribution and the supplementary distribution.

(2) Notwithstanding the provisions of section 88 the recipient of a supplementary distribution under subsection (1) shall not be entitled to a tax credit in respect of it.

(3) In relation to any supplementary distribution within the meaning of subsection (1), section 5 shall apply to the company so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

Effect of reduction of tax credit.

66.—(1) Nothing in this section shall affect the amount of income for the purposes of Schedule F which is represented by a distribution.

(2) In this section the relieved amount for a year of assessment in relation to an individual is an amount determined by the formula

where—

A is the aggregate amount of income on which the individual is chargeable under Schedule F for that year of assessment in respect of distributions to which section 64 applies,

B is the aggregate amount of the tax credits which are included in the amount referred to at A, and

C is the standard rate per cent. for the year of assessment.

(3) (a) An individual whose income for a year of assessment includes a distribution or distributions (in this subsection referred to as the said distribution or the said distributions) to which section 64 applies shall be assessed and charged to tax as if—

(i) the highest part of his income were the relieved amount, and

(ii) the next highest part of his income were the excess (in this section referred to as the said excess) of the amount of income represented by the said distribution (or the aggregate of the said distributions as the case may be) over the relieved amount.

(b) Notwithstanding the provisions of section 64, the total amount of the tax credits which, by virtue of section 88, an individual may claim to have set against the tax charged on his income or to have paid to him, shall—

(i) in relation to so much of the relieved amount as is charged to tax at a rate or rates higher than the reduced rate be an amount equal to the amount of tax so charged,

(ii) in relation to that part of the said excess which is charged to tax at a rate or rates higher than the reduced rate be a sum equal to income tax at the standard rate for the year of assessment in which the distribution is made on that part of the said excess,

(iii) in relation to so much of his income which is represented by the said distribution (or the aggregate of the said distributions as the case may be) as is charged to tax at the reduced rate be tax at the reduced rate on the amount so charged together with tax on the same amount at a rate per cent. equal to

where—

D is the difference between the standard rate per cent. and the reduced rate per cent. for the year of assessment and for this purpose “the reduced rate per cent.” for a year of assessment means 26 where the reduced rate for that year is 26 per cent. and similarly with reference to the reduced rate per cent. for a year of assessment for which the reduced rate is other than 26 per cent.,

E is the rate of imputation per cent. for the year of assessment, and for this purpose “the rate of imputation per cent.” for a year of assessment means an amount determined by the formula

where A and B have the same meanings as in subsection (2), and

F is the standard rate per cent. for the year of assessment, and

(iv) in relation to so much of his income which is represented by the said distribution (or the aggregate of the said distributions as the case may be) as is not included in his taxable income be a proportionate part of the tax credit which under section 64 is applicable to the said distribution (or, as the case may be, a proportionate part of the aggregate amount of the tax credits which under section 64 are applicable to the said distributions).

Distributions to non-resident individuals.

67.—Where for any year of assessment the income of an individual who for that year is not resident in the State includes an amount in respect of a distribution to which section 64 applies, the distribution shall be treated as representing income equal to an amount determined by the formula

where—

A is the amount of the tax credit to which the individual would have been entitled in respect of the distribution if he were resident in the State for the year of assessment, and

B is the standard rate per cent. for that year of assessment.

Appeals.

68.—An appeal to the Appeal Commissioners shall lie on any question arising under this Part in like manner as an appeal would lie against an assessment to corporation tax and the provisions of this Act relating to appeals shall apply and have effect accordingly.

PART V

Profits from Trading within Shannon Airport

Definitions.

69.—In this Part—

“the airport” has the same meaning as in the Customs-free Airport Act, 1947 ;

“company” means any company carrying on a trade;

“the Minister” means the Minister for Finance.

Exempted trading operations.

70.—(1) In this section “qualified company” means a company the whole or part of the trade of which is carried on within the airport.

(2) Subject to subsections (5) and (6), the Minister may give a certificate certifying that such trading operations of a qualified company as are specified in the certificate are, with effect as from their commencement, exempted trading operations for the purposes of this Part, and any certificate so given shall, unless it is revoked under subsection (4), remain in force until the 5th day of April, 1990:

Provided that where the Minister has given a certificate under section 3 (2) of the Finance (Miscellaneous Provisions) Act, 1958 , or under the said section 3 (2) and section 374 (2) of the Income Tax Act, 1967 (exempted trading operations), such certificate shall, until it is revoked, have effect as if it were a certificate given under this section.

(3) A certificate under subsection (2) may be given either without conditions or subject to such conditions as the Minister considers proper and specifies therein.

(4) Where, in the case of a company in relation to which a certificate under subsection (2) has been given—

(a) the trade of the company ceases or becomes carried on wholly outside the airport, or

(b) the Minister is satisfied that the company has failed to comply with any condition subject to which the certificate was given,

the Minister may, by notice in writing served by registered post on the company, revoke the certificate.

(5) The Minister shall not certify, under subsection (2), that a trading operation is an exempted trading operation unless it falls within one or more of the following classes of trading operations—

(a) the sale of goods exported, or to be exported, out of the State by the qualified company (whether acting as principal or agent), being goods which have been produced, manufactured or processed within the airport by the qualified company,

(b) the sale of goods exported, or to be exported, out of the State by the qualified company, being goods which have been imported into the State and which have been packaged or handled within the airport by the qualified company,

(c) the repair or maintenance, within the airport, of aircraft,

(d) the rendering, within the airport or outside the State, of services entailing the use of aircraft or air transport,

(e) other trading operations in regard to which the Minister is of opinion, after consultation with the Minister for Transport and Power, that they contribute to the use or development of the airport,

(f) trading operations which are ancillary to any of those described in the foregoing paragraphs of this subsection.

(6) The Minister shall not certify, under subsection (2), that any of the following trading operations is an exempted trading operation—

(a) the sale of goods brought, or to be brought, from the airport into any other part of the State otherwise than in the course of being exported out of the State,

(b) the rendering, to persons resident in the State outside the airport, of services,

(c) the production or manufacture of goods outside the airport,

(d) the operation of an air transport service other than an air transport service which—

(i) is operated between the airport and a place outside the State, and

(ii) is not so operated under an international bilateral agreement to which the Government is a party,

(e) the rendering within the State of—

(i) services to embarking or disembarking aircraft passengers, including hotel, catering, money changing or transport (other than air transport) services, or

(ii) services in connection with the landing, departure, loading or unloading of aircraft,

(f) the sale of goods by retail,