Corporation Tax Act, 1976

FIFTH SCHEDULE

Transitional Relief in respect of Certain Payments and Management Expenses

Section 186

1. (1) This paragraph applies to a company which comes within the charge to corporation tax in respect of a source of income as from a date before the 7th day of April, 1975.

(2) In this paragraph—

(a) the relevant period of a company means the period commencing on the earliest date on which the company comes within the charge to corporation tax in respect of any source of income and ending on the 5th day of April, 1976;

(b) the relevant amount payable by a company means the aggregate of the amounts specified in subparagraph (3) which become due for payment by the company in the year 1974-75 or, if it is smaller, the aggregate of the amounts specified in the said subparagraph which become due for payment by the company in the year 1975-76.

(3) The amounts referred to in subparagraph (2) (b) are payments of—

(a) any yearly interest, annuity or other annual payment and any such other payments as are mentioned in section 93 of the Income Tax Act, 1967 ;

(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 subparagraph any such interest payable by a company 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; and

(c) any royalty or other sum which is paid in respect of the user of a patent wholly out of income brought within the charge to income tax or corporation tax:

Provided that the following amounts shall be treated as not being amounts which are specified in this subparagraph—

(i) any amount of interest which, if it is paid before the 6th day of April, 1976, is treated by virtue of Chapter III of Part I of the Finance Act, 1974 , as not qualifying for relief by repayment or otherwise;

(ii) any amount which, if it is paid on or after the 6th day of April, 1976, is treated as not being a charge on income within the meaning of section 10 (allowance of charges on income);

(iii) any amount which is deductible in computing any income of the company; and

(iv) any amount which is a dividend or other distribution of the company.

(4) For the purposes of this paragraph the income of a company charged to corporation tax for any period shall be determined in accordance with the provisions of section 28 (8) (small companies).

(5) Subject to subparagraph (6), the corporation tax payable by a company to which this paragraph applies, for any accounting period of the company which falls wholly or partly within the relevant period of the company, shall be reduced by an amount determined by the formula—

B

A × __

C

D

× __

E

F

× __

100

where—

A is the relevant amount payable by the company,

B is the income of the company charged to corporation tax for the accounting period, with the addition of any amount which has been allowed in respect of charges on income or expenses of management in respect of that part, if any, of the accounting period falling after the 5th day of April, 1976,

C is the total amount of the income of the company in the accounting period (including franked investment income, dividends paid by any body corporate and income which under any provision of the Tax Acts is exempt from any tax or is disregarded for the purposes of any tax or is deemed not to be income) before any deduction for charges on income or expenses of management,

D is the number of months or fractions of months comprised in that part of the accounting period which falls before the 6th day of April, 1976,

E is the number of months or fractions of months comprised in the relevant period of the company, and

F is the standard rate per cent. for the year 1976-77.

(6) Where the amount of corporation tax which is payable by a company for any accounting period which falls wholly or partly within the relevant period of the company is reduced in accordance with the provisions of Part IV (Profits from Export of Certain Goods) the amount of the reduction to be made under this section shall be an amount which bears the same proportion to the amount determined in accordance with the provisions of subparagraph (5) as the amount of corporation tax which would be payable by the company for the accounting period if this paragraph had not been enacted bears to the amount of corporation tax which would be payable by the company for the accounting period if neither Part IV nor this paragraph had been enacted.

2. (1) This paragraph applies to an investment company (as defined in section 15 (6)) which comes within the charge to corporation tax in respect of a source of income as from a date before the 7th day of April, 1975, and which is entitled under section 214 of the Income Tax Act, 1967 , to relief for expenses of management for the year 1975-76.

(2) The corporation tax payable by a company to which this paragraph applies, for any accounting period which falls wholly or partly within the year 1975-76, shall be reduced by an amount determined by the formula—

B

A × __

C

D

× __

12

F

× __

100

where—

A is the amount of management expenses disbursed by the company for the year 1975-76 and in respect of which the company is entitled to relief under section 214 of the Income Tax Act, 1967 , or, if it is smaller, an amount which bears the same proportion to the amount of management expenses disbursed by the company for the year 1974-75 and in respect of which the company is entitled to relief under the said section as the amount of the total income (including franked investment income, dividends paid by any body corporate and income which under any provision of the Tax Acts is exempt from any tax or is disregarded for the purposes of any tax or is deemed not to be income) of the company for the year 1975-76 bears to the amount of the total income (computed in like manner) of the company for the year 1974-75,

B is the income of the company charged to corporation tax for the accounting period with the addition of any amount which has been allowed in respect of charges on income or expenses of management in respect of that part, if any, of the accounting period falling after the 5th day of April, 1976,

C is the total amount of the income of the company in the accounting period (including franked investment income, dividends paid by any body corporate and income which under any provision of the Tax Acts is exempt from any tax or is disregarded for the purposes of any tax or is deemed not to be income) before any deduction for charges on income or expenses of management,

D is the number of months or fractions of months comprised in that part of the accounting period which falls within the year 1975-76, and

F is the standard rate per cent. for the year 1976-77.

(3) Paragraph 1 (4) shall apply for the purposes of this paragraph as it applies for the purposes of paragraph 1.

3. (1) This paragraph applies to a company (whether or not the company is resident in the State) which

(a) carries on life business whether mutual or proprietary, and

(b) is not charged to corporation tax under Case I of Schedule D in respect of that business for any accounting period falling wholly or partly within the year 1975-76, and

(c) comes within the charge to corporation tax in respect of a source of income as from a date before the 7th day of April, 1975.

(2) The corporation tax payable by a company to which this paragraph applies, for any accounting period which falls wholly or partly within the year 1975-76, shall be reduced by an amount determined by the formula—

B

A × __

C

D

× __

12

F

× __

100

where—

A is the amount of management expenses disbursed by the company for the year 1975-76 and in respect of which the company is entitled to relief under section 214 of the Income Tax Act, 1967 , (or would have been so entitled, if the company had not been charged to income tax for the year 1975-76 in accordance with the provisions of the Income Tax Act, 1967, applicable to Case I of Schedule D) reduced by an amount, income tax on which at the standard rate for the year 1975-76 is equal to the amount by which relief for those expenses would fall to be restricted by reason of subparagraph (a) of the proviso to section 214 (1), and for this purpose the year ending on the 5th day of April, 1976, shall be the period for which the computation in accordance with the provisions of the Income Tax Act, 1967 , applicable to Case I of Schedule D is made,

B is the income of the company charged to corporation tax for the accounting period with the addition of any amount which has been allowed in respect of charges on income or expenses of management in respect of that part, if any, of the accounting period falling after the 5th day of April, 1976,

C is the total amount of the income of the company in the accounting period (including franked investment income, dividends paid by any body corporate and income which under any provision of the Tax Acts is exempt from any tax or is disregarded for the purposes of any tax or is deemed not to be income) before any deduction for charges on income or expenses of management,

D is the number of months or fractions of months comprised in that part of the accounting period which falls within the year 1975-76, and

F is the standard rate per cent. for the year 1976-77.

(3) Paragraph 1 (4) shall apply for the purposes of this paragraph as it applies for the purposes of paragraph 1.

Acts Referred to

Agriculture Act, 1931

1931, No. 8

Assurance Companies Act, 1909

1909, c. 49

Capital Gains Tax Act, 1975

1975, No. 20

Companies Act, 1963

1963, No. 33

Customs-free Airport Act, 1947

1947, No. 5

Finance Act, 1920

1920, c. 18

Finance Act, 1922

1922, c. 17

Finance Act, 1924

1924, No. 27

Finance Act, 1959

1959, No. 18

Finance Act, 1960

1960, No. 19

Finance Act, 1964

1964, No. 15

Finance Act, 1966

1966, No. 17

Finance Act, 1967

1967, No. 17

Finance Act, 1968

1968, No. 33

Finance Act, 1969

1969, No. 21

Finance Act, 1970

1970, No. 14

Finance Act, 1971

1971, No. 23

Finance Act, 1972

1972, No. 19

Finance Act, 1973

1973, No. 19

Finance Act, 1974

1974, No. 27

Finance Act, 1975

1975, No. 6

Finance (Miscellaneous Provisions) Act, 1956

1956, No. 47

Finance (Miscellaneous Provisions) Act, 1958

1958, No. 28

Finance (Miscellaneous Provisions) Act, 1968

1968, No. 7

Finance (Profits of Certain Mines) (Temporary Relief from Taxation) Act, 1956

1956, No. 8

Finance (Taxation of Profits of Certain Mines) Act, 1974

1974, No. 17

Income Tax Act, 1967

1967, No. 6

Industrial and Commercial Property (Protection) Act, 1927

1927, No. 16

Industrial Development Act, 1969

1969, No. 32

Inland Revenue Regulation Act, 1890

1890, c. 21

Insurance Act, 1936

1936, No. 45

Insurance Acts, 1909 to 1969

Interpretation Act, 1937

1937, No. 38

Local Government Act, 1941

1941, No. 23

Local Government Services (Corporate Bodies) Act, 1971

1971, No. 6

Minerals Development Act, 1940

1940, No. 31

Petty Sessions (Ireland) Act, 1851

1851, c. 93

Provisional Collection of Taxes Act, 1927

1927, No. 7

Shipping Investment Grants Act, 1969

1969, No. 11

Vocational Education Act, 1930

1930, No. 29

Voluntary Health Insurance Act, 1957

1957, No. 1