Finance Act, 1984

Number 9 of 1984

FINANCE ACT, 1984

ARRANGEMENT OF SECTIONS

PART I

Income Tax, Income Levy, Corporation Tax and Capital Gains Tax

Chapter I

Income Tax

Chapter II

Income Levy

Chapter III

Income Tax: Relief for Investment in Corporate Trades

Chapter IV

Anti-avoidance and Anti-evasion

Chapter V

Income Tax, Corporation Tax and Capital Gains Tax

Chapter VI

Corporation Tax

Chapter VII

Advance Corporation Tax

Chapter VIII

Stock Relief

Chapter IX

Amendment of Provisions in relation to Decrease in Stock Values other than in Trade of Farming

Chapter X

Capital Gains Tax

PART II

Customs and Excise

PART III

Value-Added Tax

PART IV

Stamp Duties

PART V

Capital Acquisitions Tax

Chapter I

Discretionary Trusts

Chapter II

Revised Computation

Chapter III

Certificate of Discharge

PART VI

Miscellaneous

FIRST SCHEDULE

Amendment of Enactments

Part I

Amendments Consequential on Changes in Rates of Tax

Part II

Amendments Consequential on Changes in Personal Reliefs

SECOND SCHEDULE

Relief for Investment in Corporate Trades: Subsidiaries

THIRD SCHEDULE

Rates of Excise Duty on Tobacco Products

FOURTH SCHEDULE

Part I

Rates of Excise Duty on Wine

Part II

Rates of Excise Duty on Made Wine

FIFTH SCHEDULE

Rates of Excise Duty on Cider and Perry

Number 9 of 1984

FINANCE ACT, 1984

AN ACT TO CHARGE AND IMPOSE CERTAIN DUTIES OF CUSTOMS AND INLAND REVENUE (INCLUDING EXCISE), TO AMEND THE LAW RELATING TO CUSTOMS AND INLAND REVENUE (INCLUDING EXCISE) AND TO MAKE FURTHER PROVISIONS IN CONNECTION WITH FINANCE. [23rd May, 1984]

BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:

PART I

Income Tax, Income Levy, Corporation Tax and Capital Gains Tax

Chapter I

Income Tax

Amendment of provisions relating to exemption from income tax.

1.—As respects the year 1984-85 and subsequent years of assessment, the Finance Act, 1980 , is hereby amended—

(a) in subsection (2) of section 1 , by the substitution of “£5,000” for “£4,800” (inserted by the Finance Act, 1983 ) and of “£2,500” for “£2,400” (inserted by the Finance Act, 1983 ), and

(b) in subsection (6) of section 2 , by the substitution of “£5,600” for “£5,000” (inserted by the Finance Act, 1982 ), of “£6,600” for “£6,000” (inserted by the Finance Act, 1982 ), of “£2,800” for “£2,500” (inserted by the Finance Act, 1982 ) and of “£3,300” for “£3,000”(inserted by the Finance Act, 1982 ),

and the said subsections (2) and (6), as so amended, are set out in the Table to this section.

TABLE

(2) In this section “the specified amount” means—

(a) in a case where the individual would, apart from this section, be entitled to a deduction specified in section 138 (a) of the Income Tax Act, 1967 , £5,000, and

(b) in any other case, £2,500.

(6) In this section “the specified amount” means—

(a) in a case where the individual would, apart from this section, be entitled to a deduction specified in paragraph (a) of the said section 138, £5,600:

Provided that, if at any time during the year of assessment either the individual or his spouse was of the age of seventy-five years or upwards, “the specified amount” means £6,600;

(b) in any other case, £2,800:

Provided that, if at any time during the year of assessment the individual was of the age of seventy-five years or upwards, “the specified amount” means £3,300.

Charge of income tax for 1984-85 and subsequent years.

2.—(1) Where a person who is charged to income tax for the year 1984-85 or any subsequent year of assessment is an individual (other than an individual acting in a fiduciary or representative capacity), he shall, notwithstanding anything in the Income Tax Acts but subject to section 5 (3) of the Finance Act, 1974 , be charged to tax on his taxable income—

(a) in a case in which he is assessed to tax otherwise than in accordance with the provisions of section 194 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , at the rates specified in Part I of the Table to this section, or

(b) in a case in which he is assessed to tax in accordance with the provisions of the said section 194, at the rates specified in Part II of the said Table,

and the rates in each Part of that Table, shall be known, respectively, by the description specified in column (3), in each such Part opposite the mention of the rate or rates, as the case may be, in column (2) of that Part.

TABLE

PART I

PART II

(2) Paragraph 1 of the Part I of the First Schedule shall have effect for the purpose of supplementing subsection (1) and paragraph 2 of the said Part I shall have effect for the purpose of supplementing section 8 of the Finance Act, 1980 .

Personal reliefs.

3.—(1) Where a deduction falls to be made from the total income of an individual for the year 1984-85 or any subsequent year of assessment in respect of relief to which the individual is entitled under a provision mentioned in column (1) of the Table to this subsection and the amount of the deduction would, but for this section, be an amount specified in column (2) of the said Table, the amount of the deduction shall, in lieu of being the amount specified in the said column (2), be the amount specified in column (3) of the said Table opposite the mention of the amount in the said column (2).

TABLE

(2) Section 2 of the Finance Act, 1982 , shall have effect subject to the provisions of this section.

(3) Part II of the First Schedule shall have effect for the purpose of supplementing subsection (1).

Amendment of section 6 (special allowance in respect of P.R.S.I for 1982-83) of Finance Act, 1982.

4.— Section 6 of the Finance Act, 1982 , shall have effect for the purpose of ascertaining the amount of income on which an individual referred to therein is to be charged to income tax for the year 1984-85, as if in subsection (2)—

(a) “1984-85” were substituted for “1982-83”, and

(b) “£286” were substituted for “£312”, in each place where it occurs.

Amendment of section 142A (allowance for rent paid by certain tenants) of Income Tax Act, 1967.

5.— Section 142A (inserted by the Finance Act, 1982 ) of the Income Tax Act, 1967 , is hereby amended, as respects the year 1984-85 and subsequent years of assessment, by the substitution in subsection (2) (a) (i) of “sixty years” for “sixty-five years”, and the said subsection (2) (a) (i), as so amended, is set out in the Table to this section.

TABLE

(i) at any time during the year of assessment he was of the age of sixty years or upwards, and

Amendment of section 432 (making of claims, etc., and appeals and rehearings) of Income Tax Act, 1967.

6.—As respects the year 1984-85 and subsequent years of assessment, subsection (1) of section 432 of the Income Tax Act, 1967 , is hereby amended—

(a) by the deletion in paragraph (c) of “of the Appeal Commissioners”, and

(b) by the substitution of “thirty” for “twenty-one”,

and the said subsection (1), as so amended, is set out in the Table to this section.

TABLE

(1) Notwithstanding any other provision of this Act—

(a) all claims of exemption or for any allowance or deduction under this Act,

(b) all claims for repayment of tax under this Act, and

(c) (i) all claims to relief under this Act where the relief is measured in the provision under which it is given, and

(ii) all matters and questions relating to any relief so measured,

in relation to which a right of appeal from a decision is, otherwise than by this section, not specifically provided,

shall be stated in such manner and form as the Revenue Commissioners may prescribe and shall be submitted to and determined by the Revenue Commissioners or such officer of the Revenue Commissioners (including an inspector) as they may authorise in that behalf, but any person aggrieved by any determination on any such claim, matter or question may, on giving notice in writing to the Revenue Commissioners or the officer within thirty days after notification to the person aggrieved of the determination, appeal to the Appeal Commissioners.

Amendment of section 41 (investment accounts in trustee savings banks) of Finance Act, 1968.

7.— Section 41 (9) of the Finance Act, 1968 , shall not apply or have effect for the year 1984-85 or any subsequent year of assessment.

Amendment of section 3 (employed person taking care of incapacitated individual) of Finance Act, 1969.

8.— Section 3 of the Finance Act, 1969 , is hereby amended, as respects the year 1984-85 and subsequent years of assessment, by the substitution, in subsection (1), for “be entitled to have a deduction of £700 made from his total income” of “be entitled to have a deduction made from his total income of £2,000, if the amount ultimately borne by him in the year of assessment in employing the employed person is not less than £2,000, or the amount so borne, if it is less than £2,000.”, and the said subsection (1), as so amended, is set out in the Table to this section.

TABLE

(1) Subject to the provisions of this section, an individual who, in the manner prescribed by the Income Tax Acts makes a claim in that behalf, makes a return in the prescribed form of his total income and proves—

(a) (i) that, throughout the year of assessment, he was totally incapacitated by physical or mental infirmity, or

(ii) that, being a husband who, for the relevant year of assessment, is assessed to tax in accordance with the provisions of section 194 of the Income Tax Act, 1967 , his wife was, throughout that year, totally incapacitated by physical or mental infirmity, and

(b) that for the year of assessment he has employed a person for the purpose of having the care of the person (being the individual or his wife) who is so incapacitated,

shall, in computing the amount of his taxable income, be entitled to have a deduction made from his total income of £2,000, if the amount ultimately borne by him in the year of assessment in employing the employed person is not less than £2,000, or the amount so borne, if it is less than £2,000.

Exemption for certain sports bodies.

9.—The Income Tax Act, 1967 , is hereby amended, as respects the year 1984-85 and subsequent years of assessment, by the substitution of the following section for section 349 :

“Exemption of bodies established for promotion of athletic or amateur games or sports.

349.—(1) In this section ‘approved body of persons’ means—

(a) any body of persons established for and existing for the sole purpose of promoting athletic or amateur games or sports, and

(b) any body of persons that, as respects the year 1983-84 or any earlier year of assessment, was granted exemption from income tax under the provisions of the Income Tax Act, 1967 , for which this section was substituted,

but does not include any such body of persons as aforesaid to which the Revenue Commissioners, after such consultation (if any) as may seem to them to be necessary with such person or body of persons as in their opinion may be of assistance to them, give a notice in writing stating that they are satisfied that the body—

(i) was not established for the sole purpose specified in paragraph (a) or was established wholly or partly for the purpose of securing a tax advantage, or

(ii) being so established for the sole purpose specified in paragraph (a) no longer exists for such purpose or commences to exist wholly or partly for the purpose of securing a tax advantage.

(2) Exemption from income tax shall be granted in respect of so much of the income of any approved body of persons as is shown to the satisfaction of the Revenue Commissioners to be income which has been or will be applied to the sole purpose specified in subsection (1) (a).

(3) Where a notice is given under subsection (1), the exemption from income tax accorded to the body of persons to which it relates shall cease to have effect—

(a) if the notice is a notice to which paragraph (i) of that subsection applies—

(i) as respects income tax, for the year of assessment in which the body of persons was established or the year 1984-85, whichever is the later, and for each subsequent year of assessment,

(ii) as respects corporation tax, for the first accounting period of the body of persons which commences on or after the 6th day of April, 1984, and for each subsequent accounting period,

(b) if the notice is a notice to which paragraph (ii) of that subsection applies—

(i) as respects income tax, for the year of assessment in which, in the opinion of the Revenue Commissioners, the body of persons ceased to exist for the sole purpose specified in subsection (1) (a) or the year in which it commenced to exist wholly or partly for the purpose of securing a tax advantage, whichever is the earlier, but not being a year earlier than the year 1984-85, and for each subsequent year of assessment,

(ii) as respects corporation tax, for the accounting period in which, in the opinion of the Revenue commissioners, the body of persons ceased to exist for the sole purpose specified in subsection (1) (a) or the accounting period in which it commenced to exist wholly or partly for the purpose of securing a tax advantage, whichever is the earlier, but not being an accounting period which ends before the 6th day of April, 1984, and for each subsequent accounting period.

(4) Section 432 shall apply to a notice under subsection (1) as if the notice were a determination by the Revenue Commissioners of a claim to an exemption under this Act.

(5) Anything required or permitted to be done by the Revenue Commissioners or any power or function conferred or imposed on them by this section may be done, exercised or performed, as appropriate, by an officer of the Revenue Commissioners authorised by them in that behalf.”.

Chapter II

Income Levy

Amendment of section 16 (income levy) of Finance Act, 1983.

10.— Section 16 of the Finance Act, 1983 , is hereby amended—

(a) in subsection (2):

(i) by the substitution of the following paragraph for paragraph (b):

“(b) the Youth Employment Levy Regulations, 1982 (S.I. No. 84 of 1982), the Youth Employment Levy (Amendment) Regulations, 1983 (S.I. No. 52 of 1983), and the Youth Employment Levy (Amendment) Regulations, 1984 (S.I. No. 75 of 1984) (referred to in this subsection as “the Regulations”), and

(ii) by the substitution of the following paragraph for paragraph (v):

“(v) in section 1 (1) of the Act, the following definition shall be substituted for the definition of ‘contribution year’:

‘ “contribution year” means a year of assessment within the meaning of the Income Tax Acts being the year 1983-84 or the year 1984-85,’ ”,

and

(b) by the insertion of the following proviso after subsection (2):

“Provided that an individual shall not be liable to pay income levy—

(a) in respect of any payment on account of emoluments made in the contribution year (within the meaning of the Youth Employment Agency Act, 1981 , as modified by this section) 1984-85 if his reckonable income consists of emoluments only in that year and the amount of the payment does not exceed an amount equal to £96 where the period in respect of which the payment is made is a week or a corresponding amount where the period in respect of which the payment is made is greater or less than a week, or

(b) in respect of his reckonable income for the contribution year (within the meaning of the Youth Employment Agency Act, 1981 , as modified by this section) 1984-85 if such income does not consist of emoluments only and the amount of that income does not exceed £5,000 in that year.”

Chapter III

Income Tax: Relief for Investment in Corporate Trades

Interpretation (Chapter III ).

11.— (1) In this Chapter—

“associate” has the same meaning in relation to a person as it has by virtue of section 103 (3) of the Corporation Tax Act, 1976 , in relation to a participator;

“control”, except in section 14 (7) and section 26 (2) (b), shall be construed in accordance with subsections (2) to (6) of section 102 of the Corporation Tax Act, 1976 ;

“debenture” has the meaning assigned to it by section 2 of the Companies Act, 1963 ;

“director” shall be construed in accordance with section 103 (5) of the Corporation Tax Act, 1976 ;

“market value” shall be construed in accordance with section 49 of the Capital Gains Tax Act, 1975 ;

“ordinary shares” means shares forming part of a company's ordinary share capital;

“the relevant period” has the meaning assigned to it by section 12 (7);

“the relief” and “relief” mean relief under section 12 and references to the amount of the relief shall be construed in accordance with subsection (3) of that section;

“qualifying trading operations” has the meaning assigned to it by section 16 (2); and

“unquoted company” means a company none of whose shares, stocks or debentures are listed in the official list of a stock exchange or dealt in on an unlisted securities market.

(2) Section 157 of the Corporation Tax Act, 1976 , applies for the purposes of the provisions of this Chapter other than section 14 .

(3) References in this Chapter to a disposal of shares include references to a disposal of an interest or right in or over the shares and an individual shall be treated for the purposes of this Chapter as disposing of any shares which he is treated by virtue of paragraph 5 of Schedule 2 to the Capital Gains Tax Act, 1975 , as exchanging for other shares.

(4) References in this Chapter to the reduction of any amount include references to its reduction to nil.

The relief.

12.—(1) This Chapter has effect for affording relief from income tax where—

(a) an individual who qualifies for the relief subscribes for eligible shares in a qualifying company;

(b) those shares are issued to him for the purpose of raising money for a qualifying trade which is being carried on by the company or which it intends to carry on; and

(c) the company provides satisfactory evidence, and it appears to the Revenue Commissioners after such consultation, if any, as may seem to them to be necessary with such person or body of persons as in their opinion may be of assistance to them, that the money was used, is being used or is intended to be used—

(i) for the purposes of—

(I) enabling the company, or enlarging its capacity, to undertake qualifying trading operations,

(II) enabling the company to engage in, or assisting the company in, research and development, the acquisition of technological information and data, the development of new or existing products or services or the provision of new products or services,

(III) enabling the company to identify new markets, and to develop new and existing markets, for its products and services, or

(IV) enabling the company to increase its sales of products or provision of services,

and

(ii) with a view to the creation or maintenance of employment in the company.

(2) In this Chapter “eligible shares” means new ordinary shares which, throughout the period of five years beginning with the date on which they are issued, carry no present or future preferential right to dividends or to a company's assets on its winding up and no present or future preferential right to be redeemed.

(3) The relief in respect of the amount subscribed by an individual for any eligible shares shall be given as a deduction of that amount from his total income for the year of assessment in which the shares are issued, and references in this Chapter to the amount of the relief are references to the amount of that deduction.

(4) The relief shall be given on a claim and shall not be allowed—

(a) unless and until the company has carried on the trade for four months; and

(b) if the company is not carrying on that trade at the time when the shares are issued, unless the company begins to carry it on within two years after that time.

(5) A claim for the relief may be allowed at any time after the trade has been carried on by the company for four months if the conditions for the relief are then satisfied; but no claim shall be allowed before the 1st day of January, 1985.

(6) In the case of a claim allowed before the end of the relevant period, the relief shall be withdrawn if by reason of any subsequent event it appears that the claimant was not entitled to the relief allowed.

(7) In this Chapter “the relevant period”, in relation to relief in respect of any eligible shares issued by a company, means—

(a) as respects sections 14 , 17 , 18 , 19 , and 20 , the period beginning with the incorporation of the company (or, if the company was incorporated more than two years before the date on which the shares were issued, beginning two years before that date) and ending five years after the issue of the shares; and

(b) as respects sections 15 , 16 , and 26 , the period beginning with the date on which the shares were issued and ending either three years after that date or, where the company was not at that date carrying on a qualifying trade, three years after the date on which it subsequently began to carry on such a trade.

(8) Where by reason of its being wound up, or dissolved without winding up, the company carries on the qualifying trade for a period shorter than four months, subsection (4) (a) shall have effect as if it referred to that shorter period but only if it is shown that the winding up or dissolution was for bona fide commercial reasons and not as part of a scheme or arrangement the main purpose or one of the main purposes of which was the avoidance of tax.

(9) All such provisions of the Income Tax Acts as apply in relation to the deductions specified in sections 138 to 143 of the Income Tax Act, 1967 , shall, with any necessary modifications, apply in relation to relief under this Chapter.

(10) Subject to the provisions of section 25 , no account shall be taken of the relief, in so far as it is not withdrawn, in determining whether any sums are excluded by virtue of paragraph 4 of Schedule 1 to the Capital Gains Tax Act, 1975 , from the sums allowable as a deduction in the computation of gains and losses for the purposes of the Capital Gains Tax Acts.

(11) This section applies only where the shares concerned are issued in the year 1984-85 or either of the two years of assessment immediately following.

Limits on relief.

13.—(1) Subject to section 27 , the relief shall not be given in respect of any amount subscribed by an individual for eligible shares issued to him by any company in any year of assessment unless the amount or total amount subscribed by him for the eligible shares issued to him by the company in that year is £200 or more:

Provided that in the case of an individual who is a husband assessed to tax for a year of assessment in accordance with the provisions of section 194 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , any amount subscribed by his spouse for eligible shares issued to her in that year of assessment by the company shall be deemed to have been subscribed by him for eligible shares issued to him by the company.

(2) The relief shall not be given to the extent to which the amount or total amount subscribed by an individual for eligible shares issued to him in any year of assessment (whether or not by the same company) exceeds £25,000.

(3) Section 198 (1) (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , is hereby amended by the insertion in paragraph (a) of the following subparagraph after subparagraph (vii):

“(viii) so far as it flows from relief under Chapter III of Part I of the Finance Act, 1984, in the proportions in which they subscribed for the eligible shares giving rise to the relief,”.

Individuals qualifying for relief.

14.—(1) (a) An individual qualifies for the relief if he subscribes on his own behalf for the eligible shares in a qualifying company, is not at any time in the relevant period connected with the company and does not during that period receive from the company any dividend which is a distribution to which either section 64 or 76 of the Corporation Tax Act, 1976 , applies.

(b) For the purposes of this section and paragraph 2 of the Second Schedule , any question whether an individual is connected with a company shall be determined in accordance with the following provisions of this section.

(2) An individual is connected with a company if he, or an associate of his, is—

(a) a partner of the company; or

(b) subject to subsection (3), a director or employee of the company or of another company which is a partner of that company.

(3) An individual is not connected with a company by reason only that he, or an associate of his, is a director or employee of the company or of another company which is a partner of that company unless he or his associate (or a partnership of which he or his associate is a member) receives a payment from either company during the period of five years beginning with the date on which the shares are issued or is entitled to receive such a payment in respect of that period or any part of it; but for that purpose there shall be disregarded—

(a) any payment or reimbursement of travelling or other expenses wholly, exclusively and necessarily incurred by him or his associate in the performance of his duties as such director or employee;

(b) any interest which represents no more than a reasonable commercial return on money lent to either company;

(c) any dividend or other distribution paid or made by either company which does not exceed a normal return on the investment;

(d) any payment for the supply of goods to either company which does not exceed their market value; and

(e) any reasonable and necessary remuneration which—

(i) (I) is paid for services rendered to either company in the course of a trade or profession (not being secretarial or managerial services or services of a kind provided by the company itself), and

(II) is taken into account in computing the profits or gains of the trade or profession under Case I or II of Schedule D or would be so taken into account if it fell in a period on the basis of which those profits or gains are assessed under that Schedule,

or

(ii) in case he is a director or an employee of either company and is not otherwise connected with either company, is paid for service rendered to the company of which he is a director or an employee in the course of the directorship or the employment.

(4) An individual is connected with a company if he directly or indirectly possesses or is entitled to acquire more than 30 per cent. of—

(a) the issued ordinary share capital of the company; or

(b) the loan capital and issued share capital of the company; or

(c) the voting power in the company.

(5) For the purposes of subsection (4) (b) the loan capital of a company shall be treated as including any debt incurred by the company—

(a) for any money borrowed or capital assets acquired by the company; or

(b) for any right to receive income created in favour of the company; or

(c) for consideration the value of which to the company was (at the time when the debt was incurred) substantially less than the amount of the debt (including any premium thereon).

(6) An individual is connected with a company if he directly or indirectly possesses or is entitled to acquire such rights as would, in the event of the winding up of the company or in any other circumstances, entitle him to receive more than 30 per cent. of the assets of the company which would at that time be available for distribution to equity holders of the company, and for the purposes of this subsection—

(a) the persons who are equity holders of the company; and

(b) the percentage of the assets of the company to which the individual would be entitled,

shall be determined in accordance with sections 109 and 111 of the Corporation Tax Act, 1976 , taking references in section 111 to the first company as references to an equity holder and references to a winding up as including references to any other circumstances in which assets of the company are available for distribution to its equity holders.

(7) An individual is connected with a company if he has control of it within the meaning of section 158 of the Corporation Tax Act, 1976 .

(8) For the purposes of this section an individual shall be treated as entitled to acquire anything which he is entitled to acquire at a future date or will at a future date be entitled to acquire; and there shall be attributed to any person any rights or powers of any other person who is an associate of his.

(9) In determining, for the purposes of this section, whether an individual is connected with a company, no debt incurred by the company by overdrawing an account with a person carrying on a business of banking shall be treated as loan capital of the company if the debt arose in the ordinary course of that business.

(10) Where an individual subscribes for shares in a company with which he is not connected (either within the meaning of this section or by virtue of paragraph 2 (2) (b) of the Second Schedule ) he shall nevertheless be treated as connected with it if he subscribes for the shares as part of any arrangement which provides for another person to subscribe for shares in another company with which the individual or any other individual who is a party to the arrangement is connected (within the meaning of this section or by virtue of that paragraph).

Qualifying companies.

15.—(1) A company is a qualifying company if it is incorporated in the State and complies with the requirements of this section.

(2) The company must, throughout the relevant period, be an unquoted company which is resident in the State and not resident elsewhere, and be—

(a) a company which exists wholly for the purpose of carrying on wholly or mainly in the State one or more qualifying trades; or

(b) a company whose business consists wholly of—

(i) the holding of shares or securities of, or the making of loans to, one or more qualifying subsidiaries of the company; or

(ii) both the holding of such shares or securities, or the making of such loans and the carrying on wholly or mainly in the State of one or more qualifying trades.

(3) In this section “qualifying subsidiary”, in relation to a company, means a subsidiary of that company of a kind which a company may have by virtue of section 26 .

(4) Without prejudice to the generality of subsection (2) but subject to subsection (5), a company ceases to comply with subsection (2) if before the end of the relevant period a resolution is passed, or an order is made, for the winding up of the company (or, in the case of a winding up otherwise than under the Companies Act, 1963 , any other act is done for the like purpose) or the company is dissolved without winding up.

(5) A company shall not be regarded as ceasing to comply with subsection (2) if it does so by reason of being wound up or dissolved without winding up and—

(a) it is shown that the winding up or dissolution is for bona fide commercial reasons and not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax; and

(b) the company's net assets, if any, are distributed to its members before the end of the relevant period or, in the case of a winding up, the end (if later) of three years from the commencement of the winding up.

(6) The company's share capital must not, at any time in the relevant period, include any issued shares that are not fully paid up.

(7) (a) Subject to section 26 , the company must not at any time in the relevant period—

(i) control (or together with any person connected with it control) another company or be under the control of another company (or of another company and any person connected with that other company); or

(ii) be a 51 per cent. subsidiary of another company or itself have a 51 per cent. subsidiary;

and no arrangements must be in existence at any time in that period by virtue of which the company could fall within subparagraph (i) or (ii).

(b) In this subsection “51 per cent. subsidiary”, in relation to any company, has the meaning assigned to it, for the purposes of the Corporation Tax Acts, by section 156 of the Corporation Tax Act, 1976 .

(8) A company is not a qualifying company if—

(a) (i) an individual has acquired a controlling interest in the company's trade after the 5th day of April, 1984; and

(ii) at any time in the period mentioned in subsection (11) he has, or has had, a controlling interest in another trade; and

(b) the trade carried on by the company, or a substantial part of it—

(i) is concerned with the same or similar types of property or parts thereof or provides the same or similar services or facilities as the other trade; or

(ii) serves substantially the same or similar outlets or markets as the other trade.

(9) For the purposes of this section a person has a controlling interest in a trade—

(a) in the case of a trade carried on by a company if—

(i) he controls the company;

(ii) the company is a close company for the purposes of the Corporation Tax Acts and he or an associate of his is a director of the company and the beneficial owner of, or able directly or through the medium of other companies or by any other indirect means to control, more than 30 per cent. of the ordinary share capital of the company; or

(iii) not less than half of the trade could in accordance with section 20 (12) of the Corporation Tax Act, 1976 , be regarded as belonging to him;

(b) in any other case, if he is entitled to not less than half of the assets used for, or the income arising from, the trade.

(10) For the purposes of subsection (9) there shall be attributed to any person any rights or powers of any other person who is an associate of his.

(11) The period referred to in subsection (8) (a) (ii) is the period beginning two years before and ending three years after—

(a) the date on which the shares were issued; or

(b) if later, the date on which the company began to carry on the trade.

(12) In subsections (8) and (11) references to a company's trade include references to the trade of any of its subsidiaries.

Qualifying trades.

16.—(1) A trade is a qualifying trade if it complies with the requirements of this section.

(2) The trade must throughout the relevant period—

(a) consist wholly or mainly of either or both of the following trading operations (in this Chapter referred to as “qualifying trading operations”)—

(i) the manufacture of goods within the meaning of Chapter VI of Part I of the Finance Act, 1980 , or

(ii) the rendering of services in the course of a service undertaking in respect of which an employment grant was made by the Industrial Development Authority under section 2 of the Industrial Development (No. 2) Act, 1981 ,

and

(b) where the trade consists wholly or partly of the manufacture of goods referred to in paragraph (a) (i), be a trade in respect of which the company which carries it on has claimed and is entitled, or would, but for an insufficiency of profits, have claimed and been entitled, to relief from corporation tax under the provisions of the said Chapter VI:

Provided that a trade which during the relevant period consists partly of qualifying trading operations and partly of other trading operations shall be regarded for the purposes of this subsection as a trade which consists wholly or mainly of qualifying trading operations if, but only if, the total amount receivable in the relevant period from sales made and services rendered in the course of qualifying trading operations is not less than 75 per cent. of the total amount receivable by the company from all sales made and services rendered in the course of the trade in the relevant period.

(3) The trade must, during the relevant period, be conducted on a commercial basis and with a view to the realisation of profits.

(4) References in this section to a trade shall be construed without regard to so much of the definition of “trade” in section 1 (1) of the Income Tax Act, 1967 , as relates to adventures or concerns in the nature of trade.

Disposal of shares.

17.—(1) Where an individual disposes of any eligible shares before the end of the relevant period, then—

(a) in a case where the disposal is otherwise than by way of a bargain made at arm's length, he shall not be entitled to any relief in respect of those shares; and

(b) in any other case, the amount of relief to which he is entitled in respect of those shares shall be reduced by the amount or value of the consideration which he receives for them.

(2) Subsection (1) shall not apply to a disposal made by a wife to her husband at a time when she is treated as living with him for income tax purposes as provided in section 192 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , or to a disposal made at such a time by him to her; but where shares issued to one of them have been transferred to the other by a transaction inter vivos—

(a) that subsection shall apply on the disposal of the shares by the transferee to a third person; and

(b) if at any time the wife ceases to be treated as living with her husband for the aforementioned purposes and any of those shares have not been disposed of by the transferee before that time, any assessment for withdrawing relief in respect of those shares shall be made on the transferee.

(3) Where an individual holds ordinary shares of any class in a company and the relief has been given in respect of some shares of that class but not others, any disposal by him of ordinary shares of that class in the company shall be treated for the purposes of this section as relating to those in respect of which relief has been given under this Chapter rather than to others.

(4) Where the relief has been given to an individual in respect of shares of any class in a company which have been issued to him at different times, any disposal by him of shares of that class shall be treated for the purposes of this section as relating to those issued earlier rather than to those issued later.

(5) Where shares in respect of which the relief was given have by virtue of any such allotment as is mentioned in subparagraph (1) (a) (i) of paragraph 2 of Schedule 2 to the Capital Gains Tax Act, 1975 (not being an allotment for payment) fallen to be treated under subparagraph (2) of that paragraph as the same asset as a new holding—

(a) the new holding shall be treated for the purposes of subsection (3) as shares in respect of which the relief has been given, and

(b) a disposal of the whole or part of the new holding shall be treated for the purposes of this section as a disposal of the whole or a corresponding part of those shares.

(6) Shares in a company shall not be treated for the purposes of this section as being of the same class unless they would be so treated if dealt in on a stock exchange in the State.

Value received from company.

18.—(1) Where an individual who subscribes for eligible shares in a company—

(a) has, before the issue of the shares but within the relevant period, received any value from the company; or

(b) on or after their issue but before the end of the relevant period, receives any such value;

the amount of the relief to which he is entitled in respect of the shares shall be reduced by the value received.

(2) For the purposes of this section an individual receives value from the company if the company—

(a) repays, redeems or repurchases any of its share capital or securities which belongs to the individual or makes any payment to him for giving up his right to any of the company's share capital or any security on its cancellation or extinguishment;

(b) repays any debt owed to the individual other than—

(i) an ordinary trade debt incurred by the company, or

(ii) any other debt which was incurred by the company—

(I) on or after the earliest date on which he subscribed for the shares in respect of which the relief is claimed; and

(II) otherwise than in consideration of the extinguishment of a debt incurred before that date;

(c) makes to the individual any payment for giving up his right to any debt on its extinguishment, other than—

(i) a debt in respect of a payment of the kind mentioned in section 14 (3) (d) or (e), or

(ii) a debt of the kind mentioned in paragraph (b) (i) or (ii);

(d) releases or waives any liability of the individual to the company or discharges, or undertakes to discharge, any liability of his to a third person;

(e) makes a loan or advance to the individual;

(f) provides a benefit or facility for the individual;

(g) transfers an asset to the individual for no consideration or for consideration less than its market value or acquires an asset from him for consideration exceeding its market value; or

(h) makes to him any other payment except a payment of the kind mentioned in section 14 (3) (a), (b), (c), (d) or (e) or a payment in discharge of an ordinary trade debt.

(3) For the purposes of this section an individual also receives value from the company if he receives in respect of ordinary shares held by him any payment or asset in a winding up or in connection with a dissolution of the company, being a winding up or dissolution falling within section 15 (5).

(4) For the purposes of this section an individual also receives value from the company if any person who would, for the purposes of section 14 , be treated as connected with the company—

(a) purchases any of its share capital or securities which belong to the individual; or

(b) makes any payment to him for giving up any right in relation to any of the company's share capital or securities.

(5) The value received by an individual is—

(a) in a case within paragraph (a), (b) or (c) of subsection (2) the amount receivable by the individual or, if greater, the market value of the shares, securities or debt in question;

(b) in a case within paragraph (d) of that subsection, the amount of the liability;

(c) in a case within paragraph (e) of that subsection, the amount of the loan or advance;

(d) in a case within paragraph (f) of that subsection, the cost to the company of providing the benefit or facility less any consideration given for it by the individual;

(e) in a case within paragraph (g) of that subsection, the difference between the market value of the asset and the consideration (if any) given for it;

(f) in a case within paragraph (h) of that subsection, the amount of the payment;

(g) in a case within subsection (3), the amount of the payment or, as the case may be, the market value of the asset; and

(h) in a case within subsection (4), the amount receivable by the individual or, if greater, the market value of the shares or securities in question.

(6) Where by virtue of this section any relief is withheld or withdrawn in the case of an individual to whom ordinary shares in a company have been issued at different times, the relief shall be withheld or withdrawn in respect of shares issued earlier rather than in respect of shares issued later.

(7) For the purposes of subsection (2) (d) a company shall be treated as having released or waived a liability if the liability is not discharged by payment within twelve months of the time when it ought to have been discharged by payment.

(8) For the purposes of subsection (2) (e) there shall be treated as if it were a loan made by the company to the individual—

(a) the amount of any debt (other than an ordinary trade debt) incurred by the individual to the company; and

(b) the amount of any debt due from the individual to a third person which has been assigned to the company.

(9) In this section “an ordinary trade debt” means any debt for goods or services supplied in the ordinary course of a trade or business where the credit given does not exceed six months and is not longer than that normally given to the customers of the person carrying on the trade or business.

(10) In this section—

(a) any reference to a payment or transfer to an individual includes a reference to a payment or transfer made to him indirectly or to his order or for his benefit; and

(b) any reference to an individual includes a reference to an associate of his and any reference to the company includes a reference to any person connected with the company.

Replacement capital.

19.—(1) An individual to whom subsection (2) applies is not entitled to relief in respect of any shares in a company where, at any time in the relevant period, the company or any of its subsidiaries—

(a) begins to carry on as its trade or as a part of its trade a trade which was previously carried on at any time in that period otherwise than by the company or any of its subsidiaries; or

(b) acquires the whole, or greater part, of the assets used for the purposes of a trade previously so carried on.

(2) This subsection applies to an individual where—

(a) any person or group of persons to whom an interest amounting in the aggregate to more than a half share in the trade (as previously carried on) belonged, at any time in the relevant period, is a person, or a group of persons, to whom such an interest in the trade carried on by the company or any of its subsidiaries belongs or has, at any such time, belonged; or

(b) any person or group of persons who controls or, at any such time, has controlled the company is a person, or a group of persons, who, at any such time, controlled another company which previously carried on the trade;

and the individual is that person or one of those persons.

(3) An individual is not entitled to relief in respect of any shares in a company where—

(a) the company comes to acquire all of the issued share capital of another company, at any time in the relevant period; and

(b) any person or group of persons who controls or has, at any such time, controlled the company is a person, or a group of persons, who, at any such time, controlled that other company;

and the individual is that person, or one of those persons.

(4) For the purposes of subsection (2) —

(a) the person or persons to whom a trade belongs and, where a trade belongs to two or more persons, their respective shares in that trade shall be determined in accordance with subsections (11) (a) and (b), (12) and (13) of section 20 of the Corporation Tax Act, 1976 ; and

(b) any interest, rights or powers of a person who is an associate of another person shall be treated as those of that other person.

(5) In this section—

“subsidiary” means a subsidiary of a kind which a qualifying company may have by virtue of section 26 ; and

“trade” includes any business, profession or vocation and references to a trade previously carried on include references to part of such a trade.

Value received by persons other than claimants.

20.—(1) The relief to which an individual is entitled in respect of any shares in a company shall be reduced in accordance with subsection (2) if at any time in the relevant period the company repays, redeems or repurchases any of its share capital which belongs to any member other than—

(a) that individual; or

(b) another individual whose relief is thereby reduced by virtue of section 18 (2),

or makes any payment to any such member for giving up his right to any of the company's share capital on its cancellation or extinguishment.

(2) Where subsection (1) applies, the amount of relief to which an individual is entitled shall be reduced by the amount receivable by the member or, if greater, the nominal value of the share capital in question; and where, apart from this subsection, two or more individuals would be entitled to relief the reduction shall be made in proportion to the amounts of relief to which they would, apart from this subsection, have been entitled.

(3) Where at any time in the relevant period a member of a company receives or is entitled to receive any value from the company within the meaning of this subsection, then, for the purposes of the provisions of section 14 (4) in their application to any subsequent time—

(a) the amount of the company's issued ordinary share capital; and

(b) the amount of the part of that capital which consists of the shares relevant to those provisions and the amount of the part consisting of the remainder,

shall each be treated as reduced in accordance with subsection (4).

(4) The amount of each of the parts mentioned in subsection (3) (b) shall be treated as equal to such proportion of that amount as the amount subscribed for that part less the relevant value bears to the amount subscribed; and the amount of the issued share capital shall be treated as equal to the sum of the amounts treated under this subsection as the amount of those parts respectively.

(5) In subsection (3) (b) the reference to the part of the capital which consists of the shares relevant to the provisions of section 14 (4) is a reference to the part consisting of shares which (within the meaning of that section) the individual directly or indirectly possesses or is entitled to acquire; and in subsection (4) “the relevant value”, in relation to each of the parts mentioned therein, means the value received by the member or members entitled to the shares of which that part consists.

(6) For the purposes of subsection (3) a member of a company receives or is entitled to received value from the company within the meaning of that subsection in any case in which an individual would receive value from the company by virtue of paragraph (d), (e), (f), (g) or (h) of subsection (2) of section 18 (but treating as excepted from paragraph (h) all payments made for full consideration) and the value received shall be determined as for the purposes of that section.

(7) For the purposes of subsection (6) a person shall be treated as entitled to receive anything which he is entitled to receive at a future date or will at a future date be entitled to receive.

(8) Subsection (1) does not apply in relation to the redemption of any share capital for which the redemption date was fixed before the 26th day of January, 1984.

(9) Where—

(a) after the 5th day of April, 1984, a company issues share capital (“the original shares”) of nominal value equal to the authorised minimum (within the meaning of the Companies (Amendment) Act, 1983) for the purposes of complying with the requirements of section 6 of that Act; and

(b) after the registrar of companies has issued the company with a certificate under the said section 6 it issues eligible shares,

subsection (1) shall not apply in relation to any redemption of any of the original shares within twelve months of the date on which those shares were issued.

(10) Where, by virtue of this section, any relief is withheld or withdrawn in the case of an individual to whom ordinary shares in the company have been issued at different times, the relief shall be withheld or withdrawn in respect of shares issued earlier rather than in respect of shares issued later.

Prevention of misuse.

21.—An individual is not entitled to relief in respect of any shares unless the shares are subscribed for and issued for bona fide commercial purposes and not as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.

Claims.

22.—(1) A claim for the relief in respect of eligible shares issued by a company in any year of assessment shall be made—

(a) not earlier than the 1st day of January, 1985, or, if later, the end of the period of four months mentioned insection 12 (4) (a), and

(b) not later than two years after the end of that year of assessment or, if that period of four months ended after the end of that year, not later than two years after the end of that period.

(2) A claim for relief in respect of eligible shares in a company shall not be allowed unless it is accompanied by a certificate issued by the company in such form as the Revenue Commissioners may direct and certifying that the conditions for the relief, so far as applying to the company and the trade, are satisfied in relation to those shares.

(3) Before issuing a certificate for the purposes of subsection (2) a company shall furnish the inspector with a statement to the effect that it satisfies the conditions for the relief, so far as they apply in relation to the company and the trade, and has done so at all times since the beginning of the relevant period.

(4) No such certificate shall be issued without the authority of the inspector or where the company, or a person connected with the company, has given notice to the inspector under section 24 (2).

(5) Any statement under subsection (3) shall contain such information as the Revenue Commissioners may reasonably require, shall be in such form as the Revenue Commissioners may direct and shall contain a declaration that it is correct to the best of the company's knowledge and belief.

(6) Where a company has issued a certificate for the purposes of subsection (2) or furnished a statement under subsection (3) and—

(a) the certificate or statement is made fraudulently or negligently; or

(b) the certificate was issued in contravention of subsection (4); the company shall be liable to a penalty not exceeding £500 or, in the case of fraud, £1,000, and such penalty 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.

(7) For the purpose of regulations made under section 127 of the Income Tax Act, 1967 , no regard shall be had to the relief unless a claim for it has been duly made and admitted.

(8) For the purposes of section 550 of the Income Tax Act, 1967 , tax charged by an assessment—

(a) shall be regarded as due and payable notwithstanding that relief from the tax (whether by discharge or repayment) is subsequently given on a claim for the relief; but

(b) shall, unless paid earlier or due and payable later, be regarded as paid, to the extent that relief from tax is due under this Chapter, on the date of the making of the claim on which the relief is given;

and section 551 of that Act shall not apply in consequence of any discharge or repayment for giving effect to the relief.

Assessments for withdrawing relief.

23.—(1) Where any relief has been given which is subsequently found not to have been due, it shall be withdrawn by the making of an assessment to tax under Case IV of Schedule D for the year of assessment for which the relief was given.

(2) Where any relief given in respect of shares for which either a husband or his wife has subscribed and which were issued while he was assessed in accordance with the provisions of section 194 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , falls to be withdrawn by virtue of a subsequent disposal of those shares by the person who subscribed for them and at the time of the disposal the husband is not so assessable, any assessment for withdrawing that relief shall be made on the person making the disposal and shall be made by reference to the reduction of tax flowing from the amount of the relief regardless of any allocation of that reduction under section 198 (1) and (2) (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , or any allocation of a repayment of tax under section 195A (inserted by the Finance Act, 1983 ) of the Income Tax Act, 1967 .

(3) Subject to the following provisions of this section, any assessment for withdrawing relief which is made by reason of an event occurring after the date of the claim may be made within ten years after the end of the year of assessment in which that event occurs.

(4) No assessment for withdrawing relief in respect of shares issued to any person shall be made by reason of any event occurring after his death.

(5) Where a person has, by a disposal or disposals to which section 17 (1) (b) applies, disposed of all the ordinary shares issued to him by a company, no assessment for withdrawing relief in respect of any of those shares shall be made by reason of any subsequent event unless it occurs at a time when he is connected with the company within the meaning of section 14 .

(6) Subsection (3) is without prejudice to the proviso to section 186 (2) (a) of the Income Tax Act, 1967 .

(7) In its application to an assessment made by virtue of this section, section 550 of the Income Tax Act, 1967 , shall have effect as if the date on which the tax charged by the assessment becomes due and payable were—

(a) in the case of relief withdrawn by virtue of section 14 , 15 , 16 , 19 or 20 (1) in consequence of any event after the grant of the relief, the date of that event;

(b) in the case of relief withdrawn by virtue of section 17 (1) in consequence of a disposal after the grant of the relief, the date of the disposal;

(c) in the case of relief withdrawn by virtue of section 18 in consequence of a receipt of value after the grant of the relief, the date of the receipt;

(d) in the case of relief withdrawn by virtue of section 21 —

(i) so far as effect has been given to the relief in accordance with regulations under section 127 of the Income Tax Act, 1967 , the 5th day of April in the year of assessment in which effect was so given; and

(ii) so far as effect has not been so given, the date on which the relief was granted.

(8) For the purposes of subsection (7) the date on which the relief is granted is the date on which a repayment of tax for giving effect to the relief was made or, if there was no such repayment, the date on which the inspector issued a notice to the claimant showing the amount of tax payable after giving effect to the relief.

Information.

24.—(1) Where an event occurs by reason of which any relief given to an individual falls to be withdrawn by virtue of section 14 , 17 or 18 , the individual shall within sixty days of his coming to know of the event give a notice in writing to the inspector containing particulars of the event.

(2) Where an event occurs by reason of which any relief in respect of any shares in a company falls to be withdrawn by virtue of section 15 , 16 , 18 , 19 , 20 or 21 —

(a) the company; and

(b) any person connected with the company who has knowledge of that matter;

shall within sixty days of the event or, in the case of a person within paragraph (b), of his coming to know of it, give a notice in writing to the inspector containing particulars of the event or payment.

(3) If the inspector has reason to believe that a person has not given a notice which he is required to give under subsection (1) or (2) in respect of any event, the inspector may by notice in writing require that person to furnish him within such time (not being less than sixty days) as may be specified in the notice with such information relating to the event as the inspector may reasonably require for the purposes of this Chapter.

(4) Where relief is claimed in respect of shares in a company and the inspector has reason to believe that it may not be due by reason of any such arrangement or scheme as is mentioned in section 14 (10), 15 (7) or 21 , he may by notice in writing require any person concerned to furnish him within such time (not being less than sixty days) as may be specified in the notice with—

(a) a declaration in writing stating whether or not, according to the information which that person has or can reasonably obtain, any such arrangement or scheme exists or has existed;

(b) such other information as the inspector may reasonably require for the purposes of the provision in question and as that person has or can reasonably obtain.

(5) References in subsection (4) to the person concerned are, in relation to sections 14 (10) and 21 , references to the claimant and, in relation to sections 15 (7) and 21 , references to the company and any person controlling the company.

(6) Where relief has been given in respect of shares in a company—

(a) any person who receives from the company any payment or asset which may constitute value received (by him or another) for the purposes of section 18 or 20 (3); and

(b) any person on whose behalf such a payment or asset is received,

shall, if so required by the inspector, state whether the payment or asset received by him or on his behalf is received on behalf of any person other than himself and, if so, the name and address of that person.

(7) Where relief has been claimed in respect of shares in a company, any person who holds or has held shares in the company and any person on whose behalf any such shares are or were held shall, if so required by the inspector, state whether the shares which are or were held by him or on his behalf are or were held on behalf of any person other than himself and, if so, the name and address of that person.

(8) No obligation as to secrecy imposed by statute or otherwise shall preclude the inspector from disclosing to a company that relief has been given or claimed in respect of a particular number or proportion of its shares.

(9) Schedule 15 to the Income Tax Act, 1967 , is hereby amended by the insertion—

(a) in column 2 of “Finance Act, 1984, section 24 (3) and (4)”; and

(b) in column 3 of “Finance Act, 1984, section 24 (1) and (2)”.

Capital gains tax.

25.—(1) The sums allowable as deductions from the consideration in the computation for the purposes of capital gains tax of the gain or loss accruing to an individual on the disposal of shares in respect of which any relief has been given and not withdrawn shall be determined without regard to that relief, except that where those sums exceed the consideration they shall be reduced by an amount equal to—

(a) the amount of that relief, or

(b) the excess,

whichever is the less, but the foregoing provisions of this subparagraph shall not apply to a disposal falling within section 13 (5) of the Capital Gains Tax Act, 1975 .

(2) In relation to shares in respect of which relief has been given and not withdrawn, any question—

(a) as to which of any such shares issued to a person at different times a disposal relates; or

(b) whether a disposal relates to such shares or to other shares;

shall for the purposes of capital gains tax be determined as for the purposes of section 17 .

(3) Where an individual holds ordinary shares in a company and the relief has been given in respect of some but not others, then, if there is within the meaning of paragraph 2 (1) of Schedule 2 to the Capital Gains Tax Act, 1975 , a reorganisation affecting those shares, paragraph 2 (2) of that Schedule shall apply separately to the shares in respect of which the relief has been given and to the other shares (so that the shares of each kind are treated as a separate holding of original shares and identified with a separate new holding).

(4) There shall be made all such adjustments of capital gains tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the relief being given or withdrawn.

Application to subsidiaries.

26.—(1) A qualifying company may in the relevant period have one or more subsidiaries if—

(a) the conditions in subsection (2) are satisfied in respect of the subsidiary or each subsidiary and, except as provided in subsection (3), continue to be so satisfied until the end of the relevant period; and

(b) the subsidiary or each subsidiary was incorporated in the State and is a company—

(i) falling within section 15 (2) (a), or

(ii) which exists solely for the purpose of carrying on wholly or mainly in the State any trade which consists solely of any one or more of the following trading operations—

(I) the purchase of goods or materials for use by the qualifying company or its subsidiaries,

(II) the sale of goods or materials produced by the qualifying company or its subsidiaries,

or

(III) the rendering of services to or on behalf of the qualifying company or its subsidiaries.

(2) The conditions referred to in subsection (1) (a) are—

(a) that the qualifying company possesses all the issued share capital of, and all the voting power in, the subsidiary; and

(b) that no other person has control of the subsidiary within the meaning of section 158 of the Corporation Tax Act, 1976 ; and

(c) that no arrangements are in existence by virtue of which the conditions in paragraphs (a) and (b) could cease to be satisfied.

(3) The conditions referred to in subsection (1) (a) shall not be regarded as ceasing to be satisfied by reason only of the subsidiary or the qualifying company being wound up or dissolved without winding up if—

(a) it is shown that the winding up or dissolution is for bona fide commercial reasons and not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax; and

(b) the net assets, if any, of the subsidiary or, as the case may be, the qualifying company are distributed to its members before the end of the relevant period, or in the case of a winding up, the end (if later) of three years from the commencement of the winding up.

(4) Where a qualifying company has one or more subsidiaries in the relevant period this Chapter shall have effect subject to the Second Schedule .

Nominees and designated investment funds.

27.—(1) Shares subscribed for, issued to, held by or disposed of for an individual by a nominee shall be treated for the purposes of this Chapter as subscribed for, issued to, held by or disposed of by that individual.

(2) (a) Relief shall be given, and section 13 (1) (apart from the proviso thereto) shall not apply, in respect of an amount subscribed as nominee for an individual by a person or persons having the management of an investment fund designated by the Revenue Commissioners for the purposes of this section (“the managers of a designated fund”) where the amount so subscribed forms part of the fund.

(b) Save as provided by paragraph (a), relief shall not be given in respect of an amount subscribed as nominee for an individual by a person or persons having the management of an investment fund where the amount so subscribed forms part of the fund.

(3) The Revenue Commissioners may, if they think fit, having regard to the facts of the particular case and after such consultation, if any, as may seem to them to be necessary with such person or body of persons as in their opinion may be of assistance to them and subject to such conditions, if any, as they think proper to attach to the designation, designate an investment fund for the purposes of this Chapter.

(4) (a) The Revenue Commissioners may, by notice in writing given to the managers of a designated investment fund, withdraw the designation given for the purposes of this section to the fund in accordance with subsection (3) and, upon the giving of the notice, the fund shall cease to be a designated fund as respects any subscriptions made after the date of the notice referred to in paragraph (b).

(b) Where the Revenue Commissioners withdraw the designation of any fund for the purposes of this section, notice of the withdrawal shall be published, as soon as may be in Iris Oifigiúil.

(5) Where an individual claims relief in respect of eligible shares in a company which have been issued to the managers of a designated fund as nominee for that individual, section 22 (2) shall apply as if it required—

(a) the certificate referred to in that paragraph to be issued by the company to the managers; and

(b) the claim for relief to be accompanied by a certificate issued by the managers, in such form as the Revenue Commissioners may authorise, furnishing such information as the Revenue Commissioners may require and certifying that the managers hold certificates issued to them by the companies concerned, for the purposes of section 22 (2) in respect of the holdings of eligible shares shown on the managers' certificate.

(6) The managers of a designated fund may be required by a notice given to them by an inspector or other officer of the Revenue Commissioners to deliver to the officer, within the time limited by the notice, a return of the holdings of eligible shares shown on certificates issued by them in accordance with subsection (5) in the year of assessment to which the return relates.

(7) Section 22 (6) shall not apply in relation to any certificate issued by the managers of a designated fund for the purposes of subsection (5).

(8) Without prejudice to the generality of subsection (3), the Revenue Commissioners shall designate a fund for the purposes of this Chapter if, but only if, they are satisfied that the fund is established under irrevocable trusts for the sole purpose of enabling individuals who qualify for the relief (hereafter in this subsection referred to as “qualifying individuals”) to invest in eligible shares of a qualifying company and that under the terms of the trusts it is provided—

(a) that the entire fund is to be invested without undue delay in eligible shares,

(b) that the fund is to subscribe only for shares which, subject to the circumstances of the qualifying individuals participating in the fund (hereafter in this subsection referred to as “participants”), qualify those participants for relief,

(c) that, pending investment in eligible shares, any moneys subscribed for the purchase of shares are to be placed on deposit in a separate account with a bank licensed, to transact business in the State,

(d) that any amounts received by way of dividends or interest are, subject to a commission in respect of management expenses not exceeding 5 per cent. of such income, to be paid without undue delay to the participants,

(e) that in connection with the establishment of the fund any charges made by way of management expenses do not in relation to any participant exceed a reasonable amount but in any case do not exceed five per cent. of the amounts subscribed to the fund by that participant,

(f) that audited accounts of the fund are submitted annually to the Revenue Commissioners as soon as may be after the end of each period for which accounts of the fund are made up,

(g) that the managers, the trustees of the fund and any of their associates are not for the time being connected either directly or indirectly with any company whose shares comprise part of the fund,

(h) that any discounts on eligible shares received by the trustees or managers of the fund are accepted solely for the benefit of the participants,

(i) that the fund is a closed fund and that the closing date for participation precedes the making of the first investment,

(j) if a limit is placed on the size of the fund or a minimum amount for investment is stipulated, that any subscriptions not accepted are to be returned without undue delay, and

(k) that no participant is allowed to have any shares in any company in which the fund has invested transferred into his name until five years have elapsed from the date of the issue of the shares to the fund.

Chapter IV

Anti-avoidance and Anti-evasion

Tax treatment of certain non-interest-bearing securities.

28.— (1) The provisions of section 465 of the Income Tax Act, 1967 , and section 63 of the Finance Act, 1969 , shall not apply to issues of securities to which this section applies which are made after the 25th day of January, 1984, unless a tender for any such securities was submitted on or before that date.

(2) This section applies to—

(a) Exchequer Bills issued by the Minister for Finance, and

(b) Agricultural Commodities Intervention Bills issued by the Minister for Agriculture.

Taxation of income deemed to arise on certain sales of securities.

29.—(1) In this section—

“owner”, in relation to securities, means, at any time, the person who would be entitled, if the securities were redeemed at that time by the person who issued them, to the proceeds of the redemption;

“securities” includes—

(a) assets which are not chargeable assets for the purposes of capital gains tax by virtue of section 19 of the Capital Gains Tax Act, 1975 , and

(b) stocks, bonds and obligations of any government, municipal corporation, company or other body corporate whether creating or evidencing a charge on assets or not,

but does not include shares (within the meaning of the Companies Act, 1963 ) of a company (within the meaning aforesaid) or similar body;

“tax” means income tax or corporation tax, as appropriate.

(2) Where the owner of a security sells or transfers the security, then, if the result of the transaction is that any interest becoming payable in respect of the security is receivable otherwise than by that owner, the interest shall be deemed to have accrued on a day to day basis from the date on which the last payment of interest in respect of the security was made to that owner or, where no such payment has been made, from the date of the acquisition of the security by that owner and that owner shall be chargeable, under Case IV of Schedule D, on the interest so deemed to have accrued up to the date of the contract for the sale or transfer or the date of the payment of the consideration in respect of the sale, whichever is the later:

Provided that this section shall not apply—

(a) if the security has been held by the same owner for a continuous period of at least two years immediately before the date of such contract or the date of such payment, whichever is the later, the personal representatives of a deceased person whose estate is in the course of administration and the deceased person being regarded, for the purposes of this paragraph, as being the same owner, or

(b) if that owner is a person carrying on a trade which consists wholly or partly of dealing in securities the profits of which are chargeable to income tax or corporation tax under Case I of Schedule D for the year of assessment or, as the case may be, the accounting period in respect of which the consideration for the sale is taken into account in computing for the purposes of assessment to income tax or corporation tax for that year or accounting period the profits of the trade unless the trade consists wholly or partly of a life business the profits of which are not assessed to corporation tax under Case I of Schedule D for that accounting period, or

(c) if the sale or transfer is a sale or transfer by a wife to her husband at a time when she is treated as living with him for income tax purposes as provided in section 192 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , or a sale or transfer by a husband to a wife at such a time as aforesaid, the husband and the wife being regarded, for the purposes of paragraph (a), in the case of a transaction such as aforesaid or in the case of a sale or transfer by the husband or the wife to any other person after a transaction or transactions such as aforesaid, as being the same owner, or

(d) if the security is a security the interest on which is treated as a distribution for the purposes of the Corporation Tax Acts.

(3) In paragraph (b) of the proviso to subsection (2) “life business” shall have the meaning assigned to it by section 50 (2) of the Corporation Tax Act, 1976 .

(4) (a) For the purposes of identifying securities acquired by an owner with securities included in a sale or transfer by the owner, so far as the securities are of the same class, securities acquired at a later date shall be deemed to be so included before securities acquired at an earlier date.

(b) Securities shall be regarded as being of the same class where they entitle their owners to the same rights against the same person as to capital and interest and the same remedies for the enforcement of those rights.

(5) (a) Without prejudice to any other provisions of the Tax Acts requiring the disclosure of information, an inspector may, by notice in writing, require any person to whom paragraph (b) applies to furnish, within the time specified in the notice, such particulars as the inspector considers necessary for the purposes of this section and for the purpose of determining whether a charge to tax arises under this section.

(b) Paragraph (a) applies to—

(i) a person who issues a security,

(ii) any agent of such a person,

(iii) an owner of a security.

(6) Schedule 15 to the Income Tax Act, 1967 , is hereby amended by the insertion in column 2 thereof of “Finance Act, 1984, section 29 ”.

(7) This section shall have effect in relation to any sale or transfer made after the 25th day of January, 1984.

Chapter V

Income Tax, Corporation Tax and Capital Gains Tax.

Amendment of section 30 (appeals against assessments and payments on account) of Finance Act, 1976.

30.— Section 30 of the Finance Act, 1976 , is hereby amended—

(a) by the insertion of the following definition in subsection (1) before “assessment to tax”:

“‘the appropriate amount’ means—

(a) in the case of an assessment to income tax (other than an assessment to an amount representing income tax for the purposes of section 31 (1) (a) of the Corporation Tax Act, 1976 ) for the year 1984-85 or a subsequent year of assessment, 85 per cent. of the amount of tax found to be chargeable by the assessment on the determination of the appeal, and

(b) in the case of any other assessment to tax, 80 per cent. of the amount of tax found to be chargeable by the assessment on the determination of the appeal;”,

and

(b) by the substitution, in subsection (5), of the following paragraph for paragraph (b):

“(b) the appropriate amount,”.

Amendment of Chapter IX (Profit Sharing Schemes) of Part I of and Third Schedule (Profit Sharing Schemes) to Finance Act, 1982.

31.—Chapter IX of Part I of and the Third Schedule to the Finance Act, 1982 , are hereby amended as follows—

(a) as respects the year 1984-85 and subsequent years of assessment, by the substitution in subsections (1) and (2) of section 56 and paragraph 1 (4) of the Third Schedule of “£5,000” for “£1,000”, and

(b) as respects any accounting period ending on or after the 6th day of April, 1984, by the deletion in the proviso to section 58 (1) of “20 per cent. of”,

and the said subsections (1) and (2), the said paragraph 1(4) and so much of the said proviso as precedes paragraph (i) thereof, as so amended, are set out in the Table to this section.

TABLE

(1) If the total of the initial market values of all the shares which are appropriated to an individual in any one year of assessment (whether under a single approved scheme or under two or more such schemes) exceeds £5,000, subsections (4) to (7) shall apply to the excess shares, that is to say, any share which caused that limit to be exceeded and any share appropriated after that limit was exceeded.

(2) For the purposes of subsection (1), if a number of shares is appropriated to an individual at the same time under two or more approved schemes, the same proportion of the shares appropriated at that time under each scheme shall be regarded as being appropriated before the limit of £5,000 is exceeded.

(4) The scheme must provide that the total of the initial market values of the shares appropriated to any one participant in a year of assessment will not exceed £5,000.

Provided that no deduction shall be allowed under this section or under any other provision of the Tax Acts in respect of so much of any sum or the aggregate amount of any sums so expended in that accounting period as exceeds the company's—

Relief for gifts for education in the arts.

32.—(1) In this section—

“approved body” means any body or institution in the State which may be approved of for the purposes of this section by the Minister for Finance and which—

(a) provides in the State any course one of the conditions of entry to which is related to the results of the Leaving Certificate Examination, a matriculation examination of a recognised university in the State or an equivalent examination held outside the State, or

(b) (i) is established on a permanent basis solely for the advancement wholly or mainly in the State of one or more of the approved subjects,

(ii) contributes to the advancement of that subject or those subjects on a national or regional basis, and

(iii) is prohibited by its constitution from distributing to its members any of its assets or profits;

“approved subject” means—

(a) the practice of architecture,

(b) the practice of art and design,

(c) the practice of music and musical composition,

(d) the practice of theatre arts,

(e) the practice of film arts, or

(f) any other subject approved of for the purposes of this section by the Minister for Finance;

“tax” means income tax or corporation tax, as the case may be.

(2) This section applies to a gift of money which—

(a) on or after the 6th day of April, 1984, is made to an approved body for the purpose of assisting that body to promote the advancement in the State of any approved subject,

(b) is applied by the approved body for the said purpose, and

(c) is not deductible in computing for the purposes of tax the profits or gains of a trade or profession or is not income to which the provisions of section 439 of the Income Tax Act, 1967 , apply.

(3) Where a person proves that he has made a gift to which this section applies and claims relief from tax by reference thereto, the provisions of subsection (4) or, as the case may be, subsection (5) shall apply:

Provided that, in determining the net amount of the gift for the purposes of those subsections, the amount or value of any consideration received by the said person as a result of making the gift, whether received directly or indirectly from the approved body to which the gift was made or otherwise, shall be deducted from the amount of the gift.

(4) For the purposes of income tax for the year of assessment in which a person makes a gift to which this section applies, the net amount thereof shall, subject to subsection (5), be deducted from or set off against any income of the person chargeable to income tax for that year and tax shall, where necessary, be discharged or repaid accordingly; and the total income of the person or, where the person is a wife whose husband is assessed to income tax in accordance with the provisions of section 194 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , the total income of the husband shall be calculated accordingly:

Provided that relief under this section shall not be given to a person for a year of assessment—

(a) if the net amount of the gift (or the aggregate of the net amounts of gifts) made by him in that year, being a gift or gifts, as the case may be, to which this section applies, does not exceed £100, or

(b) to the extent to which the net amount of the gift (or the aggregate of the net amounts of gifts) made by him in that year, being a gift or gifts, as the case may be, to which this section applies, exceeds £10,000.

(5) Where a gift to which this section applies is made by a company—

(a) the net amount thereof shall, for the purposes of corporation tax, be deemed to be a loss incurred by the company in a separate trade in the accounting period of the company in which the gift is made, and

(b) the references in the proviso to subsection (4) to a year of assessment shall be construed as references to an accounting period of the company.

(6) (a) The Minister for Finance may, by notice in writing given to the body or institution, as the case may be, withdraw the approval of any body or institution for the purposes of this section and, upon the giving of the notice, the body or institution shall cease to be an approved body as respects any gifts made after the date of the notice referred to in paragraph (b).

(b) Where the Minister for Finance withdraws the approval of any body or institution for the purposes of this section, notice of its withdrawal shall be published, as soon as may be, in Iris Oifigiúil.

Farming: amendment of provisions relating to relief in respect of increase in stock values.

33.— (1) This section shall have effect only as respects a trade of farming carried on in an accounting period which ends on or after the 6th day of April, 1983.

(2) Section 31A (inserted by the Finance Act, 1976 ) of the Finance Act, 1975 , is hereby amended—

(a) by the substitution of “1984” for “1983” (inserted by the Finance Act, 1983 ) in paragraph (iv) (inserted by the Finance Act, 1979 ) of the proviso to subsection (4) (a),

(b) by the substitution of the following subsection for subsection (7) (inserted by the Finance Act, 1977 )—

“(7) Where in relation to an accounting period a company's opening stock value exceeds its closing stock value, the amount of the excess (in this section referred to as the company's ‘decrease in stock value’) shall, if the accounting period ends on a date before the 6th day of April, 1984, be treated in the computation of the company's trading income for the purposes of corporation tax, as a trading receipt of the company's trade for that accounting period:

Provided that the amount which is treated as a trading receipt of the company's trade for any accounting period (hereafter in this proviso referred to as ‘the first-mentioned period’) shall not exceed the amount determined by the formula—

A + B − C

where—

A is the aggregate amount of the deductions which, under the provisions of this section, the company was entitled to make in computing its trading income for accounting periods which end in the period (hereafter in this proviso referred to as ‘the relevant period’) beginning 10 years before the commencement of the first-mentioned period and ending on the day immediately preceding such commencement,

B is the aggregate amount of the deductions which, by virtue of section 26 (1) (a) (i) of the Finance Act, 1976 , the company was entitled to make in computing its trading profits for the purposes of income tax, for accounting periods which end in the relevant period, and

C is the aggregate of the amounts which, under this subsection, were treated as trading receipts of the company's trade for accounting periods which end in the relevant period.”, and

(c) by the substitution of the following subsection for subsection (9) (inserted by the Finance Act, 1977 )—

“(9) In the computation of a company's trading income for the purposes of corporation tax for any accounting period which ends on or after the 6th day of April, 1984, in which there is a decrease in stock value, there shall be treated as a trading receipt of the company's trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C

where—

A is the aggregate amount of the company's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1984,

B is the aggregate amount of the company's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1984, and

C is the aggregate of the amounts which under this subsection are treated as trading receipts of the company's trade for preceding accounting periods:

Provided that the amount which is treated as a trading receipt of the company's trade for any accounting period (hereafter in this proviso referred to as ‘the first-mentioned period’) shall not exceed the amount determined by the formula—

D + E − F

where—

D is the aggregate amount of the deductions which, under the provisions of this section, the company was entitled to make in computing its trading income for accounting periods which end in the period (hereafter in this proviso referred to as ‘the relevant period’) beginning 10 years before the commencement of the first-mentioned period and ending on the day immediately preceding such commencement,

E is the aggregate amount of the deductions which, by virtue of section 26 (1) (a) (i) of the Finance Act, 1976 , the company was entitled to make in computing its trading profits, for the purposes of income tax, for accounting periods which end in the relevant period, and

F is the aggregate of the amounts which, under the provisions of this section, were treated as trading receipts of the company's trade for accounting periods which end in the relevant period.”,

and the said paragraph (iv), as so amended, is set out in the Table to this subsection.

TABLE

(iv) a deduction shall not be allowed under the provisions of this section in computing a company's trading income for any accounting period which ends on or after the 6th day of April, 1984.

(3) Section 12 of the Finance Act, 1976 , is hereby amended—

(a) by the substitution in subsection (3) of “1984-85” for “1983-84” (inserted by the Finance Act, 1983 ),

(b) by the substitution of the following subsection for subsection (5) (inserted by the Finance Act, 1978 )—

“(5) In the computation of a person's trading profits for an accounting period in which there is a decrease in stock value and which ends on a date in the period from the 6th day of April, 1976, to the 5th day of April, 1984, the amount of that decrease shall be treated as a trading receipt of the trade for that accounting period:

Provided that the amount which is so treated for any accounting period (hereafter in this proviso referred to as ‘the first-mentioned period’) shall not exceed an amount determined by the formula—

A−C

where—

A is the aggregate amount of the deductions which, under the provisions of this section, the person was entitled to make in computing his trading profits for accounting periods which end in the period (hereafter in this proviso referred to as ‘the relevant period’) beginning on the 6th day of April, 1975, or, if later, 10 years before the commencement of the first-mentioned period and ending on the day immediately preceding such commencement, and

C is the aggregate of the amounts which, under the provisions of this subsection, were treated as trading receipts of the person's trade for accounting periods which end in the relevant period.”,

and

(c) by the substitution of the following subsection for subsection ‘(6) (inserted by the Finance Act, 1977 )—

“(6) In the computation of a person's trading profits for any accounting period in which there is a decrease in stock value and which ends on or after the 6th day of April, 1984, there shall be treated as a trading receipt of the trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C

where—

A is the aggregate amount of the person's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1984,

B is the aggregate amount of the person's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1984, and

C is the aggregate of the amounts which are treated as trading receipts of the person's trade for preceding accounting periods which ended on or after the 6th day of April, 1984:

Provided that the amount which, by virtue of this subsection, is treated as a trading receipt of the person's trade, for any accounting period (hereafter in this proviso referred to as ‘the first-mentioned period’) shall not exceed an amount determined by the formula—

D−E

where—

D is the aggregate amount of the deductions which, under the provisions of this section, the person was entitled to make in computing his trading profits for accounting periods which end in the period (hereafter in this proviso referred to as ‘the relevant period’) beginning on the 6th day of April, 1975, or, if later, ten years before the commencement of the first-mentioned period and ending on the day immediately preceding such commencement, and

E is the aggregate of the amounts which, under the provisions of this section, were treated as trading receipts of the person's trade for accounting periods which end in the relevant period.”,

and the said subsection (3), as so amended, is set out in the Table to this subsection.

TABLE

(3) Any deduction allowed by virtue of this section in computing a person's trading profits for an accounting period shall not have effect for any purpose of the Income Tax Acts for any year of assessment prior to the year 1974-75 or later than the year 1984-85.

(4) Section 13 of the Finance Act, 1982 , is hereby amended by the substitution of the following proviso for the proviso to subsection (3):

“Provided that the amount by which a decrease in stock value for an accounting period (hereafter in this proviso referred to as ‘the first-mentioned period’) is to be increased under this subsection shall not exceed the amount determined by the formula—

(A−B)−(C−D)

where—

A is the aggregate amount of the deductions, in respect of which either subsection (1) (c) or (2), as may be appropriate, had effect and as increased under that subsection, which were made in computing the profits of the trade of farming for accounting periods which end in the period (hereafter in this proviso referred to as ‘the relevant period’) beginning 10 years before the commencement of the first-mentioned period or, if later and in a case in which subsection (1) (c) had effect, the 6th day of April, 1975, and ending on the day immediately preceding such commencement,

B is the aggregate amount of the deductions included in A before they were increased under the provisions of either subsection (1) (c) or (2),

C is the aggregate amount of the decreases in trading stock, in respect of which this subsection has had effect and as increased under this subsection, which were treated as trading receipts of the trade of farming for accounting periods which end in the relevant period, and

D is the aggregate amount of the decreases included in C before they were increased under the provisions of this subsection.”.

(5) (a) Where a trade of farming (hereafter in this subsection referred to as “the relevant trade”) is carried on by a person, or by the personal representative of a person who has died and who carried on the relevant trade prior to his death, (hereafter in this subsection referred to as “the predecessor”) and that relevant trade ceases to be carried on by the predecessor and immediately thereafter commences to be carried on by a person (hereafter in this subsection referred to as “the successor”) who in relation to the predecessor is a qualifying person, the predecessor, or the personal representative of the predecessor where the predecessor is a person who has died, and the successor may jointly or, where the successor is the personal representative of a person who has died, the successor alone may, by notice in writing given to the inspector within two years of the end of the year of assessment in which the successor commenced to carry on the relevant trade, elect that the following provisions shall have effect:—

(i) section 62 of the Income Tax Act, 1967 , shall not apply, and

(ii) notwithstanding anything in the Income Tax Acts—

(I) the successor shall be allowed such deductions under section 31 of the Finance Act, 1975 , in computing the profits of the relevant trade carried on by him, and

(II) there shall be treated, under the provisions of subsections (5) and (6) of section 12 of the Finance Act, 1976 and section 13 of the Finance Act, 1982 , as trading receipts of the relevant trade carried on by the successor such amounts,

as would have been so allowed or would have been so treated, as the case may be, if the predecessor had continued to carry on the relevant trade and had done all such things and been allowed all such allowances in connection therewith as were done by or allowed to the successor.

(b) For the purposes of paragraph (a), a person (hereafter in this paragraph referred to as “the first-mentioned person”) is a qualifying person in relation to the predecessor if—

(i) in the case where the predecessor is not the personal representative of a person who has died and who carried on the trade of farming prior to his death, the first-mentioned person—

(I) is resident in the State in the year of assessment in which he commences to carry on the relevant trade and is not resident elsewhere, and

(II) is—

(A) the personal representative of the predecessor, or

(B) the spouse or child of the predecessor,

and, if he is such spouse or child as aforesaid, does not, at the time he commences to carry on the relevant trade, have any trading stock of a trade of farming other than the trading stock of the relevant trade,

(ii) in the case where the predecessor is the personal representative of a person who has died and who carried on the relevant trade prior to his death, the first-mentioned person—

(I) is resident in the State in the year of assessment in which he commences to carry on the relevant trade and is not resident elsewhere, and

(II) is the spouse or child of the person who has died,

and, if he is such spouse or child as aforesaid, does not, at the time he commences to carry on the relevant trade, have any trading stock of a trade of farming other than the trading stock of the relevant trade.

(c) This subsection shall apply only where the relevant trade and the trading stock thereof pass in their entirety to the successor.

(d) This subsection shall, with any necessary modifications, apply in a case where the relevant trade ceases to be carried on by a predecessor and immediately thereafter commences to be carried on by two or more persons who, in relation to the predecessor, are qualifying persons and are carrying on the relevant trade in partnership.

(e) In this subsection—

“child” has the same meaning as in section 27 (inserted by the Capital Gains Tax (Amendment) Act, 1978 ) of the Capital Gains Tax Act, 1975 ;

“personal representative” has the meaning corresponding to that assigned to personal representatives in Part XXIX of the Income Tax Act, 1967 .

Application of section 31 (building societies) of Corporation Tax Act, 1976, for 1984-85.

34.— Section 40 (1) of the Finance Act, 1977 (as extended by section 52 of the Finance Act, 1980 ) shall have effect in relation to the year 1984-85 as it has effect in relation to the years 1980-81 and 1981-82 with the modifications that—

(a) the reduced rate which, by virtue of the said section 40 (1) (as extended by this section) would, for the year 1984-85, be 70 per cent. of the standard rate shall, for that year, be 75 per cent. of the standard rate, and

(b) the amount representing income tax which, by virtue of the said section 40 (1) (as extended by this section) would, under an assessment made for 1984-85, be payable on the 1st day of January, 1985 (or, if it were later, on the day next after the day on which the assessment is made) shall be payable in two equal instalments as follows—

(i) the first instalment on the 1st day of October, 1984, or, if it is later, on the day next after the day on which the assessment is made, and

(ii) the second instalment on the 1st day of April, 1985, or, if it is later, on the day next after the day on which the assessment is made,

and the provisions of the Income Tax Acts as to the recovery of tax shall apply to each instalment of the tax in the same manner as they apply to the whole amount of the tax.

Continuation of certain capital allowances.

35.—Each of the provisions of the Income Tax Act, 1967 , which are specified in the Table to this section and which were inserted by the Corporation Tax Act, 1976 , shall have effect as if the reference therein to the 1st day of April, 1984 (as provided for in section 26 of the Finance Act, 1979 ) were a reference to the 1st day of April, 1985.

TABLE

Subsection (4) (d) of section 251 (initial allowances)

Subsection (2A) (a) of section 254 (industrial buildings allowance)

Paragraph (ii) of the proviso to subsection (1) and paragraph (ii) of the proviso to subsection (3) of section 264 (annual allowances)

Paragraph (iii) of the proviso to subsection (1) of section 265 (balancing allowances and balancing charges)

Allowances in respect of certain laboratories.

36.— Section 255 (1) of the Income Tax Act, 1967 , shall have effect, as respects capital expenditure incurred on or after the 25th day of January, 1984, as if the reference in paragraph (a) to a mill, factory or other similar premises included a reference to a laboratory the sole or main function of which is the analysis of minerals (including oil and natural gas) in connection with the exploration for, or the extraction of, such minerals.

Application of section 23 (deduction for certain expenditure on construction of rented residential accommodation) of Finance Act, 1981.

37.—As respects any claim made after the passing of this Act under subsection (2) of section 23 of the Finance Act, 1981 , in relation to expenditure incurred on the construction of a qualifying premises, the definition in subsection (1) (a) of that section of “qualifying premises” shall have effect as if the following paragraph were substituted for paragraph (iii):

“(iii) in respect of which, if it is not a new house (within the meaning of section 4 of the Housing (Miscellaneous Provisions) Act, 1979 ) provided for sale, there is in force a certificate of reasonable cost the amount specified in which in respect of the cost of construction of the house to which the certificate relates is not less than the expenditure actually incurred on such construction, and”.

Amendment of section 25 (allowance for certain expenditure on construction of multi-storey car-parks) of Finance Act, 1981.

38.—(1) Section 25 of the Finance Act, 1981 , is hereby amended by the substitution in subsection (1), in the definition of “relevant expenditure”, of “1987” for “1984”, and the said definition, as so amended, is set out in the Table to this subsection.

TABLE

“relevant expenditure” means capital expenditure incurred on or after the 29th day of January, 1981, and before the 1st day of April, 1987, on the construction of a multi-storey car-park.

(2) The said section 25 is hereby further amended by the substitution of the following subsection for subsection (2):

“(2) All the provisions of the Tax Acts (other than section 25 of the Finance Act, 1978 ) relating to the making of allowances or charges in respect of capital expenditure on the construction of an industrial building or structure shall apply to relevant expenditure as if—

(a) it were expenditure incurred on the construction of a building or structure in respect of which an allowance falls to be made for the purposes of income tax or corporation tax, as the case may be, under Chapter II of Part XV or under Chapter I of Part XVI of the Income Tax Act, 1967 , by reason of its use for a purpose specified in section 255 (1) (a) of that Act, and

(b) the references to the 1st day of April, 1985 (as provided for by section 35 of the Finance Act, 1984) in the provisions of the Income Tax Act, 1967 (as inserted by the Corporation Tax Act, 1976 ) specified in the Table to this subsection, were references to the 1st day of April, 1987.

TABLE

Subsection (2A) (a) of section 254 (industrial buildings allowance)

Paragraph (ii) of the proviso to subsection (1) and paragraph (ii) of the proviso to subsection (3) of section 264 (annual allowances)

Paragraph (iii) of the proviso to subsection (1) of section 265 (balancing allowances and balancing charges)”.

Amendment of section 26 (allowance for certain capital expenditure on roads, bridges, etc.) of Finance Act, 1981.

39.— Section 26 of the Finance Act, 1981 , is hereby amended by the substitution in subsection (1), in the definition of “qualifying period”, of “1989” for “1984”, and the said definition, as so amended, is set out in the Table to this section.

TABLE

“qualifying period” means the period commencing on the 29th day of January, 1981, and ending on the 31st day of March, 1989;

Capital allowances for certain leased assets.

40.—(1) (a) In this section—

“chargeable period or its basis period” has the meaning assigned to it by paragraph 1 (2) of the First Schedule to the Corporation Tax Act, 1976 ;

“the specified capital allowances” means capital allowances in respect of—

(i) expenditure incurred on machinery or plant provided on or after the 25th day of January, 1984, for leasing in the course of a trade of leasing, or

(ii) the diminished value of such machinery or plant by reason of wear and tear,

other than capital allowances in respect of machinery or plant to which subsection (6) applies;

“trade of leasing” means—

(i) a trade which consists wholly of the leasing of machinery or plant, or

(ii) any part of a trade treated as a separate trade by virtue of subsection (2).

(b) For the purposes of this section—

(i) letting on charter a ship or aircraft which has been provided for such letting, and

(ii) letting any item of machinery or plant on hire,

shall be regarded as leasing of machinery or plant if, apart from this paragraph, it would not be so regarded.

(c) Where a company carries on a trade of operating ships in the course of which a ship is let on charter, paragraph (b) shall not have effect so as to treat the letting on charter as the leasing of machinery or plant if, apart from this section, the letting would fall to be regarded for the purposes of Case I of Schedule D as part of the activities of the trade.

(2) Where in any chargeable period or its basis period which ends on or after the 25th day of January, 1984, a person carries on as part of a trade any leasing of machinery or plant, that leasing shall be treated for all the purposes of the Tax Acts, other than any provisions of those Acts relating to the commencement or cessation of a trade, as a separate trade, distinct from all other activities carried on by him as part of the trade, and any necessary apportionment shall be made of receipts or expenses.

(3) (a) Notwithstanding any of the provisions of section 307 of the Income Tax Act, 1967 , where relief is claimed under that section in respect of a loss sustained in a trade of leasing, the amount of that loss in so far as, by virtue of section 318 of that Act, it is referable to the specified capital allowances shall be treated for the purposes of subsections (1) and (2) (a) of the said section 307 as reducing profits or gains of that trade of leasing only and shall not be treated as reducing any other income.

(b) Where paragraph (a) applies in the case of any claimant to relief under the said section 307—

(i) any limitation imposed by section 319 of the said Act on the amount of capital allowances which may be taken into account under section 318 of that Act shall be referred, as far as may be, to the specified capital allowances rather than to any other capital allowances, and

(ii) notwithstanding subsection (2) of the said section 318 (but without prejudice to paragraph (a) and to the order in which income is to be treated as reduced under subsection (2) (a) of the said section 307), the claimant may specify the extent to which any reduction of income treated as occurring by virtue of the said section 307 is to be referred to so much of the loss as is attributable to the loss, if any, actually sustained in the trade of leasing, the specified capital allowances or any other capital allowances, and, where the claimant so specifies, section 320 of the said Act shall apply in accordance with the claimant's specification and not in accordance with the said subsection (2) of the said section 318.

(4) (a) Where in an accounting period a company carrying on a trade of leasing incurs a loss in that trade and any specified capital allowances have been treated by virtue of section 14 of the Corporation Tax Act, 1976 , as trading expenses in arriving at the amount of the loss, the relevant amount of the loss shall not be available—

(i) for relief under subsection (2) of section 16 of that Act, except to the extent that it can be set off under that subsection against the company's income from the trade of leasing only, or

(ii) to be surrendered by way of group relief.

(b) For the purposes of paragraph (a) “the relevant amount of the loss” shall be the full amount of the loss or, if it is less, an amount equal to—

(i) where no capital allowances other than the specified capital allowances have been treated by virtue of section 14 of the Corporation Tax Act, 1976 , as trading expenses in arriving at the amount of the loss, the amount of the specified capital allowances,

or

(ii) where, in addition to the specified capital allowances, other capital allowances have been so treated by virtue of the said section 14, the lesser of—

(I) the amount of the specified capital allowances,

and

(II) the amount by which the loss exceeds the amount of the other capital allowances:

Provided that, where the amount of the loss does not exceed the amount of the other capital allowances, “the relevant amount of the loss” shall be nil.

(5) The proviso to subsection (1) of section 296 of the Income Tax Act, 1967 , and sections 14 (6) and 116 (2) of the Corporation Tax Act, 1976 , shall not have effect in relation to capital allowances—

(a) in respect of expenditure incurred on or after the 25th day of January, 1984, on the provision of machinery or plant, or

(b) in respect of the diminished value of machinery or plant by reason of wear and tear if that machinery or plant was first acquired on or after the 25th day of January 1984, by the person to whom the capital allowances are to be or have been made,

other than capital allowances in respect of machinery or plant to which subsection (6) applies.

(6) References in this section to machinery or plant to which this subsection applies are references to machinery or plant provided on or after the 25th day of January, 1984, for leasing where the expenditure incurred on the provision of the machinery or plant (or, for the purposes of paragraph (a) in the case of a film to which section 6 or 7 of the Irish Film Board Act, 1980 , applies, the cost of the making of the film)—

(a) has been or is to be met directly or indirectly, wholly or partly, by the Industrial Development Authority, the Irish Film Board, the Shannon Free Airport Development Company Limited or Údarás na Gaeltachta, or

(b) was incurred under an obligation entered into by the person providing the machinery or plant (hereafter in this subsection referred to as “the lessor”) and the person to whom it is to be leased (hereafter in this subsection referred to as “the lessee”) and that obligation was entered into—

(i) before the 25th day of January, 1984, or

(ii) before the 1st day of March, 1984, pursuant to negotiations which were in progress between the lessor and the lessee before the 25th day of January, 1984:

Provided that—

(I) an obligation shall be treated for the purposes of subparagraphs (i) and (ii) as having been entered into before a particular date if, but only if, before that date, there was in existence a binding contract in writing under which that obligation arose, and

(II) negotiations pursuant to which an obligation was entered into shall not be regarded for the purposes of subparagraph (ii) as having been in progress before the 25th day of January, 1984, unless, on or before that date, preliminary commitments or agreements in relation to that obligation had been entered into between the lessor and the lessee.

Chapter VI

Corporation Tax

Amendment of Part IX (Schedule F and Company Distributions) of Corporation Tax Act, 1976.

41.—Part IX of the Corporation Tax Act, 1976 , is hereby amended by the insertion after section 84 of the following section:

“Limitation on meaning of ‘distribution’.

84A.—(1) Any interest or other distribution which—

(a) is paid on or after the 25th day of January, 1984, out of the assets of a company (hereafter in this section referred to as ‘the borrower’) to another company which is within the charge to corporation tax, and

(b) is so paid in respect of a security of the borrower falling within subparagraph (ii), (iii) (I) or (v) of section 84 (2) (d),

shall not be a distribution for the purposes of this Act unless the application of this subsection is excluded by subsection (2), (7) or (9).

(2) Subsection (1) shall not apply to any interest which is paid by the borrower, in an accounting period of the borrower, to another company the ordinary trading activities of which include the lending of money, where—

(a) in that accounting period, the borrower carries on in the State a specified trade, and

(b) the interest, if it were not a distribution, would be treated as a trading expense of that trade for that accounting period.

(3) Subject to subsection (4), in subsection (2) ‘specified trade’ means a trade which consists wholly or mainly of—

(a) the manufacture of goods (including activities which would, if the borrower were to make a claim for relief in respect of the trade under Chapter VI of Part I of the Finance Act, 1980 , fall to be regarded for the purposes of that Chapter as the manufacture of goods), or

(b) exempted trading operations within the meaning of Part V (Profits from Trading within Shannon Airport), or

(c) the rendering of services in the course of a service undertaking in respect of which an employment grant was made by the Industrial Development Authority under section 2 of the Industrial Development (No. 2) Act, 1981 .

(4) Where the borrower mentioned in subsection (2) is a 75 per cent. subsidiary of—

(a) an agricultural society, or

(b) a fishery society,

‘specified trade’, in that subsection, means a trade of the borrower which consists wholly or mainly of either or both of—

(i) the manufacture of goods within the meaning of subsection (3) (a), and

(ii) the selling by wholesale of—

(I) where paragraph (a) applies, agricultural products, or

(II) where paragraph (b) applies, fish.

(5) For the purposes of subsections (3) and (4), a trade shall be regarded, as respects an accounting period, as consisting wholly or mainly of particular activities if, but only if, the total amount receivable by the borrower from sales made or, as the case may be, in payment for services rendered in the course of those activities in the accounting period is not less than 75 per cent. of the total amount receivable by the borrower from all sales made or, as the case may be, in payment for all services rendered in the course of the trade in that period.

(6) In subsection (4)—

‘agricultural society’ and ‘fishery society’ have the meanings assigned to them by section 18 of the Finance Act, 1978 ;

‘selling by wholesale’ 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.

(7) Subsection (1) shall not apply to any interest or other distribution which is payable on or before the relevant day either—

(a) under an obligation which was entered into before the 25th day of January, 1984, or

(b) under an obligation which was entered into before the 1st day of March, 1984, pursuant to negotiations which were in progress between the borrower and a lender before the 25th day of January, 1984:

Provided that—

(i) an obligation shall be treated for the purposes of paragraphs (a) and (b) as having been entered into before a particular date if, but only if, before that date, there was in existence a binding contract in writing (hereafter in this section referred to as a ‘loan contract’) under which that obligation arose, and

(ii) negotiations pursuant to which an obligation was entered into shall not be regarded for the purposes of paragraph (b) as having been in progress before the 25th day of January, 1984, unless, on or before that date, preliminary commitments or agreements in relation to that obligation had been entered into between the lender referred to in that paragraph and the borrower.

(8) (a) Subject to paragraphs (b) and (c), ‘the relevant day’, in subsection (7), means the 24th day of January, 1989, or, if it is earlier—

(i) in the case of any principal which had been paid to the borrower on or before the 24th day of January, 1984, the last day of the period (hereafter in this subsection referred to as ‘the repayment period’) within which the borrower was, on the 24th day of January, 1984, under an obligation to repay the principal and interest, or

(ii) in the case of any principal paid to the borrower after the 24th day of January, 1984, under a loan contract which was entered into on or before that date, the last day of the period (hereafter in this subsection referred to as ‘the repayment period’) within which the borrower was, on the date on which the principal was so paid, under an obligation to repay the principal and interest.

(b) Paragraph (a) shall apply in the case of an obligation referred to in subsection (7) (b) as if—

(i) the reference in the said paragraph (a) to the 24th day of January, 1989, were a reference to the 28th day of February, 1989, and

(ii) each reference in the said paragraph (a) to the 24th day of January, 1984, were a reference to the date (being a date later than the 24th day of January, 1984, but earlier than the 1st day of March, 1984) on which the obligation was entered into.

(c) (i) Where the repayment period referred to in either paragraph (a) (i) or (a) (ii) is extended after the 24th day of January, 1984 (whether or not the right to such an extension arose out of the terms of the loan contract), then, subject to subparagraph (ii) of this paragraph, paragraph (a) (i) or (a) (ii), as the case may be, shall apply as if that extension had not been made.

(ii) Where the repayment period referred to in either paragraph (a) (i) or (a) (ii) is extended after the 24th day of January, 1984, but before the 1st day of March, 1984, pursuant to negotiations which were in progress between the borrower and a lender before the 25th day of January, 1984, then, notwithstanding subparagraph (i) of this paragraph, each of the said paragraphs (a) (i) and (a) (ii) shall apply as if the repayment period referred to therein were that repayment period as so extended (hereafter in this subparagraph referred to as ‘the extended period’) or, if the extended period ends after the 24th day of January, 1989, the part of the extended period which ends on that date.

(iii) Paragraph (ii) of the proviso to subsection (7) shall apply, with any necessary modifications, for the purposes of subparagraph (ii) of this paragraph as it applies for the purposes of subsection (7) (b).

(9) Subsection (1) shall not apply in a case where the consideration given by the borrower for the use of the principal secured represents more than a reasonable commercial return for the use of that principal:

Provided that, where this subsection applies, nothing in subparagraph (ii), (iii) (I) or (v) of section 84 (2) (d) shall operate so as to treat as a distribution for the purposes of this Act so much of the interest or other distribution as represents a reasonable commercial return for the use of that principal.”.

Treatment of dividends on certain preference shares.

42.—(1) In this section—

“preference shares” does not include preference shares—

(a) which are quoted on a stock exchange in the State, or

(b) which are not so quoted but which carry rights in respect of dividends and capital which are comparable with those general for fixed-dividend shares quoted on a stock exchange in the State;

“shares” includes stock.

(2) Subject to subsection (4), this section applies to any dividend which—

(a) is paid on or after the 25th day of January, 1984, by a company (hereafter in this section referred to as “the issuer”) to another company (hereafter in this section referred to as “the subscriber”) which is within the charge to corporation tax, and

(b) is so paid in respect of preference shares of the issuer.

(3) Notwithstanding any provision of the Tax Acts—

(a) the subscriber shall not be entitled to a tax credit in respect of a dividend to which this section applies, and

(b) the dividend shall be chargeable to corporation tax under Case IV of Schedule D.

(4) This section shall not apply to any dividend which is payable on or before the relevant day in respect of preference shares—

(a) issued to the subscriber before the 25th day of January, 1984, or

(b) issued to the subscriber on or after that date in a case where the subscriber had either—

(i) entered into an obligation before the 25th day of January, 1984, to subscribe for those shares, or

(ii) entered into an obligation before the 1st day of March, 1984, in pursuance of negotiations which were in progress between the issuer and the subscriber before the 25th day of January, 1984, to subscribe for those shares:

Provided that—

(I) an obligation shall be treated for the purposes of paragraph (b) as having been entered into before a particular date if, but only if, before that date, there was in existence a binding contract in writing under which that obligation arose, and

(II) negotiations pursuant to which an obligation was entered into shall not be regarded for the purposes of paragraph (b) (ii) as having been in progress before the 25th day of January, 1984, unless, on or before that date, preliminary commitments or agreements in relation to that obligation had been entered into between the issuer and the subscriber.

(5) In subsection (4) “the relevant day” means the 24th day of January, 1989, or, as respects shares to which paragraph (b) (ii) of that subsection applies, the 28th day of February, 1989.

Extension of exempted transactions in relation to agricultural societies.

43.—The Second Schedule to the Finance Act, 1978 , is hereby amended by the insertion in paragraph 2 of Part I after “manure spreading” of “relief milking”.

Continuance of relief in respect of increase in employment.

44.— Chapter VIII of Part I of the Finance Act, 1982 , shall have effect as respects an accounting period or part of an accounting period of a company falling within the year ending on the 30th day of June, 1985, as it has effect as respects an accounting period or part of an accounting period of a company falling within the year ending on the 30th day of June, 1983, subject to the modifications that—

(a) in section 43 of that Act, in the definition of “relevant period”, “1985” shall be substituted for “1983”,

(b) in sections 44 and 45 of that Act, “1984” shall be substituted for “1982” in each place where it occurs, and

(c) in section 46 of that Act, “1983” shall be substituted for “1981”.

Amendment of Chapter VI (manufacturing companies) of Part I of Finance Act, 1980.

45.— Chapter VI of Part I of the Finance Act, 1980 , is hereby amended—