Finance Act, 1991
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Taxation of dealer's receipts on purchase of shares by issuing company or by its subsidiary. |
60.—(1) Where on or after the relevant day— | |
(a) a company purchases its own shares from a dealer, or | ||
(b) a company, which is a subsidiary (within the meaning of section 155 of the Companies Act, 1963 ) of another company, purchases the other company's shares from a dealer, | ||
the purchase price shall be taken into account in computing the profits of the dealer chargeable to tax under Case I or II of Schedule D, and accordingly— | ||
(i) tax shall not be chargeable under Schedule F in respect of any distribution represented by any part of the price, | ||
(ii) the dealer shall not be entitled in respect of the distribution to a tax credit under section 88 of the Act of 1976, and | ||
(iii) sections 2, 5 and 83 (5) of the Act of 1976 shall not apply to the distribution. | ||
(2) For the purposes of subsection (1) a person is a dealer in relation to shares of a company if the price received on their sale by him otherwise than to the company, or to a company which is a subsidiary (within the meaning of section 155 of the Companies Act, 1963 ) of the company, would be taken into account in computing his profits chargeable to tax under Case I or II of Schedule D. | ||
(3) Subject to subsection (4), in subsection (1)— | ||
(a) the reference to the purchase of shares includes a reference to the redemption or repayment of shares and the purchase of rights to acquire shares, and | ||
(b) the reference to the purchase price includes a reference to any sum payable on redemption or repayment. | ||
(4) Subsection (1) shall not apply in relation to— | ||
(a) the redemption of fixed-rate preference shares, or | ||
(b) the redemption, on binding terms settled before the 18th day of April, 1991, of other preference shares issued before that date, | ||
if in either case the shares were issued to and continuously held by the person from whom they are redeemed. | ||
(5) In this section— | ||
“fixed-rate preference shares” means shares which— | ||
(a) were issued wholly for new consideration, and | ||
(b) do not carry any right either to conversion into shares or securities of any other description or to the acquisition of any additional shares or securities, and | ||
(c) do not carry any right to dividends other than dividends which are of a fixed amount or at a fixed rate per cent. of the nominal value of the shares, and | ||
(d) 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; | ||
“new consideration” has the meaning given by section 87 of the Act of 1976. |