Finance Act, 1992

Amendment of Part XXXII (government and other public loans) of Income Tax Act, 1967, and computation of losses.

42.—(1) Part XXXII of the Income Tax Act, 1967 , is hereby amended—

(a) as respects securities acquired by a company after the 29th day of January, 1992, whether they were issued before or after that date, by the addition of the following proviso to section 464:

“Provided that, notwithstanding that a security has been issued with such condition, where the security is held by or for a branch or agency through which a company carries on a trade or business in the State, which is such a trade or business, as the case may be, that, if the security had been issued without such condition, interest on, or other profits or gains from, the security accruing to the company would be chargeable to corporation tax under Case I of Schedule D, or in accordance with the provisions of section 43 of the Corporation Tax Act, 1976 , then such interest and profits or gains shall be charged to tax as if the security had been issued without such condition.”,

(b) as respects securities acquired by a company after the 15th day of May, 1992, whether they were issued before or after that date, by the substitution for section 470 of the following section:

Securities of Irish local authorities issued abroad.

470.—(1) Securities issued (whether before or after the commencement of this Act) outside the State by a local authority in the State for the purpose of raising any money which they are authorised to borrow, if issued under the authority of the Minister for Finance, shall not be liable to tax, except where they are held—

(a) by persons domiciled in the State or ordinarily resident in the State, or

(b) by or for a branch or agency through which a company carries on a trade or business in the State which is such a trade or business, as the case may be, that, if this section had not been enacted, interest on, or other profits or gains from them accruing to the company would be chargeable to corporation tax under Case I of Schedule D or in accordance with the provisions of section 43 of the Corporation Tax Act, 1976 .

(2) In this section ‘local authority’ includes any public body which is recognised as a local authority for the purpose of this section by the Minister for the Environment.”,

and

(c) as respects securities acquired by a company after the 15th day of May, 1992, whether they were issued before or after that date, by the addition of the following proviso to subsection (2) of section 474:

“Provided that, notwithstanding that a security has been issued as aforesaid with either or both such conditions, where the security is held by or for a branch or agency through which a company carries on a trade or business in the State, which is such a trade or business, as the case may be, that, if the security had been issued without any such conditions, interest on, or other profits or gains from, the security accruing to the company would be chargeable to corporation tax under Case I of Schedule D or in accordance with the provisions of section 43 of the Corporation Tax Act, 1976 , then such interest and profits or gains shall be charged to tax as if the security had been issued without any such conditions.”.

(2) Notwithstanding subsection (5) of section 16 or subsection (3) of section 18 of the Corporation Tax Act, 1976 , in ascertaining for the purposes of those sections whether and to what extent a company has incurred a loss in carrying on a trade in the State through a branch or agency, the interest on, and other profits or gains from, a security held by or for the branch or agency, shall be treated as a trading receipt of the trade if such interest or other profits or gains would, if sections 464 , 470 and 474 of the Income Tax Act, 1967 , had not been enacted, have been so treated, or have been included in an amount so treated.

(3) Subsection (2) shall have effect for the purposes of ascertaining whether and to what extent a company has incurred a loss—

(a) as if sections 470 and 474 of the Income Tax Act, 1967 , were not mentioned in that subsection, where, apart from that subsection, the company would be treated as having incurred a loss and that loss would be—

(i) set-off against the trading income or profits (whether of that company or any other company) of, or

(ii) incurred in,

an accounting period falling within the period from the 1st day of February, 1992, to the 15th day of May, 1992, and

(b) where, apart from that subsection, the company would be treated as having incurred a loss and that loss would be—

(i) set-off against the trading income or profits (whether of that company or any other company) of, or

(ii) incurred in,

an accounting period ending on or after the 15th day of May, 1992:

Provided that the amount of relief against income or profits of an accounting period—

(I) ending before the 1st day of February, 1992, where paragraph (a) of subsection (3) applies, or

(II) ending before the 15th day of May, 1992, where paragraph (b) of subsection (3) applies,

for a loss shall not be reduced by virtue of subsection (2) unless the loss was incurred in an accounting period ending on or after the date concerned.

(4) (a) For the purposes of subsections (2) and (3) and paragraph (b), an accounting period which begins before the 15th day of May, 1992, and ends on or after that date, shall be divided into one part, beginning on the day on which the accounting period begins and ending on the 14th day of May, 1992, and another part beginning on the 15th day of May, 1992, and ending on the day on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods.

(b) Where subsection (2) applies, for the purpose of ascertaining whether and to what extent a company has incurred a loss, by virtue of section 464 of the Income Tax Act, 1967 , being mentioned in that subsection, then for the purposes of subsections (2) and (3) an accounting period which begins before the 1st day of February, 1992, and ends on or after that date, shall be divided into one part, beginning on the day on which the accounting period begins and ending on the 31st day of January, 1992, and another part beginning on the 1st day of February, 1992, and ending on the day on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods.