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Amendment of Chapter 1A (investment undertakings) of Part 27 of Principal Act.
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39.— (1) Chapter 1A of Part 27 of the Principal Act is amended—
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(a) in section 739B(1) in paragraph (ccc) of the definition of “ chargeable event ” by inserting “where such ending is not otherwise a chargeable event within the meaning of this section,” after “of a relevant period,”,
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(b) in section 739D—
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(i) in subsection (2)—
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(I) in paragraph (dd) by inserting “except as a consequence of a gain arising on a chargeable event within the meaning of paragraph (ccc) in section 739B(1),” after “entitlement to a unit,”, and
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(II) by substituting the following for paragraph (ddd):
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“(ddd) where the chargeable event is the ending of a relevant period in relation to a unit of a unit holder—
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(i) the excess (if any) of the value of the unit, without having regard to any amount of appropriate tax (within the meaning of section 739E) thereby arising, held by the unit holder on the day of that ending over the total amount invested in the investment undertaking by the unit holder for the acquisition of the unit, and where the unit was otherwise acquired by the unit holder, the amount so invested to acquire that unit shall be the value of the unit at the time of its acquisition by the unit holder, or
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(ii) in a case where the investment undertaking has made an election under subsection (5B), the amount determined under that subsection, and”,
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(ii) in subsection (2A) by substituting the following for paragraph (a):
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“(a) a chargeable event occurs in relation to an investment undertaking in respect of a unit holder, and”,
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(iii) in subsection (3), in the construction of C, by substituting “before the chargeable event, reduced by any amount of first tax (within the meaning of section 739E (1A)(a)),” for “before the chargeable event”,
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(iv) in subsection (4), in the construction of C, by substituting “before the chargeable event, reduced by any amount of first tax (within the meaning of section 739E (1A)(a)),” for “before the chargeable event”, and
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(v) by inserting the following after subsection (5A):
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“(5B) (a) The election referred to in paragraph (ddd) of subsection (2) is an irrevocable election made by an investment undertaking in respect of all its unit holders at the time of the election or at any other time and the amount is as determined by the formula—
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A1 — A2
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where—
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A1 is the value of the unit at the later of 30 June or 31 December prior to the date of the chargeable event,
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and
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A2 is—
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(i) the total amount invested in the investment undertaking by the unit holder for the acquisition of the unit, and where the unit was otherwise acquired by the unit holder, the amount so invested to acquire that unit shall be the value of the unit at the time of its acquisition by the unit holder, or
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(ii) if a chargeable event to which paragraph (ccc) of section 739B(1) refers has previously occurred, the value of the unit at the later of 30 June or 31 December prior to the date of the latest of such chargeable events.
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(b) On the first occasion that the investment undertaking is required to compute a gain on the happening of a chargeable event within the meaning of paragraph (ccc) in section 739B(1) in respect of a unit holder, and—
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(i) the gain is computed in accordance with paragraph (a), the investment undertaking will be deemed to have made the election specified in that paragraph, or
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(ii) the gain is not computed in accordance with paragraph (a), an election under paragraph (a) shall not be made.”,
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(c) in section 739E—
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(i) in subsection (1A)—
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(I) in paragraph (a)—
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(A) by substituting the following for the definition of “ first tax ”:
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“ ‘ first tax ’, in relation to a unit of a unit holder, means the appropriate tax that was accounted for and paid in accordance with section 739F in respect of a chargeable event within the meaning of paragraph (ccc) of the definition of ‘chargeable event’ in section 739B(1) in relation to an investment undertaking in respect of the unit and which has not been repaid;”,
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(B) by substituting the following for the definition of “ new gain ”:
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“ ‘ new gain ’, in relation to a unit of the unit holder, means a gain referred to in section 739D(2A) in respect of that unit;”,
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(II) in paragraph (b)—
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(A) by substituting the following for subparagraph (ii):
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“(ii) Where such relevant proportion exceeds such second tax, an amount equal to the amount of the excess shall—
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(I) (A) be paid by the investment under-taking to the unit holder in respect of the unit,
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(B) be included in a return under section 739F(2), and
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(C) be treated as an amount which may be set off against appropriate tax payable by the investment under-taking in respect of any chargeable event in the period for which such a return is made, or any subsequent period,
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or
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(II) if the investment undertaking so elects, in writing to the Revenue Commissioners, be paid by the Revenue Commissioners to the unit holder in respect of the unit on receipt of a claim by the unit holder but only if immediately before the chargeable event the value of the number of units of the investment undertaking in respect of which, if a gain had arisen, would be treated as arising to the investment undertaking on the happening of a chargeable event does not exceed 15 per cent of the value of the total number of units of the investment undertaking at that time,
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and where the investment undertaking has advised the unit holder, in writing, that clause (II) applies and has supplied the unit holder with the necessary information to enable the claim to be made to the Revenue Commissioners, then the investment undertaking shall be deemed to have made the election specified in that clause; otherwise the election under that clause shall not be made.”,
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and
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(B) by deleting subparagraph (iii),
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(ii) in subsection (2) by substituting “Subject to subsection (2A), an investment undertaking” for “An investment undertaking”,
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(iii) by inserting the following after subsection (2):
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“(2A) (a) Subsection (2) shall not apply in relation to a chargeable event to which paragraph (ccc) in section 739B(1) refers where—
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(i) immediately before the chargeable event the value of the number of units in the investment undertaking, or if an umbrella scheme exists in the sub-fund concerned, in respect of which any gains arising would be treated as arising to the investment undertaking, or the sub-fund as the case may be, on the happening of a chargeable event is less than 10 per cent of the value of the total number of units in the investment undertaking, or the sub-fund as the case may be, at that time, and
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(ii) the investment undertaking has made an election, in writing, to the Revenue Commissioners that it will make in respect of each year of assessment a statement (including where it is the case, a statement with a nil amount) to the Revenue Commissioners in electronic format approved by them, on or before 31 March in the year following the year of assessment, which specifies in respect of each person who is a unit holder—
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(I) the name and address of the person,
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(II) the value at the end of the year of assessment of the units to which the person is entitled at that time, and
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(III) such other information as the Revenue Commissioners may require.
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(b) Where paragraph (a) applies—
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(i) the investment undertaking shall advise the unit holder concerned, in writing, that paragraph (a) applies,
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(ii) the statement specified in paragraph (a)(ii) shall be made by the investment undertaking in accordance with that paragraph, and
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(iii) the unit holder shall be deemed for that chargeable period to be a chargeable person for the purposes of sections 951 and 1084, and the return of income to be delivered by the person for that chargeable period shall include the following particulars:
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(I) the name and address of the investment undertaking, and
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(II) the gains arising on the chargeable event.”,
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(d) in section 739G by inserting the following after subsection (2):
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“(2A) Where a gain arises on a chargeable event to which paragraph (ccc) in section 739B(1) refers, and section 739E(2) does not apply to that chargeable event by virtue of subsection (2A) of that section, then such gain—
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(a) shall be treated for the purposes of the Tax Acts as arising to the unit holder, constituting profits or gains chargeable to tax under Case IV of Schedule D at the rate specified in section 739E(1)(b), and
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(b) shall not be reckoned in computing total income for the purposes of the Tax Acts,
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and section 188, and the reductions specified in Part 2 of the Table to section 458, shall not apply as regards the tax so charged.”,
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and
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(e) in section 739H—
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(i) by inserting the following after subsection (1):
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“(1A) For the purposes of subsection (1) a reference in the definition of ‘exchange’ to an investment undertaking includes a reference to a sub-fund of an umbrella scheme where the exchange concerned is between 2 or more sub-funds of different umbrella schemes.
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(1B) Subsection (1A) shall not apply unless the exchange concerned is effected for bona fide commercial reasons and not primarily for the purpose of avoiding liability to taxation.”,
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and
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(ii) by substituting the following for subsection (2):
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“(2) The cancellation of old units arising from an exchange in relation to a scheme of reconstruction or amalgamation shall not be a chargeable event and the amount invested by a unit holder for, and the date of, the acquisition of the new units shall for the purposes of this Chapter be the amount invested by the unit holder for, and the date of, the acquisition of the old units.”.
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(2) (a) Paragraphs(a), (b), (c) and (d) of subsection (1) apply and have effect as respects any chargeable event (within the meaning of section 739B(1) of the Principal Act) occurring on or after the passing of this Act.
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(b) Paragraph (e) of subsection (1) applies and has effect as respects any exchange (within the meaning of section 739H(1) of the Principal Act) in relation to a scheme of reconstruction or amalgamation occurring on or after the passing of this Act.
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