Corporation Tax Act, 1976

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Number 7 of 1976


CORPORATION TAX ACT, 1976


ARRANGEMENT OF SECTIONS

PART I

General System of Taxation

Section

1.

Introduction for companies of corporation tax in place of income tax, corporation profits tax and capital gains tax.

2.

Irish resident company distributions not chargeable to corporation tax.

3.

Income tax on payments made or received by a company resident in the State.

4.

Claims for repayment of income tax deducted from receipts.

5.

Explanation of tax credit to be annexed to interest and dividend warrants.

PART II

Corporation Tax.

6.

General scheme of corporation tax.

7.

Tax on company in liquidation.

8.

Companies not resident in the State.

9.

Basis of, and periods for, assessment.

10.

Allowance of charges on income.

11.

Computation of income: application of income tax principles.

12.

Miscellaneous special rules for computation of income.

13.

Computation of chargeable gains.

14.

Deductions and additions in computation of profits for capital allowances and related charges.

15.

Deduction of management expenses of investment companies (including savings banks).

16.

Relief for trading losses other than terminal losses.

17.

Restriction of relief for losses in farming or market gardening.

18.

Relief for terminal loss in a trade.

19.

Losses in transactions from which income would be chargeable under Case IV or V of Schedule D.

20.

Company reconstructions without change of ownership.

21.

Application and adaptation of Income Tax Acts as to capital allowances.

22.

Double taxation relief.

23.

Double taxation relief: supplementary.

24.

Franked investment income and franked payment.

25.

Set-off of losses etc. against franked investment income.

26.

Set-off of loss brought forward or terminal loss against franked investment income in the case of financial concerns.

27.

Change in ownership of company: disallowance of trading losses.

PART III

Special Classes of Companies.

28.

Reduction of corporation tax liability of small companies.

29.

Companies carrying on mutual business, or not carrying on a business.

30.

Industrial and provident societies.

31.

Building societies.

32.

Partnerships involving companies.

33.

Expense of management of assurance companies.

34.

Companies carrying on life business.

35.

Profits of life business.

36.

Investment income reserved for policy holders.

37.

Chargeable gains reserved for policy holders.

38.

Life business: computation of profits.

39.

Annuity business: separate charge on profits.

40.

General annuity business.

41.

Pension business.

42.

Foreign life assurance funds.

43.

Overseas life assurance companies: investment income.

44.

Overseas life assurance companies: general annuity and pension businesses.

45.

Overseas life assurance companies: income tax, foreign tax and tax credit.

46.

Overseas life assurance companies: distributions set off against income.

47.

Overseas life assurance companies: expenses of management.

48.

Life policies carrying rights not in money.

49.

Benefits from life policies issued before 6th April, 1974.

50.

Interpretation.

51.

Treatment of tax-free income of non-resident banks, etc.

52.

Tax-free securities: exclusion of interest on borrowed money.

PART IV

Profits from Export of Certain Goods

53.

Definition of “relevant accounting period”.

54.

Meaning of “goods”.

55.

Ship building and repair.

56.

Export of certain goods.

57.

Standard period.

58.

Basis of relief from corporation tax.

59.

Certain manufacturing services.

60.

Relief for engineering services in relation to works outside the State.

61.

Adjustments of certain amounts.

62.

Transactions between associated persons and company succeeding to trade of another company.

63.

Production of documents and records.

64.

Distributions.

65.

Dividends and other distributions at gross rate or of gross amount.

66.

Effect of reduction of tax credit.

67.

Distributions to non-resident individuals.

68.

Appeals.

PART V

Profits from Trading within Shannon Airport

69.

Definitions.

70.

Exempted trading operations.

71.

Disregard of income or losses in the case of exempted trading operations.

72.

Transactions between associated persons.

73.

Delivery of statements, etc.

74.

Exception from Part IV.

75.

Reduction of capital allowances.

76.

Distributions.

77.

Provision for charges on income.

PART VI

Associated Companies: Relief under Parts IV and V

78.

Relief in relation to transactions between associated companies.

PART VII

Special Exemptions

79.

Reduced rate of corporation tax for certain income.

80.

Exemption of income from carrying out of voluntary health insurance schemes.

PART VIII

Distributions out of Certain Profits from Mining

81.

Distributions: profits of certain mines.

82.

Distributions out of profits from coal, gypsum and anhydrite mining operations.

PART IX

Schedule F and Company Distributions

83.

Schedule F.

84.

Matters to be treated as distributions.

85.

Bonus issues following repayment of share capital.

86.

Matters to be treated or not treated as repayments of share capital.

87.

Distributions: supplemental.

88.

Tax credit for certain recipients of distributions.

89.

Disallowance of reliefs in respect of bonus issues.

90.

Distributions made out of capital profits of companies.

91.

Distributions by newly resident companies out of profits arising before residence begins.

92.

Distributions made before 6th April, 1976.

93.

Distributions out of certain exempt profits.

PART X

Close Companies

94.

Meaning of close company.

95.

Certain companies with quoted shares not to be close companies.

96.

Certain expenses for participators and associates.

97.

Interest paid to directors and directors' associates.

98.

Loans to participators, etc.

99.

Effect of release, etc., of debt in respect of loan under section 98.

100.

Distributions to be taken into account and meaning of “distributable income”, “investment income”, “estate income”, etc.

101.

Surcharge on close company's undistributed investment and estate income.

102.

Meaning of “associated company” and “control”.

103.

Meaning of “participator”, “associate”, “director” and “loan creditor”.

104.

Information.

PART XI

Group Relief

105.

Group payments.

106.

Election: group payments.

107.

Group relief.

108.

Group relief: qualifications for entitlement.

109.

Group relief: profits or assets available for distribution.

110.

Group relief: “the profit distribution”.

111.

Group relief: “the notional winding up”.

112.

Group relief: limited rights to profits or assets.

113.

Group relief: diminishing share of profits or assets.

114.

Group relief: beneficial percentage.

115.

Group relief: “the relevant accounting period”, etc,.

116.

Kinds of group relief.

117.

Relation of group relief to other relief.

118.

Corresponding accounting periods.

119.

Companies joining or leaving group or consortium.

120.

Group relief: effect of arrangements for transfer of company to another group, etc.

121.

Leasing contracts: effect on claims for losses of company reconstructions.

122.

Partnerships involving companies: effect of arrangements for transferring relief.

123.

Information as to arrangements for transferring relief, etc.

124.

Exclusion of double allowances, etc.

125.

Claims and adjustments.

PART XII

Companies' Capital Gains

126.

Corporation tax attributable to chargeable gains: recovery from shareholder.

127.

Company reconstruction or amalgamation: transfer of assets.

128.

Interest charged to capital.

129.

Groups of companies: definitions.

130.

Transfers within a group.

131.

Transfers within a group: trading stock.

132.

Disposal or acquisition outside a group.

133.

Replacement of business assets by members of a group.

134.

Tax on company recoverable from other members of a group.

135.

Company ceasing to be member of a group.

136.

Exemption from charge under section 135 in the case of certain mergers.

137.

Shares in subsidiary member of a group.

138.

Depreciatory transactions in a group.

139.

Dividend stripping.

PART XIII

Application and Adaptation of Enactments

140.

Application and adaptation of Income Tax Acts and Capital Gains Tax Act, 1975.

PART XIV

Administration

141.

Particulars to be supplied by new companies, etc.

142.

Notice of liability to corporation tax.

143.

Return of profits.

144.

Assessment of corporation tax.

145.

Collection of corporation tax.

146.

Appeals.

147.

Application of income tax administrative provisions to corporation tax.

148.

Time for certain summary proceedings.

149.

Penalties for failure to furnish information and for incorrect information.

150.

Postponement of payment of tax to be permitted in certain cases.

151.

Income tax on payments.

152.

Provisions as to tax under section 151.

153.

Information.

154.

Meaning of “secretary”.

PART XV

Interpretation and Supplemental

155.

Interpretation.

156.

Subsidiaries.

157.

Connected persons.

158.

Meaning of “control”.

159.

Chargeable gains accruing to non-resident companies.

160.

Individuals resident abroad: tax credit.

161.

Rectification of excessive set-off, etc., of tax credit.

162.

Surcharge on undistributed income of service companies.

163.

Relief to certain companies liable to foreign tax.

164.

Income tax and corporation profits tax repeals.

165.

Section 38 of Finance Act, 1924, not to apply to corporation tax.

166.

Amendments and repeals concerning double taxation relief.

167.

Computation of payable tax credits where double taxation relief is allowed.

168.

Supplemental provisions concerning the determination of reduced Irish tax credit for section 167.

169.

Limitations on deductions in respect of interest.

170.

Patent royalties: provisions supplemental to section 34 of Finance Act 1973.

171.

Construction of references to income tax paid by deduction and to repayment.

172.

Continuation of elections.

PART XVI

Savings, Transitions, etc.

173.

Commencement of corporation tax for existing companies, and transition from income tax.

174.

Winding up of corporation profits tax.

175.

Capital gains tax losses accruing before 6th April, 1976.

176.

Transitional relief for existing companies on cessation of trade, etc.

177.

Relief from corporation tax on interest on certain loans.

178.

Dividends and other distributions at gross rate or of gross amount.

179.

Set-off of losses against franked investment income.

180.

Commencement of surcharge on close companies.

181.

Income tax relief for losses incurred in 1974–75 and 1975–76.

182.

Relief in respect of unrelieved losses and capital allowances carried forward from the year 1975–76.

183.

Relief in respect of losses or deficiencies within Case IV or V of Schedule D.

184.

Relief in respect of corporation profits tax losses.

185.

Terminal losses.

186.

Transitional relief in respect of certain payments and management expenses.

187.

Repayment of corporation profits tax.

188.

Short title and construction.

FIRST SCHEDULE

Adaptation of System of Capital Allowances

SECOND SCHEDULE

PART I

Application and Adaptation of Income Tax Acts

PART II

Application and Adaptation of Capital Gains Tax Act, 1975

THIRD SCHEDULE

Enactments Repealed

FOURTH SCHEDULE

PART I

Amendment of Enactments concerning Double Taxation Relief

PART II

Repeal of Enactments concerning Double Taxation Relief

FIFTH SCHEDULE

Transitional Relief in respect of Certain Payments and Management Expenses

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Number 7 of 1976


CORPORATION TAX ACT, 1976


AN ACT TO CHARGE AND IMPOSE ON CERTAIN PROFITS A DUTY OF INLAND REVENUE TO BE KNOWN AS CORPORATION TAX, TO AMEND THE LAW RELATING TO INLAND REVENUE AND TO MAKE FURTHER PROVISIONS IN CONNECTION WITH FINANCE. [31st March, 1976]

BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:

PART I

General System of Taxation

Introduction for companies of corporation tax in place of income tax, corporation profits tax and capital gains tax.

1.—(1) For the financial year 1974 and each subsequent financial year there shall be charged on profits of companies a tax, to be called corporation tax, at the rate of 50 per cent.

(2) For years of assessment after the year 1975–76 the provisions of the Income Tax Acts relating to the charge of income tax shall not apply to income of a company (not arising to it in a fiduciary or representative capacity) if—

(a) the company is resident in the State; or

(b) the income is, in the case of a company not so resident, within the chargeable profits of the company as defined for the purposes of corporation tax.

(3) A company shall not be chargeable to capital gains tax in respect of gains accruing to it so that it is chargeable in respect of them to corporation tax.

(4) Corporation profits tax shall not be chargeable for accounting periods or parts of accounting periods falling after the 5th day of April, 1976.

(5) In this Act, unless the context otherwise requires—

(a) “company” means any body corporate but does not include—

(i) a health board,

(ii) a vocational education committee established under the Vocational Education Act, 1930 ,

(iii) a committee of agriculture established under the Agriculture Act, 1931 , or

(iv) a local authority, and for this purpose “local authority” has the meaning assigned to it by section 2 (2) of the Local Government Act, 1941 , and includes a body established under the Local Government Services (Corporate Bodies) Act, 1971 ;

(b) “the financial year 1974” means the period of nine months beginning on the 1st day of April, 1974;

(c) “profits” means income and chargeable gains, and “chargeable gains” has the same meaning as in the Capital Gains Tax Act, 1975 , but does not include gains accruing on disposals which were made before the 6th day of April, 1976;

(d) “trade” includes “vocation” and includes also an office or employment;

(e) such other words and expressions as are specified in section 155 (interpretation) have the meanings given by or indicated in that section.

Irish resident company distributions not chargeable to corporation tax.

2.—Except as otherwise provided by this Act, corporation tax shall not be chargeable on dividends and other distributions of a company resident in the State, nor shall any such dividends or distributions be taken into account in computing income for corporation tax.

Income tax on payments made or received by a company resident in the State.

3.—(1) No payment made after the 5th day of April, 1976, by a company resident in the State shall by virtue of this section or otherwise be treated for any purpose of the Income Tax Acts as paid out of profits or gains brought into charge to income tax; nor shall any right or obligation under the Income Tax Acts to deduct income tax from any payment be affected by the fact that the recipient is a company not chargeable to income tax in respect of the payment.

(2) Subject to the provisions of this Act, where after the 5th day of April, 1976, a company resident in the State receives any payment on which it bears income tax by deduction, the income tax thereon shall be set off against any corporation tax assessable on the company by an assessment made for the accounting period in which that payment falls to be taken into account for corporation tax (or would fall to be taken into account but for any exemption from corporation tax); and accordingly in respect of that payment the company, unless wholly exempt from corporation tax, shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due.

(3) References in this section to payments received by a company apply to any received by another person on behalf of or in trust for the company, but not to any received by the company on behalf of or in trust for another person.

Claims for repayment of income tax deducted from receipts.

4.—Effect shall be given—

(a) to section 1 (2), and to that section as modified by sections 3 (2) and 8 (3), and

(b) so far as the exemptions from income tax conferred by the Corporation Tax Acts call for repayment of tax, to those exemptions,

by means of a claim.

Explanation of tax credit to be annexed to interest and dividend warrants.

5.—(1) Every warrant or cheque or other order drawn or made, or purporting to be drawn or made, in payment by any company of any dividend, or of any interest which is a distribution, shall have annexed thereto or be accompanied by a statement in writing showing—

(a) the amount of the dividend (distinguishing a dividend or any part of it which is paid out of capital profits of the company) or interest paid,

(b) (whether or not the recipient is a person entitled to a tax credit in respect thereof) the amount of the tax credit to which a recipient who is such a person is entitled in respect thereof, and

(c) the period for which the dividend or interest is paid.

(2) If a company fails to comply with any of the provisions of this section the company shall incur a penalty of £10 in respect of each offence but the aggregate amount of the penalties imposed under this section on any company in respect of offences connected with any one distribution of dividends or interest shall not exceed £100.

PART II

Corporation Tax

General scheme of corporation tax.

6.—(1) Subject to any exceptions provided for by this Act, a company shall be chargeable to corporation tax on all its profits wherever arising.

(2) A company shall be chargeable to corporation tax on profits accruing for its benefit under any trust, or arising under any partnership, in any case in which it would be so chargeable if the profits accrued to it directly; and a company shall be chargeable to corporation tax on profits arising in the winding up of the company, but shall not otherwise be chargeable to corporation tax on profits accruing to it in a fiduciary or representative capacity except as respects its own beneficial interest (if any) in those profits.

(3) Corporation tax for any financial year shall be charged on profits arising in that year; but assessments to corporation tax shall be made on a company by reference to accounting periods, and the amount chargeable (after making all proper deductions) of the profits arising in an accounting period shall, where necessary, be apportioned between the financial years in which the accounting period falls.

(4) (a) Except as otherwise provided by this subsection, corporation tax assessed for an accounting period shall be paid in two equal instalments as follows—

(i) the first instalment within nine months from the end of the accounting period or, if it is later, within two months from the making of the assessment; and

(ii) the second instalment within fifteen months from the end of the accounting period or, if it is later, within two months from the making of the assessment.

(b) Where, in respect of a source of income, a company is within the charge to income tax under Schedule D for the year of assessment 1975-76, and in respect of that source of income comes within the charge to corporation tax on or before the 6th day of April, 1975, then (so long as the company continues to be within the charge to corporation tax in respect of that source of income) the second instalment of corporation tax assessed for an accounting period shall be paid as follows—

(i) in respect of the first accounting period for which the company is within the charge to corporation tax—

(I) where that accounting period is a period of twelve months, on or before the 1st day of January, 1977, and

(II) where that accounting period is a period of less than twelve months, within the like interval from the end of the accounting period as the 1st day of January, 1977, would have been from the end of the first accounting period if that accounting period had been a period of twelve months commencing on the date on which the company comes within the charge to corporation tax; and

(ii) in respect of any subsequent accounting period, within the like interval from the end of such accounting period as there was between the end of the first accounting period for which the company was within the charge to corporation tax and the date on or before which the second instalment of corporation tax for that first accounting period would have become payable if the assessment for that accounting period had been made on the day immediately following the end of that accounting period:

Provided that in no case shall the second instalment of corporation tax assessed for an accounting period become payable before the expiration of nine months from the end of the accounting period for which it is assessed or before the expiration of two months from the making of the assessment.

(5) Corporation tax shall be under the care and management of the Revenue Commissioners who may do all such acts as may be deemed necessary and expedient for raising, collecting, receiving and accounting for the tax in the like manner as they are authorised to do with relation to any other duties under their care and management.

(6) Section 1 of the Provisional Collection of Taxes Act, 1927 , is hereby amended by the insertion of “and corporation tax” before “but no other tax or duty”.

(7) Section 39 of the Inland Revenue Regulation Act, 1890 , is hereby amended by the insertion of “corporation tax,” before “stamp duties”.

Tax on company in liquidation.

7.—An assessment on a company's profits for an accounting period which falls after the commencement of the winding up of the company shall not be invalid because made before the end of the accounting period.

Companies not resident in the State.

8.—(1) A company not resident in the State shall not be within the charge to corporation tax unless it carries on a trade in the State through a branch or agency but, if it does so, it shall, subject to any exceptions provided for by this Act, be chargeable to corporation tax on all its chargeable profits wherever arising.

(2) For purposes of corporation tax the chargeable profits of a company not resident in the State but carrying on a trade there through a branch or agency shall be—

(a) any trading income arising directly or indirectly through or from the branch or agency, and any income from property or rights used by, or held by or for, the branch or agency (but so that this paragraph shall not include distributions received from companies resident in the State); and

(b) such chargeable gains as, but for this Act, would be chargeable to capital gains tax in the case of a company which is not resident in the State:

Provided that such chargeable profits shall not include chargeable gains accruing to the company on the disposal of assets which, at or before the time when the chargeable gains accrued, were not used in or for the purposes of the trade and were not used or held or acquired for the purposes of the branch or agency.

(3) Subject to section 45 (overseas life assurance companies), where in the year 1976-77 or any later year of assessment, a company not resident in the State receives any payment on which it bears income tax by deduction, and the payment forms part of, or is to be taken into account in computing, the company's income chargeable to corporation tax, the income tax thereon shall be set off against any corporation tax assessable on that income by an assessment made for the accounting period in which the payment falls to be taken into account for corporation tax; and accordingly in respect of that payment the company shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due.

(4) Without prejudice to the general application of income tax procedure to corporation tax, the provisions of Chapter II of Part IX of the Income Tax Act, 1967 (Special Provisions as to Non-residents and Temporary Residents), and section 209 in Chapter III of the said Part (liability of trustees, etc.) relating to the assessment and charge of income tax on persons not resident in the State, so far as they are applicable to tax chargeable on a company, shall apply with any necessary adaptations in relation to corporation tax chargeable on companies not resident in the State.

Basis of, and periods for, assessment.

9.—(1) Except as otherwise provided by this Act, corporation tax shall be assessed and charged for any accounting period of a company on the full amount of the profits arising in the period (whether or not received in or remitted to the State) without any other deduction than is authorised by this Act.

(2) An accounting period of a company shall begin for purposes of corporation tax whenever—

(a) the company, not then being within the charge to corporation tax, comes within it whether by the coming into force of any provision of this Act, or by the company becoming resident in the State or acquiring a source of income, or otherwise; or

(b) an accounting period of the company ends without the company then ceasing to be within the charge to corporation tax.

(3) An accounting period of a company shall end for purposes of corporation tax on the first occurrence of any of the following—

(a) the expiration of twelve months from the beginning of the accounting period;

(b) an accounting date of the company or, if there is a period for which the company does not make up accounts, the end of that period;

(c) the company beginning or ceasing to trade or to be, in respect of the trade or (if more than one) of all the trades carried on by it, within the charge to corporation tax;

(d) the company beginning or ceasing to be resident in the State;

(e) the company ceasing to be within the charge to corporation tax.

(4) For the purposes of this section a company resident in the State, if not otherwise within the charge to corporation tax, shall be treated as coming within the charge to corporation tax on the 6th day of April, 1976, or at the time when it commences to carry on business, whichever is the later.

(5) If a company carrying on more than one trade makes up accounts of any of them to different dates, and does not make up general accounts for the whole of the company's activities, subsection (3) (b) shall apply with reference to the accounting date of such one of the trades as the Revenue Commissioners may determine.

(6) If, on or after the 6th day of April, 1976, a chargeable gain or allowable loss accrues to a company at a time not otherwise within an accounting period of the company, an accounting period of the company shall then begin for the purposes of corporation tax, and the gain or loss shall accrue in that accounting period.

(7) Notwithstanding anything in the preceding subsections, where a company is wound up, an accounting period shall end and a new one begin with the commencement of the winding up, and thereafter an accounting period shall not end otherwise than by the expiration of twelve months from its beginning or by the completion of the winding up.

For this purpose a winding up is to be taken to commence on the passing by the company of a resolution for the winding up of the company, or on the presentation of a winding up petition if no such resolution has previously been passed and a winding up order is made on the petition, or on the doing of any other act for a like purpose in the case of a winding up otherwise than under the Companies Act, 1963 .

(8) Where it appears to the inspector that the beginning or end of any accounting period of a company is uncertain, he may make an assessment on the company for such period, not exceeding twelve months, as appears to him appropriate, and that period shall be treated for all purposes as an accounting period of the company unless either the inspector on further facts coming to his knowledge sees fit to revise it or on an appeal against the assessment in respect of some other matter the company shows the true accounting periods; and if on an appeal against an assessment made by virtue of this subsection the company shows the true accounting periods the assessment appealed against shall, as regards the period to which it relates, have effect as an assessment or assessments for the true accounting periods, and there may be made such other assessments for any such periods or any of them as might have been made at the time when the assessment appealed against was made.

Allowance of charges on income.

10.—(1) In computing the corporation tax chargeable for any accounting period of a company any charges on income paid by the company in the accounting period, but not before the 6th day of April, 1976, so far as paid out of the company's profits brought into charge to corporation tax, shall be allowed as deductions against the total profits for the period as reduced by any other relief from tax other than group relief.

(2) Subject to the following subsections and to any other express exceptions, “charges on income” means for the purposes of corporation tax payments of any description mentioned in subsection (3), not being dividends or other distributions of the company, but no payment which is deductible in computing profits or any description of profits for purposes of corporation tax shall be treated as a charge on income.

(3) Subject to subsections (4) to (7), the payments referred to in subsection (2) are—

(a) any yearly interest, annuity or other annual payment and any such other payments as are mentioned in section 93 (taxation of rents under long leases and certain other payments) or section 433 (2) (yearly interest, etc., payable wholly out of taxed profits) of the Income Tax Act, 1967 , and

(b) any other interest payable in the State on an advance from a bank carrying on a bona fide banking business in the State, or from a person who in the opinion of the Revenue Commissioners is bona fide carrying on business as a member of a stock exchange in the State or bona fide carrying on the business of a discount house in the State;

and for the purposes of this section any interest payable by a company as mentioned in paragraph (b) shall be treated as paid on its being debited to the company's account in the books of the person to whom it is payable.

(4) No such payment as is mentioned in subsection (3) (a) made by a company to a person not resident in the State shall be treated as a charge on income unless the company is resident in the State and either—

(a) the company deducts income tax from the payment in accordance with section 434 of the Income Tax Act, 1967 (interest, etc., not payable out of taxed profits), or the provisions of that section as applied by section 31 of the Finance Act, 1974 , and accounts under section 151 (income tax on payments) for the tax so deducted; or

(b) the payment is one payable out of income which is brought into charge to tax under Case III of Schedule D and which arises from securities and possessions outside the State.

(5) No such payment made by a company as is mentioned in subsection (3) shall be treated as a charge on income if—

(a) the payment is charged to capital, or the payment is not ultimately borne by the company; or

(b) the payment is not made under a liability incurred for a valuable and sufficient consideration and, in the case of a company not resident in the State, incurred wholly and exclusively for the purposes of a trade carried on by it in the State through a branch or agency:

Provided that for the purposes of paragraph (b) a payment falling within section 439 (1) (ii) or (iia) of the Income Tax Act, 1967 (dispositions for short periods), shall be treated as incurred for valuable and sufficient consideration.

(6) Subject to subsection (7), any yearly or other interest such as is mentioned in subsection (3) shall be treated for the purposes of this section as a charge on income paid in any accounting period only to the extent that it does not exceed the lesser of—

(a) an amount calculated at the rate of £2,000 per annum, and

(b) in relation to a company which is connected with an individual or another company within the meaning of section 157 (connected persons), an amount determined by the formula /images/en.act.1976.0007.sec10.1.jpg

where—

A is the total amount of interest payable by the company in respect of the accounting period,

B is the aggregate amount of the interest payable in respect of the accounting period by the company and all the persons with whom it is connected, and

C is the number of months or fractions of months comprised in the accounting period;

and for this purpose all such apportionments and aggregations as may be necessary shall be made:

Provided that for the purposes of paragraph (b) interest shall be deemed not to include any amount which the company or any person with whom it is connected is entitled to deduct in computing income of any description, or any amount to which the provisions of subsection (7) or of section 32 , 34 or 36 of the Finance Act, 1974 (borrowings related to acquisition of interest in other companies, or recovery of, or replacement of capital), apply.

(7) Subject to subsection (8), the provisions of subsection (6) shall not apply to any payment of interest on a loan to a company to defray money applied for a purpose mentioned in section 33 (2) of the Finance Act, 1974 , if the conditions specified in subsection (3) of that section and in section 35 (4) of that Act are fulfilled.

(8) The provisions of section 35 of the Finance Act, 1974 , excluding subsection (5) thereof, shall have effect for corporation tax as for income tax; and references to section 33 of the Finance Act, 1974 , to the investing company and to the borrower, to interest eligible for relief, and to affording relief for interest shall have effect accordingly as if they were or included references to subsection (7) of this section, to such a company as is mentioned in the said subsection (7), to interest to be treated as a charge on income, and to treating part only of a payment of interest as a charge on income.

Computation of income: application of income tax principles.

11.—(1) Except as otherwise provided by this Act or any other enactment relating to income tax or corporation tax, the amount of any income shall for purposes of corporation tax be computed in accordance with income tax principles, all questions as to the amounts which are or are not to be taken into account as income, or in computing income, or charged to tax as a person's income, or as to the time when any such amount is to be treated as arising, being determined in accordance with income tax law and practice as if accounting periods were years of assessment.

(2) For the purposes of this section “income tax law” means, in relation to any accounting period, the law applying, for the year of assessment in which the period ends, to the charge on individuals of income tax, except that—

(a) it includes also all such enactments of the Income Tax Acts applying for the year 1975-76 as make special provision for companies in relation to matters referred to in subsection (1), and

(b) it does not include such of the enactments of the Income Tax Acts so applying as make special provision for individuals in relation to those matters.

(3) Accordingly for purposes of corporation tax income shall be computed, and the assessment shall be made, under the like Schedules and Cases as apply for purposes of income tax, and in accordance with the provisions applicable to those Schedules and Cases, but (subject to the provisions of this Act) the amounts so computed for the several sources of income, if more than one, together with any amounts to be included in respect of chargeable gains, shall be aggregated to arrive at the total profits.

(4) Nothing in this section shall be taken to mean that income arising in any period is to be computed by reference to any other period (except in so far as this results from apportioning to different parts of a period income of the whole period).

(5) Subject to section 12 and to any enactment applied by this section which expressly authorises such a deduction, no deduction shall be made in computing income from any source—

(a) in respect of dividends or other distributions; nor

(b) in respect of any yearly interest, annuity or other annual payment or any such other payments as are mentioned in section 93 or 433 (2) of the Income Tax Act, 1967 , but not including sums which are, or but for any exemption would be, chargeable under Case V of Schedule D.

(6) Without prejudice to the generality of subsection (1), any provision of the Income Tax Acts (excluding the provisions of Part XXV of the Income Tax Act, 1967 (Temporary Relief from Taxation)), or of any other statute, which confers an exemption from income tax, or which provides for the disregarding of a loss, or which provides for a person to be charged to income tax on any amount (whether expressed to be income or not, and whether an actual amount or not), shall, except as otherwise provided, have the like effect for purposes of corporation tax.

(7) This section shall not have effect so as to apply for the purposes of corporation tax anything in section 76 of the Income Tax Act, 1967 (foreign securities and possessions).

(8) Where, by virtue of this section or otherwise, any enactment applies both to income tax and to corporation tax, it shall not be affected in its operation by the fact that they are distinct taxes but, so far as is consistent with the Corporation Tax Acts, shall apply in relation to income tax and corporation tax as if they were one tax, so that, in particular, a matter which in a case involving two individuals is relevant for both of them in relation to income tax shall in a like case involving an individual and a company be relevant for him in relation to that tax and for it in relation to corporation tax; and for that purpose in any such enactment references to a relief from or charge to income tax, or to a specified provision of the Income Tax Acts shall, in the absence of or subject to any express adaptation, be construed as being or including a reference to any corresponding relief from or charge to corporation tax, or to any corresponding provision of the Corporation Tax Acts.

Miscellaneous special rules for computation of income.

12.—(1) For purposes of corporation tax, income tax law as applied by section 11 shall have effect subject to the following subsections.

(2) Where a company begins or ceases to carry on a trade, or to be within the charge to corporation tax in respect of a trade, the company's income shall be computed as if that were the commencement or, as the case may be, discontinuance of the trade, whether or not the trade is in fact commenced or discontinued:

Provided that where any provision of the Income Tax Acts is applied for corporation tax by this Act, this subsection shall not have effect for any purpose of that provision if under any enactment a trade is not to be treated as permanently discontinued for the corresponding income tax purpose.

(3) In computing income from a trade section 11 (5) (b) shall not prevent the deduction of yearly interest.

(4) In computing a company's income for any accounting period from the letting of rights to work minerals in the State there may be deducted any sums disbursed by the company wholly, exclusively and necessarily as expenses of management or supervision of those minerals in that period:

Provided that any enactments restricting the relief from income tax that might be given under section 553 of the Income Tax Act, 1967 (allowance to owner of mineral rights for expenses), shall apply to restrict in like manner the deductions that may be made under this subsection.

(5) Where a company is chargeable to corporation tax in respect of a trade under Case III of Schedule D, the income from the trade shall be computed in accordance with the provisions applicable to Case I of Schedule D.

(6) The amount of any income arising from securities and possessions in any place outside the State shall be treated as reduced (where such a deduction cannot be made under, and is not forbidden by, any provision of the Income Tax Acts applied by this Act) by any sum which has been paid in respect of income tax in the place where the income has arisen.

(7) Paragraphs (e) and (f) of Case III of Schedule D in section 53 (1) of the Income Tax Act, 1967 , shall for purposes of corporation tax extend to companies not resident in the State, so far as those companies are chargeable to tax on income of descriptions which, in the case of companies resident in the State, fall within those paragraphs (but without prejudice to any provision of the Income Tax Acts specially exempting non-residents from income tax on any particular description of income).

(8) The provisions of section 64 (1) of the Income Tax Act, 1967 , shall not apply in computing income from a trade.

Computation of chargeable gains.

13.—(1) Subject to the provisions of this section, the amount to be included in respect of chargeable gains in a company's total profits for any accounting period shall be the following amount reduced by 48 per cent. thereof, namely, the total amount of chargeable gains accruing to the company in the accounting period after deducting (a) any allowable losses accruing to the company in the accounting period and (b) any allowable losses previously accruing to the company while it has been within the charge to corporation tax so far as they have not been allowed as a deduction from chargeable gains accruing in any previous accounting period.

(2) Except as otherwise provided by this Act, the chargeable gains and allowable losses shall for purposes of corporation tax be computed in accordance with the principles applying for capital gains tax, all questions as to the amounts which are or are not to be taken into account as chargeable gains or as allowable losses, or in computing gains or losses, or charged to tax as a person's gain, or as to the time when any such amount is to be treated as accruing being determined in accordance with the provisions relating to capital gains tax as if accounting periods were years of assessment.

(3) Subject to subsection (5), where the enactments relating to capital gains tax contain any reference to income tax or to the Income Tax Acts the reference shall, in relation to a company be construed as a reference to corporation tax or to the Corporation Tax Acts; but—

(a) this subsection shall not affect the reference to income tax in paragraph 4 (2) of Schedule 1 to the Capital Gains Tax Act, 1975 (exclusion of expenditure by reference to hypothetical income tax),

(b) nothing in this section shall be taken as applying for corporation tax section 6 of the said Act (capital gains accruing to an individual: alternative charge), and

(c) in so far as the said provisions operate by reference to matters of any specified description, account shall for corporation tax be taken of matters of that description which are confined to companies, but not of any which are confined to individuals.

(4) The Capital Gains Tax Act, 1975 , as extended by this section shall not be affected in its operation by the fact that capital gains tax and corporation tax are distinct taxes but, so far as is consistent with this Act, shall apply in relation to capital gains tax and corporation tax on chargeable gains as if they were one tax, so that, in particular, a matter which in a case involving two individuals is relevant for both of them in relation to capital gains tax shall in a like case involving an individual and a company be relevant for him in relation to that tax and for it in relation to corporation tax.

(5) Where assets of a company are vested in a liquidator, this section and the enactments applied by this section shall apply as if the assets were vested in, and the acts of the liquidator in relation to the assets were the acts of, the company (acquisitions from or disposals to him by the company being disregarded accordingly).

Deductions and additions in computation of profits for capital allowances and related charges.

14.—(1) In computing for purposes of corporation tax a company's profits for any accounting period there shall be made in accordance with this section all such deductions and additions as are required to give effect to the provisions of the Income Tax Acts which relate to allowances (including investment allowances) and charges in respect of capital expenditure, as those provisions are applied by this Act.

(2) (a) Allowances and charges which fall to be made for any accounting period in taxing a trade shall be given effect by treating the amount of any allowance as a trading expense of the trade in that period and by treating the amount on which any such charge is to be made as a trading receipt of the trade in that period.

(b) (i) A company to which an allowance under Part XV of the Income Tax Act, 1967 (Initial Allowances for Certain Capital Expenditure on Machinery and Plant and on Industrial Buildings and Structures), or under section 294 (1) (a) of the said Act (allowances for expenditure on dredging) as applied to corporation tax by this Act, falls to be made in taxing a trade for any accounting period may disclaim the allowance by notice in writing given to the inspector not later than two years after the end of that period.

(ii) Any such notice shall be accompanied by a certificate signed by the person by whom the notice is given giving such particulars as show that the allowance would fall to be made if no such notice were given and the amount which would so fall to be made.

(iii) Where notice is given under subparagraph (i) for any accounting period the inspector may make an assessment to corporation tax on the company for that accounting period on the amount, or the further amount, which in his opinion ought to be charged.

(3) Where an allowance falls to be made to a company for any accounting period which is to be given by discharge or repayment of tax or in charging its income under Case V of Schedule D, and is to be available primarily against a specified class of income, it shall, as far as may be, be given effect by deducting the amount of the allowance from any income of the period, being income of the specified class.

(4) Balancing charges for any accounting period not falling to be made in taxing a trade shall, notwithstanding any provision for them to be made under Case IV or V of Schedule D, as the case may be, be given effect by treating the amount on which the charge is to be made as income of the same class as that against which the corresponding allowances are available or primarily available.

(5) Where an allowance which is to be made for any accounting period by way of discharge or repayment of tax, or in charging income under Case V of Schedule D, as the case may be, cannot be given full effect under subsection (3) in that period by reason of a want or deficiency of income of the relevant class, then (so long as the company remains within the charge to tax) the amount unallowed shall be carried forward to the succeeding accounting period, except in so far as effect is given to it under subsection (6); and the amount so carried forward shall be treated for purposes of this section, including any further application of this subsection, as the amount of a corresponding allowance for that period.

(6) Where an allowance (other than an allowance which is carried forward from an earlier accounting period) which is to be made for any accounting period by way of discharge or repayment of tax, or in charging income under Case V of Schedule D as the case may be, and which is available primarily against income of a specified class cannot be given full effect under subsection (3) in that period by reason of a want or deficiency of income of that class, the company may claim that effect shall be given to the allowance against the profits (of whatever description) of that accounting period and, if the company was then within the charge to tax, of preceding accounting periods ending within the time specified in subsection (7); and, subject to that subsection and to any relief for earlier allowances or for losses, the profits of any of those accounting periods shall then be treated as reduced by the amount unallowed under subsection (3), or by so much of that amount as cannot be given effect under this subsection against profits of a later accounting period.

(7) The time referred to in subsection (6) is a time immediately preceding the accounting period first mentioned in subsection (6) equal in length to the accounting period for which the allowance falls to be made; but the amount or aggregate amount of the reduction which may be made under that subsection in the profits of an accounting period falling partly before that time shall not, with the amount of any reduction falling to be made therein under any corresponding provision of this Act relating to losses, exceed a part of those profits proportionate to the part of the period falling within that time.

(8) A claim under subsection (6) shall be made by notice in writing given to the inspector not later than two years from the end of the accounting period in which an allowance cannot be given full effect under subsection (3).

Deduction of management expenses of Investment companies (including savings banks).

15.—(1) In computing for purposes of corporation tax the total profits for any accounting period of an investment company resident in the State there shall be deducted any sums disbursed on or after the 6th day of April, 1976, as expenses of management (including commissions) for that period, except any such expenses as are deductible in computing income for the purposes of Case V of Schedule D:

Provided that there shall be deducted from the amount treated as expenses of management the amount of any income derived from sources not charged to tax, other than franked investment income.

(2) Where in any accounting period of an investment company the expenses of management deductible under subsection (1), together with any charges on income paid in the accounting period wholly and exclusively for purposes of the company's business, exceed the amount of the profits from which they are deductible, the excess shall be carried forward to the succeeding accounting period; and the amount so carried forward shall be treated for purposes of this section (other than subsection (4)), including any further application of this subsection, as if it had been disbursed as expenses of management for that accounting period.

(3) For the purposes of subsections (1) and (2) there shall be added to a company's expenses of management in any accounting period the amount of any allowances falling to be made to the company for that period by virtue of section 37 of the Finance Act, 1968 (relief for payments in respect of redundancy), or section 16 of the Finance Act, 1972 (certain approved occupational pension schemes: exemptions and reliefs).

(4) Where an investment company proves that, in any accounting period, it has received franked investment income, it shall be entitled to claim payment of the amount of the tax credit comprised in so much of that income as is equal to the amount of any excess for the accounting period computed under subsection (2) but excluding any amount carried forward from a previous accounting period:

Provided that any excess in respect of which relief is given under this subsection shall not be carried forward under subsection (2).

(5) Notice of any claim under subsection (4), together with the particulars thereof, shall be given in writing to the inspector within two years after the end of the accounting period in respect of which the claim is made, and where the inspector objects to such claim the Appeal Commissioners shall hear and determine the same in like manner as in the case of an appeal to them against an assessment under Schedule D, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

(6) For purposes of this section and of other provisions of this Act relating to expenses of management “investment company” means any company whose business consists wholly or mainly in the making of investments, and the principal part of whose income is derived therefrom, but includes any savings bank or other bank for savings.

Relief for trading losses other than terminal losses.

16.—(1) Where in any accounting period a company carrying on a trade incurs a loss in the trade, the company may make a claim requiring that the loss be set off for purposes of corporation tax against any trading income from the trade in succeeding accounting periods; and (so long as the company continues to carry on the trade) its trading income from the trade in any succeeding accounting period shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot, on that claim or on a claim (if made) under subsection (2), be relieved against income or profits of an earlier accounting period.

(2) Where in any accounting period a company carrying on a trade incurs a loss in the trade, then (subject to subsection (4)) the company may make a claim requiring that the loss be set off for purposes of corporation tax against profits (of whatever description) of that accounting period and, if the company was then carrying on the trade and the claim so requires, of preceding accounting periods ending within the time specified in subsection (3); and, subject to that subsection and to any relief for an earlier loss, the profits of any of those periods shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection against profits of a later accounting period.

(3) The time referred to in subsection (2) is a time immediately preceding the accounting period first mentioned in subsection (2) equal in length to the accounting period in which the loss is incurred; but the amount of the reduction which may be made under that subsection in the profits of an accounting period falling partly before that time shall not exceed a part of those profits proportionate to the part of the period falling within that time.

(4) Subsection (2) shall not apply to trades falling within Case III of Schedule D.

(5) The amount of a loss incurred in a trade in an accounting period shall be computed for purposes of this section in like manner as trading income from the trade in that period would have been computed.

(6) For purposes of this section “trading income” means, in relation to any trade, the income which falls or would fall to be included in respect of the trade in the total profits of the company; but where in an accounting period a company incurs a loss in a trade in respect of which it is within the charge to corporation tax under Case I or III of Schedule D, and in any later accounting period to which the loss or any part of it is carried forward under subsection (1) relief in respect thereof cannot be given, or cannot wholly be given, because the amount of the trading income of the trade is insufficient, any interest or dividends on investments which would fall to be taken into account as trading receipts in computing that trading income but for the fact that they have been subjected to tax under other provisions shall be treated for purposes of subsection (1) as if they were trading income of the trade.

(7) Where in an accounting period the charges on income paid by a company—

(a) exceed the amount of the profits against which they are deductible, and

(b) include payments made wholly and exclusively for the purposes of a trade carried on by the company,

then, up to the amount of that excess or of those payments, whichever is the less, the charges on income so paid shall in computing a loss for purposes of subsection (1) be deductible as if they were trading expenses of the trade.

(8) In this section references to a company carrying on a trade refer to the company carrying it on so as to be within the charge to corporation tax in respect of it.

(9) Where—

(a) a claim is made under subsection (2), and

(b) the claim relates to a loss (arrived at by apportionment if necessary) incurred in a trade in the twelve months immediately preceding the date on which the company ceases to carry on such trade, and

(c) the claim is a claim to have any part of the loss set off against profits of an accounting period preceding the accounting period in which the loss was incurred,

then, such set-off shall not apply so as to reduce the amount on which the company is chargeable to corporation tax for such preceding accounting period to an amount less than an amount the corporation tax chargeable on which for that preceding accounting period is a sum equal to the excess of the tax credits comprised in the franked payments made by the company in that preceding accounting period over the tax credits comprised in the franked investment income received by the company in the said preceding accounting period.

(10) A claim under subsection (2) shall be made within two years from the end of the accounting period in which the loss is incurred.

Restriction of relief for losses in farming or market gardening.

17.—(1) In this section—

“prior three years” in relation to a loss incurred in an accounting period, means the last three years before the beginning of the accounting period;

“prior period of loss” means the prior three years, or, if losses were incurred in successive accounting periods amounting in all to a period longer than three years (and ending when the prior three years end), that longer period;

“farming” has the same meaning as in subsection (1) (inserted by the Finance Act, 1975 ) of section 13 of the Finance Act, 1974 (taxation of farming profits);

“market gardening” has the same meaning as in section 54 of the Income Tax Act, 1967 (market gardening).

(2) (a) Any loss incurred in a trade of farming or market gardening shall not be available for relief under section 16 (2) unless it is shown that, for the accounting period in which the loss is claimed to have been incurred, the trade was being carried on on a commercial basis and with a view to the realisation of profits in the trade.

(b) Without prejudice to paragraph (a), any loss incurred in any accounting period in a trade of farming or market gardening shall not be available for relief under section 16 (2), if a loss, computed without regard to capital allowances, was incurred in carrying on that trade in that accounting period, and in each of the accounting periods wholly or partly comprised in the prior three years; and for the purpose of this paragraph “loss computed without regard to capital allowances” means a loss ascertained in accordance with the rules of Case I of Schedule D, but so that, notwithstanding section 14, no account shall be taken of any allowance or charge which otherwise would be taken into account under that section.

(c) For the purposes of this section, the fact that a trade of farming or market gardening was being carried on at any time so as to afford a reasonable expectation of profit shall be conclusive evidence that it was then being carried on with a view to the realisation of profits.

(d) This subsection shall not restrict relief for any loss if it is shown by the claimant company that the whole of its farming or market gardening activities in the year next following the prior three years are of such a nature, and carried on in such a way, as would have justified a reasonable expectation of the realisation of profits in the future if they had been undertaken by a competent farmer or market gardener, but that, if that farmer or market gardener had undertaken those activities at the beginning of the prior period of loss, he could not reasonably have expected the activities to become profitable until after the end of the year next following the prior period of loss.

(e) This subsection shall not restrict relief where the carrying on of the trade forms part of and is ancillary to a larger trading undertaking.

(3) Subsection (2) shall not restrict relief for any loss if the trade was set up and commenced within the prior three years, and, for the purposes of this subsection, a trade shall be treated as discontinued, and a new trade set up, in any event which under any of the provisions of the Tax Acts is to be treated as equivalent to the permanent discontinuance or setting up of a trade:

Provided that a trade shall not be treated as discontinued if under section 20 (2) it is not to be treated as discontinued for the purpose of capital allowances and charges.

(4) Where a trade of farming or market gardening is or falls to be treated as being carried on for a part only of an accounting period by reason of its being set up and commenced, or discontinued, or both, in that accounting period, subsection (2) shall have effect in relation to that trade as regards that part of that accounting period.

(5) Where at any time there has been a change in the persons engaged in carrying on a trade of farming or market gardening, this section shall, notwithstanding subsection (3), apply to any person who was engaged in carrying on the trade immediately before and immediately after the change as if the trade were the same before and after without any discontinuance, and as if a person and another person with whom he is connected were the same person.

In this subsection any question as to whether persons are connected shall be determined in accordance with the provisions of section 157 and accordingly relief from corporation tax may be restricted under this section by reference to losses some of which are incurred in years of assessment and some, computed without regard to capital allowances, are incurred in a company's accounting periods.

Relief for terminal loss in a trade.

18.—(1) Where a company ceasing to carry on a trade has in any accounting period falling wholly or partly within the previous twelve months incurred a loss in the trade, the company may claim to set the loss off for purposes of corporation tax against trading income from the trade in accounting periods falling wholly or partly within the three years preceding those twelve months (or within any less period throughout which the company has carried on the trade); and, subject to the following subsections and to any relief for earlier losses, the trading income of any of those periods shall be then treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection against income of a later accounting period:

Provided that relief shall not be given under this subsection in respect of any loss in so far as the loss has been or can be otherwise taken into account so as to reduce or relieve any charge to tax.

(2) Where a loss is incurred in an accounting period falling partly outside the twelve months mentioned in subsection (1), relief shall be given under that subsection in respect of a part only of that loss proportionate to the part of the period falling within those twelve months; and the amount of the reduction which may be made under that subsection in the trading income of an accounting period falling partly outside the three years there mentioned shall not exceed a part of that income proportionate to the part of the period falling within those three years.

(3) Section 16 (5) to (8) shall apply for purposes of this section as they apply for purposes of section 16 (1); and relief shall not be given under this section in respect of a loss incurred in a trade so as to interfere with any relief under section 10 in respect of payments made wholly and exclusively for purposes of that trade.

(4) When the tax credits comprised in the total amount of the franked payments made by a company in an accounting period exceed the tax credits comprised in the total amount of the franked investment income received by the company in that accounting period, then, the set-off of loss provided for by subsection (1) shall not apply so as to reduce the amount on which the company is chargeable to corporation tax to an amount less than an amount the corporation tax chargeable on which for that period is a sum equal to the excess:

Provided that where the accounting period falls partly outside the three years mentioned in subsection (1) the excess of the tax credits to be taken into account for the purpose of this subsection shall be the part of the excess for the whole of the accounting period proportionate to the part of the accounting period which falls within the three years mentioned in subsection (1).

Losses in transactions from which income would be chargeable under Case IV or V of Schedule D.

19.—(1) Where in any accounting period a company incurs a loss in a transaction in respect of which the company is within the charge to corporation tax under Case IV of Schedule D, the company may claim to set the loss off against the amount of any income arising from transactions in respect of which the company is assessed to corporation tax under that Case for the same or any subsequent accounting period; and the company's income in any accounting period from such transactions shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this section against income of an earlier accounting period:

Provided that where a company sustains a loss in a transaction which, if profit had arisen from it, would be chargeable to tax by virtue of section 55 (1) or (2) of the Finance Act, 1974 (transactions in certificates of deposit), then, if the company is chargeable to tax in respect of the interest payable on the amount of money the right to which has been disposed of, the amount of that interest shall be included in the amounts against which the company may claim to set off the amount of its loss under this subsection.

(2) Where in any accounting period a company is within the charge to corporation tax under Case V of Schedule D and the aggregate of the deficiencies, computed in accordance with section 81 (4) of the Income Tax Act, 1967 (taxation of rents under short leases), exceeds the aggregate of the surpluses as so computed the excess may, on a claim being made in that behalf, be deducted from or set off, as far as may be, against the amount of any income in respect of which the company is assessed to corporation tax under the said Case V for previous accounting periods ending within the time specified in subsection (3); and, subject to that subsection and to any relief for an earlier excess of deficiencies, the said income of any of those periods shall then be treated as reduced, as far as may be, by the amount of the excess, and any portion of the excess for which relief is not so given shall be set off against the income in respect of which the company is assessed to corporation tax under Case V of Schedule D for any subsequent accounting period:

Provided that any relief under this subsection by way of carrying forward any portion of such excess shall be given as far as possible from the first subsequent assessment and, so far as it cannot be so given, then from the next assessment and so on.

(3) The time referred to in subsection (2) is a time immediately preceding the accounting period first mentioned in subsection (2) equal in length to the accounting period in which the excess of deficiencies occurred; but the amount of the reduction which may be made under that subsection in the income of an accounting period falling partly before that time shall not exceed a part of that income proportionate to the part of the period falling within that time.

(4) A claim under subsection (2) shall be made within two years from the end of the accounting period in which the excess of deficiencies was incurred.

Company reconstructions without change of ownership.

20.—(1) Where on or after the 6th day of April, 1976, on a company (“the predecessor”) ceasing to carry on a trade, another company (“the successor”) begins to carry it on, and—

(a) on or at any time within two years after that event the trade or an interest amounting to not less than a three-fourths share in it belongs to the same persons as the trade or such an interest belonged to at some time within a year before that event; and

(b) the trade is not, within the period taken for the comparison under paragraph (a), carried on otherwise than by a company which is within the charge to tax in respect of it;

then this Act shall have effect subject to subsections (2) to (5).

In paragraphs (a) and (b) references to the trade shall apply also to any other trade of which the activities comprise the activities of the first-mentioned trade.

(2) The trade shall not be treated as permanently discontinued nor a new trade as set up and commenced for the purpose of the allowances and charges provided for by section 14; but there shall be made to or on the successor in accordance with that section all such allowances and charges as would, if the predecessor had continued to carry on the trade, have fallen to be made to or on it, and the amount of any such allowance or charge shall be computed as if the successor had been carrying on the trade since the predecessor began to do so and as if everything done to or by the predecessor had been done to or by the successor (but so that no sale or transfer which on the transfer of the trade is made to the successor by the predecessor of any assets in use for the purpose of the trade shall be treated as giving rise to any such allowance or charge).

(3) The predecessor shall not be entitled to relief under section 18, except as provided by subsection (5) of this section; and, subject to any claim made by the predecessor under section 16 (2), the successor shall be entitled to relief under section 16 (1), as for a loss sustained by the successor in carrying on the trade, for any amount for which the predecessor would have been entitled to claim relief if it had continued to carry on the trade.

(4) Any securities within the meaning of section 367 of the Income Tax Act, 1967 (purchase and sale of securities), which at the time when the predecessor ceases to carry on the trade form part of the trading stock belonging to the trade shall be treated for purposes of that section as having been sold at that time in the open market by the predecessor and as having been purchased at that time in the open market by the successor.

(5) On the successor ceasing to carry on the trade—

(a) if the successor does so within four years of succeeding to it, any relief which might be given to the successor under section 18 on its ceasing to carry on the trade may, so far as it cannot be given to the successor, be given to the predecessor as if the predecessor had incurred the loss (including any amount treated as a loss under section 18 (3)); and

(b) if the successor ceases to carry on the trade within one year of succeeding to it, relief may be given to the predecessor under section 18 in respect of any loss incurred by it (or amount treated as such a loss under section 18 (3));

but for the purposes of section 18, as it applies by virtue of this subsection to the giving of relief to the predecessor, the predecessor shall be treated as ceasing to carry on the trade when the successor does so.

(6) Where the successor ceases to carry on the trade within the period taken for the comparison under subsection (1) (a) and, on its doing so a third company begins to carry on the trade, then no relief shall be given to the predecessor by virtue of subsection (5) by reference to that event, but subject to that subsections (2) to (5) shall apply both in relation to that event (together with the new predecessor and successor) and to the earlier event (together with the original predecessor and successor), but so that—

(a) in relation to the earlier event “successor” shall include the successor at either event; and

(b) in relation to the later event “predecessor” shall include the predecessor at either event;

and if the conditions of this subsection are thereafter again satisfied, it shall apply again in like manner.

(7) Where, on a company ceasing to carry on a trade, another company begins to carry on the activities of the trade as part of its trade, then that part of the trade carried on by the successor shall be treated for the purposes of this section as a separate trade, if the effect of so treating it is that subsection (1) or (6) has effect on that event in relation to that separate trade; and where, on a company ceasing to carry on part of a trade, another company begins to carry on the activities of that part as its trade or part of its trade, the predecessor shall for purposes of this section be treated as having carried on that part of its trade as a separate trade if the effect of so treating it is that subsection (1) or (6) has effect on that event in relation to that separate trade.

(8) Where under subsection (7) any activities of a company's trade fall, on the company ceasing or beginning to carry them on, to be treated as a separate trade, any necessary apportionment shall be made of receipts or expenses.

(9) Where, by virtue of subsection (8), any sum falls to be apportioned and, at the time of the apportionment, it appears that it is material as respects the liability to tax (for whatever period) of two or more companies, any question which arises as to the manner in which the sum is to be apportioned shall be determined, for the purposes of the tax of all those companies, by the Appeal Commissioners, who shall determine the question in like manner as if it were an appeal against an assessment, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications:

Provided that all the said companies shall be entitled to appear and be heard by the Appeal Commissioners or to make representations to them in writing.

(10) Any relief obtainable under this section by way of discharge or repayment of tax shall be given on the making of a claim.

(11) For the purposes of this section—

(a) a trade carried on by two or more persons shall be treated as belonging to them in the shares in which they are entitled to the profits of the trade;

(b) a trade or interest therein belonging to any person as trustee (otherwise than for charitable or public purposes) shall be treated as belonging to the persons for the time being entitled to the income under the trust;

(c) a trade or interest therein belonging to a company shall, where the result of so doing is that subsection (1) or (6) has effect in relation to an event, be treated in any of the ways permitted by subsection (12).

(12) For the purposes of this section, a trade or interest therein which belongs to a company engaged in carrying it on may be regarded—

(a) as belonging to the persons owning the ordinary share capital of the company and as belonging to them in proportion to the amount of their holdings of that capital, or

(b) in the case of a company which is a subsidiary company, as belonging to a company which is its parent company, or as belonging to the persons owning the ordinary share capital of that parent company, and as belonging to them in proportion to the amount of their holdings of that capital,

and any ordinary share capital owned by a company may, if any person or body of persons has the power to secure by means of the holding of shares or the possession of voting power in or in relation to any company, or by virtue of any power conferred by the articles of association or other document regulating any company, that the affairs of the company owning the share capital are conducted in accordance with his or their wishes, be regarded as owned by the person or body of persons having that power.

(13) For the purposes of subsection (12)—

(a) references to ownership shall be construed as references to beneficial ownership;

(b) a company shall be deemed to be a subsidiary of another company if and so long as not less than 75 per cent. of its ordinary share capital is owned by that other company, whether directly or through another company or other companies, or partly directly and partly through another company or other companies;

(c) the amount of ordinary share capital of one company owned by a second company through another company or other companies, or partly directly and partly through another company or other companies, shall be determined in accordance with section 156 (5) to (10) (subsidiaries); and

(d) where any company is a subsidiary of another company, that other company shall be considered as its parent company unless both are subsidiaries of a third company.

(14) In determining, for the purposes of this section, whether or to what extent a trade belongs at different times to the same persons, persons who are relatives of one another and the persons from time to time entitled to the income under any trust shall respectively be treated as a single person, and for this purpose “relative” means husband, wife, ancestor, lineal descendant, brother or sister.

Application and adaptation of Income Tax Acts as to capital allowances.

21.—(1) Except in so far as this Act otherwise provides—

(a) Parts XIII to XVIII of the Income Tax Act, 1967 .

(b) section 11 of the Finance Act, 1967 ,

(c) section 4 of the Finance Act, 1968 ,

(d) section 4 of the Finance Act, 1969 ,

(e) section 14 of the Finance Act, 1970 ,

(f) sections 22 , 23 , 24 and 26 of the Finance Act, 1971 ,

(g) sections 9 and 25 of the Finance Act, 1973 ,

(h) sections 1 to 7 of the Finance (Taxation of Profits of Certain Mines) Act, 1974 ,

(i) sections 22 and 25 of the Finance Act, 1974 , and

(j) any other provisions of the Income Tax Acts relating to the making of allowances or charges under or in accordance with those Parts and sections,

shall apply equally for purposes of corporation tax and for purposes of income tax and to that intent those Parts and sections shall be amended in accordance with the First Schedule.

(2) Sections 241 (3) (4) (9), 246 (3), 249 , 251 (5), 254 (6), 262 , 295 , 296 , 297 and 305 (4) of the Income Tax Act, 1967 , sections 22 (4) and 23 of the Finance Act, 1971 , and section 22 (5) (6) (7) of the Finance Act, 1974 , shall not apply for purposes of corporation tax.

(3) For purposes of corporation tax the right to an allowance or liability to a charge for an accounting period, and the rate or amount of any such allowance or charge, shall be determined under the provisions referred to in subsection (1) by applying the law in force for the year of assessment in which the accounting period ends.

(4) Where a company not resident in the State is within the charge to corporation tax in respect of one source of income and to income tax in respect of another source, then in applying the provisions referred to in subsection (1) allowances related to any source of income shall be given effect against income chargeable to the same tax as is chargeable on income from that source.

Double taxation relief.

22.—(1) Subject to any express amendments made by this Act, Part XXII of the Income Tax Act, 1967 (Relief from Double Taxation), together with any other enactment relating or referring to double taxation relief, and (except in so far as arrangements made after the passing of this Act provide otherwise) any arrangements made under section 361 of the Income Tax Act, 1967 (agreements for relief from double taxation), in relation to corporation profits tax, shall have effect in relation to corporation tax and income chargeable thereto as they are expressed to have effect in relation to corporation profits tax and profits chargeable thereto, and not as they have effect in relation to income tax:

Provided that this section shall not affect the operation, as they are applied to corporation tax by this Act, of section 361 (7) of the Income Tax Act, 1967 , and paragraph 13 of Schedule 10 to that Act (claims for credit for foreign tax).

(2) The necessary apportionments as respects corporation tax shall be made where arrangements having the force of law by virtue of section 361 of the Income Tax Act, 1967 (as applied to corporation tax by subsection (1)) apply to the unexpired portion of an accounting period current at a date specified by the arrangements, and any such apportionment shall be made in proportion to the number of months or fractions of months in the part of the relevant accounting period before the said date and in the remaining part thereof respectively.

Double taxation relief: supplementary.

23.—(1) The provisions applied to corporation tax in respect of income by section 22 shall apply also to corporation tax in respect of chargeable gains, and for that purpose—

(a) references in those provisions to income shall be construed as references to chargeable gains; and

(b) references in those provisions to taxes of a similar character, or corresponding, to corporation tax shall be construed as references to taxes on chargeable gains;

and section 361 (7) (8) of the Income Tax Act, 1967 , shall have effect accordingly.

(2) For the purposes of paragraph 4 of Schedule 10 to the Income Tax Act, 1967 (which, as applied to corporation tax by section 22, limits the credit for foreign tax allowable against corporation tax in respect of any income to the corporation tax attributable to that income and, by virtue of subsection (1), applies similarly in relation to chargeable gains), the corporation tax attributable to any income or gain (“the relevant income or gain”) shall be determined in accordance with subsections (3) and (4).

(3) Subject to subsection (4), the amount of corporation tax attributable to the relevant income or gain shall be treated as equal to such proportion of the amount of that income or gain as corresponds to the rate of corporation tax payable by the company (before any credit for double taxation relief) on its income or chargeable gains for the accounting period in which the income arises or the gain accrues (“the relevant accounting period”).

(4) Where in the relevant accounting period there is any deduction to be made for charges on income, expenses of management or other amounts which can be deducted from or set off against or treated as reducing profits of more than one description—

(a) the company may for the purposes of this section allocate the deduction in such amounts and to such of its profits for that period as it thinks fit; and

(b) the amount of the relevant income or gain shall be treated for the purposes of subsection (3) as reduced or, as the case may be, extinguished by so much (if any) of the deduction as is allocated to it.

Franked investment income and franked payment.

24.—(1) Income of a company resident in the State which consists of a distribution in respect of which the company is entitled to a tax credit (and which accordingly represents income equal to the aggregate of the amount or value of the distribution and the amount of that credit) is in this Act referred to as “franked investment income” of the company.

(2) The sum of the amount or value of a distribution made by a company resident in the State and the amount of the tax credit in respect of it is in this Act referred to as “a franked payment”, and references to any accounting or other period in which a franked payment is made are references to the period in which the distribution in question is made.

Set-off of losses etc. against franked investment income.

25.—(1) Where in any accounting period a company receives franked investment income the company may on making a claim for the purpose require that the franked investment income or part thereof shall for all or any of the purposes mentioned in subsection (2) be treated as if it were a like amount of profits chargeable to corporation tax, and subject to subsections (4) and (5) it shall be entitled to have paid to it the value of the tax credit comprised in the income or in the part thereof so treated.

(2) The purposes for which a claim may be made under subsection (1) are those of—

(a) the setting of trading losses against total profits under section 16 (2);

(b) the deduction of charges on income under section 10;

(c) the setting of certain capital allowances against total profits under section 14 (6).

(3) Where a company makes a claim under this section for any accounting period, the reduction falling to be made in profits of that accounting period shall be made as far as may be in profits chargeable to corporation tax rather than in the amount treated as profits so chargeable under this section.

(4) Where a claim under this section relates to section 16 (2) or 14 (6) and an accounting period of the company falls partly before and partly within the time mentioned in that subsection, then—

(a) the restriction imposed by section 16 (3) or by section 14 (6) on the amount of the relief shall be applied only to any relief to be given apart from this section, and shall be applied without regard to any amount treated as profits of the accounting period under this section; but

(b) relief under this section shall be given only against a part of the amount so treated proportionate to the part of the accounting period falling within the said time.

(5) Where a company has obtained payment of a tax credit on a claim under this section or under section 15 (4) and apart from such a claim any amount could be set off against or deducted from profits of a subsequent accounting period, then the company may claim that the amount shall be so set off or deducted but in that case to the extent to which the amount was used to obtain payment of a tax credit, such tax credit shall be recoverable from the company by an assessment on it to income tax under Case IV of Schedule D for the year of assessment in which the subsequent accounting period ends on an amount the income tax on which at the standard rate for the said year of assessment is equal to the amount of the said tax credit and this assessment shall be made not later than two years from the end of the subsequent accounting period:

Provided that relief under this subsection shall not be given against the profits of an accounting period if such relief could be given against the profits of an earlier accounting period.

(6) The time limits for claims under this section shall be as follows—

(a) if and so far as the purpose for which the claim is made is the setting of trading losses against total profits under section 16 (2), two years from the end of the accounting period in which the trading loss is incurred;

(b) if and so far as the purpose for which the claim is made is the deduction of charges on income under section 10 or the setting of capital allowances against total profits under section 14 (6), two years from the end of the accounting period in which the charges were paid or the capital allowances fell to be made;

(c) if the claim is a claim under subsection (5), two years from the end of the accounting period in respect of which the claim is made.

(7) Any amount on which by virtue of this section income tax is charged on a company by an assessment under Case IV of Schedule D shall not be regarded as income of the company for any purpose of the Tax Acts.

Set-off of loss brought forward or terminal loss against franked investment income in the case of financial concerns.

26.—(1) Where in any accounting period a company receives franked investment income, the company, instead of or in addition to making a claim under section 25, may on making a claim for the purpose require that the franked investment income shall be taken into account for relief under section 16 (1) or 18, up to the amount of such income received in the accounting period which, if chargeable to corporation tax, would have been so taken into account by virtue of section 16 (6); and (subject to the restriction to the said amount of franked investment income) the following subsections shall have effect where the company makes a claim under this section for any accounting period.

(2) The amount to which the claim relates shall for the purposes of the claim be treated as trading income of the accounting period.

(3) The reduction falling to be made in trading income of an accounting period shall be made as far as may be in trading income chargeable to corporation tax rather than in the amount treated as trading income so chargeable under this section:

Provided that where the claim is made under section 18—

(a) the loss in trade shall be set primarily against income chargeable to corporation tax (exclusive of income so treated as chargeable by this section) for the accounting periods referred to in section 18 (1) and the set-off of loss against franked investment income provided for by this section shall apply to the balance only of such loss which has not been set off under the provisions of section 18 (1); so that the set-off against franked investment income of such balance of loss as is referred to above shall be effected in a later rather than an earlier accounting period falling within the three years mentioned in section 18 (1); and

(b) where the aggregate of the tax credits comprised in the total amount of the franked investment income of an accounting period exceeds the aggregate of the tax credits comprised in the franked payments made in that accounting period, then the payment of tax credit to the company shall not exceed a sum equal to the excess; and for this purpose when the accounting period falls partly outside the three years mentioned in section 18 (1) the said excess shall be the part of the excess for the whole of the accounting period proportionate to the part of the accounting period which falls within the said three years.

(4) Where a company has obtained payment to it of a tax credit by virtue of this section on a claim under section 16 (1) and apart from such a claim a loss could be set off against or deducted from profits of a subsequent accounting period, then the company may claim that the loss shall be so set off or deducted but, in that case, to the extent to which the loss was used to obtain payment of a tax credit, such tax credit shall be recovered from the company by an assessment on it to income tax under Case IV of Schedule D for the year of assessment in which the subsequent accounting period ends on an amount the income tax on which at the standard rate for the said year of assessment is equal to the amount of the said tax credit and this assessment shall be made not later than two years from the end of the subsequent accounting period.

(5) If the claim relates to section 18 and an accounting period of the company falls partly outside the three years mentioned in subsection (1) of that section, then—

(a) the restriction imposed by subsection (2) of that section on the amount of the reduction that may be made in the trading income of that period shall be applied only to any relief to be given apart from this section, and shall be applied without regard to any amount treated as trading income of the period by virtue of this section, but

(b) relief under this section shall be given only against a part of the amount so treated proportionate to the part of the accounting period falling within the three years in question.

(6) Any amount on which by virtue of this section income tax is charged on a company by an assessment under Case IV of Schedule D shall not be regarded as income of the company for any purpose of the Tax Acts.

Change in ownership of company: disallowance of trading losses.

27.—(1) If—

(a) within any period of three years there is both a change in the ownership of a company and (either earlier or later in that period, or at the same time) a major change in the nature or conduct of a trade carried on by the company, or

(b) at any time after the scale of the activities in a trade carried on by a company has become small or negligible, and before any considerable revival of the trade, there is a change in the ownership of the company,

no relief shall be given—

(i) under section 16 by setting a loss incurred by the company in an accounting period beginning before the change of ownership against any income or other profits of an accounting period ending after the change of ownership; nor

(ii) under section 182 (relief in respect of unrelieved losses etc. carried forward from the year 1975-76) or 184 (relief in respect of corporation profits tax losses) against corporation tax payable for any accounting period ending after the change of ownership.

(2) In applying this section to the accounting period in which the change of ownership occurs, the part ending with the change of ownership, and the part after, shall be treated as two separate accounting periods, and the profits or losses of the accounting period shall be apportioned to the two parts.

The apportionment shall be on a time basis according to the respective lengths of those parts except that, if it appears that that method would work unreasonably or unjustly, such other method shall be used as appears just and reasonable.

(3) In subsection (1) “major change in the nature or conduct of a trade” includes—

(a) a major change in the type of property dealt in, or services or facilities provided, in the trade, or

(b) a major change in customers, outlets or markets of the trade,

and this section applies even if the change is the result of a gradual process which began outside the period of three years mentioned in subsection (1) (a).

(4) In relation to any relief available under section 20, subsection (1) shall apply as if any loss sustained by a predecessor company had been sustained by a successor company and as if the references to a trade included references to the trade as carried on by a predecessor company.

(5) Where relief in respect of a company's losses has been restricted under this section then, notwithstanding section 304 (6) of the Income Tax Act, 1967 (provisions as to interpretation for purposes of Part XVI of that Act), in applying the provisions of Part XVI of that Act (Annual Allowances for Certain Capital Expenditure) in relation to balancing charges to the company by reference to any event after the change of ownership of the company, any allowance or deduction falling to be made in taxing the company's trade for any chargeable period before the change of ownership shall be disregarded unless the profits or gains of that chargeable period or of any subsequent chargeable period before the change of ownership were sufficient to give effect to the allowance or deduction.

In applying this subsection it shall be assumed that any profits or gains are applied in giving effect to any such allowance or deduction in preference to being set off against any loss which is not attributable to such an allowance or deduction.

(6) Where the operation of this section depends on circumstances or events at a time after the change of ownership (but not more than three years after), an assessment to give effect to the provisions of this section shall not be out of time if made within ten years from that time, or the latest of those times.

(7) Notwithstanding the repeal by this Act of section 39 of the Finance Act, 1973 , the provisions of the Fifth Schedule to that Act (Disallowance of Trading Losses and Restriction of Capital Allowances), except paragraphs 8 and 10 of Part I thereof, shall have effect, as if enacted in this Act, for the purpose of supplementing this section with the substitution, for references to section 39 of that Act, of references to this section.

(8) This section shall not apply if the change of ownership took place before the 16th day of May, 1973, and subsection (1) (a) shall not apply if the major change in the nature or conduct of the trade was completed before that date; but in other respects this section shall have effect by reference to circumstances and events before that date, as well as by reference to later circumstances and events.

PART III

Special Classes of Companies

Reduction of corporation tax liability of small companies.

28.—(1) Where in any accounting period the profits of a company resident in the State do not exceed the lower relevant maximum amount, the company may claim that the corporation tax charged on its income for that period shall be calculated as if the rate of corporation tax for the financial year 1974 and each subsequent financial year were 40 per cent. (instead of being the rate fixed for companies generally).

(2) Where in any accounting period the profits of any such company exceed the lower relevant maximum amount but do not exceed the upper relevant maximum amount, the company may claim that the corporation tax charged on its income for that period shall be reduced by a sum equal to 10 per cent. of the following amount—

I

(M − P) × __

P

where M is the upper relevant maximum amount, P is the amount of the profits and I is the amount of the income.

(3) The lower and upper relevant maximum amounts mentioned in the foregoing subsections shall be determined as follows—

(a) where the company has no associated company in the accounting period those amounts are £5,000 and £10,000 respectively;

(b) where the company has one or more associated companies in the accounting period, the lower relevant maximum amount is £5,000 divided by one plus the number of those associated companies and the upper relevant maximum amount is £10,000 divided by one plus the number of those associated companies.

(4) In applying subsection (3) to any accounting period of a company, an associated company which has not carried on any trade or business at any time in that accounting period (or, if an associated company during part only of that accounting period, at any time in that part of that accounting period) shall be disregarded and for the purposes of this section a company is to be treated as an “associated company” of another at a given time if at that time one of the two has control of the other or both are under the control of the same person or persons.

In this subsection “control” shall be construed in accordance with section 102 (meaning of “associated company” and “control”).

(5) In determining how many associated companies a company has in an accounting period or whether a company has an associated company in an accounting period, an associated company shall be counted even if it was an associated company for part only of the accounting period, and two or more associated companies shall be counted even if they were associated companies for different parts of the accounting period.

(6) For an accounting period of less than twelve months the relevant maximum amounts determined in accordance with subsection (3) shall be proportionately reduced.

(7) For the purposes of the foregoing subsections the profits of a company for an accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne, with the addition of franked investment income other than franked investment income which the company (if a member of a group) receives from companies within the group.

(8) For the purposes of this section the income of a company for an accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne exclusive of the part of the profits attributable to chargeable gains; and that part shall be taken to be the amount brought into the company's profits for that period for the purposes of corporation tax in respect of chargeable gains before any deduction for charges on income, expenses of management or other amounts which can be deducted from or set against or treated as reducing profits of more than one description.

Companies carrying on mutual business, or not carrying on a business.

29.—(1) Subject to subsection (2), where a company carries on any business of mutual trading or mutual insurance or other mutual business, the provisions of this Act relating to distributions shall apply to distributions made by the company notwithstanding that they are made to persons participating in the mutual activities of that business and derive from those activities, but shall so apply only to the extent to which the distributions are made out of profits of the company which are brought into charge to corporation tax or out of franked investment income.

(2) In the case of a company carrying on any mutual life assurance business, the provisions of this Act relating to distributions shall not apply to distributions made to persons participating in the mutual activities of that business and derived from those activities; but if the business includes annuity business, the annuities payable in the course of that business shall not be treated as charges on the income of the company to any greater extent than if the business were not mutual but were being carried on by the company with a view to the realisation of profits for the company.

(3) Subject to the preceding subsections, the fact that a distribution made by a company carrying on any such business is derived from the mutual activities of that business and the recipient is a person participating in those activities shall not affect the character which the payment or other receipt has for purposes of corporation tax or income tax in the hands of the recipient.

(4) Where a company does not carry on, and never has carried on, a trade or a business of holding investments, and is not established for purposes which include the carrying on of a trade or of such a business, the provisions of this Act relating to distributions shall apply to distributions made by the company only to the extent to which the distributions are made out of profits of the company which are brought into charge to corporation tax or out of franked investment income.

Industrial and provident societies.

30.—(1) The provisions of section 218 of the Income Tax Act, 1967 (industrial and provident societies: interpretation), shall have effect for the interpretation of this section.

(2) Notwithstanding anything in the Tax Acts, any share or loan interest paid by a society—

(a) shall be paid without deduction of income tax and shall be charged under Case III of Schedule D, and

(b) shall not be treated as a distribution:

Provided that paragraph (a) shall not apply to any share interest or loan interest payable to a person whose usual place of abode is not within the State.

(3) In computing the corporation tax payable for any accounting period of a society, section 10 (allowance of charges on income) shall have effect subject to—

(a) the insertion of “the appropriate proportion of” in subsection (1) after the word “company” where it first occurs, and

(b) the deletion of the word “yearly” from subsection (3) (a).

(4) For the purposes of section 10 as modified by subsection (3) of this section, “the appropriate proportion” of any amount of charges on income paid by a society in an accounting period means the portion of that amount which bears to the whole the same proportion as the aggregate amount of the society's income and franked investment income for the accounting period bears to what would, but for section 220 of the Income Tax Act, 1967 (disregard of profits or losses attributable to certain transactions), have been the aggregate amount of the society's income and franked investment income for that accounting period:

Provided that in relation to the aggregate amount of interest paid in any accounting period the appropriate proportion of that interest shall not exceed £2,000 if the accounting period is a period of twelve months, and shall not exceed a proportionate part of £2,000 if the accounting period is a period of less than twelve months.

(5) In section 219 of the Income Tax Act, 1967 (deduction as expenses of certain sums, etc.)—

(a) in subsection (4) (b) for “any annual allowance” there shall be substituted “any writing-down allowance”, and for “any year of assessment” there shall be substituted “any chargeable period”, and

(b) in subsection (4) (c) for “any year of assessment” there shall be substituted “any chargeable period”.

(6) Section 220 of the Income Tax Act, 1967 (disregard of profits or losses attributable to certain transactions), is hereby amended by the substitution of the following subsection for subsection (5)—

“(5) Where for any chargeable period any capital allowances or any balancing charges under Part XVI fall to be made in taxing the trade of a society and a proportion of the profits, or as the case may be, the loss of that period is disregarded under this section, the amount of allowances or the amount of charges which, but for this subsection, would have been made shall be diminished in like proportion.”.

(7) All amounts receivable by an agricultural society or a fishery society from the sale of goods, being amounts which are so receivable by virtue of exempted transactions, shall be disregarded for the purposes of section 58 (export sales relief: basis of relief from corporation tax) and in this subsection “agricultural society” and “fishery society” have the same meaning as in section 220 of the Income Tax Act, 1967 .

(8) Section 220 (7) of the Income Tax Act, 1967 , shall apply in relation to corporation tax as it applies in relation to income tax.

(9) On or before the 1st day of May in each year, every society shall deliver to the inspector a return in such form as the Revenue Commissioners may prescribe, showing—

(a) the name and place of residence of every person to whom share interest or loan interest amounting to the sum of £70 or more has been paid by the society in the year of assessment which ended next before the said 1st day of May, and

(b) the amount of such share interest or loan interest paid in that year to each of those persons,

and if such a return is not duly made as respects any year of assessment the society shall not be entitled to any deduction under section 219 (1) (deduction as expenses of certain sums etc.) or 81 (5) (e) of the Income Tax Act, 1967 (taxation of rents under short leases: deduction of loan interest), or section 10 (allowance of charges on income) in respect of any payments of share interest or loan interest which it was required to include in the return, and all such assessments and additional assessments shall be made as may be necessary to give effect to this subsection.

(10) The amendments made by subsections (5) and (6) shall not have effect in relation to income tax for the year 1975-76 or any earlier year of assessment.

Building societies.

31.—(1) The Revenue Commissioners and any building society may, as respects 1976-77 and any later year of assessment, enter into arrangements whereby—

(a) on such sums as may be determined in accordance with the arrangements the society is liable to account for and pay an amount representing income tax calculated in part at the standard rate and in part at a reduced rate which takes into account the operation of the subsequent provisions of this section; and

(b) provision is made for any incidental or consequential matters,

and any such arrangements shall have effect notwithstanding anything in this Act:

Provided that in exercising their powers of entering into arrangements under this section, the Revenue Commissioners shall, subject to subsection (3) (c) and paragraph (i) of the proviso to the said subsection, at all times aim at securing that (if the amount so payable by the society under the arrangements is regarded as income tax for the year of assessment) the total income tax becoming payable to, and not becoming repayable by, the State is, when regard is had to the operation of the subsequent provisions of this section, as nearly as may be the same in the aggregate as it would have been if those powers had never been exercised.

(2) Where for any year of assessment a building society enters into arrangements under this section, dividends or interest payable in respect of shares in, or deposits with or loans to, the society shall be dealt with for the purposes of corporation tax as follows—

(a) in computing for any accounting period ending in the year of assessment the total profits of the society there shall be allowed as a deduction the actual amount paid or credited in the accounting period of any such dividends or interest, together with the amount accounted for and paid by the society in respect thereof as representing income tax,

(b) in computing the income of a company which is paid or credited in the year of assessment with any such dividends or interest, the company shall be treated as having received an amount which, after deduction of income tax at the standard rate for the year of assessment, is equal to the amount paid or credited, and shall be entitled to a set-off or repayment of income tax accordingly,

(c) no part of any such dividends or interest paid or credited in the year of assessment shall be treated as a distribution of the society or as franked investment income of any company resident in the State.

(3) Notwithstanding anything in the Tax Acts, where any arrangements under this section are in force in the case of any society as respects any year of assessment—

(a) income tax shall not be deducted from any dividends or interest payable in that year in respect of shares in or deposits with or loans to that society,

(b) subject to subsection (2) (b), no repayment of income tax and, subject to paragraph (i) of the proviso to this subsection, no assessment to income tax shall be made in respect of any such dividends or interest to or on the person receiving or entitled to the dividends or interest,

(c) any amounts paid or credited in respect of any such dividends or interest, and no more, shall be treated as income in computing the total income of an individual entitled to those amounts, and

(d) subject to section 3 (1) (income tax on payments made or received by a company resident in the State), the amounts so paid or credited (and no more) shall, in applying section 433 (yearly interest, etc., payable wholly out of taxed profits) of the Income Tax Act, 1967 , to other payments, be treated as profits or gains which have been brought into charge to income tax:

Provided that—

(i) paragraph (b) shall not prevent an assessment in respect of income tax at the higher rates and for the purpose of charging to tax at the higher rates any amounts treated as income in accordance with paragraph (c), credit under section 4 (e) of the Finance Act, 1974 (charge to tax of income from which tax has been deducted), shall be given as if, by virtue of the provisions of Schedule D, tax had been deducted (at the standard rate for the year of assessment in which those amounts were paid or credited) from the amounts charged to tax at the higher rates:

(ii) the provisions of this subsection shall not apply in relation to interest on any bank loan; and

(iii) the provisions of this subsection shall not apply in relation to any interest which is payable in respect of a loan to the society under a contract made before the beginning of the first year of assessment as respects which the society enters into arrangements under subsection (1), if and to the extent that, both at the time of the making of the contract and at the time when the interest becomes payable, it is contemplated by the parties that tax shall be deducted on payment of the interest.

(4) Where any arrangements made under this section are in force in the case of any society as respects any year of assessment then, notwithstanding anything in the Tax Acts, income tax shall not be deducted upon payment to the society of any interest on advances, being interest payable in that year.

(5) If in the course of, or as part of, a union or amalgamation of two or more building societies, or a transfer of engagements from one building society to another, there is a disposal of an asset by one society to another, both shall be treated for purposes of corporation tax in respect of chargeable gains as if the asset were acquired from the one making the disposal for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to the one making the disposal.

(6) Any arrangements made under this section as respects any year of assessment shall, if made after the beginning of that year, be deemed to have come into force at the beginning thereof, and any necessary adjustments shall be made in relation to any sums paid or credited before the date of the making of the arrangements.

(7) In this section “dividend” includes any distribution as defined for the purposes of this Act whether described as a dividend or otherwise.

(8) In this section “building society” means a building society within the meaning of the Building Societies Acts, 1874 to 1974.

(9) Notwithstanding anything in this Act, where for any year of assessment a building society enters into any arrangement under this section, the profits of the society in so far as they consist of income, shall, for any accounting period ending in the year of assessment be charged to corporation tax at the reduced rate provided for by section 79 (reduced rate of corporation tax for certain income), and, for the purposes of this subsection, the income of a society for an accounting period is its income for that period as defined in section 28 (8) for the purposes of that section.

(10) Where, under this section, a building society enters into arrangements for the year of assessment 1976-77 and is within the charge to corporation tax in respect of an accounting period which ends before the 6th day of April, 1976, subsection (2) (a) shall have effect in relation to such accounting period with the substitution for the reference to the amount accounted for and paid by the society in respect of the dividends and interest as representing income tax of a reference to the amount computed by reference to the dividends or interest in accordance with the provision made by any arrangements subsisting between such society and the Revenue Commissioners for the year 1975-76 with reference to dividends and interest for charging the society to income tax for that year.

Partnerships involving companies.

32.—(1) Subject to this section, the provisions of section 71 (1) (2) (a) (3) of the Income Tax Act, 1967 (separate assessment of partners), shall have effect for purposes of corporation tax as they have effect for purposes of income tax.

(2) Where the whole or part of an accounting period of a company is, or is part of, a period for which an account of a partnership trade has been made up, any necessary apportionments shall be made in computing the profits from or loss sustained in the company's several trade for the accounting period of the company.

(3) (a) Where a capital allowance equal to an appropriate share of a joint allowance would be made, if section 1 (2) (introduction for companies of corporation tax in place of income tax and corporation profits tax) had not been enacted, in charging to income tax the profits of a company's several trade for any year of assessment, the relevant amount shall for corporation tax purposes be treated as a trading expense of the company's several trade for any accounting period of the company any part of which falls within that year of assessment.

(b) Where a balancing charge equal to an appropriate share of a joint charge would be made, if section 1 (2) had not been enacted, in charging to income tax the profits of a company's several trade for any year of assessment, the relevant amount shall for corporation tax purposes be treated as a trading receipt of the company's several trade for any accounting period of the company any part of which falls within that year of assessment.

(c) In this subsection the “relevant amount” means—

(i) where the year of assessment and the accounting period coincide, the whole amount of the appropriate share of the joint allowance, or, as the case may be, the whole amount of the appropriate share of the joint charge, and

(ii) where part only of the year of assessment falls within the accounting period, such portion of the appropriate share of the joint allowance, or, as the case may be, such portion of the appropriate share of the joint charge as is apportioned to that part of the year of assessment which falls within the accounting period:

Provided that the relevant amount shall not include any part of the appropriate share of a joint allowance, or, as the case may be, any part of the appropriate share of a joint charge which was made in charging the profits of the company's several trade for the year 1974-75 or 1975-76.

(d) Notwithstanding the provisions of section 72 (8) of the Income Tax Act, 1967 (capital allowances and balancing charges in partnership cases), any reference in this subsection to a joint allowance for a year of assessment does not include a reference to any capital allowance which is or could be brought forward from a previous year of assessment.

(4) Where, under this section, an amount falls to be apportioned to a part of an accounting period of a company, to a part of a period for which an account of a partnership trade has been made up or to a part of a year of assessment, the apportionment shall be made by reference to the number of months or fractions of months contained in that part, and in the remainder of that period or year.

(5) In this section profits shall not be taken as including chargeable gains.

Expenses of management of assurance companies.

33.—(1) Subject to the provisions of sections 34 and 35, section 15 (deduction of management expenses of investment companies) shall apply for computing the profits of a company carrying on life business, whether mutual or proprietary, (and not charged to corporation tax in respect of it under Case I of Schedule D), whether or not the company is resident in the State, as that section applies in relation to an investment company except that—

(a) there shall be deducted from the amount treated as expenses of management for any accounting period the amount of any fines, fees or profits arising from reversions and in calculating profits arising from reversions the company may set off against those profits any losses arising from reversions in any previous accounting period during which any enactment granting this relief was in operation so far as they have not already been so set off, and

(b) no deduction shall be made under the proviso to section 15 (1).

(2) Relief under subsection (1) shall not be given to any such company, so far as it would, if given in addition to all other reliefs to which the company is entitled, reduce the corporation tax borne by the company on the income and gains of its life business for any accounting period to less than would have been paid if the company had been charged to tax in respect of that business under Case I of Schedule D; and where relief has been withheld in respect of any accounting period by virtue of this subsection, the excess to be carried forward by virtue of section 15 (2) shall be increased accordingly.

For the purposes of this subsection—

(a) any tax credit to which the company is entitled in respect of a distribution received by it shall be treated as an equivalent amount of corporation tax borne or paid in respect of that distribution; and

(b) any payment in respect of that credit under section 15 (4), 25 (set-off of losses etc. against franked investment income) or 26 (set-off of loss brought forward or terminal loss against franked investment income of financial concerns) shall be treated as reducing the tax so treated as borne or paid; and

(c) section 38 shall apply for the purposes of computing the profits of the life assurance business or the industrial assurance business, as the case may be, which would have been charged to tax under Case I of Schedule D.

The reference in paragraph 2 (1) of Schedule 1 to the Capital Gains Tax Act, 1975 (exclusion from consideration for disposals of sums chargeable to income tax), to computing income or profits or gains or losses shall not be taken as applying to a computation of a company's income for the purposes of this subsection.

Companies carrying on life business.

34.—(1) Where an assurance company carries on life business in conjunction with insurance business of any other class, the life business shall, for the purposes of corporation tax, be treated as a separate business from any other class of business carried on by the company.

(2) In ascertaining for the purposes of section 16 or 18 (relief for losses) whether and to what extent a company has incurred a loss on its life business any profits derived from the investments of its life assurance fund (including franked investment income of a company resident in the State) shall be treated as part of the profits of that business.

Profits of life business.

35.—(1) Where the profits of an assurance company in respect of its life business are, for the purposes of this Act, computed in accordance with the provisions applicable to Case I of Schedule D, the following provisions shall have effect—

(a) such part of those profits as belongs or is allocated to, or is expended on behalf of, policy holders or annuitants shall be excluded in making the computation;

(b) such part of those profits as is reserved for policy holders or annuitants shall also be excluded in making the computation, but if any profits so excluded as being so reserved cease at any time to be so reserved and are not allocated to, or expended on behalf of, policy holders or annuitants then those profits shall be treated as profits of the company for the accounting period in which they ceased to be so reserved.

(2) Where an assurance company carries on both life assurance business and industrial assurance business, the business of each such class shall, for the purposes of this Act, be treated as though it were a separate business and section 33 shall apply separately to each such class of business.

Investment income reserved for policy holders.

36.—(1) A claim may be made under this section by an assurance company carrying on life business in respect of unrelieved income from investments held in connection with that business.

(2) If on the claim the company proves that it has, for any financial year for which the rate of corporation tax exceeds the standard rate of income tax for the year of assessment in which that year ends, borne corporation tax in respect of any of the said unrelieved income, the company shall be entitled to repayment of so much of that tax borne by it for that year as is equal to the amount by which—

(a) the corporation tax borne by the company for that year in respect of the part specified in subsection (5) of the said unrelieved income,

exceeds—

(b) the corporation tax which would have been so borne in respect of that part of that income if the rate of corporation tax for that year had been equal to the standard rate of income tax for the said year of assessment.

(3) For the purposes of this section and section 37—

(a) “unrelieved income” means income which has not been excluded from charge to tax by virtue of any provision and against which no relief has been allowed by deduction or set-off;

(b) the amount of tax which has been or would be borne by a company shall be taken to be the amount of tax which has been or would be so borne after allowance of any relief to which the company is or would be entitled otherwise than under the provisions of this section.

(4) The franked investment income from investments held in connection with a company's life business shall be apportioned between policy holders or annuitants and shareholders by attributing to policy holders or annuitants such fraction of the said income as the fraction of the profits of the company's life business which, on a computation of such profits in accordance with the provisions applicable to Case I of Schedule D (whether or not the company is in fact charged to tax under that Case for the relevant accounting period or periods) would be excluded under section 35 (1) (a) (b):

Provided that, if the franked investment income exceeds the profits as computed in accordance with those provisions other than section 35, the part attributable to policy holders or annuitants shall be that fraction of the income so far as not exceeding the profits, together with the amount of the excess.

(5) (a) Where the aggregate of the said unrelieved income and the shareholders' part of the franked investment income exceeds the profits of the company in respect of its life business for the relevant accounting periods computed in accordance with the provisions of Case I of Schedule D as extended by sections 35 and 38 (whether or not the company is charged to tax under that Case) the said part shall be the amount of that excess or the unrelieved income whichever is the less, and

(b) where the said aggregate is less than the profits of the company's life business as so computed the provisions of subsection (2) shall not apply.

Chargeable gain reserved for policy holders.

37.—(1) The policy holders' share of the life assurance gains shall not be reduced under section 13 (computation of chargeable gains) but corporation tax charged on so much of that share as remains after setting against it the amounts referred to in subsection (2) (c) shall be calculated as if the rate of corporation tax were 26 per cent.

(2) For the purposes of this section there shall be ascertained the policy holders' share and the remainder (in this section referred to as the residual part) of the life assurance gains and of the relevant reliefs; and—

(a) the residual part of the relevant reliefs shall be set against so much of the residual part of those gains as remains after reducing it in accordance with section 13; and

(b) if the residual part of the relevant reliefs exceeds the residual part, as so reduced, of those gains, the excess (or so much of it as does not, together with the policy holders' share of the relevant reliefs, exceed the policy holders' share of those gains) shall be added to the policy holders' share of the relevant reliefs; and—

(c) the policy holders' share of the relevant reliefs, with any addition made under paragraph (b), shall be set against the policy holders' share of the life assurance gains.

(3) For the purposes of this section—

(a) the life assurance gains are such part of the amount which, if the words “reduced by 48 per cent. thereof” in section 13 (1) were deleted, would be included in the company's total profits as is attributable to gains from investments held in connection with the company's life business;

(b) the relevant reliefs are such of the sums to be deducted from or set off against the company's profits as are deducted from or set off against the life assurance gains;

(c) (i) where paragraph (a) of section 36 (5) applies to unrelieved income, the amount of the policy holders' share of the life assurance gains or of the relevant reliefs is the full amount; and

(ii) where paragraph (b) of section 36 (5) applies to unrelieved income, all the life assurance gains and relevant reliefs shall be included in the residual part.

Life business: computation of profits.

38.—For the purposes of sections 33, 36 and 37 the exclusion by section 2 from the charge to corporation tax of franked investment income shall not prevent such income of a company resident in the State which is attributable to the investments of the company's life assurance fund from being taken into account as part of the profits in computing trading income in accordance with the provisions applicable to Case I of Schedule D.

Annuity business: separate charge on profits.

39.—(1) Except in the case of an assurance company charged to tax in accordance with the provisions applicable to Case I of Schedule D in respect of the profits of its life assurance business, profits arising to an assurance company from pension business or from general annuity business, shall be treated as annual profits or gains within Schedule D, and be chargeable to corporation tax under Case IV of that Schedule, and for that purpose—

(a) the business of each such class shall be treated separately, and

(b) subject to the foregoing paragraph and subsection (2), the profits therefrom shall be computed in accordance with the provisions applicable to Case I of Schedule D.

(2) In making the said computation—

(a) section 35 (1) shall apply with the necessary modifications and, in particular, with the omission therefrom of all references to policy holders other than holders of policies referable to pension business, and

(b) no deduction shall be allowed in respect of any expense being an expense of management referred to in section 33 or 47, and

(c) there may be set off against the profits of pension business or general annuity business any loss, to be computed on the same basis as the profits, which was sustained in the same class of business in any previous accounting period while the company was within the charge to corporation tax in respect of that class of business so far as it has not already been so set off.

(3) Section 19 (losses in transactions from which income would be chargeable under Case IV or V of Schedule D) shall not be taken as applying to a loss sustained by a company on its general annuity business or pension business.

(4) The treatment of an annuity as containing a capital element for the purposes of section 239 of the Income Tax Act, 1967 (capital element in certain purchased annuities), shall not prevent the full amount of the annuity from being deductible in computing profits or from being treated as a charge on income for the purposes of the Corporation Tax Acts.

General annuity business.

40.—(1) In the case of a company carrying on general annuity business, the annuities paid by the company, so far as referable to that business and so far as they do not exceed the taxed income of the part of the annuity fund so referable, shall be treated as charges on income.

(2) In computing under section 39 the profits arising to an assurance company from general annuity business—

(a) taxed income shall not be taken into account as part of those profits, and

(b) of the annuities paid by the company and referable to general annuity business—

(i) those which under subsection (1) are treated as charges on income shall not be deductible, and

(ii) those which are not so treated shall, notwithstanding section 11 (computation of income: application of income tax principles), be deductible.

(3) In this section “taxed income” means income charged to corporation tax otherwise than under section 39, and franked investment income.

(4) A company which is not resident in the State but carries on through a branch or agency there any general annuity business shall not be entitled to treat any part of the annuities paid by it which are referable to that business as paid out of profits or gains brought into charge to income tax.

Pension business.

41.—(1) Exemption from corporation tax shall be allowed in respect of income from, and chargeable gains in respect of, investments and deposits of so much of an assurance company's life assurance fund and separate annuity fund, if any, as is referable to pension business.

(2) The exemption from tax conferred by subsection (1) shall not exclude any sums from being taken into account as receipts in computing profits or losses for any purpose of the Corporation Tax Acts.

(3) Subject to subsection (4) the exclusion by section 2 from the charge to corporation tax of franked investment income shall not prevent such income being taken into account as part of the profits in computing under section 39 income from pension business.

(4) If for any accounting period there is, apart from this subsection, a profit arising to an assurance company from pension business (computed in accordance with the provisions of section 39) and the company so elects as respects all or any part of its franked investment income arising in that period, being an amount of franked investment income not exceeding the amount of the said profit, subsections (1) and (3) shall not apply to the franked investment income to which the election relates.

An election under this subsection shall be made by notice in writing given to the inspector not later than two years after the end of the accounting period to which the election relates, or within such longer period as the Revenue Commissioners may by notice in writing allow.

(5) In computing under section 39 the profits from pension business, annuities shall be deductible notwithstanding section 11 (5) and a company shall not be entitled to treat as paid out of profits or gains brought into charge to income tax any part of the annuities paid by the company which is referable to pension business.

Foreign life assurance funds.

42.—(1) Corporation tax under Case III of Schedule D on income arising from securities and possessions in any place outside the State which form part of the investments of the foreign life assurance fund of an assurance company shall be computed on the full amount of the actual sums received in the State from remittances payable in the State, or from property imported, or from money or value arising from property not imported, or from money or value so received on credit or on account in respect of such remittances, property, money or value brought into the State without any deduction or abatement.

(2) Where—

(a) any securities issued by the Minister for Finance with a condition in the terms specified in section 464 of the Income Tax Act, 1967 (issue of securities with exemption from tax), or

(b) any stocks or other securities to which section 474 (exemption of certain securities from tax) of the said Act applies and which are issued with either or both of the conditions specified in subsection (2) of that section,

for the time being form part of the investments of the foreign life assurance fund of an assurance company, the income arising from any of those stocks or securities, if applied for the purposes of that fund or reinvested so as to form part of that fund, shall not be liable to tax.

(3) Where the Revenue Commissioners are satisfied that any income arising from the investments of the foreign life assurance fund of an assurance company has been remitted to the State and invested, as part of the investments of that fund, in any stocks or securities issued as aforesaid, that income shall not be liable to tax and any tax paid thereon shall, if necessary, be repaid to the company on the making of a claim.

(4) Where income from the investments of the foreign life assurance fund of an assurance company has been relieved from tax in pursuance of the provisions of this section a corresponding reduction shall be made—

(a) in the relief granted under section 33 in respect of expenses of management, and

(b) in any amount on which the company is chargeable to tax by virtue of section 39—

(i) in respect of general annuity business, or

(ii) in respect of pension business,

in so far as the investment income relieved is referable to general annuity business or pension business as the case may be.

(5) In this section “foreign life assurance fund”—

(a) means any fund representing the amount of the liability of an assurance company in respect of its life business with policy holders and annuitants residing outside the State whose proposals were made to, or whose annuity contracts were granted by, the company at or through a branch or agency outside the State, and

(b) where such a fund is not kept separately from the life assurance fund of the company, means such part of the life assurance fund as represents the liability of the company under such policies and annuity contracts, such liability being estimated in the same manner as it is estimated for the purposes of the periodical returns of the company.

(6) While agreements mentioned in Part I of Schedule 6 to the Income Tax Act, 1967 , remain in force, subsection (5) shall have effect as if after “State” in each place where it occurs, there were inserted “, Northern Ireland and Great Britain”.

(7) Where an assurance company having its head office in the State carries on business in Northern Ireland or Great Britain and under provisions of the law therein corresponding with section 41 exemption from corporation tax is allowable in respect of income from investments and deposits referable to pension business, this section shall have effect in relation to the income so exempt in Northern Ireland and Great Britain with the omission of subsection (6).

(8) Where this section has effect in relation to income arising from investments of any part of an assurance company's life assurance fund, it shall have the like effect in relation to chargeable gains accruing from the disposal of any such investments, and losses so accruing shall not be allowable losses.

Overseas life assurance companies: investment income.

43.—(1) Any income of an overseas life assurance company from the investments of its life assurance fund (excluding the pension fund and general annuity fund, if any), wherever received, shall, to the extent provided in this section, be deemed to be profits comprised in Schedule D and shall be charged to corporation tax under Case III of Schedule D.

(2) Distributions received from companies resident in the State shall be brought into account under this section notwithstanding their exclusion from the charge to corporation tax.

(3) A portion only of the income from the investments of the life assurance fund (excluding the pension fund and general annuity fund, if any) shall be charged in accordance with subsection (1), and for any accounting period that portion shall be determined by the formula

A × B

_____

C

where—

A is the total income from those investments for that period,

B is the average of the liabilities for that period to policy holders resident in the State and to policy holders resident outside the State whose proposals were made to the company at or through its branch or agency in the State, and

C is the average of the liabilities for that period to all the company's policy holders,

but any reference in this subsection to liabilities does not include liabilities in respect of general annuity and pension business.

(4) For the purposes of this section—

(a) the liabilities of an assurance company attributable to any business at any time shall be ascertained by reference to the net liabilities of the company as valued by an actuary for the purposes of the relevant periodical return, and

(b) the average of any liabilities for an accounting period shall be taken as one-half of the aggregate of the liabilities at the beginning and end of the valuation period which coincides with that accounting period or in which that accounting period falls.

(5) (a) Where the average of branch liabilities for an accounting period exceeds the mean value for the accounting period of the assets to which this subsection applies, the amount to be included in profits under section 13 (1), or that subsection as modified by section 37, shall be an amount determined by the formula

A × B

_____

C

where—

A is the amount which apart from this subsection would be so included in profits,

B is the average of branch liabilities for the accounting period, and

C is the mean value for the accounting period of the assets to which this subsection applies.

(b) For the purposes of this subsection—

(i) “the average of branch liabilities for an accounting period” means the aggregate of the amounts represented by B in subsection (3), B in section 44 (2) and the average of the liabilities attributable to pension business for the accounting period, and

(ii) “the assets to which this subsection applies” are assets the gains from the disposal of which are chargeable to corporation tax by virtue of section 4 (2) (6) (8) (a) of the Capital Gains Tax Act, 1975 , with the addition of assets the gains from the disposal of which would, but for sections 19 and 24 of, and paragraph 2 of Schedule 1 to, that Act, be so chargeable.

(6) Section 75 (1) of the Income Tax Act, 1967 (income chargeable under Case III), as applied to corporation tax, shall not apply to income to which subsection (1) applies.

Overseas life assurance companies: general annuity and pension businesses.

44.—(1) Nothing in the Corporation Tax Acts shall prevent the distributions of companies resident in the State from being taken into account as part of the profits in computing, under section 39, the profits arising from pension business and general annuity business to an overseas life assurance company.

(2) Any charge to tax under section 39 for any accounting period on profits arising to an overseas life assurance company from general annuity business shall extend only to a portion of the profits arising from that business and that portion shall be determined by the formula

A × B

_____

C

where—

A is the total amount of those profits,

B is the average of the liabilities attributable to that business for the relevant accounting period in respect of contracts with persons resident in the State or contracts with persons resident outside the State whose proposals were made to the company at or through its branch or agency in the State, and

C is the average of the liabilities attributable to that business for that accounting period in respect of all contracts.

(3) For the purposes of this section—

(a) the liabilities of an assurance company attributable to general annuity business at any time shall be ascertained by reference to the net liabilities of the company as valued by an actuary for the purposes of the relevant periodical return, and

(b) the average of any liabilities for an accounting period shall be taken as one-half of the aggregate of the liabilities at the beginning and end of the valuation period which coincides with that accounting period or in which that accounting period falls.

Overseas life assurance companies: income tax, foreign tax and tax credit.

45.—(1) Section 12 (6) (miscellaneous special rules for computation of income) shall not affect the liability to tax of an overseas life assurance company in respect of the investment income of its life assurance fund under section 43 or in respect of the profits of its annuity business under the provisions of sections 39, 41 and 44.

(2) For the purposes of section 8 (3) (set-off by non-resident companies of income tax deducted from payments received against corporation tax), as it applies to life business, the amount of the income tax referred to in that subsection which shall be available for set-off under that subsection in an accounting period shall be limited in accordance with subsections (3) and (4).

(3) If the company is chargeable to corporation tax for an accounting period in accordance with section 43 in respect of the income from the investments of its life assurance fund, the amount of income tax available for set-off against any corporation tax assessed for that period on that income shall not exceed an amount equal to income tax at the standard rate on the portion of income from investments which is chargeable to corporation tax by virtue of subsection (3) of that section.

(4) If the company is chargeable to corporation tax for an accounting period in accordance with section 44 on a proportion of the total amount of the profits arising from its general annuity business, the amount of income tax available for set-off against any corporation tax assessed for that period on those profits shall not exceed an amount equal to income tax at the standard rate on the like proportion of the income from investments included in computing those profits.

(5) Where an overseas life assurance company receives a distribution in respect of which it is entitled to a tax credit the company may claim to have that credit set off against any corporation tax assessed on the company under section 43 or 44 for the accounting period in which the distribution is received, but the restriction in subsections (3) and (4) on the amount of income tax that may be set off against corporation tax assessed under the said section 43 or 44 shall apply to the aggregate of that income tax and of the tax credit that can be so set off by virtue of this subsection.

(6) Paragraph 3 (6) of Schedule 1 to the Capital Gains Tax Act, 1975 (rules for computation of capital gains), shall not affect the liability to tax under section 43 of an overseas life assurance company in respect of gains from the disposal of investments held in connection with its life business.

Overseas life assurance companies: distributions set off against income.

46.—(1) Where an overseas life assurance company receives a distribution from a company resident in the State and relief in respect of the distribution is not available or is not claimed under arrangements made under section 361 of the Income Tax Act, 1967 (agreements for relief from double taxation of income), as applied for purposes of corporation tax, the overseas life assurance company shall be deemed for the purposes of sections 39, 41, 43, 44 and 45 to be entitled to such a tax credit in respect of the distribution as it would be entitled to if it were a company resident in the State; and accordingly for the purposes of those provisions the income represented by the distribution shall be the aggregate of the distribution and the tax credit.

(2) Where under subsection (1) an overseas life assurance company is deemed to be entitled to a tax credit in respect of a distribution, it may claim to have the income represented by the distribution set off, subject to subsection (3), against its profits chargeable to tax under section 39 or against its income chargeable to tax in accordance with section 43 or partly against the one and partly against the other; but to the extent that any income is so set off the tax credit included in it shall not be payable and shall not be set off against corporation tax under section 45 (5).

(3) The amounts that an overseas life assurance company may by virtue of this section set off against profits or income of any description shall not exceed the amount of the profits or income of that description and shall be further limited as follows—

(a) the amount set off against profits arising from general annuity business shall not exceed a portion of the company's income from investments referable to that business, and that portion shall be determined by the same formula as determines under section 44 the portion of those profits which is chargeable to tax; and

(b) the amount set off against profits from pension business shall not exceed such of its income referable to that business as is represented by distributions in respect of which the company is deemed to be entitled to a tax credit by virtue of this section, and shall not reduce any other income.

(4) Where by virtue of a set-off under this section income or profits of any description are reduced by any amount, that amount shall be left out of account in determining the amount of income tax which is available for set-off against corporation tax under section 8 (3).

(5) A claim under this section in respect of a distribution shall not prevent the making of a subsequent claim for relief in respect of that distribution under arrangements made under the said section 361; but where such a subsequent claim is made the claim under this section shall be deemed never to have been made, and no adjustment (whether by additional assessments or otherwise) to which the subsequent claim gives rise shall be out of time if it is made within twelve months after the making of the subsequent claim.

Overseas life assurance companies: expenses of management.

47.—(1) For the purposes of relief under section 33, the expenses of management of an overseas life assurance company shall be apportioned between its pension business, its general annuity business and its life assurance business (excluding such pension business and general annuity business) and the amount referable to each such class of business shall be such amount as bears to the total expenses of management the same proportion as the average of the liabilities for the accounting period attributable to that class in respect of policies and contracts bears to the average of liabilities of the company for that period in respect of all policies and contracts of its life assurance business.

(2) Where an overseas life assurance company is charged to corporation tax under Case III of Schedule D on a proportion of the income from investments of its life assurance fund in accordance with section 43, relief under section 33 in respect of the expenses of management referable to that class of business under subsection (1) shall be computed by reference to a like proportion of the expenses so referable.

(3) Where an overseas life assurance company is charged to corporation tax under Case IV of Schedule D on a proportion of the profits of its general annuity business in accordance with section 44, the relief under section 33 in respect of expenses of management referable to that class of business under subsection (1) shall be computed by reference to a like proportion of such expenses so referable.

(4) Where an overseas life assurance company is charged to corporation tax under Case IV of Schedule D in respect of pension business, relief under section 33 in respect of the expenses of management referable to that class of business under subsection (1) shall be computed by reference to the full amount of expenses so referable.

(5) For the purposes of this section the liabilities of an assurance company attributable to any business at any time shall be ascertained by reference to the net liabilities of the company as valued by an actuary for the purposes of the relevant periodical return.

(6) For the purposes of this section, the average of any liabilities for an accounting period shall be taken as one-half of the aggregate of the liabilities at the beginning and end of the valuation period which coincides with that accounting period or in which that accounting period falls.

Life policies carrying rights not in money.

48.—Where any investments or other assets are, in accordance with a policy issued in the course of life business carried on by an assurance company, transferred to the policy holder, the policy holder's acquisition of the assets, and the disposal of them to him, shall be deemed to be for a consideration equal to the market value of the assets—

(a) for the purposes of the Capital Gains Tax Act, 1975 , and

(b) for the purposes of computing income in accordance with Case I or IV of Schedule D.

Benefits from life policies issued before 6th April, 1974.

49.—(1) This section applies in relation to policies of life assurance issued before the 6th day of April, 1974, by a company carrying on life business, being policies which—

(a) provide for benefits consisting to any extent of investments of a specified description or of a sum of money to be determined by reference to the value of such investments, but

(b) do not provide for the deduction from those benefits of any amount by reference to tax chargeable in respect of chargeable gains.

(2) Where—

(a) the investments of the company's life assurance fund, so far as referable to those policies, consist wholly or mainly of investments of the description so specified, and

(b) on the company becoming liable under any of those policies for any such benefits (including benefits to be provided on the surrender of a policy), a chargeable gain accrues to the company from the disposal, in meeting or for the purpose of meeting that liability, of investments of that description forming part of its life assurance fund, or would so accrue if the liability were met by or from the proceeds of such a disposal,

then the company shall be entitled as against the person receiving the benefits to retain thereout a part thereof not exceeding in amount or value corporation tax at the full rate in respect of the chargeable gain referred to in paragraph (b) computed without regard to any amount retained under this subsection and reduced in accordance with section 13 (1).

Interpretation.

50.—(1) This section has effect for the interpretation of sections 33 to 49 and this section.

(2) Unless the context otherwise requires—

“actuary” has the meaning assigned to it in section 3 of the Insurance Act, 1936 ;

“annuity business” means the business of granting annuities on human life;

“annuity fund” means, where an annuity fund is not kept separately from the life assurance fund of an assurance company, such part of the life assurance fund as represents the liability of the company under its annuity contracts, as stated in its periodical returns;

“assurance company” has the meaning assigned to it in section 3 of the Insurance Act, 1936 ;

“general annuity business” means any annuity business which is not pension business and “pension business” shall be construed in accordance with subsections (3) and (4);

“life business” includes “life assurance business” and “industrial assurance business” which have the meanings assigned to them in section 3 of the Insurance Act, 1936 , and where a company carries on both businesses may mean either;

“life assurance fund” and “industrial assurance fund” have the meanings assigned to them in the Insurance Acts, 1909 to 1969, and life assurance fund, in relation to industrial assurance business, means the industrial assurance fund;

“overseas life assurance company” means an assurance company having its head office outside the State but carrying on life assurance business through a branch or agency in the State;

“pension fund” and “general annuity fund” shall be construed in accordance with subsection (3);

“periodical return”, in relation to an assurance company, means a return deposited with the Minister for Industry and Commerce under the Assurance Companies Act, 1909 , and the Insurance Act, 1936 ;

“policy” and “premium” have the meanings assigned to them in section 3 of the Insurance Act, 1936 ;

“valuation period” means the period in respect of which an actuarial report is made under section 5 of the Assurance Companies Act, 1909 , as extended by section 55 of the Insurance Act, 1936 .

(3) Any division to be made between general annuity business, pension business and other life assurance business shall be made on the principle of—

(a) referring to pension business any premiums falling within subsection (4), together with the incomings, outgoings and liabilities referable to those premiums, and the policies and contracts under which they are or have been paid,

(b) allocating to general annuity business all other annuity business,

and references to “pension fund” and “general annuity fund” shall be construed accordingly whether or not such funds are kept separately from the assurance company's life assurance fund.

(4) The premiums to be referred to pension business are those payable under contracts falling (at the time when the premium is payable) within one or other of the following descriptions, that is to say—

(a) any contract with an individual who is, or would but for an insufficiency of profits or gains be, chargeable to tax in respect of relevant earnings (as defined in section 235 of the Income Tax Act, 1967 (retirement annuities: relief for premiums)) from a trade, profession, office or employment carried on or held by him, being a contract approved by the Revenue Commissioners under that section or section 235A (approval of contracts for dependants or for life assurance) of the Income Tax Act, 1967 (inserted by section 66 of the Finance Act, 1974 );

(b) any contract (including a contract of assurance) entered into for the purposes of, and made with the persons having the management of, an exempt approved scheme as defined in Chapter II of Part I of the Finance Act, 1972 , being a contract so framed that the liabilities undertaken by the assurance company under the contract correspond with liabilities against which the contract is intended to secure the scheme;

(c) any contract with the trustees or other persons having the management of a superannuation fund within the meaning of section 222 of the Income Tax Act, 1967 (exemption of superannuation funds), or of a scheme approved under section 235 or 235A of that Act or under both of those sections, being a contract which—

(i) was entered into for the purposes only of that fund or scheme or, in the case of a fund part only of which is approved under the said section 222, then for the purposes only of that part of that fund, and

(ii) (in the case of a contract entered into or varied on or after the 6th day of April, 1958) is so framed that the liabilities undertaken by the assurance company under the contract correspond with liabilities against which the contract is intended to secure the fund (or the relevant part of it) or the scheme,

and in this and the last preceding subsection “premium” includes any consideration for an annuity.

Treatment of tax-free income of non-resident banks, etc.

51.—(1) Where a banking business, an insurance business or a business consisting wholly or partly in dealing in securities is carried on in the State by a person not resident therein, then—

(a) in computing for the purposes of this Act the profits arising from, or loss sustained in, the business, and

(b) in the case of an insurance business, also in computing the profits or loss from pension business and general annuity business under section 39,

the provisions of section 11 shall not prevent the inclusion of interest, dividends and other payments to which section 50 (securities of foreign territories) or 462 (exemption of dividends of non-residents) of the Income Tax Act, 1967 , extends notwithstanding the exemption from tax conferred by those sections respectively.

(2) Where—

(a) any such business as aforesaid is carried on in the State by a person not ordinarily resident therein, and

(b) in making any such computation as aforesaid with respect to that business, interest on tax-free securities is excluded by virtue of a condition of the issue of such securities,

any expenses attributable to the acquisition or holding of, or to any transaction in, the securities (but not including in those expenses any interest on borrowed money), and any profits or losses so attributable, shall also be excluded in making that computation.

(3) In the case of an overseas life assurance company as defined in section 50—

(a) in computing for the purposes of section 43 the income from the investments of the life assurance fund of the company, any interest, dividends and other payments to which section 50 or 462 of the Income Tax Act, 1967 , extends shall be included notwithstanding the exemption from tax conferred by those sections respectively.

(b) where in computing the said income interest on any tax-free securities is excluded by virtue of a condition of the issue of such securities, the relief under section 47 (2) shall be reduced so as to bear to the amount of relief which would be granted but for this paragraph the same proportion as the amount of that income, excluding the said interest, bears to the amount of that income including that interest, and

(c) where subsection (2) applies to the pension business or general annuity business of the company the relief under section 47 (3) or (4), as the case may be, shall be reduced so as to bear to the amount of the relief which would be so granted but for this paragraph the same proportion as the amount of the income (excluding interest on tax-free securities) from investments and deposits of the company's life assurance fund and separate annuity fund, if any, referable to that business bears to the said income so referable including such interest.

(4) In this section and in section 52 “tax-free securities” means securities to which section 464 (issue of securities with exemption from tax), 470 (securities of Irish local authorities issued abroad) or 474 (exemption of certain securities from tax) of the Income Tax Act, 1967 , applies and which were issued with a condition regulating the treatment of the interest thereon for tax purposes such that interest on the securities is excluded in computing income or profits.

(5) In this section “insurance business” includes assurance business within the meaning of section 3 of the Insurance Act, 1936 .

(6) In subsection (1) “securities” includes stocks and shares.

Tax-free securities: exclusion of interest on borrowed money.

52.—(1) This section has effect where section 51 (2) applies to a business for any accounting period.

(2) Up to the amount determined under this section (called the amount ineligible for relief) interest becoming due for payment on or after the 6th day of April, 1976, on money borrowed for the purposes of the business—

(a) shall be excluded in any computation under this Act of the profits (or loss) arising from the business or, where subsection (5) applies, arising from any annuity business or pension business forming part of the life business, and

(b) shall be excluded from the definition of “charges on income” in section 10.

(3) In determining the amount ineligible for relief, account shall be taken of all money borrowed for the purposes of the business which is outstanding in the accounting period, up to the total cost of the tax-free securities held for the purposes of the business in that period:

Provided that account shall not be taken of any borrowed money carrying interest which, apart from subsection (2), does not fall to be included in the computations under paragraph (a) of that subsection, and is not to be treated as a charge on income for the purposes of this Act.

(4) Subject to subsection (5), the amount ineligible for relief shall be equal to a year's interest on the amount of money borrowed which is to be taken into account under subsection (3) at a rate equal to the average rate of interest in the accounting period on money borrowed for the purposes of the business, except that in the case of an accounting period of less than twelve months, interest shall be taken for that shorter period instead of for a year.

(5) Where relief for expenses of management is to be granted to an overseas life assurance company for any accounting period and that relief falls to be reduced under section 51 (3) (b) the amount ineligible for relief shall be a fraction of the amount of interest in the accounting period on money borrowed for the purposes of the life business (excluding pension business and general annuity business, if any) and that fraction shall be the fraction which is income from tax-free securities divided by total investment income of the life assurance fund.

(6) For the purposes of this section, the cost of a holding of tax-free securities which has fluctuated in the accounting period shall be the average cost of acquisition of the initial holding, and of any subsequent acquisitions in the accounting period, applied to the average amount of the holding in the accounting period, and this subsection shall be applied separately to securities of different classes.

PART IV

Profits from Export of Certain Goods

Definition of “relevant accounting period”.

53.—In this Part “relevant accounting period” means an accounting period or part of an accounting period of a company within the period of fifteen years from the later of the two following dates, that is to say—

(a) the 1st day of October, 1956, or

(b) the first day of the basis period for the year of assessment which was the company's first year of claim for the purposes of relief under Chapter IV of Part XXV of the Income Tax Act, 1967 (Profits from Export of Certain Goods), or, if there was no such first year of claim, the 6th day of April, 1975.

Meaning of “goods”.

54.—(1) In this Part “goods” means goods manufactured within the State by the person who exports them or some of them and who in relation to the relevant accounting period is the company claiming relief under this Part:

Provided that where there are two companies one of which manufactures goods and the other of which exports them in the course of its trade and where one of the companies holds more than 90 per cent. of the ordinary shares in the other company or where persons who have a controlling interest in one company hold, either directly or indirectly, more than 90 per cent. of the ordinary shares in the other company, the goods manufactured by one of the companies shall, when exported in the course of its trade by the other company, be deemed to be manufactured by that other company.

(2) The definition of “goods” contained in subsection (1) shall include—

(a) fish produced within the State on a fish farm; and

(b) cultivated mushrooms, cultivated within the State,

and, in a case in which books or greeting cards are printed within the State otherwise than by their publisher and they or some of them are exported by their publisher (not being a case to which the proviso to subsection (1) applies), the books or greeting cards, as the case may be, shall be regarded, for the purposes of subsection (1), as having been manufactured within the State by their publisher.

(3) (a) The definition of “goods” contained in subsection (1) shall include goods manufactured within the State which do not come within that definition and which are exported by the person who in relation to the relevant accounting period is the company claiming relief under this Part where the selling by such person of the goods so exported is selling by wholesale.

(b) “Selling by wholesale” in paragraph (a) 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.

Ship building and repair.

55.—(1) In the case of a company carrying on the trade of building or repairing ships, the following provisions shall apply for the purposes of relief under this Part—

(a) repairs carried out within the State to a ship shall be regarded as the manufacture within the State of goods and, to the extent to which any such repairs have been carried out within the State to a ship which is wholly owned by persons who are not ordinarily resident in the State, the ship shall be regarded as goods which are manufactured within the State and exported by the person who manufactures them and any amount receivable in payment for repairs carried out within the State to a ship shall be regarded as an amount receivable from the sale of goods;

(b) where, as respects any relevant accounting period, the company, by notice in writing given to the inspector within twelve months after the end of that period, so elects, this Part shall apply in the case of that period—

(i) as if all ships built by the company within the State had been exported by the company,

(ii) as if all ships to which repairs were carried out by the company within the State were, to the extent of such repairs, goods exported by the company, and

(iii) as if amounts receivable by the company in payment for the building within the State or for the repair within the State of ships were amounts receivable from the sale of goods exported by the company out of the State.

(2) In subsection (1) (a) (b) any reference to repair or building includes a reference to repair or building effected at any time.

Export of certain goods.

56.—(1) In this section—

“the Board” means An Bord Bainne Co-operative Limited;

“the Commission” means the Pigs and Bacon Commission;

“milk product” means butter, whey-butter, cream, cheese, condensed milk, dried or powdered milk, dried or powdered skim-milk, dried or powdered whey, chocolate crumb, casein, butter-oil, lactose, and any other product which is made wholly or mainly from milk or from a by-product of milk and which is approved for the purposes of this section by the Minister for Finance after consultation with the Minister for Agriculture and Fisheries;

“pigmeat product” means bacon and cuts thereof including ham, pork carcases and pork sides and cuts thereof, unrendered pig fat and canned pigmeat products.

(2) Where—

(a) a company produces a pigmeat product and sells it to the Commission, and

(b) that product is exported out of the State by the Commission,

this Part shall apply as if the said product had been exported out of the State by the company, and any amount receivable by the company from the sale of the said product to the Commission shall be deemed for the purposes of this Part to be an amount receivable from the sale of goods so exported.

(3) Where—

(a) a company manufactures a milk product and sells it to the Board, and

(b) that product is exported out of the State by the Board,

this Part shall apply as if the said product had been exported out of the State by the company, and any amount receivable by the company from the sale of the said product to the Board shall be deemed for the purposes of this Part to be an amount receivable from the sale of goods so exported.

Standard period.

57.—The standard period in relation to a company's trade shall, for the purposes of this Part, be the period of one year ending on the 30th day of September, 1956, or, if the company so elects, the period of one year ending on the 30th day of September, 1955, and that standard period shall be applicable in relation to the trade whether or not, during the whole or part of that standard period, the trade was carried on by a person other than the company by which it is carried on in the relevant accounting period or separate parts of the trade were carried on by different persons, but that standard period shall not be applicable where the trade was not in existence before the end of that standard period.

Basis of relief from corporation tax.

58.—(1) Where a company claims and proves as respects a relevant accounting period—

(a) that, during the standard period in relation to the trade, goods were, in the course of the trade, exported out of the State,

(b) that, during the relevant accounting period, goods were, in the course of the trade, exported out of the State, and

(c) that the total amount receivable from the sale of the last mentioned goods was in excess of the total amount (in this section referred to as the standard amount) receivable from the sale of the goods exported during the standard period,

corporation tax payable by the company for the relevant accounting period, so far as it is referable to the income attributable to the said excess, shall be reduced to nil; and the corporation tax referable to the income attributable to the said excess shall be such an amount as bears to the relevant corporation tax, as defined in subsection (10), the same proportion as the income attributable to the said excess bears to the total income brought into charge to corporation tax.

(2) For the purposes of subsection (1) “the income attributable to the said excess” shall be taken to be such sum as bears to the amount of the company's income for the relevant accounting period, which is attributable to the sale of goods (whether exported or not), the same proportion as the amount of the said excess bears to the total amount receivable by the company from such sale in the relevant accounting period.

(3) Where a company claims and proves as respects a relevant accounting period—

(a) that, during the standard period in relation to the trade, no goods were, in the course of the trade, exported out of the State or that the standard period is not applicable, and

(b) that, during the relevant accounting period, goods were, in the course of the trade, exported out of the State,

corporation tax payable by the company for the relevant accounting period, so far as it is referable to the income from the sale of the goods so exported, shall be reduced to nil; and the corporation tax referable to the income from the sale of goods so exported shall be such an amount as bears to the relevant corporation tax the same proportion as the income from the sale of goods so exported bears to the total income brought into charge to corporation tax.

(4) For the purposes of subsection (3) “the income from the sale of the goods so exported” shall be taken to be such sum as bears to the amount of the company's income for the relevant accounting period, which is attributable to the sale of goods (whether exported or not), the same proportion as the amount receivable in the relevant accounting period from the sale of goods exported bears to the total amount receivable by the company from the sale of goods (whether exported or not) in the relevant accounting period.

(5) In a case in which the preceding provisions of this section apply, and the export out of the State in the relevant accounting period consisted of or included goods with respect to which section 54 (3) provides for the inclusion thereof in the definition of “goods”, this Part shall have effect subject to the insertion, in subsections (2) and (4), of “and of merchandise (whether exported or not) other than such goods” after “goods (whether exported or not)” wherever the latter words occur.

(6) In relation to a company which has obtained relief from corporation tax under subsection (1) or (3) of this section, from income tax under section 404 (1) or (3) of the Income Tax Act, 1967 (basis of relief from tax on profits from exports), or from corporation profits tax under section 13 (1) or (3) of the Finance (Miscellaneous Provisions) Act, 1956 (basis of relief from corporation profits tax), this section shall apply as respects any accounting period or part of an accounting period of the company within the period of five years commencing on the expiration of the period comprising the company's relevant accounting periods within the meaning of section 53 as if—

(a) “relevant accounting period”, wherever occurring in this Part, referred to it, and

(b) for “shall be reduced to nil” in subsections (1) and (3) of this section there were substituted—

(i) in case it is an accounting period or part of an accounting period within the first of those years, “shall be reduced by 80 per cent.”,

(ii) in case it is an accounting period or part of an accounting period within the second of those years, “shall be reduced by 65 per cent.”,

(iii) in case it is an accounting period or part of an accounting period within the third of those years, “shall be reduced by 50 per cent.”,

(iv) in case it is an accounting period or part of an accounting period within the fourth of those years, “shall be reduced by 35 per cent.”, and

(v) in case it is an accounting period or part of an accounting period within the fifth of those years, “shall be reduced by 15 per cent.”:

Provided that this subsection shall not apply to an accounting period or part of an accounting period falling after the 5th day of April, 1990.

(7) (a) Where a relevant accounting period is a period of less than twelve months, the standard amount shall, for the purpose of ascertaining the excess referred to in subsection (1), be taken to be such part thereof as bears to the whole of the said amount the same proportion as the relevant accounting period bears to twelve months.

(b) Where a relevant accounting period is part of an accounting period of a company, the total amount receivable from the sale of goods (whether exported or not), the total amount receivable from the sale of goods exported out of the State and the amount of the company's income which is attributable to the sale of goods (whether exported or not) shall be taken to be such part of each such amount as bears to the whole of each such amount the same proportion as the length of the relevant accounting period bears to the length of the accounting period of the company.

(8) Where, on or after the day on which the standard period commenced, any change takes place whereby a part of a trade becomes transferred to any person, the standard amount shall, as respects any relevant accounting period in which, or prior to which, the change occurs, be apportioned for the purposes of subsection (1), and every such apportionment shall be made in such manner as the Revenue Commissioners consider just, having regard to all the circumstances.

(9) A reduction shall not be made under this section in respect of corporation tax payable on income from any mining operations.

(10) For the purposes of this section “relevant corporation tax” means the corporation tax which, apart from this section and sections 184 (relief in respect of corporation profits tax losses) and 186 (transitional relief for certain payments and management expenses), would be chargeable for the relevant accounting period exclusive of the corporation tax charged on the company's chargeable gains for that period.

Certain manufacturing services.

59.—(1) Where a company carries on a trade which consists of or includes the rendering to another person of services by way of subjecting commodities or materials belonging to that person to any process of manufacturing, and all or some of such services are rendered to a person who is not resident in the State in relation to commodities or materials which have been imported into the State and, after the services have been rendered, the commodities or materials, or the products or articles into which they have been converted, are exported out of the State while continuing to belong to that person, the following provisions shall, if the company so elects, apply for the purposes of relief under this Part—

(a) the rendering in the State of such services shall be regarded as the manufacture of goods and any amount receivable in payment therefor shall be regarded as an amount receivable from the sale of goods, and

(b) the company shall be regarded in relation to any such services as are rendered to a person who is not resident in the State as having exported goods out of the State and any payment receivable by it for the services shall be regarded as an amount receivable from the sale of goods so exported.

(2) Any election under subsection (1) shall be made by notice in writing delivered to the inspector and shall have effect as respects every relevant accounting period for which relief under this Part is claimed by the company by which it is made and shall also have effect as if it were an election made under section 29 of the Finance Act, 1966 (profits from exports: relief from corporation profits tax), or section 406 of the Income Tax Act, 1967 (certain manufacturing services), or both of those sections:

Provided that where, before an election was made by it under this section, a company has made a distribution for an accounting period and the tax credit to which the recipient of that distribution is entitled exceeds the tax credit to which that recipient would have been entitled if the election had been made before the date of the distribution, any relief from corporation tax which would otherwise have been allowable to the company shall be reduced by the amount of the excess.

(3) Where for any year of assessment the income of any person consists of or includes a distribution in respect of which the proviso to subsection (2) has had effect, the person may claim to have the income tax chargeable on his income for that year reduced to the amount which would have been so chargeable if the election under subsection (1) had been made before the date of the distribution.

(4) Where for any accounting period the franked investment income of a company consists of or includes a distribution in respect of which the proviso to subsection (2) has had effect, the company may claim to have paid to it an amount equal to the excess of the tax credit to which it was entitled in respect of the distribution on the date on which the distribution was made over the tax credit to which it would have been entitled in respect of the distribution if the election under subsection (1) had been made before the date of the distribution:

Provided that for the purposes of section 15 (4) (management expenses: investment companies), section 25 (set-off of losses etc. against franked investment income) and section 26 (set-off of loss brought forward or terminal loss: financial concerns) any such distribution as aforesaid shall be treated as representing income equal to the aggregate of the amount of that distribution and the amount of the tax credit to which the company would have been entitled if the election under subsection (1) had been made before the date of the distribution.

(5) An election made under section 29 of the Finance Act, 1966 , or section 406 of the Income Tax Act, 1967 , shall have effect as if it were an election made under subsection (1).

(6) The inspector may by notice in writing require a company claiming relief from tax by virtue of subsection (1) to furnish him with such information or particulars as may be necessary for the purpose of giving effect to that subsection, and section 58 (1) (3) shall have effect as if the matters of which proof is required thereby included the information or particulars specified in a notice under this subsection.

Relief for engineering services in relation to works outside the State.

60.—(1) In this section “engineering services” means design and planning services the work on the rendering of which is carried out in the State in connection with chemical, civil, electrical or mechanical engineering works executed outside the State.

(2) Where a company carries on a trade which consists of or includes the rendering to another person of engineering services and all or some of such services are rendered to a person who is not resident in the State, the following provisions shall, if the company so elects, apply for the purposes of relief under this Part—

(a) the rendering of such services shall be regarded as the manufacture of goods and any amount receivable in payment therefor shall be regarded as an amount receivable from the sale of goods, and

(b) where such services are rendered to a person who is not resident in the State, the company shall be regarded as having exported goods out of the State and any payment receivable by it for the services shall be regarded as an amount receivable from the sale of goods so exported.

(3) Any election under subsection (2) shall be made by notice in writing delivered to the inspector and shall have effect as respects every relevant accounting period for which relief under this Part is claimed by the company by which it is made and shall also have effect as if it were an election made under section 34 of the Finance Act, 1968 (relief on engineering services in relation to works outside the State).

(4) An election made under section 34 of the Finance Act, 1968 , shall have effect as if it were an election made under subsection (2).

(5) The inspector may by notice in writing require a company claiming relief from tax by virtue of subsection (2) to furnish him with such information or particulars as may be necessary for the purpose of giving effect to that subsection, and section 58 (1) (3) shall have effect as if the matters of which proof is required thereby included the information or particulars specified in a notice under this subsection.

Adjustments of certain amounts.

61.—(1) Where a company claims relief pursuant to this Part and it appears to the inspector that, in the case of goods of a particular class, the relationship between the amount receivable from the sale in any period of goods exported and the amount receivable from the sale in that period of goods not exported is affected by the payment by the company of any duty in respect of the goods or the materials used in their manufacture, the inspector shall apply subsection (2) or (3), whichever appears to him to be appropriate, in arriving at an amount receivable from the sale in that period of such goods, and any relief to the company by reference to the sale of goods in that period shall be computed accordingly.

(2) (a) An amount receivable from the sale of goods exported out of the State shall be deemed to be increased by the amount of any drawback, rebate or repayment of duty, being duty payable in the State, received by the company in respect of such goods and to be reduced by the amount of any duty paid in any territory outside the State by the company in respect of the import of such goods into that territory.

(b) An amount receivable from the sale of goods not exported shall be deemed to be increased by the amount of any rebate or repayment of duty, being duty payable in the State, received by the company in respect of such goods.

(3) (a) An amount receivable from the sale of goods exported out of the State shall be deemed to be reduced by the amount of any duty paid in any territory outside the State by the company in respect of the import of such goods into that territory.

(b) An amount receivable from the sale of goods not exported shall be deemed to be reduced by the amount of any duty, being duty payable in the State, paid by the company in respect of such goods.

(4) The inspector may by notice in writing require the company to furnish him with such information or particulars as may be necessary for the purpose of giving effect to this section, and section 58 (1) (3) shall have effect as if the matters of which proof is required thereby included the information or particulars specified in a notice under this subsection.

(5) Where an accounting period of a company is part of a period of account of the company the amount of any duty and the amount of any drawback, rebate or repayment of duty shall for the purposes of this section be such sum as bears to these amounts for the period of account the same proportion as the length of the accounting period bears to the length of the period of account.

Transactions between associated persons and company succeeding to trade of another company.

62.—(1) Where a company claiming relief under this Part (here-after in this subsection referred to as the buyer) buys from another person (hereafter in this subsection referred to as the seller) and—

(a) the seller has control over the buyer or, the seller being a company or partnership, the buyer has control over the seller or some other person has control over both the seller and the buyer, and

(b) the price in the transaction is less than that which might have been expected to obtain if the parties to the transaction had been independent parties dealing at arm's length,

then, the income of the buyer which is attributable to sales shall, for the purposes of this Part, be computed as if the price in the transaction had been that which would have obtained if the transaction had been a transaction between independent persons dealing as aforesaid.

(2) In this section “control” has the meaning assigned to it by section 158.

(3) Where a company (hereafter in this subsection referred to as the succeeding company) succeeds to a trade or a part of a trade which, on or after the 6th day of April, 1960, was carried on by another company (hereafter in this subsection referred to as the original company) and the original company has or could have made a claim to relief under this Part or under Chapter IV of Part XXV of the Income Tax Act, 1967 , then relief in so far as such relief relates to the trade or the part of the trade in question shall be granted to the succeeding company only as respects the remaining relevant accounting periods for which such relief might have been claimed by the original company if it had continued to carry on the trade or the part of the trade in question.

(4) The inspector may by notice in writing require the company to furnish him with such information or particulars as may be necessary for the purposes of this section, and section 58 (1) (3) shall have effect as if the matters of which proof is required thereby included the information or particulars specified in a notice under this subsection.

(5) Where a company claims relief under this Part otherwise than by virtue of the provisions of section 54 (3), the foregoing provisions of this section shall have effect only in respect of transactions and successions occurring after the 19th day of April, 1961.

Production of documents and records.

63.—(1) Upon request made to him by an authorised officer at any premises of a company claiming relief under this Part, any person employed by the company at the premises shall produce to the authorised officer all such invoices, accounts, books and other documents and records whatsoever relating to purchase and sale of goods by the company as may be in such person's power, possession and procurement and, on production thereof, shall permit the authorised officer to examine them and take copies thereof or extracts therefrom.

(2) If a person requested under subsection (1) does not comply with the requirements of that subsection, he shall be liable to a penalty of £100.

(3) All penalties under this section 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.

(4) Where, in pursuance of this section, an authorised officer requests production of any documents or records, he shall, on request, show his authorisation for the purposes of this section to the person concerned.

(5) In this section “authorised officer” means an officer of the Revenue Commissioners authorised by them in writing for the purposes of this section.

Distributions.

64.—(1) This section applies to a distribution (hereafter in this section referred to as a relevant distribution) made, or deemed to have been made, by a company for an accounting period wholly or in part out of—

(a) the company's income for that accounting period the corporation tax in respect of which has been reduced under this Part, or

(b) a distribution or distributions received by the company in that accounting period in respect of which the tax credit is determined in accordance with this section.

(2) Where a relevant distribution is made or is deemed for the purposes of this section to have been made by a company for an accounting period, the tax credit to which the recipient of the relevant distribution is entitled in respect of it shall be an amount arrived at by applying a fraction determined by the formula /images/en.act.1976.0007.sec64.1.jpg to the amount of the relevant distribution

where—

A is an amount arrived at by applying to the amount of the company's distributable income for the accounting period, excluding distributions received by the company in that period, the fraction /images/en.act.1976.0007.sec64.2.jpg where D is the standard rate per cent. for the year of assessment in which the relevant distribution is made reduced in the same proportion as the company's liability to corporation tax on its income for the accounting period is reduced under section 58, subject to paragraph (c) of the proviso to section 182 (3) (transitional relief for income tax losses, etc.) and paragraph (iii) of the proviso to section 184 (3) (relief in respect of corporation profits tax losses),

B is the aggregate of the tax credits in respect of the amount referred to in subsection (4) (b), and

C is the amount of the company's distributable income for the accounting period.

(3) For the purposes of this section—

(a) where the total amount of the distributions made by a company for an accounting period exceeds the distributable income of the company for that accounting period, the excess shall be deemed for the purposes of this section to be a distribution for the immediately preceding accounting period;

(b) where the total amount of the distributions made or deemed under paragraph (a) to have been made by a company for the immediately preceding accounting period exceeds the distributable income of the company for that accounting period, the excess shall be deemed to be a distribution for the next immediately preceding accounting period and so on.

(c) where the total amount of the distributions made or deemed under this subsection to have been made for the first accounting period for which the company came within the charge to corporation tax exceeds the distributable income of the company for that accounting period—

(i) the excess shall be deemed to be a distribution for the company's period of account which ended on the accounting date last before the 6th day of April, 1975, or, if there was no such period of account, to be a distribution for the year which ended on the 5th day of April, 1976, and

(ii) the tax credit in respect of the excess which is so deemed shall be an amount equal to the amount of income tax which, under section 410 of the Income Tax Act, 1967 , the company would have been entitled to deduct from a dividend of such an amount as after deduction of that tax would equal the amount of the excess and for this purpose it shall be assumed that the dividend was paid on the 5th day of April, 1976, and was in respect of the said period of account or year which ended on the 5th day of April, 1976, as the case may be.

(4) For the purposes of this section the distributable income of a company for an accounting period shall be the aggregate of the following amounts—

(a) the income of the company charged to corporation tax for the accounting period as defined in section 28 (8) less the amount of corporation tax payable by the company for the accounting period which is attributable to that income, and

(b) an amount equal to the distributions received by the company in the accounting period which is comprised in its franked investment income of the accounting period, other than franked investment income against which relief is given under section 15 (4), 25 or 26, and which relief was not subsequently withdrawn under the provisions of those sections.

(5) Where a period of account for or in respect of which a company makes a distribution is not an accounting period and part of the period of account falls within an accounting period, the proportion of the distribution to be treated for the purposes of this section as being for or in respect of the accounting period shall be the same proportion as the said part of the period of account bears to the whole of that period.

(6) Where a company makes a distribution which is not expressed to be for or in respect of a specified period the distribution shall be treated for the purposes of this section as having been made for the accounting period in which it is made.

(7) Where the income of a company for an accounting period includes a dividend from which income tax was deducted under section 456 of the Income Tax Act, 1967 , then for the purposes of this section the amount of tax so deducted shall be deemed to be a tax credit in respect of a distribution of an amount equal to the amount of the dividend reduced by the amount of tax so deducted.

(8) In relation to a relevant distribution (other than a supplementary distribution under section 65), section 5 (dividend warrants) and section 83 (5) (Schedule F) shall apply so that the statements provided for by those sections shall show, in addition to the particulars to be given apart from this section, the amount of the tax credit which would apply in respect of the distribution if it were not a relevant distribution.

(9) The inspector may by notice in writing require a company to furnish him with such information or particulars as may be necessary for the purposes of this section and if the company does not comply with the requirements of the notice it shall be liable to a penalty of £100.

Dividends and other distributions at gross rate or of gross amount.

65.—(1) Where a company makes a distribution in respect of any right or obligation to which section 178 (dividends at gross rate or of gross amount) relates and the tax credit in respect of that distribution is calculated in accordance with section 64 then, the company shall make a supplementary distribution of an amount equal to the excess of the amount of the tax credit which would have applied to the distribution if section 64 had not been enacted over the amount of the tax credit which in accordance with the said section 64 applies to the distribution, and the person to whom the distribution and the supplementary distribution are made shall be regarded as having received one distribution consisting of the aggregate of the distribution and the supplementary distribution.

(2) Notwithstanding the provisions of section 88 the recipient of a supplementary distribution under subsection (1) shall not be entitled to a tax credit in respect of it.

(3) In relation to any supplementary distribution within the meaning of subsection (1), section 5 shall apply to the company so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

Effect of reduction of tax credit.

66.—(1) Nothing in this section shall affect the amount of income for the purposes of Schedule F which is represented by a distribution.

(2) In this section the relieved amount for a year of assessment in relation to an individual is an amount determined by the formula

B × 100

A − ________

C

where—

A is the aggregate amount of income on which the individual is chargeable under Schedule F for that year of assessment in respect of distributions to which section 64 applies,

B is the aggregate amount of the tax credits which are included in the amount referred to at A, and

C is the standard rate per cent. for the year of assessment.

(3) (a) An individual whose income for a year of assessment includes a distribution or distributions (in this subsection referred to as the said distribution or the said distributions) to which section 64 applies shall be assessed and charged to tax as if—

(i) the highest part of his income were the relieved amount, and

(ii) the next highest part of his income were the excess (in this section referred to as the said excess) of the amount of income represented by the said distribution (or the aggregate of the said distributions as the case may be) over the relieved amount.

(b) Notwithstanding the provisions of section 64, the total amount of the tax credits which, by virtue of section 88, an individual may claim to have set against the tax charged on his income or to have paid to him, shall—

(i) in relation to so much of the relieved amount as is charged to tax at a rate or rates higher than the reduced rate be an amount equal to the amount of tax so charged,

(ii) in relation to that part of the said excess which is charged to tax at a rate or rates higher than the reduced rate be a sum equal to income tax at the standard rate for the year of assessment in which the distribution is made on that part of the said excess,

(iii) in relation to so much of his income which is represented by the said distribution (or the aggregate of the said distributions as the case may be) as is charged to tax at the reduced rate be tax at the reduced rate on the amount so charged together with tax on the same amount at a rate per cent. equal to /images/en.act.1976.0007.sec66.1.jpg

where—

D is the difference between the standard rate per cent. and the reduced rate per cent. for the year of assessment and for this purpose “the reduced rate per cent.” for a year of assessment means 26 where the reduced rate for that year is 26 per cent. and similarly with reference to the reduced rate per cent. for a year of assessment for which the reduced rate is other than 26 per cent.,

E is the rate of imputation per cent. for the year of assessment, and for this purpose “the rate of imputation per cent.” for a year of assessment means an amount determined by the formula

100

B ×___

A

where A and B have the same meanings as in subsection (2), and

F is the standard rate per cent. for the year of assessment, and

(iv) in relation to so much of his income which is represented by the said distribution (or the aggregate of the said distributions as the case may be) as is not included in his taxable income be a proportionate part of the tax credit which under section 64 is applicable to the said distribution (or, as the case may be, a proportionate part of the aggregate amount of the tax credits which under section 64 are applicable to the said distributions).

Distributions to non-resident individuals.

67.—Where for any year of assessment the income of an individual who for that year is not resident in the State includes an amount in respect of a distribution to which section 64 applies, the distribution shall be treated as representing income equal to an amount determined by the formula

100

A ×

___

B

where—

A is the amount of the tax credit to which the individual would have been entitled in respect of the distribution if he were resident in the State for the year of assessment, and

B is the standard rate per cent. for that year of assessment.

Appeals.

68.—An appeal to the Appeal Commissioners shall lie on any question arising under this Part in like manner as an appeal would lie against an assessment to corporation tax and the provisions of this Act relating to appeals shall apply and have effect accordingly.

PART V

Profits from Trading within Shannon Airport

Definitions.

69.—In this Part—

“the airport” has the same meaning as in the Customs-free Airport Act, 1947 ;

“company” means any company carrying on a trade;

“the Minister” means the Minister for Finance.

Exempted trading operations.

70.—(1) In this section “qualified company” means a company the whole or part of the trade of which is carried on within the airport.

(2) Subject to subsections (5) and (6), the Minister may give a certificate certifying that such trading operations of a qualified company as are specified in the certificate are, with effect as from their commencement, exempted trading operations for the purposes of this Part, and any certificate so given shall, unless it is revoked under subsection (4), remain in force until the 5th day of April, 1990:

Provided that where the Minister has given a certificate under section 3 (2) of the Finance (Miscellaneous Provisions) Act, 1958 , or under the said section 3 (2) and section 374 (2) of the Income Tax Act, 1967 (exempted trading operations), such certificate shall, until it is revoked, have effect as if it were a certificate given under this section.

(3) A certificate under subsection (2) may be given either without conditions or subject to such conditions as the Minister considers proper and specifies therein.

(4) Where, in the case of a company in relation to which a certificate under subsection (2) has been given—

(a) the trade of the company ceases or becomes carried on wholly outside the airport, or

(b) the Minister is satisfied that the company has failed to comply with any condition subject to which the certificate was given,

the Minister may, by notice in writing served by registered post on the company, revoke the certificate.

(5) The Minister shall not certify, under subsection (2), that a trading operation is an exempted trading operation unless it falls within one or more of the following classes of trading operations—

(a) the sale of goods exported, or to be exported, out of the State by the qualified company (whether acting as principal or agent), being goods which have been produced, manufactured or processed within the airport by the qualified company,

(b) the sale of goods exported, or to be exported, out of the State by the qualified company, being goods which have been imported into the State and which have been packaged or handled within the airport by the qualified company,

(c) the repair or maintenance, within the airport, of aircraft,

(d) the rendering, within the airport or outside the State, of services entailing the use of aircraft or air transport,

(e) other trading operations in regard to which the Minister is of opinion, after consultation with the Minister for Transport and Power, that they contribute to the use or development of the airport,

(f) trading operations which are ancillary to any of those described in the foregoing paragraphs of this subsection.

(6) The Minister shall not certify, under subsection (2), that any of the following trading operations is an exempted trading operation—

(a) the sale of goods brought, or to be brought, from the airport into any other part of the State otherwise than in the course of being exported out of the State,

(b) the rendering, to persons resident in the State outside the airport, of services,

(c) the production or manufacture of goods outside the airport,

(d) the operation of an air transport service other than an air transport service which—

(i) is operated between the airport and a place outside the State, and

(ii) is not so operated under an international bilateral agreement to which the Government is a party,

(e) the rendering within the State of—

(i) services to embarking or disembarking aircraft passengers, including hotel, catering, money changing or transport (other than air transport) services, or

(ii) services in connection with the landing, departure, loading or unloading of aircraft,

(f) the sale of goods by retail,

(g) the sale of consumable goods for the fuelling of aircraft or for shipment as aircraft stores.

Disregard of income or losses in the case of exempted trading operations.

71.—(1) Except as otherwise provided, income arising from, or losses sustained in, exempted trading operations shall not be taken into account for any purpose of this Act in relation to the company by which such operations are carried on.

(2) Where the trade carried on by a company consists partly of exempted trading operations and partly of other trading operations, the amount of the income arising from, or of the loss sustained in, such other trading operations shall, for any purpose of this Act, be computed as it would have been computed for that purpose if the company were carrying on two distinct trades consisting respectively of the exempted trading operations and of the other trading operations.

Transactions between associated persons.

72.—(1) Where, in the course of exempted trading operations, the company carrying on the operations (hereafter in this subsection referred to as the buyer) buys goods from another person (hereafter in this subsection referred to as the seller) and—

(a) the seller has control over the buyer or, the seller being a body corporate or partnership, the buyer has control over the seller or some other person has control over both the seller and the buyer, and

(b) the goods are sold at a price less than the price which they might have been expected to fetch if the parties to the transaction had been independent parties dealing at arm's length, then, a computation of the income or losses of the seller, for any purpose of the Tax Acts, shall be made as if the goods had been sold for the price which they would have fetched if the transaction had been a transaction between independent persons dealing as aforesaid.

(2) In this section “control” has the meaning assigned to it by section 158.

Delivery of statements, etc.

73.—Where the Minister has given a certificate under section 70 (2) or under the sections mentioned in the proviso thereto—

(a) the provisions of the Tax Acts relating to the delivery of statements or returns of profits shall continue to have effect in relation to the company concerned as if the certificate had not been given, and

(b) the Revenue Commissioners may by notice in writing require the company concerned to furnish them, within such time as they may direct, with such accounts and other particulars as the Revenue Commissioners think necessary for the purposes of this Part.

Exception from Part IV.

74.—Notwithstanding anything in Part IV (Profits from Export of Certain Goods) no amount receivable from the sale of goods exported out of the State in the course of exempted trading operations shall be taken into account for any purpose of that Part.

Reduction of capital allowances.

75.—Where the trade carried on by a company consists partly of exempted trading operations and partly of other trading operations, the amount of any capital allowances to which, but for this section, the company would have been entitled shall be reduced by such amount, if any, as the Appeal Commissioners consider just having regard to section 71.

Distributions.

76.—(1) Where a distribution for an accounting period is made by a body corporate in part out of income from exempted trading operations and in part out of other profits, the distribution shall be treated as if it consisted of two distributions respectively made out of income from exempted trading operations and out of other profits.

(2) (a) So much of any distribution as has been made out of income from exempted trading operations—

(i) shall not, subject to section 54 of the Finance Act, 1974 (charge to tax in respect of certain dividends received by directors and employees), be regarded as income for any purpose of the Income Tax Acts; and

(ii) shall, where the recipient of such distribution is a body corporate, be deemed for the purposes of this Part to be income from exempted trading operations.

(b) The recipient of any distribution, including part of a distribution treated under subsection (1) as a distribution, made out of income from exempted trading operations shall not be entitled to a tax credit in respect of that distribution.

(3) (a) Where a body corporate makes a distribution, including part of a distribution treated under subsection (1) as a distribution, in respect of any right or obligation to which section 178 (dividends at gross rate or of gross amount) relates and the distribution is made out of income from exempted trading operations, the body corporate shall make a supplementary distribution of an amount equal to the amount of the tax credit which would have applied in respect of the distribution if subsection (2) (b) had not been enacted.

(b) Subsection (2) shall apply to a supplementary distribution under this subsection as if that supplementary distribution were a distribution made wholly out of income from exempted trading operations.

(4) In relation to any distribution (not being a supplementary distribution under this section), including part of a distribution treated under subsection (1) as a distribution, made by a body corporate out of income from exempted trading operations, section 5 (dividend warrants) and section 83 (5) (Schedule F) shall apply to the body corporate so that the statements provided for by those sections shall show, as respects each such distribution, in addition to the particulars required to be given apart from this section, that the distribution is made out of income from exempted trading operations.

(5) In relation to any supplementary distribution under subsection (3), section 5 shall apply to the body corporate so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

(6) Where a body corporate makes a distribution for an accounting period, the distribution shall be regarded for the purposes of this section as having been made out of the distributable income (as defined in section 64 (4)) of that period to the extent of that income and in relation to the excess of the distribution over that income out of the most recently accumulated income.

(7) Section 64 (5) (6) (distributions: tax credit and export sales relief) shall apply for the purposes of this section as they apply for purposes of that section.

(8) In this section “other profits” includes a dividend or other distribution of a body corporate which is resident in the State but does not include a distribution to which subsection (2) (a) (ii) applies.

Provision for charges on income.

77.—Where charges on income, which are payable out of the income of a trade consisting partly of exempted trading operations and partly of other trading operations, are paid in an accounting period by a company there shall be treated as paid out of profits brought into charge to corporation tax only the portion of the charges so payable which bears to the total amount thereof the same proportion as the amount of the income of the trade actually charged to tax bears to the amount of such income which would have been charged to tax if this Part had not been enacted.

PART VI

Associated Companies: Relief under Parts IV and V

Relief in relation to transactions between associated companies.

78.—(1) In this section—

“the airport” has the same meaning as in the Customs-free Airport Act, 1947 ;

“company” has the same meaning as in section 69 (definitions);

“control” has the meaning assigned to it by section 158;

“exempted trading operation” means a trading operation in respect of which there is in force a certificate given, before the 6th day of April, 1967, under section 3 (2) of the Finance (Miscellaneous Provisions) Act, 1958 , or, on or after that date, under the said section 3 (2) and section 374 (2) of the Income Tax Act, 1967 , or under section 70 (2) (exempted trading operations) of this Act;

“goods”, where it occurs in subsection (3), has the same meaning as in Part IV (Profits from Export of Certain Goods);

“other trading operation” means a trading operation which is carried on wholly within the airport other than an exempted trading operation;

“qualified company” has the same meaning as in section 70 (1).

(2) Where a qualified company (in this subsection referred to as the seller) which carries on a trade consisting partly of exempted trading operations and partly of other trading operations sells goods in the course of the other trading operations to a company (in this subsection referred to as the buyer) which carries on a trade in the State wholly outside the airport, and—

(a) the other trading operations would have been exempted trading operations if the goods had been exported out of the State by the seller, and

(b) the seller has control over the buyer or the buyer has control over the seller or some other person has control over both the buyer and the seller, and

(c) the goods are appropriated as trading stock of the buyer, and

(d) the goods are subjected by the buyer to a process of manufacture in the State, and

(e) the inspector is satisfied that the goods have been, or will be, exported out of the State by the buyer either as components of other goods or otherwise, and

(f) the other trading operations consist wholly of the sale of goods to the buyer and any goods sold by the buyer in the course of his trade (other than goods exported out of the State) are sold to the seller,

the income arising from, or losses sustained in, the other trading operations shall be deemed, notwithstanding section 70 (6) (a) or any certificate under section 70 (2) or any certificate having effect, by virtue of the proviso to section 70 (2), as if it were a certificate under the said section 70 (2), to arise from, or to be sustained in, exempted trading operations and Part V (Profits from trading within Shannon Airport) shall apply accordingly.

(3) Where a company (in this subsection referred to as the seller) which is not a qualified company sells goods to a person (in this subsection referred to as the buyer) who is either a qualified company which carries on a trade consisting partly of exempted trading operations and partly of other trading operations or a company which carries on a trade in the State wholly outside the airport, and—

(a) the seller would have been entitled to claim relief under Part IV in respect of the profits attributable to the sale of the goods if they had been exported out of the State, and

(b) the seller has control over the buyer or the buyer has control over the seller or some other person has control over both the buyer and the seller, and

(c) the goods are appropriated as trading stock of the buyer, and

(d) the goods are subjected by the buyer to a process of manufacture in the State, and

(e) the inspector is satisfied that the goods have been, or will be, exported out of the State by the buyer either as components of other goods or otherwise, and

(f) any goods sold by the seller in the course of his trade (other than goods exported out of the State) are sold to the buyer and any goods sold by the buyer in the course of his trade (other than goods exported out of the State) are sold to the seller,

Part IV shall apply as if the goods has been exported out of the State by the seller and any amount receivable by the seller from the sale of the goods to the buyer shall be deemed to be an amount receivable from the sale of goods so exported.

PART VII

Special Exemptions

Reduced rate of corporation tax for certain income.

79.—(1) Where in any accounting period the profits of a company include any income to which this section applies—

(a) the corporation tax charged on that income for the accounting period shall, notwithstanding the provisions of section 1 (introduction for companies of corporation tax in place of income tax and corporation profits tax), be calculated as if the rate of corporation tax for the financial year 1974 and each subsequent financial year were 35 per cent., and

(b) the income shall be disregarded for all purposes of section 28 (reduction of corporation tax liability of small companies).

(2) For the purposes of this section the income of a company for an accounting period is its income for that period as defined in section 28 for the purposes of that section.

(3) The income to which this section applies is—

(a) in the case of a public utility company which, by or by virtue of any Act, is precluded in respect of the whole of the trade or business carried on by it either from charging any higher price or from distributing any higher rate of dividend than that authorised by or by virtue of such Act, any income of such company;

(b) in the case of a public utility company which, by or by virtue of any Act, is precluded in respect of part only of the trade or business carried on by it either from charging any higher price or from distributing any higher rate of dividend than that authorised by or by virtue of such Act, so much of the income of such company as is derived from the part of its trade or business to which such preclusion applies;

(c) in the case of a company which owns a controlling interest in and directs or is entitled to direct the management of any public utility company, the income derived by the first-mentioned company from such public utility company;

(d) the income of The Agricultural Credit Corporation Limited;

(e) the income of a company which carries on a railway undertaking;

(f) the income of an association which is registered under section 24 of the Companies Act, 1963 , as a company with limited liability without the addition of the word “limited” to its name, so long as it continues to be so registered;

(g) the income of a company which is established solely for the advancement of religion or education and which under its memorandum or articles of association is prohibited from distributing any part of its profits to its members;

(h) the income of a company formed before the 4th day of August, 1920, whose assets consist wholly of stock or other securities issued by any public authority and formerly held by the persons by whom the company was formed;

(i) the income of a company which is precluded by its constitution from distributing any part of its profits amongst its members; and

(j) so much of the income of an investment trust company as is derived from dividends and other distributions received from any body corporate which is liable to the tax in Northern Ireland and Great Britain known as corporation tax to the extent that such dividends and distributions have been paid out of profits which have borne that tax.

(4) In this section “public utility company” means a company which carries on in the State any tramway, dock or canal undertaking.

(5) For the purposes of subsection (3) (i), a company shall be regarded as being precluded by its constitution from distributing any part of its profits amongst its members if, but only if—

(a) it is a company within the meaning of the Companies Act, 1963 , and its memorandum or articles of association contain provisions—

(i) prohibiting the distribution of any part of its profits amongst its members by way of dividend, bonus or otherwise, and

(ii) securing that if, after the satisfaction of all the debts and liabilities of the company on its winding up or dissolution, any property of the company is undisposed of, it shall not be given to or distributed amongst its members but shall be—

(I) given to the Minister for Finance for the benefit of the Central Fund, or

(II) given to a body of persons (within the meaning of the Income Tax Acts) selected by the members of the company at or before the time of the winding up or dissolution aforesaid the objects of which are similar to the objects of the company, and the constitution or other governing rules of which contains or contain provisions prohibiting (to an extent at least as great as the extent of the prohibitions referred to in relation to the company in this and the other subparagraphs of this paragraph) the distribution of any part of its income or property amongst its members or proprietors, or

(III) given to a body of persons (within the meaning of the Income Tax Acts) or trust established for charitable purposes only, and

(iii) securing that the aforementioned provisions may not be altered or deleted without the previous consent or approval of the Minister for Finance, or the previous consent or approval of any other Minister of State given after consultation with the Minister for Finance; or

(b) it is a company, established by or under a statute (within the meaning of section 3 of the Interpretation Act, 1937 ) and named therein, or incorporated by or under a charter, and—

(i) is prohibited by or under the statute or charter, as the case may be, from distributing any part of its profits amongst its members by way of dividend, bonus or otherwise or, if not so prohibited, is not authorised by or under the statute or charter to distribute any part of its profits amongst its members, or

(ii) is required to apply its income and property as directed by or under the statute or charter or by a Minister of State.

(6) Where provisions of the kind specified in subsection (5) (a) are contained in the memorandum or articles of association of a company and those provisions are altered or deleted without the previous consent or approval of the Minister for Finance, or the previous consent or approval of any other Minister of State given after consultation with the Minister for Finance, as the case may be, then—

(a) where the company makes a distribution out of income to which this section applies or out of profits which were, by virtue of section 43 (3) of the Finance Act, 1922 , not charged to corporation profits tax or out of that income and those profits, the company shall be assessed to income tax at the standard rate under Case IV of Schedule D on an amount the income tax on which at the standard rate for the year in which the distribution is made is equal to the amount of the tax credit which would apply in respect of the distribution if the person receiving it were an individual resident in the State;

(b) where the company distributes, on or after the 27th day of November, 1975, its assets amongst its members or proprietors on the winding up or dissolution of the company the company shall be assessed to income tax for the year of assessment in which the winding up or dissolution occurs at the standard rate under Case IV of Schedule D on an amount determined by the formula

100

D × ______

100–A

where—

A is the standard rate per cent. for the year of assessment in which the winding up or dissolution occurs, and

D is the amount by which the total value of the assets distributed to the members or proprietors on the winding up or dissolution exceeds the amount of the paid up share capital of the company.

(7) (a) In this section—

“investment trust company” means a company which complies with the following conditions—

(i) it is incorporated and resident in the State,

(ii) it has issued for public subscription not less than 80 per cent. in nominal value of its shares carrying voting rights, whether immediate or to arise in certain future circumstances,

(iii) its business consists mainly in the making of investments,

(iv) the distribution as dividend of surpluses arising from the realisation of investments is prohibited by the company's memorandum or articles of association;

“Irish securities” means securities of the Government, securities guaranteed by the Minister for Finance and any stocks, shares, debentures, bonds or obligations of any municipal corporation in the State, or any company or other body corporate incorporated in the State;

“securities” includes stocks, shares, bonds and obligations of any Government, municipal corporation, company or other body corporate.

(b) The provisions of subsection (1) shall not apply to the income of an investment trust company for any accounting period unless the following conditions are satisfied—

(i) throughout the accounting period—

(I) the value of the Irish securities held by the investment trust company was not less than 15 per cent. of the value of the securities held by the investment trust company,

(II) the securities (whether of one class or more than one class) held by the investment trust company in any one body corporate, other than an investment trust company, did not represent more than 15 per cent. by value of the first-mentioned investment trust company's securities,

(III) the number of shareholders was not less than fifty and no one shareholder was the beneficial owner of more than 49 per cent. of the shares of the investment trust company,

(IV) the value of the securities quoted on a recognised stock exchange which were held by the investment trust company was not less than 85 per cent. of the value of the securities held by the investment trust company,

and

(ii) the investment trust company did not retain more than 15 per cent. of its profits—

(I) in any accounting period, and

(II) in any period (not being a period for which the company was within the charge to corporation tax) for which accounts of the company were made up and which ended on or after the 29th day of July, 1968.

(c) The Minister for Finance may, after consultation with the Revenue Commissioners, direct that the provisions of subsection (1) shall apply in relation to an investment trust company for any accounting period notwithstanding that one or more of the conditions stated in paragraph (b) (i) of this subsection was or were not complied with and notification of any such direction shall be published in Iris Oifigiúil as soon as may be after it is given.

(8) Any amount on which by virtue of this section income tax is charged on a company by an assessment under Case IV of Schedule D shall not be regarded as income of the company for any purpose of the Tax Acts.

Exemption of income from carrying out of voluntary health insurance schemes.

80.—Income of the Voluntary Health Insurance Board arising from the business of carrying out under section 4 of the Voluntary Health Insurance Act, 1957 , schemes of voluntary health insurance shall be exempt from corporation tax.

PART VIII

Distributions out of Certain Profits from Mining

Distributions: profits of certain mines.

81.—(1) In this section—

“exempted income” means income in respect of which a company has obtained relief under the Finance (Profits of Certain Mines) (Temporary Relief from Taxation) Act, 1956 , or under Chapter II of Part XXV of the Income Tax Act, 1967 (Profits of Certain Mines), and

“other income” means income of a company which is not exempted income.

(2) Where a distribution for an accounting period is made by a company wholly out of exempted income, the distribution shall not be regarded as income for any purpose of the Income Tax Acts and, notwithstanding the provisions of section 88 (tax credit for certain recipients of distributions), the recipient of the distribution shall not be entitled to a tax credit in respect of it.

(3) Where a distribution for an accounting period is made by a company in part out of exempted income and in part out of other income, the distribution shall be treated as if it consisted of two distributions respectively made out of exempted income and other income and subsection (2) shall apply to such part of the distribution as is made out of exempted income as it applies to a distribution made wholly out of exempted income.

(4) Any distribution, including part of a distribution treated under subsection (3) as a distribution, made out of exempted income shall, where the recipient is a company resident in the State, be deemed for the purposes of this section to be exempted income of the company.

(5) (a) Where a company makes a distribution, including part of a distribution treated under subsection (3) as a distribution, in respect of any right or obligation to which section 178 (dividends at gross rate or of gross amount) relates and the distribution is made out of exempted income, the company shall make a supplementary distribution of an amount equal to the amount of the tax credit which would have applied in respect of the distribution if subsection (2) had not been enacted.

(b) Subsection (2) shall apply to a supplementary distribution under this subsection as if the supplementary distribution were a distribution made out of exempted income and section 5 (dividend warrants) shall apply so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

(6) Sections 64 (5) (6) (distributions in relation to export sales relief) and 76 (6) (distributions out of profits from trading within Shannon Airport) shall apply for the purposes of this section as they apply for the purposes of those sections.

(7) In relation to any distribution (not being a supplementary distribution under this section), including part of a distribution treated under subsection (3) as a distribution, made out of exempted income, sections 5 and 83 (5) (Schedule F) shall apply so that the statements provided for by those sections shall show, in addition to the particulars required to be given apart from this section, that the distribution is made out of exempted income.

Distributions out of profits from coal, gypsum and anhydrite mining operations.

82.—(1) For the purposes of this section, “relieved income” means the income of a company—

(a) on which income tax was paid at a reduced rate by virtue of section 395 (1) of the Income Tax Act, 1967 (relief—existing coal-mining operations), section 7 (relief—new coal-mining operations) or section 8 (relief—existing coal-mining operations) of the Finance (Miscellaneous Provisions) Act, 1956 , or section 32 of the Finance Act, 1960 (extension of relief for new mining operations to gypsum and anhydrite mining), or

(b) on which income tax was borne by deduction at a reduced rate under section 396 (1) of the Income Tax Act, 1967 (dividends), or section 9 of the Finance (Miscellaneous Provisions) Act, 1956 (dividends, etc.), or

(c) which is franked investment income the tax credit comprised in which has been reduced under this section.

(2) The tax credit in respect of a distribution made wholly out of relieved income shall, notwithstanding section 88, be the amount arrived at by applying to the amount of the distribution the fraction

A

______

100 − A

where—

A is 50 per cent. of the standard rate per cent. for the year of assessment in which the distribution is made.

(3) Where a distribution is made in part out of relieved income and in part out of other income, the distribution shall be treated as if it consisted of two distributions respectively made out of relieved income and out of other income and the tax credit in respect of each such distribution shall be calculated in accordance with subsection (2) and section 88 respectively.

(4) Any distribution, including part of a distribution treated under subsection (3) as a distribution, made out of relieved income shall, where the recipient is a company resident in the State, be deemed for the purposes of this section to be relieved income of that company.

(5) Subject to subsection (7), for the purposes of Schedule F and all other purposes of the Tax Acts a distribution made by a company out of relieved income shall be treated as representing income equal to the aggregate of the amount or value of that distribution and the amount of the tax credit in respect of it calculated in accordance with this section.

(6) Where for a year of assessment the taxable income of an individual which is chargeable at the reduced rate or the standard rate includes income represented by distributions made out of relieved income, his liability to income tax in respect of the income represented by such distributions shall be an amount equal to the tax on that income calculated at 50 per cent. of the reduced rate or of the standard rate, as the case may be, for the year of assessment in which the distributions were made.

(7) Where for a year of assessment the taxable income of an individual which is chargeable at the higher rates includes income represented by distributions made out of relieved income, his liability to income tax at the higher rates in respect of the income represented by such distributions shall be an amount equal to the tax, calculated at the higher rates for the year of assessment in which the distributions were made, on the income reduced by 50 per cent. and credit shall be given against that tax of an amount equal to tax at the standard rate for the said year on the amount of the income as so reduced.

(8) Where a company makes a distribution (including part of a distribution which is treated as a distribution under subsection (3)) in respect of any right or obligation to which section 178 relates and the tax credit in respect of that distribution is calculated in accordance with subsection (2), then the company shall make a supplementary distribution of an amount equal to the excess of the tax credit which would have applied to the distribution if this section had not been enacted over the amount of the tax credit which in accordance with subsection (2) applies to the distribution and the person to whom the distribution and the supplementary distribution are made shall be regarded as having received one distribution consisting of the aggregate of the distribution and the supplementary distribution.

(9) Notwithstanding section 88, the recipient of a supplementary distribution under subsection (8) shall not be entitled to a tax credit in respect of such supplementary distribution and section 5 (dividend warrants) shall apply so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

(10) Sections 64 (5) (6) and 76 (6) shall apply for the purposes of this section as they apply for the purposes of those sections respectively.

(11) In relation to any distribution (not being a supplementary distribution under this section), including part of a distribution treated under subsection (3) as a distribution, made by a company out of relieved income, sections 5 and 83 (5) shall apply so that the statements provided for by those sections shall show, in addition to the particulars required to be given apart from this section, that the distribution is made out of relieved income and shall also show the amount of the tax credit which would apply in respect of the distribution if it were not made out of relieved income.

PART IX

Schedule F and Company Distributions

Schedule F.

83.—(1) Income tax for any year of assessment after the year 1975-76 shall be chargeable under a new Schedule, to be called Schedule F, in respect of dividends and other distributions in that year of a company resident in the State.

(2) The Schedule referred to as Schedule F is as follows—

SCHEDULE F

1. Income tax under this Schedule shall be chargeable for any year of assessment in respect of all dividends and other distributions in that year of a company resident in the State which are not specially excluded from income tax, and for the purposes of income tax all such distributions shall be regarded as income however they fall to be dealt with in the hands of the recipient.

2. For the purposes of this Schedule and all other purposes of the Tax Acts any such distribution as aforesaid in respect of which a person is entitled to a tax credit shall be treated as representing income equal to the aggregate of the amount or value of that distribution and the amount of that credit, and income tax under this Schedule shall accordingly be charged on that aggregate.

(3) No distribution which is chargeable under Schedule F shall be chargeable under any other provision of the Income Tax Acts.

(4) Where for any year of assessment the income of a person who for that year is not resident in the State includes an amount in respect of a distribution made by a company which is resident in the State—

(a) that person's liability under any assessment to income tax made in respect of the distribution shall be reduced by a sum equal to income tax at the standard rate for that year on the said amount, and

(b) the amount or value of the distribution shall be treated for the purposes of sections 433 (yearly interest, etc., payable wholly out of taxed profits) and 434 (interest, etc., not payable out of taxed profits) of the Income Tax Act, 1967 , as not brought into charge to income tax.

(5) A company which makes a distribution (not being a distribution to which section 5 (1) refers) shall, if the recipient so requests in writing, furnish to him a statement in writing showing the amount or value of the distribution and (whether or not the recipient is a person entitled to a tax credit in respect of the distribution) the amount of the tax credit to which a recipient who is such a person is entitled in respect thereof.

The duty imposed by this subsection shall be enforceable at the suit or instance of the person requesting the statement.

Matters to be treated as distributions.

84.—(1) The following provisions of this Part, together with section 96 (payments, etc., to participators and associates) and section 97 (interest paid to directors and directors' associates), shall, subject to any express exceptions, have effect with respect to the meaning in this Act of “distribution” and for determining the persons to whom certain distributions are to be treated as made; but references in this Act to distributions of a company shall not apply to distributions made in respect of share capital in a winding up.

(2) In relation to any company “distribution” means—

(a) any dividend paid by the company, including a capital dividend;

(b) any other distribution out of assets of the company (whether in cash or otherwise) in respect of shares in the company, except, subject to section 86, so much of the distribution, if any, as represents a repayment of capital on the shares or is, when it is made, equal in amount or value to any new consideration received by the company for the distribution;

(c) any amount met out of assets of the company (whether in cash or otherwise) in respect of the redemption of any security issued by the company in respect of shares in or securities of the company otherwise than wholly for new consideration, or in the redemption of such part of any such security so issued as is not properly referable to new consideration;

(d) any interest (excluding interest paid before the 6th day of April, 1976) or other distribution out of assets of the company in respect of securities of the company (except so much, if any, of any such distribution as represents the principal thereby secured, and, without prejudice to section 87 (9), for this purpose no amount shall be regarded as representing the principal secured by a security in so far as it exceeds any new consideration which has been received by the company for the issue of the security), where the securities are—

(i) securities issued as mentioned in paragraph (c), but excluding securities issued before the 27th day of November, 1975; or

(ii) securities convertible directly or indirectly into shares in the company or securities carrying any right to receive shares in or securities of the company, not being (in either case) securities quoted on a recognised stock exchange nor issued on terms which are reasonably comparable with the terms of issue of securities so quoted; or

(iii) securities under which—

(I) the consideration given by the company for the use of the principal secured is to any extent dependent on the results of the company's business or any part of it, or

(II) the consideration so given represents more than a reasonable commercial return for the use of that principal; provided that this shall not operate so as to treat as a distribution so much of the interest or other distribution as represents a reasonable commercial return for the use of that principal; or

(iv) securities issued by the company and held by a company not resident in the State, where—

(I) the company which issued the securities is a 75 per cent. subsidiary of the other company; or

(II) both are 75 per cent. subsidiaries of a third company which is not resident in the State; or

(III) except where 90 per cent. or more of the share capital of the company which issued the securities is directly owned by a company resident in the State both the company which issued the securities and the company not resident in the State are 75 per cent. subsidiaries of a third company which is resident in the State; or

(v) securities which are connected with shares in the company, where “connected with” means that in consequence of the nature of the rights attaching to the securities or shares, and in particular of any terms or conditions attaching to the right to transfer the shares or securities, it is necessary or advantageous for a person who has, or disposes of or acquires, any of the securities also to have, or to dispose of or acquire, a proportionate holding of the shares;

(e) any such amount as is required to be treated as a distribution by subsection (3) or by section 85.

(3) Where on a transfer of assets or liabilities by a company to its members or to a company by its members, the amount or value of the benefit received by a member (taken according to its market value) exceeds the amount or value (so taken) of any new consideration given by him, the company shall be treated as making a distribution to him of an amount equal to the difference:

Provided that, where the company and the member receiving the benefit are both resident in the State and either the former is a subsidiary of the latter or both are subsidiaries of a third company also so resident, the said amount shall not be treated as a distribution.

(4) The question whether one company is a subsidiary of another for the purpose of subsection (3) shall be determined as a question whether it is a 51 per cent. subsidiary of that other, except that that other shall be treated as not being the owner—

(a) of any share capital which it owns directly in a company if a profit on a sale of the shares would be treated as a trading receipt of its trade; or

(b) of any share capital which it owns indirectly and which is owned directly by a company for which a profit on the sale of the shares would be a trading receipt; or

(c) of any share capital which it owns directly or indirectly in a company not resident in the State.

(5) (a) No transfer of assets (other than cash) or of liabilities between one company and another shall constitute, or be treated as giving rise to, a distribution by virtue of subsection (2)(b) or (3) if they are companies—

(i) both of which are resident in the State and neither of which is a 51 per cent. subsidiary of a company not so resident; and

(ii) which neither at the time of the transfer nor as a result of it are under common control.

(b) For the purposes of this subsection two companies are under common control if they are under the control of the same person or persons, and for this purpose “control” shall have the meaning assigned to it by section 158.

(c) Any amount which would be a distribution by virtue of subsection (3) apart from the proviso to that subsection (groups of companies resident in the State), shall not constitute a distribution by virtue of subsection (2)(b).

Bonus issues following repayment of share capital.

85.—(1) Where a company—

(a) repays any share capital, or has done so at any time on or after the 27th day of November, 1975; and

(b) at or after the time of that repayment issues as paid up otherwise than by the receipt of new consideration any share capital;

the amount so paid up shall be treated as a distribution made in respect of the shares on which it is paid up, except in so far as that amount exceeds the amount or aggregate amount of share capital so repaid less any amounts previously so paid up and treated by virtue of this subsection as distributions.

(2) Subsection (1) shall not apply where the repaid share capital consists of fully paid up preference shares—

(a) if those shares existed as issued and fully paid preference shares on the 27th day of November, 1975, and throughout the period from that date until the repayment those shares continued to be fully paid preference shares, or

(b) if those shares were issued after the 27th day of November, 1975, as fully paid preference shares wholly for new consideration not derived from ordinary shares and throughout the period from their issue until the repayment those shares continued to be fully paid preference shares.

(3) In this section—

“ordinary shares” means shares other than preference shares;

“preference shares” means shares—

(a) which do not carry any right to dividends other than dividends at a rate per cent. of the nominal value of the shares which is fixed, and

(b) 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;

“new consideration not derived from ordinary shares” means new consideration other than consideration consisting of the surrender, transfer or cancellation of ordinary shares of the company or any other company or consisting of the variation of rights in ordinary shares of the company or any other company, and other than consideration derived from a repayment of share capital paid in respect of ordinary shares of the company or of any other company.

(4) Except in relation to a close company within the meaning of section 94 (meaning of close company) this section shall not apply if the issue of share capital mentioned in paragraph (b) of subsection (1)—

(a) is of share capital other than redeemable share capital; and

(b) takes place more than ten years after the repayment of share capital mentioned in paragraph (a) of that subsection.

Matters to be treated or not treated as repayments of share capital.

86.—(1) Where—

(a) a company issues any share capital as paid up otherwise than by the receipt of new consideration, or has done so on or after the 27th day of November, 1975; and

(b) any amount so paid up does not fall to be treated as a distribution:

then for the purposes of sections 84 and 85 distributions afterwards made by the company in respect of shares representing that share capital shall not be treated as repayments of share capital, except to the extent to which those distributions, together with any relevant distributions previously so made, exceed the amounts so paid up (then or previously) on such shares after that date and not falling to be treated as distributions.

(2) In subsection (1) “relevant distribution” means so much of any distribution made in respect of shares representing the relevant share capital as apart from that subsection would be treated as a repayment of share capital, but by virtue of that subsection cannot be so treated.

(3) For the purposes of subsection (1) all shares of the same class shall be treated as representing the same share capital, and where shares are issued in respect of other shares, or are directly or indirectly converted into or exchanged for other shares, all such shares shall be treated as representing the same share capital.

(4) Where share capital is issued at a premium representing new consideration, the amount of the premium is to be treated as forming part of that share capital for the purpose of determining under this Part whether any distribution made in respect of shares representing the share capital is to be treated as a repayment of share capital:

Provided that this subsection shall not have effect in relation to any part of the premium after that part has been applied in paying up share capital.

(5) Subject to subsection (4), premiums paid on redemption of share capital are not to be treated as repayments of capital.

(6) Except in relation to a close company within the meaning of section 94, subsection (1) shall not prevent a distribution being treated as a repayment of share capital if it is made—

(a) more than ten years after the issue of share capital mentioned in paragraph (a) of that subsection; and

(b) in respect of share capital other than redeemable share capital.

Distributions: supplemental.

87.—(1) In this Part “new consideration” means consideration not provided directly or indirectly out of the assets of the company, and in particular does not include amounts retained by the company by way of capitalising a distribution:

Provided that where share capital has been issued at a premium representing new consideration, any part of that premium afterwards applied in paying up share capital shall be treated as new consideration also for that share capital, except in so far as the premium has been taken into account under section 86 (4) so as to enable a distribution to be treated as a repayment of share capital.

(2) (a) No consideration derived from the value of any share capital or security of a company, or from voting or other rights in a company, shall be regarded for the purposes of this Part as new consideration received by the company unless the consideration consists of—

(i) money or value received from the company as a distribution;

(ii) money received from the company as a payment which for those purposes constitutes a repayment of that share capital or of the principal secured by that security; or

(iii) the giving up of the right to that share capital or security on its cancellation, extinguishment or acquisition by the company.

(b) No amount shall be regarded as new consideration by virtue of paragraph (a) (ii) or (iii) in so far as it exceeds any new consideration received by the company for the issue of the share capital or security in question or, in the case of share capital which constituted a distribution on issue, the nominal value of that share capital.

(3) Where two or more companies enter into arrangements to make distributions to each other's members, all parties concerned may for the purposes of this Part be treated as if anything done by any of those companies had been done by any other, and this subsection applies however many companies participate in the arrangements.

(4) (a) In this Part the expressions “in respect of shares in the company” and “in respect of securities of the company” in relation to a company which is a member of a 90 per cent. group, mean respectively in respect of shares in that company or any other company in the group and in respect of securities of that company or any other company in the group.

(b) Without prejudice to section 84 (2) (b) as extended by the immediately preceding paragraph, in relation to a company which is a member of a 90 per cent. group, “distribution” includes anything distributed out of assets of the company (whether in cash or otherwise) in respect of shares in or securities of another company in the group.

(c) Nothing in this subsection shall require a company to be treated as making a distribution to any other company which is in the same group and is resident in the State.

(d) For the purposes of this subsection a principal company and all its 90 per cent. subsidiaries form a “90 per cent. group” and “principal company” means a company of which another company is a subsidiary.

(5) A distribution shall be treated under this Part as made, or consideration as provided, out of assets of a company if the cost falls on the company.

(6) In this Part “share” includes stock, and any other interest of a member in a company.

(7) References in this Part to issuing share capital as paid up apply also to the paying up of any issued share capital.

(8) For purposes of this Part “security” includes securities not creating or evidencing a charge on assets, and interest paid by a company on money advanced without the issue of a security for the advance, or other consideration given by a company for the use of money so advanced, shall be treated as if paid or given in respect of a security issued for the advance by the company.

(9) Where securities are issued at a price less than the amount repayable on them, and are not quoted on a recognised stock exchange, the principal secured shall not be taken for the purposes of this Part to exceed the issue price, unless the securities are issued on terms reasonably comparable with the terms of issue of securities so quoted.

(10) For the purposes of this Part a thing is to be regarded as done in respect of a share if it is done to a person as being the holder of the share, or as having at a particular time been the holder, or is done in pursuance of a right granted or offer made in respect of a share, and anything done in respect of shares by reference to share holdings at a particular time is to be regarded as done to the then holder of the shares or the personal representatives of any share holder then dead.

This subsection shall apply in relation to securities as it applies in relation to shares.

Tax credit for certain recipients of distributions.

88.—(1) Where a company resident in the State makes a distribution on or after the 6th day of April, 1976, and the person receiving the distribution is another such company or a person resident in the State, not being a company, the recipient of the distribution shall, subject to the provisions of this Act, be entitled to a tax credit under this section (in this Act referred to as a “tax credit”).

(2) The tax credit in respect of a distribution shall be available for the purposes specified in the Tax Acts and shall, subject to any express provision to the contrary, be an amount determined by the formula

A

D ×_____

100 – A

where—

A is the standard rate per cent. for the year of assessment in which the distribution is made, and

D is the amount or value of the distribution.

(3) A company resident in the State which is entitled to a tax credit in respect of a distribution may claim to have the amount of the tax credit paid to it if—

(a) the company is wholly exempt from corporation tax or is only not exempt in respect of trading income; or

(b) the distribution is one in relation to which express exemption (otherwise than by section 2 (resident company distributions not chargeable to corporation tax)) is given, whether specifically or by virtue of a more general exemption from tax, under any provision of the Tax Acts.

(4) A person, not being a company resident in the State, who is entitled to a tax credit in respect of a distribution may claim to have the credit set against the income tax chargeable on his income for the year of assessment in which the distribution is made and, where the credit exceeds that income tax, to have the excess paid to him.

(5) (a) Where a distribution mentioned in subsection (1) is, or falls to be treated as, or under any provision of the Tax Acts is deemed to be, income of a person other than the recipient, that person shall be treated for the purposes of this section as receiving the distribution (and accordingly the question whether he is entitled to a tax credit in respect of it shall be determined by reference to where he, and not the actual recipient, is resident); and where any such distribution is income of a trust resident in the State the trustees shall be entitled to a tax credit in respect of it if no other person falls to be treated for the purposes of this section as receiving the distribution.

(b) In this subsection “trust resident in the State” means a trust administered under the law of the State, not being a trust the general administration of which is ordinarily carried on outside the State and the trustees, or a majority of the trustees, of which are resident or ordinarily resident outside the State.

Disallowance of reliefs in respect of bonus issues.

89.—(1) This section has effect where any person (in this section referred to as “the recipient”) receives an amount treated as a distribution by virtue of—

(a) section 84 (2) (c) (d),

(b) section 85, or

(c) section 86 (1),

and in the following provisions of this section a distribution falling within paragraph (a), (b) or (c) is referred to as a “bonus issue” and “relevant tax credit”, in relation to a bonus issue, means the tax credit to which the recipient of the bonus issue becomes entitled under section 88 in respect of the bonus issue.

(2) Subject to subsection (5), if the recipient is entitled by reason of—

(a) any exemption from tax, or

(b) the setting-off of losses against profits or income, or

(c) the payment of interest,

to recover tax in respect of any distribution received by him, no account shall be taken, for the purposes of any such exemption or set-off or payment of interest, of any bonus issue or relevant tax credit received by him.

(3) Subject to subsection (5), a bonus issue and the relevant tax credit shall be treated as not being franked investment income within the meaning of section 24 (franked investment income and franked payment).

(4) Subject to subsection (5), the relevant tax credit relating to a bonus issue shall not be available to set against any income tax which the recipient is entitled to deduct under section 433 , or with which he is chargeable by virtue of section 434 , of the Income Tax Act, 1967 .

(5) Nothing in subsections (2) to (4) shall affect the proportion (if any) of any bonus issue made in respect of any shares or securities which, if it were declared as a dividend, would represent a normal return to the recipient on the consideration provided by him for the relevant shares or securities, that is to say, those in respect of which the bonus issue was made and, if those securities are derived from shares or securities previously acquired by the recipient, the shares or securities which were previously acquired; nor shall anything in those subsections affect the like proportion of the relevant tax credit relating to that bonus issue.

(6) For the purposes of subsection (5)—

(a) if the consideration provided by the recipient for any of the relevant shares or securities was in excess of their market value at the time he acquired them, or if no consideration was provided by him for any of the relevant shares or securities, the recipient shall be taken to have provided for those shares or securities consideration equal to their market value at the time he acquired them; and

(b) in determining whether an amount received by way of dividend exceeds a normal return, regard shall be had to the length of time previous to the receipt of that amount that the recipient first acquired any of the relevant shares or securities and to any dividends and other distributions made in respect of them during that time.

Distributions made out of capital profits of companies.

90.—(1) Where on or after the 6th day of April, 1976, a company resident in the State makes a distribution partly out of capital profits of the company and partly out of other profits, the distribution shall be treated as if it consisted of two distributions respectively made out of capital profits and out of other profits.

(2) Notwithstanding section 1 (2) (introduction for companies of corporation tax), where a company on or after the 6th day of April, 1976, makes a distribution (including part of a distribution treated under subsection (1) as a distribution) and the distribution is made, or is deemed under subsection (5) to have been made, out of capital profits of the company, the company shall, for the year of assessment in which the distribution is made, be assessed to income tax at the standard rate under Case IV of Schedule D on an amount the income tax on which at the standard rate for that year is equal to the amount of the tax credit which would apply in respect of the distribution if the person receiving it were an individual resident in the State.

(3) Where a distribution (including part of a distribution treated under subsection (1) as a distribution) to which subsection (2) applies is made partly out of capital profits which have been charged to capital gains tax or, after the reduction provided for by section 13 (computation of chargeable gains), to corporation tax and partly out of other capital profits, the distribution shall be treated as if it consisted of two distributions respectively made out of capital profits which have been so charged and out of other capital profits.

(4) Where on or after the 6th day of April, 1976, a company makes a distribution out of capital profits which have been charged to capital gains tax or, after the reduction provided for by section 13, to corporation tax, the tax charged under subsection (2) shall be reduced by an amount equal to the amount of capital gains tax which would be chargeable under section 3 of the Capital Gains Tax Act, 1975 , for the year of assessment in which the distribution is made on an amount equal to the aggregate of the distribution and the tax credit which would apply in respect of the distribution if the person receiving it were an individual resident in the State.

(5) Where a distribution (being a distribution by virtue of section 96 (payments to participators or associates) or section 97 (interest paid to directors and their associates)) is made by a company, the distribution shall be deemed to be made out of the profits of the company to the extent of those profits, and where the distribution exceeds the profits of the company the amount of the excess shall be deemed to have been made out of capital profits of the company which have not been charged to capital gains tax or to corporation tax.

(6) Any amount on which by virtue of this section income tax is charged on a company by an assessment under Case IV of Schedule D shall not be regarded as income of the company for any purpose of the Tax Acts.

Distributions by newly resident companies out of profits arising before residence begins.

91.—(1) Where, on or after the date on which it begins to be resident in the State, but not earlier than the 6th day of April, 1976, a company makes a distribution partly out of profits which arose to it before the date on which it begins to be so resident and partly out of other profits, the distribution shall be treated as if it consisted of two distributions respectively made out of profits which arose to the company before the date on which it begins to be resident in the State and out of other profits.

(2) Notwithstanding section 1 (2), a company which, on or after the date on which it begins to be resident in the State but not earlier than the 6th day of April, 1976, makes a distribution, including part of a distribution treated under subsection (1) as a distribution, out of profits which arose to it before the date on which it begins to be so resident shall, for the year of assessment in which the distribution is made, be assessed to income tax at the standard rate under Case IV of Schedule D on an amount the income tax on which at the standard rate for the said year of assessment is equal to the amount of the tax credit which would apply in respect of the distribution if the person receiving it were an individual resident in the State.

(3) Any person who by virtue of any exemption or relief from tax claims payment of the tax credit in respect of a distribution to which subsection (2) refers shall not be entitled to payment of the said credit if the company by which the distribution is made is a close company (as defined in section 94) which has not paid the total amount of the income tax which is assessed on it under subsection (2).

(4) Any amount on which by virtue of this section income tax is charged on a company by an assessment under Case IV of Schedule D shall not be regarded as income of the company for any purpose of the Tax Acts.

Distributions made before 6th April, 1976.

92.—(1) Where on or after the 27th day of November, 1975, and before the 6th day of April, 1976, a distribution is made by a company which is resident in the State, such distribution, for the purposes of sections 83, 88 and 90, shall be deemed to have been made on the 6th day of April, 1976:

Provided that “distribution” in this section shall be deemed not to include a dividend from which income tax was deducted or a dividend from which income tax was not deducted by virtue of section 387 or 410 of the Income Tax Act, 1967 .

(2) This section shall not apply to a distribution made on or after the 27th day of November, 1975, and before the 6th day of April, 1976, if—

(a) it was declared by the company in general meeting before the first-mentioned date; or

(b) it was declared in general meeting after the first-mentioned date but in accordance with a recommendation of the directors and the directors' decision to make that recommendation was, with the authority of the directors, publicly announced before that date; or

(c) it was made in accordance with a decision of the directors, and that decision was, with their authority, publicly announced before the first-mentioned date.

Distributions out of certain exempt profits.

93.—(1) In this section “exempt profits” means profits or gains which by virtue of—

(a) section 18 of the Finance Act, 1969 (profits from the occupation of certain lands), or

(b) that section as applied by section 11 (6) (continuation of exemptions)

were not charged to tax.

(2) Where a distribution for an accounting period is made by a company in part out of exempt profits and in part out of other profits, the distribution shall be treated as if it consisted of two distributions respectively made out of exempt profits and out of other profits.

(3) (a) So much of any distribution as has been made out of exempt profits—

(i) shall, where the recipient of such distribution is a company, be deemed for the purposes of this Act to be exempt profits of the company, and

(ii) shall not be regarded as income for any purpose of the Income Tax Acts.

(b) Notwithstanding the provisions of section 88, the recipient of any distribution, including part of a distribution treated under subsection (2) as a distribution, made out of exempt profits shall not be entitled to a tax credit in respect of that distribution.

(4) (a) Where a company makes a distribution, including part of a distribution treated under subsection (2) as a distribution, in respect of any right or obligation to which section 178 (dividends at gross rate or of gross amount) relates and the distribution is made out of exempt profits the company shall make a supplementary distribution of an amount equal to the amount of the tax credit which would have applied in respect of the distribution if subsection (3) (b) had not been enacted.

(b) Subsection (2) shall apply to a supplementary distribution under this subsection as if that supplementary distribution were a distribution made wholly out of exempt profits.

(5) In relation to any distribution (not being a supplementary distribution under this section), including part of a distribution treated under subsection (2) as a distribution, made by a company out of exempt profits, sections 5 (dividend warrants) and 83 (5) shall apply to the company so that the statements provided for by these sections shall show as respects each such distribution, in addition to the particulars required to be given apart from this section, that the distribution is made out of exempt profits.

(6) In relation to any supplementary distribution under subsection (4), section 5 shall apply to the company so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

(7) Where a company makes a distribution for an accounting period, the distribution shall be regarded for the purposes of this section as having been made out of the distributable income (as defined in section 64 (4)) of that period to the extent of that income, and in relation to the excess of the distribution over that income, out of the most recently accumulated income.

(8) Subsections (5) and (6) of section 64 shall apply for the purposes of this section as they apply for the purposes of that section.

(9) In this section “other profits” includes a dividend or other distribution of a company which is resident in the State but does not include a distribution to which subsection (3) (a) (i) applies.

PART X

Close Companies

Meaning of close company.

94.—(1) For the purposes of this Act, a “close company” is one which is under the control of five or fewer participators, or of participators who are directors, except that the expression does not apply—

(a) to a company not resident in the State, or

(b) to a registered industrial and provident society within the meaning of section 30 (industrial and provident societies), or to a building society within the meaning of section 31 (building societies), or

(c) to a company controlled by or on behalf of the State, and not otherwise a close company, or

(d) to a company falling within subsection (4) or section 95.

(2) For the purposes of this section—

(a) a company is to be treated as controlled by or on behalf of the State if, but only if, it is under the control of the State or of persons acting on behalf of the State, independently of any other person, and

(b) where a company is so controlled, it shall not be treated as being otherwise a close company unless it can be treated as a close company as being under the control of persons acting independently of the State.

(3) A company resident in the State (but not falling within subsection (1) (b)) is also a close company if, on a full distribution of its distributable income, more than half of it would fall to be paid, directly or indirectly, to five or fewer participators, or to participators who are directors.

(4) A company is not to be treated as a close company—

(a) if—

(i) it is controlled by a company which is not a close company, or by two or more companies none of which is a close company, and

(ii) it cannot be treated as a close company except by taking as one of the five or fewer participators requisite for its being so treated a company which is not a close company;

(b) if it cannot be treated as a close company except by virtue of paragraph (c) of section 102 (2) and it would not be a close company if the reference in that paragraph to participators did not include loan creditors who are companies other than close companies.

(5) References in subsection (4) to a close company shall be treated as applying to any company which, if resident in the State, would be a close company.

(6) If shares in any company (in this subsection referred to as the “first company”) are at any time after the 5th day of April, 1976, held on trust for a fund or scheme approved under section 222 or 229 of the Income Tax Act, 1967 , or for an exempt approved scheme as defined in Chapter II of Part I of the Finance Act, 1972 , then, unless the fund or scheme is established wholly or mainly for the benefit of persons who are, or are dependants of, employees or directors or past employees or directors of—

(a) the first company; or

(b) an associated company of the first company; or

(c) a company which is under the control of any director or associate of a director of the first company or of two or more persons each of whom is such a director or associate; or

(d) a close company;

the persons holding the shares shall, for the purposes of subsection (4), be deemed to be the beneficial owners of the shares and, in that capacity, to be a company which is not a close company.

Certain companies with quoted shares not to be close companies.

95.—(1) Subject to the provisions of this section, a company is not to be treated as being at any time a close company if—

(a) shares in the company carrying not less than 35 per cent. of the voting power in the company (and not being shares entitled to a fixed rate of dividend, whether with or without a further right to participate in profits) have been allotted unconditionally to, or acquired unconditionally by, and are at that time beneficially held by, the public, and

(b) any such shares have within the preceding twelve months been the subject of dealings on a recognised stock exchange, and the shares have within those twelve months been quoted in the official list of a recognised stock exchange.

(2) Subsection (1) shall not apply to a company at any time when the total percentage of the voting power in the company possessed by all of the company's principal members exceeds 85 per cent.

(3) For the purposes of subsection (1), shares in a company shall be deemed to be beneficially held by the public if, and only if, they—

(a) fall within subsection (4), and

(b) are not within the exceptions in subsection (5),

and a corresponding construction shall be given to the reference to shares which have been allotted unconditionally to, or acquired unconditionally by, the public.

(4) Shares fall within this subsection (as being beneficially held by the public)—

(a) if beneficially held by a company resident in the State which is not a close company, or by a company not so resident which would not be a close company if it were so resident, or

(b) if held on trust for a fund or scheme approved under section 222 or 229 of the Income Tax Act, 1967 , or for an exempt approved scheme as defined in Chapter II of Part I of the Finance Act, 1972 , or

(c) if they are not comprised in a principal member's holding.

(5) Shares shall not be deemed to be held by the public if they are held—

(a) by any director or associate of a director of the company, or

(b) by any company which is under the control of any such director or associate, or of two or more persons each of whom is such a director or associate, or

(c) by any associated company of the company, or

(d) as part of any fund the capital or income of which is applicable or applied wholly or mainly for the benefit of, or of the dependants of, the employees or directors, or past employees or directors, of the company, or of any company within paragraph (b) or (c).

References in this subsection to shares held by any person include references to any shares the rights or powers attached to which could, for the purposes of section 102, be attributed to that person under subsection (5) of that section.

(6) For the purposes of this section—

(a) a person is a principal member of a company if he possesses a percentage of the voting power in the company of more than 5 per cent. and, where there are more than five such persons, if he is one of the five persons who possess the greatest percentages or if, because two or more persons possess equal percentages of the voting power in the company, there are no such five persons, he is one of the six or more persons (so as to include those two or more who possess equal percentages) who possess the greatest percentages, and

(b) a principal member's holding consists of the shares which carry the voting power possessed by him.

(7) In arriving at the voting power which a person possesses, there shall be attributed to him any voting power which, for the purposes of section 102, would be attributed to him under subsection (5) or (6) of that section.

(8) In this section “share” includes “stock”.

Certain expenses for participators and associates.

96.—(1) Subject to such exceptions as are mentioned in section 84 (matters to be treated as distributions) “distribution”, in relation to a close company, includes unless otherwise stated any such amount as is required to be treated as a distribution by subsection (2).

(2) Where a close company incurs expense in or in connection with the provision for any participator of living or other accommodation, of entertainment, of domestic or other services, or of other benefits or facilities of whatever nature, the company shall be treated as making a distribution to him of an amount equal to so much of that expense as is not made good to the company by the participator:

Provided that this subsection shall not apply to expense incurred in or in connection with the provision of benefits or facilities for a person to whom section 117 of the Income Tax Act, 1967 (benefits in kind), applies as a director or employee of the company, or the provision for the spouse, children or dependants of any such person of any pension, annuity, lump sum, gratuity or other like benefit to be given on his death or retirement.

(3) Any reference in subsection (2) to expense incurred in or in connection with any matter includes a reference to a proper proportion of any expense incurred partly in or in connection with that matter; and section 118 of the Income Tax Act, 1967 (valuation of benefits in kind), shall apply for the purposes of that subsection as it applies for the purposes of section 117 of the Income Tax Act, 1967 , references to that subsection being substituted for references to section 117 (1).

(4) Subsection (2) shall not apply if the company and the participator are both resident in the State and—

(a) one is a subsidiary of the other or both are subsidiaries of a third company also so resident, and

(b) the benefit to the participator arises on or in connection with the transfer of assets or liabilities by the company to him, or to the company by him.

(5) The question whether one company is a subsidiary of another for the purpose of subsection (4) shall be determined as a question whether it is a 51 per cent. subsidiary of that other, except that that other shall be treated as not being the owner—

(a) of any share capital which it owns directly in a company if a profit on a sale of the shares would be treated as a trading receipt of its trade; or

(b) of any share capital which it owns indirectly, and which is owned directly by a company for which a profit on the sale of the shares would be a trading receipt; or

(c) of any share capital which it owns directly or indirectly in a company not resident in the State.

(6) Where each of two or more close companies makes a payment to a person who is not a participator in that company, but is a participator in another of those companies, and the companies are acting in concert or under arrangements made by any person, then each of those companies and any participator in it shall be treated as if the payment made to him had been made by that company.

This subsection shall apply, with any necessary adaptations, in relation to the giving of any consideration, and to the provision of any facilities, as it applies in relation to the making of a payment.

(7) For the purposes of this section any reference to a participator includes an associate of a participator, and any participator in a company which controls another company shall be treated as being also a participator in that other company.

Interest paid to directors and directors' associates.

97.—(1) Subject to such exceptions as are mentioned in section 84 (1), this section has effect where in any accounting period, but not before the 6th day of April, 1976, any interest is paid by a close company to, or to an associate of, a person—

(a) who is a director of the close company, or of any company which controls, or is controlled by, the close company, and

(b) who has a material interest—

(i) in the close company, or

(ii) where the close company is controlled by another company, in that other company.

(2) If the total amount so paid to any person in the accounting period exceeds the limit imposed in his case, the excess shall be a distribution made by the close company to that person.

(3) The limit shall be calculated in the first instance as an overall limit applying to the aggregate of all interest which is within subsection (1) and which was paid by the close company in the accounting period, and, where there are two or more different recipients, that overall limit shall be apportioned between them according to the amounts of interest paid to them respectively.

(4) The overall limit shall be a sum equal to interest at 13 per cent. per annum or such other rate of interest as the Minister for Finance may from time to time prescribe on whichever is the smaller of—

(a) the total of the loans, advances and credits on which the interest within subsection (1) was paid by the close company in the accounting period, or if that total was different at different times in the accounting period, the average total over the accounting period, and

(b) the nominal amount of the issued share capital of the close company plus the amount of any share premium account (or other comparable account by whatever name called) of the company, taking both amounts as at the beginning of the accounting period.

(5) In this section “interest” includes any other consideration paid or given by the close company for the use of money advanced, or credit given, by any person, and references to interest “paid” shall be construed accordingly.

(6) This section has effect subject to section 96 (6), and for the purposes of this section a person has a material interest in a company if he, either on his own or with any one or more of his associates, or if any associate of his with or without any such other associates, is the beneficial owner of, or is able, directly or through the medium of other companies or by any other indirect means, to control, more than 5 per cent. of the ordinary share capital of the company.

Loans to participators, etc.

98.—(1) Subject to the following provisions of this section, where after the 5th day of April, 1976, a close company, otherwise than in the ordinary course of a business carried on by it which includes the lending of money, makes any loan or advances any money to an individual who is a participator in the company or an associate of a participator, the company shall be deemed, for the purposes of this section, to have paid in the year of assessment in which the loan or advance is made, an annual payment of an amount which, after deduction of income tax at the standard rate for the year of assessment in which the loan or advance is made, is equal to the amount of the loan or advance, and section 151 (income tax on payments) shall apply for the purposes of the charge, assessment and recovery of such tax:

Provided that the annual payment referred to in this subsection shall not be a charge on the company's income within the meaning of section 10 (allowance of charges on income).

(2) For the purposes of this section the cases in which a close company is to be regarded as making a loan to any person include a case where—

(a) that person incurs a debt to the close company, or

(b) a debt due from that person to a third party is assigned to the close company,

and then the close company shall be regarded as making a loan of an amount equal to the debt:

Provided that paragraph (a) shall not apply to a debt incurred for the supply by the close company of goods or services in the ordinary course of its trade or business unless the credit given exceeds six months or is longer than that normally given to the company's customers.

(3) Subsection (1) shall not apply to a loan made to a director or employee of a close company, or of an associated company of the close company, if—

(a) the amount of the loan, or that amount when taken together with any other outstanding loans which were made by the close company or any of its associated companies to the borrower, or to the wife or husband of the borrower, does not exceed £15,000,

(b) the borrower works full-time for the close company, or any of its associated companies, and

(c) the borrower does not have a material interest in the close company or in any associated company of the close company but if the borrower acquires such a material interest at a time when the whole or part of any such loan remains outstanding the close company shall be regarded as making to him at that time a loan of an amount equal to the sum outstanding.

(4) Where, after a company has been assessed to tax under this section in respect of any loan or advance, the loan or advance or any part of it is repaid to the company, relief shall be given from that tax, or a proportionate part of it, by discharge or repayment.

Relief under this subsection shall be given on a claim, which must be made within ten years from the end of the year of assessment in which the repayment is made.

(5) Where, under arrangements made by any person otherwise than in the ordinary course of a business carried on by him—

(a) a close company makes a loan or advance which, apart from this subsection, does not give rise to any charge on the company under subsection (1), and

(b) some person other than the close company makes a payment or transfers property to or releases or satisfies (in whole or in part) a liability of, an individual who is a participator in the company or an associate of a participator,

then, unless in respect of the matter referred to in paragraph (b) there falls to be included in the total income of the participator or associate an amount not less than the loan or advance, this section shall apply as if the loan or advance had been made to him.

(6) In subsections (1) and (5) (b), the references to an individual shall apply also to a company receiving the loan or advance in a fiduciary or representative capacity, and to a company not resident in the State.

(7) For the purposes of this section any participator in a company which controls another company shall be treated as being also a participator in that other company; and section 97 (6) shall apply for the purpose of determining whether a person has, for the purpose of subsection (3), a material interest in a company.

(8) Where on or after the 27th day of November, 1975, but not later than the 5th day of April, 1976, a close company makes any loan or advances any money to an individual who is a participator in the company or an associate of a participator, the company shall be deemed for the purposes of this section to have made the loan or advanced the money on the 6th day of April, 1976:

Provided that this subsection shall not apply to any loan or advance or any part of it which is repaid to the company before the 6th day of April, 1976.

Effect of release, etc., of debt in respect of loan under section 98.

99.—(1) Subject to the following provisions of this section, where a company is assessed or liable to be assessed under section 98 in respect of a loan or advance and releases or writes off the whole or part of the debt in respect of it, then—

(a) for the purpose of computing the total income of the person to whom the loan or advance was made a sum equal to the amount so released or written off shall be treated as income received by him after deduction of income tax by virtue of section 434 of the Income Tax Act, 1967 (at the standard rate for the year of assessment in which the whole or part of the debt was released or written off) from a corresponding gross amount;

(b) no repayment of income tax shall be made in respect of that income;

(c) notwithstanding paragraph (a), the income included by virtue of that paragraph in the total income of that person shall be treated for the purposes of sections 433 (yearly interest, etc., payable wholly out of taxed profits) and 434 (interest, etc., not payable out of taxed profits) of the Income Tax Act, 1967 , as not brought into charge to income tax;

(d) for the purposes of section 4 (e) of the Finance Act, 1974 (charge to tax of income from which tax has been deducted), but not for any other purpose, any amount which is to be treated as income by virtue of paragraph (a) shall be treated as if tax had been deducted therefrom at the standard rate for the year of assessment in which the whole or part of the debt was released or written off, provided that where such amount or the aggregate of such amounts, if more than one, exceeds the amount of the individual's taxable income charged at the standard rate or a higher rate the amount of the credit under the said section 4 (e) in respect of the excess shall not, notwithstanding anything in the said section 4, exceed the amount of the tax, if any, charged on that excess.

(2) If the loan or advance referred to in subsection (1) was made to a person who has since died, or to trustees of a trust which has come to an end, this section, instead of applying to the person to whom it was made, shall apply to the person from whom the debt is due at the time of release or writing off (and if it is due from him as personal representative within the meaning of Part XXIX of the Income Tax Act, 1967 (Income in relation to Administration of Estates), the amount treated as received by him shall accordingly be, as regards the higher rates of tax, included for the purposes of that Part in the aggregate income of the estate) and subsection (1) shall apply accordingly with the necessary modifications.

(3) Where under section 98 (8) a loan or advance is deemed to have been made on the 6th day of April, 1976, and before that date the company which made the loan or advance releases or writes off the whole or part of the debt in respect of it, then for the purposes of this section the amount released or written off shall be deemed to have been so released or written off on the 6th day of April, 1976.

(4) This section shall be construed together with section 98.

Distributions to be taken into account and meaning of “distributable income”, “investment income”, “estate income”, etc.

100.—(1) For the purposes of section 101 the distributions of a company for an accounting period shall be taken to be the aggregate of—

(a) any dividends which are declared for or in respect of the accounting period and are paid or payable during the accounting period or within eighteen months after the end of the accounting period, and

(b) all distributions, other than dividends, made in the accounting period.

(2) Where—

(a) a period of account for or in respect of which a company declares a dividend is not an accounting period,

(b) the dividend is paid or payable during the period of account or within eighteen months after the end of the period of account, and

(c) part of the period of account falls within an accounting period,

then, the proportion of the amount of the dividend to be treated for the purposes of subsection (1) as being for or in respect of the accounting period shall be the same as the proportion which the said part of the period of account bears to the whole of that period.

(3) For the purposes of subsection (4) the income of a company for an accounting period shall be the income for the accounting period, computed in accordance with the provisions of this Act, exclusive of franked investment income, before deducting—

(a) any loss incurred in any trade or profession carried on by the company which is carried forward from an earlier, or carried back from a later, accounting period,

(b) any excess of deficiencies over surpluses which if such excess were an excess of surpluses over deficiencies would be chargeable to corporation tax on the company under Case V of Schedule D and which is carried forward from an earlier, or carried back from a later, accounting period, and

(c) any loss which if it were a profit would be chargeable to corporation tax on the company under Case III or IV of Schedule D and which is carried forward from an earlier accounting period or any expenses of management or any charges on income which are so carried forward,

and after deducting—

(d) any loss incurred in the accounting period in any trade or profession carried on by the company,

(e) any loss incurred in the accounting period which if it were a profit would be chargeable to corporation tax on the company under Case III or IV of Schedule D,

(f) any excess of deficiencies over surpluses which if such excess were an excess of surpluses would be chargeable to corporation tax on the company for the accounting period under Case V of Schedule D,

(g) any amount which is an allowable deduction—

(i) against the total profits for the accounting period in respect of charges by virtue of section 10 (1), or

(ii) in computing the total profits for the accounting period in respect of expenses of management by virtue of section 15 (1), and

(h) the amount of the corporation tax which would be payable by the company for the accounting period if the tax were computed on the basis of the income arrived at in accordance with the preceding provisions of this subsection.

(4) In this section—

“distributable income” of a company for an accounting period means the income as computed in accordance with subsection (3) increased by—

(a) the amount of the company's franked investment income for the accounting period reduced by the tax credit comprised in that income, and

(b) any reduction in the income arising in the accounting period made under section 176 (transitional relief for existing companies on cessation of trade, etc.) in respect of any source of income:

Provided that, where the aggregate of the amounts specified in paragraphs (d) to (g) of subsection (3) exceeds the income as computed in accordance with that subsection apart from the said paragraphs, the amount of the excess shall, in computing the amount of the distributable income, be deducted from the aggregate of the amounts specified in paragraphs (a) and (b);

“investment income” of a company means income other than estate income which, if the company were an individual, would not be earned income within the meaning of section 2 of the Income Tax Act, 1967 , but does not include any interest or dividends on investments which would, having regard to the nature of the company's trade, fall to be taken into account as trading receipts in computing trading income but for the fact that they have been subjected to tax otherwise than as trading receipts, or but for the fact that, by virtue of section 2 (Irish resident company distributions not chargeable to corporation tax), they are not to be taken into account in computing income for corporation tax;

“estate income” means income (other than yearly or other interest) which is chargeable to tax under Case III, IV or V of Schedule D, and which arises from the ownership of land (including any interest in or right over land) or from the letting furnished of any building or part of a building;

“trading income” means income arising from a trade (including farming) or profession in respect of which a company is chargeable to corporation tax under Case I or II of Schedule D;

“trading company” means any company which exists wholly or mainly for the purpose of carrying on a trade and any other company whose income does not consist wholly or mainly of investment or estate income.

(5) For the purposes of section 101—

“distributable investment income” of a company for an accounting period means, in a case where the proviso to subsection (4) applies, the amount arrived at in accordance with the said proviso, and, in any other case, the sum of the following two amounts—

(a) the amount arrived at by applying to the amount of the distributable income exclusive of franked investment income (as reduced by the tax credit comprised in that income) the fraction /images/en.act.1976.0007.sec100.1.jpg

where—

A is the amount of the investment income taken into account in computing the tax mentioned in subsection (3) (h), and

B is the total amount of income so taken into account,

and

(b) the amount of the franked investment income (as reduced by the tax credit comprised in that income):

Provided that in the case of a trading company the distributable investment income shall be the amount arrived at in accordance with the foregoing provisions of this paragraph reduced by 5 per cent.;

“distributable estate income” of a company for an accounting period means the amount arrived at by applying to the amount of the distributable income exclusive of franked investment income (as reduced by the tax credit comprised in that income) the fraction /images/en.act.1976.0007.sec100.2.jpg

where—

C is the amount of the estate income taken into account in computing the tax mentioned in subsection (3) (h), and

D is the total amount of income so taken into account:

Provided that in the case of a trading company the distributable estate income shall be the amount arrived at in accordance with the foregoing provisions of this paragraph reduced by 7.5 per cent.

(6) The amount for part of an accounting period of any description of income referred to in this section shall be a proportionate part of the amount for the whole period.

(7) Where a company is subject to any restriction imposed by law as regards the making of distributions, then regard shall be had to this restriction in determining the amount of income on which a surcharge shall be imposed under section 101.

Surcharge on close company's undistributed investment and estate income.

101.—(1) Where for an accounting period of a close company, the aggregate of the distributable investment income and the distributable estate income exceeds the distributions of the company for the accounting period, there shall be charged on the company for the accounting period an additional duty of corporation tax (referred to hereafter in this section as a surcharge) amounting to 20 per cent. of the excess:

Provided that—

(a) a surcharge shall not be made on the company where the excess is equal to or less than the smaller of the following amounts—

(i) £500, or, if the accounting period is less than twelve months, £500 proportionately reduced, and

(ii) where the company has one or more associated companies, £500 divided by one plus the number of those associated companies, or, if the accounting period is less than twelve months, £500 proportionately reduced divided by one plus the number of those associated companies;

(b) where the excess is greater than the smaller amount on which by virtue of paragraph (a) a surcharge would not be made, the amount of the surcharge shall not be greater than a sum equal to four-fifths of the amount by which the excess is greater than that smaller amount.

(2) Where the aggregate of—

(a) the accumulated undistributed income of the company at the end of the accounting period, and

(b) any amount which, on or after the 27th day of November, 1975, was transferred to capital reserves or was used to issue shares, stock or securities as paid up otherwise than for new consideration (as defined in Part IX) or was otherwise used so as to reduce the amount referred to in paragraph (a),

is less than the excess referred to in subsection (1), that subsection shall apply as if the amount of that aggregate were substituted for the said excess.

(3) The provisions of section 28 (4) (5) (reduction of corporation tax liability of small companies) shall apply for the purposes of subsection (1) as they apply for the purposes of section 28 (3).

(4) If any amount on which a surcharge is made on a company under this section is distributed, the tax credit in respect of the distribution shall, except where otherwise provided, be that provided for by section 88 (tax credit for certain recipients of distributions).

(5) A surcharge made under this section on a company for an accounting period shall be paid in one instalment within two months from the making of the assessment.

(6) The provisions of section 6 (5) (general scheme of corporation tax) and of Part XIV (Administration) shall apply in relation to a surcharge made under this section as they apply to corporation tax charged otherwise than under this section.

Meaning of “associated company” and “control”.

102.—(1) For the purposes of this Part a company is to be treated as another's “associated company” at a given time if, at that time or at any time within one year previously, one of the two has control of the other, or both are under the control of the same person or persons.

(2) For the purposes of this Part a person shall be taken to have control of a company if he exercises, or is able to exercise or is entitled to acquire, control, whether direct or indirect, over the company's affairs, and in particular, but without prejudice to the generality of the preceding words, if he possesses or is entitled to acquire—

(a) the greater part of the share capital or issued share capital of the company or of the voting power in the company;

or

(b) such part of the issued share capital of the company as would, if the whole of the income of the company were in fact distributed among the participators (without regard to any rights which he or any other person has as a loan creditor), entitle him to receive the greater part of the amount so distributed; or

(c) such rights as would, in the event of the winding up of the company or in any other circumstances, entitle him to receive the greater part of the assets of the company which would then be available for distribution among the participators.

(3) Where two or more persons together satisfy any of the conditions of subsection (2), they shall be taken to have control of the company.

(4) For the purposes of subsection (2) a person 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.

(5) For the purposes of subsections (2) and (3), there shall be attributed to any person any rights or powers of a nominee for him, that is to say, any rights or powers which another person possesses on his behalf or may be required to exercise on his direction or behalf.

(6) For the purposes of subsections (2) and (3), there may also be attributed to any person all the rights and powers of any company of which he has, or he and associates of his have, control or any two or more such companies, or of any associate of his or of any two or more associates of his, including those attributed to a company or associate under subsection (5), but not those attributed to an associate under this subsection; and such attributions shall be made under this subsection as will result in the company being treated as under the control of five or fewer participators if it can be so treated.

Meaning of “participator”, “associate”, “director” and “loan creditor”.

103.—(1) For the purposes of this Part, a “participator” is, in relation to any company, a person having a share or interest in the capital or income of the company, and, without prejudice to the generality of the preceding words, includes—

(a) any person who possesses, or is entitled to acquire, share capital or voting rights in the company,

(b) any loan creditor of the company,

(c) any person who possesses, or is entitled to acquire, a right to receive or participate in distributions of the company (construing “distributions” without regard to section 96 or 97) or any amounts payable by the company (in cash or in kind) to loan creditors by way of premium on redemption, and

(d) any person who is entitled to secure that income or assets (whether present or future) of the company will be applied directly or indirectly for his benefit.

In this subsection references to being entitled to do anything apply where a person is entitled to do it at a future date or will at a future date be entitled to do it.

(2) The provisions of subsection (1) are without prejudice to any particular provision of this Part requiring a participator in one company to be treated as being also a participator in another company.

(3) For the purposes of this Part “associate” means, in relation to a participator—

(a) any relative or partner of the participator,

(b) the trustee or trustees of any settlement in relation to which the participator is, or any relative of his (living or dead) is or was, a settlor (“settlement” and “settlor” having here the same meaning as in section 96 (3) (h) of the Income Tax Act, 1967 ), and

(c) where the participator is interested in any shares or obligations of the company which are subject to any trust or are part of the estate of a deceased person, any other person interested therein,

and has a corresponding meaning in relation to a person other than a participator:

Provided that paragraph (c) shall not apply so as to make an individual an associate as being entitled or eligible to benefit under a trust—

(i) if the trust relates exclusively to a fund or scheme approved under section 222 (exemption of superannuation funds) or 229 (approval of retirement benefits schemes) of the Income Tax Act, 1967 , or to an exempt approved scheme as defined in Chapter II of Part I of the Finance Act, 1972 (Occupational Pension Schemes), or

(ii) if the trust is exclusively for the benefit of the employees, or the employees and directors, of the company or their dependants (and not wholly or mainly for the benefit of directors or their relatives) and the individual in question is not (and could not as a result of the operation of the trust become) either on his own or with his relatives the beneficial owner of more than 5 per cent. of the ordinary share capital of the company,

and in applying paragraph (ii) of this proviso, any charitable trusts which may arise on the failure or determination of other trusts shall be disregarded.

(4) In subsection (3) “relative” means husband, wife, ancestor, lineal descendant, brother or sister.

(5) For the purposes of this Part “director” includes any person occupying the position of director by whatever name called, any person in accordance with whose directions or instructions the directors are accustomed to act, and any person who—

(a) is a manager of the company or otherwise concerned in the management of the company's trade or business, and

(b) is, either on his own or with one or more associates, the beneficial owner of, or able, directly or through the medium of other companies or by any other indirect means, to control 20 per cent. or more of the ordinary share capital of the company.

(6) In subsection (5) (b), the expression “either on his own or with one or more associates” requires a person to be treated as owning or, as the case may be, controlling what any associate owns or controls, even if he does not own or control share capital on his own, and in paragraph (ii) of the proviso to subsection (3) the expression “either on his own or with his relatives” has a corresponding meaning.

(7) For the purposes of this Part “loan creditor”, in relation to a company, means a creditor in respect of 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),

or in respect of any redeemable loan capital issued by the company:

Provided that a person carrying on a business of banking shall not be deemed to be a loan creditor in respect of any loan capital or debt issued or incurred by the company for money lent by him to the company in the ordinary course of that business.

(8) A person who is not the creditor in respect of any debt or loan capital to which subsection (7) applies but nevertheless has a beneficial interest therein shall, to the extent of that interest, be treated for the purposes of this Part as a loan creditor in respect of that debt or loan capital.

Information.

104.—(1) The inspector may, by notice in writing, require any company which is, or appears to him to be, a close company to furnish him within such time (not being less than thirty days) as may be specified in the notice with such particulars as he thinks necessary for the purposes of this Part.

(2) If for the purposes of this Part any person in whose name any shares are registered is so required by notice in writing by the inspector, he shall state whether or not he is the beneficial owner of the shares and, if not the beneficial owner of the shares or any of them, shall furnish the name and address of the person or persons on whose behalf the shares are registered in his name.

(3) Subsection (2) shall apply in relation to loan capital as it applies in relation to shares.

(4) The inspector may, for the purposes of this Part, by notice in writing require—

(a) any company which appears to him to be a close company to furnish him with particulars of any bearer securities issued by the company and the names and addresses of the persons to whom the securities were issued and the respective amounts issued to each person; and

(b) any person to whom securities were issued as aforesaid, or to or through whom such securities were subsequently sold or transferred, to furnish him with such further information as he may require with a view to enabling him to ascertain the names and addresses of the persons beneficially interested in the securities.

In this subsection “securities” includes shares, stocks, bonds, debentures and debenture stock and also any promissory note or other instrument evidencing indebtedness issued to a loan creditor of the company.

PART XI

Group Relief

Group payments.

105.—(1) Where on or after the 6th day of April, 1976, a company receives from another company (both being companies resident in the State) any such payments as are referred to in this subsection, and either—

(a) the company making the payment is—

(i) a 51 per cent. subsidiary of the other or of a company so resident of which the other is a 51 per cent. subsidiary; or

(ii) a trading or holding company owned by a consortium the members of which include the company receiving the payments; or

(b) the company receiving the payments is a 51 per cent. subsidiary of the company,

then, subject to the following provisions of this section, the company receiving the payments and the company paying them may jointly elect that this subsection shall apply to any such payments received from the latter by the former, and so long as the election is in force those payments may be made without deduction of income tax and neither section 434 of the Income Tax Act, 1967 (payments not payable out of taxed profits), nor section 31 of the Finance Act, 1974 (interest payments by companies), shall apply thereto.

The payments for which an election may be made under this subsection are any payments which are for corporation tax charges on income of the company making them or would be for that tax charges on income of the company making them if they were not deductible in computing profits or any description of profits or if section 10 (6) (restriction of allowance of charges on income) did not apply to them.

(2) Subsection (1) shall not apply to payments received by a company on any investments, if a profit on the sale of those investments would be treated as a trading receipt of that company.

(3) Where a company purports by virtue of an election under subsection (1) to make any payment without deduction of income tax and income tax ought to have been deducted, the inspector may make such assessments, adjustments or set-offs as may be required for securing that the resulting liabilities to tax (including interest on unpaid tax) of the company making and the company receiving the payment are, so far as possible, the same as they would have been if the income tax had been duly deducted.

(4) Where tax assessed under subsection (3) on the company which made the payment is not paid by that company before the expiry of three months from the date on which that tax is payable, that tax shall, without prejudice to the right to recover it from that company, be recoverable from the company which received the payment.

(5) In determining for the purposes of this section whether one company is a 51 per cent. subsidiary of another, that other shall be treated as not being the owner—

(a) of any share capital which it owns directly or indirectly in a company not resident in the State, or

(b) of any share capital which it owns indirectly, and which is owned directly by a company for which a profit on the sale of the shares would be a trading receipt.

(6) For the purposes of this section—

(a) “trading or holding company” means a trading company or a company whose business consists wholly or mainly in the holding of shares or securities of trading companies which are its 90 per cent. subsidiaries,

(b) “trading company” means a company whose business consists wholly or mainly of the carrying on of a trade or trades,

(c) a company is owned by a consortium if three-fourths or more of the ordinary share capital of the company is beneficially owned between them by five or fewer companies resident in the State of which none beneficially owns less than one-twentieth of that capital, and those companies are called the members of the consortium.

(7) References in this section to payments received by a company apply to any received by another person on behalf of or in trust for the company but not to any received by the company on behalf of or in trust for another person.

Election: group payments.

106.—(1) An election under section 105 (in this section referred to as an “election”) shall be made by notice in writing to the inspector, and the notice shall set out the facts necessary to show that the companies are entitled to make the election.

(2) An election shall not have effect in relation to payments made less than three months after the giving of the notice and before the inspector is satisfied that the election is validly made, and has so notified the companies concerned; but shall be of no effect if within those three months the inspector notifies the companies concerned that the validity of the election is not established to his satisfaction:

Provided that the companies shall have the like right of appeal against any decision that the validity of the election is not established as the company making the payments would have if it were an assessment made on that company, and Part XXVI of the Income Tax Act, 1967 , shall apply accordingly.

(3) An election shall cease to be in force if at any time the companies cease to be entitled to make the election, and on that happening each company shall forthwith notify the inspector.

(4) Either of the companies making an election may at any time give the inspector notice in writing revoking the election; and any such notice shall have effect from the time it is given.

Group relief.

107.—(1) Relief for trading losses and other amounts eligible for relief from corporation tax may in accordance with the following provisions of this Part be surrendered by a company (called the “surrendering company”) which is a member of a group of companies and, on the making of a claim by another company (called the “claimant company”) which is a member of the same group, may be allowed to the claimant company by way of a relief from corporation tax called “group relief”.

(2) Group relief shall also be available in accordance with the said provisions—

(a) where the surrendering company is a trading company which is owned by a consortium and which is not a 75 per cent. subsidiary of any company, and the claimant company is a member of the consortium, or

(b) where the surrendering company is a trading company—

(i) which is a 90 per cent. subsidiary of a holding company which is owned by a consortium, and

(ii) which is not a 75 per cent. subsidiary of a company other than the holding company,

and the claimant company is a member of the consortium, or

(c) where the surrendering company is a holding company which is owned by a consortium and which is not a 75 per cent. subsidiary of any company, and the claimant company is a member of the consortium:

Provided that no claim may be made by a member of a consortium if a profit on a sale of the share capital of the surrendering or holding company which that member owns would be treated as a trading receipt of that member nor if the member's share in the consortium in the relevant accounting period of the surrendering company or holding company is nil.

(3) Subject to the following sections of this Part, two or more claimant companies may make claims relating to the same surrendering company, and to the same accounting period of that surrendering company.

(4) A payment for group relief—

(a) shall not be taken into account in computing profits or losses of either company for corporation tax purposes, and

(b) shall not for any of the purposes of the Corporation Tax Acts be regarded as a distribution or a charge on income,

and in this subsection “payment for group relief” means a payment made by the claimant company to the surrendering company in pursuance of an agreement between them as respects an amount surrendered by way of group relief, being a payment not exceeding that amount.

(5) For the purposes of this section and the following sections of this Part—

(a) two companies shall be deemed to be members of a group of companies if one is the 75 per cent. subsidiary of the other or both are 75 per cent. subsidiaries of a third company,

(b) “holding company” means a company whose business consists wholly or mainly in the holding of shares or securities of companies which are its 90 per cent. subsidiaries, and which are trading companies,

(c) “trading company” means a company whose business consists wholly or mainly of the carrying on of a trade or trades.

(6) In applying for the said purposes the definition of “75 per cent. subsidiary” in section 156 (subsidiaries) any share capital of a registered industrial and provident society shall be treated as ordinary share capital.

(7) References in this and the following sections of this Part to a company apply only to companies resident in the State; and in determining for the purposes of this and the following sections of this Part whether one company is a 75 per cent. subsidiary of another, the other company shall be treated as not being the owner—

(a) of any share capital which it owns directly in a company if a profit on a sale of the shares would be treated as a trading receipt of its trade, or

(b) of any share capital which it owns indirectly, and which is owned directly by a company for which a profit on the sale of the shares would be a trading receipt, or

(c) of any share capital which it owns directly or indirectly in a company not resident in the State.

(8) For the said purposes a company is owned by a consortium if all of the ordinary share capital of that company is directly and beneficially owned between them by five or fewer companies and those companies are called the members of the consortium.

Group relief: qualifications for entitlement.

108.—(1) Notwithstanding that at any time a company (in this subsection referred to as “the subsidiary company”) is a 75 per cent. subsidiary or a 90 per cent. subsidiary, within the meaning of section 156, of another company (in this section referred to as “the parent company”) it shall not be treated at that time as such a subsidiary for the purposes of group relief unless, additionally, at that time—

(a) the parent company is beneficially entitled to not less than 75 per cent. or, as the case may be, 90 per cent. of any profits available for distribution to equity holders of the subsidiary company; and

(b) the parent company would be beneficially entitled to not less than 75 per cent. or, as the case may be, 90 per cent. of any assets of the subsidiary company available for distribution to its equity holders on a winding up.

(2) Subject to subsection (3), for the purposes of group relief a member's share in a consortium, in relation to an accounting period of the surrendering company, shall be whichever is the lowest in that period of the following percentages, namely—

(a) the percentage of the ordinary share capital of the surrendering company which is beneficially owned by that member;

(b) the percentage to which that member is beneficially entitled of any profits available for distribution to equity holders of the surrendering company; and

(c) the percentage to which that member would be beneficially entitled of any assets of the surrendering company available for distribution to its equity holders on a winding up;

and if any of those percentages have fluctuated in that accounting period, the average percentage over the period shall be taken for the purposes of this subsection.

(3) In any case where the surrendering company is a subsidiary of a holding company which is owned by a consortium, for references in subsection (2) to the surrendering company there shall be substituted references to the holding company.

Group relief: profits or assets available for distribution.

109.—(1) For the purposes of this Part, an equity holder of a company is any person who—

(a) holds ordinary shares in the company, or

(b) is a loan creditor of the company in respect of a loan which is not a normal commercial loan,

and any reference in that section to profits or assets available for distribution to a company's equity holders does not include a reference to any profits or assets available for distribution to any equity holder otherwise than as an equity holder.

(2) For the purposes of subsection (1) (a) “ordinary shares” means all shares other than fixed-rate preference shares.

(3) In this Part “fixed-rate preference shares” means shares which—

(a) are issued for consideration which is or includes 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—

(i) are of a fixed amount or at a fixed rate per cent. of the nominal value of the shares, and

(ii) represent no more than a reasonable commercial return on the new consideration received by the company in respect of the issue of the shares; and

(d) on repayment do not carry any rights to an amount exceeding that new consideration except in so far as those rights are reasonably comparable with those general for fixed dividend shares quoted on a stock exchange in the State.

(4) Section 103 (7) (definition of “loan creditor” for purposes of provisions relating to close companies) shall apply for the purposes of subsection (1) (b) as it applies for the purposes of Part X, except that the proviso shall be omitted.

(5) In subsection (1) (b) “normal commercial loan” means a loan of or including new consideration and—

(a) which does not carry any right either to conversion into shares or securities of any other description or to the acquisition of additional shares or securities; and

(b) which does not entitle the loan creditor to any amount by way of interest which depends to any extent on the results of the company's business or any part of it or on the value of any of the company's assets or which exceeds a reasonable commercial return on the new consideration lent; and

(c) in respect of which the loan creditor is entitled, on repayment, to an amount which either does not exceed the new consideration lent or is reasonably comparable with the amount generally repayable (in respect of an equal amount of new consideration) under the terms of issue of securities quoted on a stock exchange in the State.

(6) Notwithstanding anything in subsections (1) to (5) but subject to subsection (7), where—

(a) any person has, directly or indirectly, provided new consideration for any shares or securities in the company, and

(b) that person, or any person connected with him, uses for the purposes of his trade assets which belong to the company and in respect of which there is made to the company any of the allowances specified in Part XIII or XIV, Chapter I of Part XV, Chapter II of Part XVI of the Income Tax Act, 1967 , section 22 of the Finance Act, 1971 , or section 2 , 3 , 6 or 8 of the Finance (Taxation of Profits of Certain Mines) Act, 1974 ,

then, for the purposes of this Part, that person, and no other, shall be treated as being an equity holder in respect of those shares or securities and as being beneficially entitled to any distribution of profits or assets attributable to those shares or securities.

(7) In any case where subsection (6) applies in relation to a bank in such circumstances that—

(a) the only new consideration provided by the bank as mentioned in subsection (6) (a) is provided in the normal course of its banking business by way of a normal commercial loan as defined in subsection (5); and

(b) the cost to the company concerned of the assets falling within subsection (6) (b) which are used as mentioned in that subsection by the bank or a person connected with the bank is less than the amount of that new consideration,

references in subsection (6), other than the reference in paragraph (a) thereof, to shares or securities in the company shall be construed as a reference to so much only of the loan referred to in paragraph (a) of this subsection as is equal to the cost referred to in paragraph (b) of this subsection.

(8) In this section “new consideration” has the same meaning as in Part IX and any question whether one person is connected with another shall be determined in accordance with section 157 (connected persons).

Group relief: “the profit distribution”.

110.—(1) Subject to the following provisions of this Part, for the purposes of section 108, the percentage to which one company is beneficially entitled of any profits available for distribution to the equity holders of another company means the percentage to which the first company would be so entitled in the relevant accounting period on a distribution in money to those equity holders of—

(a) an amount of profits equal to the total profits of the other company which arise in that accounting period (whether or not any of those profits are in fact distributed), or

(b) if there are no profits of the other company in that accounting period, profits of £100,

and in the following provisions of this Part, that distribution is referred to as “the profit distribution”.

(2) For the purposes of the profit distribution, it shall be assumed that no payment is made by way of repayment of share capital or of the principal secured by any loan unless that payment is a distribution.

(3) Subject to subsection (2), where an equity holder is entitled as such to a payment of any description which, apart from this subsection, would not be treated as a distribution, it shall nevertheless be treated as an amount to which he is entitled on the profit distribution.

Group relief: “the notional winding up”.

111.—(1) Subject to the following provisions of this Part, for the purposes of section 108 the percentage to which one company would be beneficially entitled of any assets of another company available for distribution to its equity holders on a winding up means the percentage to which the first company would be so entitled if the other company were to be wound up and on that winding up the value of the assets available for distribution to its equity holders (that is to say, after deducting any liabilities to other persons) were equal to—

(a) the excess, if any, of the total amount of the assets of the company, as shown in the balance sheet relating to its affairs as at the end of the relevant accounting period, over the total amount of those of its liabilities as so shown which are not liabilities to equity holders as such, or

(b) if there is no such excess or if the company's balance sheet is prepared to a date other than the end of the relevant accounting period, £100.

(2) In the following provisions of this Part, a winding up on the basis specified in subsection (1) is referred to as “the notional winding up”.

(3) If, on the notional winding up, an equity holder would be entitled as such to an amount of assets of any description which, apart from this subsection, would not be treated as a distribution of assets, it shall nevertheless be treated, subject to subsection (4), as an amount to which the equity holder is entitled on the distribution of assets on the notional winding up.

(4) If an amount (in this subsection referred to as “the returned amount”) which corresponds to the whole or any part of the new consideration provided by an equity holder of a company for any shares or securities in respect of which he is an equity holder is applied by the company, directly or indirectly, in the making of a loan to, or in the acquisition of any shares or securities in, the equity holder or any person connected with him, then, for the purposes of this Part,—

(a) the total amount of the assets referred to in subsection (1) (a) shall be taken to be reduced by a sum equal to the returned amount; and

(b) the amount of assets to which the equity holder is beneficially entitled on the notional winding up shall be taken to be reduced by a sum equal to the returned amount.

(5) In subsection (4) “new consideration” has the same meaning as in Part IX and any question whether one person is connected with another shall be determined in accordance with section 157.

Group relief: limited rights to profits or assets.

112.—(1) This section applies if any of the equity holders—

(a) to whom the profit distribution is made, or

(b) who is entitled to participate in the notional winding up,

holds, as such an equity holder, any shares or securities which carry rights in respect of dividend or interest or assets on a winding up which are wholly or partly limited by reference to a specified amount or amounts (whether the limitation takes the form of the capital by reference to which a distribution is calculated or operates by reference to an amount of profits or assets or otherwise).

(2) Where this section applies, there shall be determined—

(a) the percentage of profits to which, on the profit distribution, the first company referred to in section 110 (1) would be entitled, and

(b) the percentage of assets to which, on the notional winding up, the first company referred to in section 111 (1) would be entitled,

if, to the extent that they are limited as mentioned in subsection (1), the rights of every equity holder falling within that subsection (including the first company concerned if it is such an equity holder) had been waived.

(3) If, on the profit distribution, the percentage of profits determined as mentioned in subsection (2) (a) is less than the percentage of profits determined under section 110 (1) without regard to that subsection, the lesser percentage shall be taken for the purposes of section 108 to be the percentage of profits to which, on the profit distribution, the first company referred to in section 110 (1) would be entitled as mentioned in that section.

(4) If, on the notional winding up, the percentage of assets determined as mentioned in subsection (2) (b) is less than the percentage of assets determined under section 111 (1) without regard to that subsection, the lesser percentage shall be taken for the purposes of section 108 to be the percentage to which, on the notional winding up, the first company referred to in section 111 (1) would be entitled of any assets of the other company available for distribution to its equity holders on a winding up.

Group relief: diminishing share of profits or assets.

113.—(1) This section applies if, at any time in the relevant accounting period, any of the equity holders—

(a) to whom the profit distribution is made, or

(b) who is entitled to participate in the notional winding up,

holds, as such an equity holder, any shares or securities which carry rights in respect of dividend or interest or assets on a winding up which are of such a nature (as, for example, if any shares will cease to carry a right to a dividend at a future time) that if the profit distribution or the notional winding up were to take place in a different accounting period the percentage to which, in accordance with the preceding provisions of this Part, that equity holder would be entitled of profits on the profit distribution or of assets on the notional winding up would be different from the percentage determined in the relevant accounting period.

(2) Where this section applies, there shall be determined—

(a) the percentage of profits to which, on the profit distribution, the first company referred to in section 110 (1) would be entitled, and

(b) the percentage of assets to which, on the notional winding up, the first company referred to in section 111 (1) would be entitled,

if the rights of the equity holders in the relevant accounting period were the same as they would be in the different accounting period referred to in subsection (1).

(3) If in the relevant accounting period an equity holder holds, as such, any shares or securities in respect of which arrangements exist by virtue of which, in that or any subsequent accounting period, the equity holder's entitlement to profits on the profit distribution or to assets on the notional winding up could be different as compared with his entitlement if effect were not given to the arrangements, then for the purposes of this section—

(a) it shall be assumed that effect would be given to those arrangements in a later accounting period, and

(b) those shares or securities shall be treated as though any variation in the equity holder's entitlement to profits or assets resulting from giving effect to the arrangements were the result of the operation of such rights attaching to the shares or securities as are referred to in subsection (1).

(4) Section 112 (3) (4) shall apply for the purposes of this section as they apply for the purposes of that section and, accordingly, references therein to subsection (2) (a) (b) of that section shall be construed as references to subsection (2) (a) (b) of this section.

(5) In any case where section 112 applies as well as this section, section 112 shall be applied separately (in relation to the profit distribution and the notional winding up)—

(a) on the basis specified in subsection (2), and

(b) without regard to that subsection,

and section 112 (3) (4) shall apply accordingly in relation to the percentages so determined as if for the word “lesser” there were substituted the word “lowest”.

Group relief: beneficial percentage.

114.—For the purposes of sections 108 and 110 to 113—

(a) the percentage to which one company is beneficially entitled of any profits available for distribution to the equity holders of another company, and

(b) the percentage to which one company would be beneficially entitled of any assets of another company on a winding up,

means the percentage to which the first company is, or would be, so entitled either directly or through another company or other companies or partly directly and partly through another company or other companies.

Group relief: “the relevant accounting period”, etc.

115.—(1) In this Part “the relevant accounting period” means—

(a) in a case falling within section 108 (1), the accounting period current at the time in question; and

(b) in a case falling within section 108 (2), the accounting period in relation to which the share in the consortium falls to be determined.

(2) For the purposes of sections 109 to 114 a loan to a company shall be treated as a security, whether or not it is a secured loan, and, if it is a secured loan, regardless of the nature of the security.

Kinds of group relief.

116.—(1) If in any accounting period the surrendering company has incurred a loss, computed as for the purposes of section 16 (2) (relief for trading losses other than terminal losses), in carrying on a trade, the amount of the loss may be set off for the purposes of corporation tax against the total profits of the claimant company for its corresponding accounting period:

Provided that this subsection shall not apply to so much of a loss as is excluded from section 16 (2) by section 16 (4) or section 17 (restriction of relief for losses in farming or market gardening).

(2) If for any accounting period any capital allowances fall to be made to the surrendering company which are to be given by discharge or repayment of tax or in charging its income under Case V of Schedule D and are to be available primarily against a specified class of income, so much of the amount of those capital allowances (exclusive of any carried forward from an earlier period) as exceeds its income of the relevant class arising in that accounting period (before deduction of any losses of any other period or of any capital allowances) may be set off for the purposes of corporation tax against the total profits of the claimant company for its corresponding accounting period.

(3) If for any accounting period the surrendering company (being an investment company) may under section 15 (1) deduct any amount as expenses of management disbursed for that accounting period, so much of that amount (exclusive of any amount deductible only by virtue of section 15 (2)) as exceeds the company's profits of that accounting period may be set off for purposes of corporation tax against the total profits of the claimant company (whether an investment company or not) for its corresponding accounting period.

(4) The surrendering company's profits of the period shall be determined for the purposes of subsection (3) without any deduction under section 15 and without regard to any deduction falling to be made in respect of losses or allowances of any other period.

(5) References in subsections (3) and (4) to section 15 do not include references to that section as applied by section 33 to companies carrying on life business.

(6) If in any accounting period the surrendering company has paid any amount by way of charges on income, so much of that amount as exceeds its profits of the period may be set off for purposes of corporation tax against the total profits of the claimant company for its corresponding accounting period.

(7) The surrendering company's profits of the period shall be determined for the purposes of subsection (6) without regard to any deduction falling to be made in respect of losses or allowances of any other period, or to expenses of management deductible only by virtue of section 15 (2).

(8) In applying any of the preceding subsections in the case of a claim made by a company as a member of a consortium only a fraction of the loss referred to in subsection (1), or of the excess referred to in subsection (2) or (3) or (6), as the case may be, may be set off under the subsection in question, and that fraction shall be equal to that member's share in the consortium, subject to any further reduction under section 118 (2).

(9) This section shall apply to any accounting period beginning on or after the 6th day of April, 1976.

Relation of group relief to other relief.

117.—(1) Group relief for an accounting period shall be allowed as a deduction against the claimant company's total profits for the period before reduction by any relief derived from a subsequent accounting period, but as reduced by any other relief from tax (including relief in respect of charges on income under section 10 (1)).

(2) The said other relief shall be determined on the assumption that the company makes all relevant claims under section 16 (2) or 14 (6).

(3) For the purposes of this section “relief derived from a subsequent accounting period” means—

(a) relief under section 16 (2) in respect of a loss incurred in an accounting period after the accounting period the profits of which are being computed, and

(b) relief under section 14 (6) in respect of capital allowances falling to be made for an accounting period after the accounting period the profits of which are being computed, and

(c) relief under section 176 (transitional relief on cessation of trade, etc.) where the company ceases to possess the source of income in question at a time after the end of the accounting period the profits of which are being computed, and

(d) relief under section 18 (terminal loss in trade) in respect of a loss incurred in an accounting period after the end of the accounting period the profits of which are being computed.

(4) The reductions to be made in total profits of an accounting period against which any relief derived from a subsequent accounting period is to be set off shall include any group relief for that first-mentioned accounting period, and this subsection shall have effect notwithstanding that under section 176 (3) relief under that section is to be given in priority to any other relief.

Corresponding accounting periods.

118.—(1) For the purposes of group relief any accounting period of the claimant company which falls wholly or partly within an accounting period of the surrendering company corresponds to that accounting period.

(2) If an accounting period of the surrendering company and a corresponding accounting period of the claimant company do not coincide—

(a) the amount which may be set off against the total profits of the claimant company for the corresponding accounting period shall be reduced by applying the fraction /images/en.act.1976.0007.sec118.1.jpg (if that fraction is less than unity), and

(b) the said profits against which the amount mentioned in paragraph (a) (as reduced where so required) may be set off shall be reduced by applying the fraction /images/en.act.1976.0007.sec118.2.jpg (if that fraction is less than unity),

where—

A is the length of the period common to the two accounting periods,

B is the length of the accounting period of the surrendering company, and

C is the length of the corresponding accounting period of the claimant company.

Companies joining or leaving group or consortium.

119.—(1) Subject to the following provisions of this section, group relief shall be given if, and only if, the surrendering company and the claimant company are members of the same group, or fulfil the conditions for relief for a consortium, throughout the whole of the surrendering company's accounting period to which the claim relates, and throughout the whole of the corresponding accounting period of the claimant company.

(2) Where on any occasion two companies become or cease to be members of the same group, then for the purposes specified in subsection (3) it shall be assumed as respects each company that on that occasion (unless a true accounting period of the company begins or ends then) an accounting period of the company ends, and a new one begins, the new accounting period to end with the end of the true accounting period (unless before then there is a further break under this subsection) and—

(a) that the losses or other amounts of the true accounting period are apportioned to the component accounting periods on a time basis according to their lengths, and

(b) that the amount of total profits for the true accounting period of the company against which group relief may be allowed in accordance with section 117 (1) is also so apportioned to the component accounting periods.

(3) Where the one company is the surrendering company and the other company is the claimant company—

(a) references to accounting periods, to profits, and to losses, allowances, expenses of management or charges on income of the surrendering company, in section 116 shall be construed in accordance with subsection (2),

(b) references to accounting periods in section 118 and subsection (1) of this section shall be so construed (so that if the two companies are members of the same group in the surrendering company's accounting period they must under section 118 also be members of the same group in any corresponding accounting period of the claimant company),

(c) references to profits, and amounts to be set off against the profits, in section 118 shall be so construed (so that an amount apportioned under subsection (2) to a component accounting period may fall to be reduced under section 118 (2)).

(4) Subsections (2) and (3) shall apply with the necessary modifications where a company begins or ceases to fulfil the conditions for relief for a consortium, either as a surrendering company or as a claimant company, as it applies where two companies become or cease to be members of the same group.

Group relief: effect of arrangements for transfer of company to another group, etc.

120.—(1) If, apart from this section, two companies (in this subsection referred to as “the first company” and “the second company”) would be treated as members of the same group of companies and—

(a) in an accounting period which begins on or after the 6th day of April, 1976, one of the two companies has trading losses or other amounts eligible for relief from corporation tax which it would, apart from this section, be entitled to surrender as mentioned in section 107 (1), and

(b) arrangements are in existence by virtue of which, at some time during or after the expiry of that accounting period,—

(i) the first company or any successor of it could cease to be a member of the same group of companies as the second company and could become a member of the same group of companies as a third company, or

(ii) any person has or could obtain, or any persons together have or could obtain, control of the first company but not of the second, or

(iii) a third company could begin to carry on the whole or any part of a trade which, at any time in that accounting period, is carried on by the first company and could do so either as a successor of the first company or as a successor of another company which is not a third company but which, at some time during or after the expiry of that accounting period, has begun to carry on the whole or any part of that trade,

then, for the purposes of this Part, the first company shall be treated as not being a member of the same group of companies as the second company.

(2) If a trading company is owned by a consortium or is a 90 per cent. subsidiary of a holding company which is owned by a consortium and—

(a) in any accounting period which begins on or after the 6th day of April, 1976, the trading company has trading losses or other amounts eligible for relief from corporation tax which it would, apart from this section, be entitled to surrender as mentioned in section 107 (1), and

(b) arrangements are in existence by virtue of which—

(i) the trading company or any successor of it could, at some time during or after the expiry of that accounting period, become a 75 per cent. subsidiary of a third company, or

(ii) any person who owns, or any persons who together own, less than 50 per cent. of the ordinary share capital of the trading company has or together have, or could at some time during or after the expiry of that accounting period obtain, control of the trading company, or

(iii) any person, other than a holding company of which the trading company is a 90 per cent. subsidiary, either alone or together with connected persons, holds or could obtain, or controls or could control the exercise of not less than 75 per cent. of the votes which may be cast on a poll taken at a general meeting of the trading company in that accounting period or in any subsequent accounting period, or

(iv) a third company could begin to carry on, at some time during or after the expiry of that accounting period, the whole or any part of a trade which, at any time in that accounting period, is carried on by the trading company and could do so either as a successor of the trading company or as a successor of another company which is not a third company but which, at some time during or after the expiry of that accounting period, has begun to carry on the whole or any part of that trade,

then, for the purposes of this Part, the trading company shall be treated as though it did not (as the surrendering company) fall within section 107 (2) (a) (b) (c).

(3) In any case where a trading company is a 90 per cent. subsidiary of a holding company which is owned by a consortium, any reference in subsection (2) to the trading company, other than a reference in paragraph (b) (iv) thereof, shall be construed as including a reference to the holding company.

(4) In this section “third company” means a company which, apart from any provision made by or under any such arrangements as are specified in either subsection (1) (b) or (2), is not a member of the same group of companies as the first company, within the meaning of subsection (1), or, as the case may be, the trading company or holding company to which subsection (2) applies.

(5) In subsections (1) and (2)—

“connected persons” shall be construed in accordance with section 157, and “control” has the meaning assigned to it by section 158.

(6) For the purposes of subsections (1) and (2) a company is a successor of another if it carries on a trade which, in whole or in part, the other company has ceased to carry on and the circumstances are such that—

(a) section 20 (company reconstructions without change of ownership) applies in relation to the two companies as the predecessor and the successor within the meaning of that section, or

(b) the two companies are connected with each other within the terms of section 157.

Leasing contracts: effect on claims for losses of company reconstructions.

121.—(1) Subject to the provisions of this section, if—

(a) under a contract entered into after the 27th day of November, 1975, a company (in this section referred to as “the first company”) incurs capital expenditure on the provision of machinery or plant which the first company lets to another person by another contract (in this section referred to as a “leasing contract”), and

(b) apart from this subsection, the first company would be entitled to claim relief under section 16 (1) or (2) (relief for trading losses other than terminal losses) in respect of losses incurred on the leasing contract, and

(c) in the accounting period for which an allowance under section 251 of the Income Tax Act, 1967 (machinery and plant: initial allowance), section 11 of the Finance Act, 1967 (wear and tear allowances for certain machinery and plant in undeveloped areas), or section 22 (investment allowance for machinery and plant in designated areas) or 26 (increase of wear and tear allowances for certain machinery and plant) of the Finance Act, 1971 , in respect of the expenditure referred to in paragraph (a) is made to the first company, arrangements are in existence by virtue of which, at some time during or after the expiry of that accounting period, a successor company will be able to carry on any part of the first company's trade which consists of or includes the performance of all or any of the obligations which, apart from the arrangements, would be the first company's obligations under the leasing contract,

then, in the accounting period specified in paragraph (c) and in any subsequent accounting period, the first company shall not be entitled to claim relief as mentioned in paragraph (b) except in computing its profits (if any) arising under the leasing contract.

(2) For the purposes of this section a company is a successor of the first company if the circumstances are such that—

(a) section 20 applies in relation to the first company and the other company as the predecessor and the successor within the meaning of that section, or

(b) the two companies are connected with each other within the terms of section 157.

(3) For the purposes of this section losses incurred on a leasing contract and profits arising under such a contract shall be computed as if the performance of the leasing contract were a trade begun to be carried on by the first company, separately from any other trade which it may carry on, at the commencement of the letting under the leasing contract.

(4) In determining whether the first company would be entitled to claim relief as mentioned in subsection (1) (b), any losses incurred on the leasing contract shall be treated as incurred in a trade carried on by that company separately from any other trade which it may carry on.

Partnerships involving companies: effect of arrangements for transferring relief.

122.—(1) The provisions of subsection (2) shall apply in relation to a company (in this section referred to as “the partner company”) which is a member of a partnership carrying on a trade if arrangements are in existence (whether as part of the terms of the partnership or otherwise) whereby—

(a) in respect of the whole or any part of the value of, or of any portion of, the partner company's share in the profits or loss of any accounting period of the partnership, another member of the partnership or any person connected with another member of the partnership receives any payment or acquires or enjoys, directly or indirectly, any other benefit in money's worth; or

(b) in respect of the whole or any part of the cost of, or of any portion of, the partner company's share in the loss of any accounting period of the partnership, the partner company, or any person connected with that company, receives any payment or acquires or enjoys, directly or indirectly, any other benefit in money's worth, other than a payment in respect of group relief to the partner company by a company which is a member of the same group as the partner company for the purposes of group relief.

(2) In any case where the provisions of this subsection apply in relation to the partner company—

(a) the company's share in the loss of the relevant accounting period of the partnership and its share in any charges on income, within the meaning of section 10, paid by the partnership in that accounting period shall not be available for set-off for the purposes of corporation tax except against its profits of the several trade; and

(b) except in accordance with paragraph (a), no trading losses shall be available for set-off for the purposes of corporation tax against the profits of the company's several trade for the relevant accounting period of the partnership; and

(c) except in accordance with paragraphs (a) and (b), no amount which, apart from this subsection, would be available for relief against profits shall be available for set-off for the purposes of corporation tax against so much of the company's total profits as consists of profits of its several trade for the relevant accounting period of the partnership.

(3) In subsection (2) “relevant accounting period of the partnership” means any accounting period of the partnership beginning on or after the 6th day of April, 1976, in which any such arrangements as are specified in subsection (1) are in existence or to which any such arrangements apply.

(4) If a company is a member of a partnership and tax in respect of any profits of the partnership is chargeable under Case IV or V of Schedule D, this section shall apply in relation to the company's share in the profits or loss of the partnership as if—

(a) the profits or loss to which the company's share is attributable were the profits of, or the loss incurred in, a several trade carried on by the company, and

(b) any allowance which falls to be made by discharge or repayment of tax or in charging income under Case V were an allowance made in taxing that trade.

(5) For the purposes of this section, the amount of a company's share in the profits or loss of any accounting period of a partnership shall be such amount as is determined in accordance with the provisions of section 32 (partnerships involving companies).

(6) In this section “group relief” has the same meaning as in section 107 and any question whether one person is connected with another shall be determined in accordance with section 157.

Information as to arrangements for transferring relief, etc.

123.—(1) If a company—

(a) makes a claim for group relief, or

(b) being a party to a leasing contract, as defined in section 121, claims relief as mentioned in subsection (1) (b) of that section, or

(c) being a member of a partnership, claims any relief which, if section 122 (2) applied in relation to it, it would not be entitled to claim,

and the inspector has reason to believe that any relevant arrangements may exist, or may have existed at any time material to the claim, then at any time after the claim is made he may serve notice in writing on the company requiring it to furnish him, within such time being not less than thirty days from the giving of the notice as he may direct, with—

(i) a declaration in writing stating whether or not any such arrangements exist or existed at any material time, or

(ii) such information as he may reasonably require for the purpose of satisfying himself whether or not any such arrangements exist or existed at any material time, or

(iii) both such a declaration and such information.

(2) In this section “relevant arrangements”, in relation to a claim falling within any of paragraphs (a) to (c) of subsection (1), means such arrangements as are referred to in the enactment which is specified in the corresponding paragraph below, that is to say—

(a) section 120 (1) or (2) or section 113 (3),

(b) section 121 (1) (c), or

(c) section 122 (1).

(3) In a case falling within paragraph (a) of subsection (1), a notice under that subsection may be served on the surrendering company, within the meaning of section 107, instead of or as well as on the company claiming relief.

(4) In a case falling within paragraph (c) of subsection (1), a notice under that subsection may be served on the partners instead of or as well as on the company, and accordingly may require them, instead of or as well as the company, to furnish the declaration, information or declaration and information concerned.

(5) In this section, section 113 (3) and sections 120 to 122 “arrangements” means arrangements of any kind, whether in writing or not.

Exclusion of double allowances, etc.

124.—(1) Relief shall not be given more than once in respect of the same amount, whether by giving group relief and by giving some other relief (in any accounting period) to the surrendering company or by giving group relief more than once.

(2) In accordance with subsection (1), two or more claimant companies cannot, in respect of any one loss or other amount for which group relief may be given, and whatever their accounting periods corresponding to that of the surrendering company, obtain in all more relief than could be obtained by a single claimant company whose corresponding accounting period coincided with the accounting period of the surrendering company.

(3) If claims for group relief are made by more than one claimant company which relate to the same accounting period of the same surrendering company, and—

(a) all the claims so made are admissible only by virtue of section 119 (2) (3), and

(b) there is a part of the surrendering company's accounting period during which none of those claimant companies is a member of the same group as the surrendering company,

those claimant companies shall not obtain in all more relief than could be obtained by a single claimant company which was not a member of the same group as the surrendering company during that part of the surrendering company's accounting period (but was a member during the remainder of that accounting period).

(4) If claims for group relief are made by a claimant company as respects more than one surrendering company for group relief to be set off against its total profits for any one accounting period, and—

(a) all the claims so made are admissible only by virtue of section 119 (2) (3), and

(b) there is a part of the claimant company's accounting period during which none of the surrendering companies by reference to which the claims are made is a member of the same group as the claimant company,

the claimant company shall not obtain in all more relief to be set off against its profits for the accounting period than it could obtain on a claim as respects a single surrendering company (with unlimited losses and other amounts eligible for relief) which was not a member of the same group as the claimant company during that part of the claimant company's accounting period (but was a member during the remainder of that accounting period).

(5) The provisions of this subsection have effect as respects a claim for group relief made by a company as a member of a consortium, in this subsection referred to as a “consortium claim”—

(a) a consortium claim, and a claim other than a consortium claim, shall not both have effect as respects the loss or other amount of the same accounting period of the same surrendering company, unless each of the two claims is as respects a loss or other amount apportioned under section 119 (2) (a) to a component of that accounting period, and the two components do not overlap,

(b) in subsections (3) and (4) consortium claims shall be disregarded,

and paragraph (a) shall take effect according to the order in which claims are made.

(6) Without prejudice to the provisions of section 304 (6) of the Income Tax Act, 1967 (interpretation), any reference in Part XVI (Annual Allowances for Certain Capital Expenditure) of that Act to an allowance made includes a reference to an allowance which would be made but for the granting of group relief or but for that and but for an insufficiency of profits or other income against which to make it.

Claims and adjustments.

125.—(1) A claim for group relief—

(a) need not be for the full amount available,

(b) shall require the consent of the surrendering company notified to the inspector in such form as the Revenue Commissioners may require, and

(c) must be made within two years from the end of the surrendering company's accounting period to which the claim relates.

(2) A claim for group relief by a company as a member of a consortium shall require the consent of each other member of the consortium, notified to the inspector in such form as the Revenue Commissioners may require, in addition to the consent of the surrendering company.

(3) If the inspector discovers that any group relief which has been given is or has become excessive he may make an assessment to corporation tax under Case IV of Schedule D in the amount which ought in his opinion to be charged.

(4) Subsection (3) is without prejudice to the making of an assessment under section 144 (5) (a) (iii) (additional assessments) and to the making of all such other adjustments by way of discharge or repayment of tax or otherwise as may be required where a claimant company has obtained too much relief, or a surrendering company has foregone relief in respect of a corresponding amount.

PART XII

Companies' Capital Gains

Corporation tax attributable to chargeable gains: recovery from shareholder.

126.—(1) This section applies where a person who is connected with a company resident in the State, on or after the 6th day of April, 1976, receives or becomes entitled to receive in respect of shares in the company any capital distribution from the company, other than a capital distribution representing a reduction of capital, and—

(a) the capital so distributed derives from the disposal after the 5th day of April, 1976, of assets in respect of which a chargeable gain accrues to the company; or

(b) the distribution constitutes such a disposal of assets.

(2) If the corporation tax assessed on the company for the accounting period in which the chargeable gain accrues included any amount in respect of chargeable gains, and any of the tax assessed on the company for that period is not paid within six months from the date when it becomes payable by the company, the said person may by an assessment made within two years from that date be assessed and charged (in the name of the company) to an amount of that corporation tax—

(a) not exceeding the amount or value of the capital distribution which that person has received or became entitled to receive; and

(b) not exceeding a proportion equal to that person's share of the capital distribution made by the company of corporation tax on the amount and at the rate charged in respect of that gain in the assessment in which the said tax was charged.

(3) A person paying any amount of tax under this section shall be entitled to recover a sum equal to that amount from the company.

(4) The provisions of this section are without prejudice to any liability of the person receiving or becoming entitled to receive the capital distribution in respect of a chargeable gain accruing to him by reference to the capital distribution as constituting a disposal of an interest in shares in the company.

(5) In this section “capital distribution” has the same meaning as in paragraph 1 (2) of Schedule 2 to the Capital Gains Tax Act, 1975 , and “connected with” shall be construed in accordance with section 157 (connected persons).

Company reconstruction or amalgamation: transfer of assets.

127.—(1) Subject to the provisions of this section, where—

(a) any scheme of reconstruction or amalgamation involves the transfer of the whole or part of a company's business to another company, and

(b) at the time of the transfer both companies are resident in the State, and

(c) the first-mentioned company receives no part of the consideration for the transfer (otherwise than by the other company taking over the whole or part of the liabilities of the business),

then so far as relates to corporation tax on chargeable gains the two companies shall be treated as if any assets included in the transfer were acquired by the one company from the other company for a consideration of such amount as would secure that on the disposal by way of transfer neither a gain nor a loss would accrue to the company making the disposal, and for the purposes of Part II of Schedule 1 to the Capital Gains Tax Act, 1975 (assets held on the 6th day of April, 1974), the acquiring company shall be treated as if the respective acquisitions of the assets by the other company had been the acquiring company's acquisition of them.

(2) This section does not apply in relation to an asset which, until the transfer, formed part of trading stock of a trade carried on by the company making the disposal, or in relation to an asset which is acquired as trading stock for the purposes of a trade carried on by the company acquiring the asset.

(3) In this section—

“scheme of reconstruction or amalgamation” means a scheme for the reconstruction of any company or companies or the amalgamation of any two or more companies,

“trading stock” has the meaning given by section 62 (2) of the Income Tax Act, 1967 .

Interest charged to capital.

128.—Where—

(a) a company incurs expenditure on the construction of any building, structure or works, being expenditure allowable as a deduction under paragraph 3 of Schedule 1 to the Capital Gains Tax Act, 1975 (expenditure: general provisions), in computing a gain accruing to the company on the disposal of the building, structure or work, or of any asset comprising it, and

(b) that expenditure was defrayed out of borrowed money, and

(c) the company charged to capital all or any of the interest on that borrowed money referable to a period or part of a period ending on or before the disposal,

the sums so allowable shall, notwithstanding subparagraph (3) (b) of the said paragraph 3, include the amount of that interest charged to capital.

Groups of companies: definitions.

129.—(1) For the purposes of this section and the following sections of this Part—

(a) references to a company, subject to section 138 (7), apply only to a company, as that expression is limited by subsection (2), which is resident in the State;

(b) a principal company, and all its 75 per cent. subsidiaries form a group, and where a principal company is a member of a group as being itself a 75 per cent. subsidiary that group shall comprise all its 75 per cent. subsidiaries;

(c) “principal company” means a company of which another company is a 75 per cent. subsidiary;

(d) in applying the definition of “75 per cent. subsidiary” in section 156 (subsidiaries) any share capital of a registered industrial and provident society shall be treated as ordinary share capital; and

(e) “group” and “subsidiary” shall be construed with any necessary modifications where applied to a company incorporated under the law of a country outside the State.

(2) For the purposes referred to in subsection (1) references to a company apply only to—

(a) a company within the meaning of the Companies Act, 1963 , and

(b) a company which is constituted under any other Act or a charter or letters patent or (although resident in the State) is formed under the law of a country or territory outside the State, and

(c) a registered industrial and provident society within the meaning of section 218 of the Income Tax Act, 1967 .

(3) For the purposes referred to in subsection (1) a group remains the same group so long as the same company remains the principal company of the group, and if at any time the principal company of a group becomes a 75 per cent. subsidiary of another company the group of which it was the principal company before that time shall be regarded as the same as the group of which that other company, or one of which it is a 75 per cent. subsidiary, is the principal company, and the question whether or not a company has ceased to be a member of a group shall be determined accordingly.

(4) For the purposes referred to in subsection (1) the passing of a resolution or the making of an order, or any other act, for the winding up of a company shall not be regarded as the occasion of that company, or of any 75 per cent. subsidiary of that company, ceasing to be a member of a group of companies.

(5) The following sections of this Part, except in so far as they relate to recovery of tax, shall also have effect in relation to bodies from time to time established by or under any enactment for the carrying on of any industry or part of an industry, or of any undertaking, under national ownership or control as if they were companies within the meaning of those sections, and as if any such bodies charged with related functions and subsidiaries of any of them formed a group, and as if also any two or more such bodies charged at different times with the same or related functions were members of a group:

Provided that this subsection shall have effect subject to any enactment by virtue of which property, rights, liabilities or activities of one such body fall to be treated for corporation tax as those of another.

(6) For the purposes of this Part—

(a) section 35 of the Capital Gains Tax Act, 1975 (close company transferring assets at undervalue), shall not apply where the transfer is a disposal to which section 130 (1) applies;

(b) paragraph 6 of Schedule 1 to the Capital Gains Tax Act, 1975 (part disposals), and all other provisions for apportioning on a part disposal expenditure which is deductible in computing a gain, shall be operated before the operation of, and without regard to,—

(i) section 130 (1),

(ii) any other enactment making an adjustment to secure that neither a gain nor a loss occurs on a disposal;

(c) a “non-resident group” of companies—

(i) in the case of a group, none of the members of which is resident in the State, means that group, and

(ii) in the case of a group, two or more members of which are not resident in the State, means the members which are not resident in the State,

and for the purposes of this paragraph “group” shall be construed in accordance with subsections (1) (without paragraph (a)), (3) and (4).

(7) For the purposes of section 36 of the Capital Gains Tax Act, 1975 (non-resident company)—

(a) sections 130 to 133 shall apply in relation to non-resident companies which are members of a non-resident group of companies, as they apply in relation to companies resident in the State which are members of a group of companies,

(b) sections 135 and 137 shall apply as if for any reference therein to a group of companies there were substituted a reference to a non-resident group of companies, and as if references to companies were references to companies not resident in the State.

Transfers within a group.

130.—(1) Notwithstanding any provision in the Capital Gains Tax Act, 1975 , fixing the amount of the consideration deemed to be received on a disposal or given on an acquisition, where a member of a group of companies disposes of an asset to another member of the group, both members shall, except as provided by subsections (2) and (3), be treated, so far as relates to corporation tax on chargeable gains, as if the asset acquired by the member to whom the disposal is made were acquired for a consideration of such amount as would secure that on the other's disposal neither a gain nor a loss would accrue to that other; but where it is assumed for any purpose that a member of a group of companies has sold or acquired an asset, it shall be assumed also that it was not a sale to or acquisition from another member of the group.

(2) Subsection (1) shall not apply where the disposal is—

(a) a disposal of a debt from a member of a group of companies effected by satisfying the debt or part of it; or

(b) a disposal of redeemable shares in a company on the occasion of their redemption;

and the reference in that subsection to a member of a group of companies disposing of an asset shall not apply to anything which under Schedule 2 to the Capital Gains Tax Act, 1975 , is to be treated as a disposal of an interest in shares in a company in consideration for a capital distribution (as defined in paragraph 1 of the said Schedule) from that company, whether or not involving a reduction of capital.

(3) For the purposes of subsection (1), so far as the consideration for the disposal consists of money or money's worth by way of compensation for any kind of damage or injury to assets, or for the destruction or dissipation of assets or for anything which depreciates or might depreciate an asset, the disposal shall be treated as being to the person who, whether as an insurer or otherwise, ultimately bears the burden of furnishing that consideration.

Transfers within a group: trading stock.

131.—(1) Where a member of a group of companies acquires an asset as trading stock from another member of the group, and the asset did not form part of the trading stock of any trade carried on by the other member, the member acquiring it shall be treated for purposes of paragraph 15 of Schedule 1 to the Capital Gains Tax Act, 1975 (appropriations to and from stock in trade), as having acquired the asset otherwise than as trading stock and immediately appropriated it for the purposes of the trade as trading stock.

(2) Where a member of a group of companies disposes of an asset to another member of the group and the asset formed part of the trading stock of a trade carried on by the member disposing of it but is acquired by the other member otherwise than as trading stock of a trade carried on by it, the member disposing of the asset shall be treated for purposes of the said paragraph 15 as having immediately before the disposal appropriated the asset for some purpose other than the purpose of use as trading stock.

Disposal or acquisition outside a group.

132.—(1) Where a company which is or has been a member of a group of companies disposes of an asset which it acquired from another member of the group at a time when both were members of the group, paragraph 5 of Schedule 1 to the Capital Gains Tax Act, 1975 (restriction of losses by reference to capital allowances), shall apply in relation to any capital allowances made to the other member (so far as not taken into account in relation to a disposal of the asset by that other member), and so on as respects previous transfers of the asset between members of the group (but this shall not be taken as affecting the consideration for which an asset is deemed under section 130 (1) to be acquired).

(2) Part II of Schedule 1 to the Capital Gains Tax Act, 1975 , shall apply in relation to a disposal of an asset by a company which is or has been a member of a group of companies, and which acquired the asset from another member of the group at a time when both were members of the group, as if all members of the group for the time being were the same person, and as if the acquisition or provision of the asset by the group, so taken as a single person, had been the acquisition or provision of it by the member disposing of it.

Replacement of business assets by members of a group.

133.—For the purposes of section 28 of the Capital Gains Tax Act, 1975 (replacement of business assets), all the trades carried on by members of a group of companies shall be treated as a single trade (unless it is a case of one member of the group acquiring, or acquiring the interest in, the new assets from another or disposing of, or of the interest in, the old assets to another).

Tax on company recoverable from other members of a group.

134.—(1) If at any time a chargeable gain accrues to a company which at that time is a member of a group of companies and any of the corporation tax assessed on the company for the accounting period in which the chargeable gain accrues is not paid within six months from the date when it becomes payable by the company, then, if the tax so assessed included any amount in respect of chargeable gains—

(a) a company which was at the time when the gain accrued the principal company of the group; and

(b) any other company which in any part of the period of two years ending with that time was a member of the said group of companies and owned the asset disposed of or any part of it, or where that asset is an interest or right in or over another asset, owned either asset or any part of either asset; may at any time within two years from the time when the tax became payable be assessed and charged (in the name of the company to whom the chargeable gain accrued) to an amount of that corporation tax not exceeding corporation tax on the amount and at the rate charged in respect of that gain in the assessment on the company to which the chargeable gain accrued.

(2) A company paying any amount of tax under subsection (1) shall be entitled to recover a sum of that amount—

(a) from the company to which the chargeable gain accrued, or

(b) if that company is not the company which was the principal company of the group at the time when the chargeable gain accrued, from that principal company,

and a company paying any amount under paragraph (b) shall be entitled to recover a sum of that amount from the company to which the chargeable gain accrued, and so far as it is not so recovered, to recover from any company which is for the time being a member of the group and which has while a member of the group owned the asset disposed of or any part of it (or where that asset is an interest or right in or over another asset, owned either asset or any part of it) such proportion of the amount unrecovered as is just having regard to the value of the asset at the time when the asset, or an interest or right in or over it, was disposed of by that company.

Company ceasing to be member of a group.

135.—(1) If a company (in this section called “the chargeable company”) ceases to be a member of a group of companies, this section shall have effect as respects any asset which the chargeable company acquired from another company which was at the time of acquisition a member of that group of companies, but only if the time of acquisition fell—

(a) on or after the 6th day of April, 1974, and

(b) within the period of ten years ending with the time when the company ceases to be a member of the group;

and references in this section to a company ceasing to be a member of a group of companies do not apply to cases where a company ceases to be a member of a group by being wound up or dissolved or in consequence of another member of the group being wound up or dissolved.

(2) Where two or more associated companies cease to be members of the group at the same time, subsection (1) shall not have effect as respects an acquisition by one from another of those associated companies.

(3) If, when the chargeable company ceases to be a member of the group, the chargeable company, or an associated company also leaving the group, owns, otherwise than as trading stock—

(a) the asset, or

(b) property on the acquisition of which a chargeable gain in relation to the asset has been deferred on a replacement of business assets,

the chargeable company shall be treated for all the purposes of the Capital Gains Tax Act, 1975 , as if immediately after its acquisition of the asset it had sold, and immediately reacquired, the asset at market value at that time.

(4) For the purposes of this section—

(a) two or more companies are associated companies if, by themselves, they would form a group of companies,

(b) a chargeable gain is deferred on a replacement of business assets if, by one or more claims under section 28 of the Capital Gains Tax Act, 1975 , a chargeable gain on the disposal of those assets is treated as not accruing until the new assets, within the meaning of that section, cease to be used for the purposes of a trade carried on by the company making the claim,

(c) an asset acquired by the chargeable company shall be treated as the same as an asset owned at a later time by that company or an associated company if the value of the second asset is derived in whole or in part from the first asset, and in particular where the second asset is a freehold, and the first asset was a leasehold and the lessee has acquired the reversion.

(5) If any of the corporation tax assessed on a company in consequence of this section is not paid within six months from the date when it becomes payable then—

(a) a company which on the said date, or immediately after the chargeable company ceased to be a member of the group, was the principal company of the group, and

(b) a company which owned the asset on the said date, or when the chargeable company ceased to be a member of the group,

may at any time within two years from the time when the tax became payable, be assessed and charged (in the name of the chargeable company) to all or any part of that tax; and a company paying any amount of tax under this subsection shall be entitled to recover a sum of that amount from the chargeable company.

(6) Notwithstanding any limitation on the time for making assessments, an assessment to corporation tax chargeable in consequence of this section may be made at any time within ten years from the time when the chargeable company ceased to be a member of the group, and where under this section the chargeable company is to be treated as having disposed of and reacquired, an asset, all such recomputations of liability in respect of other disposals, and all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the provisions of this section shall be carried out.

Exemption from charge under section 135 in the case of certain mergers.

136.—(1) Subject to the following provisions of this section, section 135 shall not apply in a case where—

(a) as part of a merger, a company (in this section referred to as “company A”) ceases to be a member of a group of companies (in this section referred to as “the A group”); and

(b) it is shown that the merger was carried out for bona fide commercial reasons and that the avoidance of liability to tax was not the main or one of the main purposes of the merger.

(2) In this section “merger” means an arrangement (which in this section includes a series of arrangements)—

(a) whereby one or more companies (in this section referred to as “the acquiring company” or, as the case may be, “the acquiring companies”) none of which is a member of the A group acquires or acquire, otherwise than with a view to their disposal, one or more interests in the whole or part of the business which, before the arrangement took effect, was carried on by company A; and

(b) whereby one or more members of the A group acquires or acquire, otherwise than with a view to their disposal, one or more interests in the whole or part of the business or each of the businesses which, before the arrangement took effect, was carried on either by the acquiring company or acquiring companies or by a company at least 90 per cent. of the ordinary share capital of which was then beneficially owned by two or more of the acquiring companies; and

(c) in respect of which the conditions in subsection (4) are fulfilled.

(3) For the purposes of subsection (2), a member of a group of companies shall be treated as carrying on as one business the activities of that group.

(4) The conditions referred to in subsection (2) (c) are—

(a) that not less than 25 per cent. by value of each of the interests acquired as mentioned in paragraphs (a) and (b) of subsection (2) consists of a holding of ordinary share capital, and the remainder of the interest, or as the case may be of each of the interests, acquired as mentioned in the said paragraph (b) consists of a holding of share capital (of any description) or debentures or both; and

(b) that the value or, as the case may be, the aggregate value of the interest or interests acquired as mentioned in subsection (2) (a) is substantially the same as the value or, as the case may be, the aggregate value of the interest or interests acquired as mentioned in subsection (2) (b); and

(c) that the consideration for the acquisition of the interest or interests acquired by the acquiring company or acquiring companies as mentioned in subsection (2) (a), disregarding any part of that consideration which is small by comparison with the total, either consists of, or is applied in the acquisition of, or consists partly of and as to the balance is applied in the acquisition of, the interest or interests acquired by members of the A group as mentioned in subsection (2) (b);

and for the purposes of this subsection the value of an interest shall be determined as at the date of its acquisition.

(5) Notwithstanding the provisions of section 129 (1) (a), references in this section to a company include references to a company resident outside the State.

Shares in subsidiary member of a group.

137.—(1) This section has effect if a company (in this section called “the subsidiary”) ceases to be a member of a group of companies, and on an earlier occasion shares in the subsidiary were disposed of by another company (in this section called “the chargeable company”) which was then a member of that group in the course of an amalgamation or reconstruction in the group, but only if that earlier occasion fell—

(a) on or after the 27th day of November, 1975, and

(b) within the period of ten years ending with the date on which the subsidiary ceases to be a member of the group;

and references in this section to a company ceasing to be a member of a group of companies do not apply to cases where a company ceases to be a member of a group by being wound up or dissolved or in consequence of another member of the group being wound up or dissolved.

(2) The chargeable company shall be treated, for all the purposes of the Capital Gains Tax Act, 1975 , as if immediately before the earlier occasion it had sold, and immediately reacquired, the said shares at market value at that time, and for the purposes of this subsection if the earlier occasion fell on or before the 5th day of April, 1976, it shall be deemed to have fallen on the 6th day of April, 1976.

(3) If, before the subsidiary ceases to be a member of the group, the chargeable company has ceased to exist, or a resolution has been passed, or an order made, for the winding up of the company, or any other act has been done for the like purpose, any corporation tax to which, if the chargeable company had continued in existence, it would have been chargeable in consequence of this section may be assessed and charged (in the name of the chargeable company) on the company which is, at the time when the subsidiary ceases to be a member of the group, the principal company of the group.

(4) If any of the corporation tax assessed on a company in consequence of this section, or in pursuance of subsection (3), is not paid within six months from the date when it becomes payable, then—

(a) a company which is on the said date, or was on the earlier occasion, the principal company of the group, and

(b) any company taking an interest in the subsidiary as part of the amalgamation or reconstruction in the group,

may at any time within two years from the time when the tax became payable, be assessed and charged (in the name of the chargeable company) to all or any part of that tax; and a company paying any amount of tax under this subsection shall be entitled to recover a sum of that amount from the chargeable company, or as the case may be from the company assessed under subsection (3).

(5) Notwithstanding any limitation on the time for making assessments, an assessment to corporation tax chargeable in consequence of this section may be made at any time within ten years from the time when the subsidiary ceased to be a member of the group and, in relation to any disposal of the property after the earlier occasion, there shall be made all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the provisions of this section.

(6) For the purposes of this section there is a disposal of shares in the course of an amalgamation or reconstruction in a group of companies if paragraph 4 or 5 of Schedule 2 to the Capital Gains Tax Act, 1975 (company amalgamations), applies to shares in a company so as to equate them with shares in or debentures of another company, and the companies are members of the same group, or become members of the same group as a result of the amalgamation or reconstruction.

(7) Where by virtue of paragraph 5 of the said Schedule 2 shares are to be treated as cancelled and replaced by a new issue, references in this section to a disposal of shares include references to the occasion of their being so treated.

Depreciatory transactions in a group.

138.—(1) This section has effect as respects a disposal of shares in, or securities of, a company (in this section referred to as an “ultimate disposal”) if the value of the shares or securities has been materially reduced by a depreciatory transaction effected on or after the 6th day of April, 1974; and for this purpose “depreciatory transaction” means—

(a) any disposal of assets at other than market value by one member of a group of companies to another, or

(b) any other transaction satisfying the conditions of subsection (2):

Provided that a transaction shall not be treated as a depreciatory transaction to the extent that it consists of a payment which is required to be or has been brought into account, for the purposes of corporation tax on chargeable gains, in computing a chargeable gain or allowable loss accruing to the person making the ultimate disposal.

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

(a) that the company, the shares in which, or securities of which, are the subject of the ultimate disposal, or any 75 per cent. subsidiary of that company, was a party to the transaction, and

(b) that the parties to the transaction were or included two or more companies which at the time of the transaction were members of the same group of companies.

(3) Without prejudice to the generality of subsection (1), the cancellation of any shares in or securities of one member of a group of companies under section 72 of the Companies Act, 1963 , shall, to the extent that immediately before the cancellation those shares or securities were the property of another member of the group, be taken to be a transaction fulfilling the conditions in subsection (2).

(4) If the person making the ultimate disposal is, or has at any time been, a member of the group of companies referred to in subsection (1) or (2), any allowable loss accruing on the disposal shall be reduced to such extent as appears to the inspector, or on appeal the Appeal Commissioners, or on a rehearing by a judge of the Circuit Court, that judge, to be just and reasonable having regard to the depreciatory transaction:

Provided that if the person making the ultimate disposal is not a member of the said group when he disposes of the shares or securities, no reduction of the loss shall be made by reference to a depreciatory transaction which took place when that person was not a member of the said group.

(5) The inspector or the Appeal Commissioners or the judge of the Circuit Court shall make the decision under subsection (4) on the footing that the allowable loss ought not to reflect any diminution in the value of the company's assets which was attributable to a depreciatory transaction, but allowance may be made for any other transaction on or after the 6th day of April, 1974, which has enhanced the value of the company's assets and depreciated the value of the assets of any other member of the group.

(6) If, under subsection (4), a reduction is made in an allowable loss, any chargeable gain accruing on a disposal of the shares or securities of any other company which was a party to the depreciatory transaction by reference to which the reduction was made, being a disposal not later than ten years after the depreciatory transaction, shall be reduced to such extent as appears to the inspector, or on appeal to the Appeal Commissioners, or on a rehearing by a judge of the Circuit Court, that judge, to be just and reasonable having regard to the effect of the depreciatory transaction on the value of those shares or securities at the time of their disposal:

Provided that the total amount of any one or more reductions in chargeable gains made by reference to a depreciatory transaction shall not exceed the amount of the reductions in allowable losses made by reference to that depreciatory transaction.

All such adjustments, whether by way of discharge or repayment of tax, or otherwise, as are required to give effect to the provisions of this subsection may be made at any time.

(7) For the purposes of this section—

“securities” includes any loan stock or similar security whether secured or unsecured;

references to the disposal of assets include references to any method by which one company which is a member of a group appropriates the goodwill of another member of the group;

a “group of companies” may consist of companies some or all of which are not resident in the State.

(8) References in this section to the disposal of shares or securities include references to the occasion of the making of a claim under section 12 (4) of the Capital Gains Tax Act, 1975 , that the value of shares or securities has become negligible, and references to a person making a disposal shall be construed accordingly.

Dividend stripping.

139.—(1) The provisions of this section apply where one company (in this section referred to as “the first company”) has a holding in another company (in this section referred to as “the second company”) and the following conditions are fulfilled—

(a) that the holding amounts to, or is an ingredient in a holding amounting to, 10 per cent. of all holdings of the same class in the second company,

(b) that the first company is not a dealing company in relation to the holding,

(c) that a distribution is or has been made on or after the 6th day of April, 1974, to the first company in respect of the holding, and

(d) that the effect of the distribution is that the value of the holding is or has been materially reduced.

(2) Where this section applies in relation to a holding section 138 shall apply in relation to any disposal of any shares or securities comprised in the holding, whether the disposal is by the first company or by any other company to which the holding is transferred by a transfer to which section 130 applies, as if the distribution were a depreciatory transaction and, if the companies concerned are not members of a group of companies, as if they were:

Provided that the distribution shall not be treated as a depreciatory transaction to the extent that it consists of a payment which is required to be or has been brought into account, for the purposes of corporation tax on chargeable gains, in computing a chargeable gain or allowable loss accruing to the person making the ultimate disposal.

(3) This section shall be construed together with section 138.

(4) For the purposes of this section a company is “a dealing company” in relation to a holding if a profit on the sale of the holding would be taken into account in computing the company's trading profits.

(5) References in this section to a holding in a company refer to a holding of shares or securities by virtue of which the holder may receive distributions made by the company, but so that—

(a) a company's holdings of different classes in another company shall be treated as separate holdings, and

(b) holdings of shares or securities which differ in the entitlements or obligations they confer or impose shall be regarded as holdings of different classes.

(6) For the purposes of subsection (1)—

(a) all a company's holdings of the same class in another company are to be treated as ingredients constituting a single holding, and

(b) a company's holding of a particular class shall be treated as an ingredient in a holding amounting to 10 per cent. of all holdings of that class if the aggregate of that holding and other holdings of that class held by connected persons amounts to 10 per cent. of all holdings of that class,

and section 157 shall have effect in relation to paragraph (b) as if in subsection (7) of that section after the words “or exercise control of” in each place where they occur there were inserted the words “or to acquire a holding in”.

PART XIII

Application and Adaptation of Enactments

Application and adaptation of Income Tax Acts and Capital Gains Tax Act, 1975.

140.—(1) Without prejudice to the general application to corporation tax of the provisions of the Income Tax Acts relating to the computation of income, Part I of the Second Schedule shall have effect for the purpose of applying to corporation tax or otherwise adapting the provisions of those Acts there mentioned.

(2) Without prejudice to the general application to corporation tax of the provisions of the Capital Gains Tax Act, 1975 , relating to the computation of chargeable gains, Part II of the Second Schedule shall have effect for the purpose of applying to corporation tax or otherwise adapting the provisions of that Act there mentioned.

(3) The amendments in each Part of the Second Schedule are subject to the provisions of this Act and, in particular, to the provisions of the final paragraph of that Part.

PART XIV

Administration

Particulars to be supplied by new companies, etc.

141.—(1) Every company which, on or after the 6th day of April, 1976, commences to carry on a trade, profession or business shall, within thirty days from the date of such commencement, deliver to the Revenue Commissioners a statement in writing containing the following particulars—

(a) the name of the company;

(b) the address of its registered office in the State or, in the case of a company which is not resident in the State, the address of its principal place of business in the State;

(c) the name of the secretary or, in the case of a company which is not resident in the State, the name and address of the agent, manager, factor or other representative of the company;

(d) the date of commencement of the trade, profession or business or, in the case of a company which is not resident in the State, the date of commencement of its trade or profession in the State;

(e) the nature of the trade, profession or business; and

(f) the date to which the first accounts relating to such trade, profession or business will be made up:

Provided that this subsection shall not apply to a company which is neither resident nor incorporated in the State unless it commences to carry on a trade or profession in the State.

(2) Where a company fails to deliver a statement which it is required to deliver under this section—

(a) the company shall be liable to a penalty of £500 and, if the failure continues after judgment has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £50 for each day on which the failure so continues, and

(b) the secretary of the company shall be liable to a separate penalty of £100.

Notice of liability to corporation tax.

142.—(1) Every company which is chargeable to corporation tax for any accounting period and which has not made a return of its profits for that accounting period shall, not later than one year after the end of that accounting period, give notice to the inspector that it is so chargeable:

Provided that this subsection shall not impose a duty to give any notice before the 6th day of April, 1976.

(2) Where a company fails to give a notice which it is required to give under this section—

(a) the company shall be liable to a penalty of £500 and, if the failure continues after judgment has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £50 for each day on which the failure so continues, and

(b) the secretary of the company shall be liable to a separate penalty of £100.

Return of profits.

143.—(1) A company may be required by a notice served on it 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 profits of the company computed in accordance with this Act—

(a) specifying the income taken into account in computing those profits, with the amount from each source,

(b) giving particulars of all disposals giving rise to chargeable gains or allowable losses under the provisions of the Capital Gains Tax Act, 1975 , and this Act and particulars of those chargeable gains or allowable losses, and

(c) giving particulars of all charges on income to be deducted against those profits for the purpose of the assessment to corporation tax.

(2) A notice under this section may require a return of profits arising in any period during which the company was within the charge to corporation tax.

(3) Every return under this section shall include a declaration to the effect that the return is correct and complete.

(4) A return under this section which includes profits which are payments on which the company has borne income tax by deduction shall specify the amount of income tax so borne.

(5) A notice under this section may require the inclusion in the return of particulars of management expenses, capital allowances and balancing charges which have been taken into account in arriving at the profits included in the return.

(6) Paragraph 3 (3) (4) of Schedule 4 to the Capital Gains Tax Act, 1975 (power to demand information about the acquisition of assets), shall apply in relation to a notice under this section as they apply in relation to a notice under any of the provisions of the Income Tax Acts, as applied in relation to capital gains tax by the said paragraph 3.

(7) Section 174 of the Income Tax Act, 1967 (production of accounts and books), shall apply where a company is required to make, or makes, a return under this section relating to profits which consist of or comprise those arising from a trade as it applies where a person is required to make, or makes, a return for the purposes of income tax of the profits or gains arising to him from any trade.

(8) (a) If any company has been required by notice served under the foregoing provisions of this section to deliver a return and the company fails to comply with the notice—

(i) the company shall be liable to a penalty of £500 except in the case mentioned in paragraph (b) and, if the failure continues after judgment has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £50 for each day on which the failure so continues, and

(ii) the secretary of the company shall be liable to a separate penalty of £100 except in the case mentioned in paragraph (b).

(b) Where any such failure as is mentioned in paragraph (a) continues after the expiration of one year beginning with the date on which the notice was served the first of the penalties mentioned in the said paragraph for which the company is liable shall be £1,000, and the secretary of the company shall be liable to a separate penalty of £200.

(9) Where a company fraudulently or negligently—

(a) delivers an incorrect return under the provisions of this section, or

(b) makes any incorrect return, statement or declaration in connection with any claim for any allowance, deduction or relief in respect of corporation tax, or

(c) submits to an inspector, the Revenue Commissioners or the Appeal Commissioners any incorrect accounts in connection with the ascertainment of the company's liability to corporation tax,

the company shall be liable to a penalty of—

(i) £500, or, in the case of fraud, £1,000, and

(ii) the amount, or, in the case of fraud, twice the amount, of the difference specified in subsection (10), and

the secretary of the company shall be liable to a separate penalty of £100, or, in the case of fraud, £200.

(10) The difference referred to in subsection (9) is the difference between—

(a) the amount of corporation tax payable by the said company for the accounting period or accounting periods comprising the period to which the return, statement, declaration or accounts relate, and

(b) the amount which would have been the amount so payable if the return, statement, declaration or accounts had been correct.

(11) The provisions of section 501 (3) of the Income Tax Act, 1967 (failure to correct an error not made fraudulently or negligently), shall apply for the purposes of this section as they apply for the purposes of the said section 501.

(12) (a) Section 191 of the Income Tax Act, 1967 (error or mistake), shall apply in relation to corporation tax as it applies in relation to income tax under Schedule D.

(b) Any return under this Act shall be in such form as the Revenue Commissioners prescribe.

(c) In this section “return” includes any statement, declaration or list.

Assessment of corporation tax.

144.—(1) Assessments to corporation tax shall be made by an inspector.

(2) Where a company on whose profits the tax is to be assessed is resident in the State the tax shall be assessed on the company, and where a company on whose profits the tax is to be assessed is not resident in the State the tax shall be assessed on the company in the name of any agent, manager, factor or other representative of the company.

(3) The inspector shall give notice to the company assessed, or, in the case of a company which is not resident in the State, to the agent, manager, factor or other representative of the company assessed, of every assessment made by him.

(4) If—

(a) a company makes default in the delivery of a statement in respect of corporation tax, or

(b) the inspector is not satisfied with a statement which has been delivered, or has received any information as to its insufficiency,

the inspector shall make an assessment on the company concerned in such sum as, according to the best of the inspector's judgment, ought to be charged on that company.

(5) (a) If an inspector discovers—

(i) that any profits which ought to have been assessed to corporation tax have not been assessed, or

(ii) that an assessment to corporation tax is or has become insufficient, or

(iii) that any relief which has been given is or has become excessive,

the inspector shall make an assessment in the amount, or the further amount, which ought in his opinion to be charged.

(b) Subject to any provision allowing a longer period in any class of case, no assessment to corporation tax shall be made more than ten years after the end of the accounting period to which it relates:

Provided that in a case in which any form of fraud or neglect has been committed by or on behalf of any company in connection with or in relation to corporation tax, an assessment may be made on that company at any time for any accounting period for which, by reason of the fraud or neglect, corporation tax would otherwise be lost to the Exchequer.

(c) An objection to the making of any assessment on the ground that the time limited for the making thereof has expired shall only be made on appeal from the assessment.

(d) In this subsection “neglect” means negligence or a failure to give any notice, to make any return, statement or declaration, or to produce or furnish any list, document or other information required by or under the enactments relating to corporation tax:

Provided that a company shall be deemed not to have failed to do anything required to be done within a limited time if it did it within such further time, if any, as the Revenue Commissioners or officer concerned may have allowed; and where a company had a reasonable excuse for not doing anything required to be done, it shall be deemed not to have failed to do it if it did it without unreasonable delay after the excuse had ceased.

Collection of corporation tax.

145.—(1) The Collector-General shall collect and levy the tax from time to time charged on all assessments to corporation tax of which particulars have been transmitted to him under section 187 (1) of the Income Tax Act, 1967 , as applied for the purposes of corporation tax by section 147.

(2) All such powers as are exercisable with respect to the collecting and levying of sums of income tax under Schedule D of the Income Tax Act, 1967 , of which particulars are transmitted under section 187 (1) of that Act shall extend with respect to sums of corporation tax of which particulars are transmitted under that section as applied by section 147.

(3) Section 550 of the Income Tax Act, 1967 (interest on overdue tax), shall apply for the purposes of corporation tax as it applies for the purposes of income tax subject to the inclusion in subsection (1) thereof of a reference to section 6 (4) (general scheme of corporation tax) of this Act for the reference to section 477 of the Income Tax Act, 1967 (time for payment of tax), and section 28 of the Finance Act, 1975 (interest on unpaid taxes), shall apply to interest which, under the said section 550 as applied by this section, is chargeable in respect of corporation tax.

(4) (a) In this subsection “neglect” has the same meaning as in section 144 (5) (d).

(b) Where, for any accounting period, an assessment is made for the purpose of recovering an undercharge to corporation tax which is attributable to the fraud or neglect of any person, the amount of tax undercharged shall carry interest at the rate of 1·5 per cent. for each month or part of a month from the date or dates on which the tax undercharged for that accounting period would have been payable, if it had been included in an assessment made on the expiration of six months from the end of that accounting period, to the date of payment of the tax undercharged.

(c) Subject to paragraph (e), section 550 (1) (2) of the Income Tax Act, 1967 , shall not apply to tax carrying interest under this subsection.

(d) Subsections (3), (4) and (5) of section 550 of the Income Tax Act, 1967 , shall apply to interest chargeable under this subsection as they apply to interest chargeable under the said section 550.

(e) Where an assessment of the kind referred to in paragraph (b) is made—

(i) the inspector concerned shall give notice to the person assessed that the tax charged by the assessment will carry interest under this subsection,

(ii) the person assessed may appeal against the assessment on the ground that interest should not be charged under this subsection, and the provisions of this Act relating to appeals against assessments shall apply and have effect in relation to the appeal as they apply in relation to those appeals with any necessary modifications, and

(iii) if, on the appeal, it is determined that the tax charged by the assessment should not carry interest under this subsection, section 550 (1) (2) of the Income Tax Act, 1967 , shall apply to that tax as it applies to tax charged by an assessment to income tax.

(5) The priority attaching to assessed taxes under sections 98 and 285 of the Companies Act, 1963 , shall apply to corporation tax.

Appeals.

146.—(1) The provisions of Part XXVI of the Income Tax Act, 1967 (Appeals), shall apply for the purposes of corporation tax as they apply for the purposes of income tax and accordingly, in those provisions, any reference to income tax shall be taken as including a reference to corporation tax and any reference to the Income Tax Act, 1967 , shall be taken as including a reference to the Corporation Tax Acts.

(2) Where an Appeal Commissioner is interested in his own right or in the right of any other person in any matter under appeal, he shall not take part in, or be present at, the hearing or determination of the appeal.

Application of income tax administrative provisions to corporation tax.

147.—(1) The provisions of the Income Tax Acts specified in subsection (2) shall apply in relation to corporation tax as they apply in relation to income tax and accordingly in those provisions—

(a) any reference to income tax shall be taken as including a reference to corporation tax,

(b) any reference to the Income Tax Acts shall be taken as including a reference to the Corporation Tax Acts, and

(c) any reference to a year of assessment shall be taken as including a reference to an accounting period.

(2) The provisions of the Income Tax Acts referred to in subsection (1) are sections 164 , 165 , 166 (2), 187 (1) (3), 188 (1), 190 , 212 , 339 , 491 , 498 , 505 , 506 , 507 , 514 , 515 , 516 , 518 , 519 , 521 , 536 , 537 , 538 , 539 , 541 , 542 , 543 , 547 , 549 and 551 (1) of the Income Tax Act, 1967 , section 6 of the Finance Act, 1968 , section 73 of the Finance Act, 1974 , and section 21 of the Finance Act, 1975 .

(3) The provisions of the Income Tax Acts specified in subsection (4) shall apply in relation to the recovery of a penalty under the provisions of the Corporation Tax Acts as they apply in relation to the recovery of a penalty under the provisions of Part XXXV of the Income Tax Act, 1967 .

(4) The provisions of the Income Tax Acts referred to in subsection (3) are sections 172 (5), 504 , 508 , 510 , 511 , 512 and 513 of the Income Tax Act, 1967 .

(5) All Commissioners and other persons employed for any purpose in connection with the assessment or collection of corporation tax shall be subject to the same obligations as to secrecy with respect to corporation tax as those persons are subject to with respect to income tax, and any declaration made by any such person as to secrecy with respect to income tax shall be deemed to extend also to secrecy with respect to corporation tax.

Time for certain summary proceedings.

148.—Notwithstanding section 10 (4) of the Petty Sessions (Ireland) Act, 1851 , summary proceedings under section 516 of the Income Tax Act, 1967 (false statements), as applied in relation to corporation tax or under section 63 (production of books and documents: export sales relief) may be instituted within three years from the date of the offence or incurring of the penalty (as the case may be).

Penalties for failure to furnish information and for incorrect information.

149.—(1) Where any person has been required by notice given under or for the purposes of section 27 (change in ownership of company: disallowance of trading losses), section 73 (Shannon relief: delivery of statements), section 123 (information as to arrangements for transferring relief) or Part X (Close Companies), to furnish any information or particulars and he fails to comply with the notice he shall be liable, subject to subsection (3), to a penalty of £100 and, if the failure continues after judgment has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £10 for each day on which the failure so continues.

(2) Where a person fraudulently or negligently furnishes any incorrect information or particulars of a kind mentioned in Part X, section 27, 73, 123 or 151, he shall be liable, subject to subsection (4), to a penalty of £100, or, in the case of fraud, £250.

(3) Where the person mentioned in subsection (1) is a company, it shall be liable to—

(a) a penalty of £500, and, if the failure continues after judgment has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £50 for each day on which the failure so continues, and

(b) the secretary of the company shall be liable to a separate penalty of £100.

(4) Where the person mentioned in subsection (2) is a company, it shall be liable to—

(a) a penalty of £500, or, in the case of fraud, £1,000, and

(b) the secretary of the company shall be liable to a separate penalty of £100, or, in the case of fraud, £200.

(5) The provisions of section 501 (3) of the Income Tax Act, 1967 , shall apply for the purposes of this section as they apply for the purposes of the said section 501.

Postponement of payment of tax to be permitted in certain cases.

150.—(1) Where—

(a) for any accounting period the profits of a company consist of or include income from a trade of dealing in or developing land in the course of which the company disposes of the full interest acquired by it in any land, and

(b) in relation to that disposal the conditions specified in paragraphs (b) to (e) of section 23 (1) of the Finance (Miscellaneous Provisions) Act, 1968 (postponement of payment of tax to be permitted in certain cases), are satisfied, and

(c) at the time when any amount of corporation tax charged by an assessment for that accounting period would, but for this section, become due and payable (otherwise than by virtue of section 419 of the Income Tax Act, 1967 (agreement as to amount of tax not in dispute on an appeal against an assessment), as applied for the purposes of corporation tax)—

(i) the company retains the leasehold interest acquired by it from the person to whom the disposition is made, and

(ii) has not disposed, as regards the whole or any part of the land, of an interest derived from that leasehold interest,

a part of the said amount of corporation tax equal to nine-tenths of so much thereof as would not have been chargeable if no sum had fallen to be taken into account as mentioned in section 23 (1) (d) of the Finance (Miscellaneous Provisions) Act, 1968 , shall be payable in nine equal instalments at yearly intervals the first of which is payable on the expiration of twelve months from the date on which, but for this section, the said amount of corporation tax would have been payable.

(2) Where, in a case in which the postponement of payment of any amount of corporation tax has been authorised by subsection (1)—

(a) the company ceases to retain the leasehold interest acquired by it,

(b) the company disposes, as regards the whole or any part of the land, of an interest derived from the said leasehold interest, or

(c) the company commences to be wound up,

the said amount of corporation tax, or, as the case may be, so much of it as has not already become due and payable, shall become due and payable forthwith.

Income tax on payments.

151.—(1) In this section “relevant payment” means—

(a) any payment made on or after the 6th day of April, 1976, from which income tax is deductible and to which the provisions of subsections (2) to (5) of section 434 of the Income Tax Act, 1967 (payments not payable out of taxed profits), apply, and

(b) any amount which under section 98 (loans to participators, etc.) is deemed to be an annual payment.

(2) This section shall have effect for the purpose of regulating the time and manner in which companies resident in the State—

(a) are to account for and pay income tax in respect of relevant payments, and

(b) are to be repaid income tax in respect of payments received by them on or after the 6th day of April, 1976.

(3) A company shall for each of its accounting periods make, in accordance with this section, a return to the Collector-General of the relevant payments made by it in that period and of the income tax for which the company is accountable in respect of those payments.

(4) A return for any period for which a return is required to be made under this section shall be made within six months from the end of that period.

(5) Income tax in respect of any payment required to be included in a return under this section shall be due at the time by which the return is to be made, and income tax so due shall be payable by the company without the making of any assessment; but income tax which has become due as aforesaid may be assessed on the company (whether or not it has been paid when the assessment is made) if that tax, or any part of it, is not paid on or before the due date.

(6) If it appears to the inspector that there is a relevant payment which ought to have been and has not been included in a return, or if the inspector is dissatisfied with any return, he may make an assessment on the company to the best of his judgment; and any income tax due under an assessment made by virtue of this subsection shall be treated for the purposes of interest on unpaid tax as having been payable at the time when it would have been payable if a correct return had been made.

(7) Where in any accounting period a company receives any payment on which it bears income tax by deduction the company may claim to have the income tax thereon set against any income tax which it is liable to pay under this section in respect of payments made by it in that period, and any such claim shall be included in the return made under subsection (4) for the accounting period in question and (where necessary) income tax paid by the company under this section for that accounting period and before the claim is allowed shall be repaid accordingly.

(8) (a) Where a claim has been made under subsection (7) no proceedings for collecting tax which would fall to be discharged if the claim were allowed shall be instituted pending the final determination of the claim, but this subsection shall not affect the date when the tax is due and when the claim is finally determined any tax underpaid in consequence of this subsection shall be paid.

(b) Where proceedings are instituted for collecting tax assessed, or interest on tax assessed, under any provision of subsection (5) or (6), effect shall not be given to any claim made after the institution of the proceedings so as to affect or delay the collection or recovery of the tax charged by the assessment or of interest thereon.

(c) References in this subsection to proceedings for the collection of tax include references to proceedings by way of distraint for tax.

(9) Income tax set against other tax under subsection (7) shall be treated as paid or repaid, as the case may be, and the same tax shall not be taken into account both under this subsection and under section 3 (2) (income tax on payments made or received by a company resident in the State).

(10) Where a company makes a relevant payment on a date which does not fall within an accounting period the company shall make a return of that payment within six months from that date, and the income tax for which the company is accountable in respect of that payment shall be due at the time by which the return is to be made.

(11) (a) All the provisions of the Income Tax Acts as to the time within which an assessment may be made, so far as they refer or relate to the year of assessment for which an assessment is made, or the year to which an assessment relates, shall apply in relation to any assessment under this section notwithstanding that, under this section, the assessment may be said to relate to a period which is not a year of assessment, and the provisions of section 186 of the Income Tax Act, 1967 (additional assessments), as to the circumstances in which an assessment may be made at any time shall apply accordingly on the footing that any such assessment relates to the year of assessment in which the period ends.

(b) Income tax assessed on a company under this section shall, notwithstanding the provisions of section 477 of the Income Tax Act, 1967 , be due within one month after the issue of the notice of assessment (unless due earlier under subsection (5) or (10)) subject to any appeal against the assessment, but no such appeal shall affect the date when tax is due under subsection (5) or (10).

(c) On the determination of an appeal against an assessment under this section any tax overpaid shall be repaid.

(d) Any tax assessable under any one or more of the provisions of this section may be included in one assessment if the tax so included is all due on the same date.

(12) Nothing in the foregoing provisions of this section shall be taken to prejudice any powers conferred by the Income Tax Acts for the recovery of income tax by means of an assessment or otherwise; and any assessment in respect of tax payable under subsection (10) shall be treated for the purposes of the provisions mentioned in subsection (11) (a) as relating to the year of assessment in which the payment is made.

(13) (a) The Revenue Commissioners may, by regulations made for the purposes mentioned in subsection (2), modify, supplement or replace any of the provisions of this section; and references in this Act and in any other enactment to this section shall be construed as including references to any such regulations; and without prejudice to the generality of the foregoing, the regulations may in relation to income tax charged by this section modify any provision of the Income Tax Acts relating to returns, assessments, claims or appeals or may apply any such provision with or without modification.

(b) Regulations under this subsection may—

(i) make different provision for different descriptions of companies, and for different circumstances, and may authorise the Revenue Commissioners, where in their opinion there are special circumstances justifying it, to make special arrangements as respects income tax for which a company is liable to account or the repayment of income tax borne by a company;

(ii) include such transitional and other supplemental provisions as appear to the Revenue Commissioners to be expedient or necessary.

(c) Every regulation made under this subsection shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next twenty-one days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

(14) Section 434 of the Income Tax Act, 1967 , is hereby amended by the insertion of the following subsection after subsection (5)—

“(5A) Subsections (2), (3) and (5) have effect subject to the provisions of section 151 of the Corporation Tax Act, 1976, with respect to the time and manner in which companies resident in the State are to account for and pay income tax in respect of

(i) payments from which tax is deductible, and

(ii) any amount which is deemed to be an annual payment.”.

Provisions as to tax under section 151.

152.—(1) All the provisions of the Income Tax Acts relating to—

(a) persons who are to be chargeable with income tax;

(b) income tax assessments;

(c) appeals against such assessments (including the rehearing of appeals and the statement of a case for the opinion of the High Court); and

(d) the collection and recovery of income tax,

shall, so far as they are applicable, apply to the charge, assessment, collection and recovery of income tax under section 151.

(2) (a) Any tax payable in accordance with section 151 without the making of an assessment shall carry interest at the rate of 1.5 per cent. for each month or part of a month from the date when the tax becomes due and payable until payment.

(b) The provisions of section 550 (3) (4) (5) of the Income Tax Act, 1967 , shall apply in relation to interest payable under this subsection as they apply in relation to interest payable under the said section 550.

(3) In its application to any tax charged by any assessment to income tax in accordance with section 151 , section 550 of the Income Tax Act, 1967 , shall have effect with the omission of the proviso to subsection (1) and subsections (2) and (2A).

Information.

153.—The inspector may, for any purpose in connection with the assessment and collection of corporation tax, make use of, or produce in evidence, any returns, correspondence, schedules, accounts, statements or other documents or information to which he or the Revenue Commissioners has had or have had or may have lawful access for the purposes of the Acts relating to any tax or duty under the care and management of the Revenue Commissioners.

Meaning of “secretary”.

154.—In this Part “secretary” includes such persons as are mentioned in section 207 (2) of the Income Tax Act, 1967 , and, in the case of a company which is not resident in the State, the agent, manager, factor or other representative of the company.

PART XV

Interpretation and Supplemental

Interpretation.

155.—(1) In this Act and in any Act passed after this Act “the Corporation Tax Acts”, except in so far as the context otherwise requires, means this Act (including provisions relating to income tax), together with the Income Tax Acts so far as those Acts apply for purposes of corporation tax and any other enactments relating to corporation tax.

(2) In this Act and in any Act passed after this Act “the Tax Acts”, except in so far as the context otherwise requires, means the Income Tax Acts (as defined in section 3 of the Income Tax Act, 1967 ) and the Corporation Tax Acts.

(3) Except in so far as the context otherwise requires, in this Act, and in any enactment passed after this Act which by any express provision is to be construed as one with the Tax Acts, “tax”, where neither income tax nor corporation tax is specified, means either of those taxes.

(4) Subsection (3) is without prejudice to the provisions of section 11 which apply income tax law for certain purposes of corporation tax, and accordingly the employment of “income tax” rather than “tax” in any provision of the Income Tax Acts is not a conclusive indication that that provision is not applied to corporation tax by the said section 11.

(5) For the purposes of the Corporation Tax Acts, except in so far as the context otherwise requires—

“accounting date” means the date to which a company makes up its accounts and “period of account” means the period for which it does so;

“allowable loss” does not include, for the purposes of corporation tax in respect of chargeable gains, a loss accruing to a company in such circumstances that if a gain accrued the company would be exempt from corporation tax in respect of it;

“branch or agency” means any factorship, agency, receivership, branch or management;

“chargeable gains” has the meaning given by section 1 (5) (c);

“charges on income” has the meaning given by section 10 (2);

“close company” has the meaning given by sections 94 and 95;

“company” has the meaning given by section 1 (5) (a);

“distribution” has the meaning given by Part IX with sections 96 and 97;

“the financial year 1974” has the meaning given by section 1 (5) (b);

“the financial year” followed by a reference to the year 1975 or any later year means the year beginning on the 1st day of January of such year;

“franked investment income” and “franked payment” shall be construed in accordance with section 24;

“group relief” has the meaning given by section 107;

“interest” means both annual or yearly interest and interest other than annual or yearly interest;

“ordinary share capital”, in relation to a company, means all the issued share capital (by whatever name called) of the company, other than capital the holders whereof have a right to a dividend at a fixed rate, but have no other right to share in the profits of the company;

“preference dividend” means a dividend payable on a preferred share or preferred stock at a fixed rate per cent. or, where a dividend is payable on a preferred share or preferred stock partly at a fixed rate per cent. and partly at a variable rate, such part of that dividend as is payable at a fixed rate per cent.;

“standard rate per cent.” for a year of assessment means 35 where the standard rate for that year is 35 per cent. and similarly as regards any reference to the standard rate per cent. for a year of assessment for which the standard rate is other than 35 per cent.;

“tax credit” means a credit under section 88;

a source of income is “within the charge to” corporation tax or income tax if that tax is chargeable on the income arising from it, or would be so chargeable if there were any such income, and references to a person, or to income, being within the charge to tax, shall be similarly construed.

(6) Any reference in this Act to any other enactment shall, unless the context otherwise requires, be construed as a reference to that enactment as amended or extended by any other enactment, including this Act.

(7) In the Corporation Tax Acts—

(a) a reference to a Part, section or schedule is to a Part or section of, or schedule to, the Act in which the reference occurs, and

(b) a reference to a subsection, paragraph or subparagraph is to the subsection, paragraph or subparagraph of the provision (including a schedule) in which the reference occurs,

unless it is indicated that reference to some other enactment or provision is intended.

(8) In the Corporation Tax Acts, words descriptive of any enactment are intended for convenience of reference only and shall not be used as an aid to the construction of the enactment to which they refer.

(9) References in the Corporation Tax Acts to distributions or payments received by a company apply to any received by another person on behalf of or in trust for the company but not to any received by the company on behalf of or in trust for another person.

(10) References in the Corporation Tax Acts to an amount of profits on which corporation tax falls finally to be borne are references to the amount of those profits after making all deductions and giving all reliefs that for the purposes of corporation tax are made or given from or against those profits, including deductions and reliefs which under any provision are treated as reducing them for those purposes.

(11) Except as otherwise provided by the Corporation Tax Acts and except in so far as the context otherwise requires, words and expressions used in the Income Tax Acts have the same meaning in the Corporation Tax Acts as in those Acts; but no provision of the Corporation Tax Acts as to the interpretation of any word or expression, other than a provision expressed to extend to the use of that word or expression in the Income Tax Acts, shall be taken to affect its meaning in those Acts as they apply for the purposes of corporation tax.

(12) For the purposes of the Corporation Tax Acts dividends shall, except as otherwise provided, be treated as paid on the date when they become due and payable.

(13) Except as otherwise provided by the Corporation Tax Acts, any apportionment to different periods which falls to be made under the Corporation Tax Acts shall be made on a time basis according to the respective lengths of those periods.

Subsidiaries.

156.—(1) For the purposes of the Corporation Tax Acts a company shall be deemed to be—

(a) a “51 per cent. subsidiary” of another company if and so long as more than 50 per cent. of its ordinary share capital is owned directly or indirectly by that other company,

(b) a “75 per cent. subsidiary” of another company if and so long as not less than 75 per cent. of its ordinary share capital is owned directly or indirectly by that other company,

(c) a “90 per cent. subsidiary” of another company if and so long as not less than 90 per cent. of its ordinary share capital is directly owned by that other company.

(2) In subsection (1) (a) (b) “owned directly or indirectly” by a company means owned, whether directly or through another company or other companies or partly directly and partly through another company or other companies.

(3) In this section references to ownership shall be construed as references to beneficial ownership.

(4) For the purposes of this section the amount of ordinary share capital of one company owned by a second company through another company or other companies, or partly directly and partly through another company or other companies, shall be determined in accordance with the following provisions of this section.

(5) Where, in the case of a number of companies, the first directly owns ordinary share capital of the second and the second directly owns ordinary share capital of the third, then, for the purposes of this section, the first shall be deemed to own ordinary share capital of the third through the second, and, if the third directly owns ordinary share capital of a fourth, the first shall be deemed to own ordinary share capital of the fourth through the second and third, and the second shall be deemed to own ordinary share capital of the fourth through the third, and so on.

(6) In this section—

(a) any number of companies of which the first directly owns ordinary share capital of the next and the next directly owns ordinary share capital of the next but one and so on, and, if they are more than three, any three or more of them, are referred to as “a series”;

(b) in any series—

(i) that company which owns ordinary share capital of another through the remainder is referred to as “the first owner”;

(ii) that other company the ordinary share capital of which is so owned is referred to as “the last owned company”;

(iii) the remainder, if one only, is referred to as an “intermediary” and, if more than one, are referred to as “a chain of intermediaries”;

(c) a company in a series which directly owns ordinary share capital of another company in the series is referred to as an “owner”;

(d) any two companies in a series of which one owns ordinary share capital of the other directly, and not through one or more of the other companies in the series, are referred to as being directly related to one another.

(7) Where every owner in a series owns the whole of the ordinary share capital of the company to which it is directly related, the first owner shall be deemed to own through the intermediary or chain of intermediaries the whole of the ordinary share capital of the last owned company.

(8) Where one of the owners in a series owns a fraction of the ordinary share capital of the company to which it is directly related, and every other owner in the series owns the whole of the ordinary share capital of the company to which it is directly related, the first owner shall be deemed to own that fraction of the ordinary share capital of the last owned company through the intermediary or chain of intermediaries.

(9) Where—

(a) each of two or more of the owners in a series owns a fraction, and every other owner in the series owns the whole, of the ordinary share capital of the company to which it is directly related; or

(b) every owner in a series owns a fraction of the ordinary share capital of the company to which it is directly related;

the first owner shall be deemed to own through the intermediary or chain of intermediaries such fraction of the ordinary share capital of the last owned company as results from the multiplication of those fractions.

(10) Where the first owner in any series owns a fraction of the ordinary share capital of the last owned company in that series through the intermediary or chain of intermediaries in that series, and also owns another fraction or other fractions of the ordinary share capital of the last owned company, either—

(a) directly, or

(b) through an intermediary or intermediaries which is not a member or are not members of that series, or

(c) through a chain or chains of intermediaries of which one or some or all are not members of that series, or

(d) in a case where the series consists of more than three companies, through an intermediary or intermediaries which is a member or are members of the series, or through a chain or chains of intermediaries consisting of some but not all of the companies of which the chain of intermediaries in the series consists,

then, for the purpose of ascertaining the amount of the ordinary share capital of the last owned company owned by the first owner, all those fractions shall be aggregated and the first owner shall be deemed to own the sum of those fractions.

Connected persons.

157.—(1) For the purposes of, and subject to, the provisions of the Corporation Tax Acts which apply this section, any question whether a person is connected with another shall be determined in accordance with the following provisions of this section (any provision that one person is connected with another being taken to mean that they are connected with one another).

(2) A person is connected with an individual if that person is the individual's husband or wife, or is a relative, or the husband or wife of a relative, of the individual or of the individual's husband or wife.

(3) A person, in his capacity as trustee of a settlement, is connected with any individual who in relation to the settlement is a settlor, with any person who is connected with such an individual and with a company which, in accordance with subsection (10), is deemed to be connected with that settlement (“settlement” and “settlor” having for the purposes of this subsection the meanings assigned to them by subsection (9)).

(4) Except in relation to acquisitions or disposals of partnership assets pursuant to bona fide commercial arrangements, a person is connected with any person with whom he is in partnership, and with the husband or wife or a relative of any individual with whom he is in partnership.

(5) A company is connected with another company—

(a) if the same person has control of both, or a person has control of one and persons connected with him, or he and persons connected with him, have control of the other, or

(b) if a group of two or more persons has control of each company, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person with whom he is connected.

(6) A company is connected with another person if that person has control of it or if that person and persons connected with him together have control of it.

(7) Any two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with one another and with any person acting on the directions of any of them to secure or exercise control of the company.

(8) In this section—

“control” shall be construed in accordance with section 102 (meaning of “associated company” and “control”),

“relative” means brother, sister, ancestor or lineal descendant.

(9) In this section, “settlement” includes any disposition, trust, covenant, agreement or arrangement, and “settlor”, in relation to a settlement, means any person by whom the settlement was made; and a person shall be deemed for the purposes of this section to have made a settlement if he has made or entered into the settlement directly or indirectly and in particular (but without prejudice to the generality of the preceding words) if he has provided or undertaken to provide funds directly or indirectly for the purpose of the settlement, or has made with any other person a reciprocal arrangement for that other person to make or enter into the settlement.

(10) For the purposes of this section, a company shall be deemed to be connected with a settlement in any accounting period if it is at any time in the period a close company (or only not a close company because it is not resident in the State) and the participators then include the trustees of or a beneficiary under the settlement.

Meaning of “control”.

158.—For the purposes of, and subject to, the provisions of the Corporation Tax Acts which apply this section, “control”, in relation to a company, means the power of a person to secure, by means of the holding of shares or the possession of voting power in or in relation to that or any other company, or by virtue of any powers conferred by the articles of association or other document regulating that or any other company, that the affairs of the first-mentioned company are conducted in accordance with the wishes of that person and, in relation to a partnership, means the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership.

Chargeable gains accruing to non-resident companies.

159.—If any tax payable by any company by virtue of section 36 (2) of the Capital Gains Tax Act, 1975 (under which shareholders in a non-resident company may be taxed in respect of a chargeable gain accruing to the company), is paid by the company to which the chargeable gain accrues, or in a case under subsection (8) of the said section is paid by any such other company, the amount so paid shall not for the purposes of corporation tax be regarded as a payment to the company by which the tax was originally payable.

Individuals resident abroad: tax credit.

160.—An individual who, having made a claim in that behalf, is entitled to relief under Part VI of the Income Tax Act, 1967 , by virtue of section 153 (2) of that Act (personal reliefs for certain non-residents) in respect of any year of assessment shall be entitled to a tax credit in respect of any distribution received by him in that year to the same extent as if he were resident in the State and section 67 (distributions to non-resident individuals out of profits from exports) and section 83 (4) (Schedule F) shall not have effect in relation to such an individual.

Rectification of excessive set-off etc. of tax credit.

161.—(1) If an inspector discovers that any set-off or payment of tax credit ought not to have been made, or is or has become excessive, the inspector may make any such assessments as may in his judgment be required for recovering any tax that ought to have been paid or any payment of tax credit that ought not to have been made and generally for securing that the resulting liabilities to tax of the persons concerned are what they would have been if only such set-offs or payments had been made as ought to have been made.

(2) Part XIV (Administration) shall apply to any assessment under this section for recovering a payment of tax credit as if it were an assessment to income tax for the year of assessment, or, in the case of a company, corporation tax for the accounting period, in respect of which the payment was claimed and as if that payment represented a loss of tax to the Exchequer; and any sum charged by any such assessment shall, subject to any appeal against the assessment, be due within fourteen days after the issue of the notice of assessment.

Surcharge on undistributed income of service companies.

162.—(1) Subject to subsection (2), in this section “service company” means—

(a) a close company whose business consists of or includes the carrying on of a profession or the provision of professional services,

(b) a close company having or exercising an office or employment, or

(c) a close company whose business consists of or includes the provision of services or facilities of whatsoever nature to or for—

(i) a company within either of the categories referred to in paragraphs (a) and (b),

(ii) an individual who carries on a profession,

(iii) a partnership which carries on a profession,

(iv) a person who has or exercises an office or employment, or

(v) a person or partnership connected with any person or partnership referred to in subparagraphs (i) to (iv):

Provided that the provision by a close company of services or facilities to or for a person or partnership not connected with the company shall be disregarded for the purposes of this paragraph.

(2) Where the principal part of a company's income which is chargeable to corporation tax under Cases I and II of Schedule D and Schedule E is not derived from—

(a) carrying on a profession,

(b) providing professional services,

(c) having or exercising an office or employment,

(d) providing services or facilities (other than services or facilities referred to in the proviso to subsection (1) (c)) to or for any person or partnership referred to in subsection (1) (c) (i) to (v), or

(e) any two or more of the activities specified in paragraphs (a) to (d),

the company shall be deemed not to be a service company.

(3) For the purposes of this section—

(a) a partnership shall be treated as connected with a company or individual (and a company or individual shall be treated as connected with a partnership) if any one of the partners in the partnership is connected with the company or individual,

(b) a partnership shall be treated as connected with another partnership if any one of the partners in the partnership is connected with any one of the partners in the other partnership.

(4) Where for an accounting period of a service company, the aggregate of—

(a) four-fifths of the distributable income, and

(b) one-fifth of the aggregate of the distributable investment income and the distributable estate income

exceeds the distributions of the company for the accounting period, there shall be charged on the company for the accounting period an additional duty of corporation tax (in this section referred to as a surcharge) amounting to 20 per cent. of the excess:

Provided that—

(i) a surcharge shall not be made on the company where the excess is equal to or less than the smaller of the following amounts—

(I) £500, or, if the accounting period is less than twelve months, £500 proportionately reduced, and

(II) where the company has one or more associated companies, £500 divided by one plus the number of those associated companies, or, if the accounting period is less than twelve months, £500 proportionately reduced divided by one plus the number of those associated companies;

(ii) where the excess is greater than the smaller amount on which by virtue of paragraph (i) a surcharge would not be made, the amount of the surcharge shall not be greater than a sum equal to four-fifths of the amount by which the excess is greater than that smaller amount.

(5) The provisions of section 101 (1) shall not apply in relation to a service company but the provisions of section 101 (2) (3) (4) (5) (6) shall apply in relation to a surcharge made under this section as they apply in relation to a surcharge made under the said section 101 with the substitution in section 101 (2) of a reference to subsection (4) of this section for the reference to subsection (1) of that section.

(6) (a) The provisions of section 100 (1) (2) (6) (7) (meaning of distributable income, etc.) shall apply for the purposes of this section as they apply for the purposes of the said section 100 or section 101 as the case may be.

(b) For the purposes of this section—

(i) the income of a company for an accounting period is its income computed for that period as defined in section 100 (3);

(ii) distributable income, distributable investment income and distributable estate income of a company for an accounting period have the meanings assigned to them by section 100 (4) (5) with the substitution for the reference to a trading company in each place where it occurs in section 100 (5) of a reference to a service company.

(7) The provisions of section 157 shall apply for the purposes of this section.

Relief to certain companies liable to foreign tax.

163.—(1) In this section—

“accounting period” includes a part of an accounting period;

“external tax” means a tax which is chargeable and payable under the law of the territory in which the paying company is resident, being a territory to which this section applies, and which corresponds to Irish corporation tax or income tax or both of those taxes:

Provided that a tax which is payable under the law of a province, state or other part of a country, or which is levied by or on behalf of a municipality or other local body shall, for the purposes of this subsection, be deemed not to correspond to those taxes.

(2) This section applies to every territory other than—

(a) Northern Ireland and Great Britain,

(b) the United States of America, and

(c) a territory with the Government of which arrangements are for the time being in force by virtue of section 361 of the Income Tax Act, 1967 (agreements for relief from double taxation of income).

(3) Where a company (in this section referred to as the investing company) has paid, by deduction or otherwise, or is liable to pay, by reference to any part of its income arising in a territory to which this section applies, tax for any accounting period and it is shown to the satisfaction of the Revenue Commissioners—

(a) that the said part of the investing company's income consists of a dividend, or interest, paid to it by a company resident in the territory (in this section referred to as the paying company) not less than one-half of the voting power in which is controlled, directly or indirectly, by the investing company,

(b) that the said dividend, or interest, arose from the investment in the paying company by the investing company, whether by way of loan or otherwise, of a sum or sums representing—

(i) profits the Irish tax referable to which has been reduced to nil under Chapter IV of Part XXV of the Income Tax Act, 1967 (Profits from Export of Certain Goods), or under Part III of the Finance (Miscellaneous Provisions) Act, 1956 (Profits from Exports), or under Part IV of this Act (Profits from Exports), or

(ii) such proportion of profits the Irish tax referable to which has been reduced otherwise than to nil under the said provisions as is equal to the proportion by which the said Irish tax has been so reduced, or

(iii) profits arising from exempted trading operations which by virtue of Chapter I of Part XXV of the Income Tax Act, 1967 (Profits from Trading within Shannon Airport), or Parts I and II of the Finance (Miscellaneous Provisions) Act, 1958 (Trading within Shannon Airport), or Part V of this Act (Trading within Shannon Airport) have not, in relation to the company by which such operations are carried on, been taken into account for any purpose of the Income Tax Acts or for any purpose of Part V of the Finance Act, 1920 (Corporation Profits Tax), and the enactments amending or extending the said Part, or for any purpose of this Act, and

(c) that the investing company has paid external tax in the said territory in respect of the said part of its income,

the Revenue Commissioners may grant to the investing company in respect of the said accounting period such relief as is just with a view to affording relief in respect of the double taxation of the said part of the investing company's income, but not exceeding whichever of the following is the less, that is to say, one-half of the total of the corporation tax that would, but for this section, be payable by the investing company in respect of the said part of its income or the amount of the external tax paid or payable in the said territory in respect of the said part of its income after deduction of any relief to which the company may be entitled in that territory.

(4) (a) External tax paid by the paying company in respect of its profits shall be taken into account in considering whether any, and if so, what relief ought to be allowed in respect of a dividend paid by the paying company to the investing company, and for the purposes of this section, other than this subsection, such tax, or the appropriate part thereof, shall be regarded as external tax paid by the investing company.

(b) The provisions of paragraph 9 of Schedule 10 to the Income Tax Act, 1967 (relief in respect of foreign tax), shall apply for the purpose of ascertaining the amount of the external tax paid by the paying company which is to be taken into account in relation to any dividend paid by the paying company to the investing company as they apply to the computation of foreign tax to be taken into account for the purposes of the said paragraph 9.

(5) (a) Nothing in this section shall authorise the granting of relief under this section to any company in respect of any accounting period to such an extent as would reduce the aggregate amount (computed after deduction of any relief to which the company may be entitled in the said territory) of the corporation tax and external tax payable by such company in respect of any part of its income of the kind described in subsection (3) (a) arising in a territory to which this section applies below the amount of corporation tax which would be payable by the company in respect of the said part of its income if that part of its income had arisen in the State and had been liable in the hands of the investing company to corporation tax.

(b) In computing for the purposes of paragraph (a) the amount of corporation tax which would be so payable by the company in respect of the said part of its income if that part had arisen in the State—

(i) no deduction for external tax shall be made from the said part of its income, and

(ii) where pursuant to subsection (4) external tax paid by the paying company is regarded as external tax paid by the investing company, the said part of the investing company's income shall be treated as increased by the amount of the external tax which is so regarded.

(6) Relief under this section shall be given as a credit against corporation tax chargeable by reference to the part of the investing company's income referred to in subsection (3) (a).

(7) (a) Any claim for relief under this section shall be made in writing to the inspector not later than six years from the end of the accounting period to which it relates.

(b) An appeal to the Appeal Commissioners shall lie on any question arising under this section in like manner as an appeal would lie against an assessment to corporation tax, and the provisions of the Tax Acts relating to appeals shall apply and have effect accordingly.

Income tax and corporation profits tax repeals.

164.—Each enactment mentioned in the Third Schedule is hereby repealed to the extent specified in column (3) of that Schedule, subject to the provisions of this Act and, in particular, to the provision made at the end of each Part of that Schedule.

Section 38 of Finance Act, 1924, not to apply to corporation tax.

165.Section 38 of the Finance Act, 1924 (recovery of moneys due), shall not have effect in relation to corporation tax.

Amendments and repeals concerning double taxation relief.

166.—(1) Each enactment mentioned in column (2) of Part I of the Fourth Schedule shall be amended as specified in column (3) of that Schedule and shall, as so amended, have effect in relation to corporation tax.

(2) Each enactment mentioned in Part II of the Fourth Schedule is hereby repealed to the extent specified in column (3) of that Schedule.

(3) The amendments and repeals in each Part of the Fourth Schedule are subject to the provisions of this Act and, in particular, to the provision made at the end of that Part.

Computation of payable tax credits where double taxation relief is allowed.

167.—(1) In this section—

“the company” means a company making a distribution;

“distribution” means a distribution in respect of which the recipient is entitled to a tax credit under section 88;

“distributable income” has the meaning given by section 64 (4) (distributions: export sales relief);

“double taxation relief” means any credit for tax payable in any territory outside the State which is allowable against Irish corporation tax by virtue of any international agreement having the force of law, including any such credit which under section 363 of the Income Tax Act, 1967 (treatment of dividends for double taxation relief in certain cases), or this section has been taken into account in relation to any distribution receivable by the company;

“foreign tax” means tax payable in any territory outside the State and in respect of which double taxation relief is allowable;

“foreign income” means income in respect of which foreign tax is payable;

“the reduced Irish tax credit” means the sum calculated under subsection (3).

(2) (a) For the purposes of subsection (3) the amount of relevant tax in respect of any income is an amount determined by the formula

100

(A − B) ×________

100 − C

where—

A is the amount of corporation tax which is chargeable in respect of the income,

B is an amount equal to income tax at the standard rate on the amount of the income, such standard rate being the rate for the year of assessment in which the appropriate accounting period ends, and

C is the standard rate per cent. for the year of assessment in which the appropriate accounting period ends.

(b) For the purposes of paragraph (a) the appropriate accounting period means the accounting period for which corporation tax is chargeable in respect of the income.

(c) Notwithstanding paragraph (a) the amount of relevant tax in respect of any amount of franked investment income which by virtue of subsection (4) is deemed to be foreign income shall be taken to be nil.

(3) Where a distribution (being a distribution which is made, or by virtue of subsection (6) is deemed to have been made, for an accounting period) is made wholly or partly out of foreign income, and the foreign tax paid in respect of the income exceeds the amount of relevant tax in respect of that income, any payment of the tax credit in respect of the distribution shall be made as if the said tax credit were a sum calculated by deducting from the amount of the tax credit which apart from this section would apply in respect of the distribution—

(a) where the distribution is equal in amount to the whole of the distributable income—an amount equal to the excess of the foreign tax over the relevant tax in respect of the foreign income, and

(b) where the distribution is less in amount than the whole of the distributable income—an amount which bears to the deduction which would be made if the distribution were equal in amount to the whole of the distributable income the same proportion as the distribution bears to the whole of the distributable income.

(4) Where a distribution is received by the company and the amount of any payment of the tax credit to the company in respect of that distribution would, if a proper claim in that behalf were made, be determined in accordance with this section, then for the purposes of subsection (3)—

(a) the amount of franked investment income which the distribution represents shall be deemed to be foreign income of the accounting period in which the distribution is received, and

(b) the amount by which the tax credit in respect of the distribution exceeds the tax credit which would, if a proper claim in that behalf were made, be payable to the company shall be deemed to be foreign tax paid by the company in respect of that income.

(5) (a) Where, for an accounting period, the company has paid, or, under subsection (4), is deemed for the purposes of subsection (3) to have paid, foreign tax in respect of income from more than one source, the deduction referred to in subsection (3) shall be computed separately in respect of income from each source and the separate amounts as so computed shall be aggregated for the purpose of computing the total amount of the deduction which should be made.

(b) For the purposes of this subsection—

(i) the amount of franked investment income which is represented by each distribution which is received by the company shall be deemed to be income from a separate source, and

(ii) where a company has paid foreign tax in respect of income (not being franked investment income which is deemed under subsection (4) to be foreign income) arising in two or more territories outside the State, the income arising in each such territory shall be deemed to be income from a separate source.

(6) The provisions of subsections (3), (5) and (6) of section 64 (distributions: tax credit and export sales relief) shall apply for the purposes of this section as they apply for the purposes of that section.

(7) Where the income out of which a distribution is made, or is deemed by virtue of subsection (6) to have been made, includes income the income tax on which was reduced by the allowance of double taxation relief or includes dividends to which the provisions of section 363 (2) (a) of the Income Tax Act, 1967 , applied, the tax credit in respect of that distribution shall for the purposes of payment thereof be subject to such adjustment as may be appropriate.

(8) For the purposes of this section all such apportionments as may be necessary shall be made.

(9) Where the reduced Irish tax credit falls to be computed in relation to a distribution, the particulars to be given by the company in the statement required by section 5 (dividend warrants) shall, in addition to the particulars required to be given apart from this section, include particulars of the reduced Irish tax credit.

(10) Where a distribution has been made before the making by the Government of an order to which section 361 (1) of the Income Tax Act, 1967 , relates, and any double taxation relief would have fallen to be taken into account in relation to that distribution if this section had applied thereto, that relief shall be taken into account as far as possible in determining the reduced Irish tax credit in relation to the first distribution made by the company after the making of the order, and any part of that relief which cannot be so taken into account shall as far as possible be taken into account in relation to the next succeeding distribution, and so on.

(11) Where—

(a) the whole or part of an annual payment is made out of income represented by a distribution, and

(b) that distribution is made wholly or partly out of foreign income,

the tax credit in respect of that distribution shall, notwithstanding the provisions of section 88, be an amount equal to the amount which, by virtue of subsection (3) of this section, would be payable in respect of the said tax credit:

Provided that nothing in this subsection shall affect the amount of income which a distribution is treated as representing for the purposes of Schedule F.

Supplemental provisions concerning the determination of reduced Irish tax credit for section 167.

168.—(1) In this section “the reduced Irish tax credit”, “double taxation relief”, “the company”, “distributable income” and “distribution” have the same meanings as in section 167.

(2) Where any matter affecting the calculation of double taxation relief has not been fully determined at the time when the reduced Irish tax credit falls to be determined in relation to any distribution, the double taxation relief shall be estimated according to the best of the information available at the time, and, if it is subsequently found that the relief so estimated was excessive or deficient, the appropriate adjustment shall be made in determining the reduced Irish tax credit applicable to the next subsequent distribution on the occasion of which it is practicable to make the adjustment, and shall be made by reducing or, as the case may be, increasing the double taxation relief, as calculated for the purposes of that subsequent distribution, by the amount of the excess or the deficiency.

(3) For the purposes of this section, a distribution which is not expressed to be made for any specified period shall be deemed to be made for the last period of account of the company which ended before the distribution was made.

(4) Where a company makes, or is deemed under subsection (3) to have made, a distribution for an accounting period, the distribution shall be regarded for the purposes of this section and of section 167 as having been made out of the distributable income of that period to the extent of that income and in relation to the excess of the distributions over that income, out of the most recently accumulated income.

(5) This section and section 167 shall have effect as if references therein to double taxation relief included references to relief granted under section 163.

Limitations on deductions in respect of interest.

169.—Where, apart from this section, a company would be entitled to deductions in respect of—

(a) interest under the provisions of paragraph 1 (2) of Part III of Schedule 6 to the Income Tax Act, 1967 (provisions for giving effect to agreements for avoidance of double taxation in the case of the United Kingdom), and

(b) charges on income which are payments of interest to which the provisions of section 10 (6) apply,

the aggregate amount of the deductions which may be made under those provisions shall not exceed the amount specified in section 10 (6).

Patent royalties: provisions supplemental to section 34 of Finance Act, 1973.

170.—(1) In this section—

“disregarded income” means—

(a) income which by virtue of section 34 (2) of the Finance Act, 1973 (income from patent royalties), has been disregarded for purposes of income tax, and

(b) income which by virtue of section 34 (2) of the Finance Act, 1973 , and section 11 (6) has been disregarded for purposes of corporation tax;

“other profits” includes a dividend or other distribution of a company which is resident in the State but does not include a distribution to which subsection (3) (a) (ii) applies.

(2) Where a distribution for an accounting period is made by a company in part out of disregarded income and in part out of other profits, the distribution shall be treated as if it consisted of two distributions respectively made out of disregarded income and out of other profits.

(3) (a) So much of any distribution as has been made out of disregarded income—

(i) shall not be regarded as income for any purpose of the Income Tax Acts; and

(ii) shall, where the recipient of such distribution is a company, be deemed for the purposes of this section to be disregarded income.

(b) The recipient of any distribution, including part of a distribution treated under subsection (2) as a distribution, made out of disregarded income shall not be entitled to a tax credit in respect of that distribution.

(4) (a) Where a company makes a distribution, including part of a distribution treated under subsection (2) as a distribution, in respect of any right or obligation to which section 178 (dividends at gross rate or of gross amount) relates and the distribution is made out of disregarded income, the company shall make a supplementary distribution of an amount equal to the amount of the tax credit which would have applied in respect of the distribution if subsection (3) (b) had not been enacted.

(b) Subsection (3) shall apply to a supplementary distribution under this subsection as if that supplementary distribution were a distribution made wholly out of disregarded income.

(5) In relation to any distribution (not being a supplementary distribution under this section), including part of a distribution treated under subsection (2) as a distribution, made by a company out of disregarded income, sections 5 and 83 (5) (Schedule F) shall apply to the company so that the statements provided for by those sections shall show, as respects each such distribution, in addition to the particulars required to be given apart from this section, that the distribution is made out of disregarded income.

(6) In relation to any supplementary distribution under subsection (4), section 5 shall apply to the company so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

(7) Where a company makes a distribution for an accounting period, the distribution shall be regarded for the purposes of this section as having been made out of the distributable income (as defined in section 64 (4)) of that period to the extent of that income and in relation to the excess of the distributions over that income, out of the most recently accumulated income.

(8) The provisions of subsections (5) and (6) of section 64 shall apply for the purposes of this section as they apply for the purposes of that section.

Construction of references to income tax paid by deduction and to repayment.

171.—In the Tax Acts, unless the context otherwise requires, references to—

(a) income tax paid by a person by deduction shall be construed as including references to a tax credit to which he is entitled, and

(b) repayment of income tax shall be construed as including references to payment of a tax credit.

Continuation of elections.

172.—(1) Where before the year 1976-77 a company has for purposes of income tax made any election or done any other act of a description which—

(a) would have had continuing effect for income tax for that year;

(b) may also be made for corporation tax;

then that election or act shall for corporation tax be valid and effectual as if duly made or done for that tax, and have effect from the beginning of the first accounting period for which the company is within the charge to corporation tax in respect of the matter in question.

(2) Accordingly where any such election or act is required to be made or done, if at all, at a particular time, no provision of this Act amending the enactment under which it is made or done so as to specify a different time in relation to corporation tax (whether by substituting a reference to the first accounting period for a reference to the first year of assessment in which anything takes place, or otherwise) shall be taken, unless the contrary intention appears, to invalidate any election or act duly made or done nor, where the time has passed for making or doing it for income tax, to extend the time in relation to corporation tax; but nothing in this section shall take away any right of revocation or variation.

PART XVI

Savings, Transitions, etc.

Commencement of corporation tax for existing companies, and transition from income tax.

173.—(1) A company not within the charge to income tax for the year 1975-76 in respect of a source of income shall not come within the charge to corporation tax in respect of that source for any period before the end of that year, and for this purpose a company shall be regarded as not having been within the charge to income tax for the year 1975-76 if it was entitled for that year, under agreements between the Government and the United Kingdom Government in respect of double income tax, to exemption from income tax in respect of profits or income arising in the State.

(2) Where a company is within the charge to income tax for the year 1975-76 in respect of a source of income, the company shall not come within the charge to corporation tax in respect of that source for any period before the end of that year, unless the charge to income tax for that year falls to be ascertained by reference to a period ending before the end of that year and the company possesses the source at the end of that year, but shall in that case be within the charge to corporation tax in respect of the source from the end of the basis period for income tax for that year or, if it is later, the end of the basis period for the year 1974-75.

(3) In this section any reference to the basis period for the year 1974-75 or 1975-76 is, in relation to any source of income, a reference to the period on the income of which the income tax (if any) chargeable for that year falls to be finally computed in respect of the source or, where by virtue of any provision of the Income Tax Acts the income of any other period is to be taken to be the income of the said period, that other period.

(4) Where a company is within the charge to income tax in respect of a trade on the 5th day of April, 1976, and continues to carry on the trade after that date, section 12 (2) (miscellaneous special rules for computation of income) shall not apply to treat the trade as permanently discontinued and a new trade as set up and commenced on the company first coming within the charge to corporation tax in respect of that trade.

(5) Where, in the case of a trade carried on by a company, the year 1974-75 or the year 1975-76 is the year next but one after the year of assessment in which the trade is set up and commenced and the company makes a claim under section 58 (4) of the Income Tax Act, 1967 (basis of assessment), the end of the basis period for income tax for the purpose of subsection (2) shall, if the year of claim is 1974-75 be taken to be the 5th day of April, 1975, and shall, if the year of claim is 1975-76, be taken to be the 5th day of April, 1976.

(6) Section 58 (5) (a) (ii) of the Income Tax Act, 1967 , as amended by section 3 of the Finance Act, 1971 (period of computation of profits on discontinuance of trade), shall not apply in relation to income tax for any year of assessment on the discontinuance after the 5th day of April, 1976, of a trade carried on by a company; nor shall either section 77 (3) of the Income Tax Act, 1967 (basis of assessment under Case III of Schedule D), or section 81 (3) (b) of the Income Tax Act, 1967 , as substituted by section 22 of the Finance Act, 1969 (basis of assessment under Case V of Schedule D), apply in the case of a company in relation to income tax for the year 1975-76, unless that year is the last year in which the company possesses the source.

Winding up of corporation profits tax.

174.—(1) There shall be disregarded for the purposes of corporation profits tax for any accounting period profits in respect of which a company is within the charge to corporation tax, and all amounts which would be deductible in computing any such profits for corporation profits tax purposes (in so far as they are also deductible in computing other profits for those purposes) and which are deductible for corporation tax, except that if that company is within the charge to corporation tax in respect of the profits for part only of the accounting period, this subsection shall apply in relation to that part, and there shall be made the like apportionments between that part and the remainder, as if the two parts were separate accounting periods.

(2) Section 69 (6) of the Finance Act, 1959 (which provides for capital allowances and charges to be made in the case of businesses not chargeable to income tax), shall not have effect for the making of deductions or additions by reference to the period after the year 1975-76.

(3) Where, apart from this provision, corporation profits tax would be chargeable in accordance with this section on profits of any trade or business, the company chargeable may, by notice in writing given to the Revenue Commissioners before the 6th day of April, 1978, or within such longer time as the Revenue Commissioners may in any case allow, elect that this section, except subsection (2), shall not have effect in relation to that company:

Provided that where for any accounting period an election is made under this subsection, all amounts which under section 25 of the Finance Act, 1964 (relief in respect of certain losses), could be deducted from or set off against profits of the company's trade or business for that accounting period, computed without regard to this subsection, shall be deemed to have been so deducted or set off and shall not be included in the computation of any relevant deficiency for the purposes of section 184.

Capital gains tax losses accruing before 6th April, 1976.

175.—Any losses of a company which are allowable against chargeable gains for the purposes of capital gains tax in respect of the year of assessment 1974-75 or 1975-76, in so far as they cannot be allowed against chargeable gains for the purposes of that tax, shall be treated for the purposes of corporation tax as if they were allowable losses accruing to the company while within the charge to corporation tax.

Transitional relief for existing companies on cessation of trade, etc.

176.—(1) Where a company is, in respect of any source of income, within the charge to corporation tax under any relevant Case of Schedule D during the year 1975-76 and ceases to possess that source at any time between that year and the year 1981-82, then subject to the provisions of this section the company shall be entitled to relief from tax in respect of any amount by which, if the company had ceased to possess the source on the 5th day of April, 1976, the taxed income from the source during the cessation period would have been less than the actual taxed income during that period.

(2) Relief under this section shall be an allowance equal to whichever is the less of—

(a) the amount referred to in subsection (1); and

(b) an amount equal to the appropriate fraction of the taxed income from the source during a period equal in length to the cessation period but ending when the company ceases to possess the source:

Provided that if the company ceases to possess the source in the year 1978-79 the allowance shall be reduced by one-fourth, if in the year 1979-80 by one-half, and if in the year 1980-81 by three-fourths.

(3) Where a company is entitled to an allowance under this section in respect of any source of income, then for the purpose of any liability of the company to corporation tax or income tax (but not for any other purpose) the amount of the income arising to the company from the source shall be treated as reduced by the amount of the allowance (the reduction being made, as far as may be, in the income arising in accounting periods for which the company is chargeable to corporation tax in respect of the source and, subject to that, in the income chargeable to income tax before the year 1976-77, and being made, as far as may be, in the income of a later rather than in that of an earlier period or year) and relief under this section shall be given in priority to any other relief.

(4) For purposes of this section “taxed income” means, in relation to any source, the amount of the income falling to be included in assessments for the purpose of charging the company to income tax or corporation tax in respect of the source.

(5) For purposes of this section, the relevant Cases of Schedule D are Cases I, II, III and V; and in relation to any source of income—

(a) “the cessation period” means the period over which assessments to income tax might have been revised on the company ceasing to possess the source on the 5th day of April, 1976 (and accordingly is three years for Cases I and II and two years for Cases III and V); and

(b) “the appropriate fraction” is such fraction of the cessation period as falls after the time when the company is first within the charge to corporation tax in respect of the source (and accordingly is, for Cases III and V, one-half).

(6) (a) (i) Except in so far as the context otherwise requires, references in this section to a company ceasing to possess a source of income shall, in relation to a trade, include the company ceasing in respect of the trade to be within the charge to corporation tax under Case I or II of Schedule D; and references to a company carrying on a trade or any part or activities of a trade are references to its doing so in such circumstances as to be within that charge to tax.

(ii) For purposes of this section the cessation period in relation to a trade shall be taken to be three years, notwithstanding that the trade has been carried on for less than three years before the year 1976-77; but where the appropriate fraction (that is to say the appropriate fraction under subsection (2) (b)) is to be applied to income from a trade which has been carried on by the company for a period less than three years, the appropriate fraction shall be increased in the proportion which a period of three years bears to that less period.

(iii) For purposes of this section, section 173 (7) shall apply in relation to the whole period after the trade was set up and commenced as, for other purposes of corporation tax, it applies from the end of the basis period for the year 1975-76, but (notwithstanding anything in section 173 (7)) any allowance to the company in respect of the trade, in so far as it cannot be given to the company, shall be given to the company's predecessors.

(b) (i) The following subparagraphs shall apply to the computation of a company's income from a trade for the purposes of this section.

(ii) No regard shall be had to any allowance or charge falling to be made in taxing the trade.

(iii) In determining what the taxed income from the trade would have been if the company had ceased to possess the trade as a source of income at the end of the year 1975-76, the computation shall be made, if need be, by division and apportionment or aggregation of income for accounting periods, including any period extending beyond the end of that year, and without regard to the operation of any enactment which would affect the computation on an actual discontinuance of the trade except section 58 (5) (a) of the Income Tax Act, 1967 , and section 3 of the Finance Act, 1971 .

(iv) Where the taxed income referred to in subsection (1) (whether the actual income or the income as on a cessation) falls to be ascertained partly by reference to a period in which the company incurred a loss in the trade, that income shall be ascertained as if there had been no such loss (nor any income) in that period, but in ascertaining for purposes of subsection (2) (b) the taxed income for any period losses incurred in that period and any part of a loss apportionable to that period shall be deducted from income.

(c) (i) If a company on ceasing at any time to possess a trade as a source of income continues to carry on any of the activities of the trade as activities of another trade, the company shall be disentitled as at that time to such part of the allowance in respect of the first-mentioned trade as is referable to those activities.

(ii) Where within two years after the time when a company ceases to possess a trade as a source of income—

(I) the trade or any part of it is carried on by the company or by an associated company; or

(II) the activities of the trade or part of them are carried on by an associated company as activities of another trade;

the company shall be disentitled as from that time to the allowance in respect of the first-mentioned trade:

Provided that where this subparagraph applies by reason only of part of the trade or part of its activities being carried on by an associated company the company shall be so disentitled only to such part of the allowance as is referable to that part of the trade or activities.

(iii) Where a company ceases at any time to carry on part of a trade, and within two years after that time that part of the trade or the activities of it are carried on by an associated company as its trade or part of its trade, the company shall be treated as having been, as from that time, disentitled to such part of any allowance in respect of the trade as is referable to that part of the trade or those activities.

(iv) Where by reason of a company carrying on a trade or part of a trade, or carrying on any activities in the course of a trade, that company or another company becomes disentitled to an allowance or part of an allowance, the allowance shall attach or remain attached to that trade (whether or not in the year 1975-76 that trade was being carried on by that company or at all).

(v) Where under subparagraph (iv) an allowance or part of an allowance in respect of a trade attaches to another trade, the allowance or that part of it shall, except as regards amount, be treated for all purposes as an allowance in respect of the trade, but the amount shall not be affected except as follows—

(I) the appropriate fraction shall be applied to the taxed income from that other trade, and the proviso to subsection (2) shall apply to that other trade; and

(II) the aggregate amount of the allowances to be given in respect of the trade on a company ceasing to possess it as a source of income, if there are more than one such allowance, shall not exceed the amount specified by subsection (2) (b) for that one of the allowances having the highest appropriate fraction.

(vi) For purposes of this paragraph the part of an allowance referable to any part of a trade or to any activities of a trade shall be determined, in relation to an event occurring at any time, by taking the amount of the allowance (as if on the company ceasing at that time to possess the trade as a source of income) and by apportioning that amount between that part or those activities of the trade and the remainder, according to the proportion in which the taxed income of the company from the trade is attributable thereto during the period of three years ending with that event (or any shorter period during which the company has carried on the trade), or, if there is no such taxed income, then by apportioning it in such other manner as may in the circumstances be just; but for determining the part of the allowance which is attached to a trade after that event the amount of the allowance shall be taken without regard to paragraph (b) of or the proviso to subsection (2).

(vii) Where under this paragraph a company becomes disentitled to an allowance or part of an allowance after the allowance or that part of it has been given to it or to another company, the allowance or part so given shall be withdrawn to the extent necessary to give effect to this paragraph.

(viii) For purposes of this paragraph a company is to be treated as another's “associated company” at a given time if at that time, or at any time within one year before or two years afterwards, one of the two has control of the other or both are under the control of the same person or persons (“control” having for this purpose the same meaning as in section 102).

(7) There shall be made any such adjustments of any person's liability to corporation tax or income tax, whether by way of repayment of tax, assessment or otherwise, as may be necessary to give effect to this section, and any such adjustment may be made at any time not later than ten years after the event giving rise to the adjustment.

Relief from corporation tax on interest on certain loans.

177.—(1) Where, for purposes of corporation tax, the income of a company for an accounting period includes interest payable on or after the 6th day of April, 1976, in respect of a permanent loan the company shall be entitled, on due claim, to have its liability to corporation tax for the accounting period reduced as provided by subsection (3).

(2) For the purposes of this section “permanent loan” means a loan of a permanent character made under an agreement entered into before the 27th day of November, 1975, and which under the agreement is—

(a) secured by mortgage or debenture or otherwise on the assets or income of a company, and

(b) if subject to repayment is subject to repayment at not less than three months' notice:

Provided that a loan shall not be regarded as a permanent loan for the purposes of this section if under the terms of the loan agreement the rate of interest or other conditions of the loan could be altered during the currency of the loan.

(3) The reduction referred to in subsection (1) shall be determined in accordance with section 184 (3), apart from the proviso, as if the interest were a relevant deficiency within the meaning of subsection (1) of that section.

(4) Where, in computing the reduction provided for by subsection (3), the appropriate amount as determined in accordance with section 184 (3) (a) (ii), is the company's income for the accounting period the excess of such interest as is mentioned in subsection (1) for the accounting period over that income shall, for the purposes of this section, be aggregated with the amount of any such interest for the next succeeding accounting period and relief shall be allowed for the said period in respect of the aggregated amount; and if that aggregated amount exceeds the income for the said period the excess shall be carried forward to the accounting period next succeeding the said period and so on.

(5) A claim under this section shall be made to the inspector within two years from the end of the accounting period.

Dividends and other distributions at gross rate or of gross amount.

178.—(1) Where any right or obligation created before the 6th day of April, 1976, is expressed by reference to a dividend at a gross rate or of a gross amount, that right or obligation shall, in relation to a dividend payable on or after that date, take effect as if the reference were to a dividend of an amount determined by the formula

A × D

D − _____

100

where—

A is the standard rate per cent. for the year 1976-77, and

D is an amount equal to a dividend at that gross rate or of that gross amount.

(2) Subsection (1) shall apply with the necessary modifications to a dividend partly at a gross rate or of a gross amount and shall apply to any distribution other than a dividend as it applies to a dividend.

Set-off of losses against franked investment income.

179.—(1) In this section “straddling period” means an accounting period of a company for which it is within the charge to corporation tax in respect of a source of income and which begins before the 6th day of April, 1976, and ends after the 5th day of April, 1976.

(2) Where for an accounting period which is—

(a) an accounting period for which the company is within the charge to corporation tax in respect of a source of income and which ends before the 6th day of April, 1976, or

(b) a straddling period,

and in that accounting period, and before the 6th day of April, 1976, the company receives a distribution from a company which is resident in the State (other than a distribution which is deemed under Part IX to have been made on the 6th day of April, 1976), the company may make a claim for that accounting period under section 25 (set-off of losses etc. against franked investment income) or 26 (set-off of loss brought forward or terminal loss against franked investment income in the case of financial concerns) as if references in those sections to franked investment income and payment of a tax credit were, respectively, references to dividends received under deduction of income tax and repayment of income tax:

Provided that any income tax repayable by virtue of this section shall be in substitution for, and not in addition to, any amount of income tax repayable by virtue of some other provision of the Income Tax Acts in respect of the same income.

(3) Section 25 (5) shall, with the necessary modifications, apply to any repayment of income tax made to a company under this section as it applies to the recovery of a tax credit.

Commencement of surcharge on close companies.

180.—(1) Sections 101 and 162 (surcharges on close companies) shall not have effect as regards any accounting period or part of an accounting period falling before the 6th day of April, 1976.

(2) As regards income arising to a company on or before the 5th day of April, 1976, Chapter II of Part XXXVI of the Income Tax Act, 1967 , shall continue to have effect, and the income of a company to be taken into account under that Chapter shall include income chargeable to corporation tax.

(3) Where a period of account or an accounting period of a company falls partly in the year 1975-76 and partly in the year 1976-77 the two parts shall for the purposes of the said Chapter II or, as the case may be, sections 101 and 162 be dealt with as separate accounting periods and any dividends for any such period of account or accounting period shall be apportioned according to the proportion which the income of the part falling in the year 1975-76, computed as for the said Chapter II (but less income tax at the standard rate or that rate as reduced by reference to any relief granted to the company) bears to the distributable income for the part falling in the year 1976-77.

Income tax relief for losses incurred in 1974-75 and 1975-76.

181.—(1) Where a company claims relief under section 307 of the Income Tax Act, 1967 (right to repayment of tax by reference to losses), for the year 1974-75 or the year 1975-76 the question whether the company has sustained a loss in a trade in that year, and any question as to the amount of a loss so sustained, shall not be affected by the company being within the charge to corporation tax in respect of the trade for the whole or part of that year, but the amount of loss incurred in the trade in an accounting period falling wholly or partly within that year shall, for the purposes of corporation tax, be reduced by an amount equal to the amount of loss which, in respect of the said accounting period, was taken into account in determining the amount of loss in respect of which relief was allowed under the said section 307.

(2) Section 318 of the Income Tax Act, 1967 (option to treat capital allowances as creating or augmenting loss), shall apply in relation to a claim by a company under section 307 of that Act for the year 1975-76 and for the purposes of the said section 318, as applied by this subsection, the company shall be treated, in a case where the year 1975-76 is not the basis year for the year itself, on the footing that—

(a) section 1 (2) (introduction for companies of corporation tax) did not apply in relation to the trade in question, and

(b) the period on the profits or gains of which income tax for the year 1976-77 would fall to be finally computed were the twelve months starting at the time at which the company came within the charge to corporation tax in respect of the trade,

and relief under the said section 318 may be given accordingly by reference to what, on that footing, would have been the company's capital allowances for the year 1976-77 for income tax purposes.

(3) The total amount of allowances in respect of capital expenditure which under section 14 (deductions and additions for capital allowances and charges) fall to be treated as trading expenses of a trade for the appropriate accounting periods for which the company is within the charge to corporation tax in respect of the trade shall be reduced by an amount equal to the amount of capital allowances which by virtue of subsection (2) of this section is deducted in determining the amount of loss in respect of which relief is allowed under section 307 of the Income Tax Act, 1967 ; and the appropriate accounting periods shall be accounting periods falling wholly or partly within the year 1975-76, the reduction being made in an earlier, rather than a later, accounting period.

(4) For purposes of this section “trade” includes profession or employment, the occupation of lands for the purposes of husbandry only and the occupation of woodlands managed on a commercial basis and with a view to the realisation of profits.

Relief in respect of unrelieved losses and capital allowances carried forward from the year 1975-76.

182.—(1) In this section—

“relevant amount” means, in relation to a company, the aggregate of the following amounts—

(a) such part of any loss, including any amount to be treated as a loss under section 316 of the Income Tax Act, 1967 (amount of assessment under section 434 of the Income Tax Act, 1967 , to be allowed as a loss for certain purposes), incurred by the company in a trade before the date on which the company comes within the charge to corporation tax in respect of the trade and which, but for this Act, could be carried forward to the year 1976-77 under section 309 of the Income Tax Act, 1967 (right to carry forward losses to future years), and

(b) such part of any capital allowance to which the company which carries on the trade was entitled in charging the profits or gains of the trade for years prior to the year 1976-77 and to which effect has not been given by way of relief before that year;

“relevant corporation tax” for an accounting period means the corporation tax which, apart from sections 58 (basis of relief from corporation tax for export profits), 184 and this section, is chargeable for the accounting period exclusive of the corporation tax charged on the company's chargeable gains for the accounting period.

(2) Relief, as provided in subsection (3), shall be allowed in respect of a relevant amount against corporation tax payable by the company and such relief shall be given as far as possible from the tax payable for the first accounting period for which the company is within the charge to corporation tax in respect of the trade and, in so far as it cannot be so given, from the tax payable for the next accounting period and so on.

(3) The relief for an accounting period shall be an amount calculated by applying to that part of the relevant amount in respect of which relief from tax has not been allowed a rate equal to the standard rate for the year of assessment in which the accounting period ends:

Provided that—

(a) the amount to which the said rate is applied shall not exceed the amount of income from the trade which is included in chargeable profits for the accounting period reduced by the amount, if any, which is included in charges on income paid by the company in the accounting period in respect of payments made wholly and exclusively for the purposes of the trade;

(b) where the corporation tax payable by the company for an accounting period is reduced by virtue of a claim under Part IV (Profits from Export of Certain Goods), the relief to be given under this section for the accounting period shall be reduced in the same proportion as the corporation tax payable by the company for the accounting period so far as it is attributable to the income from the trade is so reduced; and the corporation tax attributable to the income from the trade shall be an amount equal to the same proportion of the relevant corporation tax for the accounting period as the income from the trade for the accounting period bears to the total income brought into charge to corporation tax;

(c) the amount of a reduction made for an accounting period under paragraph (b) of this proviso shall, for the purposes of section 64 (distributions out of export profits), be deemed to be a reduction of the amount of relief allowed under section 58.

(4) Relief under this section shall not be allowed against corporation tax payable by a company which by virtue of agreements between the Government and the United Kingdom Government in respect of double income tax was entitled to exemption from income tax for the year 1975-76 in respect of income arising in the State.

Relief in respect of losses or deficiencies within Case IV or V of Schedule D.

183.—Where a company is entitled to relief under section 89 (relief under Case V for losses) or 310 (relief under Case IV for losses) of the Income Tax Act, 1967 , or would be entitled to relief under the said section 310 if section 237 (5) of the Income Tax Act, 1967 , had not been enacted, for the year 1975-76 or an earlier year of assessment in respect of a loss within Case IV of Schedule D or a deficiency or an excess of deficiencies within Case V of Schedule D, with the addition of any associated capital allowances in each case, and because of an insufficiency of income of the description concerned relief could not be fully granted to the company under those sections for any of those years of assessment, the unrelieved amount of loss, deficiency or excess of deficiencies (with the addition of any unrelieved associated capital allowances), as the case may be, shall be treated as if it were a loss in a trade carried on by the company and, if the company so requires, may be relieved under section 182 against income of the same description of the company within the charge to corporation tax as if that income were income of the same trade and section 182 shall apply accordingly, with any necessary modifications:

Provided that—

(a) a loss within Case IV of Schedule D, with the addition of any associated capital allowances, shall be relieved under this section only against income of the company chargeable to corporation tax under Case IV of Schedule D, and similarly a deficiency or an excess of deficiencies within Case V of Schedule D, with the addition of any associated capital allowances, shall be relieved only against income of the company chargeable to corporation tax under Case V of Schedule D; and

(b) so much of any deficiency or so much of any amount treated as a loss as under section 62 of the Finance Act, 1974 (taxation of rents: restriction in respect of certain rent and interest), could not be carried forward or set against profits or gains for income tax purposes if that tax had continued, shall be treated as not being a deficiency or loss for the purposes of this section.

Relief in respect of corporation profits tax losses.

184.—(1) In this section, subject to the proviso to section 174 (3), “relevant deficiency” means, in relation to a company, the aggregate of the following amounts—

(a) the total of the amounts which, under section 25 of the Finance Act, 1964 , could (on the footing that for corporation profits tax purposes an accounting period of the company ended on the 5th day of April, 1976, and a new accounting period commenced on the 6th day of April, 1976, and the enactments in relation to corporation profits tax mentioned in the Third Schedule had not been repealed) be deducted from or set off against profits of the company's business in an accounting period commencing on the 6th day of April, 1976; and

(b) the total of the amounts by which, under section 181 (1) (3), losses and allowances in respect of capital expenditure are reduced for the purposes of corporation tax:

Provided that any loss or any excess of deficiencies over surpluses which if such loss or excess were a profit or an excess of surpluses over deficiencies would be chargeable to corporation tax on the company for the accounting period shall not be taken into account for the purposes of paragraph (a).

(2) Relief, as provided in subsection (3), shall be allowed in respect of a relevant deficiency against corporation tax payable by the company and such relief shall be given as far as possible from the tax payable for the first accounting period for which the company is within the charge to corporation tax and, in so far as it cannot be so given, from the tax payable for the next accounting period and so on:

Provided that relief shall not be allowed against corporation tax payable for any accounting period against the profits of which (if this Act had not been enacted and if the enactments in relation to corporation profits tax referred to in the Third Schedule had not been repealed) a loss incurred prior to the 6th day of April, 1976, could not be set off under section 25 of the Finance Act, 1964 .

(3) (a) For the purposes of this subsection—

(i) the income of a company for an accounting period is its income charged to corporation tax for that period as defined in section 28 (8) (reduction of corporation tax liability of small companies),

(ii) the appropriate amount is the smaller of the amount of the relevant deficiency in respect of which relief has not been allowed and the amount of the company's income for the accounting period.

(b) The relief for an accounting period shall be an amount determined by the formula A − B

where—

A is the excess of the amount of corporation tax which, apart from this section, section 58 (basis of relief from corporation tax for export profits) and section 182, is chargeable for the accounting period over an amount calculated by applying a rate equal to the standard rate for the year of assessment in which the accounting period ends to the amount of the company's income for the accounting period, and

B is the excess of the amount of corporation tax which, apart from sections 58, 182 and this section, would be chargeable for the accounting period if the amount of the company's income for the accounting period were reduced by the appropriate amount over an amount calculated by applying a rate equal to the standard rate for the year of assessment in which the accounting period ends to the amount of the company's income for the accounting period as reduced by the appropriate amount:

Provided that—

(i) where the corporation tax payable by a company for an accounting period is reduced by virtue of a claim under section 58 (1) the amount of relief to be allowed under the foregoing provisions of this section shall be reduced in the proportion which the corporation tax referable to the income attributable to the excess referred to in section 58 (1) (c) bears to the relevant corporation tax;

(ii) where the corporation tax payable by a company for an accounting period is reduced by virtue of a claim under section 58 (3) the amount of relief to be allowed under the foregoing provisions of this section shall be reduced in the proportion which the corporation tax referable to the income from the sale of goods exported bears to the relevant corporation tax; and

(iii) the amount of a reduction made for an accounting period under paragraph (i) or (ii) of this proviso shall, for the purposes of section 64, be deemed to be a reduction of the amount of relief allowed under section 58.

For the purposes of this proviso “corporation tax referable to the income attributable to the excess”, “corporation tax referable to the income from the sale of goods exported” and “relevant corporation tax” have the meanings assigned to them in section 58.

(4) Subsections (2) and (3) shall not apply to a company which by virtue of agreements between the Government and the United Kingdom Government in respect of double income tax was entitled to exemption from income tax for the year 1975-76 in respect of income arising in the State but in such case the relevant deficiency shall be set off against income coming within the charge to corporation tax for the accounting period commencing on the 6th day of April, 1976, and in so far as the relevant deficiency cannot be so set off it shall be set off against income coming within the charge to corporation tax for the next succeeding accounting period and so on:

Provided that a relevant deficiency shall not be set off against income arising in any accounting period against the profits of which (if this Act had not been enacted and if the enactments in relation to corporation profits tax mentioned in the Third Schedule had not been repealed) a loss incurred prior to the 6th day of April, 1976, could not be set off under section 25 of the Finance Act, 1964 .

Terminal losses.

185.—Where a company carrying on a trade on the 6th day of April, 1976, ceases to do so within four years of coming within the charge to corporation tax in respect of it, section 18 (relief for terminal loss in trade) shall apply, with any necessary modifications, so as to enable relief to be given under that section against income tax for years of assessment before 1976-77 in so far as relief cannot be given against corporation tax, but so that—

(a) where relief is given against income tax, section 313 of the Income Tax Act, 1967 (amount of profits or gains for terminal loss relief), shall apply as it applies in relation to the corresponding relief under section 311 (terminal loss relief) of that Act; and

(b) where section 18 has effect by virtue of this section to reduce the profits of any period and income tax for more than one year of assessment has been computed wholly or partly by reference to those profits, such adjustments shall be made as may be necessary to prevent relief being given more than once.

Transitional relief in respect of certain payments and management expenses.

186.—The provisions of the Fifth Schedule shall have effect for the purpose of granting transitional relief in respect of certain payments and expenses of management.

Repayment of corporation profits tax.