Finance Act, 1978

Chapter III

Corporation Tax

Disregard of profits or losses attributable to certain transactions of industrial and provident societies.

18.—(1) In this section and in Parts I and II of the Second Schedule—

“agricultural society” means a society—

(a) in relation to which both the following conditions are satisfied:

(i) that the number of the society's members is not less than fifty,

(ii) that all or a majority of the society's members are persons who are mainly engaged in, and derive the principal part of their income from, husbandry,

or

(b) to which a certificate under subsection (2) (a) relates;

“exempted transactions” means—

(a) in relation to an agricultural society, transactions falling within any of the classes of transactions set out in Part I of the Second Schedule, and

(b) in relation to a fishery society, transactions falling within any of the classes of transactions set out in Part II of the Second Schedule,

but excluding sales to the intervention agency and, for the purposes of this exclusion, the sale of a commodity by an agricultural society or a fishery society to a person other than the intervention agency shall be deemed to be a sale by the agricultural society or the fishery society, as the case may be, to the intervention agency if that commodity is ultimately sold to the intervention agency;

“fishery society” means a society—

(a) in relation to which both the following conditions are satisfied:

(i) that the number of the society's members is not less than twenty,

(ii) that all or a majority of the society's members are persons who are mainly engaged in, and derive the principal part of their income from, fishing,

or

(b) to which a certificate under subsection (2) (b) relates;

“intervention agency” means the Minister for Agriculture when exercising or performing any power or function conferred on him by Regulation 3 of the European Communities (Common Agricultural Policy) (Market Intervention) Regulations, 1973 (S.I. No. 24 of 1973), and any other person when exercising or performing any corresponding power or function in any Member State of the European Economic Community;

“selling by wholesale” means selling goods of any class to a person who carries on a trade of selling goods of that class or uses goods of that class for a the purposes of a trade carried on by him;

“society” means a society registered under the Industrial and Provident Societies Acts, 1893 to 1971.

(2) (a) The Minister for Finance may, on the recommendation of the Minister for Agriculture, give a certificate entitling a society to be treated, for the purposes of this section, as an agricultural society notwithstanding that one or both of the conditions in paragraph (a) of the definition of “agricultural society” is or are not complied with in relation to the society.

(b) The Minister for Finance may, on the recommendation of the Minister for Fisheries, give a certificate entitling a society to be treated, for the purposes of this section, as a fishery society notwithstanding that one or both of the conditions in paragraph (a) of the definition of “fishery society” is or are not complied with in relation to the society.

(c) A certificate under subsection (2) (a) or (b) of section 70 of the Finance Act, 1963 , or under the said subsection (2) (a) or (b) and subsection (2) (a) or (b) of section 220 of the Income Tax Act, 1967 , shall, unless it has been revoked, be deemed to be a certificate under this subsection.

(d) A certificate under paragraph (a) or (b) of this subsection—

(i) shall have effect as from such date, whether before or after the date on which it is given, as may be stated therein, and

(ii) shall be published in Iris Oifigiúil as soon as may be after it is given.

(e) A certificate under this subsection may be revoked by the Minister for Finance at any time and notice of any such revocation shall be published as soon as may be in Iris Oifigiúil.

(3) Where, in the case of a trade carried on by a society, the transactions in any accounting period of the society throughout which the society was an agricultural society or a fishery society include exempted transactions, so much of the trading income or the loss (as the case may be) of that period as is attributable to the exempted transactions of the period shall be disregarded for all the purposes of the Tax Acts.

(4) For the purposes of subsections (3) and (5), in relation to any trade—

(a) the amount of the trading income or loss for any accounting period shall be computed in accordance with the provisions, other than this section, applicable to Case I of Schedule D after all deductions and additions for that period by virtue of section 14 of the Corporation Tax Act, 1976 , and before any set-off or reduction of income by virtue of section 16 or 18 of that Act, and

(b) the amount of the trading income or loss attributable to the exempted transactions of any accounting period shall be taken to be the amount which bears to the full amount of the trading income or loss (as the case may be) for the period the same proportion as the aggregate of the amounts receivable by the society, by virtue of those transactions, from the sale of goods and the provision of services bears to the aggregate of all amounts receivable by the society, by virtue of transactions in the period, from the sale of goods and the provision of services.

(5) Section 10 of the Corporation Tax Act, 1976 , shall have effect for the purpose of computing the corporation tax payable for any accounting period of a society which commences on or after the 1st day of April, 1978, as if—

(a) in subsection (1) “the appropriate part of” were inserted after “company” where it first occurs, and

(b) the appropriate part of any charges on income paid by the society were determined by the formula—

A ×

B + D

______

C + D

where—

A is the amount of the charges on income paid by the society in the accounting period,

B is the amount of the society's trading income for the accounting period after deducting therefrom the amount of the trading income attributable to the exempted transactions of the period,

C is the amount of the society's trading income for the period, and

D is the aggregate amount of the society's income (including franked investment income), other than trading income, for the period:

Provided that in relation to the aggregate amount of interest paid in any accounting period the appropriate part 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.

(6) All amounts receivable by an agricultural society or a fishery society from the sale of goods within the meaning of Part IV of the Corporation Tax Act, 1976 , being amounts which are so receivable by virtue of exempted transactions, shall be disregarded for the purposes of the said Part IV.

(7) The provisions of subsection (3) shall not apply to an accounting period which ends on or before the 31st day of March, 1978, and where an agricultural society or a fishery society is within the charge to corporation tax in respect of a trade on that date, an accounting period of the society shall end for purposes of corporation tax on that date.

(8) Where, apart from the provisions of this section, any loss (other than the attributable loss within the meaning of subsection (9)) incurred in a trade carried on by a society in an accounting period which ends in the period from the 6th day of April, 1976, to the 31st day of March, 1978, would, on a claim being made to that effect under section 16 (1) of the Corporation Tax Act, 1976 , fall to be carried forward to any accounting period of the society which commences on or after the 1st day of April, 1978, the amount of such loss which may be so claimed to be carried forward shall be reduced by an amount arrived at by applying to the amount of such loss the fraction /images/en.act.1978.0021.sec18.1.jpg where—

A is the aggregate of the amounts receivable by the society in the twelve months ending on the 31st day of March, 1979, by virtue of exempted transactions, from the sale of goods and the provision of services, and

B is the aggregate of all amounts receivable by the society, by virtue of transactions in that period of twelve months, from the sale of goods and the provision of services:

Provided that, in relation to a case where a society so elects by notice in writing delivered to the inspector on or before the 30th day of September, 1980, the references in the definitions of A and B to a period of twelve months ending on the 31st day of March, 1979, shall be construed as references to a period of twenty-four months ending on the 31st day of March, 1980.

(9) Where—

(a) under subsection (4) of section 33 of the Finance Act, 1976 , an allowance equal to the specified amount (within the meaning of subsection (5) of that section) was made in taxing the trade of a society for the accounting period of the society which commenced on the 6th day of April, 1976, and

(b) the society incurred a loss in its trade in that accounting period (being a loss the whole or any part of which is available for set-off under section 16 (1) of the Corporation Tax Act, 1976 , against trading income from the trade in a succeeding accounting period) and the loss was not, or is deemed under the provisions of this subsection not to have been, set off fully under the provisions of the said section 16 (1) against the trading income from the trade in an accounting period or periods ending on or before the 31st day of March, 1978, the following provisions shall apply—

(i) the whole or any part (as the case may be) of that loss which would not have arisen but for the making of the allowance referred to in paragraph (a) shall be a loss (hereinafter and in subsection (8) referred to as “the attributable loss”) in respect of which the society may not make a claim under the said section 16 (1) in respect of any accounting period which commences on or after the 1st day of April, 1978;

(ii) any set-off of loss allowed under section 16 (1) against the trading income of the society for any accounting period which commenced after the 6th day of April, 1976, and ended on or before the 31st day of March, 1978, shall be deemed to be a set-off allowed in respect of any loss other than the attributable loss incurred by the society in its trade in priority to a set-off allowed in respect of the attributable loss; and

(iii) the amount of the attributable loss which has been (or, as the case may be, is deemed under this subsection to have been) set off under the said section 16 (1) shall be treated, in relation to any claim under section 182 or 184 of the Corporation Tax Act, 1976 , for an accounting period commencing on or after the 1st day of April, 1978, as an amount in respect of which relief has been allowed under those sections for the accounting period ending on the 31st day of March, 1978.

(10) Where a society claims relief from tax by virtue of this section, the inspector may by notice in writing require the society to make available, within such time as may be specified in the notice, for inspection by him, all books, records and documents containing information as to its trading transactions for the accounting period concerned (or any other period which is relevant for the purposes of the relief claimed), and if the society fails to comply with such notice, no relief under this section shall be given.