Finance Act, 1982

Schedule D deduction of payments to trustees.

58.—(1) As respects any accounting period, any sum expended in that accounting period by the company concerned in making a payment or payments to the trustees of an approved scheme shall be included—

(a) in the sums to be deducted in computing for the purposes of Schedule D the profits or gains for that accounting period of a trade carried on by that company, or

(b) if that company is an investment company within the meaning of section 15 of the Corporation Tax Act, 1976 , or a company in the case of which that section applies by virtue of section 33 of that Act, in the sums to be deducted under section 15 (1) of that Act as expenses of management in computing the profits of the company for that accounting period for the purposes of corporation tax,

if, and only if, one of the conditions in subsection (2) is fulfilled:

Provided that no deduction shall be allowed under this section or under any other provision of the Tax Acts in respect of so much of any sum or the aggregate amount of any sums so expended in that accounting period as exceeds 20 per cent. of the company's—

(i) trading income for that accounting period, in the case of a company to which paragraph (a) applies, or

(ii) income for that accounting period, in the case of a company to which paragraph (b) applies, after taking into account any sums which, apart from this section, are to be deducted under section 15 (1) of the Corporation Tax Act, 1976 , as expenses of management in computing the profits of the company for the purposes of corporation tax.

(2) The conditions referred to in subsection (1) are—

(a) that before the expiry of the relevant period the sum in question is applied by the trustees in the acquisition of shares for appropriation to individuals who are eligible to participate in the scheme by virtue of their being or having been employees or directors of the company making the payment, and

(b) that the sum is necessary to meet the reasonable expenses of the trustees in administering the scheme.

(3) In subsection (1) “trading income”, in relation to any trade, means the income from the trade computed in accordance with the rules applicable to Case I of Schedule D before any deduction under this Chapter and after any set-off or reduction of income by virtue of section 16 or 18 of the Corporation Tax Act, 1976 , and after any deduction or addition by virtue of section 14 of that Act, and after any deduction or addition by virtue of section 31A of the Finance Act, 1975 .

(4) In subsection (2) (a) “the relevant period” means the period of nine months beginning on the day following the end of the period of account in which the sum in question is charged as an expense of the company incurring the expenditure or such longer period as the Revenue Commissioners may allow by notice in writing given to that company.

(5) For the purposes of this section, the trustees of an approved scheme shall be taken to apply sums paid to them in the order in which the sums are received by them.