Finance Act, 1995

Amendment of section 439 (dispositions for short periods) of Income Tax Act, 1967.

13.—(1) (a) Section 439 of the Income Tax Act, 1967 , is hereby amended by the substitution of the following subsection for subsection (1A) (inserted by the Finance Act, 1979 ):

“(1A) (a) This subsection applies to a disposition or dispositions of a kind or kinds referred to in paragraphs (ii) to (iv) of subsection (1) made, directly or indirectly, by a person being an individual (in this subsection referred to as the ‘disponer’) except in so far as, by virtue or in consequence thereof, income is payable or applicable in a year of assessment, in the manner referred to in paragraph (iii) or (iv) of the said subsection (1), to or for the benefit of a person being an individual who is permanently incapacitated by reason of mental or physical infirmity.

(b) Notwithstanding the provisions of subsection (1), in relation to a disponer, any income which—

(i) is payable or applicable in a year of assessment by virtue or in consequence of a disposition or dispositions to which this subsection applies, and

(ii) is in excess of 5 per cent, of the total income of that disponer for the year of assessment,

shall be deemed for the purposes of this Act to be the income of the disponer, if living, and not to be the income of any other person.

(c) In a case where this subsection has effect, in relation to any disponer, for the purpose of determining, for income tax purposes, the amount of income which remains the income of persons other than the disponer for a year of assessment by virtue or in consequence of a disposition or dispositions to which this subsection applies, the aggregate of the income so remaining shall be apportioned amongst those other persons in proportion to their entitlements under such disposition or dispositions for that year.”.

(b) Subject to subsection (3), this subsection shall apply in respect of every disposition (within the meaning of Chapter I of Part XXVIII of the Income Tax Act, 1967 ) made on or after the 8th day of February, 1995, and it shall also apply, as on and from the 6th day of April, 1995, in respect of every disposition (within the same meaning) which was made before the 8th day of February, 1995.

(2) Subject to subsection (3), as respects the year of assessment 1996-97 and subsequent years of assessment, section 439 (as amended by subsection (1)) of the Income Tax Act, 1967 , is hereby further amended—

(a) by the substitution of the following subsection for subsection (1):

“(1) (a) Any income which, by virtue of or in consequence of any disposition made, directly or indirectly, by any person (other than a disposition made for valuable and sufficient consideration) is payable to or applicable for the benefit of any other person, but excluding any income which—

(i) arises from capital of which the disponer by the disposition has divested absolutely himself in favour of or for the benefit of the said other person, or

(ii) being payable to any university or college, being a university or college in the State, for the purpose of enabling that university or college to carry on research, is so payable for a period which is or may be three years or longer, or

(iii) being payable to any body of persons to which the provisions of section 20 of the Finance Act, 1973 , apply, is so payable for a period which is or may be three years or longer, or

(iv) being payable to a relevant individual for the individual's own use, is so payable for a period which exceeds or may exceed six years, or

(v) being applicable for the benefit of a named relevant individual, is so applicable for a period which exceeds or may exceed six years,

shall be deemed for the purposes of this Act to be the income of the person, if living, by whom the disposition was made and not to be the income of any other person.

(b) For the purposes of paragraph (a), ‘relevant individual’ means an individual—

(i) who is permanently incapacitated by reason of mental or physical infirmity, or

(ii) who is aged 65 years or over.”,

and

(b) in subsection (1 A), by the substitution of the following paragraph for paragraph (a):

“(a) This subsection applies to a disposition or dispositions of a kind or kinds referred to in subparagraphs (ii) to (v) of paragraph (a) of subsection (1) made, directly or indirectly, by a person being an individual (in this subsection referred to as the ‘disponer’) except in so far as, by virtue or in consequence thereof, income is payable or applicable in a year of assessment, in the manner referred to in subparagraph (iv) or (v) of the said subsection (1), to or for the benefit of an individual referred to in paragraph (b) (i) of subsection (1).”.

(3) (a) If, but only if—

(i) the conditions set out in paragraph (c) are satisfied, and

(ii) the Revenue Commissioners are satisfied the application of the amendments effected by subsections (1) and (2) would give rise to hardship,

then, those amendments shall not, to the extent that the Revenue Commissioners consider just, apply or have effect before the 6th day of April, 1998, in respect of a disposition, to which subparagraph (i) of paragraph (b) applies, by a person (hereinafter in this subsection referred to as “the disponer”), in so far as, by virtue or in consequence thereof, income is payable in a year of assessment to or for the benefit of an individual to whom subparagraph (ii) of paragraph (b) applies.

(b) (i) This subparagraph applies to—

(I) a disposition made before the 6th day of April, 1993, or

(II) a disposition made on or after the 6th day of April, 1993, to immediately replace a disposition made before that date which has ceased to be effective and to the extent, but only to the extent, that the amount payable to or for the benefit of an individual to whom subparagraph (ii) applies under such later disposition does not exceed the amount payable to or for the benefit of that individual under the earlier disposition.

(ii) This subparagraph applies to an individual who is not a child of the disponer and who, for the whole of the year of assessment, is resident with, and shares the normal household expenses with, the disponer.

(c) The conditions referred to in paragraph (a) are as follows:

(i) the making of the disposition referred to in paragraph (b) (i) (I) shall have been notified to the Revenue Commissioners before the 8th day of February, 1995,

(ii) a child, to whom paragraph (d) applies, of the disponer or of the individual to whom subparagraph (ii) of paragraph (b) applies or of both of them is resident with them for the whole, or substantially the whole, of the year of assessment, and

(iii) the child to whom subparagraph (ii) relates is wholly or mainly maintained by the disponer and the individual jointly at their own expense.

(d) A child to whom this paragraph applies is a child who, for a year of assessment—

(i) is under the age of 16 years, or

(ii) if over the age of 16 years at the commencement of the year of assessment, is receiving full-time instruction at any university, college, school or other educational establishment.