Finance Act, 2001

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Number 7 of 2001


FINANCE ACT, 2001


ARRANGEMENT OF SECTIONS

PART I

Income Tax, Corporation Tax and Capital Gains Tax

Chapter 1

Interpretation

Section

1.

Interpretation (Part 1).

Chapter 2

Income Tax

2.

Tax credits.

3.

Alteration of rates of income tax.

4.

Age exemption.

5.

Amendment of section 122 (preferential loan arrangements) of Principal Act.

6.

Amendment of section 126 (tax treatment of certain benefits payable under Social Welfare Acts) of Principal Act.

7.

Amendment of section 467 (employed person taking care of incapacitated individual) of Principal Act.

8.

Amendment of section 469 (relief for health expenses) of Principal Act.

9.

Amendment of section 473 (allowance for rent paid by certain tenants) of Principal Act.

10.

Amendment of section 477 (relief for service charges) of Principal Act.

11.

Relief for trade union subscriptions.

12.

Amendment of Part 16 (income tax relief for investment in corporate trades — business expansion scheme and seed capital scheme) of Principal Act.

13.

Employee share ownership trusts — deceased beneficiaries.

14.

Amendment of Schedule 13 (accountable persons for purposes of Chapter 1 of Part 18) to Principal Act.

15.

Approved share option schemes.

16.

Amendment of provisions relating to employee share schemes.

17.

Provisions relating to certain approved profit sharing schemes and employee share ownership trusts.

18.

Amendment of Part 30 (occupational pension schemes, retirement annuities, purchased life annuities and certain pensions) of Principal Act.

19.

Amendment of section 470 (relief for insurance against expenses of illness) of Principal Act.

20.

Relief for premiums under qualifying long-term care policies, etc.

21.

Taxation of certain perquisites.

22.

Amendment of Chapter 4 (revenue powers) of Part 38 of Principal Act.

23.

Tax relief at source for certain interest.

24.

Provision of certain information: transitional.

25.

Amendment of section 120A (exemption from benefit-in-kind of certain childcare facilities) of Principal Act.

26.

Amendment of section 669A (interpretation (Chapter 3)) of Principal Act.

27.

Amendment of section 669C (effect of sale of quota) of Principal Act.

28.

Amendment of section 530 (interpretation (Chapter 2)) of Principal Act.

29.

Relief for fees paid for third level education, etc.

30.

Seafarer allowance, etc.

31.

Amendment of section 823 (deduction for income earned outside the State) of Principal Act.

32.

Rent-a-room relief.

Chapter 3

Income Tax, Corporation Tax and Capital Gains Tax

33.

Special savings incentive accounts.

34.

Amendment of section 97 (computational rules and allowable deductions) of Principal Act.

35.

Amendment of section 177 (conditions as to residence and period of ownership) of Principal Act.

36.

Amendment of section 198 (certain interest not to be chargeable) of Principal Act.

37.

Treatment of certain interest payments.

38.

Amendment of Part 20 (companies' chargeable gains) of Principal Act.

39.

Amendment of section 590 (attribution to participants of chargeable gains accruing to non-resident company) of Principal Act.

40.

Amendment of Schedule 18A (restriction on set-off of preentry losses) to Principal Act.

41.

Amendment of Schedule 24 (relief from income tax and corporation tax by means of credit in respect of foreign tax) to Principal Act.

42.

Amendment of section 89 (valuation of trading stock at discontinuance of trade) of Principal Act.

43.

Dividend withholding tax.

44.

Amendment of provisions relating to exploration and exploitation activities.

45.

Donations to approved bodies, etc.

46.

Amendment of section 665 (interpretation (Chapter 2)) of Principal Act.

47.

Amendment of section 666 (deduction for increase in stock values) of Principal Act.

48.

Amendment of section 667 (special provisions for qualifying farmers) of Principal Act.

49.

Amendment of section 668 (compulsory disposal of livestock) of Principal Act.

50.

Amendment of section 310 (allowances in respect of certain contributions to capital expenditure of local authorities) of Principal Act.

51.

Wear and tear allowances for licences for public hire vehicles.

52.

Wear and tear allowances for certain sea fishing boats.

53.

Wear and tear allowances.

54.

Amendment of section 274 (balancing allowances and balancing charges) of Principal Act.

55.

Amendment of Chapter 4 (interest payment by certain deposit takers) of Part 8 of Principal Act.

56.

Amendment of section 838 (special portfolio investment accounts) of Principal Act.

57.

Taxation of certain savings in credit unions and other financial institutions.

58.

Amendment of Chapter 9 (park and ride facilities and certain related developments) of Part 10 of Principal Act.

59.

Amendment of Part 10 (income tax and corporation tax: reliefs for renewal and improvement of certain urban areas, certain resort areas and certain islands) of Principal Act.

60.

Living over the shop scheme.

61.

Amendment of Part 11 (capital allowances and expenses for certain road vehicles) of Principal Act.

62.

Amendment of provisions relating to treatment of certain losses and certain capital allowances.

63.

Relief for certain rented accommodation.

64.

Capital allowances for certain hospitals.

65.

Amendment of section 420 (losses, etc. which may be surrendered by means of group relief) of Principal Act.

66.

Amendment of section 594 (foreign life assurance and deferred annuities: taxation and returns) of Principal Act.

67.

Amendment of Part 26 (life assurance companies) of Principal Act.

68.

Amendment of section 723 (special investment policies) of Principal Act.

69.

Amendment of section 730A (profits of life business: new basis) of Principal Act.

70.

Amendment of Chapter 5 (policyholders — new basis) of Part 26 of Principal Act.

71.

Amendment of section 731 (chargeable gains accruing to unit trusts) of Principal Act.

72.

Amendment of Part 27 (unit trusts and offshore funds) of Principal Act.

73.

Amendment of section 737 (special investment schemes) of Principal Act.

74.

Amendment of Chapter 1A (investment undertakings) of Part 27 of Principal Act.

75.

Amendment of Schedule 2B (investment undertakings declarations) of Principal Act.

76.

Amendment of section 843 (capital allowances for buildings used for third level educational purposes) of Principal Act.

77.

Changeover to calendar year of assessment.

78.

Provisions relating to making of returns of income and chargeable gains and payment of income tax and capital gains tax.

79.

Amendment of provisions relating to Dublin Docklands Development Authority.

80.

Amendment of Chapter 10 (designated areas of certain towns) of Part 10 of Principal Act.

81.

Capital allowances for hotels.

Chapter 4

Corporation Tax

82.

Amendment of provisions relating to a shipping trade.

83.

Amendment of section 22A (reduction of corporation tax in respect of certain trading income) of Principal Act.

84.

Foundation for Investing in Communities.

85.

Amendment of section 130 (matters to be treated as distributions) of Principal Act.

86.

Amendment of section 222 (certain dividends from a non-resident subsidiary) of Principal Act.

87.

Amendment of Chapter 2 of Part 14 of Principal Act.

88.

Amendment of Part 36 of Principal Act.

89.

Amendment of section 847 (tax relief for certain branch profits) of Principal Act.

90.

Restriction of certain losses and charges.

91.

Close company surcharges

Chapter 5

Capital Gains Tax

92.

Amendment of Chapter 6 (transfers of business assets) of Part 19 of Principal Act.

93.

Amendment of Chapter 7 (other reliefs and exemptions) of Part 19 of Principal Act.

94.

Amendment of section 649A (relevant disposals: rate of charge) of Principal Act.

95.

Amendment of section 652 (non-application of reliefs on replacement of assets in case of relevant disposals) of Principal Act.

PART 2

Excise

Consolidation and Modernisation of General Excise Law

Chapter 1

Interpretation, Liability and Payment

96.

Interpretation (Part 2).

97.

Excisable products (Part 2).

98.

Application of enactments.

99.

Suspension arrangements, liability and payment.

100.

Duties to apply to excisable products released for consumption in another Member State.

101.

All excisable products are liable for all liabilities, penalties and forfeitures of a warehousekeeper.

102.

Treatment of excisable products released for consumption.

103.

Payment.

104.

Reliefs.

105.

Repayments.

106.

Remission of losses.

107.

General mutual assistance.

108.

Mutual assistance for the recovery of claims.

109.

Warehousing.

Chapter 2

Intra-Community Movement

110.

Scope (Chapter 2).

111.

Treatment of excisable products released for consumption in another Member State.

112.

Provisions relating to vendors.

113.

Tax representatives.

114.

Application of Article 5.2 of Council Directive No. 92/12/EEC.

115.

Movement of excisable products under a suspension arrangement from the State to other Member States.

116.

Movement of excisable products under a suspension arrangement to the State from other Member States.

117.

Accompanying documents.

Chapter 3

Offences, Penalties and Proceedings

118.

Interpretation (Chapter 3).

119.

Evasion of excise duty.

120.

Amendment of section 34 (amendments relative to penalties) of Finance Act, 1963.

121.

Offences generally.

122.

Offences in relation to false returns, claims etc.

123.

Resisting, obstructing, giving false information.

124.

Penalty.

125.

Forfeiture.

126.

Proceedings in relation to offences.

127.

Condemnation.

128.

Proceedings for condemnation by court.

129.

Damages.

130.

Mitigation.

131.

Presumptions.

132.

False evidence, punishment as for perjury.

Chapter 4

Powers of Officers

133.

Interpretation (Chapter 4).

134.

Power to stop vehicles.

135.

Power to examine and search vehicles and to take samples.

136.

Entry and search of premises.

137.

General provision concerning samples.

138.

Obligation to answer certain questions, in respect of certain tobacco products.

139.

Power of arrest and detention of persons.

140.

Detention of goods and vehicles.

141.

Seizure of goods and vehicles.

142.

Notice of seizure.

143.

Notice of claim.

144.

Power to deal with seizures, before and after condemnation.

Chapter 5

Miscellaneous

145.

Appeals to Commissioners.

146.

Appeals to Appeal Commissioners.

147.

Payment of duty pending appeal.

148.

Exclusion of criminal matters.

149.

Repeals and revocations (Part 2).

150.

Saver.

151.

Continuity.

152.

Commencement.

153.

Regulations.

PART 3

Customs and Excise

Miscellaneous

154.

Tobacco products.

155.

Hydrocarbons and substitute motor fuel.

156.

Rates of mineral oil tax.

157.

Amendment of section 10 (tobacco products manufacturer's licence) of Finance (Excise Duty on Tobacco Products) Act, 1977.

158.

Amendment of section 10A (offences in relation to tax stamps) of Finance (Excise Duty on Tobacco Products) Act. 1977.

159.

Amendment of section 11 (offences) of Finance (Excise Duty on Tobacco Products) Act, 1977.

160.

Amendment of section 21 (duties on hydrocarbon oil) of Finance Act, 1935.

161.

Amendment of section 72 (removal of prescribed marker, etc. from hydrocarbon oil) of Finance Act, 1986.

162.

Amendment of section 57 (removal of substances mixed with goods liable to excise duty) of Finance Act, 1988.

163.

Amendment of section 94 (interpretation, Chapter 1) of Finance Act, 1999.

164.

Amendment of section 99 (passenger road services) of Finance Act, 1999.

165.

Amendment of section 100 (reliefs from mineral oil tax for certain mineral oils) of Finance Act, 1999.

166.

Amendment of section 102 (offences) of Finance Act, 1999.

167.

Deferment of duty on beer, made wine, wine and spirits.

168.

Remission or repayment in respect of vehicle registration tax on certain hybrid electric vehicles.

169.

Amendment of section 130 (interpretation) of Finance Act, 1992.

170.

Excise duty on mineral oil licence.

171.

Imposition of duty on liquor licence for National Concert Hall.

172.

Tax clearance in relation to excise licences.

173.

Amendment of section 49 (grant of licences and date of expiration of licences) of Finance (1909-10) Act, 1910.

174.

Amendment of section 18 (firearm certificate duty) of Finance Act, 1964.

175.

Amendment of Chapter III (amusement machine licence duty) of Part II of Finance Act, 1992.

176.

Amendment of section 43 (gaming machine licence duty) of Finance Act, 1975.

177.

Amendment of section 34 (amendments relative to penalties) of Finance Act, 1963.

178.

Amendment of section 89 (amendment of penalties under section 186 (illegally importing) of Customs Consolidation Act, 1876) of Finance Act, 1997.

179.

Amendment of Customs Consolidation Act, 1876.

180.

Repeal of the Customs Consolidation Act, 1876, Amendment Act, 1890.

PART 4

Value-Added Tax

181.

Interpretation (Part 4).

182.

Amendment of section 3 (supply of goods) of Principal Act.

183.

Amendment of section 5 (supply of services) of Principal Act.

184.

Amendment of section 8 (taxable persons) of Principal Act.

185.

Amendment of section 10A (margin scheme goods) of Principal Act.

186.

Amendment of section 10B (special scheme for auctioneers) of Principal Act.

187.

Amendment of section 11 (rates of tax) of Principal Act.

188.

Amendment of section 12 (deduction for tax borne or paid) of Principal Act.

189.

Amendment of section 12A (special provisions for tax invoiced by flat-rate farmers) of Principal Act.

190.

Amendment of section 12B (special scheme for means of transport supplied by taxable dealers) of Principal Act.

191.

Adjustment of tax deductible in certain circumstances.

192.

Amendment of section 13A (supplies to, and intra-Community acquisitions and imports by, certain taxable persons) of Principal Act.

193.

Amendment of section 17 (invoices) of Principal Act.

194.

Amendment of section 19 (tax due and payable) of Principal Act.

195.

Amendment of section 21 (interest) of Principal Act.

196.

Amendment of section 22 (estimation of tax due for a taxable period) of Principal Act.

197.

Amendment of section 27 (fraudulent returns, etc.) of Principal Act.

198.

Repeal of section 37 (substitution of agent, etc., for person not resident in State) of Principal Act.

199.

Amendment of First Schedule to Principal Act.

200.

Amendment of Second Schedule to Principal Act.

PART 5

Stamp Duties

201.

Interpretation (Part 5).

202.

Amendment of section 58 (security for future advances, how to be charged) of Principal Act.

203.

Repeal of section 60 (short-term life insurance policies) of Principal Act.

204.

Amendment of section 79 (conveyances and transfers of property between certain bodies corporate) of Principal Act.

205.

Dublin Docklands Development Authority.

206.

Transfer of site to child.

207.

Amendment of section 86 (certain loan stock) of Principal Act.

208.

Rent-a-room, etc.

209.

Amendment of Chapter 2 of Part 7 of Principal Act.

210.

Approved voluntary body.

211.

National Building Agency Limited.

212.

Certain policies of insurance.

213.

Amendment of Schedule 1 to Principal Act.

214.

Amendment of section 2 (commencement (Part 1)) of Finance (No. 2) Act, 2000.

PART 6

Capital Acquisitions Tax

215.

Interpretation (Part 6).

216.

Amendment of section 18 (taxable value of a taxable gift or taxable inheritance) of Principal Act.

217.

Amendment of section 19 (value of agricultural property) of Principal Act.

218.

Amendment of section 55 (exemption of certain objects) of Principal Act.

219.

Amendment of section 57 (exemption of certain securities) of Principal Act.

220.

Amendment of section 59C (exemption relating to certain dwellings) of Principal Act.

221.

Gifts and inheritances taken by foster children.

222.

Gifts and inheritances taken by adopted children from natural parent.

223.

Amendment of section 61 (payment of money standing in names of two or more persons) of Principal Act.

224.

Amendment of section 85 (exemption of specified collective investment undertakings) of Finance Act, 1989.

225.

Abolition of probate tax.

226.

Amendment of section 133 (exemption of certain policies of assurance) of Finance Act, 1993.

227.

Amendment of section 124 (interpretation (Chapter I)) of Finance Act, 1994.

228.

Amendment of section 127 (relevant business property) of Finance Act, 1994.

229.

Amendment of provisions relating to the taxation of discretionary trusts.

PART 7

Anti-Speculative Property Tax

230.

Abolition of anti-speculative property tax.

PART 8

Miscellaneous

231.

Interpretation (Part 8).

232.

Amendment of Chapter 3 (other obligations and returns) of Part 38 of Principal Act.

233.

Amendment of section 1078 (revenue offences) of Principal Act.

234.

Amendment of section 1094 (tax clearance in relation to certain licences) of Principal Act.

235.

Amendment of Chapter 6 (electronic transmission of returns of income, profits, etc., and of other Revenue returns) of Part 38 of Principal Act.

236.

Certificates in court proceedings.

237.

Amendment of Chapter 4 (collection and recovery of income tax on certain emoluments (PAYE system)) of Part 42 of Principal Act.

238.

Amendment of section 1002 (deduction from payments due to defaulters of amounts due in relation to tax) of Principal Act.

239.

Amendment of section 1006A (offset between taxes) of Principal Act.

240.

Amendment of enactments consequent on changeover to Euro.

241.

Deletion of certain references to Bord Telecom Éireann and Irish Telecommunications Investments plc. in Principal Act.

242.

Care and management of taxes and duties.

243.

Short title, construction and commencement.

SCHEDULE 1

Amendments Consequential on Changes in Personal Reliefs

SCHEDULE 2

Changeover to Calendar Year OF Assessment

SCHEDULE 3

Repeals and Revocations Relating to Excise Law

SCHEDULE 4

Rates of Excise Duty on Tobacco Products

SCHEDULE 5

Amendment of Enactments Consequent on Changeover to Euro


Acts Referred to

Auctioneers and House Agents Act, 1947

1947, No. 10

Betting Act, 1931

1931, No. 27

Building Societies Act, 1989

1989, No. 17

Capital Acquisitions Tax Act, 1976

1976, No. 8

Central Bank Act, 1971

1971, No. 24

Companies Act, 1963

1963, No. 33

Companies Acts, 1963 to 1990

Companies Acts, 1963 to 1999

Companies (Amendment) (No. 2) Act, 1999

1999, No. 30

Credit Union Act, 1997

1997, No. 15

Criminal Procedure Act, 1967

1967, No. 12

Customs Act, 1956

1956, No. 7

Customs (Amendment) Act, 1942

1942, No. 21

Customs and Excise (Miscellaneous Provisions) Act, 1988

1988, No. 10

Customs and Inland Revenue Act, 1878

41 & 42 Vict., c. 15

Customs and Inland Revenue Act, 1879

42 & 43 Vict., c. 21

Customs and Inland Revenue Act, 1881

44 & 45 Vict., c. 12

Customs and Inland Revenue Act, 1888

51 & 52 Vict., c. 8

Customs Consolidation Act, 1876

39 & 40 Vict., c. 36

Customs Consolidation Act, 1876, Amendment Act, 1890

53 & 54 Vict., c. 56

Customs-Free Airport Act, 1947

1947, No. 5

Customs-Free Airport (Amendment) Act, 1958

1958, No. 29

Defence (Amendment) Act, 1990

1990, No. 6

Diseases of Animals Act, 1966

1966, No. 6

Electronic Commerce Act, 2000

2000, No. 27

European Communities (Amendment) Act, 1993

1993, No. 25

Excise Act, 1828

9 Geo. 4, c. 44

Excise Management Act, 1827

7 & 8 Geo. 4, c. 53

Excise Management Act, 1834

4 & 5 Will. 4, c. 51

Excise Management Act, 1841

4 & 5 Vict., c. 20

Family Law Act, 1995

1995, No. 26

Family Law (Divorce) Act, 1996

1996, No. 33

Finance Act, 1900

63 & 64 Vict., c. 7

Finance Act, 1901

10 1 Edw. 7, c. 7

Finance Act, 1902

10 2 Edw. 7, c. 7

Finance Act, (1909-10) Act, 1910

10 Edw. 7 & 1 Geo. 5, c. 8

Finance Act, 1911

1 & 2 Geo. 5, c. 48

Finance Act, 1915

5 & 6 Geo. 5, c. 26

Finance Act, 1921

11 & 12 Geo. 5, c. 32

Finance Act, 1926

1926, No. 35

Finance Act, 1929

1929, No. 32

Finance Act, 1933

1933, No. 15

Finance Act, 1935

1935, No. 28

Finance Act, 1936

1936, No. 31

Finance Act, 1938

1938, No. 25

Finance Act, 1939

1939, No. 18

Finance Act, 1940

1940, No. 14

Finance Act, 1946

1946, No. 15

Finance Act, 1950

1950, No. 18

Finance Act, 1963

1963, No. 23

Finance Act, 1964

1964, No. 15

Finance Act, 1966

1966, No. 17

Finance Act, 1971

1971, No. 23

Finance Act, 1974

1974, No. 27

Finance Act, 1975

1975, No. 6

Finance Act, 1976

1976, No. 16

Finance Act, 1980

1980, No. 14

Finance Act, 1982

1982, No. 14

Finance Act, 1983

1983, No. 15

Finance Act, 1984

1984, No. 9

Finance Act, 1985

1985, No. 10

Finance Act, 1986

1986, No. 13

Finance Act, 1987

1987, No. 10

Finance Act, 1988

1988, No. 12

Finance Act, 1989

1989, No. 10

Finance Act, 1992

1992, No. 9

1Finance (No. 2) Act, 1992

992, No. 28

Finance Act, 1993

1993, No. 13

Finance Act, 1994

1994, No. 13

Finance Act, 1995

1995, No. 8

Finance Act, 1996

1996, No. 9

Finance Act, 1997

1997, No. 22

Finance Act, 1998

1998, No. 3

Finance (No. 2) Act, 1998

1998, No. 15

Finance Act, 1999

1999, No. 2

Finance Act, 2000

2000, No. 3

Finance (No. 2) Act, 2000

2000, No. 19

Finance (Excise Duty on Tobacco Products) Act, 1977

1977, No. 32

Firearms Acts, 1925 and 1964

Firearms Acts, 1925 to 2000

Free Ports Act, 1986

1986, No. 13

Garda Síochána Act, 1977

1977, No. 24

Health Act, 1970

1970, No. 1

Health (Eastern Regional Health Authority) Act, 1999

1999, No. 13

Higher Education Authority Act, 1971

1971, No. 22

Housing Acts, 1966 to 1998

Housing (Miscellaneous Provisions) Act, 1979

1979, No. 27

Housing (Miscellaneous Provisions) Act, 1992

1992, No. 12

Illicit Distillation (Ireland) Act, 1831

1 & 2 Will. 4, c. 55

Immature Spirits (Restriction) Act, 1947

1947, No. 12

Industrial Development Act, 1995

1995, No. 28

Inland Revenue Act, 1880

43 & 44 Vict., c. 20

Inland Revenue Regulations Act, 1890

53 & 54 Vict., c. 21

Insurance Act, 1936

1936, No. 45

Intoxicating Liquor Act, 1988

1988, No. 16

Intoxicating Liquor Act, 2000

2000, No. 17

Intoxicating Liquor (National Concert Hall) Act, 1983

1983, No. 34

Investment Intermediaries Act, 1995

1995, No. 11

Local Authorities (Higher Education Grants) Acts, 1968 to 1992

Local Government (Planning and Development) Acts, 1963 to 1999

Local Government (Sanitary Services) Act, 1964

1964, No. 29

Medical Practitioners Act, 1978

1978, No. 4

National Treasury Management Agency Act, 1990

1990, No. 18

Petroleum and Other Minerals Development Act, 1960

1960, No. 7

Planning and Development Act, 2000

2000, No. 30

Probation of Offenders Act, 1907

7 Edw. 7, c. 17

Qualifications (Education and Training) Act, 1999

1999, No. 26

Revenue (No. 2) Act, 1865

28 & 29 Vict., c. 96

Revenue Act, 1867

30 & 31 Vict., c. 90

Revenue Act, 1884

47 & 48 Vict., c. 62

Revenue Act, 1889

52 & 53 Vict., c. 42

Revenue Act, 1898

61 & 62 Vict., c. 46

Revenue Act, 1906

6 Edw. 7, c. 20

Road Traffic Act, 1961

1961, No. 24

Road Traffic Act, 1968

1968, No. 25

Road Transport Act, 1932

1932, No. 2

Scientific and Technological Education (Investment) Fund Act, 1997

1997, No. 46

Scientific and Technological Education (Investment) Fund (Amendment) Act, 1998

1998, No. 53

Social Welfare Act, 2000

2000, No. 4

Social Welfare (Consolidation) Act, 1993

1993, No. 27

Spirits Act, 1880

43 & 44 Vict., c. 24

Spirits (Ireland) Act, 1854

17 & 18 Vict., c. 89

Stamp Duties Consolidation Act, 1999

1999, No. 31

Stock Exchange Act, 1995

1995, No. 9

Taxes Consolidation Act, 1997

1997, No. 39

Tourism Traffic Act, 1939

1939, No. 24

Tourism Traffic Act, 1957

1957, No. 27

Trade Union Act, 1941

1941, No. 22

Trade Union Act, 1942

1942, No. 23

Trustee Savings Banks Act, 1989

1989, No. 21

Údarás na Gaeltachta Act, 1979

1979, No. 5

Unit Trusts Act, 1990

1990, No. 37

Value-Added Tax Act, 1972

1972, No. 22

Value-Added Tax Acts, 1972 to 2000

Value-Added Tax (Amendment) Act, 1978

1978, No. 34

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Number 7 of 2001


FINANCE ACT, 2001


AN ACT TO PROVIDE FOR THE IMPOSITION, REPEAL, REMISSION, ALTERATION AND REGULATION OF TAXATION, OF STAMP DUTIES AND OF DUTIES RELATING TO EXCISE AND OTHERWISE TO MAKE FURTHER PROVISION IN CONNECTION WITH FINANCE INCLUDING THE REGULATION OF CUSTOMS.

[30th March, 2001]

BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:

PART 1

Income Tax, Corporation Tax and Capital Gains Tax

Chapter 1

Interpretation

Interpretation (Part 1).

1.—In this Part “Principal Act” means the Taxes Consolidation Act, 1997 .

Chapter 2

Income Tax

Tax credits.

2.—(1) Where an individual is entitled under a provision of the Principal Act mentioned in column (1) of the Table to this subsection to have the income tax to be charged on the individual, other than in accordance with the provisions of section 16(2) of the Principal Act, reduced for the year of assessment 2001 or any subsequent year of assessment and the amount of the reduction would, but for this section, be an amount which is the lesser of—

(a) an appropriate percentage of an amount (in this section referred to as the “standard-rated allowance”) specified in column (2) of that Table, and

(b) the amount which reduces that liability to nil,

the amount of the reduction in accordance with paragraph (a) shall, in lieu of being the standard-rated allowance, be the amount of the tax credit specified in column (3) or column (4), as may be appropriate, of the Table opposite the mention of the amount in column (2).

TABLE

Statutory Provision

Standard rated allowance for the year

Tax credit for the year 2001

Tax credit for the year 2002 and subsequent years

(1)

(2)

(3)

(4)

Section 461

(married person)

...

...

£9,400

£1,628

€2,794

(widowed person bereaved in the year of assessment)

...

£9,400

£1,628

€2,794

(single person)

...

...

£4,700

£814

€1,397

Section 461A

(additional relief for certain widowed persons)

£1,000

£148

€254

Section 462

(additional relief for single parents)

...

...

...

£4,700

£814

€1,397

Section 463

(additional relief for widowed parent following death of spouse)

(1st year)

...

...

...

£10,000

£2,000

€2,540

(2nd year)

...

...

...

£8,000

£1,600

€2,032

(3rd year)

...

...

...

£6,000

£1,200

€1,524

(4th year)

...

...

...

£4,000

£800

€1,016

(5th year)

...

...

...

£2,000

£400

€508

Section 464

(aged person)

(married person)

...

...

£1,600

£238

€408

(single person)

...

...

£800

£119

€204

Section 465

(incapacitated child)

...

...

£1,600

£238

€408

Section 466

(dependent relative)

...

...

£220

£33

€56

Section 466A

(home carer)

...

...

...

£3,000

£444

€762

Section 468

(blind person)

...

...

£3,000

£444

€762

(both spouses blind)

...

...

£6,000

£888

€1,524

Section 472

(employee)

...

...

...

£1,000

£296

€508

(2) Section 7 of the Finance Act, 1999 , and sections 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 and 12 of the Finance Act, 2000 , shall apply subject to the provisions of this section.

(3) Schedule 1 shall have effect for the purposes of supplementing subsection (1).

Alteration of rates of income tax.

3.—Section 15 of the Principal Act is amended—

(a) as respects the year of assessment 2001 and subsequent years of assessment, by the substitution of the following for subsection (4):

“(4) For the purposes of subsection (3), ‘specified income’ means total income after deducting from such income any deduction attributable to a specific source of income and any relevant interest within the meaning of Chapter 4 of Part 8.”,

(b) as respects the year of assessment 2001—

(i) by the substitution in subsection (3) of “£8,140” for “£6,000”, and

(ii) by the substitution of the following Table for the Table to that section:

“TABLE

PART 1

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first £14,800

20 per cent

the standard rate

The remainder

42 per cent

the higher rate

PART 2

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first £17,131

20 per cent

the standard rate

The remainder

42 per cent

the higher rate

PART 3

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first £21,460

20 per cent

the standard rate

The remainder

42 per cent

the higher rate

and

(c) as respects the year of assessment 2002 and subsequent years of assessment—

(i) by the substitution in subsection (3) of “€13,967” for “£6,000”, and

(ii) by the substitution of the following Table for the Table to that section:

“TABLE

PART 1

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first €25,395

20 per cent

the standard rate

The remainder

42 per cent

the higher rate

PART 2

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first €29,395

20 per cent

the standard rate

The remainder

42 per cent

the higher rate

PART 3

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first €36,823

20 per cent

the standard rate

The remainder

42 per cent

the higher rate

Age exemption.

4.—Section 188 of the Principal Act is amended—

(a) as respects the year of assessment 2001 and subsequent years of assessment—

(i) by the substitution of the following for subsections (1) and (2):

“(1) In this section and in section 187—

‘income tax payable’ has the same meaning (inserted by the Finance Act, 2001) as in section 3, but without regard to any reduction of tax under section 244;

‘total income’ has the same meaning as in section 3, but includes income arising outside the State which is not chargeable to tax.

(2) In this section, ‘the specified amount’ means, subject to section 187(2)—

(a) in a case where the individual would apart from this section be entitled to a tax credit specified in section 461(a) (inserted by the Finance Act, 2001), £12,580, and

(b) in any other case, £6,290.”,

and

(ii) in subsection (3), by the substitution for “relief under section 461(2) as an individual referred to in paragraph (a)(i) of the definition of ‘specified amount’ in subsection (1) of that section” of “a tax credit specified in section 461(a)”,

and

(b) as respects the year of assessment 2002 and subsequent years of assessment, by the substitution, in subsection (2) (inserted by paragraph (a)), of “€21,586” for “£12,580” and of “€10,793” for “£6,290”.

Amendment of section 122 (preferential loan arrangements) of Principal Act.

5.—Section 122 of the Principal Act is amended, as respects the year of assessment 2001 and subsequent years of assessment, by the substitution in the definition of “the specified rate” in paragraph (a) of subsection (1) of—

(a) “6 per cent” for “4 per cent” in both places where it occurs, and

(b) “12 per cent” for “10 per cent”,

and the said definition, as so amended, is set out in the Table to this section.

TABLE

“the specified rate”, in relation to a preferential loan, means—

(i) in a case where—

(I) the interest paid on the preferential loan qualifies for relief under section 244, or

(II) if no interest is paid on the preferential loan, the interest which would have been paid on that loan (if interest had been payable) would have so qualified,

the rate of 6 per cent per annum or such other rate (if any) prescribed by the Minister for Finance by regulations,

(ii) in a case where—

(I) the preferential loan is made to an employee by an employer,

(II) the making of loans for the purposes of purchasing a dwelling house for occupation by the borrower as a residence, for a stated term of years at a rate of interest which does not vary for the duration of the loan, forms part of the trade of the employer, and

(III) the rate of interest at which, in the course of the employer's trade at the time the preferential loan is or was made, the employer makes or made loans at arm's length to persons, other than employees, for the purposes of purchasing a dwelling house for occupation by the borrower as a residence is less than 6 per cent per annum or such other rate (if any) prescribed by the Minister for Finance by regulations,

the first-mentioned rate in subparagraph (III), or

(iii) in any other case, the rate of 12 per cent per annum or such other rate (if any) prescribed by the Minister for Finance by regulations.

Amendment of section 126 (tax treatment of certain benefits payable under Social Welfare Acts) of Principal Act.

6.—Section 126 of the Principal Act is amended by the substitution, in subsection (8), of the following for paragraph (b) (inserted by the Finance Act, 2000 ):

“(b) Notwithstanding subsection (3) and the Finance Act, 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order, 1994 ( S.I. No. 19 of 1994 ), subsection (3)(b) shall not apply in relation to unemployment benefit paid or payable, in the period commencing on 6 April 1997 and ending on 31 December 2001, to a person employed in short-time employment.”.

Amendment of section 467 (employed person taking care of incapacitated individual) of Principal Act.

7.—Section 467 of the Principal Act is amended by the substitution of—

(a) as respects the year of assessment 2001, “£7,400” for “£8,500” in both places where it occurs, and

(b) as respects the year of assessment 2002 and subsequent years of assessment, “€12,700” for “£8,500” in both places where it occurs.

Amendment of section 469 (relief for health expenses) of Principal Act.

8.—As respects the year of assessment 2001 and subsequent years of assessment, subsection (1) of section 469 of the Principal Act is amended—

(a) in the definition of “dependent”—

(i) by the substitution in paragraph (b) of “under section 465,” for “under section 465 or 466, and”,

(ii) by the substitution in subparagraph (ii) of paragraph (c) of “year of assessment, and” for “year of assessment;”, and

(iii) by the insertion of the following paragraph after paragraph (c):

“(d) any other person being—

(i) a relative of the individual, or of the individual's spouse, who is incapacitated by old age or infirmity from maintaining himself or herself,

(ii) the widowed father or widowed mother of the individual or of the individual's spouse, whether incapacitated or not, or

(iii) a son or daughter of the individual who resides with the individual and on whose services the individual, by reason of old age or infirmity, is compelled to depend;”,

(b) by the insertion of the following after the definition of “dependant”:

“‘educational psychologist’ means a person who is entered on a register maintained by the Minister for Education and Science for the purposes of this section in accordance with guidelines set down by that Minister with the consent of the Minister for Finance;”,

(c) in the definition of “health care”, by the deletion of “other than routine maternity care”,

(d) in the definition of “health expenses”, by the insertion of the following after paragraph (h):

“(i) as respects a dependant of the individual referred to in paragraphs (b) and (c) of the definition of ‘dependant’ either or both—

(I) educational psychological assessment carried out by an educational psychologist, and

(II) speech and language therapy carried out by a speech and language therapist;”,

(e) by the deletion of the definition of “routine maternity care”, and

(f) by the insertion of the following after the definition of “routine ophthalmic treatment”:

“‘speech and language therapist’ means a person approved of for the purposes of this section by the Minister for Health and Children in accordance with guidelines set down by that Minister with the consent of the Minister for Finance.”.

Amendment of section 473 (allowance for rent paid by certain tenants) of Principal Act.

9.—Section 473 of the Principal Act is amended—

(a) as respects the year of assessment 2001, by the substitution in subsection (1) of the following definition for the definition of “the specified limit”:

“‘specified limit’, in relation to an individual for a year of assessment, means—

(a) in the case of—

(i) a married person assessed to tax in accordance with section 1017, or

(ii) a widowed person,

£1,480; but, if at any time during the year of assessment the individual was of the age of 55 years or over, ‘specified limit’ means £2,960, and

(b) in any other case, £740; but, if at any time during the year of assessment the individual was of the age of 55 years or over, ‘specified limit’ means £1,480;”,

and

(b) as respects the year of assessment 2002 and subsequent years of assessment, by the substitution in subsection (1) of the following definition for the definition of “the specified limit”:

“‘specified limit’, in relation to an individual for a year of assessment, means—

(a) in the case of—

(i) a married person assessed to tax in accordance with section 1017, or

(ii) a widowed person,

€2,540; but, if at any time during the year of assessment the individual was of the age of 55 years of over, ‘specified limit’ means €5,080, and

(b) in any other case, €1,270; but, if at any time during the year of assessment the individual was of the age of 55 years or over, ‘specified limit’ means €2,540;”.

Amendment of section 477 (relief for service charges) of Principal Act.

10.—Section 477 of the Principal Act is amended—

(a) as respects the year of assessment 2001 and subsequent years of assessment, by the substitution in paragraph (a) of subsection (6) of “subject to paragraph (d),” for “subject to paragraph (c),”,

(b) as respects the year of assessment 2001, by the substitution in paragraph (a) of subsection (7) of “£150” for “£50”, and

(c) as respects the year of assessment 2002 and subsequent years of assessment, by the substitution in paragraph (a) of subsection (7) of “€195” for “£50”.

Relief for trade union subscriptions.

11.—(1) The Principal Act is amended as respects the year of assessment 2001 and subsequent years of assessment—

(a) by the insertion in Part 2 of the Table to section 458 of the following after “section 472”:

“section 472C”,

(b) by the insertion after section 472B of the following section:

“Relief for trade union subscriptions.

472C.—(1) In this section—

‘appropriate percentage’, in relation to a year of assessment, means a percentage equal to the standard rate of tax for that year;

‘specified amount’, in relation to an individual for a year of assessment, means £74;

‘trade union’ means a body which is either—

(a) the holder of a negotiation licence under the Trade Union Act, 1941 ,

(b) an excepted body within the meaning of section 6 of that Act as amended by the Trade Union Act, 1942 ,

(c) a garda representative body established under the Garda Síochána Act, 1977, namely—

(i) the association known as the Association of Garda Sergeants and Inspectors established under regulation 5(1) of the Garda Síochána (Associations) Regulations, 1978 ( S.I. No. 135 of 1978 ),

(ii) the association known as the Garda Representative Association established under regulation 4(1) of the Garda Síochána (Associations) Regulations, 1978,

(iii) the association known as the Association of Garda Superintendents established under regulation 4(1) of the Garda Síochána (Associations) (Superintendents and Chief Superintendents) Regulations, 1987 ( S.I. No. 200 of 1987 ),

or

(d) a Defence Forces representative body established under section 2 of the Defence (Amendment) Act, 1990 , and regulations pursuant to that Act.

(2) Where an individual is a member of a trade union at any time in a year of assessment (being the year of assessment 2001 or a subsequent year of assessment), the income tax to be charged on the individual or, in the case of an individual whose spouse is assessed to tax in accordance with the provisions of section 1017, the individual's spouse, for the year of assessment, other than in accordance with section 16(2), shall, subject to the following provisions of this section, be reduced by the lesser of—

(a) the appropriate percentage of the specified amount, or

(b) the amount which reduces that income tax to nil.

(3) Notwithstanding subsection (2), the relief (if any) to which an individual is entitled under this section for the year of assessment 2001 shall, in addition to the relief (if any) to which the individual is entitled for the year of assessment 2002, be allowed to the individual in accordance with the provisions of subsection (2), in respect of the income tax to be charged on the individual for the year of assessment 2002.

(4) Relief under this section shall be allowed in priority to relief under any of the other provisions mentioned in the Table to section 458.

(5) Where the relief (if any) to which an individual is entitled under this section in respect of income tax to be charged on the individual for the year of assessment 2001 is not wholly allowed to the individual in respect of the income tax to be charged on the individual for the year of assessment 2002 owing to an insufficiency of total income of the individual in that year of assessment, the portion of the relief not so allowed shall be allowed to the individual in respect of the income tax to be charged on the individual for the year of assessment 2001 such relief being limited to the lesser of—

(a) the portion of the relief not so allowed, and

(b) the relief which reduces that income tax to nil.

(6) If an individual is a member of more than one trade union, either at the same time or at different times in a year of assessment, the individual shall be treated, for the purposes of the relief under this section, as if the individual were a member of one trade union only in that year of assessment.

(7) (a)  Notwithstanding the provisions of any other enactment—

(i) an employer of individuals entitled to relief under this section, or

(ii) a trade union of which such individuals are or were members,

shall on receipt of a request from the Revenue Commissioners furnish to them either directly or indirectly the following information, to the extent that such information is in their possession, in relation to any such individual—

(I) the name and address of the individual,

(II) the name of the trade union of which the individual is a member,

(III) the Personal Public Service Number of the individual, and

(IV) the name and address of the employer of the individual.

(b)  A return by an employer or a trade union under paragraph (a) shall, unless the Revenue Commissioners otherwise direct, be in an electronic format approved by the Revenue Commissioners.

(8) (a)  The information referred to in subsection (7)(a) shall be used by the Revenue Commissioners for the purposes of facilitating the granting of relief under this section and shall be used for no other purpose.

(b)  The provisions of section 872 shall not apply or have effect in relation to such information.”,

and

(c) by the insertion in section 1024(2)(a) of the following after subparagraph (viii):

“(viiia) relief under section 472C, to the husband or the wife according as he or she is entitled to the relief under the said section;”.

(2) As respects the year of assessment 2002 and subsequent years of assessment, section 472C (as inserted by subsection (1)) of the Principal Act is amended, in the definition of “specified amount” in subsection (1), by the substitution of “€130” for “£74”.

Amendment of Part 16 (income tax relief for investment in corporate trades — business expansion scheme and seed capital scheme) of Principal Act.

12.—Part 16 of the Principal Act is amended—

(a) in section 489, by the substitution in subsection (15), of “commencing on 6 April 1984 and ending on 31 December 2001” for “commencing on the 6th day of April, 1984, and ending on the 5th day of April, 2001”,

(b) in section 490, by the substitution, in both subsections (3)(b) and (4)(b), of “the year of assessment 2001” for “the year 2000-01”, and

(c) in section 496(2)(a)(ii)—

(i) by the substitution in clause (II) of “Shannon Free Airport Development Company Limited,” for “Shannon Free Airport Development Company Limited, or”,

(ii) by the substitution in clause (III) of “ Údarás na Gaeltachta Act, 1979 , or” for “ Údarás na Gaeltachta Act, 1979 ,”, and

(iii) by the insertion of the following after clause (III):

“(IV) as respects a subscription for eligible shares issued on or after 6 April 2001, a County Enterprise Board (being a board referred to in the Schedule to the Industrial Development Act, 1995 ) has, in accordance with the provisions of that Act, made a loan or grant to, or made an equity investment in, the qualifying company concerned,”.

Employee share ownership trusts — deceased beneficiaries.

13.—The Principal Act is amended—

(a) in section 519—

(i) in subsection (5)(a)—

(I) by the substitution in subparagraph (iv) of “the trust deed,” for “the trust deed, and”, and

(II) by the insertion after subparagraph (iv) of the following:

“(iva) the payment of any sum or the transfer of securities to the personal representatives of a deceased beneficiary under the terms of the trust deed, and”,

(ii) by the substitution of the following for subsection (7A):

“(7A) Where the trustees of a trust to which this section applies sell securities on the open market, any gain accruing to such trustees shall not be a chargeable gain if, and to the extent that, the proceeds of such sale are used—

(a) to repay monies borrowed by those trustees,

(b) to pay interest on such borrowings, or

(c) to pay a sum to the personal representatives of a deceased beneficiary.”,

(iii) by the insertion of the following after subsection (8):

“(8A) Where the trustees of a trust to which this section applies transfer securities to the personal representatives of a deceased beneficiary, any gain accruing to the trustees on that transfer shall not be a chargeable gain.

(8B) The payment of any sum as is referred to in subsection (7A)(c) or the transfer of any securities to which subsection (8A) applies shall, notwithstanding any other provision of the Income Tax Acts, be exempt from income tax.”,

(iv) in subsection (9)—

(I) by the substitution for “subsections (1) to (8)” of “subsections (1) to (8B)”,

(II) by the substitution in paragraph (c) of “Schedule 11,” for “Schedule 11, or”, and

(III) by the insertion after paragraph (c) of the following:

“(ca) the payment of any sum or the transfer of securities to the personal representatives of a deceased beneficiary of the trust, or”,

and

(v) by the insertion of the following after subsection (9):

“(10) For the purposes of this section—

‘deceased beneficiary’ means a person who on the date of such person's death—

(a) would have been eligible to have shares appropriated to him or her, had such shares been available for appropriation, under a scheme approved of by the Revenue Commissioners under Schedule 11 and for which approval has not been withdrawn, and

(b) was a beneficiary under the terms of a trust deed of an employee share ownership trust approved of by the Revenue Commissioners under Schedule 12 and for which approval has not been withdrawn and which trust deed contained provision for the transfer of securities to the trustees of the scheme referred to in paragraph (a) and for the payment of sums and for the transfer of securities to the personal representatives of deceased beneficiaries.”,

and

(b) in Schedule 12—

(i) by the insertion in subparagraph (2) of paragraph 12, of the following after clause (d):

“(da) to pay any sum or to transfer securities to the personal representatives of deceased persons who were beneficiaries under the terms of the trust deed;”,

and

(ii) by the insertion, in subparagraph (3) of paragraph 13, of the following after clause (d):

“(da) the payment of any sum to the personal representatives of a deceased person who was a beneficiary under the terms of the trust deed;”.

Amendment of Schedule 13 (accountable persons for purposes of Chapter 1 of Part 18) to Principal Act.

14.—Schedule 13 to the Principal Act is amended—

(a) by the substitution of “13. The Civil Service and Local Appointments Commissioners.” for paragraph 13,

(b) by the substitution of “42. Bord na Móna plc.” for paragraph 42,

(c) by the deletion of paragraphs 60 and 88, and

(d) by the addition of the following after paragraph 103:

“104.

The Eastern Regional Health Authority, the Health Boards Executive or an area health board established under the Health (Eastern Regional Health Authority) Act, 1999 .

105.

Irish Sports Council.

106.

An Bord Uchtála.

107.

Council for Children's Hospitals' Care.

108.

National Disability Authority.

109.

Aquaculture Licences Appeals Board.

110.

Office of the President.

111.

Director of Equality Investigations.

112.

Director of Consumer Affairs.

113.

Data Protection Commissioner.

114.

Competition Commissioner.

115.

Chief State Solicitor.

116.

Central Statistics Office.

117.

Commission to Inquire into Child Abuse.

118.

Campus and Stadium Ireland Development Ltd.

119.

Digital Media Development Ltd.

120.

Comhairle.”.

Approved share option schemes.

15.—The Principal Act is amended, with effect from the passing of this Act—

(a) in Part 17, by the insertion after Chapter 3 (inserted by the Finance Act, 1999 ) of the following:

“CHAPTER 4

Approved Share Option Schemes

519D.—(1) The provisions of this section shall apply where an individual obtains a right to acquire shares in a body corporate—

(a) by reason of the individual's office or employment as a director or employee of that or any other body corporate, and

(b) that individual obtains the right in accordance with the provisions of a share option scheme approved under Schedule 12C and in respect of which approval has not been withdrawn.

(2) Tax shall not be chargeable under any provision of the Tax Acts in respect of the receipt of the right referred to in subsection (1).

(3) Subject to subsection (4) (except where paragraph 18(2) of Schedule 12C applies), if the individual exercises the right in accordance with the provisions of the scheme at a time when it is approved—

(a) tax shall not be chargeable under any provision of the Tax Acts in respect of any gain realised by the exercise of the right, and

(b) notwithstanding section 547(1)(a), the individual shall be deemed for the purposes of the Capital Gains Tax Acts to have acquired the shares, acquired by the exercise of the right, for a consideration equal to the amount paid for their acquisition.

(4) Subsection (3) shall not apply in relation to the exercise by any individual of a right in accordance with the provisions of a scheme if the period beginning with his or her obtaining the right and ending with his or her disposal of any of—

(a) the shares acquired by the exercise of the right, or

(b) in a case where section 584, 586 or 587 applies, the shares received in exchange for the shares so acquired,

is less than 3 years.

(5) (a)  Where, in exercising a right in accordance with the provisions of the scheme at a time when it is approved, the individual acquires scheme shares from a relevant body, neither a chargeable gain nor an allowable loss shall accrue to the relevant body on the disposal of the scheme shares, and the individual shall, notwithstanding section 547(1)(a), be deemed for the purposes of the Capital Gains Tax Acts to have acquired the scheme shares for a consideration equal to the amount paid for their acquisition.

(b) In this subsection and in subsection (6)—

‘relevant body’ means a trust or a company which exists for the purpose of acquiring and holding scheme shares;

‘scheme shares’ has the meaning assigned to it by paragraph 11 of Schedule 12C.

(6) (a)  Subject to paragraph (c), this subsection applies to a sum expended by a company in establishing a share option scheme which the Revenue Commissioners approve of in accordance with the provisions of Schedule 12C and under which, subject to subsection (7), no employee or director obtains rights before such approval is given.

(b) A sum to which this subsection applies shall be included—

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

(ii) if a company is an investment company within the meaning of section 83 or a company in the case of which that section applies by virtue of section 707, in the sums to be deducted under section 83(2) as expenses of management in computing the profits of the company for the purposes of corporation tax.

(c) Notwithstanding paragraph (b) or any other provision of the Tax Acts, any sum expended by a company, either directly or indirectly, to enable a relevant body to acquire scheme shares shall not be included—

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

(ii) if the company is an investment company within the meaning of section 83 or a company in the case of which that section applies by virtue of section 707, in the sums to be deducted under section 83(2) as expenses of management in computing the profits of the company for the purposes of corporation tax.

(d) In a case where—

(i) paragraph (b) applies, and

(ii) the approval is given after the end of the period of 9 months beginning on the day following the end of the accounting period in which the sum is expended,

then, for the purposes of paragraph (b), the sum shall be treated as expended in the accounting period in which approval is given and not the accounting period mentioned in subparagraph (ii).

(7) (a) Where a share option scheme is approved by the Revenue Commissioners under Schedule 12C and, prior to such approval, an individual had obtained under the scheme a right which meets the conditions of paragraph (b), that right shall be treated for all the purposes of this section and Schedule 12C as if it had been obtained under an approved scheme.

(b) The conditions of this paragraph are—

(i) the right was exercised on or after 15 February 2001,

(ii) the scheme is approved by the Revenue Commissioners under Schedule 12C on or before 31 December 2001, and

(iii) at the time—

(I) the right was obtained, and

(II) the right was exercised, if such exercise occurred before the scheme was approved under Schedule 12C,

the scheme would, at each of those times, have been capable of approval under Schedule 12C if that Schedule had been in force from the time the right was obtained.”,

(b) by the insertion after Schedule 12B (inserted by the Finance Act, 1999 ) of the following:

“SCHEDULE 12C

Approved Share Option Schemes

Interpretation

1. (1) For the purposes of this Schedule—

‘approved’ in relation to a scheme, means approved under paragraph 2;

‘associated company’ has the same meaning as in section 432;

‘auditor’, in relation to a company, means the person or persons appointed as auditor of the company for the purposes of the Companies Acts, 1963 to 1999, or under the law of the territory in which the company is incorporated and which corresponds to those Acts;

‘control’ has the same meaning as in section 432;

‘full-time director’, in relation to a company, means a director who is required to devote substantially the whole of his or her time to the service of the company;

‘grantor’ has the meaning given by paragraph 2(1);

‘group scheme’ has the meaning given by paragraph 2(3);

‘key employee or director’, in relation to a company, means an employee or a full-time director of the company whose specialist skills, qualifications and relevant experience are vital to the future success of the company and is so certified to the Revenue Commissioners by the company;

‘market value’ shall be construed in accordance with section 548;

‘participating company’, in relation to a group scheme, has the meaning given by paragraph 2(4);

‘scheme shares’ has the meaning given by paragraph 11;

‘shares’ includes stock.

(2) Section 10 shall apply for the purposes of this Schedule.

(3) Subsection (3) of section 433 shall have effect in a case where the scheme is a group scheme, with the substitution of a reference to all the participating companies for the first reference to the company in subparagraph (ii) of paragraph (c) of that subsection.

(4) For the purposes of this Schedule—

(a) a company is a member of a consortium that owns another company if it is one of not more than 5 companies which between them beneficially own not less than 75 per cent of the other company's ordinary share capital and each of which beneficially owns not less than 5 per cent of that capital, and

(b) the question of whether one company is controlled by another shall be determined in accordance with section 432.

Approval of schemes

2. (1) On the application of a body corporate (in this Schedule referred to as the ‘grantor’) which has established a share option scheme, the Revenue Commissioners shall approve the scheme if they are satisfied that it fulfils the requirements of this Schedule.

(2) An application under subparagraph (1) shall be made in writing and contain such particulars and be supported by such evidence as the Revenue Commissioners may require.

(3) Where the grantor has control of another company or companies, the scheme may be expressed to extend to all or any of the companies of which it has control and in this Schedule a scheme which is expressed so to extend is referred to as a ‘group scheme’.

(4) In relation to a group scheme, ‘participating company’ means the grantor or any other company to which for the time being the scheme is expressed to extend.

3. (1) The Revenue Commissioners shall not approve a scheme under this Schedule if it appears to them that it contains features which are neither essential nor reasonably incidental to the purpose of providing for employees' and full-time directors' benefits in the nature of rights to acquire shares.

(2) The Revenue Commissioners shall be satisfied—

(a) that there are no features of the scheme other than any which are included to satisfy requirements of this Schedule which have or would have the effect of discouraging any description of employees who fulfil the conditions in paragraph 8(1) from actually participating in the scheme, and

(b) where the grantor is a member of a group of companies, that the scheme does not and would not have the effect of conferring benefits wholly or mainly on directors of companies in the group or on those employees of companies in the group who are in receipt of the higher or highest levels of remuneration.

(3) For the purposes of subparagraph (2), ‘a group of companies’ means a company and any other companies of which it has control or with which it is associated.

(4) For the purposes of subparagraph (3), a company shall be associated with another company where it could reasonably be considered that—

(a) both companies act in pursuit of a common purpose,

(b) any person or any group of persons or groups of persons having a reasonable commonality of identity have or had the means or power, either directly or indirectly, to determine the trading operations carried on or to be carried on by both companies, or

(c) both companies are under the control of any person or group of persons or groups of persons having a reasonable commonality of identity.

4. (1) If, at any time after the Revenue Commissioners have approved a scheme, any of the requirements of this Schedule cease to be satisfied or the grantor fails to provide information requested by the Revenue Commissioners under paragraph 20, the Revenue Commissioners may withdraw the approval with effect from that time or such later time as the Revenue Commissioners may specify.

(2) If an alteration is made in the scheme at any time after the Revenue Commissioners have approved the scheme, the approval shall not have effect after the date of the alteration unless the Revenue Commissioners have approved the alteration.

5. If the grantor is aggrieved by—

(a) the failure of the Revenue Commissioners to approve the scheme or to approve an alteration in the scheme,

(b) the withdrawal of approval, or

(c) the failure of the Revenue Commissioners to decide that a condition subject to which the approval has been given is satisfied,

it may, by notice in writing given to the Revenue Commissioners within 30 days from the date on which it is notified of the Revenue Commissioners' decision, require the matter to be determined by the Appeal Commissioners, and the Appeal Commissioners shall hear and determine the matter in like manner as an appeal made to them against an assessment and all the provisions of the Income Tax Acts relating to such an appeal (including the provisions relating to the rehearing of an appeal and to 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. The Revenue Commissioners may nominate any of their officers, including an inspector, to perform any acts and discharge any functions authorised by this Schedule to be performed or discharged by them.

Eligibility

7. (1) The scheme shall not provide for any person to be eligible to participate in it, that is to say, to obtain and exercise rights under it—

(a) unless he or she is an employee or director of the grantor or, in the case of a group scheme, of a participating company, or

(b) at any time when he or she has, or has within the preceding 12 months had, a material interest in a close company within the meaning of Chapter 1 of Part 13, which is—

(i) a company the shares of which may be acquired pursuant to the exercise of rights obtained under the scheme, or

(ii) a company which has control of such a company or is a member of a consortium which owns such a company.

(2) Notwithstanding subparagraph 1(a), the scheme may provide that a person may exercise rights obtained under it despite having ceased to be an employee or a director.

8. (1) The scheme shall provide that, at any time, every person who—

(a) is an employee or a full-time director of the grantor or, in the case of a group scheme, a participating company,

(b) has been such an employee or director at all times during a qualifying period not exceeding three years, and

(c) is chargeable to tax in respect of that person's office or employment under Schedule E,

shall be eligible to participate in the scheme, that is to say, to obtain and exercise rights under it.

(2) Subject to paragraph 9 every person eligible to participate in the scheme shall do so on similar terms.

(3) For the purposes of subparagraph (2), the fact that—

(a) the rights to be obtained by persons participating in a scheme vary or are different—

(i) in the year of assessment in which they commence to hold the office or employment by virtue of which they are entitled to participate in the scheme, or

(ii) according to the levels of their remuneration, the length of their service or similar factors,

or

(b) a person is not entitled to receive rights within a stated period of his or her normal retirement date,

shall not be regarded as meaning that they are not eligible to participate in the scheme on similar terms.

9. (1) Subject to the conditions of this paragraph, the scheme may provide for an employee or a director, who is a key employee or director of the grantor or, in the case of a group scheme, a participating company, to obtain and exercise rights under it which do not satisfy the requirement of paragraph 8 regarding participation in the scheme on similar terms.

(2) The conditions of this paragraph are that, in any year of assessment—

(a) the total number of shares in respect of which rights have been granted to key employees and directors in accordance with a rule of the scheme which conforms with this paragraph does not exceed 30 per cent of the total number of shares in respect of which rights have been granted to all employees and directors participating in the scheme whether in accordance with this paragraph or paragraph 8, and

(b) an individual who obtains rights for a year of assessment by virtue of this paragraph shall not also be entitled to obtain rights for that year in accordance with paragraph 8.

10. In determining for the purposes of paragraph 7—

(a) whether a company is a close company, section 430(1)(a) and subsections (3) to (7) of section 431 shall be disregarded, and

(b) whether a person has or has had a material interest in a company, sections 437(2) and 433(3)(c)(ii) shall have effect with the substitution for the references in those provisions to 5 per cent of references to 15 per cent.

Scheme shares

11. The scheme shall provide for directors and employees to obtain rights to acquire shares (in this Schedule referred to as ‘scheme shares’) which satisfy the requirements of paragraphs 12 to 16.

12. Scheme shares shall form part of the ordinary share capital of—

(a) the grantor,

(b) a company which has control of the grantor, or

(c) a company which either is, or has control of, a company which—

(i) is a member of a consortium which owns either the grantor or a company having control of the grantor, and

(ii) beneficially owns not less than 15 per cent of the ordinary share capital of the company so owned.

13. Scheme shares shall be—

(a) shares of a class quoted on a recognised stock exchange.

(b) shares in a company which is not under the control of another company, or

(c) shares in a company which is under the control of a company (other than a company which is, or if resident in the State would be, a close company within the meaning of section 430) whose shares are quoted on a recognised stock exchange.

14. (1) Scheme shares—

(a) shall be fully paid up,

(b) shall not be redeemable, and

(c) shall not be subject to any restrictions other than restrictions which attach to all shares of the same class or a restriction authorised by subparagraph (2).

(2) Subject to subparagraph (3), the shares may be subject to a restriction imposed by the company's articles of association—

(a) requiring all shares held by directors or employees of the company or of any other company of which it has control to be disposed of on ceasing to be so held, and

(b) requiring all shares acquired, in pursuance of rights or interests obtained by such directors or employees, by persons who are not, or have ceased to be, such directors or employees to be disposed of when they are acquired.

(3) A restriction is not authorised by subparagraph (2) unless—

(a) any disposal required by the restriction will be by way of sale for a consideration in money on terms specified in the articles of association, and

(b) the articles also contain general provisions by virtue of which any person disposing of shares of the same class (whether or not held or acquired as mentioned in subparagraph (2)) may be required to sell them on terms which are the same as those mentioned in clause (a).

15. (1) In determining for the purposes of paragraph 14(1)(c) whether scheme shares which are or are to be acquired by any person are subject to any restrictions, there shall be regarded as a restriction attaching to the shares any contract, agreement, arrangement or condition by which such person's freedom to dispose of the shares or of any interest in them or of the proceeds of their sale or to exercise any right conferred by them is restricted or by which such a disposal or exercise may result in any disadvantage to that person or to a person connected with that person.

(2) Subparagraph (1) does not apply to so much of any contract, agreement, arrangement or condition as contains provisions similar in purpose and effect to any of the provisions of the Model Rules set out in the Listing Rules of the Irish Stock Exchange.

16. Except where scheme shares are in a company whose ordinary share capital consists of shares of one class only, the majority of the issued shares of the same class shall be held by persons other than—

(a) persons who acquired their shares in pursuance of a right conferred on them or an opportunity afforded to them as a director or employee of the grantor or any other company and not in pursuance of an offer to the public,

(b) trustees holding shares on behalf of persons who acquired their beneficial interests in the shares as mentioned in subparagraph (a), and

(c) in a case where the shares fall within subparagraph (c) of paragraph 13 but do not fall within subparagraph (a) of that paragraph, companies which have control of the company whose shares are in question or of which that company is an associated company.

Exchange provisions

17. (1) The scheme may provide that if any company (in this paragraph referred to as ‘the acquiring company’)—

(a) obtains control of a company whose shares are scheme shares as a result of making a general offer—

(i) to acquire the whole of the issued ordinary share capital of the company which is made on a condition such that if it is satisfied the person making the offer will have control of the company, or

(ii) to acquire all the shares in the company which are of the same class as the scheme shares,

(b) obtains control of a company whose shares are scheme shares in pursuance of a compromise or arrangement sanctioned by the court under section 201 of the Companies Act, 1963 , or

(c) becomes bound or entitled to acquire shares, under section 204 of the Companies Act, 1963 , in a company whose shares are scheme shares.

any participant in the scheme may at any time within the appropriate period, by agreement with the acquiring company, release his or her rights under the scheme (in this paragraph referred to as ‘the old rights’) in consideration of the grant to him or her of rights (in this paragraph referred to as ‘the new rights’) which are equivalent to the old rights but relate to shares in a different company (whether the acquiring company itself or some other company falling within subparagraph (b) or (c) of paragraph 12).

(2) In subparagraph (1) ‘the appropriate period’ means—

(a) in a case falling within clause (a) of that subparagraph, the period of 6 months beginning with the time when the person making the offer has obtained control of the company and any condition subject to which the offer is made is satisfied,

(b) in a case falling within clause (b) of that subparagraph, the period of 6 months beginning with the time when the court sanctions the compromise or arrangement, and

(c) in a case falling within clause (c) of that subparagraph, the period during which the acquiring company remains bound or entitled as mentioned in that clause.

(3) The new rights shall not be regarded for the purposes of this paragraph as equivalent to the old rights unless—

(a) the shares to which they relate satisfy the conditions specified, in relation to scheme shares, in paragraphs 12 to 16,

(b) the new rights will be exercisable in the same manner as the old rights and subject to the provisions of the scheme as it had effect immediately before the release of the old rights,

(c) the total market value, immediately before the release, of the shares which were subject to the participant's old rights is equal to the total market value, immediately after the grant, of the shares in respect of which the new rights are granted to the participant, and

(d) the total amount payable by the participant for the acquisition of shares in pursuance of the new rights is equal to the total amount that would have been payable for the acquisition of shares in pursuance of the old rights.

(4) Where any new rights are granted pursuant to a provision included in a scheme by virtue of this paragraph they shall be regarded—

(a) for the purposes of section 519D and this Schedule, and

(b) for the purposes of the subsequent application (by virtue of a condition complying with subparagraph (3)(b)) of the provisions of the scheme,

as having been granted at the time when the corresponding old rights were granted.

Transfer of rights

18. (1) The scheme shall not permit any person obtaining rights under it to transfer any of them but may provide that if such a person dies before exercising them, they may be exercised after, but not later than one year after, the date of that person's death.

(2) Where the scheme contains the provisions permitted by subparagraph (1) and any rights are exercised after the death of the person who obtained them, subsection (3) of section 519D shall apply with the omission of the reference to subsection (4) of that section.

Share price

19. The price at which scheme shares may be acquired by the exercise of a right obtained under the scheme shall be stated at the time the right is obtained and shall not be less than the market value of shares of the same class at that time or, if the Revenue Commissioners and the grantor agree in writing, at such earlier time or times as may be provided in the agreement, but the scheme may provide for such variation of the price so stated as may be necessary to take account of any variation in the share capital of which the scheme shares form part.

Information

20. (1) The Revenue Commissioners may by notice in writing require any person to furnish them, within such time as the Revenue Commissioners may direct (not being less than 30 days), with such information as the Revenue Commissioners think necessary for the performance of their functions under this Schedule, and which the person to whom the notice is addressed has or can reasonably obtain, including in particular information—

(a) to enable the Revenue Commissioners to determine—

(i) whether to approve a scheme or withdraw an approval already given, or

(ii) the liability to tax, including capital gains tax, of any person who has participated in a scheme,

and

(b) in relation to the administration of a scheme and any alteration of the terms of a scheme.

(2) Notwithstanding the generality of subparagraph (1), the Revenue Commissioners may request a certificate from the auditor of a grantor company certifying that, in his or her opinion—

(a) the terms of any rule or rules included in the scheme by virtue of either or both paragraphs 8 and 9 are complied with in relation to a year of assessment, or

(b) as respects rights obtained under the scheme before it was approved under this Schedule, the conditions in subsection (7)(b) of section 519D are satisfied.

21. (1) For the purposes of section 437(2), as applied by paragraph 10(b) of this Schedule, a right to acquire shares (however arising) shall be taken to be a right to control them.

(2) Any reference in subparagraph (3) to the shares attributed to an individual is a reference to the shares which, in accordance with section 437(2) as applied by paragraph 10(b) of this Schedule, fall to be brought into account in that individual's case to determine whether their number exceeds a particular percentage of the company's ordinary share capital.

(3) In any case where—

(a) the shares attributed to an individual consist of or include shares which that individual or any other person has a right to acquire, and

(b) the circumstances are such that, if that right were to be exercised, the shares acquired would be shares which were previously unissued and which the company is contractually bound to issue in the event of the exercise of the right,

then, in determining at any time prior to the exercise of that right whether the number of shares attributed to the individual exceeds a particular percentage of the ordinary share capital of the company, that ordinary share capital shall be taken to be increased by the number of unissued shares referred to in clause (b).”,

and

(c) in Schedule 29, by the insertion after “Schedule 9, paragraph 8” in Column 2 of:

“Schedule 12, paragraph 3(4)

Schedule 12A, paragraph 6

Schedule 12B, paragraph 5

Schedule 12C, paragraph 20”.

Amendment of provisions relating to employee share schemes.

16.—The Principal Act is amended—

(a) in Schedule 11, as respects profit sharing schemes approved on or after the passing of this Act, by the substitution in subparagraph (1A) (inserted by the Finance Act, 1998 ) of paragraph 4 of the following for clause (b):

“(b) For the purposes of this subparagraph—

(i) ‘a group of companies’ means a company and any other companies of which it has control or with which it is associated, and

(ii) a company shall be associated with another company where it could reasonably be considered that—

(I) both companies act in pursuit of a common purpose,

(II) any person or any group of persons or groups of persons having a reasonable commonality of identity have or had the means or power, either directly or indirectly, to determine the trading operations carried on or to be carried on by both companies, or

(III) both companies are under the control of any person or group of persons or groups of persons having a reasonable commonality of identity.”,

(b) in Schedule 12, as respects employee share ownership trusts approved on or after the passing of this Act, by the substitution in paragraph 2(2) (inserted by the Finance Act, 1998 ) of the following for clause (b):

“(b) For the purposes of this subparagraph—

(i) ‘a group of companies’ means a company and any other companies of which it has control or with which it is associated, and

(ii) a company shall be associated with another company where it could reasonably be considered that—

(I) both companies act in pursuit of a common purpose,

(II) any person or any group of persons or groups of persons having a reasonable commonality of identity have or had the means or power, either directly or indirectly, to determine the trading operations carried on or to be carried on by both companies, or

(III) both companies are under the control of any person or group of persons or groups of persons having a reasonable commonality of identity.”,

and

(c) in Schedule 12A (inserted by the Finance Act, 1999 ), as respects savings-related share option schemes approved on or after the passing of this Act, by the substitution in paragraph 3 of the following for subparagraph (3):

“(3) For the purposes of subparagraph (2)—

(a) ‘a group of companies’ means a company and any other companies of which it has control or with which it is associated, and

(b) a company shall be associated with another company where it could reasonably be considered that—

(i) both companies act in pursuit of a common purpose,

(ii) any person or any group of persons or groups of persons having a reasonable commonality of identity have or had the means or power, either directly or indirectly, to determine the trading operations carried on or to be carried on by both companies, or

(iii) both companies are under the control of any person or group of persons or groups of persons having a reasonable commonality of identity.”,

Provisions relating to certain approved profit sharing schemes and employee share ownership trusts.

17.—(1) The Principal Act is amended—

(a) in section 511A—

(i) by the insertion in subsection (2)(c) of “or paragraph 11A, as the case may be,” after “paragraph 11”, and

(ii) by the insertion in subsection (5) of “or paragraph 11A, as the case may be,” after “paragraph 11”,

(b) in Schedule 11—

(i) in paragraph 4—

(I) by the insertion in subparagraph (1A)(a)(i) of “, having regard to subparagraph (1B),” after “subparagraph (1)”, and

(II) by the insertion of the following subparagraph after subparagraph (1A):

“(1B) As respects a scheme which has been established by a relevant company (within the meaning of paragraph 1 of Schedule 12)—

(a) any reference in subparagraph (1)(a)(ii) to an employee or a full-time director shall be deemed to be a reference to an individual who was such an employee or a full-time director, as the case may be, of that relevant company or of a company within the relevant company's group (within the meaning of paragraph 1(3A) of Schedule 12) on the day the scheme was established, and

(b) for the purposes of satisfying the qualifying period requirement referred to in subparagraph (1)(b), such periods in which an individual was or is an employee or a director of a company referred to in subparagraphs (3)(b) and (13) of paragraph 11A of Schedule 12 shall also be taken into account.”,

(ii) in paragraph 12A by the insertion in subparagraph (b) of “or paragraph 11A, as the case may be,” after “paragraph 11”, and

(iii) by the insertion of the following paragraph after paragraph 13A:

“13B. (1) Nothing in paragraph 13 shall prevent shares being appropriated to an individual under an approved scheme established by a relevant company (within the meaning of paragraph 1 of Schedule 12) and where, in a year of assessment, shares have been appropriated to an individual under such an approved scheme, paragraph 13 shall apply as if those shares had not been appropriated to that individual in that year of assessment.

(2) Section 515 and paragraph 3(4) shall, subject to any necessary modification, apply in respect of all shares appropriated to that individual in that year of assessment.”,

and

(c) in Schedule 12—

(i) in paragraph 1—

(I) by the insertion in subparagraph (1) after the definition of “ordinary share capital” of the following:

“‘relevant company’ means—

(a) a company into which a trustee savings bank has been reorganised under section 57 of the Trustee Savings Banks Act, 1989 , or

(b) ICC Bank plc;”,

and

(II) by the insertion of the following subparagraph after subparagraph (3):

“(3A) For the purposes of this Schedule a company falls within the relevant company's group at a particular time if—

(a) it is the relevant company, or

(b) at that time, it is controlled by the relevant company and the trust concerned referred to in paragraph 2(1) is expressed to extend to it.”,

(ii) by the insertion of the following paragraph after paragraph 7:

“7A. Notwithstanding any other provision in this Schedule, in a case to which paragraph 11A applies, any reference in paragraph 8, 9 or 10 to an employee or a director of a company shall be construed as a reference to an individual who—

(a) was an employee or a director, as the case may be, of the relevant company or of a company within the relevant company's group on the day the trust was established, and

(b) is, at the relevant time (within the meaning, as may be appropriate in the circumstances, of paragraph 8, 9 or 10), an employee or a director, as the case may be, of a company referred to in paragraph 11A(3)(b).”,

and

(iii) by the insertion of the following paragraph after paragraph 11:

“11A. (1) Notwithstanding any other provision of this Schedule, in any case where a trust is established by a company which is a relevant company, this Schedule shall, with any necessary modification, apply as respects the beneficiaries under the trust as if this paragraph were substituted for paragraph 11.

(2) The trust deed shall contain provision as to the beneficiaries under the trust in accordance with this paragraph.

(3) The trust deed shall provide that a person is a beneficiary at a particular time (in this subparagraph referred to as the ‘relevant time’) if—

(a) the person was an employee or a director of the relevant company or of a company within the relevant company's group on the day the trust was established by that relevant company,

(b) the person is at the relevant time an employee or a director of—

(i) a company (in this subparagraph referred to as the ‘first-mentioned company’) which is, or was at any time since the day the trust was established, within the founding company's group,

(ii) a company within a group of companies (within the meaning of paragraph 2(2)(b)) which has acquired control of the first-mentioned company,

(iii) a company to which—

(I) an employee, or

(II) a director,

referred to in clause (a) has been transferred under either or both the European Communities (Safe-guarding of Employees' Rights on Transfer of Undertaking) Regulations, 1980 and 2000 and the Central Bank Act, 1971 , or

(iv) a company within a group of companies (within the meaning of paragraph 2(2)(b)), of which the company referred to in subclause (iii) is, or was at any time, a member,

(c) at each given time in a qualifying period the person was such an employee or a director of a company referred to in clause (b),

(d) in the case of a director, at that given time the person worked as a director of a company referred to in clause (b) or of a company within the relevant company's group at the rate of at least 20 hours a week (disregarding such matters as holidays and sickness), and

(e) the person is chargeable to income tax in respect of his or her office or employment under Schedule E.

(4) The trust deed may provide that a person is a beneficiary at a particular time if, but for subparagraph (3)(e), he or she would be a beneficiary within the rule which is included in the deed and conforms with subparagraph (3).

(5) Subject to subparagraph (6), the trust deed may provide that a person is a beneficiary at a particular time (in this subparagraph referred to as the ‘relevant time’) if—

(a) the person was an employee or a director of the relevant company or of a company within the relevant company's group on the day the trust was established by that relevant company,

(b) the person has at each given time in a qualifying period been an employee or a director of a company referred to in subparagraph (3)(b) at that given time,

(c) the person has ceased to be an employee or a director of a company referred to in subparagraph (3)(b),

(d) at each given time in the 5 year period, or such lesser period as the Minister for Finance may by order prescribe, commencing on the date the trust was established, 50 per cent or such lesser percentage as the Minister for Finance may by order prescribe, of the securities retained by the trustees at that time were pledged by them as security for borrowings, and

(e) at the relevant time a period of not more than 15 years has elapsed since the trust was established.

(6) The trust deed may provide that a person is a beneficiary at a particular time (in this subparagraph referred to as the ‘relevant time’) if—

(a) the person was an employee or a director of the relevant company or of a company within the relevant company's group on the day the trust was established by that relevant company,

(b) the person has at each given time in a qualifying period been an employee or a director of a company referred to in subparagraph (3)(b) at that given time,

(c) the person has ceased to be an employee or a director of a company referred to in subparagraph (3)(b), and

(d) at the relevant time a period of not more than 18 months has elapsed since the person so ceased.

(7) The trust deed shall not contain a rule that conforms with subparagraph (5) unless the rule is expressed as applying to every person within it.

(8) The trust deed may provide for a person to be a beneficiary if the person is a charity and the circumstances are such that—

(a) there is no person who is a beneficiary within the rule which is included in the deed and conforms with subparagraph (3) or with any rule which is so included and conforms with subparagraph (4), (5) or (6); and

(b) the trust is in consequence of being wound up.

(9) For the purposes of subparagraph (3), a qualifying period shall be a period—

(a) whose length is not more than 3 years,

(b) whose length is specified in the trust deed, and

(c) which ends with the relevant time (within the meaning of that subparagraph).

(10) For the purposes of subparagraphs (5) and (6), a qualifying period shall be a period—

(a) whose length is equal to that of the period specified in the trust deed for the purposes of a rule which conforms with subparagraph (3), and

(b) which ends when the person ceased as mentioned in subparagraph (5)(c) or (6)(c), as the case may be.

(11) The trust deed shall not provide for a person to be a beneficiary unless the person is within the rule which is included in the deed and conforms with subparagraph (3) or any rule which is so included and conforms with subparagraph (4), (5), (6) or (8).

(12) The trust deed shall provide that, notwithstanding any other rule which is included in it, a person cannot be a beneficiary at a particular time (in this subparagraph referred to as the ‘relevant time’) by virtue of a rule which conforms with subparagraph (3), (4), (5), (6) or (8) if—

(a) at the relevant time the person has a material interest in a company referred to in subparagraph (3)(b), or

(b) at any time in the period of one year preceding the relevant time the person has had a material interest in that company,

and for the purposes of this subparagraph any reference to a company shall, in a case to which clause (a) of the definition of relevant company applies, also include a reference to a trustee savings bank which has been reorganised into the relevant company concerned.

(13) For the purposes of satisfying the qualifying period requirement referred to in subparagraphs (3)(c), (5)(b) and (6)(b) a person shall also be regarded as such an employee or a director for any period in which that person is an employee or a director of, in a case to which clause (a) of the definition of relevant company applies, a trustee savings bank which has been reorganised into that relevant company.

(14) For the purposes of this paragraph ‘charity’ means any body of persons or trust established for charitable purposes only.

(15) Where an order is proposed to be made under subparagraph (5)(d), a draft of the order shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann.”.

(2) Subsection (1) shall apply and have effect as respects—

(a) a profit sharing scheme, or

(b) an employee share ownership trust,

approved on or after 12 December 2000.

Amendment of Part 30 (occupational pension schemes, retirement annuities, purchased life annuities and certain pensions) of Principal Act.

18.—Part 30 of the Principal Act is amended—

(a) in Chapter 1—

(i) in section 770(1):

(I) by the insertion of the following after the definition of “pension”:

“‘pension adjustment order’ means an order made in accordance with either section 12 of the Family Law Act, 1995 , or section 17 of the Family Law (Divorce) Act, 1996 ;”,

(II) by the substitution of the following for the definition of proprietary director:

“‘proprietary director’ means a director who, either alone or together with his or her spouse and minor children is or was, at any time within 3 years of the date of—

(i) the specified normal retirement date,

(ii) an earlier retirement date, where applicable,

(iii) leaving service, or

(iv) in the case of a pension or part of a pension payable in accordance with a pension adjustment order, the relevant date in relation to that order,

the beneficial owner of shares which, when added to any shares held by the trustees of any settlement to which the director or his or her spouse had transferred assets, carry more than 5 per cent of the voting rights in the company providing the benefits or in a company which controls that company;”,

and

(III) by the insertion of the following after the definition of “relevant benefits”:

“‘relevant date’ means, in relation to a pension adjustment order, the date on which the decree of separation or the decree of divorce, as the case may be, was granted, by reference to which the pension adjustment order in question was made;”,

and

(ii) in subsection (3A) (inserted by the Finance Act, 1999 ) of section 772, by the substitution of the following for subparagraph (i):

“(i) a proprietary director of, or where a pension or part of a pension is payable in accordance with a pension adjustment order, the spouse or former spouse to whom the pension or part of the pension is so payable, of a proprietary director of, a company to which the scheme relates, or”,

and

(b) in Chapter 2—

(i) in section 784, by the insertion of the following after subsection (6):

“(7) Notwithstanding anything in section 18 or section 19, any payment of an annuity made on or after 1 January 2002 in respect of an annuity contract approved under this section or under section 785 shall be regarded as a pension chargeable to tax under Schedule E, and Chapter 4 of Part 42 shall apply accordingly.”,

(ii) in paragraph (c) of subsection (6) of section 784E (inserted by the Finance Act, 1999 ), by the substitution, as on and from 25 March 1999, for “subsections (2) and (4)” of “subsections (2) to (4)”,

and

(iii) in section 787—

(I) by the deletion of subsection (9),

(II) by the substitution of the following for subsection (10):

“(10) Where in any year of assessment a reduction or a greater reduction would be made under this section in the relevant earnings of an individual but for an insufficiency of net relevant earnings, the amount of the reduction which would have been made but for that reason, less the amount of the reduction which is made in that year, shall be carried forward to the next year of assessment, and shall be treated for the purposes of relief under this section as the amount of a qualifying premium paid in the next year of assessment.”,

and

(III) by the deletion of subsection (12).

Amendment of section 470 (relief for insurance against expenses of illness) of Principal Act.

19.—(1) As respects the year of assessment 2001 and subsequent years of assessment, section 470 of the Principal Act is amended—

(a) in subsection (1)—

(i) by the substitution of the following for the definition of “relevant contract”:

“‘relevant contract’, in relation to an individual, means a contract of insurance which provides specifically, whether in conjunction with other benefits or not, for the reimbursement or discharge, in whole or in part, of actual health expenses (within the meaning of section 469) of—

(a) the individual,

(b) the spouse of the individual, or

(c) the children or other dependants of the individual or of the spouse of the individual;”,

and

(ii) by the insertion after the definition of “relevant contract” of the following:

“‘relievable amount’, in relation to a payment to an authorised insurer under a relevant contract, means—

(a) where the payment covers no benefits other than such reimbursement or discharge as is referred to in the definition of ‘relevant contract’, an amount equal to the full amount of the payment, or

(b) where the payment covers benefits other than such reimbursement or discharge as is referred to in that definition, an amount equal to so much of the payment as is referable to such reimbursement or discharge.”,

(b) by the substitution of the following for subsections (2) and (3):

“(2) Subject to subsection (3), where for a year of assessment—

(a) an individual, or

(b) if the individual is a married person assessed to tax in accordance with section 1017, the individual's spouse,

has made a payment to an authorised insurer under a relevant contract, then, the income tax to be charged on the individual for the year of assessment, other than in accordance with section 16(2), shall be reduced by an amount which is the lesser of—

(i) an amount equal to the appropriate percentage of the relievable amount in relation to the payment, and

(ii) the amount which reduces that income tax to nil.

(3) (a) Where, on or after 6 April 2001, an individual makes a payment to an authorised insurer in respect of a premium due on or after that date under a relevant contract for which relief is due under subsection (2), the individual shall be entitled to deduct and retain out of it an amount equal to the appropriate percentage, for the year of assessment in which the payment is due, of the relievable amount in relation to the payment.

(b) An authorised insurer to which a payment referred to in paragraph (a) is made—

(i) shall accept the amount paid after deduction in discharge of the individual's liability to the same extent as if the deduction had not been made, and

(ii) may, on making a claim in accordance with regulations, recover from the Revenue Commissioners an amount equal to the amount deducted.”,

and

(c) by the insertion of the following after subsection (4):

“(5) (a) The Revenue Commissioners shall make regulations providing generally as to administration of this section and those regulations may, in particular and without prejudice to the generality of the foregoing, include provision—

(i) that a claim under subsection (3)(b)(ii) by an authorised insurer, which has registered with the Revenue Commissioners for the purposes of making such a claim, shall—

(I) be made in such form and manner,

(II) be made at such time, and

(III) be accompanied by such documents,

as provided for in the regulations;

(ii) for the making of annual information returns by authorised insurers, in such form (including electronic form) and manner as may be prescribed, and containing specified details in relation to—

(I) each individual making payments to such insurers under relevant contracts in a year of assessment,

(II) the total amount of premiums paid under a relevant contract by that individual in the year of assessment, and

(III) the total amount deducted by that individual under subsection (3)(a);

and

(iii) for the furnishing of information to the Revenue Commissioners for the purposes of the regulations.

(b) Every regulation made under this section 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 21 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.

(6) (a) Where any amount is paid to an authorised insurer by the Revenue Commissioners as an amount recoverable by virtue of subsection (3)(b)(ii) but is an amount to which that authorised insurer is not entitled, that amount shall be repaid by the authorised insurer.

(b) There shall be made such assessments, adjustments or set-offs as may be required for securing repayment of the amount referred to in paragraph (a) and the provisions of this Act relating to the assessment, collection and recovery of income tax shall, in so far as they are applicable and with necessary modification, apply in relation to the recovery of such amount.”.

(2) Notwithstanding any other provision to the contrary, in relation to the year of assessment 2001 an individual shall be entitled to relief under section 470 of the Principal Act in respect of premiums paid to an authorised insurer under a relevant contract both in that year and in the year preceding that year of assessment.

(3) Schedule 29 to the Principal Act is amended in column 1 by the insertion after “section 121” of “section 470 and Regulations under that section”.

Relief for premiums under qualifying long-term care policies, etc.

20.—The Principal Act is amended—

(a) in Chapter 1 of Part 15—

(i) by the insertion in Part 2 of the Table to section 458 of “Section 470A” after “Section 470”, and

(ii) by the insertion of the following after section 470:

“Relief for premiums under qualifying long-term care policies.

470A.—(1) In this section—

‘activities of daily living’ means one or more of the following, that is to say, washing, dressing, feeding, toileting, mobility and transferring;

‘appropriate percentage’, in relation to a year of assessment, means a percentage equal to the standard rate of tax for that year;

‘long-term care services’ means necessary diagnostic, preventive, therapeutic, curing, treating, mitigating and rehabilitative services and maintenance or personal care services carried out by or on the advice of a practitioner;

‘maintenance or personal care services’ means any care the primary purpose of which is the provision of needed assistance with any of the disabilities as a result of which an individual is a relevant individual (including protection from threats to health and safety due to severe cognitive impairment);

‘mobility’ means the ability to move indoors from room to room on level surfaces;

‘policy’ means a policy of insurance;

‘PPS Number’, in relation to an individual, means that individual's Personal Public Service Number within the meaning of section 223 of the Social Welfare (Consolidation) Act, 1993 ;

‘practitioner’ means any person who is registered in the register established under section 26 of the Medical Practitioners Act, 1978 , or, in relation to long-term care services provided outside the State, is entitled under the laws of the territory in which such services are provided to practice medicine there;

‘qualifying individual’ in relation to an individual and a qualifying long-term care policy, means—

(a) the individual,

(b) the spouse or a child of the individual, or

(c) a relative of the individual or of the spouse of the individual;

‘qualifying insurer’ means, subject to subsection (2), the holder of—

(i) an authorisation issued by the Minister for Enterprise, Trade and Employment under the European Communities (Life Assurance) Regulations of 1984 ( S.I. No. 57 of 1984 ) as amended, or

(ii) an authorisation granted by the authority charged by law with the duty of supervising the activities of insurance undertakings in a Member State of the European Communities, other than the State, in accordance with Article 6 of Directive No. 79/267/EEC1 , who is carrying on the business of life assurance in the State, or

(iii) an official authorisation to undertake insurance in Iceland, Liechtenstein and Norway pursuant to the EEA Agreement within the meaning of the European Communities (Amendment) Act, 1993 , and who is carrying on the business of life assurance in the State;

‘qualifying long-term care policy’ means a policy which provides for the discharge or reimbursement of expenses of long-term care services for a relevant individual and which, in accordance with the provisions of this section, is approved of by the Revenue Commissioners for the purposes of this section;

‘relative’, in relation to an individual or the spouse of the individual, includes a relation by marriage and a person in respect of whom the individual is or was the legal guardian;

‘relevant individual’, in relation to a qualifying long-term care policy, means a qualifying individual in relation to that policy in respect of whom a practitioner has certified that the individual is—

(a) unable to perform (without substantial assistance from another individual) at least 2 of the activities of daily living for a period of at least 90 days due to a loss of functional capacity, or

(b) requires substantial supervision to protect such individual from threats to health and safety due to severe cognitive impairment;

‘transferring’ means the ability to move from a bed to an upright chair or a wheelchair and vice versa.

(2) (a) A person shall not be a qualifying insurer until such time as the person has been entered in a register maintained by the Revenue Commissioners for the purposes of this section and any regulations made thereunder.

(b) Where at any time a qualifying insurer—

(i) is not resident in the State, or

(ii) is not carrying on business in the State through a fixed place of business,

the qualifying insurer shall ensure that there is a person resident in the State and appointed by the qualifying insurer to be responsible for the discharge of all the duties and obligations imposed on the qualifying insurer by this section and any regulations made thereunder.

(c) Where a qualifying insurer appoints a person in accordance with paragraph (b), that insurer shall advise the Revenue Commissioners of the identity of that person and the fact of the person's appointment.

(3) (a) The Revenue Commissioners shall not approve a policy for the purposes of this section unless they are satisfied that—

(i) the only benefits provided under the policy are the discharge or reimbursement of expenses of long-term care services in respect of an individual who is a relevant individual in relation to the policy,

(ii) the policy is either not expressed to be terminable by the insurer under the terms of the policy, or is expressed to be so terminable only in special circumstances mentioned in the policy,

(iii) the policy secures that for the purposes of the policy the question of whether an individual is a relevant individual shall be determined by reference to at least 5 activities of daily living,

(iv) subject to paragraph (b), the policy does not provide for—

(I) a lump sum payment on termination,

(II) a cash surrender value, or

(III) any other money,

that can be paid or assigned to any person, borrowed, or pledged as collateral for a loan, and

(v) the policy is not connected with any other policy.

(b) A policy shall not fail to meet the requirements of paragraph (a)(iv) merely because it provides for the payment of periodic amounts of money without regard to the expenses incurred on the services provided during the period to which the payments relate.

(c) A policy is connected with another policy, whether held by the same person or another person, if—

(i) either policy was issued in respect of an assurance made with reference to the other, or with a view to enabling the other to be made on particular terms, or with a view to facilitating the making of the other on particular terms, and

(ii) the terms on which either policy was issued would have been different if the other policy had not been issued.

(4) (a) A long-term care policy shall be a qualifying long-term care policy within the meaning of this section if it conforms with a form which at the time it is issued is either—

(i) a standard form approved by the Revenue Commissioners as a standard form of qualifying long-term care policy, or

(ii) a form varying from a standard form so approved in no other respects than by making such alterations to that standard form as are, at the time the policy is issued, approved by the Revenue Commissioners as being compatible with a qualifying long-term care policy when made to that standard form and satisfying any conditions subject to which the alterations are so approved.

(b) In approving a policy, or a standard form of a policy, as a qualifying long-term care policy for the purposes of this section, the Revenue Commissioners may disregard any provision of the policy which appears to them insignificant.

(5) Where, for any year of assessment, an individual, who is resident in the State, makes a payment to a qualifying insurer in respect of a premium under a qualifying long-term care policy, the beneficiary of which is a qualifying individual in relation to the individual, the individual making the payment shall, subject to the condition specified in subsection (6), be entitled to relief under this section in accordance with subsection (8).

(6) The condition specified in this subsection is that, at the time the long-term care policy is entered into, the individual (in this subsection referred to as the ‘declarer’) furnishes to the qualifying insurer a declaration in writing which—

(a) is made and signed by the declarer,

(b) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(c) contains the declarer's full name, the address of his or her permanent residence and his or her PPS Number,

(d) declares that—

(i) at the time the declaration is made that he or she is resident in the State, and

(ii) the beneficiary under the policy is a qualifying individual in relation to the declarer,

and

(e) contains an undertaking that if, at any time while the long-term care policy is in force, the declarer ceases to be resident in the State he or she will notify the qualifying insurer accordingly.

(7) (a) A qualifying insurer shall—

(i) keep and retain for the longer of the following periods—

(I) a period of 6 years, and

(II) a period which, in relation to the long-term care policy in respect of which the declaration is made, ends not later than 3 years after the date on which premiums have ceased to be paid or payable in respect of the policy.

all declarations of the kind mentioned in subsection (6) which have been made in respect of qualifying long-term care policies issued by the qualifying insurer, and

(ii) on being so required by notice given to that insurer in writing by an inspector, make available within the State to the inspector, within the time specified in the notice, all or any of the declarations of the kind mentioned in subsection (6).

(b) The inspector may examine or take extracts from or copies of any declarations made available to him or her under paragraph (a).

(8) (a) Where an individual makes a payment to a qualifying insurer in respect of which he or she is entitled to relief under this section, the individual shall be entitled to deduct and retain out of the payment an amount equal to the appropriate percentage for the year of assessment in which payment of the premium falls due.

(b) The qualifying insurer to whom a payment referred to in paragraph (a) is made—

(i) shall accept the amount paid after deduction in discharge of the individual's liability to the same extent as if the deduction had not been made, and

(ii) may, on making a claim in accordance with regulations, recover from the Revenue Commissioners an amount equal to the amount deducted.

(9) (a) The Revenue Commissioners shall make regulations providing generally as to administration of this section and those regulations may, in particular and without prejudice to the generality of the foregoing, include provision—

(i) for the registration of persons as qualifying insurers for the purposes of this section and those regulations,

(ii) that a claim under subsection (8)(b)(ii) by a qualifying insurer shall—

(I) be made in such form and manner,

(II) be made at such time, and

(III) be accompanied by such documents,

as provided for in the regulations,

(iii) for the making of annual information returns by qualifying insurers, in such form (including electronic form) and manner as may be prescribed, and containing specified details in relation to—

(I) each individual making payments to such insurers under qualifying long-term care policies in a year of assessment,

(II) the total amount of premiums paid under a qualifying long-term care policy by that individual in the year of assessment, and

(III) the total amount deducted by that individual under subsection (8)(a),

and

(iv) for the furnishing of information to the Revenue Commissioners for the purposes of the regulations.

(b) Every regulation made under this section shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annualling the regulation is passed by Dáil Éireann within the next 21 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.

(10) (a) Where any amount is paid to a qualifying insurer by the Revenue Commissioners as an amount recoverable by virtue of subsection (8)(b)(ii) but is an amount to which that qualifying insurer is not entitled, that amount shall be repaid by the qualifying insurer.

(b) There shall be made such assessments, adjustments or set-offs as may be required for securing repayment of the amount referred to in paragraph (a) and the provisions of this Act relating to the assessment, collection and recovery of income tax shall, in so far as they are applicable and with necessary modification, apply in relation to the recovery of such amount.

(11) Where relief is given under this section in respect of a payment, relief shall not be given under any other provision of the Income Tax Acts in respect of that payment.

(12) The Revenue Commissioners may nominate any of their officers, including an inspector, to perform any acts and discharge any functions authorised by this section, other than those specified in subsection (9), to be performed or discharged by them.”,

(b) in Chapter 1 of Part 44, by the substitution in section 1024(2)(a) of the following for subparagraph (vi):

“(vi) relief under sections 470, 470A and 473, to the husband or to the wife according as he or she made the payment giving rise to the relief;”,

and

(c) in Schedule 29, by the insertion, in column 1, after “section 121” of “section 470A and Regulations under that section”.

Taxation of certain perquisites.

21.—As respects the year of assessment 2001 and subsequent years of assessment, the Principal Act is amended in Chapter 1 of Part 5 by the insertion of the following section after section 112:

“112A.—(1) In this section—

‘appropriate percentage’, ‘authorised insurer’, ‘relevant contract’ and ‘relievable amount’ have the same meanings, respectively, as in section 470, and

‘qualifying insurer’ and ‘qualifying long-term care policy’ have the same meanings, respectively, as in section 470A.

(2) Section 112 shall apply in relation to a perquisite comprising the payment to—

(a) an authorised insurer under a relevant contract, or

(b) a qualifying insurer under a qualifying long-term care policy

as if any deduction authorised by—

(i) in a case in which paragraph (a) applies, section 470(3)(a), or

(ii) in a case in which paragraph (b) applies, section 470A(8)(a),

had not been made.

(3) Where, for any year of assessment, an employer (within the meaning of section 983)—

(a) makes a payment of emoluments consisting of a perquisite of the kind mentioned in subsection (2), and

(b) deducts therefrom and retains in accordance with—

(i) section 470(3)(a), an amount equal to the appropriate percentage for the year of assessment of the relievable amount in relation to the payment, or

(ii) section 470A(8)(a), an amount equal to the appropriate percentage for the year of assessment of the payment,

the employer shall be assessed and charged to income tax in an amount equal to the amount so deducted and retained and that amount shall be allowable as a deduction in charging to tax the profits or gains of such employer.

(4) Subsections (3) to (6) of section 238 shall apply, with necessary modifications, in relation to a payment referred to in subsection (3) as they apply in relation to a payment to which that section applies.”.

Amendment of Chapter 4 (revenue powers) of Part 38 of Principal Act.

22.—(1) As respects the year of assessment 2001 and subsequent years of assessment, the Principal Act is amended in Chapter 4 of Part 38 by the insertion of the following after section 904D (inserted by the Finance Act, 2000 ):

“Power of inspection: claims by authorised insurers.

904E.—(1) In this section—

‘authorised insurer’ has the same meaning as in section 470;

‘authorised officer’ means an officer of the Revenue Commissioners authorised by them in writing to exercise the powers conferred by this section.

(2) An authorised officer may at all reasonable times enter any premises or place of business of an authorised insurer for the purpose of auditing for a year of assessment claims made by the authorised insurer under section 470(3)(b)(ii).

(3) Without prejudice to the generality of subsection (2), the authorised officer may—

(a) examine the procedures put in place by the authorised insurer in relation to the vouching of claims referred to in that subsection, and

(b) check a sample of the cases in respect of which such a claim has been made to determine whether the procedures referred to in paragraph (a) have been observed in practice and whether they are adequate.

(4) An authorised officer may require an authorised insurer or an employee of the authorised insurer to furnish information, explanations and particulars and to give all assistance which the authorised officer reasonably requires for the purposes of his or her audit and examination under subsections (2) and (3).

(5) An authorised officer when exercising or performing his or her powers or duties under this section shall, on request, produce his or her authorisation for the purposes of this section.

(6) An employee of an authorised insurer who fails to comply with the requirements of the authorised officer in the exercise or performance of the authorised officer's powers or duties under this section shall be liable to a penalty of £1,000.

(7) An authorised insurer which fails to comply with the requirements of the authorised officer in the exercise or performance of the authorised officer's powers or duties under this section shall be liable to a penalty of £15,000 and, if that failure continues, a further penalty of £2,000 for each day on which the failure continues.”.

(2) As respects the year of assessment 2002 and subsequent years of assessment, section 904E (inserted by subsection (1)) of the Principal Act is amended—

(a) by the substitution in subsection (6) of “€1,265” for “£1,000”, and

(b) by the substitution in subsection (7) of—

(i) “€19,045” for “£15,000”, and

(ii) “€2,535” for “£2,000”.

(3) As respects the year of assessment 2002 and subsequent years of assessment, the Principal Act is amended in Chapter 4 of Part 38 by the insertion of the following after section 904E (inserted by subsection (1)):

“Power of inspection: claims by qualifying lenders.

904F.—(1) In this section—

‘authorised officer’ means an officer of the Revenue Commissioners authorised by them in writing to exercise the powers conferred by this section;

‘books, records or other documents’ includes—

(a) any records used in the business of a qualifying lender whether—

(i) comprised in bound volume, loose-leaf binders or other loose-leaf filing system, loose-leaf ledger sheets, pages, folios or cards, or

(ii) kept on microfilm, magnetic tape or in any non-legible form (by the use of electronics or otherwise) which is capable of being reproduced in a legible form, and

(b) every electronic or other automatic means, if any, by which any such thing in non-legible form is so capable of being reproduced, and

(c) documents in manuscript, documents which are typed, printed, stencilled or created by any other mechanical or partly mechanical process in use from time to time and documents which are produced by any photographic or photostatic process, and

(d) correspondence and records of other communications between a qualifying lender and an individual having a qualifying mortgage loan from that qualifying lender;

‘qualifying lender’ and ‘qualifying mortgage loan’ have the same meanings respectively as in section 244A.

(2) An authorised officer may at all reasonable times enter any premises or place of business of a qualifying lender for the purpose of auditing for a year of assessment claims made by the qualifying lender under section 244A(2)(b)(ii).

(3) Without prejudice to the generality of subsection (2), the authorised officer may—

(a) examine the procedures put in place by the qualifying lender in relation to the vouching of claims referred to in that subsection, and

(b) check a sample of the cases in respect of which such a claim has been made to determine whether the procedures referred to in paragraph (a) have been observed in practice and whether they are adequate.

(4) An authorised officer may require a qualifying lender or an employee of the qualifying lender to produce books, records or other documents and to furnish information, explanations and particulars and to give all assistance, which the authorised officer reasonably requires for the purposes of his or her audit and examination under subsections (2) and (3).

(5) An authorised officer may make extracts from or copies of all or any part of the books, records or other documents or other material made available to him or her or require that copies of books, records, or other documents be made available to him or her, in exercising or performing his or her powers or duties under this section.

(6) An authorised officer when exercising or performing his or her powers or duties under this section shall, on request, produce his or her authorisation for the purposes of this section.

(7) An employee of a qualifying lender who fails to comply with the requirements of the authorised officer in the exercise or performance of the authorised officer's powers or duties under this section shall be liable to a penalty of €1,265.

(8) A qualifying lender which fails to comply with the requirements of the authorised officer in the exercise or performance of the authorised officer's powers or duties under this section shall be liable to a penalty of €19,045 and if that failure continues a further penalty of €2,535 for each day on which the failure continues.”.

(4) As respects the year of assessment 2001 and subsequent years of assessment, the Principal Act is amended in Chapter 4 of Part 38 by the insertion of the following after section 904F (inserted by subsection (3)):

“Power of inspection: claims by qualifying insurers.

904G.—(1) In this section—

‘authorised officer’ means an officer of the Revenue Commissioners authorised by them in writing to exercise the powers conferred by this section;

‘qualifying insurer’ and ‘qualifying long-term care policies’ have the same meanings respectively as in section 470A.

(2) An authorised officer may at all reasonable times enter any premises or place of business of a qualifying insurer for the purpose of auditing for a year of assessment claims made by the qualifying insurer under section 470A(8)(b)(ii).

(3) Without prejudice to the generality of subsection (2), the authorised officer may—

(a) examine the procedures put in place by the qualifying insurer in relation to the vouching of claims referred to in that subsection, and

(b) check a sample of the cases in respect of which such a claim has been made to determine whether the procedures referred to in paragraph (a) have been observed in practice and whether they are adequate.

(4) An authorised officer may require a qualifying insurer or an employee of the qualifying insurer to furnish information, explanations and particulars and to give all assistance which the authorised officer reasonably requires for the purposes of his or her audit and examination under subsections (2) and (3).

(5) An authorised officer when exercising or performing his or her powers or duties under this section shall, on request, produce his or her authorisation for the purposes of this section.

(6) An employee of a qualifying insurer who fails to comply with the requirements of the authorised officer in the exercise or performance of the authorised officer's powers or duties under this section shall be liable to a penalty of £1,000.

(7) A qualifying insurer which fails to comply with the requirements of the authorised officer in the exercise or performance of the authorised officer's powers or duties under this section shall be liable to a penalty of £15,000 and, if that failure continues, a further penalty of £2,000 for each day on which the failure continues.

Power of inspection: qualifying savings managers.

904H.—(1) In this section—

‘authorised officer’ means an officer of the Revenue Commissioners authorised by them in writing to exercise the powers conferred by this section;

‘qualifying savings manager’ has the same meaning as in section 848B (inserted by the Finance Act, 2001);

‘special savings incentive account’ has the same meaning as in section 848B (inserted by the Finance Act, 2001).

(2) An authorised officer may at all reasonable times enter any premises or place of business of a qualifying savings manager, or a person (in this section referred to as an ‘appointed person’) appointed by a qualifying savings manager in accordance with section 848R (inserted by the Finance Act, 2001), for the purposes of auditing compliance with the provisions of Part 36A (inserted by the Finance Act, 2001) and without prejudice to the generality of the foregoing the authorised officer may—

(a) audit the returns made in accordance with sections 848P and 848Q (inserted by the Finance Act, 2001),

(b) examine the procedures put in place by the qualifying savings manager, or as the case may be, the appointed person, so as to ensure compliance with the obligations imposed by Part 36A (inserted by the Finance Act, 2001),

(c) examine all, or a sample of, special savings incentive accounts to determine—

(i) whether those procedures have been observed in practice,

(ii) whether the terms under which each such account was commenced and continues, are in accordance with the terms referred to in section 848C (inserted by the Finance Act, 2001), and

(iii) whether the qualifying savings manager, in respect of each such account, is, where appropriate, in possession of a declaration referred to in sections 848F, 848I, and 848O (inserted by the Finance Act, 2001), and is not in possession of any information which would reasonably suggest that any such declaration is incorrect,

and

(d) examine any notice and declaration referred to in section 848N(3) (inserted by the Finance Act, 2001).

(3) An authorised officer may require a qualifying savings manager, or (as the case may be) the appointed person, or an employee of either such person, to produce all or any of the records relating to the management by him or her of special savings incentive accounts and furnish information, explanations and particulars and to give all assistance, which the authorised officer reasonably requires for the purposes of his or her audit and examination under subsection (2).

(4) An employee of a qualifying savings manager or of an appointed person who fails to comply with the requirements of the authorised officer in the exercise or performance of the authorised officer's powers or duties under this section shall be liable to a penalty of £1,000.

(5) A qualifying savings manager or an appointed person who fails to comply with the requirements of the authorised officer in the exercise or performance of the authorised officer's powers or duties under this section shall be liable to a penalty of £15,000 and, if that failure continues, a further penalty of £2,000 for each day on which the failure continues.”.

(5) As respects the year of assessment 2002 and subsequent years of assessment—

(a) section 904G (inserted by subsection (4)) of the Principal Act is amended—

(i) by the substitution in subsection (6) of “€1,265” for “£1,000”, and

(ii) by the substitution in subsection (7) of—

(I) “€19,045” for “£15,000”, and

(II) “€2,535” for “£2,000”,

and

(b) section 904H (inserted by subsection (4)) of the Principal Act is amended—

(i) by the substitution in subsection (4) of “€1,265” for “£1,000”, and

(ii) by the substitution in subsection (5) of—

(I) “€19,045” for “£15,000”, and

(II) “€2,535” for “£2,000”.

Tax relief at source for certain interest.

23.—(1) As respects the year of assessment 2002 and subsequent years of assessment, the Principal Act is amended in Chapter 3 of Part 8 by the insertion of the following section after section 244:

“Application of section 244 (relief for interest paid on certain home loans) of Principal Act.

244A.—(1) (a) In this section—

(i) ‘qualifying dwelling’, in relation to an individual, means a qualifying residence situated in the State;

‘qualifying lender’ has the meaning assigned to it by subsection (3);

‘qualifying mortgage interest’, in relation to an individual and a year of assessment, means the qualifying interest paid by the individual in the year of assessment in respect of a qualifying mortgage loan;

‘qualifying mortgage loan’, in relation to an individual, means a qualifying loan or loans secured by the mortgage of freehold or leasehold estate or interest in a qualifying dwelling, and

(ii) ‘appropriate percentage’, ‘qualifying interest’, ‘qualifying loan’, ‘qualifying residence’ and ‘relievable interest’ have the same meanings, respectively, as they have in section 244.

(b) This section provides for a scheme whereby relief due under section 244 shall, in certain circumstances, be given by way of deduction at source (‘the tax relief at source scheme’) under subsection (2)(a) and in no other manner.

(2)  (a) Where an individual makes a payment of qualifying mortgage interest to a qualifying lender in respect of which relief is due under section 244, the individual shall be entitled in accordance with regulations to deduct and retain out of it an amount equal to the appropriate percentage, for the year of assessment in which the payment is due, of the relievable interest.

(b) A qualifying lender to which a payment referred to in paragraph (a) is made—

(i) shall accept in accordance with regulations the amount paid after deduction in discharge of the individual's liability to the same extent as if the deduction had not been made, and

(ii) may, on making a claim in accordance with regulations, recover from the Revenue Commissioners an amount equal to the amount deducted.

(3) The following bodies shall be qualifying lenders—

(a) a bank holding a licence under section 9 of the Central Bank Act, 1971 ;

(b) a building society incorporated or deemed to be incorporated under the Building Societies Act, 1989 ;

(c) a trustee savings bank within the meaning of the Trustee Savings Banks Act, 1989 ;

(d) ACC Bank plc;

(e) a local authority;

(f) a body which—

(i) (I) holds a licence or similar authorisation, corresponding to a licence referred to in paragraph (a), or

(II) has been incorporated in a manner corresponding to that referred to in paragraph (b),

under the law of any other Member State of the European Communities,

and

(ii) provides qualifying mortgage loans;

and

(g) a body which applies to the Revenue Commissioners for registration as a qualifying lender and in respect of which the Revenue Commissioners, having regard to the activities and objects of the body, are satisfied is entitled to be so registered.

(4) (a) The Revenue Commissioners shall maintain, and publish in such manner as they consider appropriate, a register for the purposes of subsection (3).

(b) If the Revenue Commissioners are satisfied that an applicant for registration is entitled to be registered, they shall register the applicant with effect from such date as may be specified by them.

(c) If it appears to the Revenue Commissioners at any time that a body which is registered under this subsection would not be entitled to be registered if it applied for registration at that time, the Revenue Commissioners may, by written notice given to the body, cancel its registration with effect from such date as may be specified by them in the notice.

(d) Any body which is aggrieved by the failure of the Revenue Commissioners to register it or by the cancellation of its registration, may, by notice given to the Revenue Commissioners before the end of the period of 30 days beginning with the date on which the body is notified of the Revenue Commissioners' decision, require the matter to be determined by the Appeal Commissioners and the Appeal Commissioners shall hear and determine the matter in like manner as an appeal.

(5) (a) The Revenue Commissioners shall make regulations providing generally as to administration of this section and those regulations may, in particular and without prejudice to the generality of the foregoing, include provision—

(i) that a claim under subsection (2)(b)(ii) shall be—

(I) made in such form and manner,

(II) made at such time, and

(III) accompanied by such documents,

as provided for in the regulations,

(ii) that, in circumstances specified in regulations, a claim may be made under subsection (2)(b)(ii) where a payment is due but not made;

(iii) for the making by qualifying lenders, in such form and manner as may be prescribed, of monthly returns containing particulars in relation to—

(I) each individual making payments of qualifying mortgage interest,

(II) the amount of qualifying mortgage interest paid or due by the individual to date in the year of assessment,

(III) the amount deducted by the individual, or the amount he or she would have been entitled to deduct, under subsection (2)(a),

(IV) the estimated qualifying mortgage interest to be paid by the individual in the year of assessment,

(V) the total amount of qualifying mortgage loans of the qualifying lender outstanding at the date of the return,

(VI) the total amount claimed by the qualifying lender under subsection (2)(b)(ii) for the month to which the return relates,

(VII) qualifying mortgage loans repaid in full in that month, and

(VIII) such other matters as may be specified;

(iv) for the transmission by the Revenue Commissioners to qualifying lenders, on a monthly basis, of such details as may be specified in the regulations in relation to—

(I) qualifying mortgage loans, and

(II) individuals with qualifying mortgage loans,

which are necessary for the operation of this section;

(v) in relation to the obligations and entitlements of individuals with qualifying mortgage loans under the tax relief at source scheme;

(vi) in relation to the obligations and entitlements of qualifying lenders under the tax relief at source scheme;

(vii) for deeming of certain qualifying mortgage loans, in such circumstances as may be specified in the regulations, as being no longer entitled to relief under this section;

(viii) for the granting of appropriate relief in any case where inadequate or excessive relief has been granted under this section; and

(ix) for the implementation of this section where a qualifying lender disposes of all or part of its qualifying mortgage loans.

(b) Every regulation made under this section 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 21 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.

(6) (a) Where any amount is paid to a qualifying lender by the Revenue Commissioners as an amount recoverable by virtue of subsection (2)(b)(ii) but is an amount to which that qualifying lender is not entitled, that amount shall be repaid by the qualifying lender.

(b) There shall be made such assessments, adjustments or set-offs as may be required for securing repayment of the amount referred to in paragraph (a) and the provisions of this Act relating to the assessment, collection and recovery of income tax shall, in so far as they are applicable and with necessary modification, apply in relation to the recovery of such amount.”.

(2) Schedule 29 to the Principal Act is amended in column 1 by the insertion after “section 121” of “section 244A and Regulations under that section”.

Provision of certain information: transitional.

24.—(1) In this section “qualifying lender” has the same meaning as in section 244A (inserted by this Act) of the Principal Act.

(2) (a) A qualifying lender shall, on receipt of a request from the Revenue Commissioners, furnish to them the information specified in paragraph (b) in relation to every individual having a loan or loans, secured by the mortgage of freehold or leasehold estate or interest in a dwelling, with that qualifying lender in the year of assessment 2001.

(b) The information referred to in paragraph (a) is as follows—

(i) the name and address of the individual, and

(ii) the account number of the qualifying lender relating to the loan or loans referred to in paragraph (a).

(3) The information referred to in subsection (2) shall be used by the Revenue Commissioners for the purpose of facilitating the granting of relief under section 244A of the Principal Act and shall not be used for any other purpose.

(4) The provisions of section 872 of the Principal Act shall not apply or have effect in relation to information acquired by the Revenue Commissioners under the provisions of this section.

Amendment of section 120A (exemption from benefit-in-kind of certain childcare facilities) of Principal Act.

25.—Section 120A of the Principal Act is amended in the definition of “qualifying premises”—

(a) by the substitution in paragraph (b) of “service” for “service, or” and by the insertion in paragraph (c) of “or” after “service,”,

(b) by the insertion of the following after paragraph (c):

“(d) are made available by the employer jointly with other persons or are made available by any other person or persons and the employer is wholly or partly responsible for capital expenditure on the construction or refurbishment of the premises,”,

and

(c) by the insertion after subsection (2) of the following:

“(3) In the case of a qualifying premises within the meaning of paragraph (d) of the definition of ‘qualifying premises’, the exemption provided for in subsection (2) shall be limited to the amount expended by the employer on capital expenditure on the construction or refurbishment of the premises.”.

Amendment of section 669A (interpretation (Chapter 3)) of Principal Act.

26.—Section 669A of the Principal Act is amended by the substitution of the following for paragraph (b) of the definition of “qualifying quota”:

“(b) a milk quota purchased by a lessee who entered into a lease agreement with a lessor in respect of that quota prior to 13 October 1999 and which ends on or after 31 March 2000 and which complies with the provisions of Council Regulation (EEC) No. 857/84 of 31 March 19841 or Council Regulation (EEC) No. 3950 of 28 December 1992;”.

Amendment of section 669C (effect of sale of quota) of Principal Act.

27.—Section 669C of the Principal Act is amended in subsection (2) by the substitution of “chargeable period” for “accounting period.”.

Amendment of section 530 (interpretation (Chapter 2)) of Principal Act.

28.—Section 530 of the Principal Act is amended in subsection (1):

(a) by the insertion before the definition of “construction operations” of the following definition:

“‘certified subcontractor’, in relation to a principal, means a subcontractor—

(a) in respect of whom the principal holds, at the time of making a payment under a relevant contract to the subcontractor, a relevant payments card for the year in which the payment is made, and

(b) in respect of whom the principal has not received a notice under paragraph (a) of subsection (13) of section 531;”,

and

(b) by the insertion after the definition of “subcontractor” of the following definition:

“‘uncertified subcontractor’ means a subcontractor who is not a certified subcontractor.”.

Relief for fees paid for third level education, etc.

29.—(1) Chapter 1 of Part 15 of the Principal Act, is amended by the insertion of the following after section 473—

“Relief for fees paid for third level education, etc.

473A.—(1) In this section—

‘academic year’, in relation to an approved course, means a year of study commencing on a date not earlier than the 1st day of August in a year of assessment;

‘appropriate percentage’, in relation to a year of assessment, means a percentage equal to the standard rate of tax for that year;

‘approved college’, in relation to a year of assessment, means—

(a) a college or institution of higher education in the State which—

(i) provides courses to which a scheme approved by the Minister under the Local Authorities (Higher Education Grants) Acts, 1968 to 1992, applies, or

(ii) operates in accordance with a code of standards which from time to time may, with the consent of the Minister for Finance, be laid down by the Minister, and which the Minister approves for the purposes of this section;

(b) any university or similar institution of higher education in a Member State of the European Union (other than the State) which—

(i) is maintained or assisted by recurrent grants from public funds of that or any other Member State of the European Union (including the State), or

(ii) is a duly accredited university or institution of higher education in the Member State in which it is situated;

(c) a college or institution in another Member State of the European Union providing distance education in the State, which—

(i) provides courses to which a scheme approved by the Minister under the Local Authority (Higher Education Grants) Acts, 1968 to 1992, applies, or

(ii) operates in accordance with a code of standards which from time to time may, with the consent of the Minister for Finance, be laid down by the Minister, and which the Minister approves for the purposes of this section;

(d) any university or similar institution of higher education in any country, other than the State or a Member State of the European Union which—

(i) is maintained or assisted by recurrent grants from public funds of that country, or

(ii) is a duly accredited university or institution of higher education in the country in which it is situated;

‘approved course’ means—

(a) a full-time or part-time undergraduate course of study provided by a college to which paragraph (a), (b) or (c) of the definition of ‘approved college’ relates which—

(i) is of at least 2 academic years' duration, and

(ii) in the case of a course provided by a college to which paragraph (a)(ii) or (c)(ii) of the definition of ‘approved college’ relates, the Minister, having regard to a code of standards which from time to time may, with the consent of the Minister for Finance, be laid down by the Minister in relation to the quality of education to be offered on such approved course, approves of for the purposes of this section;

(b) a postgraduate course of study leading to a postgraduate award, based on a thesis or on the results of an examination or both, in an approved college—

(i) of not less than one academic year, but not more than 4 academic years, in duration,

(ii) that requires an individual, undertaking the course, to have been conferred with a degree or an equivalent qualification, and

(iii) that, in the case of a course provided by a college to which paragraph (a)(ii) of the definition of ‘approved college’ relates, the Minister, having regard to any code of standards which from time to time may, with the consent of the Minister for Finance, be laid down by the Minister in relation to the quality of education to be offered on such approved course, approves for the purposes of this section;

‘dependant’, in relation to an individual, means a spouse or child of the individual or a person in respect of whom the individual is or was the legal guardian;

‘the Minister’ means the Minister for Education and Science;

‘qualifying fees’, in relation to an approved course and an academic year, means the amount of fees chargeable in respect of tuition to be provided in relation to that course in that year which, with the consent of the Minister for Finance, the Minister approves of for the purposes of this section.

(2) Subject to this section, where an individual for a year of assessment proves that he or she has, on his or her own behalf or on behalf of his or her dependant, made a payment in respect of qualifying fees in respect of an approved course for the academic year in relation to that course commencing in that year of assessment, the income tax to be charged on the individual for that year of assessment, other than in accordance with section 16(2), shall be reduced by an amount which is the lesser of—

(a) the amount equal to the appropriate percentage of the aggregate of all such payments proved to be so made, and

(b) the amount which reduces that income tax to nil.

(3) In the case of an individual who is a married person assessed to tax for a year of assessment in accordance with section 1017, any payment in respect of qualifying fees made by the individual's spouse shall, except where section 1023 applies, be deemed to have been made by the individual.

(4) For the purposes of this section, a payment in respect of qualifying fees shall be regarded as not having been made in so far as any sum in respect of, or by reference to, such fees has been or is to be received, directly or indirectly, by the individual, or, as the case may be, his or her dependant, from any source whatever by means of grant, scholarship or otherwise.

(5) (a) Where the Minister is satisfied that an approved college, within the meaning of paragraph (a)(ii) or (c)(ii) of the definition of ‘approved college’, or an approved course in that college, no longer meets the appropriate code of standards laid down, the Minister may by notice in writing given to the approved college withdraw, with effect from the year of assessment following the year of assessment in which the notice is given, the approval of that college or course, as the case may be, for the purposes of this section.

(b) Where the Minister withdraws the approval of any college or course for the purposes of this section, notice of its withdrawal shall be published as soon as may be in Iris Oifigiúil.

(6) Any claim for relief under this section made by an individual in respect of fees paid to an approved college shall be accompanied by a statement in writing made by the approved college concerned stating each of the following, namely—

(a) that the college is an approved college for the purposes of this section,

(b) the details of the course undertaken by the individual or his or her dependant,

(c) the duration of the course, and

(d) the amount of the fees paid in respect of the course.

(7) Where for the purposes of this section any question arises as to whether—

(a) a college is an approved college, or

(b) a course of study is an approved course,

the Revenue Commissioners may consult with the Minister.

(8) On or before 1 July in each year of assessment, the Minister shall furnish the Revenue Commissioners with full details of—

(a) all colleges and courses in respect of which approval has been granted and not withdrawn for the purposes of this section, and

(b) the amount of the qualifying fees in respect of each such course for the academic year commencing in that year of assessment.”.

(2) Chapter 1 of Part 15 of the Principal Act is further amended by the deletion in Part 2 of the Table to section 458 of “section 474”, “section 474A”, “section 475” and “section 475A” and by the insertion of “section 473A” after “section 473”.

(3) Sections 474, 474A, 475 and 475A of the Principal Act, are repealed.

Seafarer allowance, etc.

30.—Section 472B of the Principal Act is amended—

(a) in subsection (4)—

(i) as respects the year of assessment 2001, by the substitution of “125 days” and “£3,700” for “169 days” and “£5,000”, respectively, and

(ii) as respects the year of assessment 2002 and subsequent years of assessment, by the substitution of “€6,350” for “£5,000”,

and

(b) by the insertion after subsection (4) of the following:

“(4A) (a) Notwithstanding subsection (4), but subject to paragraph (b)—

(i) as respects the year of assessment 2001, the reference in that subsection to ‘125 days’ shall be construed as a reference to ‘119 days’, and

(ii) as respects the year of assessment 2002 and subsequent years of assessment, the reference in that subsection to ‘169 days’ shall be construed as a reference to ‘161 days’.

(b) Paragraph (a) shall come into operation on such day as the Minister for Finance may by order appoint.”.

Amendment of section 823 (deduction for income earned outside the State) of Principal Act.

31.—(1) Section 823 of the Principal Act is amended—

(a) in subsection (1)—

(i) by the substitution of the following for the definition of “qualifying day”:

“‘qualifying day’, in relation to an office or employment of an individual, means a day on or before 31 December 2003 which is one of at least 11 consecutive days throughout the whole of which the individual is absent from the State for the purposes of the performance of the duties of the office or employment or of those duties and the duties of other offices or employments of the individual outside the State and which (taken as a whole) are substantially devoted to the performance of such duties, but no day shall be counted more than once as a qualifying day;”,

and

(ii) in the formula in the definition of “the specified amount”, by the substitution as respects the year of assessment 2001, of “270” for “365”,

and

(b) in subsection (3)—

(i) after “90 days” by the insertion of “or, in the case where subparagraph (i) applies and the year of assessment concerned is the year of assessment 2001, 67 days”, and

(ii) by the substitution as respects the year of assessment 2001, of “£18,500” for “£25,000”.

(2) Subparagraph (a)(i) of subsection (1) shall apply as on and from 26 January 2001.

Rent-a-room relief.

32.—(1) The Principal Act is amended in Chapter 1 of Part 7 by the insertion of the following after section 216:

“216A.—(1) In this section—

‘qualifying residence’, in relation to an individual for a year of assessment, means a residential premises situated in the State which is occupied by the individual as his or her sole or main residence during the year of assessment;

‘relevant sums’ means all sums arising in respect of the use for the purposes of residential accommodation, of a room or rooms in a qualifying residence and includes sums arising in respect of meals, cleaning, laundry and other similar goods and services which are incidentally supplied in connection with that use;

‘residential premises’ means a building or part of a building used as a dwelling.

(2) (a) This subsection applies if—

(i) relevant sums, chargeable to income tax under Case IV or Case V of Schedule D, arise to an individual (regardless of whether the relevant sums are chargeable to income tax under Case IV or Case V or under both Case IV and Case V), and

(ii) the amount of the relevant sums does not exceed the individual's limit for the year of assessment.

(b) In ascertaining the amount of relevant sums for the purposes of this subsection no deduction shall be made in respect of expenses or any other matter.

(c) Where this subsection applies the following shall be treated as nil for the purposes of the Income Tax Acts—

(i) the profits or gains of the year of assessment, and

(ii) the losses of any such year of assessment, in respect of relevant sums arising to an individual.

(d) Where an individual has relevant sums chargeable to income tax under Case V of Schedule D and an election under subsection (3)(a) has not been made, an allowance under section 284, which would on due claim being made be granted, shall be deemed to have been granted.

(3) (a) Subsection (2) shall not apply for a year of assessment if an individual so elects by notice in writing to the inspector on or before the specified return date for the chargeable period (within the meaning of section 950).

(b) An election under this subsection shall have effect only for the year of assessment for which it is made.

(4) The provisions of the Income Tax Acts relating to the making of returns shall apply as if this section had not been enacted.

(5) Subject to subsections (6) and (7), the limit of an individual referred to in subsection (2) is £6,000.

(6) As respects the year of assessment 2001 the limit referred to in subsection (5) is £4,440.

(7) Where relevant sums arise to more than one individual in respect of a qualifying residence the limits referred to in subsections (5) and (6) shall be divided by the number of such individuals.

(8) Where subsection (2) applies, the receipt of relevant sums shall not operate so as to restrict or reduce any entitlement to relief under section 244 or 604.”.

(2) Section 216A (inserted by subsection (1)) of the Principal Act is amended as respects the year of assessment 2002 and subsequent years of assessment—

(a) in subsection (5) by the substitution of “€7,620” for “£6,000”, and

(b) by the deletion of subsection (6).

Chapter 3

Income Tax, Corporation Tax and Capital Gains Tax

Special savings incentive accounts.

33.—(1) The Principal Act is amended by the insertion after Part 36 of the following:

“PART 36A

Special savings incentive accounts

Interpretation.

848B.—(1) In this Part—

‘deposit account’ means an account beneficially owned by an individual, which is—

(a) an account into which a deposit (within the meaning of section 256(1)) is made, or

(b) an account with a relevant European institution into which repayable funds are lodged;

‘investment undertaking’ has the meaning assigned to it in section 739B and ‘units in an investment undertaking’ shall be construed accordingly;

‘PPS Number’, in relation to an individual, means that individual's Personal Public Service Number within the meaning of section 223 of the Social Welfare (Consolidation) Act, 1993 ;

‘qualifying assets’, subject to section 848G, means—

(a) deposit accounts,

(b) shares within the meaning of section 2(1) of the Credit Union Act, 1997 ,

(c) units in an investment undertaking,

(d) units in, or shares of, a relevant UCITS,

(e) relevant life assurance policies,

(f) shares issued by a company, wherever incorporated, officially listed on a recognised stock exchange, and

(g) securities issued by or on behalf of a government;

‘qualifying individual’ means an individual who at the time of opening a special savings incentive account—

(a) is 18 years of age, or older, and

(b) is resident in the State;

‘qualifying savings manager’ means—

(a) a person who is a holder of a licence granted under section 9 of the Central Bank Act, 1971 , or a person who holds a licence or other similar authorisation under the law of any other Member State of the European Communities which corresponds to a licence granted under that section,

(b) a building society within the meaning of section 256,

(c) a trustee savings bank within the meaning of the Trustee Savings Banks Act, 1989 ,

(d) ACC Bank plc,

(e) the Post Office Savings Bank,

(f) a credit union within the meaning of the Credit Union Act, 1997 ,

(g) an investment undertaking,

(h) the holder of—

(i) an authorisation issued by the Minister for Enterprise, Trade and Employment under the European Communities (Life Assurance) Regulations of 1984 ( S.I. No. 57 of 1984 ), as amended, or,

(ii) an authorisation granted by the authority charged by law with the duty of supervising the activities of insurance undertakings in a Member State of the European Communities, other than the State, in accordance with Article 6 of Directive No. 79/267/EEC1 , who is carrying on the business of life assurance in the State, or

(iii) an official authorisation to undertake insurance in Iceland, Liechtenstein and Norway pursuant to the EEA Agreement within the meaning of the European Communities (Amendment) Act, 1993 , and who is carrying on the business of life assurance in the State,

(i) a person which is an authorised member firm of the Irish Stock Exchange, within the meaning of the Stock Exchange Act, 1995 , or a member firm (which carries on a trade in the State through a branch or agency) of a stock exchange of any other Member State of the European Communities,

(j) a firm approved under section 10 of the Investment Intermediaries Act, 1995 , which is authorised to hold client money, other than a firm authorised as a Restricted Activity Investment Product Intermediary, where the firm's authorisation permits it to engage in the proposed activities, or a business firm which has been authorised to provide similar investment business services under the laws of a Member State of the European Communities which correspond to that Act, or

(k) the Minister for Finance, acting through the Agency (within the meaning of section (1) of the National Treasury Management Agency Act, 1990 );

‘relevant European institution’ means an institution which is a credit institution (within the meaning of the European Communities (Licensing and Supervision of Credit Institutions) Regulations, 1992 ( S.I. No. 395 of 1992 )) which has been authorised by the Central Bank of Ireland to carry on business of a credit institution in accordance with the provisions of the supervisory enactments (within the meaning of those Regulations);

‘relevant UCITS’ means a UCITS situated in a Member State of the European Communities, other than the State, which has been authorised by the competent authorities of the Member State in which it is situated;

‘relevant life assurance policy’ means a policy of assurance which satisfies the conditions specified in subsection (3);

‘special savings incentive account’ has the meaning assigned to it in section 848C;

‘tax credit’, in relation to a subscription, has the meaning assigned to it in section 848D(1);

‘UCITS’ means undertakings for collective investment in transferable securities within the meaning of Article 1 of Council Directive 85/6112 and references to—

(a) ‘the Member State in which UCITS is situated’

and

(b) a UCITS which has been ‘authorised by the competent authorities of the Member State in which it is situated’,

shall have the same meanings as in Articles 3 and 4 respectively of that Directive;

‘units in, or shares of, a relevant UCITS’ means the rights or interests (however described) of the holder of units or shares in that relevant UCITS.

(2) Nothing in this Part shall be construed as authorising or permitting a person who is a qualifying savings manager to provide any services which that person would not otherwise be authorised or permitted to provide in the State.

(3) The conditions referred to in the definition of ‘relevant life assurance policy’ in subsection (1) are that the policy of assurance is on the life of a person who beneficially owns the policy, and that the terms and conditions of the policy provide—

(a) for an express prohibition of any transfer of the policy, or the rights conferred by the policy or any share or interest in the policy or rights respectively, other than the cash proceeds from the termination of the policy or a partial surrender of the rights conferred by the policy, to that person,

(b) the policy, the rights conferred by the policy and any share or interest in the policy or rights respectively, shall not be capable of assignment, other than that the proceeds on the termination of the policy (other than on the death of the policyholder) may be transferred from a qualifying savings manager to another qualifying savings manager in accordance with the provisions of this Part, and

(c) the policy is not issued in the course of annuity business or pension business, within the meaning of section 706.

Special savings incentive account.

848C.—A special savings incentive account is a scheme of investment commenced on or after 1 May 2001 and on or before 30 April 2002 by a qualifying individual with a qualifying savings manager (who is registered in accordance with section 848R) under terms which include the following—

(a) apart from tax credits, in relation to subscriptions, subscribed by the qualifying savings manager under section 848E(1)(b)(ii) only the qualifying individual, or the spouse of that individual, may subscribe to the account,

(b) such subscriptions are funded by the qualifying individual, or the spouse of that individual, from funds available to either or both of them out of their own resources without recourse to borrowing, or the deferral of repayment (whether in respect of capital or interest) of sums already borrowed,

(c) subject to paragraph (d), such subscriptions, ignoring any amounts withdrawn from the account by the qualifying individual—

(i) in the month the account is commenced and in each of the 11 months immediately after that month, are of an amount agreed between the qualifying individual and the qualifying savings manager when the account is commenced, which amount shall not be less than £10, and

(ii) in any one month, do not exceed £200,

(d) such subscriptions, made in the month which is the month in which the fifth anniversary of the day of commencing the account falls, or thereafter, shall not be subscriptions for the purposes of section 848D,

(e) such subscriptions and tax credits, in relation to such subscriptions, are to be used, and used only, by the qualifying savings manager to acquire qualifying assets which—

(i) are held in the account and managed by the qualifying savings manager, and

(ii) are beneficially owned by the qualifying individual,

(f) all or any of the qualifying assets can not be assigned or otherwise pledged, as security for a loan,

(g) on commencing the account, the qualifying individual makes a declaration of a kind referred to in section 848F,

(h) for the account to be treated as maturing (otherwise than in respect of the death of the qualifying individual) in accordance with section 848H(1), the qualifying individual shall make a declaration of a kind referred to in section 848I within the period commencing 60 days before and ending 30 days after the fifth anniversary of the commencement of the account,

(i) that at the request of the qualifying individual, and within such time as shall be agreed, the account, with all rights and obligations of the parties thereto may be transferred to another qualifying savings manager in accordance with the provisions of this Part,

(j) that the qualifying savings manager will notify the qualifying individual if he or she ceases to be a qualifying savings manager, or ceases to be registered in accordance with section 848R, and

(k) that the qualifying savings manager will take reasonable measures—

(i) to establish that the PPS Number, contained in the declaration referred to in paragraph (g), made by a qualifying individual, is the PPS Number in relation to that individual, and

(ii) to ensure that the terms, provided for in this section, under which the account is commenced are and continue to be complied with, and

(l) that the qualifying savings manager will retain a copy of all material used to establish the correctness of each PPS Number contained in a declaration in accordance with paragraph (k)(i), for so long as the declaration is required to be retained under section 848R(11) and on being so required by an inspector, will make such material available for inspection.

Tax credits.

848D.—Where a qualifying individual, or the spouse of that individual, subscribes to a special savings incentive account—

(a) the qualifying individual shall be treated, for the purposes of the Tax Acts, as having paid a grossed up amount, which amount, after deducting income tax at the standard rate for the year of assessment 2001, leaves the amount of the subscription, and

(b) the qualifying individual shall be entitled to be credited with the amount of income tax (in this Part referred to as the ‘tax credit’, in relation to the subscription) treated as having been so deducted, in accordance with the provisions of this Part and not under any other provision of the Tax Acts.

Payment of tax credit.

848E.—(1) Where a qualifying individual subscribes to a special savings incentive account, and the qualifying savings manager of that account complies with the provisions of section 848P in relation to that subscription—

(a) the Revenue Commissioners shall, subject to that section, pay to the qualifying savings manager the tax credit in relation to that subscription, and

(b) that tax credit shall—

(i) be beneficially owned by the qualifying individual, and

(ii) on receipt, be immediately subscribed by the qualifying savings manager to the special savings incentive account.

(2) Subject to this Part, exemption from income tax and capital gains tax shall be allowed in respect of the income and chargeable gains arising in respect of qualifying assets held in a special savings incentive account.

(3) A deposit (within the meaning of section 256(1)) made to a deposit account which is a qualifying asset, shall not be a relevant deposit (within the meaning of that section) for the purposes of Chapter 4 of Part 8.

(4) Notwithstanding subsection (2), where in a year of assessment an individual commences a special savings incentive account, the individual is obliged to include in a return, required to be delivered by the individual under section 951, or as the case may be, section 879, in respect of that year of assessment, a statement to the effect that the individual has commenced such an account.

Declaration on commencement.

848F.—The declaration referred to in section 848C(g) is a declaration in writing made by the qualifying individual to the qualifying savings manager which—

(a) is made and signed by the qualifying individual,

(b) is made in such form—

(i) as may be prescribed or authorised by the Revenue Commissioners, and

(ii) which contains a reference to the offence of making a false declaration under section 848T,

(c) contains the qualifying individual's—

(i) name,

(ii) address of his or her permanent residence,

(iii) PPS Number, and

(iv) date of birth,

(d) declares at the time the declaration is made, that the qualifying individual—

(i) is resident in the State,

(ii) has not commenced another special savings incentive account,

(iii) is the person who will beneficially own the qualifying assets to be held in the account,

(iv) will subscribe to the account from funds available to him or her, or his or her spouse, from their own resources, without recourse to borrowing, or the deferral of repayment (whether in respect of capital or interest) of sums already borrowed, and

(v) will not assign or otherwise pledge qualifying assets to be held in the account as security for a loan,

and

(e) contains an undertaking that if at any time the declaration ceases to be materially correct, the qualifying individual will advise the qualifying savings manager accordingly.

Acquisition of qualifying assets.

848G.—(1) Qualifying assets held in a special savings incentive account, managed by a qualifying savings manager and beneficially owned by a qualifying individual may not at any time—

(a) be purchased (or otherwise acquired) by the qualifying savings manager, otherwise than—

(i) out of money which the qualifying savings manager holds in the account, and

(ii) by way of a bargain made at arm's length,

(b) be purchased from the qualifying individual or any person connected with that individual (within the meaning of section 10), or

(c) be connected with any other asset or liability of the qualifying individual or any other person connected with that individual (within the meaning of section 10) and for this purpose a qualifying asset is connected with another asset or a liability if the terms under which either asset or the liability is acquired and held would be different if the qualifying asset, the other asset or the liability, had not been acquired and held.

(2) Shares fulfil the condition as to official listing in paragraph (f) of the definition of ‘qualifying assets’ in section 848B(1) if in pursuance of a public offer, a qualifying savings manager applies for the allotment or allocation to him or her of shares in a company which are due to be admitted to such listing within 30 days of the allocation or allotment, and which, when admitted to such a listing, would be qualifying assets.

Termination of special savings incentive account.

848H.—(1) A special savings incentive account is treated as maturing—

(a) 30 days after the fifth anniversary of the end of the month in which a subscription was first made to the account where the qualifying individual has made a declaration of a kind referred to in section 848I, or,

(b) on the day of the death of the qualifying individual,

whichever event first occurs.

(2) A special savings incentive account is treated as ceasing, where at any time before the account is treated as maturing—

(a) any of the terms referred to in section 848C are not complied with, or

(b) the qualifying individual is neither resident nor ordinarily resident in the State.

(3) Where a special savings incentive account is treated as maturing or ceasing—

(a) the account thereafter shall not be a special savings incentive account for the purposes of section 848E, and

(b) the assets remaining in the account after having regard to all liabilities to tax on gains treated as accruing to the account under this Part shall—

(i) where the assets are shares, securities, or units in, or shares of, a relevant UCITS, be treated for the purposes of the Capital Gains Tax Acts, as having been acquired by the qualifying individual at their then market value at that time,

(ii) where the asset is a relevant life assurance policy, be treated as if it were a policy commenced at that time and in respect of which premiums in an amount equal to the market value of the policy at that time had been paid at that time, for the purposes of Chapter 5 of Part 26, and

(iii) where the asset is units in an investment undertaking, be treated as if the units had been acquired at that time, for their market value at that time, for the purposes of Chapter IA of Part 27.

Declaration on maturity.

848I.—The declaration referred to in section 848C(h) is a declaration in writing made by the qualifying individual to the qualifying savings manager which—

(a) is made and signed by the qualifying individual,

(b) is made in such form—

(i) as may be prescribed or authorised by the Revenue Commissioners, and

(ii) which contains a reference to the offence of making a false declaration under section 848T,

(c) contains the qualifying individual's—

(i) name,

(ii) address of his or her permanent residence,

(iii) PPS Number, and

(iv) date of birth,

(d) declares that at all times in the period from which the account was commenced until the date the declaration is made, the qualifying individual—

(i) was the beneficial owner of the qualifying assets held in the account,

(ii) had only one special savings incentive account,

(iii) was resident or ordinarily resident in the State,

(iv) subscribed to the account from funds available to the qualifying individual or his or her spouse without recourse to borrowing, or the deferral of repayment (whether of capital or interest) of sums borrowed when the account was commenced, and

(v) did not assign or otherwise pledge qualifying assets held in the account as security for a loan.

Gain on maturity.

848J.—(1) On the day on which a special savings incentive account is treated as maturing, a gain shall be treated as accruing on the account in an amount determined under subsection (2).

(2) The amount of the gain referred to in subsection (1) is an amount equal to the aggregate market value of all assets (including cash) held in the account on the day the account is treated as maturing, less the sum of all subscriptions (including subscriptions made by the qualifying savings manager under section 848E(1)(b)(ii)), made to the account on or before that day to the extent that they have not previously been treated, in accordance with subsection (3), as having been withdrawn from the account.

(3) For the purposes of subsection (2) where there is a withdrawal from an account, the amount withdrawn (before being reduced by any tax liability arising under this Part in respect of any gain treated as accruing to the account as a result of the withdrawal) shall be treated as a withdrawal of subscriptions to the extent that the amount withdrawn does not exceed the total amount of subscriptions (including subscriptions made by the qualifying savings manager in accordance with section 848E(1)(b)(ii)) made to the account since commencement, reduced by the amount of such subscriptions previously treated as subscriptions withdrawn from the account under this subsection.

(4) For the purposes of subsection (3) where there is a withdrawal of assets (other than cash) from an account the amount withdrawn shall be the amount which is the market value of those assets at the time of their withdrawal.

Gain on cessation.

848K.—(1) On the day on which a special savings incentive account is treated as ceasing, a gain shall be treated as accruing on the account in an amount determined under subsection (2).

(2) The amount of the gain referred to in subsection (1) is an amount equal to the aggregate market value of all assets (including cash) held in the account on the day the account is treated as ceasing.

Gain on withdrawal.

848L.—(1) Where before a special savings incentive account is treated as maturing or ceasing (as the case may be) a qualifying individual withdraws cash or other assets from the account, a gain shall be treated as accruing on the account in an amount determined under subsection (2).

(2) The amount of the gain referred to in subsection (1) is—

(a) where the withdrawal is in cash, the amount of that cash, and

(b) where the withdrawal is of assets (other than cash) an amount equal to the market value of such assets on the day of withdrawal.

Taxation of gains.

848M.—(1) A qualifying savings manager shall be liable to tax (in this Part referred to as ‘relevant tax’) on a gain treated under this Part as accruing to a special savings incentive account in an amount equal to 23 per cent of the amount of that gain.

(2) A qualifying savings manager who becomes liable under subsection (1) to an amount of relevant tax shall be entitled to withdraw sufficient funds from the account to which the gain is treated as accruing to satisfy that liability and the qualifying individual shall allow such withdrawal; but where there are no funds or insufficient funds available in the account out of which the qualifying savings manager may satisfy, or fully satisfy, such liability, the amount of relevant tax for which there are insufficient funds so available shall be a debt due to the qualifying savings manager from the qualifying individual.

(3) Subject to section 848P, the relevant tax in respect of a gain which in accordance with that section, is required to be included in a return, shall be due at the time by which the return is to be made and shall be paid by the qualifying fund manager without the making of an assessment; but relevant tax which has become so due may be assessed on the qualifying savings manager (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.

(4) Where it appears to the inspector that there is any amount of relevant tax which ought to have been, but has not been, included in a return, or where the inspector is dissatisfied with any return, the inspector may make an assessment on the qualifying savings manager to the best of his or their judgment, and any amount of relevant 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.

(5) (a) Any relevant tax assessed on a qualifying savings manager under this Chapter shall be due within one month after the issue of the notice of assessment (unless that tax is due earlier under subsection (3)) subject to any appeal against the assessment, but no such appeal shall affect the date when any amount is due under subsection (3).

(b) On the determination of an appeal against an assessment under this section any relevant tax overpaid shall be repaid.

(6) (a) The provisions of the Income Tax Acts relating to—

(i) assessments to income tax,

(ii) appeals against such assessments (including the rehearing of appeals and the statement of a case for the opinion of the High Court), and

(iii) the collection and recovery of income tax,

shall, in so far as they are applicable, apply to the assessment, collection and recovery of relevant tax.

(b) Any amount of relevant tax payable in accordance with this Part without the making of an assessment shall carry interest at the rate of 1 per cent for each month or part of a month from the date when the amount becomes due and payable.

(c) Subsections (2) to (4) of section 1080 shall apply in relation to interest payable under paragraph (b) as they apply in relation to interest payable under section 1080.

(d) In its application to any relevant tax charged by any assessment made in accordance with this section, section 1080 shall apply as if subsection (1)(b) of that section were deleted.

Transfer of special savings incentive account.

848N.—(1) Where arrangements are made by a qualifying individual to transfer his or her special savings incentive account from one qualifying savings manager (in this section referred to as the ‘transferor’) to another qualifying savings manager (in this section referred to as the ‘transferee’) or the account is transferred in consequence of the transferor ceasing to act or to be a qualifying savings manager, the following provisions of this section shall apply.

(2) Where a transfer takes place under subsection (1)—

(a) all subscriptions to the special savings incentive account in so far as they have not been applied to acquire qualifying assets, and all qualifying assets in the account, must be made to a single transferee,

(b) the qualifying individual shall make a declaration of a kind referred to in section 848O to the transferee, and

(c) the transferee shall thereafter for the purposes of this Part be the qualifying savings manager of the special savings incentive account transferred.

(3) The transferor shall within 30 days after the date of transfer—

(a) give to the transferee a notice containing the information specified in subsection (4) and the declaration specified in subsection (5), and

(b) pay to the transferee the aggregate of the amounts referred to in subsection (4)(b)(vi).

(4) The information referred to in subsection (3) is—

(a) as regards the qualifying individual his or her—

(i) name,

(ii) address of permanent residence,

(iii) date of birth,

(iv) PPS Number,

and

(b) as respects the special savings incentive account transferred pursuant to this section—

(i) the date of transfer,

(ii) the date the account was commenced,

(iii) the identification of the assets held in the account,

(iv) the total of all subscriptions made to the account by the qualifying individual, or the spouse of that individual,

(v) the total of all tax credits, in relation to subscriptions, subscribed to the account,

(vi) the amount of any dividends, and other amounts payable in respect of qualifying assets held in the account and amounts of tax credits, which have not been received by the transferor at the date of transfer, and

(vii) the amount of each withdrawal from the account and the date of each such withdrawal.

(5) The declaration referred to in subsection (3) is a declaration in writing made and signed by the transferor to the effect that—

(a) the transferor has fulfilled all obligations under this Part,

(b) the transferor has transferred to the transferee all money and qualifying assets held in the account and that where registration of any such transfer is required, the transferor has taken the necessary steps to ensure that those qualifying assets can be registered in the name of the transferee, and

(c) that, to the best of the qualifying savings manager's knowledge and belief, the information contained in the notice referred to in subsection (3) is correct.

(6) Notwithstanding section 848C, where a special savings incentive account is being transferred in accordance with this section it shall not be treated as ceasing should, during the period of the transfer, the qualifying assets held in the account, temporarily cease to be managed by a qualifying savings manager, or a qualifying savings manager who is registered in accordance with section 848R.

Declaration on transfer.

848O.—The declaration referred to in section 848N(2)(b) is a declaration in writing made by the qualifying individual to the qualifying savings manager who is the transferee referred to in that section, which—

(a) is made and signed by the qualifying individual,

(b) is made in such form—

(i) as may be prescribed or authorised by the Revenue Commissioners, and

(ii) which contains a reference to the offence of making a false declaration under section 848T.

(c) contains the qualifying individual's—

(i) name,

(ii) address of his or her permanent residence,

(iii) PPS Number, and

(iv) date of birth,

and

(d) declares—

(i) at the time the declaration is made, that the qualifying individual—

(I) has not commenced another special savings incentive account, and

(II) is the person who beneficially owns the qualifying assets held in the account being transferred,

(ii) at the time the special savings incentive account was commenced, the qualifying individual was resident in the State,

(iii) that subscriptions to the account have been and will continue to be made from funds available to him or her, or his or her spouse, out of their own resources without recourse to borrowing, or the deferral of repayment (whether in respect of capital or interest) of sums borrowed when the account was commenced, and

(iv) has not and will not assign or otherwise pledge qualifying assets held in the account as security for a loan.

Monthly returns.

848P.—A qualifying savings manager who is or was registered in accordance with section 848R, shall, within 15 days of the end of every month, make a return (including, where it is the case, a nil return) to the Revenue Commissioners, which—

(a) specifies in respect of all special savings incentive accounts managed by the qualifying savings manager in that month—

(i) the aggregate amount of tax credits, in relation to the aggregate of subscriptions made to those accounts in that month,

(ii) the aggregate amount of relevant tax to which the qualifying savings manager is liable in respect of gains treated as accuring on those accounts in that month, and

(iii) the net amount (being the difference between the amounts specified in paragraphs (a) and (b)) due from or, as the case may be, to, the Revenue Commissioners,

and

(b) contains a declaration in a form prescribed or authorised by the Revenue Commissioners that, to the best of the qualifying savings manager's knowledge and belief, the information referred to in paragraph (a) is correct.

Annual returns.

848Q.—A qualifying savings manager who is or was registered in accordance with section 848R shall in respect of each year of assessment, on or before 28 February in the year following the year of assessment, make a return (including, where it is the case, a nil return), to the Revenue Commissioners which in respect of the year of assessment—

(a) specifies in respect of each special incentive savings account managed by the qualifying savings manager—

(i) the name of the qualifying individual,

(ii) the address of that individual's permanent residence,

(iii) the PPS Number of the individual,

(iv) the date the account was commenced,

(v) the total amount of subscriptions made by the qualifying individual, or the spouse of that individual, to the account,

(vi) the total amount of tax credits, in respect of subscriptions, subscribed to the account, and

(vii) in respect of each gain accuring on the account—

(I) the amount of relevant tax to which the qualifying savings manager has thereby become liable, and

(II) whether the gain accrued under section 848J, 848K or 848L.

and

(b) containing a declaration, in a form prescribed or authorised by the Revenue Commissioners, that to the best of the qualifying savings manager's knowledge and belief—

(i) in respect of each special savings incentive account referred to in the return, the terms referred to in section 848C have been and are being complied with, and

(ii) the information referred to in paragraph (a) and the declaration referred to in subparagraph (i) is correct.

Registration etc.

848R.—(1) A person can not be a qualifying savings manager unless the person is included in a register maintained by the Revenue Commissioners of persons registered in accordance with subsection (5).

(2) Where at any time a qualifying savings manager does not have a branch or business establishment in the State, or has such a branch or business establishment but does not intend to carry out all the functions as a qualifying savings manager at that branch or business establishment, the qualifying savings manager shall not be registered in accordance with subsection (5) unless the qualifying savings manager appoints for the time being a person, who—

(a) where an individual, is resident in the State, and

(b) where not an individual, has a business establishment in the State,

to be responsible for securing the discharge of the obligations which fall to be discharged by the qualifying savings manager under this Part, and advises the Revenue Commissioners of the identity of that person and the fact of that person's appointment.

(3) Where a person has been appointed in accordance with subsection (2), and subject to subsection (4) that person shall—

(a) be entitled to act on the qualifying savings manager's behalf for any of the purposes of the provisions of this Part,

(b) shall secure (where appropriate by acting on the qualifying savings manager's behalf) the qualifying savings manager's compliance with and discharge of the obligations under this Part, and

(c) shall be personally liable in respect of any failure of the qualifying savings manager to comply with or discharge any such obligations as if the obligations imposed on the qualifying savings manager were imposed jointly and severally on the qualifying savings manager and the person concerned.

(4) The appointment of a person in accordance with subsection (2) shall be treated as terminated in circumstances where—

(a) the Revenue Commissioners have reason to believe that the person concerned—

(i) has failed to secure the discharge of any of the obligations imposed on a qualifying savings manager under this Part, or

(ii) does not have adequate resources to discharge those obligations,

and

(b) the Revenue Commissioners have notified the qualifying savings manager and that person that they propose to treat the appointment of that person as having terminated with effect from the date of the notice.

(5) If the Revenue Commissioners are satisfied that an applicant for registration is entitled to be registered, they shall register the applicant with effect from such date as may be specified by them.

(6) If it appears to the Revenue Commissioners at any time that a qualifying savings manager who is registered under this section—

(a) would not be entitled to be registered if it applied for registration at that time, or

(b) has not complied with the provisions of this Part,

the Revenue Commissioners may, by written notice given to the qualifying savings manager, cancel its registration with effect from such date as may be specified in the notice.

(7) Any qualifying savings manager who is aggrieved by the failure of the Revenue Commissioners to register it or by the cancellation of its registration, may, by notice given to the Revenue Commissioners before the end of the period of 30 days beginning with the date on which the qualifying savings manager was notified of the Revenue Commissioners decision, require the matter to be determined by the Appeal Commissioners and the Appeal Commissioners shall hear and determine the matter in like manner as an appeal.

(8) A qualifying savings manager shall give notice to the Revenue Commissioners and the qualifying individuals whose special savings incentive accounts he or she manages of his or her intention to cease to act as the qualifying savings manager not less than 30 days before he or she so ceases so that his or her obligations to the Revenue Commissioners can be conveniently discharged at or about the time he or she ceases to so act, and the notice to the qualifying individuals shall inform them of their right to transfer their special savings incentive accounts under section 848N.

(9) Subject to subsection (10), every return to be made by a qualifying savings manager under section 848P and 848Q shall be made in electronic format approved by the Revenue Commissioners and shall be accompanied by a declaration made by the qualifying savings manager, in a form prescribed or authorised for that purpose by the Revenue Commissioners, to the effect that the return is correct.

(10) Where the Revenue Commissioners are satisfied that a qualifying savings manager does not have the facilities to make a return under section 848P or 848Q in the format referred to in subsection (9), such returns shall be made in writing in a form prescribed or authorised by the Revenue Commissioners, and shall be accompanied by a declaration made by the qualifying savings manager, on a form prescribed or authorised for that purpose by the Revenue Commissioners, to the effect that the return is correct.

(11) A qualifying savings manager shall retain—

(a) in respect of each special savings incentive account which is treated as maturing, the declarations of a kind referred to in sections 848F, 848I and 848O for a period of 3 years after the date on which the account was treated as maturing, and

(b) in respect of each special savings incentive account which is treated as ceasing, the declarations of a kind referred to in sections 848F and 848O for a period of 3 years after the date on which the account was treated as ceasing,

and on being so required by notice given to him or her in writing by an inspector, make available for inspection all or any such declarations.

Regulations.

848S.—(1) The Revenue Commissioners shall make regulations providing generally as to the administration of this Part and those regulations may, in particular and without prejudice to the generality of the foregoing include provisions—

(a) as to the manner in which a qualifying savings manager is to register under section 848R,

(b) as to the manner in which a return is to be made under section 848P,

(c) as to the manner in which a return is to be made under section 848Q,

(d) as to the manner in which tax credits are to be paid under section 848E(1), or the net amount referred to in section 848P(a)(iii),

(e) as to the circumstances in which the Revenue Commissioners may require a qualifying savings manager to give a bond or guarantee to the Revenue Commissioners which is sufficient to indemnify the Commissioners against any loss arising by virtue of the fraud or negligence of the qualifying savings manager in relation to the operation of the provisions of this Part, and

(f) as to the manner in which a qualifying savings manager ensures compliance with the terms of special savings incentive accounts provided for in section 848C.

(2) Every regulation made under this section 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 21 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.

Offences.

848T.—A person who makes a declaration under section 848F, section 848I, section 848O or section 848N(5) which is false, shall be guilty of an offence and shall be liable on summary conviction to a fine of £1,500, or, at the discretion of the court, to imprisonment for a term not exceeding 6 months or to both the fine and the imprisonment.

Disclosure of information.

848U.—Notwithstanding any obligation as to secrecy or other restriction upon disclosure of information imposed by or under statute or otherwise, where a qualifying savings manager has reasonable grounds to suspect that the terms, provided for under section 848C, under which a special savings incentive account was commenced, are not being complied with, the qualifying savings manager shall inform the Revenue Commissioners accordingly.”.

(2) (a) The Principal Act is amended in Part 36A (inserted by subsection (1))—

(i) in section 848C(b)(i) by the substitution of “€12.50” for “£10”,

(ii) in section 848C(b)(ii) by the substitution of “€254” for “£200”, and

(iii) in section 848T by the substitution of “€1,900” for “£1,500”.

(b) This subsection shall apply as on and from 1 January 2002.

Amendment of section 97 (computational rules and allowable deductions) of Principal Act.

34.—Section 97 (as amended by the Finance (No. 2) Act, 1998 ) of the Principal Act is amended—

(a) in subsection (2B)—

(i) by the substitution in paragraph (d) for “1997, or” of “1997,”,

(ii) by the substitution in paragraph (e) for “during the year.” of “during the year, or”, and

(iii) by the insertion of the following after paragraph (e):

“(f) in the purchase, improvement or repair of a premises which complies with the conditions of subsection (2F).”,

and

(b) by the insertion of the following after subsection (2E):

“(2F) (a) The conditions of this subsection are—

(i) the premises was converted into multiple residential units prior to 1 October 1964,

(ii) the premises was acquired by the chargeable person under a contract which was evidenced in writing on or after 5 January 2001,

(iii) subsequent to the acquisition by the chargeable person of the premises, the number of residential units is not, subject to subparagraph (iv), reduced to less than 50 per cent of the total number of residential units contained in the premises at date of acquisition,

(iv) the premises consists throughout the year of a minimum of 3 residential units,

(v) at all times during the year (except for reasonable periods of temporary disuse between the ending of one lease and the commencement of another lease) not less than 50 per cent of the residential units in the premises are let under a lease where the lesses in the case of each such letting is either—

(I) a local authority, or a person nominated by a local authority under an agreement in writing between the lessor and that local authority, or

(II) a person who, at the commencement of the tenancy, is entitled to a payment under section 179 of the Social Welfare (Consolidation) Act, 1993 , in respect of rent,

and

(vi) all the requirements of the following Regulations—

(I) the Housing (Standards for Rented Houses) Regulations, 1993 ( S.I. No. 147 of 1993 ),

(II) the Housing (Rent Books) Regulations, 1993 ( S.I. No. 146 of 1993 ), and

(III) the Housing (Registration of Rented Houses) Regulations, 1996 ( S.I. No. 30 of 1996 ), as amended by the Housing (Registration of Rented Houses) (Amendment) Regulations, 2000 ( S.I. No. 12 of 2000 ),

are complied with in relation to the premises throughout the year,

and

(b) in this subsection—

‘local authority’, in relation to a premises, means the council of a country or the corporation of a country or other borough or, where appropriate, the council of an urban district in whose functional area the premises is located; ‘residential unit’ means a separately contained part of a residential premises used or suitable for use as a dwelling.”.

Amendment of section 177 (conditions as to residence and period of ownership) of Principal Act.

35.—As respects a redemption, repayment or purchase of its own shares by a company to which section 176 applies on or after 15 February 2001, section 177 of the Principal Act is amended by the substitution of the following for subsection (6):

“(6) The shares shall have been owned by the vendor throughout the period of—

(a) where the shares were appropriated to the vendor under an approved scheme (within the meaning of Chapter 1 of Part 17), and to which the provisions of subsections (4) to (7) of section 515 do not apply, 3 years, and

(b) in any other case, 5 years,

ending on the date of redemption, repayment or purchase, as the case may be.”.

Amendment of section 198 (certain interest not to be chargeable) of Principal Act.

36.—(1) Section 198 of the Principal Act is amended in subsection (1)—

(a) by the substitution in the definition of “tax” in paragraph (a) for “corporation tax” of “income tax or corporation tax, as is appropriate,”,

(b) by the substitution in paragraph (b) for “company” of “person” in each place in which it occurs,

(c) by the deletion of “and” at the end of subparagraph (i) of paragraph (c),

(d) by the substitution in subparagraph (ii)(II) of paragraph (c) for “relevant territory,” of “relevant territory,” and by the insertion of “and” at the end of that subparagraph,

(e) by the insertion after subparagraph (ii) of paragraph (c) of the following:

“(iii) a person shall not be chargeable to income tax in respect of interest paid by a company if—

(I) the person is not resident in the State, and

(II) the person is regarded for the purposes of this subsection as being a resident of a relevant territory,

and the interest is interest to which section 64(2) applies.”.

(2) This section shall apply as respects interest paid on or after the date of the passing of this Act.

Treatment of certain interest payments.

37.—(1) Part 8 of the Principal Act is amended—

(a) in section 243—

(i) by the insertion after subsection (1) of the following:

“(1A) For the purposes of this section, ‘bank’ includes building society within the meaning of section 256(1).”,

and

(ii) in subsection (5)(a)—

(I) in subparagraph (I) by the deletion of “or”, and

(II) by the substitution for subparagraph (II) of the following:

“(II) the interest is interest referred to in paragraph (a), (b) or (h) of section 246(3), or

(III) the interest is interest to which section 64(2) applies,”,

and

(b) in section 246(1)—

(i) by the substitution for the definitions of “a collective investment undertaking” and “collective investor” of the following:

“‘bank’ includes building society within the meaning of section 256(1);”

and

(ii) by the substitution for the definition of “relevant person” of the following:

“‘investment undertaking’ means—

(a) a unit trust mentioned in section 731(5)(a),

(b) a special investment scheme within the meaning given to it in section 737, or

(c) an investment undertaking within the meaning given to it in section 739B;

‘relevant person’ means—

(a) a company, or

(b) an investment undertaking;”.

(2) This section shall apply to interest paid on or after the date of passing of this Act.

Amendment of Part 20 (companies' chargeable gains) of Principal Act.

38.—(1) Part 20 of the Principal Act is amended—

(a) in section 615 as respects a disposal on or after 15 February 2001 by the substitution for subsection (2) of the following:

“(2) (a) Subject to this section, where—

(i) any scheme of reconstruction or amalgamation involves the transfer of the whole or part of a company's business to another company,

(ii) (I) the company acquiring the assets is resident in the State at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately after that time, and

(II) the company from which the assets are acquired is resident in the State at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately before that time,

and

(iii) 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, in so far as relates to corporation tax on chargeable gains, both 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 means of the transfer neither a gain nor a loss would accrue to the company making the disposal, and for the purposes of section 556 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 the assets.

(b) For the purposes of paragraph (a)—

(i) an asset is a ‘chargeable asset’ in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain, and

(ii) a reference to a company shall apply only to a company which, by virtue of the law of a Member State of the European Communities, is resident for the purposes of tax in such a Member State, and for this purpose ‘tax’, in relation to a Member State of the European Communities other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State.”,

(b) in section 616—

(i) in subsection (1)—

(I) by the substitution for paragraph (a) of the following:

“(a) subject to section 621(1), a reference to a company or companies shall apply only to a company or companies, as limited by subsection (2), being a company or, as the case may be, companies which, by virtue of the law of a Member State of the European Communities, is or are resident for the purposes of tax in such a Member State, and for this purpose ‘tax’, in relation to a Member State of the European Communities other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State, and references to a member or members of a group of companies shall be construed accordingly;”,

(II) in paragraph (e) by the substitution of “State;” for “State.”, and

(III) by the insertion after paragraph (e) of the following:

“(f) an asset is a ‘chargeable asset’ in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain.”,

and

(ii) in subsection (2)(b), by the deletion of “(although resident in the State)”,

(c) in section 617 as respects a disposal on or after 15 February 2001 by the substitution for subsection (1) of the following:

“(1) Notwithstanding any provision in the Capital Gains Tax Acts fixing the amount of the consideration deemed to be received on a disposal or given on an acquisition, where—

(a) a member of a group of companies disposes of an asset to another member of the group,

(b) the company making the disposal is resident in the State at the time of the disposal or the asset is a chargeable asset in relation to that company immediately before that time, and

(c) the other company is resident in the State at the time of the disposal or the asset is a chargeable asset in relation to that company immediately after that time,

both members shall, except where provided by subsections (2) and (3), be treated, in 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 member's disposal neither a gain nor a loss would accure to that other member; 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.”,

(d) in section 618 as respects an acquisition or disposal on or after 15 February 2001—

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

“(1) Where—

(a) a company which is a member of a group of companies acquires an asset as trading stock of a trade to which this section applies,

(b) the acquisition is from another company which is a member of the group, and

(c) the asset did not form part of the trading stock of any such trade carried on by the other company,

the company acquiring the asset shall be treated for the purposes of section 596 as having acquired the asset otherwise than as trading stock and immediately appropriated it for the purposes of the trade as trading stock.”,

(ii) by the insertion in subsection (2) after “formed part of the trading stock of a trade” of “to which this section applies”, and

(iii) by the insertion after subsection (2) of the following:

“(3) This section applies to—

(a) a trade carried on by a company which is resident in the State, and

(b) a trade carried on in the State through a branch or agency by a company which is not so resident.”,

(e) in section 619 as respects an acquisition on or after 15 February 2001 in subsections (1) and (2) by the substitution of “in the course of a disposal to which section 617 applies” for “at a time when both were members of the group”,

(f) by the substitution for section 620 of the following:

“Replacement of business assets by members of group.

620.—(1) For the purposes of this section ‘old assets’ and ‘new assets’ have the same meanings as in section 597.

(2) Subject to subsection (4), for the purposes of section 597 all the trades to which this section applies carried on by members of a group of companies shall be treated as a single trade (except in a case of one member of the group acquiring, or acquiring the interest in, the new assets from another member or disposing of, or disposing of the interest in, the old assets to another member).

(3) This section applies to—

(a) any trade carried on by a company which is resident in the State, and

(b) any trade carried on in the State through a branch or agency of a company which is not so resident.

(4) This section shall not apply unless—

(a) the company disposing of the old assets is resident in the State at the time of the disposal, or the assets are chargeable assets in relation to that company immediately before that time, and

(b) the company acquiring the new assets is resident in the State at the time of acquisition, or the assets are chargeable assets in relation to that company immediately after that time.”,

(g) by the insertion after section 620 of the following:

“Deemed disposal in certain circumstances.

620A.—(1) This section applies in relation to a company where—

(a) at any time on or after 15 February 2001 an asset ceases to be a chargeable asset in relation to the company—

(i) where at the time of the acquisition of the asset by the company the asset consisted of shares deriving their value or the greater part of their value from assets specified in paragraph (a) or (b) of section 29(3), by virtue of the assets ceasing to so derive their value or the greater part of their value, or

(ii) by virtue of the asset becoming situated outside the State,

and

(b) (i) the company acquired the asset in the course of—

(I) a transfer to which section 615 applies, or

(II) a disposal to which section 617 applies,

or

(ii) by virtue of section 620 the asset constitutes new assets for the purposes of section 597.

(2) Where this section applies in relation to a company, the company shall be deemed for the purposes of the Capital Gains Tax Acts and the Corporation Tax Acts—

(a) to have disposed of the asset immediately before the time when it ceased to be a chargeable asset in relation to the company, and

(b) immediately to have reacquired it,

at its market value at that time.”,

(h) in section 621 as respects a case in which the depreciatory transaction (within the meaning of section 621) is on or after 15 February 2001 by the substitution for the definition of a group of companies of the following:

“a group of companies' may consist of companies some or all of which are not resident for the purposes of tax in a Member State of the European Communities.”,

(i) in section 623 as respects an asset acquired on or after 15 February 2001 by the substitution for subsection (2) of the following:

“(2) This section applies where—

(a) a company (in this section referred to as the ‘chargeable company’) which is a member of a group of companies acquires an asset from another company which at the time of acquisition was a member of the group.

(b) the chargeable company ceases to be a member of the group within the period of 10 years after the time of the acquisition,

(c) the chargeable company is resident in the State at the time of acquisition of the asset, or the asset is a chargeable asset in relation to that company immediately after that time, and

(d) the other company is resident in the State at the time of that acquisition, or the asset is a chargeable asset in relation to that company immediately before that time.”,

(j) in section 624(5) by the substitution of “a company which is not resident in a Member State of the European Communities” for “a company resident outside the State”, and

(k) in section 629(1) in the definition of “group” by the substitution of “a Member State of the European Communities” for “the State”.

(2) (a) Except where the context otherwise requires and subject to paragraph (b), this section applies from 15 February 2001.

(b)  (i) Subsection (1) (f) applies in relation to cases in which—

(I) either the disposal or acquisition is on or after 15 February 2001, or

(II) both the disposal and acquisition are on or after that date.

(ii) In a case to which subparagraph (i)(I) relates, any question of whether a company was, at the time of the acquisition or disposal corresponding to the disposal or acquisition referred to in that subparagraph, a member of a group shall be determined in accordance with section 616 as amended by subsection (1)(b).

Amendment of section 590 (attribution to participants of chargeable gains accruing to non-resident company) of Principal Act.

39.—(1) Section 590 of the Principal Act is amended in subsection (16)—

(a) in paragraph (b)(i) by the substitution of “section 617 (other than paragraphs (b) and (c) of subsection (1)), section 618 (with the omission of the words ‘to which this section applies’ in subsections (1)(a) and (2), of ‘such’ in subsection (1)(c) and of subsection (3)), section 619(2) (with the substitution for ‘in the course of a disposal to which section 617 applies’ of ‘at a time when both were members of the group’) and section 620(2) (with the omission of the words ‘to which this section applies’)” for “sections 617 to 620”,

(b) in paragraph (b)(ii) by the insertion after “section 623” of “(apart from paragraphs (c) and (d) of subsection (2))”.

(2) This section applies in cases in which section 617, 618, 619(2) or 620(2), as the case may be, have effect as amended by this Act.

Amendment of Schedule 18A (restriction on set-off of pre-entry losses) to Principal Act.

40.—(1) Schedule 18A to the Principal Act is amended in paragraph 1—

(a) in subparagraph (3) by the substitution of “at the time immediately before the relevant event occurred in relation to it by a company which is or was” for “by a company at the time immediately before the company became”,

(b) by the insertion after subparagraph (3) of the following:

“(3A) (a) In this paragraph references to the relevant event occurring in relation to a company—

(i) in a case in which—

(I) the company was resident in the State at the time when it became a member of the relevant group, or

(II) the asset was a chargeable asset in relation to the company at that time,

are references to the company becoming a member of that group;

(ii) in any other case, are references to whichever is the first of—

(I) the company becoming resident in the State, or

(II) the asset becoming a chargeable asset in relation to the company.

(b) For the purposes of paragraph (a), an asset is a ‘chargeable asset’ in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain.”,

(c) in subparagraph (4)(a) by the substitution of “the relevant event occurred in relation to it” for “the company became a member of the relevant group”, and

(d) in subparagraph (5)—

(i) in the opening words by the substitution of “the relevant event occurred in relation to the company by reference to which that asset is a pre-entry asset” for “the company by reference to which the asset is a pre-entry asset became a member of the relevant group”,

(ii) in clause (a) by the substitution of “a relevant event has occurred in relation to a company” for “a company has become a member of the relevant group”, and

(iii) in clause (b) by the substitution of “a relevant event occurred in relation to a company” for “a company became a member of the relevant group”.

(2) (a) This section applies in relation to—

(i) where chargeable gains are to be included in a company's total profits, the amount to be included in respect of chargeable gains in the company's total profits for any accounting period ending on or after 15 February 2001, and

(ii) in any other case, the amount on which a company is chargeable in accordance with section 31 for the year of assessment 2000-2001 and any subsequent year of assessment.

(b) For the purposes of this section, any question whether a company was, in relation to any time before 15 February 2001, a member of a group shall be determined by reference to the Principal Act before its amendment by this Act.

Amendment of Schedule 24 (relief from income tax and corporation tax by means of credit in respect of foreign tax) to Principal Act.

41.—(1) Schedule 24 of the Principal Act is amended—

(a) in paragraph 3 by the substitution for “Credit shall not be allowed” of “Subject to paragraphs 9A, 9B and 9C, credit shall not be allowed”,

(b) in paragraph 4(4)(e) by the insertion after “644B” of “by any fraction”,

(c) in paragraph 9A—

(i) in subparagraph (3) by the substitution for “company resident in the State” of “company falling within subparagraph (3A)”,

(ii) by the insertion after subparagraph (3) of the following subparagraph:

“(3A) (a) A company falls within this subparagraph if—

(i) it is resident in the State, or

(ii) it is, by virtue of the law of a Member State of the European Communities other than the State, resident for the purposes of tax in such a Member State and the dividend referred to in subparagraph (3) forms part of the profits of a branch or agency of the company in the State.

(b) For the purposes of subparagraph (a)(ii), ‘tax’, in relation to a Member State of the European Communities other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State.”,

and

(iii) in subparagraph (4)(b) by the substitution for “company resident in the State” of “company falling within subparagraph (3A)”,

(d) in paragraph 9B—

(i) in subparagraph (1) by the substitution for “an Irish company” of “a company falling within subparagraph (1A) (in this paragraph referred to as the ‘relevant company’)”, and by the substitution for “the Irish company” of “the relevant company”,

(ii) by the insertion after subparagraph (1) of the following subparagraph:

“(1A) (a) A company falls within this subparagraph if—

(i) it is resident in the State, or

(ii) it is, by virtue of the law of a Member State of the European Communities other than the State, resident for the purposes of tax in such a Member State and the dividend referred to in subparagraph (1) forms part of the profits of a branch or agency of the company in the State.

(b) For the purposes of subparagraph (a)(ii), ‘tax’, in relation to a Member State of the European Communities other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State.”,

(iii) in subparagraphs (2) and (3) by the substitution for “the Irish company” of “the relevant company”,

(iv) in subparagraph (4) by the substitution for “an Irish company” of “a relevant company”, and

(v) in subparagraph (5) by the deletion of the definition of “Irish company”,

and

(e) by the insertion after paragraph 9B, but in Part 2, of the following:

“9C.—(1) In this paragraph—

‘relevant company’ means a company which—

(a) is not resident in the State,

(b) is, by virtue of the law of a Member State of the European Communities other than the State, resident for the purposes of tax in such a Member State, and

(c) carries on a trade in the State through a branch or agency,

and for the purposes of subparagraph (b) of this definition ‘tax’, in relation to a Member State of the European Communities other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State;

‘relevant tax’ means foreign tax paid in respect of the income or chargeable gains of a branch or agency in the State of a relevant company, other than such tax paid in a territory in which the company is liable to tax by reason of domicile, residence, place of management or other similar criterion.

(2) A relevant company shall, as respects an accounting period, be entitled to such relief under this Schedule in respect of relevant tax as would, if the branch or agency in the State had been a company resident in the State, have been given under any arrangements to that company resident in the State.”.

(2) This section applies as respects accounting periods ending on or after 15 February 2001.

Amendment of section 89 (valuation of trading stock at discontinuance of trade) of Principal Act.

42.—(1) Section 89 of the Principal Act is amended—

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

“(b) For the purposes of this section—

(i) ‘trading stock’, in relation to a trade, includes any services, article or material which, if the trade were a profession, would be treated as work in progress of the profession for the purposes of section 90, and references to the sale or transfer of trading stock shall be construed accordingly;

(ii) two persons are connected with each other if—

(I) they are connected with each other within the meaning of section 10;

(II) one of them is a partnership and the other has a right to a share in the partnership;

(III) one of them is a body corporate and the other has control over that body;

(IV) both of them are partnerships and some other person has a right to a share in each of them; or

(V) both of them are bodies corporate or one of them is a partnership and the other is a body corporate and, in either case, some other person has control over both of them;

and in this subparagraph the references to a right to a share in a partnership are references to a share of the assets or income of the partnership and control has the meaning given by section 11.”,

(b) by the substitution in subsection (2)(a) for “the price paid for such trading stock on such sale or the value of the consideration given for such trading stock on such transfer, as the case may be” of “the amount determined in accordance with subsections (3) and (4)”, and

(c) by the insertion of the following after subsection (2):

“(3) Subject to subsection (4), paragraph 2(2) of Schedule 16 and paragraph 4(2) of Schedule 17, the value of any trading stock falling to be valued under subsection (2)(a) shall be taken—

(a) except where the person to whom it is sold or transferred is connected with the person who makes the sale or transfer, to be the amount (in this subsection and subsection (4) referred to as ‘the price actually received for it’) realised on the sale or, as the case may be, which is in fact the value of the consideration given for the transfer, and

(b) if those persons are connected with each other, to be what would have been the price actually received for it had the sale or transfer been a transaction between independent persons dealing at arm's length.

(4) If—

(a) trading stock is sold or transferred to a person in circumstances where subsection (3)(b) would, apart from this subsection, apply for determining the value of stock so sold or transferred,

(b) the amount which would be taken in accordance with subsection (3)(b) to be the value of the stock sold or transferred to that person is more than the acquisition value of that stock and also more than the price actually received for it, and

(c) the person by whom the stock is sold or transferred includes in a return required to be delivered under section 951 for the chargeable period in which the trade is discontinued an election signed by both parties to the sale or transfer that this subsection shall apply,

then the stock so sold or transferred shall be taken to have a value equal to whichever is the greater (taking all the stock so sold or transferred together) of its acquisition value and the price actually received for it or, in a case where they are the same, to either of them.

(5) In subsection (4) ‘acquisition value’, in relation to any trading stock, means the amount which, in computing for any tax purposes the profits or gains of the discontinued trade, would have been deductible as representing the purchase price of that stock if—

(a) the stock had, immediately before the discontinuance, been sold in the course of the trade for a price equal to whatever would be its value in accordance with subsection (3)(b), and

(b) the period for which those profits or gains were to be computed began immediately before the sale.

(6) Where any trading stock falls to be valued under subsection (2)(a), the amount determined in accordance with subsections (3) and (4) to be the amount to be brought into account as the value of that stock in computing profits or gains of the discontinued trade shall also be taken, for the purpose of making any deduction in computing the profits or gains of any trade carried on by the purchaser, to be the cost of that stock to the purchaser.”.

(2) This section applies from 6 December 2000.

Dividend withholding tax.

43.—(1) Chapter 8A (inserted by the Finance Act, 1999 ) of Part 6 of the Principal Act is amended—

(a) in section 172A(1)(a)—

(i) by the insertion of the following definitions after the definition of “approved body of persons” (inserted by the Finance Act, 2000 ):

“‘approved minimum retirement fund’ has the same meaning as in section 784C;

‘approved retirement fund’ has the same meaning as in section 784A;”,

(ii) by the insertion of the following definition after the definition of “qualifying employee share ownership trust”:

“‘qualifying fund manager’ has the same meaning as in section 784A;”,

(iii) by the insertion of the following definition after the definition of “qualifying non-resident person”:

“‘qualifying savings manager’ has the same meaning as in section 848B (inserted by the Finance Act, 2001);”,

and

(iv) by the insertion of the following definition after the definition of “special portfolio investment account”:

“‘special savings incentive account’ has the same meaning as in section 848M (inserted by the Finance Act, 2001);”,

(b) in section 172B, by the insertion of the following after subsection (7) (inserted by the Finance Act, 2000 ):

“(8) This section shall not apply where a relevant distribution is made by a company resident in the State to another company so resident and the company making the relevant distribution is a 51 per cent subsidiary of that other company.”,

(c) in section 172C—

(i) in subsection (2)—

(I) in paragraph (a), by the insertion after “Schedule 2A” of “, but this paragraph is without prejudice to the operation of section 172B(8)”,

(II) by the insertion of the following after paragraph (b):

“(ba) a qualifying fund manager or a qualifying savings manager who—

(i) is receiving the relevant distribution as income arising in respect of assets held—

(I) in the case of a qualifying fund manager, in an approved retirement fund or an approved minimum retirement fund, and

(II) in the case of a qualifying savings manager, in a special savings incentive account,

and

(ii) has made a declaration to the relevant person in relation to the relevant distribution in accordance with paragraph 4A of Schedule 2A,”,

and

(III) by the insertion of the following after paragraph (d):

“(da) a person who—

(i) is entitled to exemption from income tax under Schedule F in respect of the relevant distribution by virtue of section 189(2), subsection (2) or (3)(b) of section 189A or section 192(2), and

(ii) has made a declaration to the relevant person in relation to the relevant distribution in accordance with paragraph 6A of Schedule 2A,”,

and

(ii) in subsection (3)—

(I) by the deletion of “and” in paragraph (a), and

(II) by the insertion of the following after paragraph (b):

“(c) a qualifying fund manager or a qualifying savings manager who receives a relevant distribution as income arising in respect of assets held—

(i) in the case of a qualifying fund manager, in an approved retirement fund or an approved minimum retirement fund, and

(ii) in the case of a qualifying savings manager, in a special savings incentive account,

and

(d) the trustees of a qualifying trust (within the meaning of section 189A) who receive a relevant distribution as income arising in respect of the trust funds (within the meaning of that section),”,

(d) in section 172D, by the deletion of subsection (1), and

(e) in section 172F(3)(a)(ii)(II), by the substitution of “paragraph 9(f)” for “subparagraphs (f) and (g) of paragraph 9”.

(2) Schedule 2A (inserted by the Finance Act, 1999 ) to the Principal Act is amended—

(a) by the insertion of the following after paragraph 4:

Declaration to be made by qualifying fund manager or qualifying savings manager

4A. The declaration referred to in section 172C(2)(ba)(ii) shall be a declaration in writing to the relevant person which—

(a) is made by the person (in this paragraph referred to as the ‘declarer’) beneficially entitled to the relevant distribution in respect of which the declaration is made,

(b) is signed by the declarer,

(c) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(d) declares that, at the time the declaration is made, the person beneficially entitled to the relevant distribution is a person referred to in section 172C(2)(ba)(i),

(e) contains the name and tax reference number of the person,

(f) contains a statement that, at the time when the declaration is made, the relevant distribution in respect of which the declaration is made will be applied as income of an approved retirement fund, an approved minimum retirement fund or, as the case may be, a special savings incentive account,

(g) contains an undertaking that, if the person mentioned in paragraph (d) ceases to be an excluded person, the declarer will, by notice in writing, advise the relevant person in relation to the relevant distribution accordingly, and

(h) contains such other information as the Revenue Commissioners may reasonably require for the purposes of Chapter 8A of Part 6.”,

and

(b) by the insertion of the following after paragraph 6:

Declaration to be made by persons entitled to exemption from income tax under Schedule F

6A. The declaration referred to in section 172C(2)(da)(ii) shall be a declaration in writing to the relevant person which—

(a) is made by the person (in this paragraph referred to as ‘the declarer’) beneficially entitled to the relevant distributions in respect of which the declaration is made,

(b) is signed by the declarer,

(c) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(d) declares that, at the time when the declaration is made, the person beneficially entitled to the relevant distribution is a person referred to in section 172C(2)(da)(i),

(e) contains the name and tax reference number of the person,

(f) contains an undertaking by the declarer that, if the person mentioned in subparagraph (d) ceases to be an excluded person, the declarer will, by notice in writing, advise the relevant person in relation to the relevant distributions accordingly, and

(g) contains such other information as the Revenue Commissioners may reasonably require for the purposes of Chapter 8A of Part 6.”.

Amendment of provisions relating to exploration and exploitation activities.

44.—The Principal Act is amended—

(a) in section 13 by the substitution for subsection (4) of the following:

“(4) Where exploration or exploitation activities are carried on by a person on behalf of the holder of a licence or lease granted under the Petroleum and Other Minerals Development Act, 1960 , such holder shall, for the purpose of an assessment to income tax, be deemed to be the agent of that person.”,

(b) in section 567 by the substitution for subsection (3) of the following:

“(3) Where exploration or exploitation activities are carried on by a person on behalf of the holder of a licence or lease granted under the Petroleum and Other Minerals Development Act, 1960 , such holder shall for the purpose of an assessment to capital gains tax be deemed to be the agent of that person.”,

and

(c) in Schedule 1 by the insertion after paragraph 6 of the following:

“Interpretation

7. In this Schedule a reference to a licence granted under the Petroleum and Other Minerals Development Act, 1960 , includes a reference to a lease granted under that Act.”.

Donations to approved bodies, etc.

45.—(1) Part 36 of the Principal Act is amended by the insertion of the following after section 848—

“Donations to approved bodies.

848A.—(1) (a) In this section—

‘appropriate certificate’, in relation to a relevant donation by a donor who is an individual, other than an individual referred to in subsection (7), to an approved body, means a certificate which is in such form as the Revenue Commissioners may prescribe and which contains—

(i) statements to the effect that—

(I) the donation satisfies the requirements of subsection (3), and

(II) the donor has paid or will pay to the Revenue Commissioners income tax of an amount equal to income tax at the standard rate or the higher rate or partly at the standard rate and partly at the higher rate, as the case may be, for the relevant year of assessment on the grossed up amount of the donation, but not being—

(A) income tax which the donor is entitled to charge against any other person or to deduct, retain or satisfy out of any payment which the donor is liable to make to any other person, or

(B) appropriate tax within the meaning of Chapter 4 of Part 8,

(ii) a statement specifying how much of the grossed up amount referred to in subparagraph (i)(II) has been or will be liable to income tax at the standard rate and the higher rate for the relevant year of assessment, and

(iii) the identifying number, known as the Personal Public Service Number (PPSN), of the donor;

‘approved body’ means a body specified in Part 1 of Schedule 26A;

‘relevant accounting period’ in relation to a relevant donation means the accounting period in which the relevant donation is made;

‘relevant donation’ means a donation which satisfies the requirements of subsection (3) and takes the form of the payment by a person (in this section referred to as the ‘donor’) of a sum or sums of money amounting to at least £200 to an approved body which is made—

(i) where the donor is a company, in an accounting period, and

(ii) where the donor is an individual, in a year of assessment;

‘relevant year of assessment’, in relation to a relevant donation, means the year of assessment in which the relevant donation is made.

(b) For the purposes of this section and in relation to a donation by a donor who is an individual (other than an individual referred to in subsection (7)), references to the grossed up amount are to the amount which after deducting income tax at the standard rate or the higher rate or partly at the standard rate and partly at the higher rate, as the case may be, for the relevant year of assessment leaves the amount of the donation.

(c) This section shall be construed together with Schedule 26A.

(2) Where it is proved to the satisfaction of the Revenue Commissioners that a person has made a relevant donation the provisions of subsection (4), subsection (7) or subsection (9), as the case may be, shall apply.

(3) A donation will satisfy the requirements of this section if—

(a) it is not subject to a condition as to repayment,

(b) neither the donor nor any person connected with the donor receives a benefit in consequence of making the donation, either directly or indirectly,

(c) it is not conditional on or associated with, or part of an arrangement involving, the acquisition of property by the approved body, otherwise than by way of gift, from the donor or a person connected with the donor,

(d) subject to subsection (4)—

(i) it would not be deductible in computing for the purposes of corporation tax the profits or gains of a trade or profession, and

(ii) it would not be an expense of management deductible in computing the total profits of a company,

(e) in respect of a donation made by an individual, the individual—

(i) is resident in the State for the relevant year of assessment,

(ii) has, except in the case of an individual referred to in subsection (7), given an appropriate certificate in relation to the donation to the approved body, and

(iii) has, except in the case of an individual referred to in subsection (7), paid the tax referred to in such appropriate certificate and is not entitled to claim a repayment of that tax or any part of that tax.

(4) Where a company makes a relevant donation in any accounting period and claims relief from tax by reference thereto, the amount thereof shall, for the purposes of corporation tax, be treated as—

(a) a deductible trading expense of a trade carried on by the company in, or

(b) an expense of management deductible in computing the total profits of the company for,

that accounting period.

(5) A claim by a company under this section shall be made with the return required to be delivered under section 951 for the accounting period in which the relevant donation is made.

(6) Where a relevant donation is made by a donor in an accounting period of a company or in a year of assessment which is less than 12 months, the amounts specified in the definition of ‘relevant donation’ shall be proportionately reduced.

(7) Where a relevant donation is made to an approved body in a year of assessment by an individual who is a chargeable person (within the meaning of Part 41) for the year of assessment, the amount of the donation shall be deducted from or set off against any income of the individual chargeable to income tax for that year of assessment and tax shall where necessary be discharged or repaid accordingly, and the total income of the individual or, where the individual's spouse is assessed to income tax in accordance with section 1017, the total income of the spouse shall be calculated accordingly; but any such deduction or set-off shall not be taken into account in determining the net relevant earnings (within the meaning of section 787) of the individual or, as the case may be, the individual's spouse for the year of assessment.

(8) Where a relevant donation is made to an approved body by an individual who is a chargeable person (within the meaning of Part 41) a claim under this section shall be made with the return required to be made by that individual under section 951 for the year of assessment in which the donation is made.

(9) Where a donation is a relevant donation made by a donor who is an individual (other than an individual referred to in subsection (7) to an approved body, the Tax Acts shall apply in relation to the approved body as if—

(a) the grossed up amount of the donation were an annual payment which was the income of the approved body received by it under deduction of tax, in the amounts and at the rates specified in the statement referred to in paragraph (ii) of the definition of ‘appropriate certificate’ for the relevant year of assessment, and

(b) the provisions of those Acts which apply in relation to a claim to repayment of tax applied in relation to any claim to repayment of such tax by an approved body;

but, if the total amount of the tax referred to in paragraph (ii) of the definition of ‘appropriate certificate’ is not paid, the amount of any repayment which would otherwise be made to an approved body in accordance with this section shall not exceed the amount of tax actually paid by the donor.

(10) The details contained in an appropriate certificate shall be given by the approved body to the Revenue Commissioners in an electronic format approved by the Revenue Commissioners in connection with the making of a claim to repayment of tax to which subsection (9)(b) refers and where it is so given it shall be accompanied by a declaration made by the approved body, on a form prescribed or authorised for that purpose by the Revenue Commissioners, to the effect that the details are correct and complete.

(11) Where the Revenue Commissioners are satisfied that an approved body does not have the facilities to give the details contained in an appropriate certificate in the electronic format referred to in subsection (10), such details shall be given in writing in a form prescribed or authorised by the Revenue Commissioners and shall be accompanied by a declaration made by the approved body to the effect that the claim is correct and complete.

(12) Section 764 shall apply as if subsection (1)(b) were deleted and subsection (2) shall be construed accordingly.

(13) Section 88, 484, 485, 485A, 485B, 486, 486A and 767, subparagraphs (ii) and (iii) of subsection (1)(b), and subsection (3), of section 792 and section 848 are repealed.

(14) Where any body to which Part 2 or Part 3 of Schedule 26A relates has been approved or is the holder of an authorisation, as the case may be, under any enactment and, that approval or authorisation has not been withdrawn on the day prior to the coming into operation of this section, such body shall be deemed to be an approved body for the purposes of this section.”.

(2) Chapter 1 of Part 15 of the Principal Act is amended by the substitution in Part 2 of the Table to section 458 of “section 848A(7)” for “section 485A(4)”.

(3) In respect of a donation made on or after 1 January 2002, m“relevant donation” in subsection (1)(a) of section 848A of the Principal Act (inserted by subsection (1)) is amended by the substitution of “€250” for “£200”.

(4) The Principal Act is amended by the insertion of the following after Schedule 26:

Section 848A .

SCHEDULE 26A

PART 1

List of approved bodies for the purposes of section 848A

1. A body approved for education in the arts in accordance with Part 2.

2. A body approved as an eligible charity in accordance with Part 3.

3. An institution of higher education within the meaning of section 1 of the Higher Education Authority Act, 1971 , or any body established in the State for the sole purpose of raising funds for such an institution.

4. An institution in the State in receipt of public funding which provides courses to which a scheme approved by the Minister for Education and Science under the Local Authorities (Higher Education Grants) Acts, 1968 to 1992, applies or any body established in the State for the sole purpose of raising funds for such an institution.

5. An institution of higher education in the State which provides courses which are validated by the Higher Education Training and Awards Council under the provisions of the Qualifications (Education and Training) Act, 1999 .

6. An institution or other body in the State which provides primary education up to the end of sixth standard, based on a programme prescribed or approved by the Minister for Education and Science.

7. An institution or other body in the State which provides post-primary education up to the level of either or both the Junior Certificate and the Leaving Certificate based on a programme prescribed or approved by the Minister for Education and Science.

8. STEIF which is the Scientific and Technological Education (Investment) Fund established under the Scientific and Technological Education (Investment) Fund Act, 1997 (as amended by the Scientific and Technological Education (Investment) Fund (Amendment) Act, 1998 ).

9. The company incorporated under the Companies Acts, 1963 to 1990, on 20 September 1990 as First Step Limited.

10. The Malting Research Committee of the Irish Malters Association.

11. The European Research Institute of Ireland.

12. The Equine Foundation.

13. The Dun Research Foundation.

14. The Institute of Ophthalmology.

15. The Mater College for Research and Postgraduate Education.

16. St. Luke's Institute of Cancer Research.

17. A body to which section 209 applies which is a body for the promotion of the observance of the Universal Declaration of Human Rights or the implementation of the European Convention for the Protection of Human Rights and Fundamental Freedoms or both the promotion of the observance of that Declaration and the implementation of that Convention.

18. The Foundation for Investing in Communities Limited or any of its 90 per cent subsidiaries as may be approved for the purposes of this Schedule by the Minister for Finance.

PART 2

Approval of a body for education in the arts

1. In this Part—

‘approved body’ means any body or institution in the State which may be approved of by the Minister for Finance and which—

(a) provides in the State any course one of the conditions of entry to which is related to the results of the Leaving Certificate Examination, a matriculation examination of a recognised university in the State or an equivalent examination held outside the State, or

(b)   (i) is established on a permanent basis solely for the advancement wholly or mainly in the State of one or more approved subjects,

(ii) contributes to the advancement of that subject or those subjects on a national or regional basis, and

(iii) is prohibited by its constitution from distributing to its members any of its assets or profits;

‘approved subject’ means—

(a) the practice of architecture,

(b) the practice of art and design,

(c) the practice of music and musical composition,

(d) the practice of theatre arts,

(e) the practice of film arts, or

(f) any other subject approved of for the purpose of this Part by the Minister for Finance.

2. (a) The Minister for Finance may, by notice in writing given to the body or institution, as the case may be, withdraw the approval of any body or institution for the purposes of this Part, and on the giving of the notice the body or institution shall cease to be an approved body from the day after the date of the notice referred to in subparagraph (b).

(b) Where the Minister for Finance withdraws the approval of any body or institution for the purposes of this Part, notice of its withdrawal shall be published as soon as may be in Iris Oifigiúil.

PART 3

Approval of body as eligible charity

1. In this Part—

‘authorisation’ shall be construed in accordance with paragraph 3;

‘eligible charity’ means any body in the State that is the holder of an authorisation that is in force.

2. Subject to paragraph 3, the Revenue Commissioners may, on application to them by a body in the State, and on the furnishing of the body to the Revenue Commissioners of such information as they may reasonably require for the purpose of their functions under this Part, issue to the body a document (in this Part referred to as ‘an authorisation’) stating that the body is an eligible charity for the purposes of this Part.

3. An authorisation shall not be issued to a body unless it shows to the satisfaction of the Revenue Commissioners that—

(a) it is a body of persons or a trust established for charitable purposes only,

(b) the income of the body is applied for charitable purposes only,

(c) before the date of the making of the application concerned under paragraph 2, it has been granted exemption from tax for the purposes of section 207 for a period of not less than 3 years,

(d) it provides such other information to the Revenue Commissioners as they may require for the purposes of their functions under this Part, and

(e) it complies with such conditions, if any, as the Minister for Social, Community and Family Affairs may, from time to time, specify for the purposes of this Part.

4. An eligible charity shall publish such information in such manner as the Minister for Finance may reasonably require, including audited accounts of the charity comprising—

(a) an income and expenditure account or a profit and loss account, as appropriate, for its most recent accounting period, and

(b) a balance sheet as at the last day of that period.

5. Notwithstanding any obligations as to secrecy or other restriction upon disclosure of information imposed by or under any statute or otherwise, the Revenue Commissioners may make available to any person the name and address of an eligible charity.

6. Subject to paragraph 7, an authorisation shall have effect for such period, not exceeding 5 years, as the Revenue Commissioners may determine and specify therein.

7. Where the Revenue Commissioners are satisfied that an eligible charity has ceased to comply with paragraph 3 or 4, they shall, by notice in writing served by registered post on the charity, withdraw the authorisation of the charity and the withdrawal shall apply and have effect from such date, subsequent to the date of the notice, as is specified therein.”.

Amendment of section 665 (interpretation (Chapter 2)) of Principal Act.

46.—Section 665 of the Principal Act is amended by the deletion of the definition of “person”.

Amendment of section 666 (deduction for increase in stock values) of Principal Act.

47.—(1) Section 666 of the Principal Act is amended by the substitution of the following for subsection (4):

“(4) (a) A deduction shall not be allowed under this section in computing a company's trading income for any accounting period which ends on or after the 31 December 2002.

(b) Any deduction allowed by virtue of this section in computing the profits or gains of the trade of farming for an accounting period of a person other than a company shall not apply for any purpose of the Income Tax Acts for any year of assessment later than the year 2002.”.

(2) This section shall come into operation on such day as the Minister for Finance may by order appoint.

Amendment of section 667 (special provisions for qualifying farmers) of Principal Act.

48.—(1) Section 667 of the Principal Act is amended in paragraph (b) of subsection (2) by the substitution of the following for subparagraph (ii):

“(ii) on or after 6 April 1995 and before 31 December 2002, for the year of assessment in which the individual becomes a qualifying farmer and for each of the 3 immediately succeeding years of assessment.”.

(2) This section shall come into operation on such day as the Minister for Finance may by order appoint.

Amendment of section 668 (compulsory disposal of livestock) of Principal Act.

49.—Section 668 of the Principal Act is amended by the substitution of the following for the definition of “stock to which this section applies”:

“‘stock to which this section applies’ means—

(a) all cattle forming part of the trading stock of the trade of farming, where such cattle are compulsorily disposed of on or after 6 April 1993, under any statute relating to the eradication or control of diseases in livestock, and for the purposes of this section all cattle shall be regarded as compulsorily disposed of where, in the case of any disease eradication scheme relating to the eradication or control of brucellosis in livestock, all eligible cattle for the purposes of any such scheme, together with such other cattle as are required to be disposed of, are disposed of, or

(b) animals and poultry of a kind specified in Parts I and II, respectively, of the First Schedule to the Diseases of Animals Act, 1966 , forming part of the trading stock of the trade for farming, where all animals or poultry of the particular kind forming part of that trade of farming are disposed of on or after 6 December 2000, in such circumstances that compensation is paid by the Minister for Agriculture, Food and Rural Development in respect of that disposal.”.

Amendment of section 310 (allowances in respect of certain contributions to capital expenditure of local authorities) of Principal Act.

50.—(1) Section 310 of the Principal Act is amended—

(a) by the insertion of the following after the definition of “approved scheme”:

“‘local authority’, means the council of a county or the corporation of a county or other borought or the council of an urban district;”,

(b) by the substitution of the following for subsection (2)—

“(2) Where a person, for the purposes of a trade carried on or to be carried on by the person, contributes a capital sum to capital expenditure incurred by a local authority on or after 15 February 2001 on the provision of an asset to be used for the purposes of—

(a) an approved scheme, in so far as the scheme relates to the treatment of trade effluents, or

(b) the supply of water under an agreement in writing between the person and the local authority.

then, such allowances, if any, shall be made to the person under section 272 or 284 as would have been made to the person if the capital sum contributed in the chargeable period or its basis period had been expenditure on the provision for the purposes of that trade of a similar asset and that asset had continued at all material times to be in use for the purposes of the trade.”,

and

(c) by the insertion of the following after subsection (2):

“2(A) Where, by virtue of subsection (2), a person is entitled to an allowance under section 284, then, for the purposes of determining the amount of wear and tear allowances to be made for any chargeable period or its basis period for the purposes of this section, section 284 shall apply as if the reference in paragraph (aa) (inserted by the Finance Act, 2001) of subsection (2) of that section to ‘20 per cent of the actual cost of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by means of renewal, improvement or reinstatement’ were a reference to ‘20 per cent of the capital sum contributed in the chargeable period or its basis period’.”.

(2) This section shall come into operation on such day as the Minister for Finance may by order appoint.

Wear and tear allowances for licences for public hire vehicles.

51.—The Principal Act is amended by the insertion of the following after section 286:

“286A.—(1) In this section—

‘licence’ means a taxi licence or a wheelchair accessible taxi licence granted in respect of a small public service vehicle by a licensing authority in accordance with the Road Traffic (Public Service Vehicles) Regulations, 1963 to 2000, made under section 82 of the Road Traffic Act, 1961 , as amended by section 57 of the Road Traffic Act, 1968 ;

‘qualifying expenditure’ means—

(a) capital expenditure incurred on the acquisition of a licence on or before 21 November 2000 and for the purposes of this section, where capital expenditure is so incurred it shall be deemed to have been incurred on 21 November 1997 or, if later, on the day on which the trade commenced, or

(b) where a licence formed part of an inheritance taken by an individual on or before 21 November 2000 and inheritance tax or probate tax was paid in relation to that licence, an amount equal to the open market value of the licence used for the purpose of inheritance tax or probate tax if that amount is greater than the amount of the capital expenditure incurred on the acquisition of the licence and, where this paragraph applies, the first-mentioned amount shall be deemed to have been capital expenditure incurred on the acquisition of a licence on 21 November 1997 or, if later, on the date on which the trade commenced;

‘qualifying trade’, means a trade carried on by an individual which consists of the carriage of members of the public for reward in a vehicle in respect of which a licence has been granted but excluding any trade or part of a trade which consists of the letting of such a vehicle.

(2) (a) Where an individual carrying on a qualifying trade proves to have incurred qualifying expenditure, then, for the purposes of this Chapter, other than sections 298 and 299, and for the purposes of Chapter 4 of this Part—

(i) the licence shall, subject to paragraph (c), be treated as machinery or plant,

(ii) such machinery or plant shall be treated as having been provided for the purposes of the trade, and

(iii) for so long as the individual is entitled to the licence, that machinery or plant shall be treated as belonging to that individual.

(b) Where an individual who has incurred qualifying expenditure carries on a qualifying trade and uses a vehicle, being the vehicle to which the machinery or plant referred to in paragraph (a) relates, partly for letting to another person and partly for the purposes of the qualifying trade, the machinery or plant shall be deemed for the purposes of section 284(1) to be used only for the purposes of the qualifying trade.

(c) Notwithstanding paragraph (a), where an individual who has incurred qualifying expenditure in relation to more than one licence carries on a qualifying trade and lets more than one of the vehicles, which are used for the purposes of the trade, being the vehicles to which the machinery or plant referred to in paragraph (a) relates, to another person or persons for use also by that other person or persons, paragraph (a) shall apply in respect of so much of that machinery or plant as relates to one licence only (in this section referred to as ‘the relevant licence’).

(3) Where an individual who is not, apart from this subsection, entitled to allowances under this Chapter by virtue of this section, becomes the beneficial owner of a licence on the death of his or her spouse, and that spouse—

(a) had incurred qualifying expenditure in respect of the licence, and

(b) had carried on a qualifying trade,

then, for the purposes of this section, if the individual lets the vehicle to which the licence relates, or lets the licence, for use for the purposes of a qualifying trade carried on by another person—

(i) the individual shall be deemed to have incurred the qualifying expenditure in respect of the licence,

(ii) that licence shall be treated as machinery or plant, and

(iii) the letting of that vehicle or of that licence by the individual shall be deemed to be a qualifying trade carried on by the individual which commenced on the date of the first letting of that vehicle,

but this subsection shall apply in relation to an individual as respects one licence only.

(4) In determining what capital allowances are to be made in taxing the trade of an individual to which subsection (2) refers for any year of assessment, section 284(2)(aa) (inserted by the Finance Act, 2001) shall apply—

(a) as if the machinery or plant to which subsection (2) refers were machinery or plant to which section 284(2)(aa) applies, and

(b) as if the reference to ‘on or after 1 January 2001’ in section 284(2)(aa) were a reference to ‘on 21 November 1997’.

(5)   (a) This subsection shall apply to an individual to whom paragraph (b) or (c) of subsection (2) relates who lets a vehicle to which subsection (2)(b) relates or a vehicle relating to a relevant licence.

(b) Notwithstanding section 381, where relief is claimed under that section in respect of a loss sustained in a qualifying trade, the amount of that loss, in so far as by virtue of section 392 it is referable to an allowance under this section, shall be treated for the purposes of subsections (1) and (3)(b) of section 381 as reducing income only from a letting to which paragraph (a) refers and shall not be treated as reducing any other income.

(6) Subsection (7) of section 953 shall apply to an excess, referred to in that subsection, arising by virtue of an allowance made under this section as if the reference in paragraph (a)(ii) of that subsection to ‘section 438(4)’ were a reference to this section.

(7) This section shall be deemed to have come into operation as on and from 6 April 1997.”.

Wear and tear allowances for certain sea fishing boats.

52.—(1) Section 284(3A) of the Principal Act is amended—

(a) by the substitution in paragraph (a) of “6 years” for “3 years”,

(b) by the substitution in paragraph (b) of “paragraph (ba) and subsection (4)” for “subsection (4)”,

(c) by the insertion after paragraph (b) of the following:

“(ba) Notwithstanding subsection (2), but subject to subsection (4), wear and tear allowances to be made to any person in respect of machinery or plant to which this subsection applies, and in respect of which capital expenditure is incurred on or after the date of the coming into operation of section 52 of the Finance Act, 2001, shall be made during a writing-down period of 6 years beginning with the first chargeable period or its basis period at the end of which the machinery or plant belongs to that person and is in use for the purposes of that person's trade, and shall be of an amount equal to—

(i) as respects the first year of the writing-down period, 50 per cent of the actual cost of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on that machinery or plant by means of renewal, improvement or reinstatement, and

(ii) as respects the next 5 years of the writing-down period, 20 per cent of the balance of that actual cost after the deduction of any allowance made by virtue of subparagraph (i).”,

and

(d) by the insertion in paragraph (c) of “or in subparagraph (i) or (ii), as may be appropriate, of paragraph (ba),” after “paragraph (b),”.

(2) Section 403(5A) of the Principal Act is amended by the substitution in paragraph (b)(ii) of “6 years” for “3 years”.

(3) This section shall come into operation on such day as the Minister for Finance may by order appoint.

Wear and tear allowances.

53.—Section 284(2) of the Principal Act is amended as respects capital expenditure incurred on or after 1 January 2001—

(a) in paragraph (a), by the insertion before “subsection (4)” of “paragraph (aa) and”,

(b) by the insertion of the following paragraph after paragraph (a):

“(aa) Notwithstanding paragraph (a), where capital expenditure is incurred on or after 1 January 2001 on the provision of—

(i) machinery or plant, other than machinery or plant to which paragraph (a)(ii) and subsection (3A) relates, or

(ii) machinery or plant to which paragraph (a)(ii) relates, other than a car within the meaning of section 286 used for qualifying purposes within the meaning of that section,

the amount of the wear and tear allowance to be made shall be an amount equal to 20 per cent of the actual cost of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by means of renewal, improvement or reinstatement.”,

and

(c) in paragraph (b), by the insertion after “subparagraph (i) or (ii) of paragraph (a)” of “or the amount specified in paragraph (aa)”.

Amendment of section 274 (balancing allowances and balancing charges) of Principal Act.

54.—Section 274(3) of the Principal Act is amended by the substitution for “or that consideration.” of the following:

“or that consideration; but this subsection shall not apply in the case of consideration of the type referred to in subsection (1)(a)(iv) which is received on or after 5 March 2001.”.

Amendment of Chapter 4 (interest payment by certain deposit takers) of Part 8 of Principal Act.

55.—Chapter 4 of Part 8 of the Principal Act is amended—

(a) in section 256(1)—

(i) by the substitution for the definition of “appropriate tax”—

(I) as on and from 6 April 2000, of the following:

“‘appropriate tax’, in relation to a payment of relevant interest, means a sum representing income tax on the amount of the payment—

(a) in the case of a relevant deposit or relevant deposits held in a special savings account, at the rate of 20 per cent,

(b) subject to paragraph (c), in the case of any other relevant deposit, at the standard rate in force at the time of payment, and

(c) in the case of a relevant deposit, being a deposit made on or after 23 March 2000, other than a relevant deposit—

(i) referred to in paragraph (a), or

(ii) the interest in respect of which is payable annually or at more frequent intervals, or

(iii) which is a specified deposit within the meaning of section 260,

at a rate determined by the formula—

(S + 3) per cent

where S is the standard rate per cent (within the meaning of section 4(1)) in force at the time of payment;”,

and

(II) as on and from 6 April 2001, of the following:

“‘appropriate tax’, in relation to a payment of relevant interest, means a sum representing income tax on the amount of the payment—

(a) in the case of interest paid in respect of a relevant deposit or relevant deposits held in a special savings account, at the rate of 20 per cent,

(b) subject to paragraph (c), in the case of interest paid in respect of any other relevant deposit, at the standard rate in force at the time of payment, and

(c) in the case of interest paid in respect of a relevant deposit, being a deposit made on or after 23 March 2000, other than interest which is—

(i) referred to in paragraph (a), or

(ii) payable annually or at more frequent intervals, or

(iii) specified interest within the meaning of section 260,

at a rate determined by the formula—

(S + 3) per cent

where S is the standard rate per cent (within the meaning of section 4(1)) in force at the time of payment;”,

(ii) by the substitution for the definition of “deposit”, as respects a deposit made on or after 6 April 2001, of the following:

“‘deposit’ means a sum of money paid to a relevant deposit taker on terms under which it, or any part of it, may be repaid with or without interest and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person to whom it is made, notwithstanding that the amount to be repaid may be to any extent linked to or determined by changes in a stock exchange index or any other financial index;”,

(iii) by the substitution for the definition of “interest”, as respects a deposit made on or after 6 April 2001, of the following:

“‘interest’ means any interest of money whether yearly or otherwise, including any amount, whether or not described as interest, paid in consideration of the making of a deposit, and, as respects—

(a) a deposit, where the amount to be repaid may be to any extent linked to or determined by changes in a stock exchange index or any other financial index, includes any amount which is or is to be repaid over and above the amount of the deposit,

(b) a building society, includes any dividend or other distribution in respect of shares in the society,

but any amount consisting of an excess of the amount received on the redemption of any holding of A.C.C. Bonus Bonds — First Series, issued by ACC Bank plc, over the amount paid for the holding shall not be treated as interest for the purposes of this Chapter,”,

and

(iv) in the definition of “special savings account” by the substitution for “on or after the 1st day of January, 1993” of “on or after 1 January 1993 and before 6 April 2001”,

(b) in section 258(9)(c), as on and from 6 April 1997, by the substitution for “Subsections 2 and 4” of “Subsections 2 to 4”,

(c) in section 261(c)(i)(II) by the substitution for “paragraph (b) or the definition” of “paragraph (b) of the definition”, and

(d) in section 265(2)(e) by the substitution for “true and correct” of “true and correct; but in the case of a company no such certificate shall be required where the declarer includes a written statement, as part of the declaration to the relevant deposit taker, confirming that the company has availed of the exemption under Part III of the Companies (Amendment) (No. 2) Act, 1999 ”.

Amendment of section 838 (special portfolio investment accounts) of Principal Act.

56.—Section 838 of the Principal Act is amended—

(a) in subsection (1)—

(i) in the definition of “special portfolio investment account” by the substitution for “on or after the 1st day of February, 1993” of “on or after 1 February 1993 and before 6 April 2001”, and

(ii) by the deletion of the definition of “relevant period”,

and

(b) in subsection (2)—

(i) by the deletion of paragraph (c), and

(ii) in paragraph (g) by the substitution for “on or after the 1st day of February, 1996” of “on or after 1 February 1996 and before 31 December 2000”.

Taxation of certain savings in credit unions and other financial institutions.

57.—(1) The Principal Act is amended—

(a) in Part 8—

(i) in section 256(1)—

(I) by the substitution for paragraph (a) of the definition of “appropriate tax” of the following:

“(a) in the case of interest paid in respect of a relevant deposit or relevant deposits held in—

(i) a special savings account, or

(ii) a special term account,

at the rate of 20 per cent,”,

(II) by the insertion after the definition of “building society” of the following:

“‘credit union’ means a society registered under the Credit Union Act, 1997 , including a society deemed to be so registered under section 5(3) of that Act;”,

(III) by the insertion after the definition of “interest” of the following:

“‘long term account’ means an account opened by an individual with a relevant deposit taker on terms under which the individual has agreed that each relevant deposit held in the account is to be held in the account for a period of not less than 5 years;

‘medium term account’ means an account opened by an individual with a relevant deposit taker on terms under which the individual has agreed that each relevant deposit held in the account is to be held in the account for a period of not less than 3 years;”,

(IV) by the insertion in the definition of “relevant deposit taker” after paragraph (c) of the following:

“(ca) a credit union,”,

(V) by the substitution for the definition of “relevant interest” of the following:

“‘relevant interest’ means, subject to section 261A, interest paid in respect of a relevant deposit;”,

(VI) by the substitution in paragraph (b) of the definition of “special savings account” of “deposit taker;” for “deposit taker.”, and

(VII) by the insertion after the definition of “special savings account” of the following:

“‘special term account’ means—

(a) a medium term account, or

(b) a long term account,

being an account in which a relevant deposit or relevant deposits made by an individual is or are held and in respect of which—

(i) the conditions specified in section 264A(1) are satisfied, and

(ii) a declaration of the kind mentioned in section 264A(2) has been made to the relevant deposit taker.”,

(ii) by the insertion after section 261 of the following:

“Taxation of interest on special term accounts.

261A.—(1) Where interest is paid by a relevant deposit taker in respect of a relevant deposit held in a special term account, such interest shall be relevant interest for the purposes of this Chapter only to the extent provided for in this section.

(2) Interest paid in a year of assessment in respect of a relevant deposit held in a medium term account shall be relevant interest only to the extent that such interest exceeds £278.

(3) Interest paid in a year of assessment in respect of a relevant deposit held in a long term account shall be relevant interest only to the extent that such interest exceeds £370.

(4) Where an individual opens a medium term account, the individual may subsequently make an election in writing to the relevant deposit taker to have the account converted to a long term account.

(5) Where an election is made in accordance with subsection (4), interest paid in a year of assessment which commences on or after the date the election is made shall be relevant interest only to the extent that such interest exceeds £370.

(6) Subject to subsection (8), section 261 shall apply in relation to any relevant interest paid in respect of a relevant deposit held in a special term account, as if the following paragraph were substituted for paragraph (c) of that section:

‘(c) the amount of any payment of relevant interest paid in respect of any relevant deposit held in a special term account shall not, except for the purposes of a claim to repayment under section 267(3) in respect of the appropriate tax deducted from such relevant interest, be reckoned in computing total income for the purposes of the Income Tax Acts;’.

(7) An account shall cease to be a special term account if any of the conditions specified in section 264A(1) cease to be satisfied, and where that occurs—

(a) all interest paid on or after the occurrence in respect of relevant deposits held in the account shall be relevant interest,

(b) all interest (in this paragraph referred to as ‘past interest’) paid prior to the occurrence, in respect of relevant deposits held in the account, shall be treated by the relevant deposit taker as relevant interest to the extent that such interest has not already been treated as relevant interest, and—

(i) the provisions of section 257(1) shall apply as if the payment of past interest was being made on the date of the occurrence, and

(ii) where on that date the past interest has already been withdrawn from the account—

(I) the relevant deposit taker shall deduct from the relevant deposits held in the account on that date, an amount equal to the amount of the appropriate tax which would have been deducted from the past interest under subparagraph (i), but for the withdrawal, and such amount shall be treated as appropriate tax, and

(II) the provisions of paragraphs (b) and (c) of section 257(1) shall apply to such deduction as they apply to a deduction from relevant interest.

(8) Subsection (6) shall not apply to any interest in respect of any relevant deposit held in the account which is paid, or by virtue of subsection (7) treated as paid, on or after the date on which the account ceases to be a special term account.”,

(iii) in section 261A (as inserted by subparagraph (ii)), as respects the year of assessment 2002 and subsequent years of assessment, by the substitution—

(I) in subsection (2) of “€480” for “£278”, and

(II) in subsections (3) and (5) of “€635” for “£370”,

(iv) by the insertion after section 264 of the following:

“Conditions and declarations relating to special term accounts.

264A.—(1) The following are the conditions referred to in subparagraph (i) of the definition of ‘special term account’ in section 256(1):

(a) the account shall be opened and designated by the relevant deposit taker as a medium term account or, as the case may be, a long term account;

(b) the account shall not be denominated in a foreign currency;

(c) the account shall not be connected with any other account held by the account holder or any other person; and for this purpose an account shall be connected with another account if—

(i) (I) either account was opened with reference to the other account, or with a view to enabling the other account to be opened on particular terms, or with a view to facilitating the opening of the other account on particular terms, and

(II) the terms on which either account was opened would have been significantly less favourable to the account holder if the other account had not been opened,

or

(ii) the terms on which either account is operated are altered or affected in any way whatever because of the existence of the other account;

(d) all relevant deposits held in the account shall be subject to the same terms;

(e) there shall not be any agreement, arrangement or understanding in existence, whether express or implied, which influences or determines, or could influence or determine, the rate (other than an unspecified and variable rate) of interest which is paid or payable, in respect of the relevant deposit or relevant deposits held in the account, in or in respect of any period which is more than 12 months;

(f) interest paid or payable in respect of the relevant deposit or relevant deposits held in the account shall not directly or indirectly be linked to or determined by any change in the price or value of any shares, stocks, debentures or securities listed on a stock exchange or dealt in on an unlisted securities market;

(g) the account shall not be opened by or held in the name of an individual who is under 16 years of age;

(h) the account shall be opened by and held in the name of the individual beneficially entitled to the relevant interest payable in respect of the relevant deposit or relevant deposits held in the account;

(i) the account may be held jointly by not more than 2 individuals;

(j) subject to paragraph (k), an individual shall not simultaneously hold, whether solely or jointly, another special term account;

(k) where the account is held jointly by individuals who are married to each other they may simultaneously hold one other such account jointly;

(l) subject to paragraphs (m) and (n), the amount of a deposit or the aggregate amount of deposits which may be made to an account in any one month shall not exceed £500;

(m) at the time an individual opens an account with a relevant deposit taker, a deposit consisting of all or part of the relevant deposits of the individual which are at that time held by the same relevant deposit taker, may be transferred to the account;

(n) otherwise than by way of a transfer under paragraph (m), a deposit of not more than £6,000 may be made by an individual once and only once to an account during the period in which the account is a special term account;

(o) any interest credited to the account by the relevant deposit taker shall not be treated as a deposit for the purposes of paragraph (l) or (p), but such interest may not be withdrawn from the account, otherwise than in accordance with paragraph (q), unless the withdrawal is made within the period of 12 months from the date it was so credited;

(p) subject to paragraph (q), a deposit may not be withdrawn from an account held by an individual within—

(i) 3 years from the date the deposit was made, in the case of a medium term account, and

(ii) 5 years from the date the deposit was made, in the case of a long term account,

otherwise than on the death of the individual or, where the account is an account held jointly by 2 individuals, on the death of one of them;

(q) one and only one withdrawal may be made from an account by an individual who is 60 years of age or over on the date of the withdrawal, provided that the account was opened when the individual was under that age.

(2) The declaration referred to in subparagraph (ii) of the definition of ‘special term account’ in section 256(1) shall be a declaration in writing to a relevant deposit taker which—

(a) is made by the individual (in this subsection referred to as ‘the declarer’) who holds the account in respect of which the declaration is made is payable,

(b) is signed by the declarer,

(c) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(d) declares that at the time when the declaration is made the conditions referred to in paragraphs (g), (h), (j) and (k) of subsection (1) are satisfied in relation to the account in respect of which the declaration is made,

(e) contains the full name and address of the declarer,

(f) contains an undertaking by the declarer that, if the conditions referred to in paragraphs (g), (h), (j) and (k) of subsection (1) cease to be satisfied in respect of the account in respect of which the declaration is made, the declarer will notify the relevant deposit taker accordingly, and

(g) contains such other information as the Revenue Commissioners may reasonably require for the purposes of this Chapter.

(3) Section 263(2) shall apply as respects declarations of the kind mentioned in this section as it applies as respects declarations of the kind mentioned in that section.

Returns of special term accounts by relevant deposit takers.

264B.—(1) In this section ‘appropriate inspector’ means—

(a) the inspector who has last given notice in writing to the relevant deposit taker that he or she is the inspector to whom the relevant deposit taker is required to deliver the return referred to in subsection (2), or

(b) where there is no such inspector as is referred to in paragraph (a), the inspector of returns specified in section 950.

(2) On or before 31 March in each year of assessment, every relevant deposit taker shall prepare and deliver to the appropriate inspector a return, in such form as may be prescribed or authorised by the Revenue Commissioners specifying—

(a) the name and address of the holder or holders, as the case may be, of each special term account which was opened during the previous year of assessment,

(b) whether such account is a medium term account or a long term account, and

(c) the date of opening of such account.

(3) Sections 1052 and 1054 shall apply to a failure by a relevant deposit taker to deliver a return required by subsection (2) and to each and every such failure, as they apply to a failure to deliver a return referred to in section 1052.”,

(v) in section 264A(1) (inserted by subparagraph (iv)), as respects the year of assessment 2002 and subsequent years of assessment, by the substitution—

(I) in paragraph (l) of “€635” for “£500”, and

(II) in paragraph (n) of “€7,620” for “£6,000”,

(vi) by the insertion after Chapter 4 of the following:

Chapter 5

Dividend Payments by Credit Unions

Interpretation (Chapter 5).

267A.—(1) In this Chapter—

‘appropriate tax’ has the same meaning as in section 256(1);

‘dividend’ means a dividend on shares declared by a credit union at an annual general meeting of that credit union;

‘long term share account’ means an account opened by a member (being an individual) with a credit union on terms under which the member has agreed that each share subscribed for by the member to be held in the account is to be held in the account for a period of not less than 5 years;

‘medium term share account’ means an account opened by a member (being an individual) with a credit union on terms under which the member has agreed that each share subscribed for by the member to be held in the account is to be held in the account for a period of not less than 3 years;

‘relevant deposit’ has the same meaning as in section 256(1);

‘relevant deposit taker’ has the same meaning as in section 256(1);

‘relevant interest’ has the same meaning as in section 256(1);

‘savings’ includes shares and deposits;

‘share’ has the same meaning as in section 2 (1) of the Credit Union Act, 1997 ;

‘special share account’ means an account in which shares subscribed for by a member are held by a credit union on terms under which the member has agreed with the credit union that for the purposes of Chapter 4 of this Part—

(a) the value of the shares held in the account at any time is to be treated as an amount of a relevant deposit held by the credit union at that time, and

(b) the value of any dividend paid on those shares at any time is to be treated as an amount of relevant interest paid in respect of such relevant deposit by the credit union at that time;

‘special term share account’ means—

(a) a medium term share account, or

(b) a long term share account,

being an account in which shares subscribed for by a member are held by a credit union and in respect of which—

(i) the conditions specified in section 267D(1) are satisfied, and

(ii) a declaration of the kind mentioned in section 267D(2) has been made to the credit union.

Election to open a special share account or a special term share account.

267B.—(1) A person, who is a member or is about to become a member of a credit union, may either or both—

(a) make an election in writing to the credit union to open an account which is a special share account, and

(b) where the person is an individual, make an election in writing to the credit union to open either a medium term share account or a long term share account.

(2) Where an election is made in accordance with subsection (1)(a), the credit union shall designate the account as a special share account and shall treat—

(a) the value of the shares held in the account at any time, as an amount of a relevant deposit held by it at that time, and

(b) the value of any dividend paid on those shares at any time, as an amount of relevant interest paid at that time in respect of such relevant deposit and the provisions of Chapter 4 of this Part shall apply to such relevant interest treated as paid by a credit union as they apply to relevant interest paid by a relevant deposit taker, and the appropriate tax in respect of such relevant interest shall be at a rate of 20 per cent.

(3) Where an election is made in accordance with subsection (1)(b), the credit union shall treat—

(a) the value of the shares held in the account at any time, as an amount of a relevant deposit held by it at that time, and

(b) subject to section 267C, the value of any dividend paid on those shares at any time, as an amount of relevant interest paid at that time in respect of such relevant deposit and the provisions of Chapter 4 of this Part shall apply to such relevant interest treated as paid by the credit union as they apply to relevant interest paid by a relevant deposit taker, and the appropriate tax in respect of such relevant interest shall be at a rate of 20 per cent.

Taxation of dividends on special term share accounts.

267C.—(1) The value of the dividend paid in a year of assessment on shares held in a medium term share account, shall be treated as an amount of relevant interest paid in that year of assessment, only to the extent that such value exceeds £278.

(2) The value of the dividend paid in a year of assessment on shares held in a long term share account, shall be treated as an amount of relevant interest paid in that year of assessment, only to the extent that such value exceeds £370.

(3) Where an account is opened by a member as a medium term share account, the member may subsequently make an election in writing to the credit union to have the account converted to a long term share account.

(4) Where an election is made in accordance with subsection (3), the value of the dividend paid on shares in a year of assessment which commences on or after the date the election is made shall be treated as an amount of relevant interest paid for that year of assessment, only to the extent that such value exceeds £370.

(5) An account shall cease to be a special term share account if any of the conditions specified in subsection (1) of section 267D cease to be satisfied and where that occurs—

(a) the account shall be treated as a special share account from the time of the occurrence, and

(b) the value of all dividends (in this paragraph referred to as ‘past dividends’) paid prior to the occurrence, on shares held in the account, shall be treated by the credit union as an amount of relevant interest to the extent that the value of such dividends has not already been treated as an amount of relevant interest, and—

(i) the provisions of section 257(1) shall apply as if the payment of past dividends was being made on the date of the occurrence, and

(ii) where on that date the past dividends have already been withdrawn from the account—

(I) the credit union shall deduct from the value of the shares in the account on that date, an amount equal to the amount of the appropriate tax which would have been deducted from the past dividends under subparagraph (i), but for the withdrawal, and such amount shall be treated as appropriate tax, and

(II) the provisions of paragraphs (b) and (c) of section 257(1) shall apply to such deduction as they apply to a deduction from relevant interest.

Conditions and declarations relating to special term share accounts.

267D.—(1) The following are the conditions referred to in subparagraph (i) of the definition of ‘special term share account’ in section 267A(1):

(a) the account shall be opened and designated by the credit union as a medium term share account or, as the case may be, a long term share account;

(b) the account shall not be denominated in a foreign currency;

(c) the account shall not be connected with any other share account or deposit account held by the member or any other person; and for this purpose an account shall be connected with another account if—

(i) (I) either account was opened with reference to the other account, or with a view to enabling the other account to be opened on particular terms, or with a view to facilitating the opening of the other account on particular terms, and

(II) the terms on which either account was opened would have been significantly less favourable to the member if the other account had not been opened,

or

(ii) the terms on which either account is operated are altered or affected in any way whatever because of the existence of the other account;

(d) all shares held in the account shall be subject to the same terms;

(e) there shall not be any agreement, arrangement or understanding in existence, whether express or implied, which influences or determines, or could influence or determine, the rate (other than an unspecified and variable rate) of dividend which is paid or payable, in respect of the share or shares held in the account, in or in respect of any period which is more than 12 months;

(f) dividends paid or payable in respect of the share or shares held in the account shall not directly or indirectly be linked to or determined by any change in the price or value of any shares, stocks, debentures or securities listed on a stock exchange or dealt in on an unlisted securities market;

(g) the account shall not be opened by or held in the name of a member who is under 16 years of age;

(h) the account shall be opened by and held in the name of the member beneficially entitled to the dividend payable in respect of the share or shares held in the account;

(i) an account may be held jointly by not more than 2 individual members;

(j) subject to paragraph (k), a member shall not simultaneously hold, whether solely or jointly, another special term share account;

(k) where the account is held jointly by individuals who are married to each other they may simultaneously hold one other such account jointly;

(l) subject to paragraph (m) and (n) the amount of a subscription or aggregate amount of subscriptions for shares which may be added to an account in any one month shall not exceed £500;

(m) at the time a member opens an account with a credit union, a single subscription for shares consisting of all or part of the savings of the member which are already held by the same credit union, may be transferred to the account;

(n) otherwise than by way of a transfer under paragraph (m), shares at a cost of not more than £6,000 may be added by a member once and only once to an account during the period in which the account is a special term share account;

(o) any disbursement of the surplus funds of a credit union, in the form of dividends or rebate of loan interest, which is added to the account shall not be treated as a subscription for shares for the purposes of paragraph (l) or (p), but such dividend or rebate of loan interest may not be withdrawn from the account, otherwise than in accordance with paragraph (q), unless the withdrawal is made within the period of 12 months from the date it was so added;

(p) subject to paragraph (q), a share may not be withdrawn from an account held by a member within—

(i) 3 years from the date the share was subscribed for, in the case of a medium term share account, and

(ii) 5 years from the date the share was subscribed for, in the case of a long term share account,

otherwise than on the death of the member or, where the account is an account held jointly by 2 members, on the death of one of them;

(q) one and only one withdrawal may be made from an account by a member who is 60 years of age or over on the date of the withdrawal, provided that the account was opened when the member was under that age;

(r) a transfer of shares from an account by a credit union to reduce a balance outstanding on a loan from the credit union to a member shall not be treated as a withdrawal from the account for the purposes of paragraph (p) where—

(i) such shares were pledged as security for the loan at the time the loan was granted,

(ii) a default (whether of interest or otherwise) in the terms of the repayment of the loan of not less than 6 months has occurred, and

(iii) the credit union has followed its standard procedures in seeking to recover the loan.

(2) The declaration referred to in subparagraph (ii) of the definition of ‘special term share account’ in section 267A(1) shall be a declaration in writing to the credit union which—

(a) is made by the member (in this subsection referred to as ‘the declarer’) who holds the account in respect of which the declaration is made is payable,

(b) is signed by the declarer,

(c) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(d) declares that at the time when the declaration is made the conditions referred to in paragraphs (g), (h), (j) and (k) of subsection (1) are satisfied in relation to the account in respect of which the declaration is made,

(e) contains the full name and address of the declarer,

(f) contains an undertaking by the declarer that, if the conditions referred to in paragraphs (g), (h), (j) and (k) of subsection (1) cease to be satisfied in respect of the account in respect of which the declaration is made, the declarer will notify the credit union accordingly, and

(g) contains such other information as the Revenue Commissioners may reasonably require for the purposes of this Chapter.

(3) Section 263(2) shall apply as respects declarations of the kind mentioned in this section as it applies as respects declarations of the kind mentioned in that section.

Returns of special term share accounts by credit unions.

267E.—(1) In this section ‘appropriate inspector’ means—

(a) the inspector who has last given notice in writing to the credit union that he or she is the inspector to whom the credit union is required to deliver the return required under subsection (2), or

(b) where there is no such inspector as is referred to in paragraph (a), the inspector of returns specified in section 950.

(2) On or before 31 March in each year of assessment, every credit union shall prepare and deliver to the appropriate inspector a return, in such form as may be prescribed or authorised by the Revenue Commissioners specifying—

(a) the name and address of the holder or holders, as the case may be, of each special term share account which was opened during the previous year of assessment,

(b) whether the account is a medium term share account or a long term share account, and

(c) the date of opening of such account.

(3) Sections 1052 and 1054 shall apply to a failure by a credit union to deliver a return required by subsection (2) and to each and every such failure, as they apply to a failure to deliver a return referred to in section 1052.

Supplementary provisions (Chapter 5).

267F.—(1) The provisions of section 904A shall apply to a credit union, treated under this Chapter as paying relevant interest, as they apply to a relevant deposit taker paying relevant interest.

(2) In applying Chapter 4 of this Part for the purposes of this Chapter, section 258(4) shall not apply.

(3) Section 261 shall apply in relation to any dividend paid on shares held in a special share account or a special term share account which under section 267B is treated in whole or in part as relevant interest paid in respect of a relevant deposit, as if the following paragraph were substituted for paragraph (c) of that section:

(c) the amount of any payment of relevant interest paid in respect of a relevant deposit shall not, except for the purposes of a claim to repayment under section 267(3) in respect of the appropriate tax deducted from such relevant interest, be reckoned in computing total income for the purposes of the Income Tax Acts;'.”,

(vii) in section 267C (inserted by subparagraph (vi)), as respects the year of assessment 2002 and subsequent years of assessment, by the substitution—

(I) in subsection (1) of “€480” for “£278”, and

(II) in subsections (2) and (4) of “€635” for “£370”,

and

(viii) in section 267D(1) (inserted by subparagraph (vi)), as respects the year of assessment 2002 and subsequent years of assessment, by the substitution—

(I) in paragraph (i) of “€635” for “£500”, and

(II) in paragraph (n) of “€7,620” for “£6,000”,

(b) in section 700(1) by the insertion after “Notwithstanding anything in the Tax Acts,” of “other than Chapter 5 of Part 8,”, and

(c) in Schedule 29 by the insertion

(i) in column 2 after “section 258(2)” of:

“section 264B

section 267E”,

and

(ii) in column 3 of “section 267B” after “section 257(1)”.

(2) This section shall come into operation on such day or days as the Minister for Finance may by order or orders appoint either generally or with reference to any particular purpose or provision and different days may be so appointed for different purposes or different provisions.

Amendment of Chapter 9 (park and ride facilities and certain related developments) of Part 10 of Principal Act.

58.—Chapter 9 (inserted by the Finance Act, 1999 ) of Part 10 of the Principal Act is amended—

(a) in section 372V—

(i) by the substitution in subsection (1)(a) of “subsections (2) to (4A)” for “subsections (2) to (4)”,

(ii) in subsection (4)—

(I) by the insertion in paragraph (a) after “was first used” of “or, where subsection (4A) applies, first used as a qualifying park and ride facility,” and

(II) by the substitution in paragraph (b) of “qualifying park and ride facility” for “park and ride facility”,

and

(iii) by the insertion of the following after subsection (4):

“(4A) Notwithstanding subsections (1), (3)(a) and (4), where it is shown in respect of a building or structure which is to be a qualifying park and ride facility that the relevant local authority is unable to give the certificate in writing referred to in the definition of ‘qualifying park and ride facility’ in section 372U(1) due to a delay in the provision of a train service to serve the building or structure, then, in relation to capital expenditure incurred in the qualifying period on the construction or refurbishment of that building or structure—

(a) section 271 shall apply—

(i) as if in the definition of ‘appropriate chargeable period’ in subsection (1) of that section ‘the chargeable period in which the building or structure becomes an industrial building or structure’ were substituted for ‘the chargeable period related to the expenditure’, and

(ii) as if in subsection (6) of that section ‘if, within 5 years of the building or structure coming to be used, it is not an industrial building or structure’ were substituted for ‘if the building or structure, when it comes to be used, is not an industrial building or structure’,

(b) section 272 shall apply as if in subsection (4)(a)(ii) of that section ‘beginning with the time when the building or structure was first used as an industrial building or structure’ were substituted for ‘beginning with the time when the building or structure was first used’,

(c) section 274 shall apply—

(i) as if in subsection (1)(b)(i)(II) of that section ‘after the building or structure was first used as an industrial building or structure’ were substituted for ‘after the building or structure was first used’, and

(ii) as if in subsection (5)(a) of that section ‘when the building or structure was first used as an industrial building or structure’ were substituted for ‘when the building or structure was first used for any purpose’,

(d) section 277 shall apply—

(i) as if in subsection (2) of that section ‘when the building or structure is first used as an industrial building or structure’ were substituted for ‘when the building or structure is first used’, and

(ii) as if in subsection (4)(a) of that section ‘when the building or structure was first used as an industrial building or structure’ were substituted for ‘when the building or structure was first used for any purpose’,

(e) section 278 shall apply as if in subsection (2) of that section ‘before the building or structure is first used as an industrial building or structure’ were substituted for ‘before the building or structure is first used for any purpose’, and

(f) section 279 shall apply as if in subsections (2) and (3) of that section ‘before the building or structure is used as an industrial building or structure or within the period of one year after it commences to be so used’ were substituted for ‘before the building or structure is used or within the period of one year after it commences to be used’ (in each place where it occurs in those subsections).”,

and

(b) in section 372W—

(i) in subsection (1)—

(I) by the deletion in paragraph (a) of “and” where it last occurs, and

(II) by the substitution of the following for paragraph (c):

“(c) (i) is in use for the purposes of the retailing of goods or the provision of services only within the State but excluding any building or structure in use—

(I) as offices, or

(II) for the provision of mail order or financial services,

or

(ii) is let on bona fide commercial terms for such use as is referred to in subparagraph (i) and for such consideration as might be expected to be paid in a letting of the building or structure negotiated on an arm's length basis,”,

(ii) in subsection (2)(a), by the substitution of “subsections (3) to (5A)” for “subsections (3) to (5)”,

(iii) in subsection (5)(a), by the insertion after “was first used” of “or, where subsection (5A) applies, first used as a qualifying premises”, and

(iv) by the insertion of the following after subsection (5):

“(5A) Notwithstanding subsections (2)(a), (4)(a) and (5), where it is shown in respect of a building or structure which is to be a qualifying premises that the relevant local authority is unable to give the certificate in writing referred to in subsection (1)(a) relating to compliance with certain requirements at a park and ride facility which would be a qualifying park and ride facility but for the delay referred to in section 372V(4A), then, in relation to capital expenditure incurred in the qualifying period on the construction or refurbishment of the building or structure—

(a) section 271 shall apply—

(i) as if in the definition of ‘appropriate chargeable period’ in subsection (1) of that section ‘the chargeable period in which the building or structure becomes an industrial building or structure’ were substituted for ‘the chargeable period related to the expenditure’, and

(ii) as if in subsection (6) of that section ‘if, within 5 years of the building or structure coming to be used, it is not an industrial building or structure’ were substituted for ‘if the building or structure, when it comes to be used, is not an industrial building or structure’,

(b) section 272 shall apply as if in subsection (4)(a)(ii) of that section ‘beginning with the time when the building or structure was first used as an industrial building or structure’ were substituted for ‘beginning with the time when the building or structure was first used’,

(c) section 274 shall apply—

(i) as if in subsection (1)(b)(i)(II) of that section ‘after the building or structure was first used as an industrial building or structure’ were substituted for ‘after the building or structure was first used’, and

(ii) as if in subsection (5)(a) of that section ‘when the building or structure was first used as an industrial building or structure’ were substituted for ‘when the building or structure was first used for any purpose’,

(d) section 277 shall apply—

(i) as if in subsection (2) of that section ‘when the building or structure is first used as an industrial building or structure’ were substituted for ‘when the building or structure is first used’, and

(ii) as if in subsection (4)(a) of that section ‘when the building or structure was first used as an industrial building or structure’ were substituted for ‘when the building or structure was first used for any purpose’,

(e) section 278 shall apply as if in subsection (2) of that section ‘before the building or structure is first used as an industrial building or structure’ were substituted for ‘before the building or structure is first used for any purpose’, and

(f) section 279 shall apply as if in subsections (2) and (3) of that section ‘before the building or structure is used as an industrial building or structure or within the period of one year after it commences to be so used’ were substituted for ‘before the building or structure is used or within the period of one year after it commences to be used’ (in each place where it occurs in those subsections).”.

Amendment of Part 10 (income tax and corporation tax: reliefs for renewal and improvement of certain urban areas, certain resort areas, and certain islands) of Principal Act.

59.—(1) Part 10 of the Principal Act is amended—

(a) in section 344(1), in paragraph (c) of the definition of “qualifying period” by the substitution of “31 December 2001” for “31 December 2000”, and “30 September 2001” for “30 September 2000”, and

(b) in Chapter 8—

(i) in section 372M(3)(b), by the substitution of “paragraph (b)” for “paragraph (i)”,

(ii) in section 372P(1), by the substitution in paragraph (c) of the definition of “qualifying premises” of “175 square metres” for “140 square metres”,

(iii) in section 372Q(1), by the substitution in paragraph (b) of the definition of “qualifying premises” of “175 square metres” for “150 square metres”,

(iv) in section 372R(1), by the substitution in paragraph (b) of the definition of “qualifying premises” of “175 square metres” for “150 square metres”, and

(v) in section 372T(1), by the insertion after paragraph (a) of the following:

“(aa) in respect of expenditure incurred on or after 6 April 2001 on the construction or refurbishment of a building or structure or a qualifying premises where any part of such expenditure has been or is to be met, directly or indirectly, by grant assistance from the State or from any other person,”.

(2) (a) Subsection (1)(a) shall be deemed to have applied as on and from 6 April 2000, and

(b) subparagraphs (ii), (iii) and (iv) of subsection (1)(b) shall apply as respects expenditure incurred on or after 6 December 2000, being expenditure which is—

(i) expenditure on the construction of a qualifying premises as defined in section 372P,

(ii) conversion expenditure within the meaning of section 372Q, or

(iii) relevant expenditure within the meaning of section 372R,

as the case may be.

Living over the shop scheme.

60.—Chapter 7 of Part 10 of the Principal Act is amended—

(a) in section 372A—

(i) in subsection (1)—

(I) by the insertion before the definition of “lease” of the following:

“existing building” means a building or structure which—

(a) fronts on to a qualifying street, and

(b) existed on 13 September 2000;

(II) by the insertion after the definition of “multi-storey car park” of the following:

“‘necessary construction’, in relation to an existing building, means one or more of the following:

(a) construction of an extension to the building which does not exceed 30 per cent of the floor area of the building immediately before expenditure on the construction, conversion or refurbishment of the building was incurred, where such extension is necessary for the purposes of facilitating access to, or providing essential facilities in, one or more qualifying premises within the meaning of section 372F or 372I,

(b) construction of an additional storey or additional storeys to the building which was or were, as the case may be, necessary for the restoration or enhancement of the streetscape, or

(c) construction of a replacement building;”,

(III) by the substitution of the following for the definition of “qualifying period”:

“‘qualifying period’ means—

(a) subject to section 372B and in relation to a qualifying area, the period commencing on 1 August 1998 and ending on 31 December 2002, and

(b) subject to 372BA and in relation to a qualifying street, the period commencing on 6 April 2001 and ending on 31 December 2004;”,

(IV) by the insertion before the definition of “refurbishment” of the following:

“‘qualifying street’ means a street specified as a qualifying street under section 372BA;”,

(V) by the substitution in the definition of “refurbishment” of “the building or structure;” for “the building or structure.”, and

(VI) by the insertion after the definition of “refurbishment” of the following:

“‘replacement building’, in relation to a building or structure which fronts on to a qualifying street, means a building or structure or part of a building or structure, as the case may be, which is constructed to replace an existing building, where—

(a) (i) a notice under subsection (1) of section 3 or an order under subsection (5) of that section, of the Local Government (Sanitary Services) Act, 1964 , which required the demolition of the existing building or part of that building, was given or made, as the case may be, on or after 13 September 2000 and before 31 March 2001, and

(ii) the replacement building is consistent with the character and size of the existing building,

or

(b) the demolition of the existing building (being a single storey building) was required for structural reasons, in order to facilitate the construction of an additional storey or additional storeys to the building which was or were, as the case may be, necessary for the restoration or enhancement of the streetscape;

‘relevant local authority’ in relation to a street means, in respect of the county boroughs of Cork, Dublin, Galway, Limerick or Waterford, the corporation of the borough in whose functional area the street is situated;

‘street’ includes part of a street and the whole or part of any road, square, quay or lane.”,

and

(ii) in subsection (2) by the insertion after “This Chapter shall apply” of “in relation to qualifying areas”,

(b) in section 372B(4) by the insertion after “of this Chapter” of “in respect of the construction, refurbishment or conversion of a building, structure or house, the site of which is wholly within a qualifying area,”,

(c) by the insertion of the following after section 372B:

“Qualifying streets.

372BA.—(1) The Minister for Finance may, on the recommendation of the Minister for the Environment and Local Government (which recommendation shall take into consideration proposals submitted by a relevant local authority to that Minister in respect of a street identified by it), by order direct that—

(a) a street described (being a street situated in the functional area of the relevant local authority) in the order shall be a qualifying street for the purposes of one or more sections of this Chapter,

(b) where such a street is to be a qualifying street for the purposes of section 372D, the categories of building or structure mentioned in subsection (2) shall not be a qualifying premises within the meaning of that section, and

(c) as respects any such street so described in the order, the definition of ‘qualifying period’ in section 372A shall be construed as a reference to such period as shall be specified in the order in relation to that street; but no such period specified in the order shall commence before 6 April 2001 or end after 31 December 2004.

(2) The categories of building or structure referred to in subsection (1)(b) shall be buildings or structures—

(a) other than those in use for the purposes of the retailing of goods or the provision of services only within the State,

(b) in use as offices, and

(c) in use for the provision of mail order or financial services.

(3) Every order made by the Minister for Finance under subsection (1) shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the order is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the order is laid before it, the order shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

(4) Notwithstanding an order under subsection (1), no relief from income tax or corporation tax, as the case may be, may be granted in respect of the construction, refurbishment or conversion of a building, structure or house which fronts on to a qualifying street unless the relevant local authority has certified in writing that such construction, refurbishment or conversion is consistent with the aims, objectives and criteria for the Living over the Shop Scheme, as outlined in a circular of the Department of the Environment and Local Government entitled ‘Living Over The Shop Scheme’, reference numbered UR 43A and dated 13 September 2000, or in any further circular of that Department amending paragraph 6 of the first-mentioned circular for the purposes of increasing the aggregate length of street allowable, to the manager of the relevant local authority concerned.”,

(d) in section 372D—

(i) by the insertion in subsection (1), of “, or which fronts on to a qualifying street,” after “qualifying area”, and

(ii) by the insertion of the following after subsection (3):

“(3A) (a) In the case of a qualifying premises which fronts on to a designated street, subsection (2) shall apply in relation to capital expenditure incurred in the qualifying period on the construction or refurbishment of the qualifying premises, only if—

(i) the qualifying premises are comprised in the ground floor of—

(I) an existing building, or

(II) a replacement building,

and

(ii) apart from the capital expenditure incurred in the qualifying period on the construction or refurbishment of the qualifying premises, expenditure is incurred on the upper floor or floors of the existing building or the replacement building, as the case may be, which is—

(I) expenditure on the construction (being necessary construction) of a qualifying premises as defined in section 372F,

(II) conversion expenditure within the meaning of section 372G,

(III) relevant expenditure within the meaning of section 372H, or

(IV) qualifying expenditure within the meaning of section 372I (being qualifying expenditure on necessary construction, or on refurbishment within the meaning of that section),

and in respect of which a deduction has been given, or would on due claim being made be given, under section 372F, 372G, 372H or 372I, as the case may be.

(b) Notwithstanding paragraph (a), subsection (2) shall not apply in relation to so much (if any) of the capital expenditure incurred in the qualifying period on the construction or refurbishment of the qualifying premises as exceeds the amount of the deduction, or the aggregate amount of the deductions, which has been given, or which would on due claim being made be given, under section 372F, 372G, 372H or 372I, as the case may be, in respect of the expenditure on construction (being necessary construction), conversion expenditure, the relevant expenditure or, as the case may be, the qualifying expenditure (being qualifying expenditure on necessary construction, or on refurbishment).”,

(e) in section 372F—

(i) in subsection (1), in the definition of “qualifying premises” by the insertion in paragraph (a) of “, or which fronts on to a qualifying street” after “qualifying area”, and

(ii) in subsection (2), by the insertion after “a qualifying premises” of “the site of which is wholly within a qualifying area, or on the necessary construction of a qualifying premises which fronts on to a qualifying street”,

(f) in section 372G(1) by the insertion in paragraphs (a)(i) and (b)(i) of the definition of “conversion expenditure” of “, or which fronts on to a qualifying street” after “qualifying area” in each case,

(g) in section 372H(1) by the insertion in paragraph (a) of the definition of “specified building” of “, or which fronts on to a qualifying street” after “qualifying area”,

(h) in section 3721—

(i) in subsection (1)—

(I) in the definition of “qualifying expenditure” by the substitution for “local authority;” of the following:

“local authority; but in the case of a qualifying premises which fronts on to a qualifying street or which is comprised in a building or part of a building which fronts on to a qualifying street, this definition shall apply as if the reference to ‘construction’ were a reference to ‘necessary construction’.”,

and

(II) in the definition of “qualifying premises” by the insertion in paragraph (a) of “, or which fronts on to a qualifying street or which is comprised in a building or part of a building which fronts on to a qualifying street” after “qualifying area”,

and

(ii) in subsection (2)(a), by the substitution of the following for subparagraph (i):

“(i) in the case where the qualifying expenditure has been incurred—

(I) on the construction of a qualifying premises the site of which is wholly within a qualifying area, 5 per cent of the amount of that expenditure, and

(II) on the necessary construction of a qualifying premises which fronts on to a qualifying street or which is comprised in a building or part of a building which fronts on to a qualifying street, 10 per cent of the amount of that expenditure.”,

(i) in section 372J by the insertion after subsection (5) of the following:

“(5A) A house which fronts on to a qualifying street or which is comprised in a building or part of a building which fronts on to a qualifying street shall not be a qualifying premises for the purposes of section 372F, 372G, 372H or 372I unless—

(a) the house is comprised in the upper floor or floors of an existing building or a replacement building, and

(b) the ground floor of such building is in use for commercial purposes, or, where it is temporarily vacant, it is subsequently so used.”,

and

(j) in section 372K(1), by the insertion after paragraph (a) of the following:

“(aa) in respect of expenditure incurred on or after 6 April 2001 on the construction or refurbishment of a building or structure or a qualifying premises the site of which is wholly within a qualifying area where any part of such expenditure has been or is to be met, directly or indirectly, by grant assistance from the State or from any other person,”.

Amendment of Part 11 (capital allowances and expenses for certain road vehicles) of Principal Act.

61.—(1) Part 11 of the Principal Act is amended—

(a) in section 373(2)—

(i) in paragraph (l), by the substitution of “mechanically propelled vehicle;” for “mechanically propelled vehicle.”,

(ii) subject to subparagraph (iii), by the insertion of the following after paragraph (l):

“(m) £17,000, where the expenditure was incurred—

(i) in an accounting period ending on or after 1 January 2001, or

(ii) in a basis period for the year of assessment 2000-2001 or for a subsequent year of assessment, where that basis period ends on or after 1 January 2001.”,

and

(iii) as respects the year of assessment 2002 and subsequent years of assessment by the substitution in paragraph (m) of “€21,585.55” for “£17,000” (as inserted by subparagraph (ii)),

(b) in subsection (1) of section 376—

(i) by the insertion before the definition of “qualifying expenditure” of the following:

“‘basis period’ has, subject to any necessary modification, the meaning assigned to it in section 306;”,

(ii) in the definition of “relevant amount”—

(I) by the substitution in paragraph (e) of “£16,500,” for “£16,500;”, and

(II) subject to clause (III), by the insertion of the following after paragraph (e):

“(f) £17,000, in relation to qualifying expenditure incurred—

(i) in an accounting period ending on or after 1 January 2001, or

(ii) in a basis period for the year of assessment 2000-2001 or for a subsequent year of assessment, where that basis period ends on or after 1 January 2001;”,

and

(III) as respects the year of assessment 2002 and subsequent years of assessment by the substitution in paragraph (f) of “€21,585.55” for “£17,000” (as inserted by clause (II)),

and

(c) in subsection (2) of section 376, by the substitution of the following for that subsection:

“(2) Where for any year of assessment or accounting period a deduction is claimed by any person in respect of qualifying expenditure and that expenditure is incurred in respect of a vehicle the relevant cost of which exceeds the relevant amount, the amount of the deduction to be allowed in respect of that qualifying expenditure shall be reduced by an amount which bears to the amount of the qualifying expenditure the same proportion as the excess of the relevant cost of the vehicle over the relevant amount bears to the relevant cost of the vehicle.”.

(2) Subsection (1)(c) shall apply in relation to qualifying expenditure incurred—

(a) in an accounting period ending on or after 1 January 2001, or

(b) in a basis period for the year of assessment 2000-2001 or for a subsequent year of assessment, where that basis period ends on or after 1 January 2001.

Amendment of provisions relating to treatment of certain losses and certain capital allowances.

62.—(1) Chapter 4 of Part 12 of the Principal Act is amended—

(a) in section 405—

(i) in subsection (1)—

(I) by the substitution of “Subject to subsections (2) and (3)” for “Subject to subsection (2)”, and

(II) by the substitution of the following for paragraph (a):

“(a) sections 305(1)(b), 308(4) and 420(2) shall not apply as respects that allowance, and”,

and

(ii) by the insertion after subsection (2) of the following:

“(3) This section shall not apply to a building or structure which is in use as a holiday cottage and comprised in premises first registered on or after 6 April 2001 in a register of approved holiday cottages established by Bord Fáilte Éireann under Part III of the Tourist Traffic Act, 1939 , where, prior to such premises becoming so registered—

(a) the building or structure was a qualifying premises within the meaning of section 353, by virtue of being in use for the purposes of the operation of a tourist accommodation facility specified in a list published under section 9 of the Tourist Traffic Act, 1957 , and

(b) the provisions of section 355(4) did not apply to expenditure incurred on the acquisition, construction or refurbishment of that building or structure, by virtue of the provisions of section 355(5).”.

(b) by the substitution of the following for section 406:

“Restriction on use of capital allowances on fixtures and fittings for furnished residential accommodation.

406.—Where a person incurs capital expenditure of the type to which subsection (7) of section 284 applies and an allowance is to be made in respect of that expenditure under that section, sections 305(1)(b), 308(4) and 420(2) shall not apply as respects that allowance.”,

and

(c) in section 409A—

(i) in subsection (2)—

(I) subject to clause (II), as respects an allowance to be made for the year of assessment 2001 and subsequent years of assessment, by the substitution of the following for that subsection:

“(2) Subject to subsection (5), in relation to any allowance to be made to an individual under Chapter 1 of Part 9 for any year of assessment in respect of capital expenditure incurred on or after 3 December 1997, on a specified building, section 305 shall apply as if the following were substituted for subsection (1)(b) of that section:

(b) (i) Notwithstanding paragraph (a), where an allowance referred to in that paragraph is available primarily against income of the specified class and the amount of the allowance is greater than the amount of the person's income of that class for the first-mentioned year of assessment (after deducting or setting off any allowances for earlier years), then the person may, by notice in writing given to the inspector not later than 2 years after the end of the year of assessment, elect that the excess or £18,500, whichever is the lower, shall be deducted from or set off—

(I) against the individual's other income for that year of assessment, or

(II) where the individual, or, being a husband or wife, the individual's spouse, is assessed to tax in accordance with section 1017, firstly, against the individual's other income for that year of assessment and, subsequently, against the income of the individual's husband or wife, as the case may be, for that year of assessment.

(ii) Where an election is made in accordance with subparagraph (i), the excess or £18,500, whichever is the lower, shall be deducted from or set off against the income referred to in clause (I) or (II) of that subparagraph, as the case may be, and tax shall be discharged or repaid accordingly and only the balance, if any, of the amount of the allowance referred to in paragraph (a) over all the income referred to in the said clause (I) or (II), as the case may be, for that year of assessment shall be deducted from or set off against the person's income of the specified class for succeeding years.'.”,

(II) as respects an allowance to be made for the year of assessment 2002 and subsequent years of assessment, by the substitution of “€31,750” for “£18,500” (as inserted by clause (I)) in each place where it occurs,

and

(ii) in subsection (3):

(I) as respects an allowance to be made for the year of assessment 2001, by the substitution of “£18,500” for “£25,000”, and

(II) as respects an allowance to be made for the year of assessment 2002 and subsequent years of assessment, by the substitution of “€31,750” for “£18,500” (as inserted by clause (I)).

(2) Paragraphs (e) and (f) of section 40 of the Finance Act, 2000 , are repealed.

Relief for certain rented accommodation.

63.—The Principal Act is amended by the insertion after Part 11A of the following:

“PART 11B

Income Tax and Corporation Tax: Deduction for Expenditure on Refurbishment of Certain Residential Accommodation

Interpretation (Part 11B).

380G.—In this Part—

‘house’ includes any building or part of a building used or suitable for use as a dwelling and any outoffice, yard, garden or other land appurtenant to or usually enjoyed with that building or part of a building;

‘lease’, ‘lessee’, ‘lessor’, ‘premium’ and ‘rent’ have the same meanings, respectively, as in Chapter 8 of Part 4;

‘market value’, in relation to a house, means the price which the unencumbered fee simple of the house would fetch if sold in the open market in such manner and subject to such conditions as might reasonably be calculated to obtain for the vendor the best price for the house, less the part of that price which would be attributable to the acquisition of, or of rights in or over, the land on which the house is constructed;

‘qualifying period’ means the period commencing on 6 April 2001;

‘refurbishment’, in relation to a house, means any work of construction, reconstruction, repair or renewal, including the provision or improvement of water, sewerage or heating facilities, carried out in the course of the repair or restoration, or maintenance in the nature of repair or restoration, of the house or for the purposes of compliance with the requirements of the Housing (Standards for Rented Houses) Regulations, 1993 ( S.I. No. 147 of 1993 ).

Rented residential accommodation: deduction for certain expenditure on refurbishment.

380H.—(1) In this section and section 380I—

‘non-residential unit’ has the same meaning that it has in the definition of ‘relevant expenditure’;

‘qualifying lease’, in relation to a house, means, subject to section 380I(2), a lease of the house the consideration for the grant of which consists—

(a) solely of periodic payments all of which are or are to be treated as rent for the purposes of Chapter 8 of Part 4, or

(b) of payments of the kind mentioned in paragraph (a), together with a payment by means of a premium—

(i) which is payable on or subsequent to the date of the completion of the refurbishment to which the relevant expenditure relates or which, if payable before that date, is so payable by reason of or otherwise in connection with the carrying out of the refurbishment, and

(ii) which does not exceed 10 per cent of the market value of the house on the date of completion of the refurbishment to which the relevant expenditure relates and, in the case of a house which is a part of a building and is not saleable apart from the building of which it is a part, the market value of the house on that date shall for the purposes of this subparagraph be taken to be an amount which bears to the market value of the building on that date the same proportion as the total floor area of the house bears to the total floor area of the building;

‘qualifying premises’ means, subject to subsection (3), to paragraph (a) and (b) of subsection (4) and to subsection (5) of section 380I, a house—

(a) which is used solely as a dwelling,

(b) which on the date of completion of the refurbishment to which the relevant expenditure relates is let (or, if not let on that date, is, without having been used after that date, first let) in its entirety under a qualifying lease and thereafter throughout the remainder of the relevant period (except for reasonable periods of temporary disuse between the ending of one qualifying lease and the commencement of another such lease) continues to be let under such a lease,

but excluding any house on which expenditure has been incurred, where that expenditure has qualified or would on due claim being made qualify for relief under any provision of Parts 10 or 11A;

‘relevant expenditure’ means, subject to section 380I(7), expenditure incurred on the refurbishment of a specified building, other than expenditure attributable to any part (in this section referred to as a ‘non-residential unit’) of the building which on completion of the refurbishment is not a house, and for the purposes of this definition where expenditure is attributable to the specified building in general (and not directly to any particular house or non-residential unit comprised in the building on completion of the refurbishment), such an amount of that expenditure shall be deemed to be attributable to a non-residential unit as bears to the whole of that expenditure the same proportion as the total floor area of the non-residential unit bears to the total floor area of the building;

‘relevant period’, in relation to a qualifying premises, means the period of 10 years beginning on the date of the completion of the refurbishment to which the relevant expenditure relates or, if the premises was not let under a qualifying lease on that date, the period of 10 years beginning on the date of the first such letting after the date of such completion;

‘specified building’ means a building or part of a building—

(a) in which before the refurbishment to which the relevant expenditure relates there is one or more than one house, and

(b) which on completion of that refurbishment contains (whether in addition to any non-residential unit or not) one or more than one house.

(2) Subject to subsection (3), where a person, having made a claim in that behalf, proves to have incurred relevant expenditure in relation to a house which is a qualifying premises—

(a) such person shall, subject to paragraph (b), be entitled, in computing for the purposes of section 97(1) the amount of a surplus or deficiency in respect of the rent from the qualifying premises, to a deduction of so much (if any) of the expenditure as is to be treated under section 380I(6) or under this section as having been incurred by such person in the qualifying period,

(b) the deduction to which paragraph (a) refers shall be given for the chargeable period in which the expenditure is incurred or, if the premises was not let under a qualifying lease during that chargeable period, the chargeable period beginning on the date of the first such letting after the expenditure is incurred, and for any of the subsequent chargeable periods in which the qualifying premises in respect of which the person incurred the relevant expenditure continues to be a qualifying premises and the deduction shall be of an amount equal to 15 per cent of the expenditure to which paragraph (a) refers; but, the total amount to be deducted shall not exceed 100 per cent of that expenditure,

(c) where a chargeable period consists of a period less than one year in length, the amount of the deduction to which paragraph (b) refers shall not exceed such portion of the amount specified in that paragraph as bears to that amount the same proportion as the length of the chargeable period bears to a period of one year, and

(d) Chapter 8 of Part 4 shall apply as if the deduction referred to in paragraph (a) were a deduction authorised by section 97(2).

(3) (a) This subsection shall apply to any premium or other sum which—

(i) is payable, directly or indirectly, under a qualifying lease or otherwise under the terms subject to which the lease is granted, to or for the benefit of the lessor or to or for the benefit of any person connected with the lessor, and

(ii) is payable on or subsequent to the date of completion of the refurbishment to which the relevant expenditure relates or, if payable before that date, is so payable by reason of or otherwise in connection with the carrying out of the refurbishment.

(b) Where any premium or other sum to which this subsection applies, or any part of such premium or such other sum, is not or is not treated as rent for the purposes of section 97, the relevant expenditure to be treated as having been incurred in the qualifying period in relation to the qualifying premises to which the qualifying lease relates shall be deemed for the purposes of subsection (2) to be reduced by the lesser of—

(i) the amount of such premium or such other sum or, as the case may be, that part of such premium or such other sum, and

(ii) the amount which bears to the amount mentioned in subparagraph (i) the same proportion as the amount of the relevant expenditure actually incurred in relation to the qualifying premises, which is to be treated under section 380I(6) as having been incurred in the qualifying period bears to the whole of the relevant expenditure incurred in relation to the qualifying premises.

(4) Where a qualifying premises forms a part of a building or is one of a number of buildings in a single development, or forms a part of a building which is itself one of a number of buildings in a single development, there shall be made such apportionment as is necessary of the relevant expenditure incurred on that building or those buildings for the purposes of determining the relevant expenditure incurred in relation to the qualifying premises.

(5) Where a house is a qualifying premises and at any time during the relevant period in relation to the premises either of the following events occurs—

(a) the house ceases to be a qualifying premises, or

(b) the ownership of the lessor's interest in the house passes to any other person but the house does not cease to be a qualifying premises,

then, the person who before the occurrence of the event received or was entitled to receive a deduction under subsection (2) in respect of relevant expenditure incurred in relation to the qualifying premises shall be deemed to have received on the day before the day of the occurrence of the event an amount as rent from the qualifying premises equal to the amount of the deduction.

(6) Where the event mentioned in subsection (5)(b) occurs in the relevant period in relation to a house which is a qualifying premises, the person to whom the ownership of the lessor's interest in the house passes shall be treated for the purposes of this section as having incurred in the qualifying period an amount of relevant expenditure in relation to the house equal to the amount of the relevant expenditure which under section 380I(6) or under this section (apart from subsection (3)(b)) the lessor was treated as having incurred in the qualifying period in relation to the house; but, in the case of a person who purchases such a house, the amount so treated as having been incurred by such person shall not exceed—

(a) the net price paid by such person on the purchase, or

(b) in case only a part of the relevant expenditure incurred in relation to the house is to be treated under section 380I(6) as having been incurred in the qualifying period, the amount which bears to that net price the same proportion as that part bears to the whole of the relevant expenditure incurred in relation to the house.

(7) Where relevant expenditure is incurred in relation to a house and before the house is used subsequent to the incurring of that expenditure it is sold, the person who purchases the house shall be treated for the purposes of this section as having incurred in the qualifying period relevant expenditure in relation to the house equal to the lesser of—

(a) the amount of such expenditure which is to be treated under section 380I(6) as having been incurred in the qualifying period, and

(b) (i) the net price paid by such person on the purchase, or

(ii) in case only a part of the relevant expenditure incurred in relation to the house is to be treated under section 380I(6) as having been incurred in the qualifying period, the amount which bears to that net price the same proportion as that part bears to the whole of the relevant expenditure incurred in relation to the house;

but, where the house is sold more than once before it is used subsequent to the incurring of the relevant expenditure in relation to the house, this subsection shall apply only in relation to the last of those sales.

(8) This section shall not apply in the case of any refurbishment unless planning permission, in so far as it is required, in respect of the work carried out in the course of the refurbishment has been granted under the Local Government (Planning and Development) Acts, 1963 to 1999, or the Planning and Development Act, 2000 .

(9) Expenditure in respect of which a person is entitled to relief under this section shall not include any expenditure in respect of which any person is entitled to a deduction, relief or allowance under any other provision of the Tax Acts.

(10) Section 380I shall apply for the purposes of supplementing this section.

Provisions supplementary to section 380H.

380I.—(1) A lease shall not be a qualifying lease for the purposes of section 380H if the terms of the lease contain any provision enabling the lessee or any other person, directly or indirectly, at any time to acquire any interest in the house to which the lease relates for a consideration less than that which might be expected to be given at that time for the acquisition of the interest if the negotiations for that acquisition were conducted in the open market at arm's length.

(2) A house shall not be a qualifying premises for the purposes of section 380H if—

(a) (i) it is occupied as a dwelling by any person connected with the person entitled, in relation to the expenditure incurred on the refurbishment of the house, to a deduction under section 380H(2), and

(ii) the terms of the qualifying lease in relation to the house are not such as might have been expected to be included in the lease if the negotiations for the lease had been at arm's length,

or

(b) the lessor has not complied with all the requirements of the following Regulations—

(i) the Housing (Standards for Rented Houses) Regulations, 1993 ( S.I. No. 147 of 1993 ),

(ii) the Housing (Rent Books) Regulations, 1993 ( S.I. No. 146 of 1993 ), and

(iii) the Housing (Registration of Rented Houses) Regulations, 1996 ( S.I. No. 30 of 1996 ), as amended by the Housing (Registration of Rented Houses) (Amendment) Regulations, 2000 ( S.I. No. 12 of 2000 ).

(3) (a) A house shall not be a qualifying premises for the purposes of section 380H unless it complies with such conditions, if any, as may be determined by the Minister for the Environment and Local Government from time to time for the purposes of section 5 of the Housing (Miscellaneous Provisions) Act, 1979 , in relation to standards for improvements of houses and the provision of water, sewerage and other services in houses.

(b) A house shall not be a qualifying premises for the purposes of section 380H unless the house or, in a case where the house is one of a number of houses in a single development, the development of which it is a part complies with such guidelines as may from time to time be issued by the Minister for the Environment and Local Government, with the consent of the Minister for Finance, in relation to the refurbishment of houses as qualifying premises for the purposes of section 380H and, without prejudice to the generality of the foregoing, such guidelines may include provisions in relation to the refurbishment of houses, and the provision of ancillary facilities and amenities in relation to houses.

(4) A house shall not be a qualifying premises for the purposes of section 380H unless persons authorised in writing by the Minister for the Environment and Local Government for the purposes of that section are permitted to inspect the house at all reasonable times on production, if so requested by a person affected, of their authorisations.

(5) For the purposes of determining, in relation to any claim under section 380H(2), whether and to what extent expenditure incurred on the refurbishment of a qualifying premises is incurred or not incurred during the qualifying period, only such an amount of that expenditure as is properly attributable to work on the refurbishment of the premises actually carried out during the qualifying period shall be treated as having been incurred.

(6) For the purposes of section 380H, other than the purposes mentioned in subsection (5), relevant expenditure incurred in relation to the refurbishment of a qualifying premises shall be deemed to have been incurred on the date of the commencement of the relevant period, in relation to the premises, determined as respects the refurbishment to which the relevant expenditure relates.

(7) For the purposes of section 380H, expenditure shall not be regarded as incurred by a person in so far as it has been or is to be met, directly or indirectly, by the State, by any board established by statute or by any public or local authority.

(8) Section 555 shall apply as if a deduction under section 380H(2) were a capital allowance and as if any rent deemed to have been received by a person under section 380H(5) were a balancing charge.

(9) An appeal to the Appeal Commissioners shall lie on any question arising under this section or under section 380H (other than a question on which an appeal lies under section 18 of the Housing (Miscellaneous Provisions) Act, 1979 ) in the like manner as an appeal would lie against an assessment to income tax or corporation tax, and the provisions of the Tax Acts relating to appeals shall apply accordingly.

Provision against double relief.

380J.—Where relief is given by virtue of any provision of this Part in relation to expenditure incurred on any premises, relief shall not be given in respect of that expenditure under any other provision of the Tax Acts.”.

Capital allowances for certain hospitals.

64.—(1) Part 9 of the Principal Act is amended—

(a) in section 268—

(i) in subsection (1)—

(I) in paragraph (h), by the deletion of “or,” where it last occurs,

(II) in paragraph (i), by the substitution of “that Act, or” for “that Act.”, and

(III) by the insertion after paragraph (i) of the following:

“(j) for the purposes of a trade which consists of the operation or management of a qualifying hospital,”,

(ii) by the insertion after subsection (2) of the following:

“(2A) In this section—

‘health board’ means—

(a) a health board established under the Health Act, 1970 ,

(b) the Eastern Regional Health Authority,

(c) an Area Health Board established under the Health (Eastern Regional Health Authority) Act, 1999 , or

(d) the Health Board Executive;

‘qualifying hospital’ means a hospital (within the meaning of the Tobacco (Health Promotion and Protection) Regulations, 1995 ( S.I. No. 359 of 1995 )) which—

(a) is a private hospital (within the meaning of the Health Insurance Act, 1994 (Minimum Benefits) Regulations, 1996 ( S.I. No. 83 of 1996 )),

(b) is operated or managed by a body of persons, or trust, established for charitable purposes only and which, by virtue of section 208, is entitled to exemption from income tax or corporation tax in respect of the profits or gains derived from the operation or management of the hospital,

(c) has the capacity to provide and normally provides medical and surgical services to persons every day of the year,

(d) has the capacity to provide out-patient services and accommodation on an over-night basis of not less than 100 in-patient beds,

(e) contains an operating theatre or theatres and related on-site diagnostic and therapeutic facilities,

(f) contains facilities to provide not less than 5 of the following services:

(i) accident and emergency,

(ii) cardiology and vascular,

(iii) eye, ear, nose and throat,

(iv) gastroenterology,

(v) geriatrics,

(vi) haematology,

(vii) maternity,

(viii) medical,

(ix) neurology,

(x) oncology,

(xi) orthopaedic,

(xii) respiratory,

(xiii) rheumatology, and

(xiv) paediatric,

(g) undertakes to the health board in whose functional area it is situated—

(i) to make available annually, for the treatment of persons who have been awaiting in-patient or out-patient hospital services as public patients, not less than 20 per cent of its capacity, subject to service requirements to be specified by the health board in advance and to the proviso that nothing in this subparagraph shall require the health board to take up all or any part of the capacity made available to the health board by the hospital, and

(ii) in relation to the fees to be charged in respect of the treatment afforded to any such person, that such fees shall not be more than 90 per cent of the fees which would be charged in respect of similar treatment afforded to a person who has private medical insurance,

and

(h) in respect of which that health board, in consultation with the Minister for Health and Children and with the consent of the Minister for Finance, gives a certificate in writing stating that it is satisfied that the hospital complies with the conditions mentioned in paragraphs (a), (c), (d), (e), (f) and (g),

but does not include any part of the hospital which consists of consultants' rooms or offices.”,

and

(iii) in subsection (9)—

(I) in paragraph (e), by the deletion of “and” where it last occurs,

(II) in paragraph (f), by the substitution of “1998, and” for “1998.”, and

(III) by the insertion after paragraph (f) of the following:

“(g) by reference to paragraph (j), as respects capital expenditure incurred on or after the date of the coming into operation of section 64 of the Finance Act, 2001.”,

(b) in section 272—

(i) in subsection (3)—

(I) in paragraph (f), by the deletion of “and”,

(II) in paragraph (g), by the substitution of “subsection (2)(c), and” for “subsection (2)(c).”, and

(III) by the insertion after paragraph (g) of the following:

“(h) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(j), 15 per cent of the expenditure referred to in subsection (2)(c).”,

and

(ii) in subsection (4)—

(I) in paragraph (f), by the deletion of “and”,

(II) in paragraph (g)(ii)(II), by the substitution of “1998,” for “1998.”, and

(III) by the insertion after paragraph (g) of the following:

“and

(h) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(j), 7 years beginning with the time when the building or structure was first used.”,

and

(c) in section 274(1)(b)—

(i) in subparagraph (v)(II), by the deletion of “and”,

(ii) in subparagraph (vi)(II)(B), by the substitution of “1998,” for “1998.”, and

(iii) by the insertion after subparagraph (vi) of the following:

“and

(vii) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(j), 10 years beginning with the time when the building or structure was first used.”.

(2) This section shall come into operation on such day as the Minister for Finance may by order appoint.

Amendment of section 420 (losses, etc. which may be surrendered by means of group relief) of Principal Act.

65.—(1) Section 420 of the Principal Act is amended by the substitution for subsection (1) of the following:

“(1) Where in any accounting period the surrendering company has incurred a loss, computed as for the purposes of section 396(2), in carrying on a trade in respect of which the company is within the charge to corporation tax, 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; but this subsection shall not apply—

(a) to so much of a loss as is excluded from section 396(2) by section 396(4) or 663, or

(b) so as to reduce the profits of a claimant company which carries on life business (within the meaning of section 706) by an amount greater than the amount of such profits (before a set off under this subsection) computed in accordance with Case I of Schedule D and section 710(1).”.

(2) This section shall be deemed to have applied as respects accounting periods commencing on or after 1 January 1999.

Amendment of section 594 (foreign life assurance and deferred annuities: taxation and returns) of Principal Act.

66.—(1) Section 594 of the Principal Act is amended—

(a) in subsection (1)—

(i) by the deletion in paragraph (c)(ii) of “, on or after the 20th day of May, 1993”,

(ii) by the insertion after paragraph (c)(ii) of the following subparagraphs:

“(iii) Subsection (2) shall apply as if section 573(2)(b) had not been enacted.

(iv) For the purposes of subsection (2)—

(I) there shall be a disposal of or of an interest in the rights of a policy of assurance, where benefits are payable under the policy, and

(II) where at any time, a policy of assurance, or an interest therein, gives rise to benefits in respect of death or disability, either on or before maturity of the policy, the amount or value of such benefits which shall be taken into account for the purposes of determining the amount of a gain under that subsection shall be the excess of the value of the policy or, as the case may be, the interest therein, immediately before that time, over the value of the policy or, as the case may be, the interest therein, immediately after that time.

(v) For the purposes of subparagraph (iv), the value of a policy or of an interest therein at any time means—

(I) in the case of a policy which has a surrender value, the surrender value of the policy or, as the case may be, of the interest therein, at that time, and,

(II) in the case of a policy which does not have a surrender value, the market value of the rights or other benefits conferred by the policy or, as the case may be, the interest therein, at that time.”,

and

(iii) by the insertion after paragraph (f) of the following:

“(g) Where a policy was issued or a contract made before 20 May 1993, only so much of the gain on disposal as accrued on or after 20 March 2001 shall be a chargeable gain.”,

(b) by the deletion of subsection (3), and

(c) in subsection (4) by the substitution for paragraph (a) of the following:

“(a) in this subsection, ‘reinsurance contract’ means any contract or other agreement for reassurance or reinsurance in respect of—

(i) any policy of assurance on the life of any person, or

(ii) any class of such policies, not being new basis business within the meaning of section 730A.”.

(2) (a) In this section “chargeable period” has the same meaning as in section 321(2).

(b) This section—

(i) as respects paragraph (a), shall apply as on and from 20 March 2001,

(ii) as respects paragraph (b), shall apply in respect of any chargeable period commencing on or after 15 February 2001, and

(iii) as respects paragraph (c), shall be deemed to have applied as on and from 1 January 2001.

Amendment of Part 26 (life assurance companies) of Principal Act.

67.—Part 26 of the Principal Act is amended by the insertion after Chapter 5 of the following Chapter:

“Chapter 6

Certain Foreign Life Policies — Taxation and Returns

Interpretation and application.

730H.—(1) In this Chapter—

‘chargeable period’ has the same meaning as in section 321(2);

‘EEA Agreement’ means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993;

‘EEA state’ means a State, other than the State, which is a Contracting Party to the EEA Agreement;

‘foreign life policy’ means a policy of assurance on the life of a person commenced—

(a) by a branch or agency, carrying on business in an offshore state, of an assurance company, or

(b) by an assurance company carrying on business in an offshore state, other than by its branch or agency carrying on business in the State;

‘OECD’ means the organisation known as the Organisation for Economic Co-operation and Development;

‘offshore state’ means a State other than the State which is—

(i) a Member State of the European Communities,

(ii) a State which is an EEA state, or

(iii) a State which is a member of the OECD, the government of which have entered into arrangements having the force of law by virtue of section 826;

‘relevant payment’ means any payment made to a person in respect of a foreign life policy where such payments are made annually or at more frequent intervals, other than a payment made in consideration of the disposal, in whole or in part, of the foreign life policy;

‘return of income’ has the meaning assigned to it by section 1084;

‘specified return date for the chargeable period’ has the meaning assigned to it by section 950;

‘standard rate per cent’ has the meaning assigned to it by section 4.

(2) For the purposes of this Chapter—

(a) there shall be a disposal of an asset if there would be such a disposal for the purposes of the Capital Gains Tax Acts,

(b) an income shall be correctly included in a return made by a person, only where that income is included in a return of income made by the person on or before the specified return date for the chargeable period in which the income arises, and

(c) details of a disposal shall be correctly included in a return made by a person, only where details of the disposal are included in a return of income made by the person or, where the person has died, his or her executor or administrator, on or before the specified return date for the chargeable period in which the disposal is made.

Returns on acquisition of foreign life policy.

730I.—Where in any chargeable period a person acquires a foreign life policy, the person shall, notwithstanding anything to the contrary in section 950 or 1084, be deemed for that chargeable period to be a chargeable person for the purposes of sections 951 and 1084, and the return of income to be delivered by the person for that chargeable period shall include the following particulars—

(a) the name and address of the person who commenced the foreign life policy,

(b) a description of the terms of the foreign life policy including premiums payable, and

(c) the name and address of the person through whom the foreign life policy was acquired.

Payment in respect of foreign life policy.

730J.— Where on or after 1 January 2001 a person who has a foreign life policy is in receipt of a payment in respect of the foreign life policy, then—

(a) where the person is not a company, and—

(i) the income represented by the payment is correctly included in a return made by the person, then, notwithstanding section 15, the rate of income tax to be charged on the income shall be—

(I) where the payment is a relevant payment, the standard rate per cent, and

(II) where the payment is not a relevant payment and is not made in consideration of the disposal, in whole or in part, of the foreign life policy, at the rate determined by the formula—

(S + 3) per cent,

where S is the standard rate per cent,

and

(ii) where the income represented by the payment is not correctly included in a return made by the person, the income shall be charged to income tax at a rate determined by section 15,

and

(b) where the person is a company, the income represented by the payment shall be charged to tax under Case III of Schedule D.

Disposal of foreign life policy.

730K.—(1) Where on or after 1 January 2001 a person disposes, in whole or in part, of a foreign life policy, and the disposal gives rise to a gain computed in accordance with subsection (2), and details of the disposal have been correctly included in a return made by the person, then notwithstanding section 594, the amount of the gain shall be treated as an amount of income chargeable to tax under Case IV of Schedule D, and where the person is not a company, the rate of income tax to be charged on that income shall be the rate determined by the formula—

(S + 3) per cent,

where S is the standard rate per cent.

(2) The amount of the gain accruing on a disposal referred to in subsection (1) is the amount of the relevant gain (within the meaning of section 594(2)) which would be computed if the gain accruing on the disposal were computed for the purposes of that section.

(3) Notwithstanding sections 538 and 546, where apart from this subsection the effect of any computation under subsection (2) would be to produce a loss, the gain on the disposal referred to in subsection (1) shall be treated as nil and accordingly for the purposes of this Chapter no loss shall be treated as accruing on such disposal.

(4) Where, as a result of a disposal by a person, an amount of income is chargeable to tax under Case IV of Schedule D in accordance with subsection (1), that amount shall not be reduced by a claim made by the person—

(a) where the person is not a company, under section 381 or 383, or

(b) where the person is a company, under section 396 or 399.

(5) Where an individual is chargeable to tax in accordance with subsection (1) in respect of an amount of income—

(a) the tax thereby payable, in so far as it is paid, shall be treated as an amount of capital gains tax paid for the purposes of section 63 of the Finance Act, 1985 , and

(b) that amount of income shall not be included in reckonable income (within the meaning of the Health Contributions Regulations, 1979 ( S.I. No. 107 of 1979 )) for the purposes of those Regulations.”.

(2) This section shall be deemed to have applied as on and from 1 January 2001.

Amendment of section 723 (special investment policies) of Principal Act.

68.—(1) Section 723 of the Principal Act is amended—

(a) by the deletion in subsection (1) of the definition of “relevant period”,

(b) by the substitution in subsection (2) for paragraph (g) of the following paragraph:

“(g) the aggregate of consideration given for shares which are, at any time on or after 1 February 1996 and before 31 December 2000, assets of the fund shall not be less than—

(i) as respects qualifying shares, 55 per cent, and

(ii) as respects specified qualifying shares, 10 per cent,

of the aggregate of the consideration given for the assets which are assets of the fund at that time,”,

and

(c) in subsection (3) by the deletion of paragraph (c).

(2) This section shall be deemed to have applied as on and from 1 January 2001.

Amendment of section 730A (profits of life business: new basis) of Principal Act.

69.—(1) Section 730A of the Principal Act is amended in subsection (1)—

(a) in the definition of “new basis business”—

(i) in paragraph (a) by the substitution for subparagraph (i) of the following:

“(i) all policies and contracts commenced by the assurance company on or after 1 January 2001 except those which refer to industrial assurance business, and”,

and

(ii) in paragraph (c) by the substitution for “from the time it began to carry on life business.” of “from the time it began to carry on life business;”,

(b) by the insertion after the definition of “new basis business” of the following:

“‘sinking fund or capital redemption business’ has the same meaning as in section 3 of the Insurance Act, 1936 .”,

and

(c) by the insertion after subsection (5) of the following:

“(6) Notwithstanding the provisions of Chapter 3 of Part 12, where an assurance company incurs a loss in respect of new basis business, the amount of the loss which may be set off against profits of any other business of the company shall not exceed such amount of those profits computed under the provisions of Case 1 of Schedule D and section 710.

(7) (a) This subsection applies to a company carrying on any mutual life assurance business.

(b) Subject to paragraph (c), in respect of each accounting period of a company to which this subsection applies, one-twentieth of the amount determined under subsection (8)(c) shall be treated as annual profits or gains within Schedule D and shall be chargeable to corporation tax under Case III of that Schedule.

(c) Where for an accounting period the value referred to in subsection (8)(c)(ii) is not less than such value at 31 December 2000, but exceeds the value referred to in subsection (8)(c)(i), an amount equal to one-twentieth of the excess may be deducted from annual profits or gains chargeable to corporation tax by virtue of paragraph (b), of the previous accounting period (so long as it commences on or after 1 January 2001) or a subsequent accounting period.

(8) (a) In this subsection ‘statutory accounts’, in relation to a company means—

(i) in the case of a company (in this definition referred to as the ‘resident company’) resident in the State, the profit and loss account and balance sheet of that company, and

(ii) in the case of a company (in this definition referred to as the ‘non-resident company’) not resident in the State but carrying on a trade in the State through a branch or agency, the profit and loss account and balance sheet of the company,

a report in respect of which is required to be made to the members of the company by an auditor appointed under section 160 of the Companies Act, 1963 , or under the law of the State in which the resident company or non-resident company is incorporated and which corresponds to that section.

(b) For the purposes of this subsection 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 statutory accounts in relation to the company.

(c) The amount referred to in subsection (7)(b) is—

(i) the total value at the end of the accounting period,

less—

(ii) the total value at the beginning of the accounting period,

of all funds the allocation of which to policyholders has not been determined; but in the case of an overseas life assurance company, the values referred to in subparagraphs (i) and (ii) at a time shall be multiplied by the following fraction—

A

B

where—

A   is the liabilities at that time to policyholders whose proposals were made to the company at or through its branch or agency in the State, and

B   is the liabilities at that time to all the company's policyholders.”.

(2) This section shall apply as respects accounting periods commencing on or after 1 January 2001.

Amendment of Chapter 5 (policyholders— new basis) of Part 26 of Principal Act.

70.—(1) Chapter 5 of Part 26 of the Principal Act is amended—

(a) in section 730B by the substitution for subsection (2) of the following:

“(2) Subject to subsection (3), this Chapter applies for the purpose of imposing certain charges to tax in respect of a policy (in this Chapter referred to as a ‘life policy’) which is—

(a) a policy of assurance on the life of any person, or

(b) a policy in respect of sinking fund or capital redemption business,

where the life policy is new basis business of the assurance company which commenced the life policy.”,

(b) by the substitution for section 730C of the following:

“Chargeable event.

730C.—(1) Subject to the provisions of this section, in this Chapter—

(a) ‘chargeable event’, in relation to a life policy, means—

(i) the maturity of the life policy (including where payments are made on death or disability, which payments result in the termination of the life policy),

(ii) the surrender in whole or in part of the rights conferred by the life policy (including where payments are made on death or disability, which payments do not result in the termination of the life policy),

(iii) the assignment in whole or in part, of those rights,

and

(b) in the case of a life policy issued by an assurance company which could have made an election under section 730A(2), but did not so do, a chargeable event shall be deemed to happen on 31 December 2000, where the life policy was commenced before that date.

(2) No account shall be taken for the purposes of subsection (1) of an assignment in whole or in part effected—

(a) by way of security for a debt, or the discharge of a debt secured by the rights concerned, where the debt is a debt due to a financial institution (within the meaning of section 906A),

(b) between a husband and wife,

(c) between the spouses or former spouses concerned (as the case may be), by virtue or in consequence of an order made under Part III of the Family Law (Divorce) Act, 1996 , on or following the granting of a decree of divorce,

(d) between the spouses concerned, by virtue or in consequence of an order made under Part II of the Family Law Act, 1995 , on or following the granting of a decree of judicial separation within the meaning of that Act, or

(e) between the spouses or former spouses concerned (as the case may be), by virtue of an order or other determination of like effect, which is analogous to an order referred to in paragraph (c) or (d), of a court under the law of a territory other than the State made under or in consequence of the dissolution of a marriage or the legal separation of the spouses, being a dissolution or legal separation that is entitled to be recognised as valid in the State.

(3) (a) Where at any time a life policy, or an interest therein, gives rise to benefits in respect of death or disability, the amount or value of such benefits which shall be taken into account for the purposes of determining the amount of a gain under section 730D shall be the excess of the value of the policy or, as the case may be, the interest therein, immediately before that time, over the value of the policy or, as the case may be, the interest therein, immediately after that time.

(b) For the purposes of paragraph (a), the value of a policy or of an interest therein at a time means—

(i) in the case of a policy which has a surrender value, the surrender value of the policy or, as the case may be, of the interest therein, at that time, and

(ii) in the case of a policy which does not have a surrender value, the market value of the rights or other benefits conferred by the policy or, as the case may be, the interest therein, at that time.

(c) In determining the amount or value of benefits payable under a life policy for the purposes of paragraph (a) or (b), no account shall be taken of any amount of appropriate tax which may be required by this Chapter to be deducted from such benefits.”,

(c) in section 730D—

(i) by the substitution for subsection (2) of the following:

“(2) A gain shall not be treated as arising on the happening of a chargeable event in relation to a life policy where—

(a) immediately before the chargeable event, the assurance company which commenced the life policy—

(i) is in possession of a declaration, in relation to the life policy, of a kind referred in section 630E(2), and

(ii) is not in possession of any information which would reasonably suggest that—

(I) the information contained in that declaration is not, or is no longer, materially correct,

(II) the policyholder (within the meaning of section 730E) failed to comply with the undertaking referred to in section 730E(2)(f), or

(III) immediately before the chargeable event the policyholder (within the said meaning) is resident or ordinarily resident in the State,

(b) immediately before the chargeable event, the policy holder is—

(i) a company carrying on life business,

(ii) an investment undertaking (within the meaning of section 639B), or

(iii) a person who is entitled to exemption from income tax by virtue of section 207(1)(b),

and the assurance company which commenced the life policy is in possession of a declaration in relation to the life policy, of a kind referred to in section 730E(3), or

(c) where the life policy is an asset held in a special savings incentive account within the meaning of section 848B (inserted by the Finance Act, 2001) and the assurance company which commenced the life policy is in possession of a declaration of a kind referred to in section 730E(3A).”,

and

(ii) in subsection (4) by the substitution for paragraph (a) of the following:

“(a) For the purposes of subsection (3), the amount of premiums taken into account in determining a gain on the happening of a chargeable event, is where the gain is, or would but for subsection (2) be determined—

(i) under paragraph (c) of subsection (3), an amount equal to the lesser of B and—

(P × B)

V  ,

and

(ii) under paragraph (d) of subsection (3), an amount equal to the lesser of A and—

(P × A)

V  ,

(d) in section 730E—

(i) in subsection (2)—

(I) by the substitution for “section 730D(2)(a)(i)” of “section 730D(2)(a)”,

(II) by the substitution for paragraph (a) of the following:

“(a) is made by the policyholder,”,

and

(III) by the substitution for paragraph (d) of the following:

“(d) declares that the policyholder is not resident and not ordinarily resident in the State at the time of making the declaration,”,

and

(ii) by the substitution for subsection (3) of the following:

“(3) The declaration referred to in section 630D(2)(b) in relation to a life policy is, subject to subsection (4), a declaration in writing to the assurance company which—

(a) is made by the policyholder,

(b) is signed by the policyholder,

(c) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(d) contains the name and address of the policyholder,

(e) declares that the policyholder, at the time the declaration is made, is—

(i) a company carrying on life business,

(ii) an investment undertaking (within the meaning of section 739B), or, as the case may be,

(iii) a person who is entitled to exemption from income tax by virtue of section 207(1)(b),

(f) contains an undertaking that should the policyholder cease to be a person referred to in subparagraph (i), (ii), or as the case may be (iii) of paragraph (e), the assurance company will be advised accordingly, and

(g) contains such other information as the Revenue Commissioners may reasonably require for the purposes of this Chapter.

(3A) The declaration referred to in section 630D(2)(c) in relation to a life policy is a declaration in writing to the assurance company which—

(a) is made by a qualifying savings manager (in this paragraph referred to as the ‘declarer’) within the meaning of section 848B (inserted by the Finance Act, 2001), in respect of the life policy which is an asset held in a special savings incentive account,

(b) is signed by the declarer,

(c) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(d) declares that, at the time the declaration is made, the life policy in respect of which the declaration is made—

(i) is an asset held in a special savings investment account, and

(ii) is managed by the declarer for the individual who is beneficially entitled to the life policy,

(e) contains the name and the address, and the PPS Number (within the meaning of section 223 of the Social Welfare (Consolidation) Act, 1993 ), of the individual referred to in paragraph (d),

(f) contains an undertaking by the declarer that if the life policy ceases to be an asset held in the special savings incentive account, the declarer will notify the assurance company accordingly, and

(g) contains such other information as the Revenue Commissioners may reasonably require for the purposes of this Chapter.”,

(e) in section 730G(1) in paragraph (c) by the substitution for “Subsections (2) and (4)” by “Subsections (2) to (4)”, and

(f) by the insertion after section 730G of the following:

“Repayment of appropriate tax.

730GA.—For the purposes of a claim to relief, under section 189, 189A or 192, or a repayment of income tax in consequence thereof, the amount of a payment made to a policyholder by an assurance company shall be treated as a net amount of income from the gross amount of which has been deducted income tax, of an amount equal to the amount of appropriate tax (within the meaning of section 730F) deducted from the payment, and such amount of gross income shall be treated as chargeable to tax under Case III of Schedule D.

Capital acquisitions tax: set-off.

730GB.—Where appropriate tax is payable as a result of the death of a person, the amount of such tax, in so far as it has been paid, shall be treated as an amount of capital gains tax paid for the purposes of section 63 of the Finance Act, 1985 .”.

(2) This section shall—

(a) as respects paragraph (b), apply as on and from 15 February 2001,

(b) as respects paragraphs (a), (c), (d), (e) and (f), apply as on and from 1 January 2001.

Amendment of section 731 (chargeable gains accruing to unit trusts) of Principal Act.

71.—(1) Section 731 of the Principal Act is amended in subsection (5)—

(a) by the substitution in paragraph (a) for “all the issued units in a unit trust” of “all the issued units in a unit trust which neither is, nor is deemed to be, an authorised unit trust scheme (within the meaning of the Unit Trusts Act, 1990 )”, and

(b) by the insertion after paragraph (b) of the following:

“(c) Where, by virtue of paragraph (a), gains accruing to a unit trust in a year of assessment are not chargeable gains, then—

(i) the unit trust shall not be chargeable to income tax for that year of assessment, and

(ii) a deposit (within the meaning of section 256(1)), which is an asset of the unit trust, shall not be a relevant deposit (within the meaning of that section) for the purposes of Chapter 4 of Part 8, for that year of assessment.”.

(2) This section shall be deemed to have applied—

(a) as respects paragraph (a), as on and from 1 January 2001, and

(b) as respects paragraph (b), for the year of assessment 2000-2001 and subsequent years of assessment.

Amendment of Part 27 (unit trusts and offshore funds) of Principal Act.

72.—(1) Part 27 of the Principal Act is amended by the insertion after Chapter 3 of the following:

Chapter 4

Certain Offshore Funds — Taxation and Returns

Interpretation and application.

747B.—(1) In this Chapter—

‘chargeable period’ has the same meaning as in section 321(2);

‘EEA Agreement’ means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993;

‘EEA state’ means a State, other than the State, which is a Contracting Party to the EEA Agreement;

‘material interest’ shall be construed in accordance with section 743;

‘OECD’ means the organisation known as the Organisation for Economic Co-operation and Development;

‘offshore fund’ has the meaning assigned to it by section 743;

‘offshore state’ means a State, other than the State, which is—

(i) a Member State of the European Communities,

(ii) a State which is an EEA state, or

(iii) a State which is a member of the OECD, the government of which have entered into arrangements having the force of law by virtue of section 826;

‘relevant payment’ means any payment including a distribution made to a person in respect of a material interest in an offshore fund, where such payments are made annually or at more frequent intervals, other than a payment made in consideration of the disposal of an interest in the offshore fund;

‘return of income’ has the meaning assigned to it by section 1084;

‘specified return date for the chargeable period’ has the meaning assigned to it by section 950;

‘standard rate per cent’ has the meaning assigned to it by section 4.

(2) This Chapter applies to an offshore fund which—

(a) being a company, the company is resident in,

(b) being a unit trust scheme, the trustees of the unit trust scheme are resident in, or

(c) being any arrangements referred to in section 743(1), those arrangements take effect by virtue of the law of,

an offshore state.

(3) For the purposes of this Chapter—

(a) (i) there shall be a disposal of an asset if there would be such a disposal for the purposes of the Capital Gains Tax Acts, and

(ii) where, on the death of a person, an asset which the person was competent to dispose, is a material interest in an offshore fund to which this Chapter applies, then, notwithstanding section 573(2)(b), such material interest shall be deemed to be disposed of and reacquired by the person immediately before the death of the person for a consideration equal to its then market value,

(b) an income shall be correctly included in a return made by a person, only where that income is included in a return of income made by the person on or before the specified return date for the chargeable period in which the income arises, and

(c) details of a disposal shall be correctly included in a return made by a person, only where details of the disposal are included in a return of income made by the person or, where the person has died, his or her executor or administrator, on or before the specified return date for the chargeable period in which the disposal is made.

Return on acquisition of material interest.

747C.—Where in any chargeable period a person acquires a material interest in an offshore fund, the person shall, notwithstanding anything to the contrary in section 950 or 1084, be deemed for that chargeable period to be a chargeable person for the purposes of sections 951 and 1084, and the return of income to be delivered by the person for that chargeable period shall include the following particulars—

(a) the name and address of the offshore fund,

(b) a description, including the cost to the person, of the material interest acquired, and

(c) the name and address of the person through whom the material interest was acquired.

Payment in respect of offshore funds.

747D.—Where on or after 1 January 2001 a person who has a material interest in an offshore fund, is in receipt of a payment from the offshore fund, then—

(a) where the person is not a company, and

(i) the income represented by the payment is correctly included in a return made by the person, then notwithstanding section 15, the rate of income tax to be charged on the income shall be—

(I) where the payment is a relevant payment, the standard rate per cent, and

(II) where the payment is not a relevant payment and is not made in consideration of the disposal of an interest in the offshore fund, at the rate determined by the formula—

(S + 3) per cent,

where S is the standard rate per cent,

and

(ii) where the income represented by the payment is not correctly included in a return made by the person, the income shall be charged to income tax at a rate determined by section 15,

and

(b) where the person is a company, the income represented by the payment shall be charged to tax under Case III of Schedule D.

Disposal of an interest in offshore funds.

747E.—(1) Where on or after 1 January 2001 a person who has a material interest in an offshore fund, disposes of an interest in the offshore fund and the disposal gives rise to a gain computed in accordance with subsection (2), then, notwithstanding sections 645 and 747, the amount of that gain shall be treated as an amount of income chargeable to tax under Case IV of Schedule D, and where the person is not a company, and the person has correctly included details of the disposal in a return made by the person, the rate of income tax to be charged on that income shall, notwithstanding section 15, be the rate determined by the formula—

(S + 3) per cent,

where S is the standard rate per cent.

(2) The amount of the gain accruing on a disposal referred to in subsection (1) is the amount which would be the amount of a gain accruing on the disposal for the purposes of the Capital Gains Tax Acts, if it were computed without regard to—

(a) any charge to tax by virtue of this section, and

(b) section 556(2).

(3) Notwithstanding sections 538 and 546, where apart from this subsection the effect of any computation under subsection (2) would be to produce a loss, the gain on the disposal referred to in subsection (1) shall be treated as nil and accordingly for the purposes of this Chapter no loss shall be treated as accruing on such disposal.

(4) Where, as a result of a disposal by a person, an amount of income is chargeable to tax under Case IV of Schedule D, that amount shall not be reduced by a claim made by the person—

(a) where the person is not a company, under section 381 or 383, or

(b) where the person is a company, under section 396 or 399.

(5) Where an individual is chargeable to tax in accordance with subsection (1) in respect of an amount of income—

(a) the tax thereby payable, in so far as it is paid, shall be treated as an amount of capital gains tax paid, for the purposes of section 63 of the Finance Act, 1985 , and

(b) that amount of income shall not be included in reckonable income (within the meaning of the Health Contributions Regulations, 1979 ( S.I. No. 107 of 1979 )) for the purposes of those Regulations.”.

(2) This section shall be deemed to have applied as on and from 1 January 2001.

Amendment of section 737 (special investment schemes) of Principal Act.

73.—(1) Section 737 of the Principal Act is amended—

(a) by the deletion in subsection (1) of the definition of “relevant period”,

(b) by the substitution in subsection (2) for paragraph (a)(v) of the following paragraph:

“(v) the aggregate of consideration given for shares which are, at any time on or after 1 February 1996 and before 31 December 2000, assets subject to any trust created under the scheme shall not be less than—

(I) as respects qualifying shares, 55 per cent, and

(II) as respects specified qualifying shares, 10 per cent,

of the aggregate of the consideration given for the assets which are at that time subject to any such trust.”,

and

(c) by the deletion in subsection (3)(a) of subparagraph (iii).

(2) This section shall be deemed to have applied as on and from 1 January 2001.

Amendment of Chapter 1A (investment undertakings) of Part 27 of Principal Act.

74.—(1) Chapter 1A of Part 27 of the Principal Act is amended—

(a) in section 739B—

(i) in subsection (1)—

(I) in the definition of “chargeable event”—

(A) by the deletion in paragraph (b) of “other than a payment made on the death of a unit holder”,

(B) by the deletion in paragraph (c) of “(other than as a result of the death of the unit holder)”, and

(C) by the substitution for paragraphs (A) and (B) of the following:

“(I) any exchange by a unit holder, effected by way of a bargain made at arm's length by an investment undertaking which is an umbrella scheme, of units in a sub-fund of the investment undertaking, for units in another sub-fund of the investment undertaking,

(II) any exchange by a unit holder, effected by way of a bargain made at arm's length by an investment undertaking, of units in the investment undertaking for other units in the investment undertaking,

(III) any transaction in relation to, or in respect of, units which are held in a recognised clearing system, and

(IV) the transfer by a unit holder of entitlement to a unit where the transfer is—

(A) between a husband and wife,

(B) between the spouses or former spouses concerned (as the case may be), by virtue or in consequence of an order made under Part III of the Family Law (Divorce) Act, 1996 , on or following the granting of a decree of divorce,

(C) between the spouses concerned, by virtue or in consequence of an order made under Part II of the Family Law Act, 1995 , on or following the granting of a decree of judicial separation within the meaning of that Act, or

(D) between the spouses or former spouses concerned (as the case may be), by virtue of an order or other determination of like effect, which is analogous to an order referred to in subparagraph (B) or (C), of a court under the law of a territory other than the State made under or in consequence of the dissolution of a marriage or the legal separation of the spouses, being a dissolution or legal separation that is entitled to be recognised as valid in the State,

but on the happening of a chargeable event following such a transfer, the then unit holder shall be treated as having acquired the unit transferred at the same cost as the person who transferred the unit;”,

(II) by the insertion after the definition of “qualifying management company” of the following:

“‘qualifying savings manager’ has the meaning assigned to it in section 848B (inserted by the Finance Act, 2001);”,

and

(III) by the insertion after the definition of “special investment scheme” of the following:

“‘special savings incentive account’ has the meaning assigned to it by section 848B (inserted by the Finance Act, 2001);”,

and

(ii) by the substitution for subsection (3) of the following:

“(3) This Chapter applies to an investment undertaking and the unit holders in relation to that investment undertaking where the investment undertaking—

(a) is on 31 March 2000 a specified collective investment undertaking, from 1 April 2000,

(b) first issued units on or after 1 April 2000, from the day of such first issue, or

(c) was a unit trust mentioned in section 631(5)(a), from the day on which the unit trust became an investment undertaking.”,

(b) in section 739D—

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

“(a) references to an investment undertaking being associated with another investment undertaking are references to both investment undertakings being set up and promoted by the same person,”,

(ii) by the substitution for subsections (3), (4) and (5) of the following:

“(3) The amount referred to in subsection (2)(c) is the amount determined by the formula—

P —

(C × P)

V

where—

P is the amount in money or money's worth payable to the unit holder on the cancellation, redemption or repurchase of units, without having regard to any amount of appropriate tax (within the meaning of section 739E) thereby arising,

C is the total amount invested by the unit holder in the investment undertaking to acquire the units held by the unit holder immediately before the chargeable event and—

(a) where any unit was otherwise acquired by the unit holder, or

(b) where a chargeable event was deemed to happen on 31 December 2000 in respect of the unit holder of that unit,

the amount so invested to acquire the unit is—

(i) where paragraph (a) applies, the value of the unit at the time of its acquisition by the unit holder, and

(ii) where paragraph (b) applies, the greater of the cost of first acquisition of the unit by the unit holder and the value of the unit on 31 December 2000, without having regard to any amount of appropriate tax (within the meaning of section 739E) thereby arising,

and

V is the total value of the units held by the unit holder immediately before the chargeable event.

(4) The amount referred to in subsection (2)(d) is the amount determined by the formula—

V1 —

(C × V1)

V2

where—

V1 is the value of the units transferred, at the time of transfer, without having regard to any amount of appropriate tax (within the meaning of section 639E) thereby arising,

C is the total amount invested by the unit holder in the investment undertaking to acquire the units held by the unit holder immediately before the chargeable event and—

(a) where any unit was otherwise acquired by the unit holder, or

(b) a chargeable event was deemed to happen on 31 December 2000 in respect of the unit holder of that unit,

the amount so invested to acquire the unit is—

(i) where paragraph (a) applies, the value of the unit at the time of its acquisition by the unit holder, and

(ii) where paragraph (b) applies, the greater of the cost of first acquisition of the unit by the unit holder and the value of the unit on 31 December 2000, without having regard to any amount of appropriate tax (within the meaning of section 739E) thereby arising,

and

V2 is the total value of the units held by the unit holder immediately before the chargeable event.

(5) (a) The election referred to in paragraphs (c) and (d) of subsection (2) is an irrevocable election made by an investment undertaking in respect of all its unit holders at the time of the election or at any other time, so that, for the purposes of identifying units acquired with units subsequently disposed of by a unit holder, units acquired at an earlier time are deemed to have been disposed of before units acquired at a later time.

(b) On the first occasion that an investment undertaking is required to compute a gain on the happening of a chargeable event in respect of a unit holder on the cancellation, redemption, repurchase or transfer of a unit, and—

(i) the gain is computed in accordance with paragraph (a), the investment undertaking will be deemed to have made the election specified in that paragraph, or

(ii) the gain is not computed in accordance with paragraph (a), an election under paragraph (a) shall not be made.”,

(iii) by the substitution for subsection (6)(h) of the following:

“(h) is a person who is entitled to exemption from income tax and capital gains tax by virtue of section 784A(2) (as amended by the Finance Act, 2000 ) or by virtue of section 848E (inserted by the Finance Act, 2001) and the units held are assets of an approved retirement fund, an approved minimum retirement fund or, as the case may be, a special savings incentive account, and the qualifying fund manager, or, as the case may be, the qualifying savings manager has made a declaration to the investment undertaking in accordance with paragraph 9 of Schedule 2B.”,

(iv) by the insertion of the following after subsection (7):

“(7A) Where an investment undertaking is in possession of—

(a) a declaration made by a unit holder who is a person referred to in subsection (6), or

(b) a declaration made by a unit holder of the kind referred to in subsection (7) and paragraph (b) of that subsection is satisfied, which unit holder is entitled to the units in respect of which the declaration was made, a gain shall not be treated as arising—

(i) to the investment undertaking on the happening of a chargeable event in respect of the unit holder in relation to any other units in the investment undertaking to which the unit holder becomes entitled, or

(ii) to another investment undertaking which is associated with the investment undertaking referred to in subparagraph (i), on the happening of a chargeable event in respect of the unit holder in relation to units in that other investment undertaking to which the unit holder becomes entitled.”,

(v) by the substitution for subsection (8) of the following:

“(8) (a) A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder where the investment undertaking was on 31 March 2000 a specified collective investment undertaking and—

(i) the unit holder was a unit holder (within the meaning of section 734(1)) in relation to that specified collective investment undertaking at that time and the investment undertaking on or before 30 June 2000 makes to the Collector-General a declaration in accordance with paragraph 12 of Schedule 2B, or

(ii) the unit holder otherwise became a unit holder on or before 30 September 2000 and the investment undertaking forwarded to the Collector-General, on or before 1 November 2000, a list containing the name and address of each such unit holder who is resident in the State,

otherwise than, subject to paragraph (b), in respect of a unit holder (in this subsection and in section 739G referred to as an ‘excepted unit holder’)—

(I) whose name is included in the schedule to the declaration referred to in paragraph 12(d) of Schedule 2B or the list referred to in subparagraph (ii), and

(II) who has not made a declaration of a kind referred to in subsection (6) to the investment undertaking.

(b) A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of an excepted unit holder where a chargeable event is deemed to happen on 31 December 2000.

(8A) Where under subsection (8)(a) a gain is not treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder who acquired units on or before 30 September 2000, a gain shall not be treated as arising—

(a) to the investment undertaking on the happening of a chargeable event in respect of the unit holder in relation to any other units in the investment undertaking to which the unit holder becomes entitled, or

(b) to another investment undertaking which is associated with the investment undertaking referred to in paragraph (a), on the happening of a chargeable event in respect of the unit holder in relation to units in that other investment undertaking to which the unit holder becomes entitled.

(8B) A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder where—

(a) the investment undertaking was a unit trust mentioned in section 731(5)(a),

(b) the unit holder held units in that unit trust at the time that it became an investment undertaking, and

(c) within 30 days of that time, the investment undertaking forwards to the Collector-General a list containing the name and address of each such unit holder and such other information as the Revenue Commissioners reasonably require.

(8C) (a) In this section a ‘scheme of amalgamation’ means an arrangement whereby a unit holder in a unit trust referred to in section 631(5)(a) exchanges units so held, for units in an investment undertaking.

(b) A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder where—

(i) the unit holder acquires units in the investment undertaking in exchange for units held in a unit trust referred to in section 731(5)(a), under a scheme of amalgamation, and

(ii) within 30 days of the scheme of amalgamation taking place, the investment undertaking forwards to the Collector-General a list containing, in respect of each unit holder who so acquired units in the investment undertaking, the name and address and such other information as the Revenue Commissioners may reasonably require.

(8D) (a) In this section ‘scheme of migration and amalgamation’ means an arrangement whereby the assets of a unit trust, whose trustees are neither resident nor ordinarily resident in the State, are transferred to an investment undertaking in exchange for the issue by the investment undertaking of units to the unit holders of the unit trust, in proportion to the number of units they so held, and as a result of which the units in the unit trust become negligible in value.

(b) A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder where—

(i) under a scheme of migration and amalgamation the unit holder acquires units in the investment undertaking in exchange for units held in a unit trust whose trustees are neither resident nor ordinarily resident in the State, and

(ii) within 30 days of the scheme of migration and amalgamation taking place, the investment undertaking forwards to the Collector-General, a declaration of a kind referred to in paragraph (c),

otherwise than in respect of a unit holder whose name is included in the schedule referred to in paragraph (c)(ii).

(c) The declaration referred to in paragraph (b) is a declaration in writing made and signed by the investment undertaking which—

(i) declares to the best of the investment undertaking's knowledge and belief that at the time of the scheme of migration and amalgamation it did not issue units to a person who was resident in the State at that time, other than such persons whose names and addresses are set out on the schedule to the declaration, and

(ii) contains a schedule which sets out the name and address of each person who was resident in the State at the time that the person was issued units by the investment undertaking under the scheme of migration and amalgamation.”,

(vi) by the substitution in subsection (9) for “A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder who is an intermediary” of “A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder”, and

(vii) by the substitution for subsection (10) of the following:

“(10) An investment undertaking shall keep and retain declarations made to it in accordance with Schedule 2B for a period of 6 years from the time the unit holder of the units in respect of which the declaration was made, ceases to be both such a unit holder and a unit holder in all investment undertakings which are associated with the investment undertaking.”,

(c) in section 739F by the substitution for subsection (5) of the following:

“(5) Where—

(a) any item has been incorrectly included in a return as appropriate tax, the inspector may make such assessments, adjustments or set-offs as may in his or her judgement be required for securing that the resulting liabilities, including interest on unpaid tax, whether of the investment undertaking making the return or of any other person, are in so far as possible the same as they would have been if the item had not been included, or

(b) any item has been correctly included in a return, but within one year of the making of the return the investment undertaking proves to the satisfaction of the Revenue Commissioners that it is just and reasonable that an amount of appropriate tax (included in the return) which has been paid, should be repaid to the investment undertaking, such amount may be repaid to the investment undertaking.”,

(d) in section 739F(7) by the substitution for paragraph (c) of the following:

“(c) Subsections (2) to (4) of section 1080 shall apply in relation to interest payable under paragraph (b) as they apply in relation to interest payable under section 1080.”,

(e) in section 739G—

(i) in subsection (2)—

(I) by the substitution for paragraph (b) of the following paragraph:

“(b) where the unit holder is not a company and the payment is a payment from which appropriate tax has not been deducted, the amount of the payment shall be treated for the purposes of the Tax Acts as income arising to the unit holder, constituting profits or gains chargeable to tax under Case IV of Schedule D; but where the payment is in respect of the cancellation, redemption, repurchase or transfer of units, such income shall be reduced by the amount of the consideration in money or money's worth given by the unit holder for the acquisition of those units,”,

(II) by the substitution for paragraphs (e) and (f) of the following:

“(e) where the unit holder is a company, the payment is not a relevant payment and appropriate tax has been deducted therefrom, such payment shall, subject to paragraph (g), not otherwise be taken into account for the purposes of the Tax Acts,

(f) where the unit holder is a company, the payment is not a relevant payment and appropriate tax has not been deducted from the payment, the amount of such payment shall, subject to paragraph (g), be treated for the purposes of the Tax Acts as income arising to the unit holder, constituting profits or gains chargeable to tax under Case IV of Schedule D; but where the payment is in respect of the cancellation, redemption, repurchase or transfer of units, such income shall be reduced by the amount of the consideration in money or money's worth given by the unit holder for the acquisition of those units,”,

(III) by the substitution in paragraph (h) of “chargeable to income tax,” for “chargeable to income tax, and”, and

(IV) by the substitution for paragraph (i) of the following:

“(i) otherwise than by virtue of section 739F(5) or paragraph (j), no repayment of appropriate tax shall be made to any person who is not a company within the charge to corporation tax, and

(j) notwithstanding paragraph (a), for the purposes of a claim to relief, under section 189, 189A or 192, or a repayment of income tax in consequence thereof, the amount of a payment made to a unit holder shall be treated as a net amount of income from the gross amount of which has been deducted income tax (of an amount equal to the amount of appropriate tax deducted in making the payment), and such gross amount of income shall be treated as chargeable to tax under Case III of Schedule D.”,

and

(ii) by the insertion after subsection (2) of the following:

“(3) References in subsection (2) to payments, from which appropriate tax has not been deducted, made to a unit holder by an investment undertaking, include references to payments made to a unit holder who holds units which are held in a recognised clearing system.

(4) Where the units of an investment undertaking are denominated in a currency other than the currency of the State (in this subsection referred to as ‘foreign currency’), then for the purposes of the Capital Gains Tax Acts the amount of foreign currency given by a unit holder to the investment undertaking for the acquisition of a unit in the investment undertaking shall be deemed to have been disposed of and reacquired by the unit holder—

(a) immediately before it was so given, and

(b) immediately after the unit holder receives payment for the cancellation, redemption or repurchase of, or as the case may be, transfer of, his or her units.

(5) Where appropriate tax is payable as a result of the death of a person, the amount of such tax, in so far as it has been paid, shall be treated as an amount of capital gains tax paid, for the purposes of section 63 of the Finance Act, 1985 .”.

(2) This section shall—

(a) as respects paragraph (a)(i), apply on of after 15 February 2001, and

(b) as respects paragraphs (a)(ii) and (b) to (e), be deemed to have applied on or after 1 April 2000.

Amendment of Schedule 2B (Investment undertakings declarations) of Principal Act.

75.—The Principal Act is amended in Schedule 2B by the substitution for paragraph 9 of the following:

“Declaration of qualifying fund manager or qualifying savings manager

9. The declaration referred to in section 739D(6)(h) is a declaration in writing to the investment undertaking which—

(a) is made by a qualifying fund manager or, as the case may be, a qualifying savings manager (in this paragraph referred to as the ‘declarer’) in respect of the units which are assets in an approved retirement fund, an approved minimum retirement fund, or a special savings incentive account,

(b) is signed by the declarer,

(c) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(d) declares that, at the time the declaration is made, the units in respect of which the declaration is made—

(i) are assets of an approved retirement fund, an approved minimum retirement fund or, as the case may be, a special savings incentive account, and

(ii) are managed by the declarer for the individual who is beneficially entitled to the units,

(e) contains the name, address and tax reference number of the individual referred to in paragraph (d),

(f) contains an undertaking by the declarer that if the units cease to be assets of the approved retirement fund, the approved minimum retirement fund or held in the special savings incentive account, including a case where the units are transferred to another such fund or account, the declarer will notify the investment undertaking accordingly, and