Finance Act 2004

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Number 8 of 2004

FINANCE ACT 2004

ARRANGEMENT OF SECTIONS

PART 1

Income Tax, Corporation Tax and Capital Gains Tax

Chapter 1

Interpretation

Chapter 2

Income Tax

Chapter 3

Income Tax, Corporation Tax and Capital Gains Tax

Chapter 4

Corporation Tax

PART 2

Excise

PART 3

Value-Added Tax

PART 4

Stamp Duties

PART 5

Capital Acquisitions Tax

PART 6

Miscellaneous

SCHEDULE 1

Exemption from Tax for Certain Interest and Royalties Payments

SCHEDULE 2

Rates of Excise Duty on Tobacco Products

SCHEDULE 3

Miscellaneous Technical Amendments in Relation to Tax

SCHEDULE 4

Taxation of Savings Income in the Form of Interest Payments

Acts Referred to

Number 8 of 2004

FINANCE ACT 2004

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. [25th March 2004]

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

Age exemption.

2.—As respects the year of assessment 2004 and subsequent years of assessment, section 188 of the Principal Act is amended, in subsection (2), by substituting “€31,000” for “€30,000” (inserted by the Finance Act 2003 ) and “€15,500” for “€15,000” (as so inserted).

Employee tax credit.

3.—(1) As respects the year of assessment 2004 and subsequent years of assessment, section 472 of the Principal Act is amended, in subsection (4), by substituting “€1,040” for “€800” (inserted by the Finance Act 2003 ) in both places where it occurs.

(2) Section 3 of the Finance Act 2002 , shall have effect subject to the provisions of this section.

Amendment of section 472C (relief for trade union subscriptions) of Principal Act.

4.—As respects the year of assessment 2004 and subsequent years of assessment, section 472C (inserted by the Finance Act 2001 ) of the Principal Act is amended, in subsection (1), by substituting “€200” for “€130” in the definition of “specified amount”.

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

5.—(1) Schedule 13 to the Principal Act is amended—

(a) by substituting “25. The National Tourism Development Authority.” for paragraph 25,

(b) by deleting paragraph 27,

(c) by substituting “83. The Commission for Communications Regulation.” for paragraph 83,

(d) by substituting “94. The Standards in Public Office Commission.” for paragraph 94, and

(e) by inserting the following after paragraph 140 (inserted by the Personal Injuries Assessment Board Act 2003 ):

“141. The National Council for Curriculum and Assessment.

142. The State Examinations Commission.

143. The Special Residential Services Board.”.

(2) (a) Paragraphs (a) and (b) of subsection (1) shall be deemed to have come into force and shall take effect as on and from 28 May 2003.

(b) Paragraph (c) of subsection (1) shall be deemed to have come into force and shall take effect as on and from 1 December 2002.

(c) Paragraph (d) of subsection (1) shall be deemed to have come into force and shall take effect as on and from 10 December 2001.

(d) Paragraph (e) of subsection (1) comes into operation on 1 May 2004.

Amendment of section 189 (payment in respect of personal injuries) of Principal Act.

6.—Section 189 of the Principal Act is amended in subsection (1) by substituting the following for paragraph (b):

“(b) (i) pursuant to the issue of an order to pay under section 38 of the Personal Injuries Assessment Board Act 2003 , or

(ii) following the institution by or on behalf of the individual of a civil action for damages,

in respect of personal injury giving rise to that mental or physical infirmity.”.

Exemption in respect of certain payments under employment law.

7.—The Principal Act is amended in Chapter 1 of Part 7 by inserting the following after section 192:

“192A.—(1) In this section—

‘relevant Act’ means an enactment which contains provisions for the protection of employees' rights and entitlements or for the obligations of employers towards their employees;

relevant authority' means any of the following—

(a) a right commissioner,

(b) the Director of Equality Investigations,

(c) the Employment Appeals Tribunal,

(d) the Labour Court,

(e) the Circuit Court, or

(f) the High Court.

(2) Subject to subsections (3) and (5), this section applies to a payment under a relevant Act, to an employee or former employee by his or her employer or former employer, as the case may be, which is made, on or after 4 February 2004, in accordance with a recommendation, decision or a determination by a relevant authority in accordance with the provisions of that Act.

(3) A payment made in accordance with a settlement arrived at under a mediation process provided for in a relevant Act shall be treated as if it had been made in accordance with a recommendation, decision or determination under that Act of a relevant authority.

(4)  (a)  Subject to subsection (5) and without prejudice to any of the terms or conditions of an agreement referred to in this subsection, this section shall apply to a payment—

(i) made, on or after 4 February 2004, under an agreement evidenced in writing, being an agreement between persons who are not connected with each other (within the meaning of section 10), in settlement of a claim which—

(I) had it been made to a relevant authority, would have been a bona fide claim made under the provisions of a relevant Act,

(II) is evidenced in writing, and

(III) had the claim not been settled by the agreement, is likely to have been the subject of a recommendation, decision or determination under that Act by a relevant authority that a payment be made to the person making the claim,

(ii) the amount of which does not exceed the maximum payment which, in accordance with a decision or determination by a relevant authority (other than the Circuit Court or the High Court) under the relevant Act, could have been made under that Act in relation to the claim, had the claim not been settled by agreement, and

(iii) where—

(I) copies of the agreement and the statement of claim are kept and retained by the employer, by or on behalf of whom the payment was made, for a period of six years from the day on which the payment was made, and

(II) the employer has made copies of the agreement and the statement of claim available to an officer of the Revenue Commissioners where the officer has requested the employer to make those copies available to him or her.

(b)  (i)  On being so requested by an officer of the Revenue Commissioners, an employer shall make available to the officer all copies of—

(I) such agreements as are referred to in paragraph (a) entered into by or on behalf of the employer, and

(II) the statements of claim related to those agreements,

kept and retained by the employer in accordance with subparagraph (iii) of that paragraph.

(ii) The officer may examine and take extracts from or copies of any documents made available to him or her under this subsection.

(5) This section shall not apply to so much of a payment under a relevant Act or an agreement referred to in subsection (4) as is—

(a) a payment, however described, in respect of remuneration including arrears of remuneration, or

(b) a payment referred to in section 123(1) or 480(2)(a).

(6) Payments to which this section applies shall be exempt from income tax and shall not be reckoned in computing total income for the purposes of the Income Tax Acts.”.

Exemption in respect of certain benefits-in-kind.

8.—(1) Part 5 of the Principal Act is amended—

(a) in section 116—

(i) by inserting the following after the definition of “business premises”:

“‘business use’, in relation to the use of an asset by a person, means the use of that asset by the person in the performance of the duties of the person's office or employment;”,

and

(ii) by inserting the following after the definition of “employment”:

“‘private use’, in relation to an asset, means use of the asset other than business use.”,

(b) in section 118 by substituting the following for subsection (5A) (inserted by the Finance Act 1999 ):

“(5A) (a) Subsection (1) shall not apply to expense incurred by the body corporate in or in connection with the provision for a director or employee of a monthly or annual bus or railway pass issued by or on behalf of one or more approved transport providers for travel on either or both bus and railway.

(b) In this subsection—

‘approved transport provider’ means—

(a) Coras Iompair Éireann or any of its subsidiaries,

(b) a holder of a passenger licence granted under section 7 of the Road Transport Act 1932 ,

(c) a person who provides a passenger transport service under an arrangement entered into with Coras Iompair Éireann in accordance with section 13 (1) of the Transport Act 1950 ,

(d) the Railway Procurement Agency or any of its subsidiaries, or

(e) a person who has entered into an arrangement with the Railway Procurement Agency, in accordance with section 43 (6) of the Transport (Railway Infrastructure) Act 2001 to operate a railway;

‘railway pass’ includes a pass issued by a railway designated as a light railway or as a metro in a railway order issued under section 43 of the Transport (Railway Infrastructure) Act 2001 .

(5B) (a) Subsection (1) shall not apply to expense incurred by the body corporate in or in connection with the provision, without any transfer of the property in it, for a director or employee of a mobile telephone for business use where private use of the mobile telephone is incidental.

(b) The mobile telephones to which the exemption provided by this subsection applies include any mobile telephone provided in connection with a car or van notwithstanding that the vehicle is made available as referred to in section 121 or 121A, as the case may be.

(c) In this subsection ‘mobile telephone’ means telephone apparatus which—

(i) is not physically connected to a land-line, and

(ii) is not a cordless telephone.

(d) For the purposes of paragraph (c)—

‘cordless telephone’ means telephone apparatus designed or adapted to provide a wireless extension to a telephone, and used only as such an extension to a telephone that is physically connected to a land-line;

‘telephone apparatus’ means wireless telegraphy apparatus designed or adapted for the purposes of transmitting and receiving either or both spoken messages and information (being information for the same purposes as the Electronic Commerce Act 2000 ) and connected to a public telecommunications network (as defined in the European Communities (Telecommunications Services) Regulations 1992 ( S.I. No. 45 of 1992 )).

(5C) (a) Subsection (1) shall not apply to expense incurred by the body corporate in or in connection with the provision for a director or employee of a high-speed internet connection to the director's or employee's home for business use where private use of the connection is incidental.

(b) In this subsection ‘high-speed internet connection’ means a connection capable of transmitting information (being information for the same purposes as the Electronic Commerce Act 2000 ) at a rate equal to or greater than 250 kilobits per second.

(5D) (a) Subsection (1) shall not apply to expense incurred by the body corporate in or in connection with the provision, without any transfer of the property in it, for a director or employee of computer equipment for business use where private use of the computer equipment is incidental.

(b) In this section ‘computer equipment’, in addition to a computer, includes—

(i) a facsimile machine, and

(ii) printers, scanners, modems, discs, disc drives, and other peripheral devices designed to be used by being connected to or inserted in a computer and computer software to be used in such equipment.

(5E) (a) Subsection (1) shall not apply to expense incurred by the body corporate, or incurred by a director or employee and reimbursed by the body corporate, in or in connection with the payment on behalf of a director or employee of the annual membership fees of a professional body where membership of that body by the director or employee is relevant to the business of the body corporate.

(b) Membership of a professional body by a director or employee of a body corporate may be regarded as relevant to the business of that body corporate where—

(i) it is necessary for the performance of the duties of the office or employment of the director or employee, or

(ii) it facilitates the acquisition of knowledge which—

(I) is necessary for or directly related to the performance of the duties of the office or employment of the director or employee, or

(II) would be necessary for or directly related to the performance of prospective duties of the office or employment of the director or employee with that body corporate.

(5F) Subsection (1) shall not apply to expense incurred by the body corporate in or in connection with the provision, without any transfer of the property in it, for a director or employee of a mechanically propelled road vehicle which is—

(a) designed or constructed solely or mainly for the carriage of goods or other burden, and

(b) of a type not commonly used as a private vehicle and unsuitable to be so used.”,

and

(c) in section 121A (inserted by the Finance Act 2003 )—

(i) in subsection (1)—

(I) by inserting the following before the definition of “van”:

“‘gross vehicle weight’, in relation to a vehicle, means the weight which the vehicle is designed or adapted not to exceed when in normal use and travelling on the road laden.”,

and

(II) in the definition of “van”—

(A) by deleting “and” in paragraph (b),

(B) by substituting “areas, and” for “areas.”, in paragraph (c), and

(C) by inserting the following after paragraph (c):

“(d) has a gross vehicle weight not exceeding 3,500 kilograms.”,

and

(ii) by inserting the following after subsection (2):

“(2A) Subsection (2) shall not apply for a year of assessment in respect of the private use of a van made available to a person (in this subsection referred to as the ‘employee’) as set out in that subsection where the following conditions are met—

(a) the van made available to the employee is necessary for the performance of the duties of the employee's employment,

(b) the employee is required by the person who made the van available to keep it, when not in use in the performance of the duties of the employee's employment, at or in the vicinity of the employee's private residence,

(c) apart from travel between the employee's private residence and workplace, other private use of the van is prohibited by the person making the van available and there is no such other private use, and

(d) in the performance of the duties of his or her employment, the employee spends at least 80 per cent of his or her time engaged on such duties away from the premises of the employer to which the employee is attached.”.

(2) This section is deemed to have come into force and taken effect as on and from 1 January 2004.

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

9.—(1) Chapter 4 of Part 42 of the Principal Act is amended—

(a) in section 985A (inserted by the Finance Act 2003 )—

(i) in subsection (1)—

(I) by substituting “Subject to subsection (1A), this section applies” for “This section applies”, and

(II) by deleting “excluding perquisites or profits whatever in the form of shares (including stock) in a company, but” in paragraph (a),

(ii) by inserting the following after subsection (1)—

“(1A) Subsection (1) shall not apply to emoluments in the form of perquisites or profits whatever received by an employee in the form of shares (including stock) being shares or stock in—

(a) the company in which the employee holds his or her office or employment, or

(b) a company which has control (within the meaning of section 432) of that company.”,

(iii) by inserting the following after subsection (4)—

“(4A) Any amount of tax which an employer remits in accordance with subsection (4) and any regulations made under that subsection in respect of a notional payment shall be treated as an amount of tax which, at the time the notional payment is made, is deducted in respect of the employee's liability to income tax.”,

and

(iv) by inserting the following after subsection (6):

“(7) 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.”,

(b) by inserting the following after section 985A—

(c) in section 994, by substituting the following for subsection (1):

“(1) In this section ‘employer's liability for the period of 12 months’ means the aggregate of—

(a) all sums which an employer was liable under this Chapter and any regulations under this Chapter to deduct from emoluments to which this Chapter applies paid by the employer, and

(b) all sums that were not so deducted but which an employer was liable, in accordance with section 985A and any regulations under that section, to remit to the Collector-General in respect of notional payments made by the employer,

during the period of 12 months referred to in subsection (2), reduced by any amounts which the employer was liable under this Chapter and any regulations under this Chapter to repay during the same period, and subject to the addition of interest payable under section 991.”,

and

(d) in section 995 by substituting the following for paragraph (a)(i):

“(i) which, apart from Regulation 29 of the Income Tax (Employments) (Consolidated) Regulations 2001 ( S.I. No. 559 of 2001 ), would otherwise have been an amount due at the relevant date in respect of—

(I) sums which an employer is liable under this Chapter and any regulations under this Chapter (other than Regulation 29 of those Regulations) to deduct from emoluments, to which this Chapter applies, paid by the employer, and

(II) sums that were not so deducted but which the employer was liable, in accordance with section 985A and any regulations under that section, to remit to the Collector-General in respect of notional payments made by the employer,

during the period of 12 months next before the relevant date,”.

(2)  (a) Subject to paragraph (b), subsection (1) has effect as on and from the passing of this Act.

(b) Subsection (1) (a) (iii) applies as respects the year of assessment 2004 and subsequent years of assessment.

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

10.—(1) Section 122 of the Principal Act is amended in paragraph (a) of subsection (1)—

(a) by substituting the following for paragraph (i) of the definition of “employer”:

“(i) a person of whom the individual or the spouse of the individual is or was an employee,”,

and

(b) by substituting “3.5 per cent” for “4.5 per cent” (inserted by the Finance Act 2003 ) in both places where it occurs in the definition of “the specified rate”.

(2)  (a) Subsection (1)(a) applies as respects loans made on or after 4 February 2004.

(b) Subsection (1)(b) applies with effect from 1 January 2004.

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

11.—Section 470 of the Principal Act is amended, as on and from the passing of this Act, in subsection (1)—

(a) by substituting the following for the definition of “authorised insurer”:

“ ‘authorised insurer’ means—

(a) any undertaking entered in the Register of Health Benefits Undertakings, lawfully carrying on such business of medical insurance referred to in paragraph (a) of the definition of ‘relevant contract’ but, in relation to an individual, also means any undertaking authorised pursuant to Council Directive No. 73/239/EEC of 24 July 1973¹ , Council Directive No. 88/357/EEC of 22 June 1988² , and Council Directive No. 92/49/EEC of 18 June 1992³ , where such a contract was effected with the individual when the individual was not resident in the State but was resident in another Member State of the European Communities, or

(b) (i) any undertaking standing authorised under—

(I) the European Communities (Non-Life Insurance) Framework Regulations 1994 ( S.I. No. 359 of 1994 ),

(II) the European Communities (Non-Life Insurance) Regulations 1976 ( S.I. No. 115 of 1976 ), or

(III) the European Communities (Non-Life Insurance) (Amendment) (No. 2) Regulations 1991 ( S.I. No. 142 of 1991 ),

or

(ii) any undertaking authorised 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 Council Directive No. 73/239/EEC of 24 July 1973 as inserted by Article 4 of Council Directive No. 92/49/EEC of 18 June 1992,

lawfully carrying on such business of dental insurance referred to in paragraph (b) of the definition of ‘relevant contract’;”,

and

(b) by substituting the following for the definition of “relevant contract”:

“ ‘relevant contract’ means a contract of insurance which, in relation to an individual, the spouse of the individual, or the children or other dependants of the individual or of the spouse of the individual, provides specifically, whether in conjuction with other benefits or not, for the reimbursement or discharge, in whole or in part, of—

(a) actual health expenses (within the meaning of section 469), being a contract of medical insurance, or

(b) dental expenses other than expenses in respect of routine dental treatment (within the meaning of section 469), being a contract of dental insurance;”.

Payments under Scéim na bhFoghlaimeoirí Gaeilge.

12.—The Principal Act is amended in Chapter 1 of Part 7 by inserting the following after section 216A (inserted by the Finance Act 2001 ):

Amendment of Chapter 2 (farming: relief for increase in stock values) of Part 23 of Principal Act.

13.—(1) Chapter 2 of Part 23 of the Principal Act is amended—

(a) in subsection 667(1)—

(i) by substituting “In this section, but subject to section 667A,” for “In this section,”,

(ii) in paragraph (b)(iii) of the definition of “qualifying farmer”—

(I) by inserting “or” after “so set out,” in clause (I),

(II) by substituting “180 hours.” for “180 hours,” in clause (II) and by deleting “or” where it last occurs in that clause, and

(III) by deleting clause (III),

and

(b) by inserting the following after section 667:

TABLE

(2) Subsection (1) shall apply and have effect as on and from 1 January 2004.

Amendment of section 664 (relief for certain income from leasing of farm land) of Principal Act.

14.—(1) Section 664 of the Principal Act is amended—

(a) in subsection (1)(a)—

(i) in paragraph (i) of the definition of “qualifying lessor” by substituting “40 years” for “55 years”,

(ii) in the definition of “the specified amount” by substituting—

(I) in paragraph (ii)(IV)(B) “in any other case,” for “in any other case, or”, and

(II) the following for paragraph (ii)(V):

“(V) in the period beginning on 23 January 1996, and ending on 31 December 2003—

(A) €7,618.43, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(B) €5,078.95, in any other case,

or

(VI) on or after 1 January 2004—

(A) €10,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(B) €7,500, in any other case,”,

and

(b) in subsection (1)(b) by substituting the following for subparagraph (iii):

“(iii) from a qualifying lease or qualifying leases made in the period beginning on 23 January 1996, and ending on 31 December 2003, and from a qualifying lease made before 23 January 1996, the specified amount shall not exceed—

(I) €7,618.43, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(II) €5,078.95, in any other case;

(iv) from a qualifying lease or qualifying leases made on or after 1 January 2004, and from a qualifying lease made at any other time, the specified amount shall not exceed—

(I) €10,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(II) €7,500, in any other case.”.

(2) Subsection (1) shall apply and have effect as on and from 1 January 2004.

Amendment of Schedule 12 (employee share ownership trusts) to Principal Act.

15.—Schedule 12 to the Principal Act is amended—

(a) in paragraph 11(2C) by inserting “or (3)” after “subparagraph (2B)”, and

(b) in paragraph 11A—

(i) in subparagraph (5)(a) by inserting “or, in the case of a company referred to in clause (d) of the definition of ‘relevant company’ in paragraph 1(1), at some time within 9 months prior to that day,” after “established by that relevant company,”,

(ii) in subparagraph (6)(a) by inserting “or, in the case of a company referred to in clause (d) of the definition of ‘relevant company’ in paragraph 1(1), at some time within 9 months prior to that day,” after “established by that relevant company,”, and

(iii) in subparagraph (7) by inserting “or (6)” after “subparagraph (5)”.

Occupational pension schemes.

16.—(1) Section 772 of the Principal Act is amended by inserting the following after subsection (3D):

“(3E) A retirement benefits scheme shall neither cease to be an approved scheme nor shall the Revenue Commissioners be prevented from approving a retirement benefits scheme for the purposes of this Chapter because of any provision in the rules of the scheme which makes provision for borrowing by the scheme.”.

(2) Section 774 of the Principal Act is amended by substituting the following for subparagraph (ii) of subsection (7)(b):

“(ii) in the case of—

(I) such a contribution made on retirement, following an application in writing made before 6 February 2003 by the employee in response to an invitation in writing under the scheme, pursuant to the rules of the scheme—

(A) to contribute towards the purchase for superannuation purposes of relevant benefits, consisting of only a pension on retirement not exceeding one-eightieth of the employee's final remuneration for each year of service up to a maximum of 40 years and a lump sum not exceeding three-eightieths of the employee's final remuneration for each year of service up to a maximum of 40 years, in respect of actual service by the employee before becoming a member of the scheme, and

(B) to make such purchase by way of such a contribution either on retirement or otherwise,

and as a consequence of which application the employee opted, or was treated by the scheme as opting, to make the contribution on retirement, for the purposes of receiving relevant benefits under the scheme in excess of the benefits which, if the application referred to had not been made, the employee would otherwise have been entitled to receive under those rules, or

(II) a contribution to which paragraph (ba) applies,

be apportioned among such years as the Revenue Commissioners direct, and the amount of the contribution attributed thereby to any year shall be treated as an ordinary annual contribution paid in that year.”.

(3) Section 776 of the Principal Act is amended by substituting the following for subparagraph (ii) of subsection (2)(b):

“(ii) in the case of—

(I) such a contribution made on retirement, following an application in writing made before 6 February 2003 by the employee in response to an invitation in writing under the scheme, pursuant to the rules of the scheme—

(A) to contribute towards the purchase for superannuation purposes of relevant benefits, consisting of only a pension on retirement not exceeding one-eightieth of the employee's final remuneration for each year of service up to a maximum of 40 years and a lump sum not exceeding three-eightieths of the employee's final remuneration for each year of service up to a maximum of 40 years, in respect of actual service by the employee before becoming a member of the scheme, and

(B) to make such purchase by way of such a contribution either on retirement or otherwise,

and as a consequence of which application the employee opted, or was treated by the scheme as opting, to make the contribution on retirement, for the purposes of receiving relevant benefits under the scheme in excess of the benefits which, if the application referred to had not been made, the employee would otherwise have been entitled to receive under those rules, or

(II) a contribution to which paragraph (ba) applies,

be apportioned among such years as the Revenue Commissioners direct, and the amount of the contribution attributed thereby to any year shall be treated as an ordinary annual contribution paid in that year.”.

(4) (a) Subsection (1) applies as on and from the date of the passing of this Act.

(b) Subsections (2) and (3) are deemed to have applied as on and from 6 February 2003.

CHAPTER 3

Income Tax, Corporation Tax and Capital Gains Tax

Exemption from tax on certain income and gains.

17.—(1) Chapter 1 of Part 7 of the Principal Act is amended—

(a) in section 189 by substituting the following for subsection (2):

“(2) (a) In this subsection—

‘relevant gains’ means chargeable gains (including allowable losses) within the meaning of the Capital Gains Tax Acts, which accrue to an individual, to or in respect of whom payments to which this section applies are made, from the disposal of—

(a) assets acquired with such payments,

(b) assets acquired with relevant income, or

(c) assets acquired directly or indirectly with the proceeds from the disposal of assets referred to in paragraphs (a) and (b);

‘relevant income’ means income which arises to an individual, to or in respect of whom payments to which this section applies are made, from the investment—

(a) in whole or in part of such payments, or

(b) of income derived directly or indirectly from such payments,

being income consisting of dividends or other income which, but for this section, would be chargeable to tax under Schedule C or under Case III, IV (by virtue of section 59 or section 745) or V of Schedule D or under Schedule F.

(b) Where for any year of assessment the aggregate of the relevant income arising to and the relevant gains accruing to an individual exceeds 50 per cent of the aggregate of the total income arising to and the total chargeable gains (including allowable losses) accruing to the individual for that year of assessment—

(i) the relevant income shall be exempt from income tax and shall not be reckoned in computing total income for the purposes of the Income Tax Acts, but the provisions of those Acts relating to the making of returns shall apply as if this section had not been enacted, and

(ii) the relevant gains shall be exempt from capital gains tax, but the provisions of the Capital Gains Tax Acts relating to the making of returns shall apply as if this section had not been enacted.

(c) For the purposes of computing whether a chargeable gain is, in whole or in part, a relevant gain, or whether income is, in whole or in part, relevant income, all such apportionments shall be made as are, in the circumstances, just and reasonable.”,

(b) in section 189A by substituting the following for subsections (3) and (4):

“(3) Gains accruing to trustees of a qualifying trust in respect of the trust funds shall not be chargeable gains for the purposes of the Capital Gains Tax Acts.

(4) (a) In this subsection—

‘relevant gains’ means chargeable gains (including allowable losses) within the meaning of the Capital Gains Tax Acts, which accrue to an incapacitated individual from the disposal of—

(a) assets acquired with payments made by the trustees of a qualifying trust,

(b) assets acquired with relevant income, or

(c) assets acquired directly or indirectly with the proceeds from the disposal of assets referred to in paragraphs (a) and (b);

‘relevant income’ means income which—

(a) consists of payments made by the trustees of a qualifying trust to or in respect of an incapacitated individual, being a subject of the trust, or

(b) arises to such an incapacitated individual from the investment—

(i) in whole or in part of payments, made by the trustees of a qualifying trust, or

(ii) of income derived directly or indirectly from such payments,

being income consisting of dividends or other income which, but for this section, would be chargeable to tax under Schedule C or under Case III, IV (by virtue of section 59 or section 745) or V of Schedule D or under Schedule F.

(b) Where for any year of assessment the aggregate of relevant income arising to and the relevant gains accruing to an individual exceeds 50 per cent of the aggregate of the total income arising to and the total chargeable gains (including allowable losses) accruing to the individual in that year of assessment—

(i) the relevant income shall be exempt from income tax and shall not be reckoned in computing total income for the purposes of the Income Tax Acts, but the provisions of those Acts relating to the making of returns shall apply as if this section had not been enacted, and

(ii) the relevant gains shall be exempt from capital gains tax, but the provisions of the Capital Gains Tax Acts relating to the making of returns shall apply as if this section had not been enacted.

(c) For the purposes of computing whether a chargeable gain is, in whole or in part, a relevant gain, or whether income is, in whole or in part, relevant income, all such apportionments shall be made as are, in the circumstances, just and reasonable.”,

(c) in section 191(3) by substituting “the Income Tax Acts and the Capital Gains Tax Acts” for “the Income Tax Acts”, and

(d) in section 192 by inserting the following after subsection (2):

“(3) Gains which accrue to a person, to or in respect of whom payments to which this section applies are made, from the disposal of—

(a) assets acquired with such payments,

(b) assets acquired with income exempted from income tax under subsection (2), or

(c) assets acquired directly or indirectly with the proceeds from the disposal of assets referred to in paragraphs (a) and (b),

shall not be chargeable gains for the purposes of the Capital Gains Tax Acts.

(4) For the purposes of computing whether by virtue of this section a gain is, in whole or in part, a chargeable gain, or whether income is, in whole or in part, exempt from income tax, all such apportionments shall be made as are, in the circumstances, just and reasonable.”.

(2) This section applies for the year of assessment 2004 and subsequent years of assessment.

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

18.—(1) Part 16 of the Principal Act is amended—

(a) in section 489—

(i) by inserting the following after subsection (4A) (inserted by the Finance Act 2002 ):

“(4B) Notwithstanding any other provision of this section, where—

(a) (i) in accordance with section 508 relief is due in respect of an amount subscribed as nominee for a qualifying individual by the managers of a designated fund,

(ii) the amount so subscribed was subscribed to the designated fund in the period beginning on 1 January 2004 and ending on 4 February 2004, and

(iii) the eligible shares in respect of which the amount is subscribed by the managers of the designated fund are issued on or before 31 December 2004,

or

(b) eligible shares are issued by a qualifying company to a qualifying individual in the period beginning on 1 January 2004 and ending on 4 February 2004,

then the qualifying individual may elect, by notice in writing to the inspector, to have the relief due given as a deduction from his or her total income for the year of assessment 2003 instead of (as provided for in subsection (3)) as a deduction from his or her total income for the year of assessment 2004.”,

and

(ii) in subsection (15), by substituting “4 February 2004” for “31 December 2003”,

and

(b) in section 490—

(i) in subsection (3)(a), by substituting “subsection (4), (4A) or (4B) of section 489” for “section 489(4) or (4A)”, and

(ii) in subsections (3)(b) and (4)(b), by substituting “2006” for “2003”.

(2) Part 16 of the Principal Act, as amended by subsection (1), is further amended—

(a) in section 489(15), by substituting “31 December 2006” for “4 February 2004”,

(b) in subsections (2)(a) and (3)(a) of section 491, by substituting “€1,000,000” for “€750,000”,

(c) in section 494, in subsection (2)(a)(ii), by substituting the following for clause (II):

“(II) €25,000 or, in the case of the year of assessment 2001, €18,500.”,

(d) in section 496(2)(a)—

(i) in subparagraph (i)—

(I) in clause (I), by substituting “this Part,” for “this Part, and”,

(II) in clause (II), by substituting “this Part, and” for “this Part,”, and

(III) by inserting the following after clause (II):

“(III) as respects a subscription for eligible shares issued on or after 4 February 2004, trading operations consisting of software development services referred to in subparagraph (ii) of paragraph (a) of section 443(10) and which would be qualifying trading operations if the employment grants referred to in subparagraph (I) of that paragraph were made, shall, notwithstanding anything in subparagraph (ii), be regarded as qualifying trading operations if approval for the making of such grant is obtained,”,

and

(ii) in subparagraphs (iv) and (xv), by substituting “on or after 1 January 2003 and on or before 31 December 2004” for “on or after 1 January 2003”,

and

(e) in section 499, by inserting the following after subsection (3):

“(3A) (a) A specified individual shall not have received value from a company by virtue of subsection (3)(b) where—

(i) the specified individual has made an investment in the company by way of a loan,

(ii) the loan is converted into eligible shares within one year of the making of the loan, and

(iii) the specified individual provides a statement by the auditor of the company certifying that, in his or her opinion, the money raised by the company by way of the loan was used, and only used, by it in accordance with the provisions of section 489(1)(c).

(b) Where paragraph (a) applies, conversion of the loan into eligible shares shall, notwithstanding any other provision of this Part, be treated as the making of a relevant investment by the specified individual on the date of the making of the loan.

(c) For the purposes of this subsection ‘auditor’, in relation to a company, means the person or persons appointed as auditor of the company for all the purposes of the Companies Acts 1963 to 2003.”.

(3) (a) Subsection (1) is deemed to have come into operation and have taken effect as on and from 1 January 2004.

(b) Subject to paragraph (c), subsection (2) applies as follows—

(i) as respects paragraphs (a) and (e), as on and from 4 February 2004,

(ii) as respects paragraph (b), in relation to eligible shares issued on or after 1 January 2004,

(iii) as respects paragraph (c), in relation to relevant investments made on or after 4 February 2004, and

(iv) as respects paragraph (d), as respects subscriptions for eligible shares made on or after 4 February 2004.

(c) Subsection (2) comes into operation on the making of an order to that effect by the Minister for Finance.

Transitional arrangements in relation to section 18 (1)(a)(ii).

19.—(1) In this section—

“auditor” means—

(a) in relation to a company or its qualifying subsidiary, the person or persons appointed as auditor of the company or its qualifying subsidiary, as appropriate, for all the purposes of the Companies Acts 1963 to 2003, and

(b) in relation to a specified designated fund, the person or persons appointed as auditor of that fund;

“certifying agency” has the meaning assigned to it by section 488 of the Principal Act;

“certifying Minister” has the meaning assigned to it by section 488 of the Principal Act;

“County Enterprise Board” means a board referred to in the Schedule to the Industrial Development Act 1995 ;

“eligible shares” has the meaning assigned to it by section 488 of the Principal Act;

“industrial development agency” has the meaning assigned to it by section 488 of the Principal Act;

“the principal provisions” means Part 16 of the Principal Act;

“prospectus”, in relation to a company, means any prospectus, notice, circular or advertisement, offering to the public for subscription or purchase any eligible shares of the company, and in this definition “the public” includes any section of the public, whether selected as members of the company or as clients of the person issuing the prospectus or in any other manner;

“qualifying subsidiary”, in relation to a company, has the same meaning as it has for the purposes of section 495 of the Principal Act;

“qualifying trading operations” has the meaning assigned to it by section 496 of the Principal Act;

“specified designated fund” means an investment fund designated under section 508 of the Principal Act which closed on or before 4 February 2004;

“the specified period” means the period beginning on 5 February 2003 and ending on 4 February 2004.

(2) This section applies to a company which, or whose qualifying subsidiary, either carries on or intends to carry on one or more of the qualifying trading operations.

(3) Subject to subsection (7) where the conditions in either subsection (4) or (5) are met, section 18 (1)(a)(ii) shall apply as if, in the case of a company to which this section applies, “31 December 2004” were substituted for “4 February 2004”.

(4) The conditions of this subsection referred to in subsection (3) are—

(a) the eligible shares are issued by the company on or before 31 December 2004, and

(b) the eligible shares are issued following a subscription on behalf of an individual by a person or persons having the management of a specified designated fund, and

(c) the company proves to the satisfaction of the Revenue Commissioners that on or before 4 February 2004 it had the intention of raising money before that date under the principal provisions through the specified designated fund referred to in paragraph (b),

and in determining whether they are satisfied that the company has complied with the requirements specified in paragraph (c) the Revenue Commissioners shall have regard to the following—

(i)  (I) signed heads of agreement between the company and the fund, or

(II) exchange of correspondence between the company and the fund showing a clear intention that the fund intended to subscribe for eligible shares in the company,

(ii) a certificate by the auditor of the fund confirming that it is a specified designated fund, and

(iii) any other information the Revenue Commissioners deem necessary for the purpose.

(5) The conditions of this subsection referred to in subsection (3) are—

(a) the eligible shares are issued by the company on or before 31 December 2004, and

(b) the company proves to the satisfaction of the Revenue Commissioners that on or before 4 February 2004 it had an intention to raise money under the principal provisions, and in determining whether they are so satisfied the Revenue Commissioners shall have regard to one or more of the following—

(i) an application in writing made by the company to the Revenue Commissioners in the specified period for the opinion of the Revenue Commissioners as to whether the company would be a qualifying company for the purposes of the principal provisions,

(ii) an application in writing made by the company to an industrial development agency in the specified period for a certificate referred to in section 489(2)(e) of the Principal Act,

(iii) an application in writing made to a certifying agency, certifying Minister or County Enterprise Board in the specified period for a certificate under section 497 of the Principal Act, and

(iv) the publication in the specified period of a prospectus by, or on behalf of, the company,

and

(c)  (i) in the case of a company which, or whose qualifying subsidiary, either carries on or intends to carry on a qualifying trading operation as is mentioned in subparagraph (i), (ii), (iii), (v), (viii), (ix), (xi) or (xiii) of paragraph (a) of section 496(2) of the Principal Act, that in the specified period the company or its qualifying subsidiary, as the case may be, had entered into a binding contract in writing—

(I) to purchase or lease land or a building,

(II) to purchase or lease plant or machinery, or

(III) for the construction or refurbishment of a building,

to be used in the carrying on of its qualifying trading operation,

(ii) in the case of a company which, or whose qualifying subsidiary, either carries on or intends to carry on a qualifying trading operation as is mentioned in subparagraph (vii) of paragraph (a) of section 496(2) of the Principal Act, that in the specified period the company or its qualifying subsidiary, as the case may be, had entered into a binding contract in writing—

(I) to purchase or lease greenhouses,

(II) to purchase or lease plant or machinery, or

(III) for the construction or refurbishment of greenhouses,

to be used in the carrying on of its qualifying trading operation, and

(iii) in the case of a company which, or whose qualifying subsidiary, either carries on or intends to carry on a qualifying trading operation as is mentioned in subparagraph (xii) of paragraph (a) of section 496(2) of the Principal Act, that in the specified period the company or its qualifying subsidiary, as the case may be, had entered into a binding contract in writing for the production, publication, marketing or promotion of the qualifying recording or qualifying recordings which the company or its qualifying subsidiary, as the case may be, intends to produce,

and the company proves to the satisfaction of the Revenue Commissioners that the contract which it or its qualifying subsidiary, as the case may be, had entered into was integral to, or consistent with, the purpose for which it had intended to raise money under the principal provisions and that the consideration of the contract is equal to 25 per cent or more of the money which it is intended to so raise.

(6) For the purposes of subsection (5)—

(a) the date on which a contract was entered into by a company or, as the case may be, its qualifying subsidiary, and

(b) the date on which a prospectus was published by, or on behalf of, a company,

shall be confirmed in a certificate by the auditor of the company, or its qualifying subsidiary, as appropriate.

(7) If, in accordance with an order made by the Minister for Finance under subsection (3)(c) of section 18 , subsection (2) of that section comes into operation on a date earlier than 1 January 2005, this section shall cease to apply and have effect as on and from that earlier date.

Amendment of section 531 (payments to subcontractors in certain industries) of Principal Act.

20.—(1) Section 531 of the Principal Act is amended—

(a) by inserting the following after subsection (6)(b):

“(ba) (i) the setting up by the Revenue Commissioners and the maintenance by them of a register containing details of every person who is a principal within the meaning of section 530(1), and

(ii) requiring every such person as is specified in the regulations, to notify the Revenue Commissioners within the period and in such manner as is provided for in the said regulations, that that person is a principal for the purposes of this Chapter;”,

(b) by inserting the following after subsection (11)(b):

“(ba) Notwithstanding paragraph (a), where the Revenue Commissioners have issued a certificate of authorisation to a person under the provisions of that paragraph or paragraph (b), the Revenue Commissioners may issue a further certificate of authorisation to that person without a requirement that the person make a further application to them in that behalf, where they are satisfied, in respect of that person, in relation to the matters specified in subparagraphs (i) to (vi) of paragraph (a), or, as the case may be, where the provisions of paragraph (b) apply.”,

and

(c) in subsection (20), by substituting “subsection (17) or subsection (17A)” for “subsection (17)”.

(2) (a) Paragraph (a) of subsection (1) applies as and from the date of passing of this Act.

(b) Paragraph (b) of subsection (1) applies as on and from 1 January 2004.

(c) Paragraph (c) of subsection (1) is deemed to have applied as respects the year 1999-2000 and subsequent years of assessment.

Amendment of section 659 (farming: allowances for capital expenditure on the construction of farm buildings, etc., for control of pollution) of Principal Act.

21.—Section 659 of the Principal Act is amended in subsection (1)(c) by substituting “1 January 2007” for “1 January 2004” (inserted by the Finance Act 2001 ).

Restriction of relief to individuals in respect of loans applied in acquiring interest in companies.

22.—(1) Chapter 3 of Part 8 of the Principal Act is amended by inserting the following section after section 250:

“250A.—(1) In this section—

‘distribution’ has the same meaning as it has for the purposes of the Corporation Tax Acts by virtue of section 4;

‘eligible loan’ in relation to an individual and a company, means a loan, being a loan to which section 248 applies, to the individual to defray money applied for any of the purposes specified in that section;

‘relevant interest’ has the same meaning as in section 269;

‘residue of expenditure’ shall be construed in accordance with section 277;

‘specified amount’ in relation to an eligible loan, means the amount of the eligible loan or so much of the eligible loan where the money or, as the case may be, part of the money which was defrayed by that loan and which was applied by the individual—

(a) is used after 1 January 2003 by the company directly or indirectly—

(i) in the acquisition (whether by the company or by any other person) of the relevant interest in relation to any capital expenditure incurred or deemed to be incurred on the construction or refurbishment of a specified building,

(ii) in replacing money used in such acquisition of such an interest, or

(iii) in paying off a loan used in such acquisition of such an interest,

(b) pays off another eligible loan or so much of another eligible loan where the money or, as the case may be, part of the money which was defrayed by that other loan (or any previous loan or loans which it replaced) and which was applied by the individual was used after 1 January 2003 by the company directly or indirectly for any of the purposes referred to in paragraph (a), or

(c) was applied in acquiring, on or after 20 February 2004, any part of the ordinary share capital of a company at least 75 per cent of whose income consists of profits or gains chargeable under Case V of Schedule D in respect of one or more specified buildings;

‘specified building’ means a building or structure, or a part of a building or structure—

(a) (i) which is or is to be an industrial building or structure by reason of its use or deemed use for a purpose specified in section 268(1) and in relation to which an allowance has been, or is to be, made to a company under Chapter 1 of Part 9, or

(ii) in relation to which an allowance has been, or is to be, so made to a company by virtue of Part 10 or section 843 or 843A,

in respect of—

(I) the capital expenditure incurred or deemed to be incurred on the construction or refurbishment of the building or structure or, as the case may be, the part of the building or structure, or

(II) the residue of that expenditure,

(b) in relation to which at any time beginning on or after 1 January 2003 the company referred to in paragraph (a) is entitled to the relevant interest in relation to the capital expenditure referred to in that paragraph, and

(c) in relation to which any other company (not being the company referred to in paragraph (a)) is entitled, at any time subsequent to the time referred to in paragraph (b), to an allowance under Chapter 1 of Part 9, in respect of the capital expenditure referred to in paragraph (a) or the residue of that expenditure, following the acquisition of the relevant interest or any part of the relevant interest in relation to that capital expenditure, whether or not, subsequent to the time referred to in paragraph (b), any other person or persons had previously become entitled to that relevant interest or that part of that relevant interest;

‘specified provisions’ means section 248 and that section as extended by section 250.

(2) Notwithstanding anything in the specified provisions, relief under section 248 for any year of assessment in relation to any payment or payments of interest on the specified amount of an eligible loan by the individual concerned shall not exceed that individual's return from the company concerned in that year in relation to that specified amount.

(3) Subject to subsection (4), an individual's return from a company in relation to a specified amount of an eligible loan in any year of assessment is—

(a) where the specified amount defrays an amount of money applied by the individual for the purpose specified in section 248(1)(a) or (b), the amount, if any, of the distributions (before deduction of any dividend withholding tax under Chapter 8A of Part 6), or, as the case may be, the amount, if any, of the interest, received by the individual from the company in that year as a result of the application by the individual of that amount of money, or

(b) where the specified amount defrays an amount of money applied by the individual, directly or indirectly, in paying off the specified amount of another eligible loan where the earlier specified amount defrayed an amount of money (subsequently referred to in this paragraph as ‘that earlier amount of money’) which was applied by the individual for the purpose specified in section 248(1)(a) or (b), the amount, if any, of the distributions (before deduction of any dividend withholding tax under Chapter 8A of Part 6), or, as the case may be, the amount, if any, of the interest, received by the individual from the company in that year as a result of the application by the individual of that earlier amount of money.

(4) In determining for the purposes of this section—

(a) the amount of any payment or payments of interest by an individual on the specified amount of an eligible loan, or

(b) the amount of interest received by an individual as a result of the application by the individual of an amount of money which was defrayed by the specified amount of an eligible loan,

such apportionment, where necessary, of the total payments of interest by the individual on the eligible loan, or, as the case may be, the total amount of interest received by the individual as a result of the application of all the money defrayed by the eligible loan, shall be made in the same proportion which the specified amount of the eligible loan bears to the amount of the eligible loan.”.

(2) This section shall apply in relation to any payment or payments of interest by an individual—

(a) on or after 19 March 2003, or

(b) where this section applies by virtue of paragraph (c) of the definition of “specified amount” (within the meaning of section 250A (as inserted by this section) of the Principal Act), on or after 20 February 2004,

and for this purpose interest shall be deemed to accrue from day to day.

Qualifying residential units.

23.—(1) Section 268(3A) of the Principal Act is amended—

(a) in paragraph (b)(ii), by substituting the following for “comprised in a two storey building”:

“comprised in a building of one or more storeys in relation to which building a fire safety certificate under Part III of the Building Control Regulations 1997 ( S.I. No. 496 of 1997 ) (as amended from time to time) is required, and prior to the commencement of the construction works on the building, is granted by the building control authority (within the meaning of section 2 of the Building Control Act 1990 , as amended by the Local Government (Dublin) Act 1993 and the Local Government Act 2001 ) in whose functional area the building is situated”,

and

(b) in paragraph (c) by substituting “not less than 10 qualifying residential units” for “not less than 20 qualifying residential units”.

(2) This section applies as respects capital expenditure incurred on or after 4 February 2004.

Qualifying hospitals and qualifying sports injuries clinics.

24.—(1) Section 268 of the Principal Act is amended—

(a) in subsection (1A), by substituting “shall not, as regards a claim for any allowance under this Part by any such person, be regarded as an industrial building or structure” for “shall not be regarded as an industrial building or structure”, and

(b) in subsection (1B), by substituting “shall not, as regards a claim for any allowance under this Part by any such person, be regarded as an industrial building or structure” for “shall not be regarded as an industrial building or structure”.

(2) This section applies as respects capital expenditure incurred on the construction or refurbishment of a building or structure on or after 1 May 2004.

Capital allowances for hotels, holiday camps and holiday cottages.

25.—(1) Part 9 of the Principal Act is amended—

(a) in section 268(13)(b)—

(i) by substituting “31 July 2006” for “31 December 2004”,

(ii) in subparagraph (i)(I), by inserting “, in so far as planning permission is required,” after “Development Act 2000)”,

(iii) in subparagraph (i)(II), by substituting “31 December 2004” for “31 May 2003”,

(iv) by deleting “or” between subparagraphs (i) and (ii),

(v) in subparagraph (ii)(I), by substituting “a planning application, in so far as planning permission was required,” for “a planning application”,

(vi) in subparagraph (ii)(III), by substituting “regulations,” for “regulations.”, and

(vii) by inserting the following after subparagraph (ii):

“or

(iii) where the construction or refurbishment work on the holiday cottage represented by that expenditure is exempted development for the purposes of the Planning and Development Act 2000 by virtue of section 4 of that Act or by virtue of Part 2 of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ) and—

(I) a detailed plan in relation to the development work is prepared,

(II) a binding contract in writing, under which the expenditure on the development is incurred, is in existence, and

(III) work to the value of 5 per cent of the development costs is carried out,

not later than 31 December 2004.”,

(b) in section 272(8)—

(i) by substituting “31 July 2006” for “31 December 2004”,

(ii) in paragraph (a)(i), by inserting “, in so far as planning permission is required,” after “Development Act 2000)”,

(iii) in paragraph (a) (ii), by substituting “31 December 2004” for “31 May 2003”,

(iv) in paragraph (b)(i), by substituting “a planning application, in so far as planning permission was required,” for “a planning application”,

(v) by inserting the following paragraph after paragraph (b):

“(ba) where the construction or refurbishment work on the building or structure represented by that expenditure is exempted development for the purposes of the Planning and Development Act 2000 by virtue of section 4 of that Act or by virtue of Part 2 of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ) and—

(i) a detailed plan in relation to the development work is prepared,

(ii) a binding contract in writing, under which the expenditure on the development is incurred, is in existence, and

(iii) work to the value of 5 per cent of the development costs is carried out,

not later than 31 December 2004.”,

and

(vi) in paragraph (c)(ii), by substituting “31 December 2004” for “31 May 2003”,

(c) in section 274(1A)—

(i) by substituting “31 July 2006” for “31 December 2004”,

(ii) in paragraph (a)(i), by inserting “, in so far as planning permission is required,” after “Development Act 2000)”,

(iii) in paragraph (a)(ii), by substituting “31 December 2004” for “31 May 2003”,

(iv) in paragraph (b)(i), by substituting “a planning application, in so far as planning permission was required,” for “a planning application”,

(v) by inserting the following paragraph after paragraph (b):

“(ba) where the construction or refurbishment work on the building or structure represented by that expenditure is exempted development for the purposes of the Planning and Development Act 2000 by virtue of section 4 of that Act or by virtue of Part 2 of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ) and—

(i) a detailed plan in relation to the development work is prepared,

(ii) a binding contract in writing, under which the expenditure on the development is incurred, is in existence, and

(iii) work to the value of 5 per cent of the development costs is carried out,

not later than 31 December 2004.”,

and

(vi) in paragraph (c)(ii), by substituting “31 December 2004” for “31 May 2003”,

and

(d) in section 316, by inserting the following subsection after subsection (2):

“(2A) For the purposes only of determining, in relation to a claim for an allowance under Chapter 1 of this Part, whether and to what extent capital expenditure incurred on the construction (within the meaning of section 270) of:

(a) a building or structure in use for the purposes of the trade of hotel keeping, or

(b) a building or structure deemed to be a building or structure in use for such purposes by virtue of section 268(3),

is incurred or not incurred on or before 31 July 2006, only such an amount of that capital expenditure as is properly attributable to work on the construction or refurbishment of the building or structure actually carried out on or before 31 July 2006 shall (notwithstanding subsection (2) and any other provision of the Tax Acts as to the time when any capital expenditure is or is to be treated as incurred) be treated as having been incurred on or before that date.”.

(2) Paragraphs (a)(ii) and (iv), (b)(ii) and (iii), and (c)(ii) and (iii) of subsection (1) are deemed to have applied as on and from 4 December 2002.

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.

26.—(1) Part 10 of the Principal Act is amended—

(a) in section 344(1), in paragraph (c) of the definition of “qualifying period” by substituting “31 July 2006” for “31 December 2004”,

(b) in section 372A—

(i) in subsection (1), in the definition of “qualifying period”:

(I) by substituting in paragraph (a)(ii), “31 July 2006” for “31 December 2004”, and

(II) by substituting the following for paragraph (b):

“(b) subject to section 372BA and in relation to a qualifying street, the period commencing on 6 April 2001 and ending on—

(i) 31 December 2004, or

(ii) where subsection (1B) applies, 31 July 2006;”,

and

(ii) by inserting the following subsection after subsection (1A):

“(1B) This subsection shall apply in relation to a qualifying street, as respects capital expenditure incurred on the construction or refurbishment of a building or structure, if—

(a)  (i) a planning application (not being an application for outline permission within the meaning of section 36 of the Planning and Development Act 2000 ), in so far as planning permission is required, in respect of the construction or refurbishment work on the building or structure represented by that expenditure, is made in accordance with the Planning and Development Regulations 2001 to 2003,

(ii) an acknowledgement of the application, which confirms that the application was received on or before 31 December 2004, is issued by the planning authority in accordance with article 26(2) of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ), and

(iii) the application is not an invalid application in respect of which a notice is issued by the planning authority in accordance with article 26(5) of those regulations,

(b)  (i) a planning application, in so far as planning permission was required, in respect of the construction or refurbishment work on the building or structure represented by that expenditure, was made in accordance with the Local Government (Planning and Development) Regulations 1994 ( S.I. No. 86 of 1994 ), not being an application for outline permission within the meaning of article 3 of those regulations,

(ii) an acknowledgement of the application, which confirms that the application was received on or before 10 March 2002, was issued by the planning authority in accordance with article 29(2)(a) of the regulations referred to in subparagraph (i), and

(iii) the application was not an invalid application in respect of which a notice was issued by the planning authority in accordance with article 29(2)(b)(i) of those regulations,

or

(c) where the construction or refurbishment work on the building or structure represented by that expenditure is exempted development for the purposes of the Planning and Development Act 2000 by virtue of section 4 of that Act or by virtue of Part 2 of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ) and—

(i) a detailed plan in relation to the development work is prepared,

(ii) a binding contract in writing, under which the expenditure on the development is incurred, is in existence, and

(iii) work to the value of 5 per cent of the development costs is carried out,

not later than 31 December 2004.”,

(c) in section 372B—

(i) in paragraph (c)(ii), by substituting “31 July 2006” for “31 December 2004”, and

(ii) in paragraph (d)(ii), by substituting “31 July 2006” for “31 December 2004”,

(d) in section 372BA(1)—

(i) in paragraph (ba), by substituting “where such a street is to be a qualifying street for the purposes of section 372AP, that section shall apply in relation to that street” for “where such an area or areas is or are to be a qualifying area for the purposes of section 372AP, that section shall apply in relation to that area or those areas”,

(ii) by inserting the following paragraph after paragraph (ba):

“(bb) as respects any such street so described in the order and in so far as this Chapter is concerned, 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—

(i) 31 December 2004, or

(ii) where section 372A(1B) applies, 31 July 2006,”,

and

(iii) by substituting the following for paragraph (c):

“(c) as respects any such street so described in the order and in so far as Chapter 11 of this Part is concerned, 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—

(i) 31 December 2004, or

(ii) where section 372AL(1A) applies, 31 July 2006.”,

(e) in section 372L—

(i) by numbering the existing provisions in that section as subsection (1),

(ii) in paragraph (a) of the definition of “qualifying period” in the said subsection (1), by substituting the following for “and ending on 31 December 2004”:

“and ending on—

(i) 31 December 2004, or

(ii) where subsection (2) applies, 31 July 2006”,

and

(iii) by inserting the following subsection after the said subsection (1):

“(2) This subsection shall apply, as respects capital expenditure incurred on the construction or refurbishment of a building or structure, if—

(a)  (i) a planning application (not being an application for outline permission within the meaning of section 36 of the Planning and Development Act 2000 ), in so far as planning permission is required, in respect of the construction or refurbishment work on the building or structure represented by that expenditure, is made in accordance with the Planning and Development Regulations 2001 to 2003,

(ii) an acknowledgement of the application, which confirms that the application was received on or before 31 December 2004, is issued by the planning authority in accordance with article 26(2) of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ), and

(iii) the application is not an invalid application in respect of which a notice is issued by the planning authority in accordance with article 26(5) of those regulations,

(b)  (i) a planning application, in so far as planning permission was required, in respect of the construction or refurbishment work on the building or structure represented by that expenditure, was made in accordance with the Local Government (Planning and Development) Regulations 1994 ( S.I. No. 86 of 1994 ), not being an application for outline permission within the meaning of article 3 of those regulations,

(ii) an acknowledgement of the application, which confirms that the application was received on or before 10 March 2002, was issued by the planning authority in accordance with article 29(2)(a) of the regulations referred to in subparagraph (i), and

(iii) the application was not an invalid application in respect of which a notice was issued by the planning authority in accordance with article 29(2)(b)(i) of those regulations,

or

(c) where the construction or refurbishment work on the building or structure represented by that expenditure is exempted development for the purposes of the Planning and Development Act 2000 by virtue of section 4 of that Act or by virtue of Part 2 of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ) and—

(i) a detailed plan in relation to the development work is prepared,

(ii) a binding contract in writing, under which the expenditure on the development is incurred, is in existence, and

(iii) work to the value of 5 per cent of the development costs is carried out,

not later than 31 December 2004.”,

(f) in section 372U—

(i) in subsection (1), by substituting the following for the definition of “qualifying period”:

“ ‘qualifying period’ means the period commencing on 1 July 1999 and ending on—

(a) 31 December 2004, or

(b) where subsection (1A) applies, 31 July 2006;”,

and

(ii) by inserting the following subsection after subsection (1):

“(1A) This subsection shall apply, as respects capital expenditure incurred on the construction or refurbishment of a building or structure, if—

(a)  (i) a planning application (not being an application for outline permission within the meaning of section 36 of the Planning and Development Act 2000 ), in so far as planning permission is required, in respect of the construction or refurbishment work on the building or structure represented by that expenditure, is made in accordance with the Planning and Development Regulations 2001 to 2003,

(ii) an acknowledgement of the application, which confirms that the application was received on or before 31 December 2004, is issued by the planning authority in accordance with article 26(2) of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ), and

(iii) the application is not an invalid application in respect of which a notice is issued by the planning authority in accordance with article 26(5) of those regulations,

(b)  (i) a planning application, in so far as planning permission was required, in respect of the construction or refurbishment work on the building or structure represented by that expenditure, was made in accordance with the Local Government (Planning and Development) Regulations 1994 ( S.I. No. 86 of 1994 ), not being an application for outline permission within the meaning of article 3 of those regulations,

(ii) an acknowledgement of the application, which confirms that the application was received on or before 10 March 2002, was issued by the planning authority in accordance with article 29(2)(a) of the regulations referred to in subparagraph (i), and

(iii) the application was not an invalid application in respect of which a notice was issued by the planning authority in accordance with article 29(2)(b)(i) of those regulations,

or

(c) where the construction or refurbishment work on the building or structure represented by that expenditure is exempted development for the purposes of the Planning and Development Act 2000 by virtue of section 4 of that Act or by virtue of Part 2 of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ) and—

(i) a detailed plan in relation to the development work is prepared,

(ii) a binding contract in writing, under which the expenditure on the development is incurred, is in existence, and

(iii) work to the value of 5 per cent of the development costs is carried out,

not later than 31 December 2004.”,

(g) in section 372W(2)(c)(i), by substituting “this Chapter or Chapter 11” for “this Chapter”,

(h) in section 372AA—

(i) in subsection (1), by substituting the following for the definition of “qualifying period”:

“ ‘qualifying period’ means, subject to section 372AB, the period commencing on 6 April 2001 and ending on—

(a) 31 December 2004, or

(b) where subsection (1A) applies, 31 July 2006;”,

and

(ii) by inserting the following subsection after subsection (1):

“(1A) This subsection shall apply, as respects capital expenditure incurred on the construction or refurbishment of a building or structure, if—

(a)  (i) a planning application (not being an application for outline permission within the meaning of section 36 of the Planning and Development Act 2000 ), in so far as planning permission is required, in respect of the construction or refurbishment work on the building or structure represented by that expenditure, is made in accordance with the Planning and Development Regulations 2001 to 2003,

(ii) an acknowledgement of the application, which confirms that the application was received on or before 31 December 2004, is issued by the planning authority in accordance with article 26(2) of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ), and

(iii) the application is not an invalid application in respect of which a notice is issued by the planning authority in accordance with article 26(5) of those regulations,

(b)  (i) a planning application, in so far as planning permission was required, in respect of the construction or refurbishment work on the building or structure represented by that expenditure, was made in accordance with the Local Government (Planning and Development) Regulations 1994 ( S.I. No. 86 of 1994 ), not being an application for outline permission within the meaning of article 3 of those regulations,

(ii) an acknowledgement of the application, which confirms that the application was received on or before 10 March 2002, was issued by the planning authority in accordance with article 29(2)(a) of the regulations referred to in subparagraph (i), and

(iii) the application was not an invalid application in respect of which a notice was issued by the planning authority in accordance with article 29(2)(b)(i) of those regulations,

or

(c) where the construction or refurbishment work on the building or structure represented by that expenditure is exempted development for the purposes of the Planning and Development Act 2000 by virtue of section 4 of that Act or by virtue of Part 2 of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ) and—

(i) a detailed plan in relation to the development work is prepared,

(ii) a binding contract in writing, under which the expenditure on the development is incurred, is in existence, and

(iii) work to the value of 5 per cent of the development costs is carried out,

not later than 31 December 2004.”,

(i) in section 372AB(1)(c)—

(i) in subparagraph (i), by substituting “6 April 2001” for “the day referred to in paragraph (a) of the definition of ‘qualifying period’ in section 372AA”, and

(ii) by substituting the following for “or end after 31 December 2003”:

“or end after 31 December 2004, or—

(I) in the case of sections 372AC and 372AD where section 372AA(1A) applies, end after 31 July 2006, and

(II) in the case of any provision of Chapter 11 of this Part where section 372AL(1A) applies, end after 31 July 2006.”,

and

(j) in section 372AL—

(i) in subsection (1)—

(I) in paragraph (a)(ii) by substituting “31 July 2006” for “31 December 2004”,

(II) in paragraph (b) by substituting “and ending on 31 December 2004 or, where subsection (1A) applies, ending on 31 July 2006” for “and ending on 31 December 2004”,

(III) in paragraphs (c)(i) and (c)(ii) by substituting “and ending on 31 December 2004 or, where subsection (1A) applies, ending on 31 July 2006” for “and ending on 31 December 2004”,

(IV) in paragraph (d) by substituting “and ending on 31 December 2004 or, where subsection (1A) applies, ending on 31 July 2006” for “and ending on 31 December 2004”,

(V) in paragraph (e) by substituting “and ending on 31 December 2004 or, where subsection (1A) applies, ending on 31 July 2006” for “and ending on 31 December 2004”, and

(VI) in paragraph (f) by substituting the following for subparagraph (ii):

“(ii) where subsection (1A) applies, 31 July 2006.”,

and

(ii) by inserting the following subsection after subsection (1):

“(1A) This subsection shall apply, as respects expenditure incurred on the construction, conversion or, as the case may be, refurbishment of a building or structure, if—

(a)  (i) a planning application (not being an application for outline permission within the meaning of section 36 of the Planning and Development Act 2000 ), in so far as planning permission is required, in respect of the construction, conversion or refurbishment work on the building or structure represented by that expenditure, is made in accordance with the Planning and Development Regulations 2001 to 2003,

(ii) an acknowledgement of the application, which confirms that the application was received on or before 31 December 2004, is issued by the planning authority in accordance with article 26(2) of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ), and

(iii) the application is not an invalid application in respect of which a notice is issued by the planning authority in accordance with article 26(5) of those regulations,

(b)  (i) a planning application, in so far as planning permission was required, in respect of the construction, conversion or refurbishment work on the building or structure represented by that expenditure, was made in accordance with the Local Government (Planning and Development) Regulations 1994 ( S.I. No. 86 of 1994 ), not being an application for outline permission within the meaning of article 3 of those regulations,

(ii) an acknowledgement of the application, which confirms that the application was received on or before 10 March 2002, was issued by the planning authority in accordance with article 29(2)(a) of the regulations referred to in subparagraph (i), and

(iii) the application was not an invalid application in respect of which a notice was issued by the planning authority in accordance with article 29(2)(b)(i) of those regulations,

or

(c) where the construction, conversion or refurbishment work on the building or structure represented by that expenditure is exempted development for the purposes of the Planning and Development Act 2000 by virtue of section 4 of that Act or by virtue of Part 2 of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ) and—

(i) a detailed plan in relation to the development work is prepared,

(ii) a binding contract in writing, under which the expenditure on the development is incurred, is in existence, and

(iii) work to the value of 5 per cent of the development costs is carried out,

not later than 31 December 2004.”,

(2) (a) Paragraphs (b)(i)(I), (b)(i)(II), (b)(ii), (c)(i), (d)(ii) and (e) of subsection (1) shall come into operation on the making of an order to that effect by the Minister for Finance.

(b) Paragraphs (d)(i), (g) and (i)(i) of subsection (1) are deemed to have applied as on and from 1 January 2002.

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

27.—Section 843 of the Principal Act is amended—

(a) in subsection (1), by inserting the following after the definition of “qualifying expenditure”:

“ ‘qualifying period’ means the period commencing on 1 July 1997 and ending on 31 July 2006;”,

(b) in subsection (2), by substituting “Subject to subsections (2A) to (7)” for “Subject to subsections (3) to (7)”,

(c) by inserting the following subsection after subsection (2):

“(2A) An allowance shall be given by virtue of subsection (2) in relation to any qualifying expenditure on a qualifying premises only in so far as that expenditure is incurred in the qualifying period.”,

(d) in subsection (3), by inserting “incurred in the qualifying period” after “qualifying expenditure”, and

(e) by inserting the following subsection after subsection (8):

“(9) For the purposes only of determining, in relation to a claim for an allowance by virtue of subsection (2), whether and to what extent capital expenditure incurred on the construction of a qualifying premises is incurred or not incurred in the qualifying period, only such an amount of that capital expenditure as is properly attributable to work on the construction of the premises actually carried out during the qualifying period shall (notwithstanding any other provision of the Tax Acts as to the time when any capital expenditure is or is to be treated as incurred) be treated as having been incurred in that period.”.

Amendment of section 481 (relief for investment in films) of Principal Act.

28.—(1) Section 481 of the Principal Act is amended—

(a) in subsection (1)—

(i) by inserting the following after the definition of “authorised officer”:

“ ‘eligible individual’ means an individual who is a citizen of Ireland or of another Member State of the European Communities, or an individual domiciled, resident or ordinarily resident in the State or in another Member State of the European Communities;”,

(ii) in the definition of “film”, by substituting the following for paragraph (a):

“(a) a film of a kind which is included within the categories of films eligible for certification by the Revenue Commissioners under subsection (2A), as specified in regulations made under subsection (2E), and”,

(iii) in the definition of “Minister” by substituting “Arts, Sport and Tourism” for “Arts, Heritage, Gaeltacht and the Islands”,

(iv) by substituting the following for the definition of “qualifying film”:

“ ‘qualifying film’ means a film in respect of which the Revenue Commissioners have issued a certificate under subsection (2A), which has not been revoked under subsection (2D);”,

(v) in the definition of “qualifying period” by substituting “31 December 2008” for “31 December 2004”, and

(vi) in the definition of “relevant investment”—

(I) by substituting the following for paragraph (b):

“(b) paid by the allowable investor company or the qualifying individual, as the case may be, for the purpose of enabling the qualifying company to produce a film in respect of which, at the time such sum of money is paid, the authorised officer has given notice in writing to the qualifying company that the Revenue Commissioners are satisfied for the time being that an application in writing, in the form prescribed by the Revenue Commissioners and containing such information as may be specified in regulations made under subsection (2E), has been made to enable the Revenue Commissioners to consider whether a certificate should be issued to that company under subsection (2A), and”,

and

(II) by substituting “other than a provision for its repayment in the event of the Revenue Commissioners not giving a certificate under subsection (2A)” for “other than a provision for its repayment in the event of the Minister not giving a certificate under subsection (2)”,

(b) in subsection (2)—

(i) by substituting the following for paragraphs (a) and (b):

“(a) The Minister, on request from the Revenue Commissioners following an application to them by a qualifying company for a certificate under subsection (2A) in relation to a film to be produced by the company, may subject to paragraph (b) and in accordance with regulations made under subsection (2E), give authorisation to the Revenue Commissioners that they may, subject to subsection (2A), issue a certificate under that subsection to the qualifying company in relation to that film.

(b) In considering whether to give the authorisation referred to in paragraph (a), the Minister, in accordance with regulations made under subsection (2E), shall have regard to—

(i) the categories of films eligible for certification by the Revenue Commissioners under subsection (2A), as specified in those regulations, and

(ii) any contribution which the production of the film is expected to make to either or both the development of the film industry in the State and the promotion and expression of Irish culture,

and where such authorisation is given, the Minister, having regard to those matters, shall specify in the authorisation such conditions, as the Minister may consider proper, including a condition—

(I) that not less than—

(A) 75 per cent, or

(B) in the case of a co-production (as specified in regulations made under subsection (2E)), such lower percentage, not being less than 10 per cent, which, the Minister specifies in the authorisation,

of the work on the production of the film shall be carried out in the State,

(II) in relation to—

(A) the employment and responsibilities of the producer, and the producer company, of a film for the production of that film, and

(B) the employment of personnel, including trainees, (other than the producer) for the production of that film.”,

(ii) in paragraph (c), by substituting “€15,000,000” for “€10,480,000”, and

(iii) by deleting paragraphs (d) and (e),

(c) by inserting the following after subsection (2):

“(2A)  (a) Subject to the provisions of this subsection, the Revenue Commissioners, on the making of an application by a qualifying company, may, in accordance with regulations made under subsection (2E), issue a certificate to a qualifying company stating, in relation to a film to be produced by the company, that the film may be treated as a qualifying film for the purpose of this section.

(b) The Revenue Commissioners shall not issue a certificate under paragraph (a) unless given authorisation that they may do so by the Minister under subsection (2)(a).

(c) Nothing in this section shall be construed as obliging the Revenue Commissioners to issue a certificate under paragraph (a) and in any case where, in relation to a film, the principal photography has commenced, the first animation drawings have commenced or the first model movement has commenced, as the case may be, before application is made by a qualifying company, the Revenue Commissioners shall not issue a certificate under that paragraph.

(d) An application for a certificate under paragraph (a) shall be in the form prescribed by the Revenue Commissioners and shall contain such information as may be specified in regulations made under subsection (2E).

(e) In considering whether to issue a certificate under paragraph (a) the Revenue Commissioners shall, in respect of the proposed production of the film, examine all aspects of the qualifying company's proposal.

(f) The Revenue Commissioners may refuse to issue a certificate under paragraph (a) if they are not satisfied with any aspect of the qualifying company's application and, in particular, the Revenue Commissioners may refuse to issue a certificate—

(i) if they have reason to believe that the budget or any particular item of proposed expenditure in the budget is inflated, or

(ii) where—

(I) they are not satisfied that there is a commercial rationale for the corporate structure proposed—

(A) for the production, financing, distribution or sale of the film, or

(B) for all of those purposes,

or

(II) they are of the opinion that the corporate structure proposed would hinder the Revenue Commissioners in verifying compliance with any of the provisions governing the relief.

(g) A certificate issued by the Revenue Commissioners under paragraph (a) shall be subject to such conditions specified in the certificate as the Revenue Commissioners may consider proper, having regard, in particular, to the examination referred to in paragraph (e) and any conditions specified in the authorisation given by the Minister under subsection (2)(a), and in particular the Revenue Commissioners shall specify in the certificate a condition—

(i) in relation to the percentage of the work on the production of the film which shall be carried out in the State, as specified by the Minister in the authorisation,

(ii) in relation to the matters specified by the Minister in the authorisation by virtue of subsection (2)(b)(II),

(iii) subject to subsection (2)(c), that the amount per cent of the total cost of production of the film which may be met by relevant investments shall not exceed the specified percentage, as referred to in that subsection,

(iv) in relation to the minimum amount of money to be expended directly—

(I) on the employment of eligible individuals, and

(II) on the provision of certain goods, services and facilities, as set out in regulations made under subsection (2E),

on the production of the qualifying film.

(h) The Revenue Commissioners, having consulted with the Minister as appropriate, may amend or revoke any condition (including a condition added by virtue of this paragraph) specified in the certificate, or add to such conditions, by giving notice in writing to the qualifying company concerned of the amendment, revocation or addition, and this section shall apply as if—

(i) a condition so amended or added by the notice was specified in the certificate, and

(ii) a condition so revoked was not specified in the certificate.

(2B) In carrying out their functions under this section the Revenue Commissioners may—

(a) consult with any person, agency or body of persons, as in their opinion may be of assistance to them, and

(b) notwithstanding any obligation as to secrecy or other restriction on the disclosure of information imposed by, or under, the Tax Acts or any other statute or otherwise, disclose any detail in a qualifying company's application which they consider necessary for the purposes of such consultation.

(2C) A company shall not be regarded as a qualifying company for the purposes of this section—

(a) unless the company, in relation to a qualifying film, notifies the Revenue Commissioners in writing immediately when the principal photography has commenced, the first animation drawings have commenced or the first model movement has commenced, as appropriate,

(b) if the financial arrangements which the company enters into in relation to the qualifying film are—

(i) financial arrangements of any type with a person resident, registered or operating in a territory other than—

(I) a Member State of the European Communities, or

(II) a territory with the government of which, arrangements having the force of law by virtue of section 826(1)(a), have been made,

or

(ii) financial arrangements under which funds are channelled, directly or indirectly, to, or through, a territory other than a territory referred to in clause (I) or (II) of subparagraph (i),

(c) unless the company provides, when requested to do so by the Revenue Commissioners, for the purpose of verifying compliance with the provisions governing the relief or with any condition specified in a certificate issued by them under subsection (2A)(a), evidence to vouch each item of expenditure in the State or elsewhere on the production and distribution of the qualifying film, whether expended by the qualifying company or by any other person engaged, directly or indirectly, by the qualifying company to provide goods, services or facilities in relation to such production or distribution and, in particular, such evidence shall include—

(i) records required to be kept or retained by the company by virtue of section 886, and

(ii) records, in relation to the production and distribution of the qualifying film, required to be kept or retained by that other person by virtue of section 886, or which would be so required if that other person were subject to the provisions of that section,

and

(d) unless the company, within such time as is specified in the regulations made under subsection (2E)—

(i) notifies the Revenue Commissioners in writing of the date of completion of the production of the qualifying film,

(ii) provides to the Revenue Commissioners and to the Minister, such number of copies of the film in such format and manner as may be specified in those regulations, and

(iii) provides to the Revenue Commissioners, a compliance report, in such format and manner specified in those regulations, which proves to the satisfaction of the Revenue Commissioners that—

(I) the provisions of this section in so far as they apply in relation to the company and a qualifying film have been met, and

(II) any conditions attaching to a certificate issued to the company in relation to a qualifying film under subsection (2A)(a) have been fulfilled.

(2D) Where a company fails—

(a) to comply with any of the provisions of subsection (2C) or any other provision governing the relief, or

(b) to fulfil any of the conditions to which a certificate issued to it under paragraph (a) of subsection (2A) is subject, by virtue of paragraph (g) or (h) of that subsection,

that failure shall constitute the failure of an event to happen by reason of which relief may be withdrawn under subsection (11) and the Revenue Commissioners may, by notice in writing served by registered post on the company, revoke the certificate.

(2E) The Revenue Commissioners with the consent of the Minister for Finance, and with the consent of the Minister in relation to the matters to be considered regarding the issue of an authorisation under subsection (2), shall make regulations with respect to the administration by them of the relief under this section and with respect to the matters to be considered by the Minister for the purposes of that subsection and, without prejudice to the generality of the foregoing, regulations under this subsection may include provision—

(a) governing the application for certification pursuant to subsection (2A) and the information and documents to be provided in or with such application,

(b) specifying the categories of films eligible for certification by the Revenue Commissioners under subsection (2A),

(c) prescribing the form of such application,

(d) governing the records that a qualifying company shall maintain or provide to the Revenue Commissioners,

(e) governing the period for which, and the place at which, such records shall be maintained,

(f) specifying the time within which a qualifying company shall notify the Revenue Commissioners of the completion of the production of a qualifying film,

(g) specifying the time within which, and the format, number and manner in which, copies of a qualifying film shall be provided to the Revenue Commissioners and to the Minister,

(h) specifying the form and content of the compliance report to be provided to the Revenue Commissioners, the manner in which such report shall be made and verified, the documents to accompany the report and the time within which such report shall be provided,

(i) governing the type of expenditure which may be accepted by the Revenue Commissioners as expenditure on the production of a qualifying film,

(j) governing the provision of the goods, services and facilities referred to in subsection (2A)(g)(iv)(II), including the place of origin of those goods, services and facilities, the place in which they are provided and the location of the supplier,

(k) specifying the currency exchange rate to be applied to expenditure on the production of a qualifying film, and

(l) specifying the criteria to be considered by the Minister, in relation to the matters referred to in subsections (2)(b)(i) and (ii)—

(i) in deciding whether to give authorisation to the Revenue Commissioners under subsection (2)(a), and

(ii) in specifying conditions in such authorisation, as provided for in subsection (2)(b),

and the information required for those purposes to be included in the application made to the Revenue Commissioners under subsection (2A) by a qualifying company.”,

(d) in subsection (8), by substituting “the year of assessment 2008” for “the year of assessment 2004”,

(e) in subsection (9), by substituting “the year of assessment 2008” for “the year of assessment 2004”,

(f) in subsection (11)(a), by substituting “the revocation, under subsection (2D), by the Revenue Commissioners of a certificate issued by them under subsection (2A)” for “the revocation by the Minister of a certificate under subsection (2)”,

(g) in subsection (13), by deleting paragraphs (b) and (c), and

(h) by inserting the following subsection after subsection (21):

“(22) The Revenue Commissioners shall be responsible for verifying compliance with conditions specified in any certificate issued by the Minister prior to the day appointed by order made by the Minister for Finance for the coming into operation of this subsection, where the qualifying company has not, prior to the day so appointed, submitted the items, statements, reports or other matters required to be submitted to the Minister under the terms of such certificate to enable the Minister to verify such compliance.

(23) 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.”.

(2) This section shall come into operation on such day or days as the Minister for Finance may by order or orders appoint and different days may be appointed for different purposes or different provisions.

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

29.—(1) Chapter 1A (inserted by the Finance Act 2000 ) of Part 27 of the Principal Act is amended—

(a) in the definition of “chargeable event” in section 739B(1)—

(i) by deleting “and” in paragraph (c), and

(ii) by inserting the following after paragraph (c):

“(cc) the appropriation or cancellation of units of a unit holder by an investment undertaking for the purposes of meeting the amount of appropriate tax payable on any gain arising by virtue of paragraph (c), and”,

(b) in section 739D—

(i) by deleting “and” after “unit holder,” in subsection (2)(d)(ii),

(ii) by inserting the following after subsection (2)(d):

“(dd) where the chargeable event is the appropriation or cancellation of units by an investment undertaking as a consequence of the transfer by a unit holder of entitlement to a unit, the amount determined under subsection (5A), and”,

and

(iii) by inserting the following after subsection (5):

“(5A) The amount referred to in subsection (2)(dd) is the amount determined by the formula—

where—

A  is the appropriate tax payable on the transfer by a unit holder of entitlement to a unit in accordance with subsection (2)(d),

G  is the amount of the gain on that transfer of that unit divided by the value of that unit, and

S  is the standard rate per cent (within the meaning of section 4).”,

and

(c) in section 739E—

(i) in subsection (1)(b) by substituting “paragraph (b), (c), (d) or (dd)” for “paragraph (b), (c) or (d)”, and

(ii) in subsection (3)—

(I) by deleting “or” in paragraph (b)(i), and

(II) by inserting the following after paragraph (b)(i):

“(ia) the appropriation or cancellation of units as a consequence of the transfer by a unit holder of entitlement to a unit, or”.

(2) This section applies as respects the appropriation or cancellation of a unit (within the meaning of section 739B of the Principal Act) on or after 4 February 2004.

Amendment of Chapter 4 (certain offshore funds — taxation and returns) of Part 27 of Principal Act.

30.—Chapter 4 of Part 27 of the Principal Act is amended—

(a) in section 747E(4)(b) by substituting “section 396, 396B” for “section 396”, and

(b) by inserting the following after section 747E:

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

31.—(1) Schedule 24 of the Principal Act is amended—

(a) in paragraph 9A—

(i) in subparagraph (4)(b) by substituting “5 per cent” for “25 per cent”, and

(ii) in subparagraph (5)(a) by deleting “, in respect of taxes covered by these arrangements,”,

(b) in paragraph 9B—

(i) in subparagraph (2) by substituting the following for “underlying tax to be taken into account.”:

“underlying tax to be taken into account: and for this purpose there shall, subject to Part 1, be taken into account as if it were tax payable under the law of the territory in which the third company is resident—

(i) any income tax or corporation tax payable in the State by the foreign company in respect of its profits, and

(ii) any tax which, under the law of any other territory, is payable by the foreign company in respect of its profits.”,

(ii) in subparagraph (5)—

(I) in clause (b)(i) by substituting “5 per cent” for “25 per cent”, and

(II) in clause (b)(iii) by substituting “5 per cent” for “10 per cent”,

and

(c) by adding the following after paragraph 9D—

“Treatment of unrelieved foreign tax

9E. (1) (a) In this paragraph—

‘the aggregate amount of corporation tax payable by a company for an accounting period in respect of relevant dividends received by the company in the accounting period from foreign companies’ means so much of the corporation tax which, apart from this paragraph, would be payable by the company for that accounting period as would not have been payable had those dividends not been received by the company;

‘foreign company’ means a company resident outside the State;

‘unrelieved foreign tax’ has the meaning assigned to it in subparagraph (2).

(b) For the purposes of this paragraph, a dividend is a relevant dividend if it is received by a company (in this clause referred to as the ‘receiving company’) from a company which is not resident in the State (in this clause referred to as the ‘paying company’) and the paying company is related to the receiving company (within the meaning of paragraph 9B(5)(b)).

(2) Where as respects a relevant dividend received in an accounting period by a company any part of the foreign tax cannot, apart from this paragraph, be allowed as a credit against any of the Irish taxes and, accordingly, the amount of income representing the dividend is treated under paragraph 7(3)(c) as reduced by that part of the foreign tax, then an amount determined by the formula—

where—

R is the rate per cent specified in section 21A(3), and

D is the amount of the part of the foreign tax by which the income is to be treated under paragraph 7(3)(c) as reduced,

shall be treated for the purposes of subparagraph (3) as unrelieved foreign tax of that accounting period.

(3) The aggregate amount of corporation tax payable by a company for an accounting period in respect of relevant dividends received by the company in that accounting period from foreign companies shall be reduced by the unrelieved foreign tax of that accounting period.

(4) Where the unrelieved foreign tax in relation to an accounting period of a company exceeds the aggregate amount of corporation tax payable by the company for the accounting period in respect of relevant dividends received by the company in that accounting period from foreign companies, the excess shall be carried forward and treated as unrelieved foreign tax of the next succeeding accounting period, and so on for succeeding accounting periods.”.

(2) This section comes into operation on such day or days as the Minister for Finance by order appoints, 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 section 817C (restriction on deductibility of certain interest) of Principal Act.

32.—(1) Section 817C (inserted by the Finance Act 2003 ) of the Principal Act is amended—

(a) in subsection (2) by substituting “Subject to subsection (2A), this section applies where” for “This section applies where”, and

(b) by inserting the following after subsection (2):

“(2A) (a) This section does not apply where the connected person referred to in subsection (2) is a company which—

(i) is not resident in the State, and

(ii) is not under the control, whether directly or indirectly, of a person who is, or persons who are, resident in the State.

(b) For the purposes of this subsection—

(i) ‘control’ shall be construed in accordance with subsections (2) to (6) of section 432 as if in subsection (6) of that section for ‘5 or fewer participators’ there were substituted ‘persons resident in the State’, and

(ii) a company shall not be treated as under the control whether directly or indirectly, of a person or persons if that person is or those persons are, in turn under the control of another person or other persons.”.

(2) This section is deemed to have applied as respects any chargeable period ending on or after 6 February 2003.

Chapter 4

Corporation Tax

Tax credit for research and development expenditure, etc.

33.—(1) The Principal Act is amended—

(a) by substituting the following for section 766:

and

(b) in section 141(5)(a), by substituting the following for the definition of “research and development activities”:

“‘research and development activities’ has the meaning that it would have in section 766 if section 33 of the Finance Act 2004 had not been enacted.”.

(2) This section comes into operation on such day as the Minister for Finance may appoint by order and has effect as respects expenditure incurred on or after that day.

Amendment of section 831 (implementation of Council Directive No. 90/435/EEC concerning the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States) of Principal Act.

34.—Section 831 of the Principal Act is amended—

(a) in subsection (1)—

(i) in the definition of “company” by deleting “, other than in the expression ‘unlimited company’ in subsection (5A),”,

(ii) in the definition of “the Directive” by inserting “, as amended by Council Directive No. 2003/123/EC of 22 December 2003¹ ,” after “1990”,

(iii) in the definition of “parent company”—

(I) by substituting the following for paragraph (i):

“(i) a company which owns at least 5 per cent of the share capital of another company which is not resident in the State, or”,

and

(II) by substituting “5 per cent” for “25 per cent” in each place where it occurs in paragraphs (ii), (I) and (II),

(b) in subsection (2)—

(i) by deleting “which is resident in this State”, and

(ii) in paragraph (a)—

(I) by substituting the following for subparagraph (i):

“(i) any witholding tax charged on the distribution by a Member State pursuant to a derogation duly given from Article 5.1 of the Directive,”,

(II) in subparagraph (ii) by substituting “resident, and” for “resident,”, and

(III) by inserting the following after subparagraph (ii):

“(iii) any foreign tax borne by a company that would be allowed under paragraph 9B of Schedule 24 if in subparagraphs (2) and (3) ‘and is connected with the relevant company’ in each place where it occurs were deleted.”,

(c) by inserting the following after subsection (2):

“(2A) Subject to subsections (3) and (4), where by virtue of the legal characteristics of a subsidiary (being a company which is not resident in the State) of a parent company, the parent company is chargeable to tax in the State on its share of the profits of the subsidiary company as they arise credit shall be allowed for so much of—

(a) any foreign tax borne by the subsidiary, and

(b) any foreign tax that would be treated as tax paid by the subsidiary company under paragraph 9B of Schedule 24 if—

(i) the subsidiary company were the foreign company for the purposes of that paragraph, and

(ii) in subparagraphs (2) and (3) of that paragraph ‘and is connected with the relevant company’ in both places where it occurs were deleted,

as is properly attributable to the proportion of the subsidiary's profits which are chargeable on the parent company in the State against corporation tax in respect of the profits so chargeable on the parent company to the extent that credit for such foreign tax would not otherwise be so allowed.”,

(d) in subsection (3) by inserting “or (2A)” after “(2)(a)”, and

(e) by deleting subsection (5A).

Taxation of certain short-term leases plant and machinery.

35.—(1) Chapter 5 of Part 4 of the Principal Act is amended by inserting the following after section 80:

“80A.—(1) In this section—

‘asset’ means machinery or plant;

‘fair value’, in relation to a leased asset, means an amount equal to such consideration as might be expected to be paid for the asset at the inception of the lease on a sale negotiated on an arm's length basis, less any grants receivable by the lessor towards the purchase of the asset;

‘inception of the lease’ means the date on which the leased asset is brought into use by the lessee or the date from which lease payments under the lease first accrue, whichever is the earlier;

‘lease payments’ means the lease payments over the term of the lease to be paid to the lessor in relation to the leased asset, and includes any residual amount to be paid to the lessor at or after the end of the term of the lease and guaranteed by the lessee or by a person connected with the lessee or under the terms of any scheme or arrangement between the lessee and any other person;

‘lessee’ and ‘lessor’ have the same meanings, respectively, as in section 403;

‘normal accounting practice’ means normal accounting practice in relation to the accounts of companies incorporated in the State;

‘predictable useful life’, in relation to an asset, means the useful life of the asset estimated at the inception of the lease, having regard to the purpose for which the asset was acquired and on the assumption that—

(a) its life will end when it ceases to be useful for the purpose for which it was acquired, and

(b) it will be used in the normal manner and to the normal extent throughout its life;

‘relevant period’ means the period—

(a) beginning at the inception of the lease, and

(b) ending at the earliest time at which the aggregate of amounts of the discounted present value at the inception of the lease of lease payments under the terms of the lease which are payable at or before that time amounts to 90 per cent or more of the fair value of the leased asset, and, for the purposes of this definition, relevant lease payments shall be discounted at a rate which, when applied at the inception of the lease to the amount of the relevant lease payments, produces discounted present values the aggregate of which equals the amount of the fair value of the leased asset at the inception of the lease;

‘relevant short-term asset’ in relation to a company means an asset—

(a) the predictable useful life of which does not exceed 8 years, and

(b) the expenditure on which is incurred by the company on or after the date referred to in subsection (3);

‘relevant short-term lease’ means a lease—

(a) of a relevant short-term asset, and

(b) the relevant period in relation to which does not exceed 8 years.

(2) Where a company makes a claim under this section—

(a) the amount to be included in the trading income of the company in respect of all relevant short-term leases is the amount of income from such leases computed in accordance with normal accounting practice,

(b) the company will not be entitled to any allowance in respect of expenditure incurred on assets which are the subject of relevant short-term leases under Part 9, section 670, Part 29 or any other provision of the Tax Acts relating to the making of allowances in accordance with Part 9, and

(c) the income from relevant short-term leases will be treated for the purposes of section 403 as if it were not income from a trade of leasing.

(3) A claim by a company under this section shall be made by the time by which a return under section 951 falls to be made for an accounting period of the company and shall apply as respects expenditure incurred on or after the date on which the accounting period begins.”.

(2) This section applies as respects accounting periods ending on or after 4 February, 2004.

Amendment of section 434 (distributions to be taken into account and meaning of “distributable income”, “investment income”, “estate income”, etc.) of Principal Act.

36.—Section 434 of the Principal Act is amended in subsection (1) by substituting the following for the definition of “investment income”:

“‘investment income’ of a company means income other than estate income which, if the company were an individual, would not be earned income within the meaning of section 3, but, without prejudice to the meaning of ‘franked investment income’ in this section, does not include—

(a) any interest or dividends on investments which, having regard to the nature of the company's trade, would be taken into account as trading receipts in computing trading income but for the fact that they have been subjected to tax otherwise than as trading receipts, or but for the fact that by virtue of section 129 they are not to be taken into account in computing income for corporation tax, and

(b) any dividends or other distributions received by the company in respect of shares at a time when any gain on a disposal of the shares would not have been a chargeable gain by virtue of section 626B or would not have been a chargeable gain by virtue of section 626B if paragraphs (a) and (b) of subsection (3) of that section were deleted.”.

Amendment of section 396B (relief for certain trading losses on a value basis) of Principal Act.

37.—(1) Section 396B of the Principal Act is amended, in subsection (1), by substituting the following for the definition of “relevant corporation tax”:

“‘relevant corporation tax’, in relation to an accounting period of a company, means the corporation tax which would be chargeable on the company for the accounting period apart from—

(a) this section and sections 239, 241, 420B, 440 and 441, and

(b) where the company carries on a life business (within the meaning of section 706 of the Principal Act), any corporation tax which would be attributable to policyholders' profits;”.

(2) This section shall apply as respects any claim for relief made on or after 4 February 2004.

Amendment of section 420B (group relief: relief for certain losses on a value basis) of Principal Act.

38.—(1) Section 420B of the Principal Act is amended, in subsection (1), by substituting the following for the definition of “relevant corporation tax”:

“‘relevant corporation tax’, in relation to an accounting period of a company, means the corporation tax which would be chargeable on the company for the accounting period apart from—

(a) this section and sections 239, 241, 440 and 441, and

(b) where the company carries on a life business (within the meaning of section 706 of the Principal Act), any corporation tax which would be attributable to policyholders' profits;”.

(2) This section shall apply as respects any claim for relief made on or after 4 February 2004.

Amendment of section 486B (relief for investment in renewable energy generation) of Principal Act.

39.—(1) Section 486B of the Principal Act is amended in subsection (1) by substituting “31 December 2006” for “31 December 2004” in the definition of “qualifying period”.

(2) Subsection (1) comes into operation on such day as the Minister for Finance may appoint by order.

Amendment of Schedule 4 (exemption of specified non-commercial State sponsored bodies from certain tax provisions) to Principal Act.

40.—Schedule 4 to the Principal Act is amended by inserting “83A. The Personal Injuries Assessment Board.” after “83. The Pensions Board.”.

Exemption from tax for certain interest and royalties payments.

41.—(1) Part 8 of the Principal Act is amended by substituting the provisions set out in Schedule 1 for Chapter 6 (inserted by the European Communities (Abolition of Withholding Tax on Certain Interest and Royalties) Regulations 2003 ( S.I. No. 721 of 2003 )).

(2) The European Communities (Abolition of Withholding Tax on Certain Interest and Royalties) Regulations 2003 are revoked.

Exemption from tax in the case of gains on certain disposals of shares.

42.—(1) The Principal Act is amended—

(a) in Chapter 1 of Part 20 by inserting the following after section 626A: