Finance Act, 1963

• Permanent Page URL

Amendment of section 34 of Income Tax Act, 1918.

3.—As respects tax for the year 1963-64 or a subsequent year of assessment—

(a) the following section shall be substituted for section 34 of the Income Tax Act, 1918:

“34.—(1) Subject to the provisions of this section, where in any year of assessment any person has sustained a loss in any trade, profession, employment or vocation, carried on by him either solely or in partnership, or in the occupation of lands for the purposes of husbandry only, or in the occupation of woodlands in respect of which he has elected to be charged to tax under Schedule D, he shall be entitled, on making a claim in that behalf, to such repayment of tax as is necessary to secure that the aggregate amount of tax for the year ultimately borne by him will not exceed the amount which would have been borne by him if his income had been reduced by the amount of the loss.

(2) (a) For the purposes of subsection (1) of this section the amount of tax which would have been borne if income had been reduced by the amount of a loss shall be computed—

(i) where the loss has been sustained by an individual, on the basis of treating the loss as reducing first the appropriate income of the individual, then the other income of the individual, then the appropriate income of the individual's wife or husband and then the other income of the individual's wife or husband, and

(ii) where the loss has been sustained in a trade carried on by a body corporate, on the basis of treating the loss as reducing first the income of the body corporate from profits or gains of the trade in which the loss was sustained and then the other income of the body corporate.

(b) For the purposes of subparagraph (i) of paragraph (a) of this subsection, ‘appropriate income’ means either earned or unearned income according as income arising during the same period as the loss to the person sustaining it from the same activity would have been that person's earned or unearned income.

(3) Except as is otherwise provided by paragraph (2) of Rule 15 of the Rules applicable to Cases I and II of Schedule D, the amount of a loss sustained in an activity shall, for the purposes of this section, be computed in like manner as profits or gains arising or accruing from the activity would be computed under the relevant provisions of the Income Tax Acts.

(4) Where repayment has been made to a person for any year under this section—

(a) no portion of the loss which, in the computation of the repayment, was treated as reducing his income shall be taken into account in computing the amount of an assessment for any subsequent year, and

(b) so much of the loss as was required, by subsection (2) of this section, to be treated as reducing income of a particular class or income from a particular source shall, for all the purposes of the Income Tax Acts, be regarded as a deduction to be made from income of that class or from income from that source, as the case may be, in computing the person's total income for the year.

(5) Any claim to repayment under this section shall be made, in a form prescribed by the Revenue Commissioners, not later than two years after the end of the year of assessment and shall be made to, and determined by, the inspector of taxes; but any person aggrieved by any determination of the inspector of taxes on any such claim may, on giving notice in writing to the said inspector within twenty-one days after notification to him of the determination, appeal to the Special Commissioners.

(6) The Special Commissioners shall hear and determine an appeal to them under subsection (5) of this section as if it were an appeal to them against an assessment to income tax and the provisions of the Income Tax Acts relating to the re-hearing of an appeal or the statement of a case for the opinion of the High Court on a point of law, shall, with the necessary modifications, apply accordingly.”;

(b) paragraph (2) of Rule 15 of the Rules applicable to Cases I and II of Schedule D shall have effect subject to the substitution of “repayment of tax under section 34 of” for “an adjustment of its liability by reference to the loss and to the aggregate amount of its income under the provisions contained in”;

(c) section 4 of the Finance Act, 1943 , shall not have effect;

(d) subsection (1) of section 52 of the Finance Act, 1958 , and subsection (1) of section 9 of the Finance Act, 1959 , shall have effect subject to the deletion of “and the aggregate amount of his income” in each subsection.