Finance Act, 1971
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Amendment of section 20 of Finance Act, 1965. |
36.—(1) Section 20 of the Finance Act, 1965 , is hereby amended— | |
(a) by the deletion in subsection (1) in the definition of “company controlled by the deceased” of paragraphs (a) and (b), and by the insertion in that definition after “nominees of relatives of the deceased” of “or trustees of a settlement whose objects include the deceased or relatives of the deceased”, | ||
(b) by the deletion in the said subsection (1) of the definition of “control”, | ||
(c) by the substitution in the said subsection (1) for the definition of “relative” of the following definition: | ||
“‘relative’ means a person who is a relative of another person for the purposes of subsection (4) of section 31 of the Finance Act, 1941 , and references to children and to issue in that subsection shall be deemed, for the purposes of this subsection to include references to step-children and children adopted under the Adoption Acts, 1952 and 1964.”, | ||
(d) by the insertion in subsection (2) after paragraph (a) of the following paragraph: | ||
“(aa) a person shall be deemed to have control of a company at any time if— | ||
(i) he then had control of powers of voting on all questions, or on any particular question, affecting the company as a whole which, if exercised, would have yielded a majority of the votes capable of being exercised thereon, or could then have obtained such control by an exercise at that time of a power exercisable by him or at his direction or with his consent, or | ||
(ii) he then had the capacity, or could then by an exercise of a power exercisable by him or at his direction or with his consent obtain the capacity, to exercise or to control the exercise of any of the following powers, that is to say, the powers of a board of directors or of a governing director of the company, power to nominate a majority of the directors or a governing director thereof, power to veto the appointment of a director thereof, or powers of a like nature, or | ||
(iii) he then had a right to receive or the receipt of more than one half of the total amount of the dividends of the company, whether declared or not, and for the purposes of this subparagraph ‘dividend’ shall be deemed to include interest on any debentures of the company, or | ||
(iv) he then had an interest in the shares in or the debentures of the company or in both of an aggregate principal value representing one half or more of the aggregate principal value of the shares and debentures of the company,”, | ||
(e) by the insertion in subsection (5) after “deceased” of “at any time within the period of five years before his death”, | ||
(f) by the substitution for subsection (6) of the following subsection: | ||
“(6) Where there pass or are deemed to pass on a death shares in a company which is not a non-trading company and which was a company controlled by the deceased at any time within the period of five yearsbefore his death, the value of each such share shall, for all purposes of death duties, be determined as if it formed part of a group of shares sufficient in number to give the owner of the group control of the company, and for the purposes of this subsection ‘share’ includes any interest whatsoever in a company, by whatsoever name it is called, analogous to a share.”, and | ||
(g) by the insertion in subsection (7) after “controlled by the deceased” of “or was a company controlled by the deceased at any time within the period of five years before his death”. | ||
(2) (a) “income or benefits” in section 20 (4) (a) (ii) of the Finance Act, 1965 , shall be deemed to include any income of the company and any periodical payment out of the resources or at the expense of the company which the deceased received for his own benefit whether directly or indirectly or any such income or payment which the deceased was entitled to receive or could have become entitled to receive by the exercise of any power exercisable by him or with his consent and any such income or benefits shall be deemed to have accrued to him at the earliest time at which he could have obtained the receipt thereof and, without prejudice to the generality of the foregoing, the redemption by the company of any share or debenture of the company to which the deceased was entitled or the repayment of any other loan made by the deceased to the company shall be treated as income or benefits to which the deceased was entitled, and interest at the normal commercial rate on any interest free loan made by the company to the deceased shall likewise be deemed to be income to which the deceased was entitled, and | ||
(b) “payment” in the said section 20 (4) (a) (ii) shall be deemed to include a transfer of property and a set-off or release of an obligation: | ||
Provided however that, in any case in which it is shown to the satisfaction of the Revenue Commissioners or on appeal under section 10 of the Finance Act, 1894 , of the court entertaining the appeal, that any loan made by the deceased to the company, other than a loan to enable the company to acquire additional assets, was in all respects a transaction at arm's length with the company, the repayments on foot of such loan or the payment of interest on such loan shall not be treated as income or benefits for the purposes of the said section 20 (4) (a) (ii). | ||
(3) This section shall have effect only in cases in which the deceased dies after the passing of this Act. |