Finance Act, 2000

• Permanent Page URL

Chapter 5

Corporation Tax

Amendment of section 21A (higher rate of corporation tax) of Principal Act.

75.—(1) Section 21A (inserted by the Finance Act, 1999 ) of the Principal Act is amended—

(a) in subsection (1)—

(i) by the substitution for paragraph (a) of the definition of “excepted operations” of the following:

“(a) dealing in or developing land, other than such part of that operation or activity as consists of—

(i) construction operations, or

(ii) dealing by a company in land which, in relation to the company, is qualifying land,”,

(ii) by the insertion after the definition of “excepted trade” of the following definition:

“‘exempt development’ means a development within Class 1 of Part 1 of the Second Schedule to the Local Government Planning and Development Regulations, 1994 ( S.I. No. 86 of 1994 ), which complies with the conditions and limitations specified in column 2 of that Part which relate to that Class;”,

and

(iii) by the insertion, after the definition of “petroleum rights” of the following definition:

“‘qualifying land’, in relation to a company, means land which is disposed of at any time by the company, being land—

(a) on which a building or structure had been constructed by or for the company before that time, and

(b) which had been developed by or for the company to such an extent that it could reasonably be expected at that time that no further development (within the meaning of section 639) of the land would be carried out in the period of 20 years beginning at that time (other than a development which is not material and which is intended to facilitate the occupation of, and the use or enjoyment of, the building or structure for the purposes for which it was constructed) and for those purposes a development of land on which a building or buildings had been constructed shall not be material if it consists of one or both of the following—

(i) an exempt development, and

(ii) a development, not being an exempt development, if the total floor area of the building or buildings on the land after such development is not greater than 120 per cent of the total floor area of the building or buildings on the land calculated without regard to that development;”,

and

(b) by the substitution for subsections (3) and (4) of the following:

“(3) (a) Notwithstanding section 21, but subject to subsection (4), corporation tax shall be charged on the profits of companies, in so far as those profits consist of income chargeable to corporation tax under Case III, IV or V of Schedule D or of income of an excepted trade, at the rate of 25 per cent for the financial year 2000 and subsequent financial years.

(b) For the purposes of paragraph (a), the profits of a company for an accounting period shall be treated as consisting of income of an excepted trade to the extent of the income of the trade for the accounting period after deducting from the amount of that income the amount of charges on income paid in the accounting period wholly and exclusively for the purposes of that trade.

(4) This section shall not apply to the profits of a company for any accounting period—

(a) to the extent that those profits consist of income from the sale of goods within the meaning of section 454, and

(b) to the extent that those profits consist of income which arises in the course of any of the following trades—

(i) non-life insurance,

(ii) reinsurance, and

(iii) life business, in so far as the income is attributable to shareholders of the company.

(5)   (a) Notwithstanding subsection (1), as respects an accounting period ending before 1 January 2001, operations carried out in relation to residential development land (within the meaning of section 644A) shall be treated for the purposes of this section as not being construction operations if they consist of—

(i) the demolition or dismantling of any building or structure on the land,

(ii) the construction or demolition of any works forming part of the land, being roadworks, water mains, wells, sewers or installations for the purposes of land drainage, or

(iii) any other operations which are preparatory to residential development on the land other than the laying of foundations for such development.

(b) For the purposes of this subsection, where an accounting period of a company begins before 1 January 2001 and ends on or after that day, it shall be divided into two parts, one beginning on the day on which the accounting period begins and ending on 31 December 2000 and the other beginning on 1 January 2001 and ending on the day on which the accounting period ends, and both parts shall be treated for the purpose of this section as if they were separate accounting periods of the company.”.

(2) This section shall apply for the financial year 2000 and subsequent financial years.