Finance Act, 2001

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Interpretation and application.

747B.—(1) In this Chapter—

‘chargeable period’ has the same meaning as in section 321(2);

‘EEA Agreement’ means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993;

‘EEA state’ means a State, other than the State, which is a Contracting Party to the EEA Agreement;

‘material interest’ shall be construed in accordance with section 743;

‘OECD’ means the organisation known as the Organisation for Economic Co-operation and Development;

‘offshore fund’ has the meaning assigned to it by section 743;

‘offshore state’ means a State, other than the State, which is—

(i) a Member State of the European Communities,

(ii) a State which is an EEA state, or

(iii) a State which is a member of the OECD, the government of which have entered into arrangements having the force of law by virtue of section 826;

‘relevant payment’ means any payment including a distribution made to a person in respect of a material interest in an offshore fund, where such payments are made annually or at more frequent intervals, other than a payment made in consideration of the disposal of an interest in the offshore fund;

‘return of income’ has the meaning assigned to it by section 1084;

‘specified return date for the chargeable period’ has the meaning assigned to it by section 950;

‘standard rate per cent’ has the meaning assigned to it by section 4.

(2) This Chapter applies to an offshore fund which—

(a) being a company, the company is resident in,

(b) being a unit trust scheme, the trustees of the unit trust scheme are resident in, or

(c) being any arrangements referred to in section 743(1), those arrangements take effect by virtue of the law of,

an offshore state.

(3) For the purposes of this Chapter—

(a) (i) there shall be a disposal of an asset if there would be such a disposal for the purposes of the Capital Gains Tax Acts, and

(ii) where, on the death of a person, an asset which the person was competent to dispose, is a material interest in an offshore fund to which this Chapter applies, then, notwithstanding section 573(2)(b), such material interest shall be deemed to be disposed of and reacquired by the person immediately before the death of the person for a consideration equal to its then market value,

(b) an income shall be correctly included in a return made by a person, only where that income is included in a return of income made by the person on or before the specified return date for the chargeable period in which the income arises, and

(c) details of a disposal shall be correctly included in a return made by a person, only where details of the disposal are included in a return of income made by the person or, where the person has died, his or her executor or administrator, on or before the specified return date for the chargeable period in which the disposal is made.

Return on acquisition of material interest.

747C.—Where in any chargeable period a person acquires a material interest in an offshore fund, the person shall, notwithstanding anything to the contrary in section 950 or 1084, be deemed for that chargeable period to be a chargeable person for the purposes of sections 951 and 1084, and the return of income to be delivered by the person for that chargeable period shall include the following particulars—

(a) the name and address of the offshore fund,

(b) a description, including the cost to the person, of the material interest acquired, and

(c) the name and address of the person through whom the material interest was acquired.

Payment in respect of offshore funds.

747D.—Where on or after 1 January 2001 a person who has a material interest in an offshore fund, is in receipt of a payment from the offshore fund, then—

(a) where the person is not a company, and

(i) the income represented by the payment is correctly included in a return made by the person, then notwithstanding section 15, the rate of income tax to be charged on the income shall be—

(I) where the payment is a relevant payment, the standard rate per cent, and

(II) where the payment is not a relevant payment and is not made in consideration of the disposal of an interest in the offshore fund, at the rate determined by the formula—

(S + 3) per cent,

where S is the standard rate per cent,

and

(ii) where the income represented by the payment is not correctly included in a return made by the person, the income shall be charged to income tax at a rate determined by section 15,

and

(b) where the person is a company, the income represented by the payment shall be charged to tax under Case III of Schedule D.

Disposal of an interest in offshore funds.

747E.—(1) Where on or after 1 January 2001 a person who has a material interest in an offshore fund, disposes of an interest in the offshore fund and the disposal gives rise to a gain computed in accordance with subsection (2), then, notwithstanding sections 645 and 747, the amount of that gain shall be treated as an amount of income chargeable to tax under Case IV of Schedule D, and where the person is not a company, and the person has correctly included details of the disposal in a return made by the person, the rate of income tax to be charged on that income shall, notwithstanding section 15, be the rate determined by the formula—

(S + 3) per cent,

where S is the standard rate per cent.

(2) The amount of the gain accruing on a disposal referred to in subsection (1) is the amount which would be the amount of a gain accruing on the disposal for the purposes of the Capital Gains Tax Acts, if it were computed without regard to—

(a) any charge to tax by virtue of this section, and

(b) section 556(2).

(3) Notwithstanding sections 538 and 546, where apart from this subsection the effect of any computation under subsection (2) would be to produce a loss, the gain on the disposal referred to in subsection (1) shall be treated as nil and accordingly for the purposes of this Chapter no loss shall be treated as accruing on such disposal.

(4) Where, as a result of a disposal by a person, an amount of income is chargeable to tax under Case IV of Schedule D, that amount shall not be reduced by a claim made by the person—

(a) where the person is not a company, under section 381 or 383, or

(b) where the person is a company, under section 396 or 399.

(5) Where an individual is chargeable to tax in accordance with subsection (1) in respect of an amount of income—

(a) the tax thereby payable, in so far as it is paid, shall be treated as an amount of capital gains tax paid, for the purposes of section 63 of the Finance Act, 1985 , and

(b) that amount of income shall not be included in reckonable income (within the meaning of the Health Contributions Regulations, 1979 ( S.I. No. 107 of 1979 )) for the purposes of those Regulations.”.