Finance Act, 1984

Taxation of income deemed to arise on certain sales of securities.

29.—(1) In this section—

“owner”, in relation to securities, means, at any time, the person who would be entitled, if the securities were redeemed at that time by the person who issued them, to the proceeds of the redemption;

“securities” includes—

(a) assets which are not chargeable assets for the purposes of capital gains tax by virtue of section 19 of the Capital Gains Tax Act, 1975 , and

(b) stocks, bonds and obligations of any government, municipal corporation, company or other body corporate whether creating or evidencing a charge on assets or not,

but does not include shares (within the meaning of the Companies Act, 1963 ) of a company (within the meaning aforesaid) or similar body;

“tax” means income tax or corporation tax, as appropriate.

(2) Where the owner of a security sells or transfers the security, then, if the result of the transaction is that any interest becoming payable in respect of the security is receivable otherwise than by that owner, the interest shall be deemed to have accrued on a day to day basis from the date on which the last payment of interest in respect of the security was made to that owner or, where no such payment has been made, from the date of the acquisition of the security by that owner and that owner shall be chargeable, under Case IV of Schedule D, on the interest so deemed to have accrued up to the date of the contract for the sale or transfer or the date of the payment of the consideration in respect of the sale, whichever is the later:

Provided that this section shall not apply—

(a) if the security has been held by the same owner for a continuous period of at least two years immediately before the date of such contract or the date of such payment, whichever is the later, the personal representatives of a deceased person whose estate is in the course of administration and the deceased person being regarded, for the purposes of this paragraph, as being the same owner, or

(b) if that owner is a person carrying on a trade which consists wholly or partly of dealing in securities the profits of which are chargeable to income tax or corporation tax under Case I of Schedule D for the year of assessment or, as the case may be, the accounting period in respect of which the consideration for the sale is taken into account in computing for the purposes of assessment to income tax or corporation tax for that year or accounting period the profits of the trade unless the trade consists wholly or partly of a life business the profits of which are not assessed to corporation tax under Case I of Schedule D for that accounting period, or

(c) if the sale or transfer is a sale or transfer by a wife to her husband at a time when she is treated as living with him for income tax purposes as provided in section 192 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , or a sale or transfer by a husband to a wife at such a time as aforesaid, the husband and the wife being regarded, for the purposes of paragraph (a), in the case of a transaction such as aforesaid or in the case of a sale or transfer by the husband or the wife to any other person after a transaction or transactions such as aforesaid, as being the same owner, or

(d) if the security is a security the interest on which is treated as a distribution for the purposes of the Corporation Tax Acts.

(3) In paragraph (b) of the proviso to subsection (2) “life business” shall have the meaning assigned to it by section 50 (2) of the Corporation Tax Act, 1976 .

(4) (a) For the purposes of identifying securities acquired by an owner with securities included in a sale or transfer by the owner, so far as the securities are of the same class, securities acquired at a later date shall be deemed to be so included before securities acquired at an earlier date.

(b) Securities shall be regarded as being of the same class where they entitle their owners to the same rights against the same person as to capital and interest and the same remedies for the enforcement of those rights.

(5) (a) Without prejudice to any other provisions of the Tax Acts requiring the disclosure of information, an inspector may, by notice in writing, require any person to whom paragraph (b) applies to furnish, within the time specified in the notice, such particulars as the inspector considers necessary for the purposes of this section and for the purpose of determining whether a charge to tax arises under this section.

(b) Paragraph (a) applies to—

(i) a person who issues a security,

(ii) any agent of such a person,

(iii) an owner of a security.

(6) Schedule 15 to the Income Tax Act, 1967 , is hereby amended by the insertion in column 2 thereof of “Finance Act, 1984, section 29 ”.

(7) This section shall have effect in relation to any sale or transfer made after the 25th day of January, 1984.