Finance Act, 1991

Amendment of section 29 (taxation of income deemed to arise on certain sales of securities) of Finance Act, 1984.

27.Section 29 of the Finance Act, 1984 , is hereby amended as respects any sale or transfer of securities (within the meaning of that section) made on or after the 18th day of May, 1991, by the substitution of the following subsections for subsections (2) and (3):

“(2) Subject to subsection (2A), where the owner of a security sells or transfers, or causes or authorises to be sold or transferred, the security and where any interest payable in respect of the security is receivable otherwise than by that owner, then, for the purposes of this section, interest payable in respect of the security shall be deemed to have accrued on a day to day basis from the date on which that owner acquired the security and that owner shall be chargeable under Case IV of Schedule D on interest so deemed to have accrued from that date up to the date of the contract for sale or transfer of the security or the date of payment of the consideration in respect of the sale or transfer, whichever is the later:

Provided that, if during his period of ownership of the security that owner has received interest in respect of the security in respect of which he is chargeable to tax under any other provision of the Tax Acts, then the amount of interest on which he is chargeable under this section shall be reduced by the amount in respect of which he is so chargeable under that other provision:

Provided also that—

(a) if under the terms of the said sale or transfer or an associated agreement, arrangement, understanding, promise or undertaking, whether express or implied, that owner—

(i) agrees to buy back or reacquire the security, or

(ii) acquires an option, which he subsequently exercises, to buy back or reacquire the security,

then the charge to tax imposed under this section shall be based on the interest deemed to have accrued up to the next date after the aforesaid sale or transfer on which interest is payable in respect of the security, and

(b) if that owner subsequently resells or retransfers, or causes or authorises to be resold or retransferred, the security, then any further charge to tax under this section in respect of that subsequent resale or retransfer shall be based on interest deemed to have accrued from a date not earlier than the aforesaid next payment date.

(2A) 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 for sale or transfer or the date of such payment of consideration, whichever is the later, as is referred to in subsection (2), 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 the 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) (a) The reference in subsection (2) to buying back or reacquiring the security shall be deemed to include references to buying or acquiring a similar security, and securities shall be so deemed to be similar if they entitle their holders to the same rights against the same persons as to capital and interest and the same remedies for the enforcement of those rights, notwithstanding any difference in the total nominal amounts of the respective securities or in the form in which they are held or the manner in which they can be transferred.

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