Finance Act , 1963

PART I. Income Tax.

1 Income tax and sur-tax for the year 1963-64.

1.—(1) Income tax shall be charged for the year beginning on the 6th day of April, 1963, at the rate of six shillings and four pence in the pound.

(2) Sur-tax for the year beginning on the 6th day of April, 1963, shall be charged in respect of the income of any individual the total of which from all sources exceeds two thousand five hundred pounds and shall be so charged at the same rates as those at which it is charged for the year beginning on the 6th day of April, 1962.

(3) The several statutory and other provisions which were in force on the 5th day of April, 1963, in relation to income tax and sur-tax shall, subject to the provisions of this Act, have effect in relation to the income tax and sur-tax to be charged as aforesaid for the year beginning on the 6th day of April, 1963.

2 Exemption of bodies established for promotion of athletic or amateur games or sports.

2.—Exemption shall be granted from income tax in respect of so much of the income of any body of persons established for the sole purpose of promoting athletic or amateur games or sports as is shown to the satisfaction of the Revenue Commissioners to be income which has been or will be applied to that purpose.

3 Amendment of section 34 of Income Tax Act, 1918.

3.—As respects tax for the year 1963-64 or a subsequent year of assessment—

(a) the following section shall be substituted for section 34 of the Income Tax Act, 1918:

“34.—(1) Subject to the provisions of this section, where in any year of assessment any person has sustained a loss in any trade, profession, employment or vocation, carried on by him either solely or in partnership, or in the occupation of lands for the purposes of husbandry only, or in the occupation of woodlands in respect of which he has elected to be charged to tax under Schedule D, he shall be entitled, on making a claim in that behalf, to such repayment of tax as is necessary to secure that the aggregate amount of tax for the year ultimately borne by him will not exceed the amount which would have been borne by him if his income had been reduced by the amount of the loss.

(2) (a) For the purposes of subsection (1) of this section the amount of tax which would have been borne if income had been reduced by the amount of a loss shall be computed—

(i) where the loss has been sustained by an individual, on the basis of treating the loss as reducing first the appropriate income of the individual, then the other income of the individual, then the appropriate income of the individual's wife or husband and then the other income of the individual's wife or husband, and

(ii) where the loss has been sustained in a trade carried on by a body corporate, on the basis of treating the loss as reducing first the income of the body corporate from profits or gains of the trade in which the loss was sustained and then the other income of the body corporate.

(b) For the purposes of subparagraph (i) of paragraph (a) of this subsection, ‘appropriate income’ means either earned or unearned income according as income arising during the same period as the loss to the person sustaining it from the same activity would have been that person's earned or unearned income.

(3) Except as is otherwise provided by paragraph (2) of Rule 15 of the Rules applicable to Cases I and II of Schedule D, the amount of a loss sustained in an activity shall, for the purposes of this section, be computed in like manner as profits or gains arising or accruing from the activity would be computed under the relevant provisions of the Income Tax Acts.

(4) Where repayment has been made to a person for any year under this section—

(a) no portion of the loss which, in the computation of the repayment, was treated as reducing his income shall be taken into account in computing the amount of an assessment for any subsequent year, and

(b) so much of the loss as was required, by subsection (2) of this section, to be treated as reducing income of a particular class or income from a particular source shall, for all the purposes of the Income Tax Acts, be regarded as a deduction to be made from income of that class or from income from that source, as the case may be, in computing the person's total income for the year.

(5) Any claim to repayment under this section shall be made, in a form prescribed by the Revenue Commissioners, not later than two years after the end of the year of assessment and shall be made to, and determined by, the inspector of taxes; but any person aggrieved by any determination of the inspector of taxes on any such claim may, on giving notice in writing to the said inspector within twenty-one days after notification to him of the determination, appeal to the Special Commissioners.

(6) The Special Commissioners shall hear and determine an appeal to them under subsection (5) of this section as if it were an appeal to them against an assessment to income tax and the provisions of the Income Tax Acts relating to the re-hearing of an appeal or the statement of a case for the opinion of the High Court on a point of law, shall, with the necessary modifications, apply accordingly.”;

(b) paragraph (2) of Rule 15 of the Rules applicable to Cases I and II of Schedule D shall have effect subject to the substitution of “repayment of tax under section 34 of” for “an adjustment of its liability by reference to the loss and to the aggregate amount of its income under the provisions contained in”;

(c) section 4 of the Finance Act, 1943, shall not have effect;

(d) subsection (1) of section 52 of the Finance Act, 1958, and subsection (1) of section 9 of the Finance Act, 1959, shall have effect subject to the deletion of “and the aggregate amount of his income” in each subsection.

4 Amendment of section 39 of Income Tax Act, 1918.

4.—Subsection (2) of section 39 of the Income Tax Act, 1918, is hereby amended by the substitution of “six hundred pounds by way of gross sum” and “two hundred and fifty pounds a year by way of annuity” for “three hundred pounds by way of gross sum” and “one hundred and thirty pounds a year by way of annuity”, respectively.

5 Option to treat capital allowances as creating or augmenting loss in trade, etc.

5.—(1) In this section—

“balancing charges” means balancing charges under Part V of the Finance Act, 1959;

“capital allowances” means allowances, other than allowances falling to be made in computing profits or gains, under Rule 6 of the Rules applicable to Cases I and II of Schedule D, section 5 or section 6 of the Finance Act, 1946, Part V of the Finance Act, 1956, Part IV of the Finance (Miscellaneous Provisions) Act, 1956, Part V of the Finance Act, 1957, or Part V or section 74 of the Finance Act, 1959;

“year of claim” means, in relation to any claim under section 34 of the Income Tax Act, 1918, the year of assessment for which the claim is made.

(2) Subject to the provisions of this section, any claim made under section 34 of the Income Tax Act, 1918, for relief in respect of a loss sustained in any trade, being a claim in the case of which the year of claim is the year 1963-64 or a subsequent year of assessment, may require the amount of the loss to be determined as if an amount equal to the capital allowances for the year of assessment for which the year of claim is the basis year were to be deducted in computing the profits or gains or losses of the trade in the year of claim and a claim may be so made notwithstanding that apart from those allowances a loss has not been sustained in the trade in the year of claim.

(3) Where on any claim made by virtue of this section relief is not given under the said section 34 for the full amount of the loss determined as aforesaid, the relief shall be referred as far as may be to the loss sustained in the trade rather than to the capital allowances in respect of the trade.

(4) For the purposes of this section—

(a) where the end of the basis period for a year of assessment falls in or coincides with the end of any year of assessment, that year is the basis year for the first mentioned year of assessment, but so that if a year of assessment would under the foregoing provision be the basis year both for that year itself and another year of assessment, it shall be the basis year for the year itself and not for the other year;

(b) any reference to capital allowances or balancing charges for a year of assessment shall be construed as a reference to those falling to be made in charging the profits or gains of the trade for that year, excluding, in the case of allowances, amounts carried forward from an earlier year;

(c) effect shall be deemed to be given in charging the profits or gains of the trade for a year of assessment to allowances carried forward from an earlier year before it is given to allowances for the year of assessment; and

(d) any reference to an amount of capital allowances non-effective in a year of assessment shall be construed as referring to the amount to which by reason of an insufficiency of profits or gains effect cannot be given in charging the profits or gains of the trade for that year.

In paragraph (a) of this subsection “the basis period for a year of assessment” means in relation to any trade the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D in respect of the trade or, where, by virtue of any Act, the profits or gains of any other period are to be taken to be the profits or gains of the said period, that other period.

(5) The capital allowances for any year of assessment shall be taken into account under subsection (2) of this section only if and so far as they are not required to offset balancing charges for the year; and, where the capital allowances taken into account are allowances for the year of claim, relief shall not be given by reference to those allowances in respect of an amount greater than the amount non-effective in the year of claim.

(6) For the purposes of subsection (5) of this section, the capital allowances for any year of assessment shall be treated as required to offset balancing charges for the year up to the amount on which the balancing charges fall to be made after deducting from that amount the amount, if any, of capital allowances for earlier years which is carried forward to that year and would, without the balancing charges, be non-effective in that year.

(7) Subject to subsection (8) of this section, where for any year of claim relief is given under the said section 34 by reference to any capital allowances, then, for all the purposes of the Income Tax Acts, effect shall be deemed to have been given to those allowances up to the amount in respect of which relief is so given, and any relief previously given for a subsequent year on the basis that effect had not been given to the allowances as aforesaid shall be adjusted, where necessary, by additional assessment.

(8) Where in any year of assessment a trade is permanently discontinued, or is treated, for the purposes of Rule 11 of the Rules applicable to Cases I and II of Schedule D, as permanently discontinued, and immediately before the discontinuance the trade was being carried on in partnership, then, notwithstanding the last foregoing subsection, for the purposes of any claim for relief made by virtue of section 4 of the Finance Act, 1960, and relating to that discontinuance, effect shall not be deemed to have been given either—

(a) to any part of the capital allowances falling to be made in charging the profits or gains of the trade for that year by reason of relief given under the said section 34 by reference to those allowances; or

(b) to any part of the capital allowances falling to be made in charging the profits or gains of the trade for the preceding year by reason of relief so given by reference to them, in so far as that relief must be referred to the part of the allowances apportionable to the part of the year within twelve months of the discontinuance on an apportionment made by reference to the comparative lengths of the two parts of the year;

but, where the same partner claims relief both under the said section 34 and under the said section 4 in respect of the same allowances, the total amount for which relief is to be given to him by reference thereto shall not exceed the greater of the amounts for which, apart from any deficiency of income, relief might have been given under either section separately, and the total amount for which relief is to be given to all the partners under those sections in respect of any allowances shall not in any event exceed the amount of the allowances to which effect has not been given apart from those sections.

(9) Where a person claiming relief under the said section 34 has, since the end of the year of claim, carried on the trade in question in partnership, effect shall not be given to this section in relation to that claim, except with the written consent of, or of the personal representatives of, every other person who has been engaged in carrying on the trade between the end of that year and the making of the claim:

Provided that where the claim is for a loss sustained before an event treated as the permanent discontinuance of the trade, this subsection shall not require the consent of any person as having been so engaged since that discontinuance or as the personal representative of such a person.

(10) Relief from tax may be given by virtue of subsection (2) of this section by reference to capital allowances for a year of assessment before the passing of any Act imposing income tax for that year, as if income tax had been imposed for the year without alteration; but if relief given to a person by virtue of that subsection for any year of claim is affected by a subsequent alteration of the law, or by any discontinuance of the trade or other event occurring after the end of the year, any necessary adjustment may be made, and so much of any repayment of tax as exceeded the amount repayable in the events that happened shall, if not otherwise made good, be recovered from the person by assessment under Case VI of Schedule D; and for the purpose of such assessment the amount of capital allowances by reference to which the repayment was made, or an appropriate part of that amount, shall be deemed to be income chargeable under the said Case VI for the year of claim.

(11) This section applies, with any necessary adaptations, in relation to a profession, employment or vocation and in relation to the occupation of lands for the purposes of husbandry only or of woodlands, where, in either case, profits or gains arising from the occupation are, for the year of claim and the year of assessment for which the year of claim is the basis year, chargeable under Schedule D, as it applies in relation to a trade.

6 Assessment of profits from occupation of land under Schedule D in certain cases.

6.—(1) Where, for any year of assessment, a person to whom this section applies is chargeable to tax under Schedule B in respect of the occupation for the purposes of husbandry of any lands—

(a) the person shall when required to do so by a notice in writing served on him by an inspector of taxes prepare and deliver to the inspector, within the time limited by the notice, a statement of the profits or gains on which he would have been chargeable for the year of assessment if he had made an election in relation to the lands under Rule 5 of the Rules applicable to Schedule B;

(b) where the person fails to deliver the statement, or where the Revenue Commissioners are not satisfied with the statement delivered by the person, the Revenue Commissioners may serve on the person a notice in writing or notices in writing requiring him to do any of the following things, that is to say—

(i) to deliver to an inspector of taxes copies of such accounts (including balance sheets) relating to the occupation of the lands as may be specified or described in the notice within such period as may be therein specified, including, where the accounts have been audited, a copy of the auditor's certificate,

(ii) to make available, within such time as may be specified in the notice, for inspection by an inspector of taxes or by any officer authorised by the Revenue Commissioners, all such books, accounts and documents in his possession or power as may be specified or described in the notice, being books, accounts and documents which contain information as to transactions related to the occupation of the lands;

(c) the inspector of taxes or other officer may take copies of, or extracts from, any books, accounts or documents made available for his inspection under the foregoing paragraph;

(d) where the person fails to do anything which he is required to do by a notice under paragraph (b) of this subsection, the Income Tax Acts shall apply as if he had duly made, under Rule 5 of the Rules applicable to Schedule B, an election in relation to the lands by notice delivered immediately after the commencement of the year of assessment;

(e) where the person has delivered copies of accounts relating to the occupation of the lands and the Revenue Commissioners are of opinion that the accounts overstate the profits or gains arising from such occupation, the Revenue Commissioners may certify accordingly;

(f) where the Revenue Commissioners have given a certificate under the foregoing paragraph—

(i) the Income Tax Acts shall, subject to the next subparagraph, apply as if the person had duly made, under Rule 5 of the Rules applicable to Schedule B, an election in relation to the lands by notice delivered immediately after the commencement of the year of assessment,

(ii) an appeal against the certificate shall, within twenty-one days after notification to the person of the giving of the certificate, lie to the Special Commissioners in like manner as an appeal would lie against an assessment to income tax and the provisions of the Income Tax Acts relating to appeals shall have effect accordingly.

(2) (a) This section applies to—

(i) a person carrying on in the year of assessment a trade, profession or vocation,

(ii) a person who, in the year of assessment, is a married person whose wife or husband carries on in that year a trade, profession or vocation, or

(iii) a person who, in the year of assessment, is a director of a company carrying on in that year a trade and is either the beneficial owner of, or able, either directly or through the medium of other companies or by any other means, to control, more than twenty-five per cent. of the ordinary share capital of the company,

subject to the proviso that a person who, apart from this proviso, would, by virtue of subparagraph (ii) of this paragraph, be a person to whom this section applies shall not be such a person in a case in which the wife is not to be treated for income tax purposes as living with her husband.