Income Tax Act , 1967

(b) where the rights purchased begin one complete year or more after the commencement of the patent and paragraph (a) of this proviso does not apply, the said provisions shall have effect with the substitution for the reference to seventeen years of a reference to seventeen years less the number of complete years, which, when the rights begin, have elapsed since the commencement of the patent, or, if seventeen complete years have elapsed as aforesaid, of a reference to one year, and

(c) any expenditure incurred on or after the operative date for the purposes of a trade by a person about to carry it on shall be treated for the purposes of this subsection as if it had been incurred by that person on the first day on which he does carry it on, unless, before the said first day, he has sold all the rights on the purchase of which the expenditure was incurred.

(3) The appropriate fraction is the fraction the numerator of which is one and the denominator of which is the number of the relevant years of assessment.

286 Effect of lapse of patent rights, sales, etc.

286.—(1) Where, on or after the operative date, a person incurs capital expenditure on the purchase of patent rights and, before the end of the relevant years of assessment, any of the following events occurs:

(a) the rights come to an end without being subsequently revived;

(b) he sells all those rights or so much thereof as he still owns;

(c) he sells part of those rights and the net proceeds of the sale (so far as they consist of capital sums) are not less than the amount of the capital expenditure remaining unallowed;

no annual allowance shall be made to that person for the year of assessment in his basis period for which the event takes place or any subsequent year of assessment.

(2) Where, on or after the operative date, a person incurs capital expenditure on the purchase of patent rights and, before the end of the relevant years of assessment, either of the following events occurs:

(a) the rights come to an end without being subsequently revived;

(b) he sells all those rights, or so much thereof as he still owns, and the net proceeds of the sale (so far as they consist of capital sums) are less than the amount of the capital expenditure remaining unallowed;

there shall, subject to and in accordance with the following provisions of this Chapter, be made to him for the year of assessment, in his basis period for which the event takes place, an allowance (in this Chapter referred to as a balancing allowance) equal, if the event is the rights coming to an end, to the amount of the capital expenditure remaining unallowed, and, if the event is a sale, to the amount of the capital expenditure remaining unallowed less the net proceeds of the sale.

(3) Where a person who, on or after the operative date, has incurred capital expenditure on the purchase of patent rights sells all or any part of those rights and the net proceeds of the sale (so far as they consist of capital sums) exceed the amount of the capital expenditure remaining unallowed, if any, there shall, subject to and in accordance with the following provisions of this Chapter, be made on him for the year of assessment, in his basis period for which the sale takes place, a charge (in this Chapter referred to as a balancing charge) on an amount equal to the excess or, where the amount of the capital expenditure remaining unallowed is nil, to the said net proceeds.

(4) Where a person who, on or after the operative date, has incurred capital expenditure on the purchase of patent rights sells a part of those rights and subsection (3) does not apply, the amount of any annual allowance made in respect of that expenditure for the year of assessment in his basis period for which the sale takes place or any subsequent year of assessment shall be the amount arrived at by—

(a) subtracting the net proceeds of the sale (so far as they consist of capital sums) from the amount of the expenditure remaining unallowed at the time of the sale, and

(b) dividing the result by the number of the relevant years of assessment which remained at the beginning of the year of assessment in his basis period for which the sale takes place,

and so on for any subsequent sales.

(5) References in the preceding provisions of this section to the amount of any capital expenditure remaining unallowed shall, in relation to any event, be construed as references to the amount of that expenditure less any annual allowances made in respect thereof for years of assessment before the year of assessment in the basis period for which that event occurs, and less also the net proceeds of any previous sale by the person who incurred the expenditure of any part of the rights acquired by the expenditure, so far as those proceeds consist of capital sums.

(6) Notwithstanding anything in the preceding provisions of this section, no balancing allowance shall be made in respect of any expenditure unless an annual allowance has been, or, but for the happening of the event giving rise to the balancing allowance, could have been, made in respect of that expenditure, and the total amount on which a balancing charge is made in respect of any expenditure shall not exceed the total annual allowances actually made in respect of that expenditure, less, if a balancing charge has previously been made in respect of that expenditure, the amount on which that charge was made.

287 Special provision for certain capital expenditure.

287.—Where within one year before the operative date a person has incurred capital expenditure on the purchase of patent rights for the purposes of a trade carried on or about to be carried on by him and has not sold any part of the said rights before the operative date, he shall be deemed for the purposes of sections 285 and 286 to have incurred the said expenditure on the operative date.

288 Charges on capital sums received for sale of patent rights.

288.—(1) Where, on or after the operative date, a person resident in the State sells any patent rights and the net proceeds of the sale consist wholly or partly of a capital sum, he shall, subject to the provisions of this Chapter, be charged to tax under Case IV of Schedule D for the year of assessment in which the sum is received by him and for each of the five succeeding years of assessment, on an amount equal to one-sixth of that sum:

Provided that—

(a) if that person, by notice in writing served on the inspector not later than twelve months after the end of the year of assessment in which that sum was received, elects that the whole of that sum shall be charged to tax for the said year of assessment, it shall be charged to tax accordingly;

(b) if that person, by notice as aforesaid, applies to have the period for which he is to be charged determined as being other than the six years of assessment hereinbefore referred to (that is to say, the year of assessment in which that sum was received and the five succeeding years of assessment), then, if it appears to the Revenue Commissioners that hardship is likely to arise having regard to all the circumstances of the case unless a direction is given under this paragraph, they may direct that the charge shall be spread equally over a number of years of assessment other than six, of which the first shall be the year of assessment in which that sum was received.

(2) Where, on or after the operative date, a person not resident in the State sells any patent rights and the net proceeds of the sale consist wholly or partly of a capital sum, and the patent is an Irish patent, then, subject to the provisions of this Chapter—

(a) he shall be chargeable to tax in respect of that sum under Case IV of Schedule D, and

(b) section 434 shall apply to that sum as if it were an annual payment payable otherwise than out of profits or gains brought into charge to tax:

Provided that if, not later than twelve months after the end of the year of assessment in which the sum is paid, the person to whom it is paid, by notice in writing to the Revenue Commissioners, elects that the said sum shall be treated for the purpose of income tax for that year and for each of the five succeeding years as if one-sixth thereof, and no more, were included in his income chargeable to tax for all those years respectively, it shall be so treated, and all such repayments and assessments of tax for each of those years shall be made as are necessary to give effect to the election, so, however, that—

(i) the election shall not affect the amount of tax falling to be deducted and accounted for under section 434;

(ii) where any sum is deducted under section 434, any adjustments necessary to give effect to the election shall be made by way of repayment of tax, and

(iii) the said adjustments shall be made year by year and as if one-sixth of the sum deducted had been deducted in respect of tax for each year, and no repayment of, or of any part of, that portion of the tax deducted which is to be treated as deducted in respect of tax for any year shall be made unless and until it is ascertained that the tax (other than sur-tax) ultimately falling to be paid for that year is less than the amount of tax (other than sur-tax) paid for that year.

(3) Where the patent rights sold by a person, or the rights out of which the patent rights sold by a person were granted, were acquired by him by purchase and the price paid consisted wholly or partly of a capital sum, subsections (1) and (2) shall apply as if any capital sum received by him when he sells the rights were reduced by the amount of that sum:

Provided that—

(a) where between the said purchase and the said sale he has sold part of the patent rights acquired by him and the net proceeds of that sale consist wholly or partly of a capital sum, the amount of the reduction falling to be made under this subsection in respect of the subsequent sale shall be itself reduced by the amount of that sum,

(b) nothing in this subsection shall affect the amount of tax falling to be deducted and accounted for under section 434 by virtue of subsection (2) of this section, and where any sum is deducted under section 434, any adjustment necessary to give effect to the provisions of this subsection shall be made by way of repayment of tax.

(4) This section shall apply in relation to any sale of part of any patent rights as it applies in relation to sales of patent rights.

289 Patent rights sold before operative date.

289.—Nothing in the preceding provisions of this Chapter shall apply in relation to any patent rights if those rights, or any rights out of which they were granted, have been the subject of a sale before the operative date and the proceeds of the sale consisted wholly or partly of a capital sum:

Provided that, in relation to any patent rights to which section 287 applies, this section shall apply as if, for the reference to the operative date, there were substituted a reference to the date on which the said rights were purchased by the person who, by virtue of that section, is deemed to have purchased them on the operative date.

290 Relief for expenses.

290.—(1) Notwithstanding anything in section 61, in computing the profits or gains of any trade, there shall be allowed to be deducted as expenses any fees paid or expenses incurred in obtaining, for the purposes of the trade, the grant of a patent or an extension of the term of a patent.

(2) Where—

(a) on or after the operative date, a person, otherwise than for the purposes of a trade carried on by him, pays any fees or incurs any expenses in connection with the grant or maintenance of a patent or the obtaining of an extension of a term of a patent, and

(b) those fees or expenses would, if they had been paid or incurred for the purposes of a trade, have been allowable as a deduction in estimating the profits or gains thereof,

there shall be made to him, for the year of assessment in which those expenses were paid or incurred, an allowance equal to the amount thereof.

(3) Where a patent is granted in respect of any invention, an allowance equal to so much of the net amount of any expenses incurred on or after the operative date by an individual who, whether alone or in conjunction with any other person, actually devised the invention as is properly ascribable to the devising thereof (not being expenses in respect of which, or of assets representing which, an allowance falls to be made under any other provision of this Act) shall be made to that individual for the year of assessment in which the expenses were incurred.

(4) The provisions of subsection (3) shall apply in relation to expenses incurred before the operative date as if those expenses were incurred on that day, subject to the modification that, if the patent in question was granted one complete year or more before that day, the amount to be allowed shall be reduced by applying thereto the fraction the numerator of which is seventeen less the number of complete years comprised in the period beginning with the commencement of the patent and ending immediately before the operative date and the denominator of which is seventeen.

291 Spreading of revenue payments over several years.

291.—(1) Where a royalty or other sum to which section 433 or 434 applies is paid in respect of the user of a patent, and that user extended over a period of six complete years or more, the person receiving the payment may require that the income tax (including sur-tax) payable by him by reason of the receipt of that sum shall be reduced so as not to exceed the total amount of income tax (including sur-tax) which would have been payable by him if that royalty or sum had been paid in six equal instalments at yearly intervals, the last of which was paid on the date on which the payment was in fact made.

(2) Subsection (1) shall apply in relation to a royalty or other sum where the period of the user is two complete years or more but less than six complete years as it applies to the royalties and sums mentioned in that subsection, but with the substitution for the reference to six equal instalments of a reference to so many equal instalments as there are complete years comprised in that period.

(3) In this section, any reference to the income tax (including sur-tax) payable by a person includes, in cases where the income of a wife is deemed to be the income of the husband, references to the income tax (including sur-tax) payable by his wife or her husband, as the case may be.

(4) Nothing in this section shall apply to any sum to which section 434 applies by virtue of section 288.

292 Manner of making allowances and charges.

292.—(1) An allowance or charge under any of the provisions of this Chapter shall be made to or on a person in charging the profits or gains of his trade if—

(a) he is carrying on a trade the profits or gains of which are, or, if there were any, would be, chargeable to tax under Case I of Schedule D for the year of assessment for which the allowance or charge is made, and

(b) at any time in his basis period for that year of assessment, the patent rights in question, or other rights out of which they were granted, were or were to be used for the purposes of that trade:

Provided that nothing in this subsection shall affect any of the preceding provisions of this Chapter allowing a deduction as expenses in computing the profits or gains of a trade or requiring a charge to be made under Case IV of Schedule D.

(2) Save as aforesaid, an allowance under this Chapter shall be made by way of discharge or repayment of tax and shall be available against income from patents, and a charge under this Chapter shall be made under Case IV of Schedule D.

293 Effect of death, winding up and partnership changes.

293.—(1) Where a person on whom, by reason of the receipt of a capital sum, a charge falls or would otherwise fall to be made under section 288 dies or, being a body corporate, commences to be wound up—

(a) no sums shall be charged under that section on that person for any year of assessment subsequent to that in which the death takes place or the winding up commences, and

(b) the amount falling to be charged for the year of assessment in which the death occurs or the winding up commences shall be increased by the total amounts which, but for the death or winding up, would have fallen to be charged for subsequent years:

Provided that, in the case of a death, the personal representatives may, by notice in writing served on the inspector not later than twenty-one days after notice has been served on them of the charge falling to be made by virtue of this section, require that the income tax (including sur-tax) payable out of the estate of the deceased by reason of the increase provided for by this section shall be reduced so as not to exceed the total amount of income tax (including sur-tax) which would have been payable by him or out of his estate by reason of the operation of section 288 in relation to that sum, if, instead of the amount falling to be charged for the year in which the death occurs being increased by the whole amount of the sums charged for subsequent years, the several amounts falling to be charged for the years beginning with that in which the capital sum was received and ending with that in which the death occurred had each been increased by the said whole amount divided by the number of those years.

(2) Where, under the provisions of Chapter V of this Part as modified by Chapter III of Part IV, charges under section 288 fall to be made on two or more persons as being the persons for the time being carrying on a trade, and the relevant period, within the meaning of the said Chapter III, comes to an end, the provisions of subsection (1) shall have effect in relation to the ending of the relevant period as they have effect where a body corporate commences to be wound up:

Provided that—

(a) the additional sums which, under subsection (1), fall to be charged for the year in which the relevant period ends shall be aggregated and apportioned among the members of the partnership immediately before the ending of the relevant period according to their respective interests in the partnership profits at that time and each partner (or, if he is dead, his personal representatives) charged for his proportion, and

(b) each partner (or, if he is dead, his personal representatives) shall have the same right to require a reduction of the total income tax (including sur-tax) payable by him or out of his estate by reason of the increase as would have been exercisable by the personal representatives under subsection (1) in the case of a death, and the proviso to that subsection shall have effect accordingly but as if references to the amount of income tax (including sur-tax) which would have been payable by the deceased or out of his estate in the event therein mentioned were a reference to the amount of income tax (including sur-tax) which would in that event have fallen to be paid or borne by the partner in question or out of his estate.

(3) In this section, any references to income tax (including sur-tax) paid or borne or payable or falling to be paid or borne by a person include, in cases where the income of a wife is deemed to be income of the husband, references to the income tax (including sur-tax) paid or borne, or payable or falling to be paid or borne, by his wife or her husband, as the case may be.

Chapter IV Dredging: Initial and Annual Allowances

294 Allowances for expenditure on dredging.

294.—(1) Subject to the provisions of this section, where a person for the purposes of any qualifying trade carried on by him incurs capital expenditure on dredging, and either the trade consists of the maintenance or improvement of the navigation of a harbour, estuary or waterway or the dredging is for the benefit of vessels coming to, leaving or using any dock or other premises occupied by him for the purposes of the trade, then, there shall be made in respect of the expenditure to the person for the time being carrying on the trade—

(a) for the first relevant year of assessment, an initial allowance equal to one-tenth of the expenditure, and

(b) for that and each subsequent year of assessment (until the allowances made under this section in respect of the expenditure equal the amount of the expenditure), an annual allowance equal to one-fiftieth of the expenditure:

Provided that this subsection shall not apply to any expenditure incurred before the 30th day of September, 1956.

(2) If the trade is permanently discontinued in any year of assessment, then, for that year there shall be made to the person last carrying on the trade, in addition to any other allowance made to him, an allowance equal to the amount of the expenditure less the allowances made in respect of it under subsection (1) for that and previous years of assessment.

(3) For the purposes of this section, a trade shall not be treated by virtue of any of the provisions of this Act as discontinued on a change in the persons engaged in carrying it on.

(4) Any allowance under this section shall be made in charging the profits or gains of the trade, and if different persons are charged in respect of the trade for different parts of any year of assessment, any annual allowance for that year shall be apportioned between them in proportion to the length of the periods for which they are so charged, but, if it is the first relevant year of assessment, any initial allowance shall be made to the person first carrying on the trade in the year.

(5) Where expenditure is incurred partly for the purposes of a qualifying trade and partly for other purposes, subsection (1) shall apply to so much only of that expenditure as on a just apportionment ought fairly to be treated as incurred for the purposes of that trade.

(6) In this section “qualifying trade” means any trade or undertaking which, or a part of which, complies with any of the following conditions:

(a) the condition that it consists of the maintenance or improvement of the navigation of a harbour, estuary or waterway,

(b) any condition set out in the provisions of section 255 (1),

but where part only of a trade or undertaking complies with those conditions, subsection (5) shall apply as if the part which does and the part which does not comply were separate trades.

(7) Where a person incurs capital expenditure for the purposes of a trade or part of a trade not yet carried on by him but with a view to carrying it on, or incurs capital expenditure in connection with a dock or other premises not yet occupied by him for the purposes of a qualifying trade but with a view to so occupying the dock or premises, the foregoing provisions of this section shall apply as if he had been carrying on the trade or part of the trade or occupying the dock or premises for the purposes of the qualifying trade, as the case may be, at the time when the expenditure was incurred.

(8) For the purposes of this section, the first relevant year of assessment, in relation to expenditure incurred by any person, is the year in his basis period for which he incurs the expenditure or, in the case of expenditure for which allowances are to be made by virtue of subsection (7), the first year of assessment in his basis period for which he both carries on the trade or part of the trade for the purposes of which the expenditure was incurred and occupies for the purposes of that trade or part of the trade the dock or other premises in connection with which it was incurred.

(9) Where a person contributes a capital sum to expenditure on dredging incurred by another person, he shall, for the purposes of this section, be treated as incurring capital expenditure on that dredging equal to the amount of the contribution and the capital expenditure incurred by the other person on that dredging shall, for those purposes, be deemed to be reduced by the amount of the contribution.

(10) In this section “dredging” does not include things done otherwise than in the interests of navigation, but (subject to that) includes the removal of anything forming part of or projecting from the bed of the sea or of any inland water, by whatever means it is removed and whether or not at the time of removal it is wholly or partly above water; and this section shall apply to the widening of an inland waterway in the interests of navigation as it applies to dredging.

(11) No allowance shall be made by virtue of this section in respect of any expenditure if for the same or any previous or subsequent year of assessment an allowance is or can be made in respect of it under Chapter II of Part XV or Chapter I of this Part.

(12) Notwithstanding any other provision of this section, no allowance under this section shall be made for any year of assessment beginning before the 6th day of April, 1960, but, in determining the allowances to be made under this section in any particular case, there shall be deemed to have been made in that case all such allowances (other than initial allowances) as could have been made if this section had always had effect.

Chapter V Miscellaneous and General

295 Manner of granting allowances and charging tax in certain cases.

295.—(1) Any claim by a person for an allowance falling to be made to him under any of the provisions of this Part in charging the profits or gains of his trade shall be included in the annual statement required to be delivered under this Act of the profits or gains thereof, and the allowance shall be made as a deduction in charging those profits or gains, and section 241 (3) shall apply in relation to the allowance as it applies in relation to deductions allowable in respect of wear and tear of machinery and plant.

(2) Any charge falling to be made under any of the provisions of this Part on a person for any year of assessment in charging the profits or gains of his trade shall be made by means of an assessment in addition to any other assessment falling to be made thereon for that year.

(3) The preceding provisions of this section shall apply in relation to professions, employments and offices as they apply in relation to trades.

296 Manner of granting, and effect of, allowances made by way of discharge or repayment of tax.

296.—(1) Where, under any of the provisions of this Part, an allowance falls to be made to a person for any year of assessment which is to be given by way of discharge or repayment of tax, and is to be available, or available primarily, against a specified class of income, the amount of the allowance shall be deducted from or set off against income of his of that class for that year of assessment, and, if the amount to be allowed is greater than the amount of his income of that class for that year of assessment, the balance shall be deducted from or set off against his income of that class for the next year of assessment, and so on for subsequent years of assessment and tax shall be discharged or repaid accordingly:

Provided that where the allowance is available primarily against income of the specified class and the amount of the allowance is greater than the amount of the person's income of that class for the first-mentioned year of assessment, he may, by notice in writing given to the inspector not later than one year after the end of the year of assessment, elect that the excess shall be deducted from or set off against his other income for that year of assessment, and it shall be deducted from or set off against that income and tax discharged or repaid accordingly and only the excess, if any, of the amount of the allowance over all his income for that year of assessment shall be deducted from or set off against his income of the specified class for succeeding years.

(2) Section 524 (2) shall apply in relation to the allowances mentioned in subsection (1) as it applies in relation to the allowances and adjustments mentioned in section 524 (2).

(3) Any claim for such an allowance as is mentioned in subsection (1) shall be made to and determined by the inspector, but any person aggrieved by any decision of the inspector on any such claim may, on giving notice in writing to the inspector within twenty-one days after the notification to him of the decision, appeal to the Special Commissioners.

(4) The Special Commissioners shall hear and determine an appeal to them under subsection (3) as if it were an appeal against an assessment to income tax, and the provisions of this Act relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law, shall, with the necessary modifications, apply accordingly.

(5) If any person, for the purpose of obtaining for himself or any other person any relief from or repayment of tax in respect of such an allowance as is mentioned in subsection (1), knowingly makes any false statement or false representation, he shall be liable to a penalty of £500.

297 Meaning of “basis period”.

297.—(1) In this Part, “basis period” has the meaning assigned to it by the following provisions of this section.

(2) In the case of a person to or on whom an allowance or charge falls to be made in charging the profits or gains of his trade, his basis period for any year of assessment is 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 in question or, where, by virtue of any provision of this 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:

Provided that, in the case of any trade—

(a) where two basis periods overlap, the period common to both shall be deemed for the purpose of this subsection to fall in the first basis period only,

(b) where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment, then, unless the second-mentioned year of assessment is the year of the permanent discontinuance of the trade, the interval shall be deemed to be part of the second basis period, and

(c) where there is an interval between the end of the basis period for the year of assessment preceding that in which the trade is permanently discontinued and the basis period for the year in which it is permanently discontinued, the interval shall be deemed to form part of the first basis period.

(3) Any reference in the proviso to subsection (2) to the overlapping of two periods shall be construed as including a reference to the coincidence of two periods or to the inclusion of one period in another, and references to the period common to both of two periods shall be construed accordingly.

(4) Where an allowance or charge falls to be made under Chapter II of this Part to or on a person carrying on or holding a profession, employment or office, the provisions of the preceding subsections of this section shall apply as if the references to a trade included references to a profession, employment or office and as if the references to Case I of Schedule D included references to Case II of Schedule D and Schedule E.

(5) In the case of any other person to or on whom an allowance or charge falls to be made under this Part, his basis period for any year of assessment is the year of assessment itself.

298 Apportionment of consideration and exchanges and surrenders of leasehold interests.

298.—(1) Any reference in this Part to the sale of any property includes a reference to the sale of that property together with any other property and, where property is sold together with other property, so much of the net proceeds of the sale of the whole property as, on a just apportionment is properly attributable to the first-mentioned property shall, for the purposes of this Part, be deemed to be the net proceeds of the sale of the first-mentioned property, and references to expenditure incurred on the provision or the purchase of property shall be construed accordingly.

For the purposes of this subsection, all the property which is sold in pursuance of one bargain shall be deemed to be sold together, notwithstanding that separate prices are or purport to be agreed for separate items of that property or that there are or purport to be separate sales of separate items of that property.

(2) The provisions of subsection (1) shall, with the necessary adaptations, apply in relation to other sale, insurance, salvage or compensation moneys as they apply in relation to the net proceeds of sales.

(3) This Part shall have effect as if any reference therein (including any reference in the preceding provisions of this section) to the sale of any property included a reference to the exchange of any property and in the case of a leasehold interest, also included a reference to the surrender thereof for valuable consideration and any provisions of this Part referring to the sales shall have effect accordingly with the necessary adaptations and, in particular, with the adaptations that references to the net proceeds of sale and to the price shall be taken to include references to the consideration for the exchange or surrender and references to capital sums included in the price shall be taken to include references to so much of the consideration as would have been a capital sum if it had taken the form of a money payment.

(4) The preceding provisions of this section shall, with the necessary adaptations, have effect in relation to—

(a) sections 241 and 243, and

(b) Chapter I of Part XV,

as if the said sections 241 and 243 and the said Chapter I were provisions of this Part.

299 Special provisions as to certain sales.

299.—(1) The provisions of this section shall have effect in relation to sales of any property where either—

(a) the buyer is a body of persons over whom the seller has control, or the seller is a body of persons over whom the buyer has control, or both the seller and the buyer are bodies of persons and some other person has control over both of them, or

(b) it appears with respect to the sale or with respect to transactions of which the sale is one, that the sole or main benefit which, apart from the provisions of this section, might have been expected to accrue to the parties or any of them was the obtaining of an allowance or deduction under section 241 or 243, under Chapter I of Part XV or under any of the provisions of this Part.

References in this subsection to a body of persons include references to a partnership.

(2) Where the property is sold at a price other than that which it would have fetched if sold in the open market, then, subject to the provisions of subsections (3) and (4), the like consequences shall ensue for the purposes of the enactments mentioned in subsection (1), in their application to the income tax of all persons concerned, as would have ensued if the property had been sold for the price which it would have fetched if sold in the open market.

(3) Where the sale is a sale of machinery or plant—

(a) no initial allowance shall be made to the buyer, and

(b) subject to the provisions of subsection (4), if the price which the property would have fetched if sold in the open market is greater than the amount which, for the purpose of determining whether any, and if so, what, balancing charge should be made on the seller in respect of the property under Chapter II of this Part, would be taken to be the amount of the capital expenditure incurred by the seller on the provision of the property, subsection (2) shall have effect as if for each of the references to the price which the property would have fetched if sold in the open market there were substituted a reference to the said amount:

Provided that this subsection shall not apply in relation to a sale of machinery or plant which was never used if the business or part of the business of the seller was the manufacture or supply of machinery or plant of that class and the sale was effected in the ordinary course of the seller's business.

(4) (a) Subject to subsection (5), where the sale is one to which subsection (1) (a) applies and subsection (1) (b) does not apply, and the parties to the sale by notice in writing to the inspector so elect, the following provisions shall have effect:

(i) subsection (2) shall have effect as if, for each of the references to the price which the property would have fetched if sold in the open market, there were substituted a reference to that price or to the sum hereinafter mentioned, whichever is the lower,

(ii) subsection (3) (b) shall not apply, and

(iii) notwithstanding anything in the preceding provisions of this section, such balancing charge, if any, shall be made on the buyer on any event occurring after the date of the sale as would have fallen to be made on the seller if the seller had continued to own the property and had done all such things and been allowed all such allowances or deductions in connection therewith as were done by or allowed to the buyer.

(b) The sum referred to in paragraph (a) (i) is—

(i) in the case of an industrial building or structure, the residue of the expenditure on the construction of that building or structure immediately before the sale, computed in accordance with the provisions of section 266,

(ii) in the case of machinery or plant, the amount of the expenditure on the provision thereof still unallowed immediately before the sale, computed in accordance with the provisions of section 274,

(iii) in the case of patent rights, the amount of the capital expenditure on the acquisition thereof remaining unallowed, computed in accordance with the provisions of section 286.

(5) An election under subsection (4) (a) may not be made if—

(a) any of the parties to the sale is not resident in the State at the time of the sale, and

(b) the circumstances are not at that time such that an allowance or charge under this Part falls or might fall to be made to or on that party in consequence of the sale,

but, except as aforesaid, this section shall have effect in relation to a sale notwithstanding that it is not fully applicable by reason of the non-residence of a party to the sale or otherwise.

(6) In this section “control”, in relation to a body corporate, means the power of a person to secure, by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate, that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person and, in relation to a partnership, means the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership.

300 Effect, in certain cases, of succession to trade, etc.

300.—(1) Where, on or after the 6th day of April, 1967, a person succeeds to any trade or profession which until that time was carried on by another person and, by virtue of any of the provisions of section 59, the trade or profession is to be treated as discontinued, any property which, immediately before the succession takes place, was in use for the purposes of the discontinued trade or profession and, without being sold is, immediately after the succession takes place, in use for the purposes of the new trade or profession shall, for the purposes of this Part, and of sections 241 and 243, be treated as if it had been sold to the successor when the succession takes place, and as if the net proceeds of that sale had been the price which that property would have fetched if sold in the open market.

(2) Where, after the setting up and before the permanent discontinuance of a trade or profession which at any time is carried on in partnership anything is done for the purposes thereof, any allowance or charge which, if the trade or profession had at all times been carried on by one and the same person, would have fallen to be made to or on him under section 241 or Part XV or any of the provisions of this Part, shall, subject to section 72, be made to or on the person or persons from time to time carrying on that trade or profession, and the amount of any such allowance or charge shall be computed as if that person or those persons had at all times been carrying on the trade or profession and as if everything done to or by his or their predecessors in the carrying on thereof had been done to or by him or them.

(3) In relation to machinery or plant this section shall have effect subject to the provisions of Chapter II of this Part.

301 Procedure on apportionment, etc.

301.—(1) Where, under or by virtue of any provisions of this Part, any sum falls to be apportioned and, at the time of the apportionment, it appears that it is material as respects the liability to income tax (for whatever year of assessment) of two or more persons, any question which arises as to the manner in which the sum is to be apportioned shall be determined, for the purposes of the income tax of all those persons, by the Special Commissioners, in like manner as if it were an appeal against an assessment to income tax under Schedule D, and the provisions of this Act relating to such an appeal shall apply accordingly with any necessary modifications:

Provided that all the said persons shall be entitled to appear and be heard by the Special Commissioners or to make representations to them in writing.

(2) This section applies in relation to any determination for the purposes of this Part of the price which property would have fetched if sold in the open market as it applies in relation to apportionments.

302 Property used for purposes of “exempted trading operations”.

302.—(1) Where an event occurs which gives rise, or would, but for this section, give rise to a balancing allowance or balancing charge in respect of any property to or on a company in relation to which a certificate under section 374 (2) has been given, then, whether the certificate is still in force or not, the following provisions of this section shall apply.

(2) If the property has been used by the company exclusively for the purposes of its exempted trading operations within the meaning of Chapter I of Part XXV no balancing allowance or balancing charge shall be made.

(3) If the property has been used partly for the purposes of the company's exempted trading operations and partly for the purposes of its other trading operations, regard shall be had to all the relevant circumstances of the case and there shall be made to or on the company an allowance of such an amount, or, as the case may be, a charge on such an amount, as may be just and reasonable.

303 Interpretation of certain references to expenditure, etc.

303.—(1) References in this Part to capital expenditure and capital sums—

(a) in relation to the person incurring the expenditure or paying the sums, do not include any expenditure or sum which is allowed to be deducted in computing, for the purposes of income tax, the profits or gains of a trade, profession, office or employment carried on or held by him, and

(b) in relation to the person receiving the amounts expended or the sums in question, do not include references to any amounts or sums which fall to be taken into account as receipts in computing the profits or gains of any trade, profession, office or employment carried on or held by him,

and do not include, in relation to any such person as aforesaid, any expenditure or sum in the case of which a deduction of tax falls or may fall to be made, otherwise than by virtue of the provisions of Chapter III of this Part relating to charges on capital sums received for patent rights, under section 433 or 434.

(2) Any reference in this Part to the date on which expenditure is incurred shall be construed as a reference to the date when the sums in question become payable.

(3) Expenditure shall not be regarded for any of the purposes of this Part as having been incurred by any person in so far as it has been or is to be met directly or indirectly by the State, by any board established by statute or by any public or local authority:

Provided that in considering whether any and, if so, what, balancing charge is to be made on a person under Chapter II of this Part in respect of any machinery or plant provided before the 15th day of April, 1959, this subsection shall not apply.

304 Other provisions as to interpretation.

304.—(1) In this Part, except where the context otherwise requires—

“income” includes any amount on which a charge to tax is authorised to be made under any of the provisions of this Part;

“lease” includes an agreement for a lease where the term to be covered by the lease has begun, and any tenancy, but does not include a mortgage, and “lessee”, “lessor” and “leasehold interest” shall be construed accordingly;

“sale, insurance, salvage or compensation moneys” mean, in relation to an event which gives rise or might give rise to a balancing allowance or a balancing charge to or on any person—

(a) where the event is a sale of any property, the net proceeds to that person of the sale,

(b) where the event is the demolition or destruction of any property, the net amount received by him for the remains of the property, together with any insurance moneys received by him in respect of the demolition or destruction and any other compensation of any description received by him in respect thereof, in so far as that compensation consists of capital sums,

(c) as respects machinery or plant, where the event is the permanent loss thereof otherwise than in consequence of its demolition or destruction, any insurance moneys received by him in respect of the loss and any other compensation of any description received by him in respect thereof, in so far as that compensation consists of capital sums, and

(d) where the event is that a building or structure ceases altogether to be used, any compensation of any description received by him in respect of that event, in so far as that compensation consists of capital sums.

(2) Any reference in this Part to any building, structure, machinery or plant shall be construed as including a reference to a part of any building, structure, machinery or plant.

(3) The provisions of this Part shall apply in relation to a share in machinery or plant as they apply in relation to a part of machinery or plant, and for the purposes of those provisions a share in machinery or plant shall be deemed to be used for the purposes of a trade so long as, and only so long as, the machinery or plant is used for the purposes thereof.

(4) Any reference in this Part to the time of any sale shall be construed as a reference to the time of completion or the time when possession is given, whichever is the earlier.

(5) Any reference in this Part to the setting up or permanent discontinuance of a trade includes, except where the contrary is expressly provided, a reference to the occurring of any event which, under any of the provisions of this Act, is to be treated as equivalent to the setting up or permanent discontinuance of a trade.

(6) Any reference in this Part to an allowance made or deduction allowed includes a reference to an allowance or deduction which would be made or allowed but for an insufficiency of profits or gains, or other income, against which to make it.

PART XVII Relief for Expenditure on Training of Local Staff Before Commencement of Trading

305 Training of local staff before commencement of trading.

305.—(1) Where, before the day of the setting up or commencement of a trade consisting of the production for sale of manufactured goods, a person who is about to carry on the trade incurs or has incurred expenditure on the recruitment and training, with a view to their employment in the trade, of persons all or a majority of whom are Irish citizens—

(a) for the year of assessment in which that day occurs and each of the next two years of assessment, there shall be made to him an allowance equal to one-third of that expenditure, and such allowance shall be made as a deduction in charging the profits or gains of the trade,

(b) section 241 (3) shall apply in relation to an allowance under paragraph (a) as it applies in relation to a deduction allowable in respect of wear and tear of machinery or plant.

(2) For the purposes of this section—

(a) expenditure shall not include any expenditure incurred by a person in respect of which no deduction would have been allowable to him, in computing the profits or gains of the trade under the provisions of this Act applicable to Case I of Schedule D, if it had been incurred on or after the day of the setting up or commencement of the trade,

(b) expenditure shall not be regarded as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State, by any board established by statute or by any public or local authority.

(3) For the purposes of this section, the date on which any expenditure is incurred shall be taken to be the date on which the sum in question becomes payable.

(4) Any claim by a person for an allowance under this section shall be included in the annual statement required to be delivered under this Act of the profits or gains of his trade and shall be accompanied by a certificate signed by the claimant, which shall be deemed to form part of the claim, stating that the expenditure was incurred on the recruitment and training, with a view to their employment in the trade, of persons all or a majority of whom are Irish citizens and giving such particulars as show that the allowance falls to be made.

PART XVIII Allowance for Expenditure on Production of Certain Commodities

306 Expenditure on production of certain commodities.

306.—(1) This section relates only to commodities which were not produced commercially in the State in the twelve months ended on the 31st day of August, 1939, and the production of which in the State (whether for home consumption or for export) would not have been commercially profitable at any time during those twelve months, and “commodity to which this section relates” shall in this section be construed accordingly.

(2) In this section references to abnormal economic conditions in respect of a commodity to which this section relates shall be construed as meaning that, owing to circumstances created by or arising from the national emergency to which the resolution passed by each House of the Oireachtas on the 2nd day of September, 1939, related (including circumstances continuing after the termination of that emergency),—

(a) the said commodity is urgently required in the State to meet an essential need of the people and either cannot be imported in sufficient quantities to meet that need or cannot be imported at all, and

(b) the production of the said commodity in the State for home consumption is, while the said circumstances exist, commercially profitable, but will cease to be commercially profitable after the cesser of those circumstances.

(3) Where—

(a) a person applies, in accordance with this section, to the Revenue Commissioners for a special allowance under this section in respect of any year of assessment, and

(b) shows, to the satisfaction of the Revenue Commissioners, that during that year he used buildings erected or acquired or plant or machinery installed by him after the 31st day of August, 1939, solely for the production by way of trade or business of a commodity to which this section relates, and that such commodity was so produced solely for consumption within the State, and

(c) also shows to the satisfaction aforesaid that during the said year abnormal economic conditions existed in respect of the said commodity,

the Revenue Commissioners may cause such special allowance as they consider just to be made in respect of the said buildings, plant, or machinery from the assessment made on the said person for the said year in respect of the profits of his trade or business of so producing the said commodity.

(4) Application to the Revenue Commissioners for a special allowance under this section in relation to any year of assessment may be made within twelve months after the end of such year.

(5) Where a special allowance is made under the foregoing provisions of this section, effect shall be given to such allowance by repayment or otherwise.

(6) Where special allowances under this section have been made to a person and the Revenue Commissioners are satisfied that abnormal economic conditions have ceased to exist in respect of the commodity in relation to the production of which the said allowances were made, the Revenue Commissioners may review the said allowances.

(7) The following provisions shall have effect in relation to or in consequence of a review under the next preceding subsection of this section of the special allowances under this section made to any person, that is to say:—

(a) for the purpose of such review the Revenue Commissioners may compare the following amounts, that is to say:—

(i) the net cost (as hereinafter defined) to the said person of the buildings, plant, or machinery in respect of which the said special allowances were made, and

(ii) the total allowances as hereinafter defined made to the said person;

(b) for the purposes of the said comparison, the said net cost shall be taken to be the amount by which the actual cost to the said person of the erection or acquisition of the said buildings or the installation of the said plant or machinery exceeds the aggregate of—

(i) the sum or sums (if any) provided by way of subsidy or grant out of public funds towards the said erection, acquisition, or installation, and

(ii) the amount for which, in the opinion of the Revenue Commissioners, the said buildings, plant, or machinery are worth to be sold at or within twelve months after the cesser of abnormal economic conditions in respect of the commodity for the production of which the said buildings, plant, or machinery were or was used;

(c) the said total allowances shall be taken to be the aggregate of all special allowances made to the said person under the foregoing provisions of this section and all allowances made to such person in respect of the said buildings, machinery, or plant under or by reason of section 65 (4) (a), 241 or 243 for the year of assessment in which occurred the cesser of abnormal economic conditions in respect of the commodity for the production of which the said buildings, plant, or machinery was or were used and for any previous year of assessment during which the said buildings, plant, or machinery were or was so used;

(d) if the said net cost exceeds the said total allowances, the Revenue Commissioners may make, by repayment or otherwise, such further special allowance as is in their opinion just;

(e) if the said total allowances exceed the said net cost, the special allowances under this section made to the said person may be revised and such additional assessments as the Revenue Commissioners consider to be necessary may be made on the said person for any year of assessment in respect of which any such special allowance was granted to him.

PART XIX Losses

Chapter I Relief for Losses

307 Right to repayment of tax by reference to losses.

307.—(1) Subject to the provisions of this section, where in any year of assessment any person has sustained a loss in any trade, profession or employment, 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) 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 paragraph (a) (i), “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 section 216 (2), 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 this Act.

(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), to be treated as reducing income of a particular class or income from a particular source, shall for all the purposes of this Act, 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, but any person aggrieved by any determination of the inspector 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) as if it were an appeal to them against an assessment to income tax and the provisions of this Act relating to the rehearing 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.

308 Persons carrying on two or more trades.

308.—A person who carries on, either solely or in partnership, two or more distinct trades the profits of which are chargeable under Schedule D may deduct from or set off against the profits as computed under this Act in respect of one or more such trades, the loss so computed sustained in any other such trade, and may make separate statements as to each such trade.

309 Right to carry forward losses to future years.

309.—(1) Where a person has in any trade or profession carried on by him, either solely or in partnership, sustained a loss (to be computed in like manner as profits or gains under the provisions of this Act applicable to Cases I and II of Schedule D) in respect of which relief has not been wholly given under section 307 or 308 or under any other provision of this Act, he may claim that any portion of the loss for which relief has not been so given shall be carried forward and, as far as may be, deducted from or set off against the amount of profits or gains on which he is assessed under Schedule D in respect of that trade or profession for any subsequent year of assessment, save that if and in so far as relief in respect of any loss has been given to any person under this section that person shall not be entitled to claim relief in respect of that loss under any other provision of this Act.

(2) Any relief under this section shall be given as far as possible from the first subsequent assessment, and so far as it cannot be so given then from the next assessment and so on.

(3) Where a loss is sustained—

(a) by a person in the occupation of woodlands, who, if he had made a profit, would, by reason of his election under section 36, have been chargeable for the succeeding year to tax under Schedule D computed on the amount of that profit, or

(b) by a person in the occupation of lands who, if he had made a profit, would, in consequence of his election under section 34, have been chargeable for the succeeding year to tax under Schedule D computed on the amount of that profit;

this section shall apply so as to give relief in respect of that loss in the same manner and to the same extent as if it were a loss sustained in a trade:

Provided that, if for any year after the year in which the loss is sustained the person who suffered the loss is assessed under Schedule B in respect of the occupation of the lands in question no such deduction or set-off as aforesaid shall in respect of that loss be allowed for that or any succeeding year.

310 Relief under Case IV for losses.

310.—(1) Where in any year of assessment a person sustains a loss in any transaction (being a transaction of such kind that, if any profits had arisen therefrom, he would have been liable to be assessed in respect thereof under Case IV of Schedule D) in which he engages, whether solely or in partnership, he may claim that the amount of the said loss shall, as far as may be, be deducted from or set off against the amount of profits or gains on which he is assessed under the said Case IV for that year and that any portion of the loss for which relief is not so given shall be carried forward and, as far as may be, deducted from or set off against the amount of profits or gains on which he is assessed under the said Case IV for any subsequent year of assessment.

(2) In the application of this section to a loss sustained by a partner in a partnership, “the amount of profits or gains on which he is assessed” shall, in respect of any year, be taken to mean such portion of the amount on which the partnership is assessed under Case IV of Schedule D as he would be required under this Act to include in a return of his total income for that year.

(3) Any relief under this section by way of carrying forward any portion of a loss shall be given as far as possible from the first subsequent assessment, and so far as it cannot be so given then from the next assessment and so on.

311 Terminal loss.

311.—(1) Where a trade or profession is permanently discontinued, and any person carrying it on, either solely or in partnership, immediately before the time of the discontinuance, has sustained therein a loss to which this section applies (hereafter in this Chapter referred to as a terminal loss), then, subject to the provisions of sections 312 to 315, he may claim that the amount of the terminal loss shall, as far as may be, be deducted from or set off against the amount of profits or gains on which he has been charged to income tax under Schedule D in respect of the trade or profession for the three years of assessment last preceding that in which the discontinuance occurs, and there shall be made all such amendments of assessments or repayments of tax as may be necessary to give effect to the claim:

Provided that relief shall not be given in respect of the same matter both under this section and under some other provision of this Act.

(2) Any relief under this section shall be given as far as possible from the assessment for a later rather than an earlier year.

312 Determination of terminal loss.

312.—(1) The question whether a person has sustained any, and if so what, terminal loss in a trade or profession shall for the purposes of section 311 be determined by taking the amounts, if any, of the following (in so far as they have not been otherwise taken into account so as to reduce or relieve any charge to tax), that is to say:

(a) the loss sustained by him in the trade or profession in the year of assessment in which it is permanently discontinued;

(b) the relevant capital allowances for that year of assessment;

(c) the loss sustained by him in the trade or profession in the part of the preceding year of assessment beginning twelve months before the date of the discontinuance;

(d) the same fraction of the relevant capital allowances for that preceding year of assessment as the part beginning as aforesaid is of a year.

(2) In subsection (1), “the relevant capital allowances” means, in relation to any year of assessment, the capital allowances falling to be made in charging the profits or gains of the trade or profession for that year excluding amounts carried forward from an earlier year, and, for the purposes of subsection (1)(a)(c), the amount of a loss shall be computed in like manner as profits or gains are computed under the provisions of this Act applicable to Cases I and II of Schedule D.

313 Amount of profits or gains.

313.—(1) Subject to subsection (3), the amount of the profits or gains on which a person has been charged to income tax for any year of assessment in respect of the profits or gains of a trade or profession shall, for the purposes of relief under section 311 from the assessment for that year, be taken to be the full amount of the profits or gains on which he was assessable for that year reduced by—

(a) a sum equal to the total amount of the deductions, if any, in respect of capital allowances made in charging the profits or gains, and

(b) a sum equal to the total amount of the deductions, if any, in respect of payments made or losses sustained, which fell to be made from the profits or gains in computing for income tax purposes the person's total income for the year, or would have fallen to be so made if the person were an individual, and

(c) in the case of a body of persons, a sum equal to so much of the profits or gains as was applied in payment of dividends:

Provided that where any deduction such as is mentioned in paragraph (b) may be treated in whole or in part either as having been made from the profits or gains or as having been made from other income, the deduction shall, as far as may be, be treated for the purposes of this subsection as made from the other income.

(2) Where, under subsection (1) (b), the amount of the profits or gains on which a person was assessable for any year is reduced by reference to a payment made by him, a like reduction shall be made in the amount of the terminal loss for which relief may be given under section 311 for earlier years unless the payment was made wholly and exclusively for the purposes of the trade or profession.

(3) Where a person claiming relief under section 311 on a discontinuance has, since the beginning of the third year of assessment preceding that in which the discontinuance occurs, carried on the trade or profession in partnership, the full amount of the profits or gains on which he was assessable for any year, or part of a year, prior to 1965-66 for which the partnership was assessed in respect of the trade or profession, shall, for the purposes of subsection (1), be taken to be the amount of his share, computed in accordance with this Act, of the profits or gains on which the partnership has been charged to tax and the amount of the profits or gains on which the partnership has been so charged shall, for this purpose, be computed as it would be computed under subsection (1) if that subsection applied to a partnership as it applies to a person.

314 Meaning of “permanently discontinued” and “capital allowances”.

314.—(1) For all the purposes of sections 311 to 315 a trade or profession shall be treated as permanently discontinued and a new trade or profession set up or commenced when it is so treated for the purposes of section 59, or where by reference to section 71 (1) (a) (ii) a several trade of a partner has been deemed to have been permanently discontinued, but—

(a) a person who continues to be engaged in carrying it on immediately after such a discontinuance shall not be entitled to relief in respect of any terminal loss on that discontinuance, and

(b) on any discontinuance, a person not continuing to be so engaged may be given relief in respect of a terminal loss against profits or gains on which he was charged in respect of the same trade or profession for a period before a previous discontinuance, if he has been continuously engaged in carrying it on between the two discontinuances, and, in his case, if the previous discontinuance occurred within twelve months before the other, it shall be disregarded for the purposes of section 312 (1).

(2) In sections 312 and 313 “capital allowances” means allowances, other than allowances falling to be made in computing profits or gains, under section 241 or Part XIV, XV, XVI or XVII.

315 Determination claims for terminal loss.

315.—(1) Any claim under section 311 shall be made to and determined by the inspector, but any person aggrieved by any decision of the inspector on any such claim may, on giving notice in writing to the said inspector within twenty-one days after the notification to him of the decision, appeal to the Special Commissioners.

(2) The Special Commissioners shall hear and determine an appeal to them under subsection (1) as if it were an appeal against an assessment to income tax, and the provisions of this Act relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall, with the necessary modifications, apply accordingly.

316 Amount of assessment under section 434 to be allowed as a loss for certain purposes.

316.—(1) Subject to the provisions of this section, where a person has been assessed to tax for the year 1963-64 or a subsequent year of assessment under section 434, in respect of a payment made wholly and exclusively for the purposes of a trade or profession, the amount on which tax has been paid under that assessment shall, for the purposes of sections 309 and 311 to 315, be treated as though it were a loss sustained in that trade or profession and relief in respect thereof shall be allowed accordingly:

Provided that no relief shall be allowed under this section in respect of any such payment or any part of such payment which is not ultimately borne by the person assessed or which is charged to capital.

(2) This section shall not apply to any sum assessed under section 434 by virtue of Chapter II of Part XII or section 221 (2) (b), 288, 363 or 435.

Chapter II Treatment of Capital Allowances

317 Interpretation.

317.—(1) In this Chapter—

“balancing charges” means balancing charges under Part XVI;

“capital allowances” means allowances, other than allowances falling to be made in computing profits or gains, under section 241 or Part XIV, XV, XVI or XVII;

“year of claim” means, in relation to any claim under section 307, the year of assessment for which the claim is made.

(2) For the purposes of this Chapter—

(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) “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 this 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.

318 Option to treat as creating or augmenting loss.

318.—(1) Subject to the provisions of this Chapter, any claim made under section 307, for relief in respect of a loss sustained in any trade, 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.

(2) Where on any claim made by virtue of this Chapter relief is not given under section 307 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.

319 Extent to which allowances to be taken into account.

319.—(1) The capital allowances for any year of assessment shall be taken into account under section 318 (1) 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.

(2) For the purposes of subsection (1), 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.

320 Effect of giving relief.

320.—Where for any year of claim relief is given under section 307 by reference to any capital allowances, then, for all the purposes of this Act, 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.

321 Grant of relief before passing of annual Act.

321.—Relief from tax may be given by virtue of section 318 (1) 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 section 318 (1) 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 IV 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 IV for the year of claim.

322 Application to professions, etc.

322.—This Chapter applies, with any necessary adaptations, in relation to a profession or employment 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.

Chapter III Payments by Companies to Associated Companies in Respect of Losses

323 Interpretation.

323.—In this Chapter—

“accounting period” means, in relation to a company, a period for which the accounts of the company have been made up;

“auxiliary company” means a company incorporated not earlier than the 14th day of December, 1961, and not later than the 31st day of March, 1965, being a company—

(a) of whose ordinary share capital—

(i) a part is held beneficially by each of two or more companies, and

(ii) not less than 95 per cent. is held beneficially by companies, and

(b) which does not hold any stock, share or security issued by a company holding beneficially a part of such ordinary share capital;

“capital allowances” means allowances, other than allowances falling to be made in computing profits or gains, under section 241 or Part XIV, XV, XVI or XVII;

“company” means a body corporate resident in the State and carrying on a trade;

“deficiency payment” means a payment made to an auxiliary company by one of its principal companies under an agreement providing for the principal company to bear, or share in, losses or a particular loss sustained by the auxiliary company in a trade carried on by it, not being a payment which, apart from this Chapter, would fall to be taken into account in computing profits or gains or losses of either company or would fall to be treated as income of the auxiliary company;

“ordinary share capital” means, in relation to a company, all the issued capital (by whatever name called) of the company, other than capital the holders whereof have a right to a dividend at a fixed rate or a rate fluctuating in accordance with the rate of income tax, but have no other right to share in the profits of the company;

“principal company” means, in relation to an auxiliary company a company which holds beneficially a part of the ordinary share capital of that company;

“trade” means a trade carried on wholly or partly in the State.

324 Treatment of deficiency payments as trading receipts and trading expenses.

324.—(1) Subject to the provisions of this Chapter, where an auxiliary company—

(a) has a deficiency in a trade for an accounting period, and

(b) receives in relation to the trade a deficiency payment in respect of that period, being a deficiency payment in relation to which this subsection applies,

then, in computing for the purposes of income tax the profits or gains or losses of the company and of the principal company from which the payment was received, the payment shall be treated as a trading receipt of the auxiliary company, receivable by that company on the last day of the period, and shall be allowed as a deduction to the principal company as if it were a trading expense incurred on that day.

(2) A deficiency payment in respect of an accounting period shall be a deficiency payment in relation to which subsection (1) applies if (but only if)—

(a) at all times during the period—

(i) the payee company was an auxiliary company, and

(ii) the paying company was, in relation to the payee company, a principal company, and

(b) the payment is made not later than three years after the end of the period.

(3) If an auxiliary company receives in respect of an accounting period a deficiency payment or deficiency payments from one or more principal companies and the payment or the aggregate of the payments exceeds the deficiency in its relevant trade for that period, the excess shall be disregarded for the purposes of this Chapter; and, where payments by more than one principal company are in question, the payments shall be treated as abating in such manner as may be agreed between all the companies concerned or, in default of agreement, as may be determined by the Revenue Commissioners.

(4) Where a deficiency payment is made to an auxiliary company in respect of more than one accounting period of that company or is made by a principal company carrying on more than one trade, the apportioned part of the payment to be attributed for the purposes of this Chapter to any period or trade shall be determined by the Revenue Commissioners.

325 Meaning of “deficiency”.

325.—(1) For the purposes of this Chapter—

(a) a company has a deficiency in a trade for an accounting period if (but only if) the aggregate amount of—

(i) any loss sustained in the trade in the period (computed in like manner as profits or gains under the provisions, other than this Chapter, applicable to Case I of Schedule D),

(ii) any amounts referable to the period of capital allowances falling to be made in charging the profits or gains of the trade for any year of assessment of which the whole or a part is within the period, and

(iii) any payments to which section 433 or 434 applies (other than payments to which section 434 applies by virtue of section 288) being payments made wholly and exclusively for the purposes of the trade and not deductible in computing the profits or gains or losses of the trade,

exceeds the aggregate amount of—

(I) any profits or gains arising from the trade in the period (computed in accordance with the provisions, other than this Chapter, applicable to Case I of Schedule D), and

(II) any amounts referable to the period of balancing charges under Part XVI falling to be made in charging the profits or gains of the trade for any year of assessment of which the whole or a part is within the period, and

(b) if there is such an excess, the amount of the deficiency shall be taken as being equal to the amount of the excess.

(2) For the purposes of this section the amount of an allowance or charge referable to a period shall be taken to be the amount thereof to be taken into account in computing for the purposes of corporation profits tax the profits of the company for that period.

326 Adjustment of assessments in certain cases.

326.—(1) Where under the foregoing provisions of this Chapter a deficiency payment, or part of a deficiency payment, made by a principal company falls to be treated as an expense of a trade incurred in an accounting period of which the whole or a part—

(a) falls within the company's basis periods for more than one year of assessment, or

(b) does not fall within the company's basis period for any year of assessment,

then, such adjustments, if any, shall be made—

(i) in a case within paragraph (a), of the assessment for any year mentioned in that paragraph other than the first, or

(ii) in a case within paragraph (b), of the assessment for the year next following the end of the said accounting period or, where the trade has been permanently discontinued before the beginning of that year, for the year in which the said accounting period ends,

as may be necessary to secure that, so far as may be, the aggregate of the amounts which, disregarding this Chapter, would be the final assessments on the company is reduced by an amount neither more nor less than the amount of the deficiency payment.

(2) For the purposes of this section a company's basis period for a year of assessment is 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 in question.

327 Method of giving effect to this Chapter.

327.—There shall be made such additional assessments, reductions of assessments or repayments of tax as may in any case be required in order to give effect to this Chapter; and where a deficiency payment reduces or extinguishes a loss in respect of which a company has received repayment of tax under section 307 or 311, so much of the repayment as would not have been made if the deficiency payment had been taken into account shall, if not otherwise made good, be recovered from the company by assessment under Case IV of Schedule D; and for the purpose of such assessment the deficiency payment, or an appropriate part thereof, shall be deemed to be income chargeable under the said Case IV for the year of assessment for which the repayment was made.

328 Restriction of relief for losses of auxiliary companies.

328.—This Chapter shall not have effect in relation to a loss sustained by an auxiliary company during an accounting period beginning more than five years after the date on which the company first commenced to trade; and where, after a trade has been set up or commenced by an auxiliary company, the trade, or a part of the trade, becomes carried on by any other company, the other company shall, for the purposes of this section, be deemed to have first commenced to trade on the same day as the first-mentioned company.

PART XX Relief to Investors in Irish Securities

Chapter I Stocks, Shares, and Securities of Companies other than Manufacturing Companies

329 Relief to investors.

329.—(1) Where an individual who is resident in the State and is not resident elsewhere claims and proves to the satisfaction of the Special Commissioners that he is entitled to the beneficial ownership of any stock, shares, or security to which this section applies, the following provisions shall have effect, that is to say—

(a) such individual shall be entitled to repayment of 20 per cent. of the income tax applicable to any dividend or interest received by him in respect of such stock, shares, or security, save in so far as relief or repayment in respect of such tax has been or is granted under any other provision of this Act;

(b) in estimating the total income from all sources of such individual for the purposes of income tax and sur-tax the amount of any dividend or interest in respect of such stock, shares, or security shall be deemed to be diminished by 20 per cent.

(2) Subject to Chapter II of this Part and to the provisions of sections 330 and 331, this section shall apply to all stocks, shares, and securities issued for public subscription after the 4th day of August, 1932, in respect of which the Minister for Finance certifies that he is satisfied, after consultation with the Minister for Industry and Commerce, that all the following conditions are complied with in relation to such stock, share, or security, that is to say—

(a) such stock, share, or security is or was issued by a company which complies with the following provisions that is to say, such company—

(i) is incorporated by or under the laws of the State, and

(ii) is a company limited by shares within the meaning of the Companies Act, 1963, and

(iii) is managed and controlled in the State, and

(iv) carries on or (in the case of a company which has not commenced to carry on business) intends to carry on its business wholly or mainly in the State; and

(b) the capital raised by the issue of such stock, share, or security is or is intended to be or has been devoted to the establishment or extension in the State of one or more industries as defined by this section; and

(c) no part of the said capital so raised is intended to be or is being or has been used for the purpose of acquiring (directly or indirectly) an existing business or any share or interest in an existing business or of purchasing investments, or of paying off existing loans or debentures; and

(d) such issue of stock, shares, or security is so described and designated that it is readily distinguishable from all other (if any) issues of such company.

(3) Every warrant, cheque, or order drawn or made for the payment of any dividend or interest in respect of any stock, share, or security to which this section applies shall indicate clearly either (as the case may require)—

(a) that the whole of the sum for which such warrant, cheque, or order is drawn or made is a payment of or on account of dividend or interest in respect of such stock, share, or security; or

(b) that a part (the amount of which is separately stated) of such sum is a payment of or on account of such dividend or interest.

(4) Any stock, share, or security to which this section applies shall cease to be a stock, share, or security (as the case may be) to which this section applies if and when the Minister for Finance certifies in relation to such stock, share, or security that he is satisfied, after consultation with the Minister for Industry and Commerce, either—

(a) that the company by which such stock, share, or security was issued has ceased to comply with the provisions set forth in subsection (2) (a), or

(b) that the capital raised by the issue of such stock, share, or security has been or is being devoted wholly or partly to purposes other than the establishment or extension in the State of one or more industries as defined by this section, or

(c) that such capital is being used wholly or partly in contravention of subsection (2) (c), or

(d) that such issue of stock, shares, or security has ceased to be described and designated in accordance with subsection (2) (d), or

(e) that subsection (3) is not being complied with in relation to such stock, share, or security.

(5) In this section “industry” means any trade or business whatsoever save and except the purchase and sale of imported coal, the manufacture or distribution of gas for lighting, heating, or power, the carrying on, organisation, or conduct of road transport, the provision of amusement or entertainment of any kind, the holding (otherwise than by way of investment of reserve or subsidiary funds) of or dealing in stocks, shares, or securities, whether of all kinds or of any particular class or classes or of one or more particular companies.

330 Restriction of section 329.

330.—(1) In this section—

“qualified person” means a person who is a citizen of Ireland, and

“qualified holding company” means a company of which—

(i) the issued shares are, to an extent exceeding one-half (in nominal value) thereof in the beneficial ownership of a qualified person or persons, and

(ii) at least two-thirds (in nominal value) of every class of shares issued and carrying voting rights (whether immediate or to arise in certain future circumstances) are in the beneficial ownership of a qualified person or persons.

(2) Section 329 shall not apply to any stock, share, or security issued after the 30th day of July, 1935, unless the certificate of the Minister for Finance under subsection (2) of that section certifies that (in addition to the conditions set out in the said subsection (2)) the following conditions are complied with in relation to such stock, share, or security, that is to say that such stock, share, or security is or was issued by a company of which—

(a) a majority of the directors (other than a managing director giving the whole of his time to his duties as such director) are qualified persons, and

(b) unless the company is a company licensed under the Insurance Act, 1936, to carry on assurance business, the issued shares are, to an extent exceeding one-half (in nominal value) thereof in the beneficial ownership of a person who is, or of two or more persons each of whom is, either a qualified person or a qualified holding company, and

(c) at least two-thirds (in nominal value) of every class of shares issued and carrying voting rights (whether immediate or to arise in certain future circumstances) are in the beneficial ownership of a person who is, or of two or more persons each of whom is, either a qualified person or a qualified holding company.

(3) Without prejudice to the provisions of section 329 (4) any stock, share, or security issued after the 30th day of July, 1935, to which section 329 applies shall cease to be a stock, share, or security (as the case may be) to which that section applies if and when the Minister for Finance certifies in relation to such stock, share, or security that he is satisfied, after consultation with the Minister for Industry and Commerce, that the company by which such stock, share, or security was issued has ceased to comply with the conditions set out in subsection (2) of this section.

331 Shares, etc., deemed to be issued for public subscription.

331.—(1) Where—