Finance Act , 1973

PART I Income Tax, Sur-Tax and Corporation Profits Tax

Chapter I Income Tax

1 Amendment of section 129 of Income Tax Act, 1967.

1.—(1) Section 129 of the Income Tax Act, 1967, is hereby amended by the addition of the following:

“Provided that if the amount of the interest as so calculated is less than £5, the amount of interest payable shall be £5.”.

(2) Subsection (1) shall have effect in relation to interest chargeable for any month commencing on or after the date of the passing of this Act, or any part of such a month, on tax for the transmission of which an employer is or was liable whether before, on or after such date.

2 Amendment of section 138 of Income Tax Act, 1967.

2.—Section 138 (3) of the Income Tax Act, 1967, is hereby amended by the substitution of “£104” for “£74”.

3 Amendment of section 141 of Income Tax Act, 1967.

3.—Section 141 of the Income Tax Act, 1967, is hereby amended—

(1) by the substitution for subsection (1A) (inserted by the Finance Act, 1969) of the following subsection:

“(1A) The deduction referred to in subsection (1) shall be:

(a) (i) in the case of a child to whom paragraph (a) of that subsection applies and who is shown by the claimant to have been over the age of 11 years at the commencement of the year of assessment, £170, and in the case of any other such child, £155, or

(ii) in the case of a child to whom paragraph (aa) of that subsection applies and who is shown by the claimant to have been over the age of 11 years at the commencement of the year of assessment, £220, and in the case of any other such child, £205;

(b) in the case of a child to whom subsection (1) (b) (i) applies, £170;

(c) in the case of a child to whom subsection (1) (b) (ii) applies and who is wholly or partly maintained by the claimant at his own expense, £220 if the amount expended by the claimant in the year of assessment on the maintenance of the child is not less than £220, and, where the amount so expended is less than £220, that amount:

Provided that—

(i) any deduction under subsection (1) (b) (ii) shall be in substitution for, and not in addition to, any deduction to which the claimant might be entitled in respect of the child under section 142; and

(ii) a claimant shall not be entitled to more than one deduction under subsection (1) in respect of the same child.”.

(2) by the insertion after subsection (1A) of the following subsections—

“(1AA) Where the claimant is or would on due application be entitled throughout the year of assessment to a children's allowance in respect of more than one child, the deduction to be given under subsections (1) and (2) shall—

(i) in the case of one such child be reduced by £15, and

(ii) in the case of any such children in excess of one, be reduced by £23 each.

(1AAA) Where for the year 1973-74 or any subsequent year of assessment a claimant's total income for the relevant year of assessment from all sources, as estimated in accordance with the provisions of the Income Tax Acts, exceeds £2,500 and the claimant is or would on due application be entitled throughout the year of assessment, to a children's allowance in respect of any child, any deduction in respect of that child to be given under this section shall, in addition to any reduction to be made by virtue of subsection (1AA), be reduced by £42 for the year 1973-74 and by £50 for any subsequent year:

Provided that a claimant who in consequence of the provisions of this subsection has the amount of income tax payable by him increased shall be entitled to have that amount reduced to a sum equal to the aggregate of the following amounts, that is to say, the amount of tax which would have been payable if his total income had amounted to, but not exceeded, £2,500 and the amount by which his total income exceeds £2,500.”.

(3) by the substitution in subsection (1B) of the following definition for the definition of “children's allowance”:

“‘children's allowance’ means an allowance under the Social Welfare (Children's Allowances) Acts, 1944 to 1970, and any subsequent Act together with which those Acts may be cited.”.

(4) Section 523 (1) (a) of the Income Tax Act, 1967, shall have effect as if section 141 (1AAA) (inserted by the Finance Act, 1973) had not been enacted.

4 Amendment of section 142 of Income Tax Act, 1967.

4.—Section 142 (1) of the Income Tax Act, 1967, is hereby amended by the substitution of “£407” for “£355” (inserted by the Finance Act, 1972) in both places where it occurs and by the substitution of “£347” for “£295” (inserted by the said Finance Act, 1972).

5 Amendment of section 154 of Income Tax Act, 1967.

5.—For the purposes of section 154 of the Income Tax Act, 1967, no account shall be taken of any tax paid in respect of income for a year of assessment beginning after the year 1972-73 or of any relief to which a person would have been entitled for such a year of assessment in the circumstances mentioned in that section.

6 Amendment of section 211 of Income Tax Act, 1967.

6.—Section 211 of the Income Tax Act, 1967, is hereby amended by the deletion of subsection (4).

7 Amendment of section 229 of Income Tax Act, 1967.

7.—Section 229 (1) (i) of the Income Tax Act, 1967, is hereby amended, as on and from the 6th day of April, 1972, by the deletion of the words from “whichever of the following amounts” to the end of the paragraph and the substitution therefor of “an amount equal to four times the person's final remuneration”.

8 Restriction of section 246 of Income Tax Act, 1967.

8.—(1) Section 246 of the Income Tax Act, 1967, shall not apply to any expenditure incurred on or after the 24th day of July, 1973, and before the 1st day of April, 1975, on the purchase of a new ship.

(2) This section shall not apply to any expenditure incurred under a contract entered into before the 24th day of July, 1973.

9 Amendment of section 251 of Income Tax Act, 1967.

9.—(1) Section 251 of the Income Tax Act, 1967, is hereby amended by the substitution in subsection (4) (d) (inserted by the Finance Act, 1972) of “the 1st day of April, 1975” for “the 1st day of April, 1973”.

(2) Where on or after the 3rd day of July, 1973, a claim is made by a person for an initial allowance under section 251 of the Income Tax Act, 1967, for any year of assessment in respect of machinery or plant, any allowance made to the person under that section shall not exceed such sum as will, when added to—

(a) the amount of any deduction in respect of the machinery or plant allowed to the person under section 241 of the said Act for that year of assessment, and

(b) the aggregate amount of any deductions allowed to the person in respect of the machinery or plant under the said sections 241 and 251 for earlier years of assessment,

equal the actual amount of the expenditure incurred by him on the provision of the said machinery or plant.

10 Amendment of section 254 of Income Tax Act, 1967.

10.—Section 254 (2) of the Income Tax Act, 1967, is hereby amended by the substitution of “the 1st day of April, 1975” for “the 1st day of April, 1973” (inserted by the Finance Act, 1971).

11 Amendment of section 272 of Income Tax Act, 1967.

11.—(1) Section 272 of the Income Tax Act, 1967, is hereby amended by the substitution for subsection (5) of the following subsections:

“(5) Where the aggregate amount of initial allowances and wear and tear allowances made to any person in respect of any machinery or plant exceeds the actual amount of the expenditure incurred by him on the provision of the said machinery or plant,

the amount of such excess (in this subsection referred to as the excess amount) shall, on the occurrence of an event falling within any of the paragraphs (a), (b) or (c) of subsection (1), be deemed to be a payment of an equal amount received by the person on account of sale, insurance, salvage or compensation moneys and shall be added to any other such moneys received in respect of the said machinery or plant and a balancing charge shall be made, and the amount on which it is made shall be an amount equal to—

(a) where there are no sale, insurance, salvage or compensation moneys, the said excess amount, or

(b) where there are sale, insurance, salvage or compensation moneys, the aggregate of such moneys and the said excess amount.

(5A) Where, as respects any machinery or plant, an event falling within any of the paragraphs (a), (b) or (c) of subsection (1) is followed by another event falling within any of those paragraphs, any balancing allowance or balancing charge made to or on a person by virtue of the happening of the later event shall take account of any balancing allowance or balancing charge previously made to or on that person in respect of the expenditure incurred by him on the provision of that machinery or plant.”.

(2) This section shall have effect where, as respects any machinery or plant, the event giving rise to a balancing charge in respect of that machinery or plant occurs or occurred on or after the 3rd day of July, 1973.

12 Amendment of section 336 of Income Tax Act, 1967.

12.—Section 336 of the Income Tax Act, 1967, is hereby amended by the substitution of “£450” for “£350” (inserted by the Finance Act, 1971).

13 Amendment of section 357 of Income Tax Act, 1967.

13.—Section 357 (3) of the Income Tax Act, 1967, shall have effect in relation to any dividend paid on or after the 6th day of April, 1973, as if “controls, directly or indirectly, not less than ten per cent. of the voting power in” were substituted for “beneficially owns, directly or indirectly, not less than three-quarters of the ordinary share capital of”.

14 Amendment of section 387 of Income Tax Act, 1967.

14.—Section 387 of the Income Tax Act, 1967, is hereby amended by the addition thereto of the following subsection—

“(4) (a) Where, under section 456, a body corporate is entitled to deduct income tax from any dividend, not being a dividend to which subsection (2) or (3) applies, tax shall not in any case be deducted at a rate exceeding the rate of income tax as reduced by any relief from that tax given under or by virtue of this Chapter, and the provisions of section 457 shall apply accordingly, with any necessary modifications.

(b) The rate of income tax at which any repayment of income tax for any year of assessment falls to be made shall be subject to such adjustments as may be proper in cases in which relief is given under or by virtue of this Chapter.

(c) Where, by virtue of paragraph (a), income tax is deducted from a dividend at a reduced rate, the amount to be included in respect of the dividend in any return for the purpose of sur-tax shall be an amount which bears the same proportion to the amount of the dividend as the rate of income tax deducted therefrom bears to the rate which would have been authorised to be deducted if this subsection had not been enacted.”.

15 Amendment of section 439 of Income Tax Act, 1967.

15.—Section 439 (1) of the Income Tax Act, 1967, is hereby amended by the insertion, after paragraph (ii), of the following paragraph:

“(iia) being payable to any body of persons to which the provisions of section 20 of the Finance Act, 1973, apply, is so payable for a period which is or may be three years or longer, or”.

16 Amendment of section 22 of Finance Act, 1971.

16.—Section 22 (2) of the Finance Act, 1971, is hereby amended by the substitution of “the 1st day of April, 1975” for “the 1st day of April, 1973”.

17 Amendment of section 26 of Finance Act, 1971.

17.—Section 26 (1) of the Finance Act, 1971, is hereby amended by the substitution of “the 1st day of April, 1975” for “the 1st day of April, 1973”.

18 Amendment of section 21 of Finance Act, 1972.

18.—Section 21 of the Finance Act, 1972, is hereby amended—

(a) by the addition to subsection (2) of the following proviso:

“Provided that, in the case of any repayment under a statutory scheme established under a public statute, the administrator of the scheme shall be entitled to deduct the tax chargeable in respect of that repayment from the amount thereof”, and

(b) by the substitution in subsection (4) of “if the administrator is entitled under the rules of the relevant scheme or otherwise” for “if the rules of the relevant scheme permit its administrator”.

19 Payments in respect of thalidomide children.

19.—(1) Income to which this section applies shall be disregarded for all the purposes of the Income Tax Acts.

(2) This section applies to any income consisting of payments made by the foundation known as the Hilfswerk fr behinderte Kinder to or in respect of any person handicapped by reason of infirmity which can be linked with the taking by the person's mother during her pregnancy of preparations containing thalidomide.

20 Bodies for the promotion of Universal Declaration of Human Rights and the implementation of European Convention for the Protection of Human Rights and Fundamental Freedoms.

20.—Where any body of persons having consultative status with the United Nations Organisation or the Council of Europe—

(a) has as its sole or main object the promotion of observance of the provisions of the Universal Declaration of Human Rights or the implementation of the European Convention for the Protection of Human Rights and Fundamental Freedoms or both, and

(b) is precluded by its rules or constitution from the direct or indirect payment or transfer, otherwise than for valuable and sufficient consideration, to any of its members of any of its income or property by way of dividend, gift, division, bonus or otherwise howsoever by way of profit,

there shall, on a claim in that behalf being made to the Revenue Commissioners, be allowed, in the case of the body, such exemption from income tax as falls to be allowed under section 333 of the Income Tax Act, 1967, in the case of a body of persons established for charitable purposes only the whole income of which is applied to charitable purposes only.

21 Payments to universities.

21.—(1) Where a person carrying on a trade or profession—

(a) pays, on or after the 6th day of April, 1973, any sum to an Irish university for the purpose of enabling the university to undertake research in, or engage in the teaching of, approved subjects, and

(b) the sum so paid is not income to which section 439 of the Income Tax Act, 1967, applies,

the sum so paid shall, if not otherwise so deductible, be deducted as an expense in computing the profits or gains of the person's trade or profession.

(2) For the purposes of this section, “approved subjects” means—

(a) industrial relations,

(b) marketing, and

(c) any other subject which is approved for the purposes of this section by the Minister for Finance.

22 Recovery of income tax.

22.—Section 131 of the Income Tax Act, 1967, shall apply to the recovery of—

(a) any amount of tax estimated under section 7 of the Finance Act, 1968, and

(b) any amount of tax estimated under section 8 of the said Finance Act, 1968, or any balance of tax so estimated but remaining unpaid,

as if the amount so estimated or the balance of tax so estimated but remaining unpaid were an amount of tax which any person paying emoluments was liable under Chapter IV of Part V of the Income Tax Act, 1967, and any regulations thereunder, to pay to the Revenue Commissioners.

23 Policies of life insurance.

23.—(1) This section applies to any policy of life insurance made on the life of a person under the age of fifty-six years which is an endowment policy within the meaning of subsection (2) and which is or was issued in respect of an insurance made on or after the 16th day of May, 1973:

Provided that a policy of life insurance issued in respect of an insurance made before the 16th day of May, 1973, shall be treated for the purposes of this section as issued in respect of one made after that date if it is varied on or after that date so as to increase the benefits secured or to extend the term of the insurance.

(2) In this section and in the First Schedule “an endowment policy” means a policy of life insurance which secures a capital sum payable either on survival for a specified term or on earlier death, or earlier death or disability but does not include a policy issued in the course of an industrial assurance business, within the meaning of section 3 of the Insurance Act, 1936.

(3) Relief from income tax under section 143 of the Income Tax Act, 1967, shall be granted in respect of the premiums payable on an endowment policy only if the policy is a qualifying policy within the meaning of the said First Schedule.

24 Business entertainment expenses.

24.—(1) Section 61 (a) of the Income Tax Act, 1967, shall as respects expenses incurred in providing business entertainment have effect as if “wholly, exclusively and necessarily” were substituted for “wholly and exclusively”.

(2) Expenses incurred in providing business entertainment shall not, except to the extent that they are wholly, exclusively and necessarily laid out or expended for the purposes of a business, be included in computing any expenses of management in respect of which relief may be claimed under section 214 (1) of the Income Tax Act, 1967.

(3) For the purposes of section 241, Chapter III of Part XIV, Chapters I and III of Part XV and Chapters II and V of Part XVI of the Income Tax Act, 1967, and section 22 of the Finance Act, 1971, the use of any asset for providing business entertainment shall, except to the extent that the asset is used for providing business entertainment the expenses incurred in the provision of which are wholly, exclusively and necessarily laid out or expended for the purposes of a trade, be treated as use otherwise than for the purposes of a trade.

(4) The expenses to which subsection (1) applies include, in the case of any person, any sum paid by him to, or on behalf of, or placed by him at the disposal of, a member of his staff for the purpose of defraying expenses incurred or to be incurred by him in providing business entertainment.

(5) For the purposes of this section “business entertainment” means entertainment (including hospitality of any kind) provided by a person, or by a member of his staff, in connection with a trade carried on by that person, but does not include anything provided by him for bona fide members of his staff unless its provision for them is incidental to its provision also for others.

(6) This section shall apply in relation to the provision of a gift as it applies in relation to the provision of entertainment.

(7) In this section—