Legalize / Ireland / Act

Finance Act 1974

Type Act

Publication 1974-08-06

State In force

Source Irish Statute Book

articles 88

Reform history JSON API

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

Chapter I Method of Charging Income Tax for 1974-75 and Subsequent Years

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

1.—Section 1 (1) of the Income Tax Act, 1967, is hereby amended—

(a) by the deletion of the definition of “assessable income”,

(b) by the substitution for the definitions of “standard rate of tax”, “tax” and “year of assessment” of the following definitions, respectively, that is to say:

“‘standard rate’, in relation to tax, means the rate of tax provided for by section 3 (1) of the Finance Act, 1974;”,

“‘tax’ means income tax;”, and

“‘year of assessment’ means a year for which income tax is imposed by any Act imposing duties of income tax;”,

“‘higher rates’, in relation to tax, means the rates of tax provided for by section 3 (2) (c) of the Finance Act, 1974;”,

(d) by the insertion, after the definition of “rating authority”, of the following definition:

“‘reduced rate’, in relation to tax, means the rate of tax provided for by section 3 (2) (a) of the Finance Act, 1974;” and

(e) by the insertion, after the definition of “taxable income” of the following definition:

“‘total income’ means total income from all sources as estimated in accordance with the provisions of this Act;”.

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

2.—Section 4 of the Income Tax Act, 1967, is hereby amended by the substitution of “at any rate or rates, tax at that rate or at those rates, as may be appropriate,” for “at any rate, the tax at that rate” and the said section 4, as so amended, is set out in the Table to this section.

TABLE

Where any Act enacts that income tax shall be charged for any year at any rate or rates, tax at that rate or at those rates, as may be appropriate, shall, subject to the provisions of this Act, be charged for that year in respect of all property, profits, or gains respectively described or comprised in the Schedules contained in the sections of this Act enumerated below, that is to say—

Schedule C—Section 47;

Schedule D—Section 52; and

Schedule E—Section 109

and in accordance with the provisions of this Act respectively applicable to those Schedules.

3 Charge of income tax for 1974-75 and subsequent years.

3.—(1) Income tax shall be charged for the year 1974-75 and for each subsequent year of assessment and, subject to subsection (2), shall be so charged at the rate of 35 per cent, (which shall be known as the standard rate).

(2) Where a person, who is charged to income tax for the year 1974-75 or any subsequent year of assessment is an individual (other than an individual acting in a fiduciary or representative capacity), he shall, subject to section 5 (3), be charged to tax—

(a) in respect of so much of his taxable income as does not exceed £1,550, at the rate of 26 per cent, (which shall be known as the reduced rate),

(b) in respect of so much (if any) of his taxable income as exceeds £1,550 but does not exceed £4,350, at the standard rate, and

(c) in respect of so much (if any) of his taxable income as exceeds £4,350, at the rates (which shall be known as the higher rates) specified in the following Table:

	Part of excess over £4,350	Higher rate
	The first £2,000	50 per cent.
	The next £2,000	65 per cent.
	The remainder	80 per cent.

4 Charge to tax of income from which tax has been deducted.

4.—Where income (in this section referred to as the relevant income)—

(a) from which tax is deductible by virtue of the provisions of Schedule C or Schedule D, or

(b) from which tax is deductible by virtue of section 433, 434 or 456 of the Income Tax Act, 1967, or

(c) which, by virtue of section 525 of the Income Tax Act, 1967, is treated as if it were a net amount of an annual payment from the gross amount of which tax had been duly deducted under section 434 of the said Act,

is to be taken into account in computing the total income of an individual for any year of assessment, then, for the purpose of charging the said total income to tax at the rate or rates of tax charged for that year of assessment, the following provisions shall apply—

(d) the relevant income shall be regarded as income chargeable to tax under Case IV of Schedule D and shall be charged accordingly;

(e) in determining the amount of tax payable on the said total income credit shall be given for the tax deducted from the relevant income and the amount of the credit shall, subject to the provisions of sections 233 and 525 of the Income Tax Act, 1967, be the amount of tax deducted from the relevant income:

Provided that where tax is deducted from a dividend at a rate as reduced by virtue of section 363, 396 or 410 of the Income Tax Act, 1967, or section 14 of the Finance Act, 1973, such adjustment shall be made in the amount of the credit as may be necessary for the purpose of giving effect to the relief provided by those sections.

5 Provisions as to tax charged by way of deduction.

5.—(1) The provisions of the Income Tax Acts which provide that tax may be deducted from any payment at the rate or rates of tax in force during the period through which the payment was accruing due, or that there may be deducted from any dividend the tax appropriate thereto shall have effect as if they provided that tax may be deducted or shall be allowed at the standard rate for the year in which the amount payable becomes due:

Provided that this subsection shall not affect the deduction of tax at a rate less than the standard rate by virtue of section 363, 396 or 410 of the Income Tax Act, 1967, or section 14 of the Finance Act, 1973.

(2) In estimating under the Income Tax Acts the total income of any person, any income which is chargeable with tax by way of deduction at the standard rate in force for any year shall be deemed to be income of that year, and any deductions which are allowable on account of sums payable under deduction of tax at the standard rate in force for any year out of the property or profits of that person shall be allowed as deductions in respect of that year, notwithstanding that the income or sums, as the case may be, accrued or will accrue in whole or in part before or after that year.

(3) Where a person is required to be assessed and charged with tax in respect of any property, profits or gains out of which he makes any payment in respect of any annual interest, annuity or other annual sum, or any royalty or other sum in respect of the user of a patent, he shall, in respect of so much of the property, profits or gains as is equal to the said payment and may be deducted in computing his total income, be charged at the standard rate only.

6 Personal reliefs.

6.—(1) Where a deduction falls to be made from the total income of an individual for the year 1974-75 or any subsequent year of assessment in respect of relief to which the individual is entitled under a provision mentioned in column (1) of the Table to this section and the amount of the deduction would, but for this section, be an amount specified in column (2) of the said Table, the amount of the deduction shall, in lieu of being the amount specified in the said column (2) be the amount specified in column (3) of the said Table opposite the mention of the amount in the said column (2).

TABLE

Statutory provision	Amount to be deducted for 1973-74	Amount to be deducted from total income for 1974-75 and subsequent years
(1)	(2)	(3)
	£	£
Income Tax Act, 1967:
section 138 (married man)	494	800
(single person)	299	500
(widowed person)	324	550
(working wife)	104 or, if less, three-fourths of amount of wife's earned income	200 or, if less, amount of wife's earned income
sections 139 and 140 (housekeeper)	100	140
section 141 (child)—under 11 years	155	200
—11 years or over	170	200
section 142 (dependent relative)	60	80
Finance Act, 1969:
section 3 (housekeeper taking care of incapacitated person)	100	140
Finance Act, 1971:
section 11 (blind person)	100	140
(both spouses blind)	200	280

(2) Part I of the First Schedule shall have effect for the purpose of supplementing this section.

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

7.—Section 142 (1) of the Income Tax Act, 1967, is hereby amended by the substitution of “£489” for “£407” (inserted by the Finance Act, 1973) in both places where it occurs, by the substitution of “£80” for “£60”, in both places where it occurs, and by the substitution of “£409” for “£347” (inserted by the said Finance Act, 1973) and the said section 142 (1), as so amended, is set out in the Table to this section.

TABLE

142.—(1) If the claimant proves that he maintains at his own expense any person, being a relative of his or of his wife who is incapacitated by old age or infirmity from maintaining himself, or his or his wife's widowed mother, whether incapacitated or not, and being a person whose total income from all sources is less than £489 a year, he shall be entitled to a deduction of £80 in respect of each person whom he so maintains, and a like deduction shall be made in the case of a claimant who, by reason of old age or infirmity, is compelled to depend upon the services of a person (being a person whose total income from all sources is less than £489 a year and being a son or daughter of the claimant) resident with and maintained by him or her:

Provided that each of the foregoing provisions of this subsection shall have effect, in a case in which the total income from all sources of the person in respect of whom the deduction is to be made exceeds £409 a year, as if, instead of specifying a deduction of £80, it specified a deduction of that amount reduced by the amount of the excess.

8 Age allowance.

8.—(1) Where, for the year 1974-75 or any subsequent year of assessment, an individual is entitled to a deduction under section 138 of the Income Tax Act, 1967, and he proves that at any time during that year of assessment he was, or in the case of a married man whose wife is living with him, either he or his wife was, of the age of sixty-five years or upwards, he shall, in addition to the allowance to which he is entitled under the said section 138 for that year of assessment, be entitled to a deduction—

(a) in case he is a married man whose wife is living with him, of £50, and

(b) in any other case, of £25.

(2) All such provisions of the Income Tax Acts as apply in relation to every deduction specified in sections 138 to 143 of the Income Tax Act, 1967, shall apply in relation to a deduction under this section.

9 Amendment of section 152 of Income Tax Act, 1967.

9.—Section 152 of the Income Tax Act, 1967, is hereby amended by the substitution for subsection (1) of the following subsection:

“(1) The aggregate of the premiums or other sums in respect of which relief is given to any person under sections 143 and 151 shall not exceed one-sixth of the total income of the person or £1,000, whichever is the lesser:

Provided that in any case where the aggregate of the premiums paid on policies of insurance or on contracts for deferred annuities exceeds £1,000 and the insurance or contract was made before the 3rd day of April, 1974, relief in respect of the said premiums or other sums shall be given under the sections aforesaid without regard to the restriction of £1,000 provided for in this subsection.”.

10 Cesser of charge to sur-tax.

10.—Sur-tax shall not be charged for the year 1974-75 or any subsequent year of assessment.

11 Consequential amendments.

11.—Part II of the First Schedule shall have effect for the purpose of supplementing this Chapter.

12 Commencement of Chapter 1.

12.—The provisions of this Chapter shall have effect for the year 1974-75 and subsequent years of assessment and, accordingly, the amendments effected by those provisions and the First Schedule and the repeals effected by section 86 and mentioned in Part I of the Second Schedule shall not be taken to affect tax for an earlier year of assessment or the doing of anything in relation to tax for such a year.

Chapter II Taxation of Farming Profits, Provisions in Respect of Certain Farm Losses and Restriction of Personal Allowances

13 Definitions (Chapter II).

13.—(1) In this Chapter “farming”, “farm land” and “occupation” have the same meaning as in section 18 (1) of the Finance Act, 1969.

(2) Any reference in this Chapter to farm land occupied by an individual includes farm land deemed, by virtue of section 17, to be occupied by him.

(3) A reference in this Chapter to the rateable valuation of farm land occupied by an individual at a particular time is a reference to the aggregate of the rateable valuations of all farm land occupied by him and of all farm land deemed to be occupied by him at that time and a reference to the rateable valuation of farm land occupied by an individual for a year of assessment or part of a year of assessment is a reference to the total rateable valuation of all farm land occupied by him and of all farm land deemed to be occupied by him for that year of assessment, or part of a year of assessment calculated in accordance with the provisions of section 17 (5), (6) and (7):

Provided that, in calculating the rateable valuation of farm land for the purposes of this Chapter, the rateable valuation of any building on the land shall be excluded.

14 Repeal of section 18 (2) (a) of Finance Act, 1969.

14.—Section 18 (2) (a) of the Finance Act, 1969, is hereby repealed.

15 Farming profits to be charged under Schedule D.

15.—(1) Subject to subsection (3), all farming in the State shall be treated as the carrying on of a trade or, as the case may be, of part of a trade, and the profits or gains thereof shall be charged to tax under Case I of Schedule D accordingly.

(2) Notwithstanding anything to the contrary in Chapter III of Part IV of the Income Tax Act, 1967, all farming carried on by any person whether solely or in partnership shall be treated as the carrying on of a single trade.

(3) Subsection (1) shall not apply, as respects any year of assessment, in the case of an individual who shows that the rateable valuation of all farm land occupied by him did not, at any time during that year of assessment, amount to £100 or more.

16 Farming carried on by certain persons.

16.—(1) Section 15 (3) shall not have effect for any year of assessment in a case where farming is carried on in that year of assessment by an individual—

(a) who at any time in that year of assessment is also carrying on either solely or in partnership another trade or profession,

(b) whose spouse, in a case where the individual is a married person, is, at any time in that year of assessment, also carrying on either solely or in partnership another trade or profession,

(c) who, at any time in that year of assessment, is a director of a company carrying on a trade or profession and who is either the beneficial owner of, or able, either directly or through the medium of other companies or by any other means, to control more than 25 per cent. of the ordinary share capital of the company, or

(d) whose spouse, in a case where the individual is a married person, is, at any time in that year of assessment, a director of a company carrying on a trade or profession and who is either the beneficial owner of, or able, either directly or through the medium of other companies or by any other means, to control more than 25 per cent. of the ordinary share capital of the company:

Provided that paragraphs (b) and (d) shall not apply in a case where the wife of an individual is treated for tax purposes as not living with her husband.

(2) Subsection (1) shall apply in the case of a married person whose wife is carrying on farming and the provisions of that subsection shall have effect in such a case as if the references to the individual were a reference to his wife.

(3) This section shall not apply, as respects any year of assessment, in the case of an individual who shows that the rateable valuation of all farm land occupied by him did not, at any time during that year of assessment, exceed £50, or if it did so exceed £50, that any trade carried on by his spouse consisted solely of the provision of accommodation in buildings on the said farm land, the provision of such accommodation being ancillary to the farming of that farm land.

(4) For the purposes of paragraphs (c) and (d) of subsection (1), ordinary share capital which is owned or controlled in the manner referred to in that paragraph by a person being the wife, the husband or an infant child of a director, or by the trustee of a trust for the benefit of a person or persons being or including any such person or such director, shall be deemed to be owned or controlled by such director and not by any other person.

(5) In this section—

“company” means a company within the meaning of the Companies Act, 1963;

“director” includes a person holding any office or employment under a company;

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

17 Farm land occupied or deemed to be occupied by an individual.

17.—(1) For the purposes of this Chapter, farm land shall be I deemed to be occupied by an individual where it is occupied by his wife or it is farm land of which he or his wife is the beneficial owner or of which they are the beneficial owners and which is occupied by any other person or persons.

(2) Where farm land is occupied by an individual, or by his wife, in partnership with any other person or persons and neither he nor his wife is a beneficial owner of the farm land, the individual shall be deemed to occupy a proportionate part of that farm land and the rateable valuation of the proportionate part shall be so much of the total rateable valuation of the said farm land as bears to the said total rateable valuation the same proportion as his or her share, as may be appropriate, of the profits or losses on an apportionment thereof made in accordance with the terms of the partnership agreement as to the sharing of profits or losses bears to the total profits or losses of the partnership.

(3) Where farm land is beneficially owned by an individual, or by his wife, jointly with any other person or persons but is not occupied by the individual or his wife either solely or jointly with any other person or persons, the individual shall be deemed to occupy farm land the rateable valuation of which is an amount which is equal to such part of the total rateable valuation of the land of which he or his wife is a beneficial owner, as is proportionate to his or her share in the beneficial ownership of the said farm land.

(4) Where farm land is beneficially owned by an individual, or by his wife, jointly with any other person or persons and the said farm land is occupied by the individual or by his wife, in partnership with any other person or persons, he shall be deemed to occupy farm land the rateable valuation of which is an amount which is equal to such fractional part of the total rateable valuation of the land of which he or his wife is a beneficial owner as is proportionate to his or her share in the beneficial ownership of the said farm land.

(5) The total rateable valuation of farm land occupied by an individual for a year of assessment shall be the sum of—

(a) the rateable valuation of all farm land occupied by him or deemed to be occupied by him by virtue of subsection (1),

(b) the rateable valuation of all proportionate parts of farm land deemed to be occupied by him by virtue of subsections (2), (3) and (4).

(6) Where farm land is occupied by an individual for part only of any year of assessment, the rateable valuation of the farm land so occupied shall, for that year of assessment, be deemed for the purposes of this section to be an amount which bears to the total rateable valuation thereof the same proportion that the length of the period during which the said farm land was so occupied in the year of assessment bears to twelve months.

(7) Where by virtue of subsection (1), (2), (3) or (4) farm land is deemed to be occupied by an individual and for any year of assessment the circumstances by reference to which he is deemed to occupy that farm land or any proportionate part thereof obtained for part only of that year of assessment, the rateable valuation of any farm land deemed to be occupied by him shall, for that year of assessment, be deemed for the purposes of this section to be an amount which bears to the total rateable valuation of the said farm land the same proportion that the length of the period during which the said circumstances obtained in the year of assessment bears to twelve months.

18 Apportionment of valuation.

18.—(1) Where, in the case of property valued under the Valuation Acts as a unit, a part is and a part is not farm land, the rateable valuation of each part shall be arrived at for the purposes of this Chapter by apportionment of the rateable valuation of the property.

(2) Where farm land valued under the Valuation Acts as a unit is divided into two or more distinct occupations, the rateable valuation of the part occupied by each occupier shall be arrived at for the purposes of this Chapter by apportionment of the rateable valuation of the farm land concerned.

(3) Any apportionment required by this section shall be made by the inspector according to the best of his knowledge and judgment.

(4) Section 67 (3A) (c) of the Income Tax Act, 1967, (inserted by section 31 of the Finance Act, 1969) shall apply in respect of any apportionment made under this section as it applies in respect of any apportionment made under section 67 (3A) (b) of the said Act.

19 Limit on amount of tax to be charged in certain cases.

19.—(1) Where for any year of assessment an individual, other than an individual to whom section 16 applies, is chargeable to tax in respect of profits or gains from farming, the amount of tax so chargeable for that year of assessment shall not exceed—

(a) where the rateable valuation of the farm land occupied by him for that year of assessment does not exceed £100, one-twentieth of the tax appropriate to the profits or gains from farming;

(b) where the rateable valuation of the farm land occupied by him for that year of assessment exceeds £100, the amount arrived at by multiplying the tax appropriate to the profits or gains from farming by a fraction the denominator of which is twenty and the numerator of which is the number equivalent to the amount by which the rateable valuation of the land so occupied exceeds £99:

Provided that, in a case where there is no income chargeable to tax other than profits or gains from farming, the tax chargeable shall not exceed by an amount greater than £40 the amount of tax which would be chargeable in accordance with the provisions of this section if the rateable valuation of the farm land occupied by him were £1 less than the actual rateable valuation.

(2) For the purposes of this section, the tax appropriate to the profits or gains from farming shall, in relation to an individual, be so much of the tax that would, but for the provisions of this section, be payable in respect of the individual's total income as bears to that tax the same proportion as the amount of the profits or gains from farming included in the said total income bears to that total income.

(3) This section shall not apply in any case where the rateable valuation of the farm land occupied by an individual at any time during the year of assessment exceeds £119.

20 Optional basis of assessment.

20.—(1) Where, for the year of assessment 1974-75, a person is, by virtue of section 15, chargeable to tax in respect of profits or gains from farming and would, in accordance with the provisions of section 58 (1) of the Income Tax Act, 1967, be charged to tax under Case I of Schedule D on the full amount of the profits or gains of the year preceding that year of assessment, he may, by notice in writing given to the inspector within six months after the commencement of the said year of assessment, elect to be charged to tax for that year of assessment on the full amount of the profits or gains of that year and not on the full amount of the profits or gains of the year preceding that year of assessment.

(2) For the purposes of this section, the profits or gains of the year 1974 may, at the election of the person chargeable to tax in respect of them, be taken as the profits or gains of the year 1974-75.

21 Notional basis of assessment for 1974-75.

21.—(1) Where, for the year of assessment 1974-75, an individual, other than an individual to whom section 16 applies, is, by virtue of section 15, chargeable to tax in respect of profits or gains from farming he may, by notice in writing given to the inspector within six months after the commencement of the said year of assessment, elect to be charged to tax for that year of assessment in respect of those profits or gains in accordance with the provisions of this section and not by reference to the provisions of section 58 (1) of the Income Tax Act, 1967, or of section 20.

(2) Where an individual elects as provided for in subsection (1), he shall be charged to tax under Case I of Schedule D in respect of the profits or gains from farming on an amount equal to 40 times the rateable valuation of the farm land occupied by him for the said year of assessment less deductions in respect of—

(a) rates payable for that year of assessment in respect of the farm land so occupied; and

(b) (i) emoluments payable for that year of assessment to any person employed for the purpose of working the said farm land, in respect of such work, or

(ii) payments made to any other person for that year of assessment in respect of work of the kind referred to in subparagraph (i):

Provided that for the purposes of subparagraph (i) emoluments payable to a person connected with the individual shall be taken into account only in so far as they are paid to that person in cash.

(3) Where profits or gains from farming farm land are charged to tax in accordance with the provisions of subsection (2),

(a) the individual so charged shall be entitled to claim any deduction in respect of machinery or plant used for the purpose of farming the said farm land which he would be entitled to claim if he had been charged to tax on the full amount of those profits or gains, and

(b) any balancing charge which would fall to be made under section 272 of the Income Tax Act, 1967, if the individual were charged to tax on the full amount of those profits or gains, may be made.

(4) In charging profits or gains in accordance with the provisions of this section, no deduction shall be allowed other than those specified in subsections (2) and (3).

(5) Where for the said year of assessment an individual is chargeable to tax under Case V of Schedule D in respect of the profits or gains from any rent or any receipts in respect of any easement in relation to any part of the farm land occupied by him, subsection (2) shall apply for the year of assessment to the farm land so occupied but excluding that part from which the said profits or gains chargeable under Case V of Schedule D arise:

Provided that this subsection shall not apply where the said rent or the said receipts are, having regard to values prevailing at the time, less than the amount which could have been obtained on the basis that the negotiations for the lease or the easement had been at arm's length.

(6) A person shall, for the purposes of this section, be regarded as connected with an individual if that person would be so regarded for the purposes of section 16 of the Finance (Miscellaneous Provisions) Act, 1968.

22 Farming: allowances for capital expenditure on construction of buildings and other works.

22.—(1) This section applies to any person carrying on farming, the profits or gains of which are chargeable to tax in accordance with the provisions of section 15 (1).

(2) Where a person to whom this section applies incurs, for the purpose of farming farm land occupied by him, any capital expenditure on the construction of farmhouses, farm buildings, cottages, fences or other works, there shall be made in charging the profits or gains from farming the said farm land an annual allowance (in this section referred to as a farm buildings allowance) equal to one-tenth of the said expenditure for the first relevant year of assessment and for each subsequent year of assessment until the allowances made under this section in respect of the expenditure equal the amount of the expenditure:

Provided that this subsection shall not apply to any expenditure incurred before the 6th day of April, 1974,

(3) Any capital expenditure as aforesaid incurred on or after the 6th day of April, 1974, by a person about to carry on farming but before commencing farming shall, for the purposes of this section, be treated as if it had been incurred on the first day on which he commences farming.

(4) Where capital expenditure as aforesaid is incurred on a farmhouse, one-third only of that expenditure shall be taken into account, or, if the accommodation and amenities of the farmhouse are out of due relation to the nature and extent of the farm, such proportion thereof not greater than one-third as may be just.

(5) 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 (within the meaning of section 297 of the Income Tax Act, 1967) for which he incurs the expenditure.

(6) Any claim by a person for an allowance falling to be made to him under the provisions of this section shall be included in the annual statement required to be delivered under the Income Tax Acts of the profits or gains from farming, and the allowance shall be made as a deduction in charging those profits or gains, and section 241 (3) of the Income Tax Act, 1967, shall apply in relation to the allowance as it applies in relation to deductions allowable in respect of wear and tear of machinery or plant.

(7) Any claim for an allowance under the provisions of this section 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 Appeal Commissioners.

(8) The Appeal Commissioners shall hear and determine an appeal to them made under subsection (7) as if it were an appeal against an assessment to tax and the provisions of the Income Tax Acts 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 apply accordingly with any necessary modifications.

(9) Where a person who is entitled to an allowance under subsection (2) in respect of capital expenditure incurred for the purpose of farming farm land transfers his interest in that farm land or any part of that farm land to another person, that other person shall, to the exclusion of the first-mentioned person be entitled to the allowances under this section for the years of assessment following the year in which the transfer of interest took place:

Provided that where the transfer of interest took place in relation to part only of the farm land, this subsection shall apply to so much of the allowance as is properly referable to that part of the land as if it were a separate allowance.

(10) Where expenditure is incurred partly for the purposes of farming and partly for other purposes, subsection (2) 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 farming.

(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 has been made in respect of it under Chapter II of Part XV or Chapter I of Part XVI of the Income Tax Act, 1967.

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

23 Application of section 20 of Finance Act, 1969.

23.—The repeal, by virtue of section 14, of section 18 (2) (a) of the Finance Act, 1969, shall not prevent section 20 of the said Act from applying to a dividend paid on or after the 6th day of April, 1974, in a case where the dividend is paid out of profits exempted from tax by virtue of the said section 18 (2) (a), or is paid in part out of such profits and in part out of other profits.

24 Restriction in respect of certain losses.

24.—No relief shall be given under section 309 of the Income Tax Act, 1967, in respect of a loss sustained in any year of assessment prior to the year 1974-75 in the carrying on of farming, by deducting such loss from or setting it against the amount of the profits or gains from farming assessed for the year 1974-75 or any subsequent year of assessment.

25 Wear and tear allowance deemed to have been made in certain cases.

25.—(1) In determining whether any, and if so what, wear and tear allowance, balancing allowance or balancing charge in respect of machinery or plant falls to be made to or on any person for any year of assessment in charging the profits or gains from farming, there shall be deemed to have been made to that person, for every previous year of assessment in which the machinery or plant belonged to him and which is a year of assessment to be taken into account for the purpose of this section, such wear and tear allowance or greater wear and tear allowance, if any, in respect of the machinery or plant as would have fallen to be made to him if, in relation to every such previous year—

(a) the profits or gains from farming had been chargeable to tax under Case I of Schedule D,

(b) farming had been carried on by him ever since the date on which he acquired the machinery or plant,

(d) a proper claim had been duly made by him for wear and tear allowance in respect of the machinery or plant for every relevant year of assessment.

(2) There shall be taken into account for the purposes of this section every previous year of assessment in which the machinery or plant concerned belonged to the person and—

(a) during which the machinery or plant was not used by the person for the purposes of farming,

(b) during which farming was not carried on by him, or

(c) during which farming was carried on by him in such circumstances that the full amount of the profits or gains thereof was not liable to be charged to tax under Case I of Schedule D.

(3) Nothing in this section shall affect the provisions of section 272 (4) of the Income Tax Act, 1967.

(4) In this section—

“balancing allowance” and “balancing charge” have the same meanings as in Chapter II of Part XVI of the Income Tax Act, 1967;

“wear and tear allowance” means a deduction allowed under section 241 of the Income Tax Act, 1967.

26 Amendment of section 307 of Income Tax Act, 1967.

26.—Section 307 of the Income Tax Act, 1967, is hereby amended—

(a) by the substitution in subsection (1) of “trade other than farming, or in any” for “trade,”,

(b) by the substitution in subsection (1) of “or in farming in a case in which this section applies” for “or in the occupation of lands for the purposes of husbandry only”, and

“(1A) This section applies in any case where farming is carried on other than in the case of an individual to whom section 15 (3) of the Finance Act, 1974, applies or would apply if the individual so claimed.”,

and the said subsection (1) of section 307, as so amended, is set out in the Table to this section.

TABLE

(1) Subject to the provisions of this section, where in any year of assessment any person has sustained a loss in any trade other than farming, or in any profession or employment, carried on by him either solely or in partnership, or in farming in a case in which this section applies or in the occupation of woodlands managed on a commercial basis and with a view to the realisation of profits, 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.

27 Restriction of relief for losses in farming or market gardening.

27.—(1) In this section—

“basis year”, in relation to any capital allowance, shall be construed in accordance with section 317 (2) of the Income Tax Act, 1967;

“capital allowance” has the same meaning as in section 317 of the Income Tax Act, 1967;

“prior three years” in relation to a loss incurred in a year of assessment, means the last three years of assessment before that year;

“prior period of loss” means the prior three years, or, if losses were incurred in successive years of assessment amounting in all to a period longer than three years (and ending when the prior three years end), that longer period;

“market gardening” has the same meaning as in section 54 of the Income Tax Act, 1967.

(2) (a) Any loss (including any amount in respect of allowances which, by virtue of section 318 of the Income Tax Act, 1967, is to be treated as a loss) incurred in a trade of farming or market gardening shall not be available for relief under section 307 or 308 of that Act unless it is shown that, for the year of assessment in which the loss is claimed to have been incurred, the trade was being carried on on a commercial basis and with a view to the realisation of profits in the trade.

(b) Without prejudice to paragraph (a), any loss (including any amount in respect of allowances which by virtue of section 318 of the Income Tax Act, 1967, is to be treated as a loss) incurred in any year of assessment in a trade of farming or market gardening shall not be available for relief under section 307 or 308 of the Income Tax Act, 1967, if in each of the prior three years a loss was incurred in carrying on that trade.

(c) For the purposes of this section, the fact that a trade of farming or market gardening was being carried on at any time so as to afford a reasonable expectation of profit shall be conclusive evidence that it was then being carried on with a view to the realisation of profits.

(d) This subsection shall not restrict relief for any loss or any capital allowance if it is shown by the claimant that the whole of his farming or market gardening activities in the year next following the prior three years are of such a nature, and carried on in such a way, as would have justified a reasonable expectation of the realisation of profits in the future if they had been undertaken by a competent farmer or market gardener, but that, if that farmer or market gardener had undertaken those activities at the beginning of the prior period of loss, he could not reasonably have expected the activities to become profitable until after the end of the year next following the prior period of loss.

(e) This subsection shall not restrict relief where the carrying on of the trade forms part of, and is ancillary to, a larger trading undertaking.

(3) In ascertaining for the purposes of this section whether a loss was incurred in any year the rules applicable to Case I of Schedule D shall be applied.

(4) Where a trade of farming or market gardening is or falls to be treated as being carried on for a part only of a year of assessment by reason of its being set up and commenced, or discontinued, or both, in that year, subsection (2) shall have effect in relation to that trade as regards that part of that year.

(5) Subsection (2) shall not restrict relief for any loss or capital allowance if the trade was set up and commenced within the prior three years, and, for the purposes of this subsection, a trade shall be treated as discontinued, and a new trade set up, in any event which under any of the provisions of the Income Tax Acts is to be treated as equivalent to the permanent discontinuance or setting up of a trade.

(6) Where at any time there has been a change in the persons engaged in carrying on a trade of farming or market gardening, this section shall, notwithstanding subsection (5), apply to any person who was engaged in carrying on the trade immediately before and immediately after the change as if the trade were the same before and after without any discontinuance, and as if a person and another person with whom he is connected were the same person. In this subsection any question as to whether persons are connected shall be determined in accordance with the provisions of section 16 of the Finance (Miscellaneous Provisions) Act, 1968.

(7) Any loss to which this section applies shall not be taken into account in computing profits or losses for the purposes of section 53 of the Finance Act, 1920.

28 Farming profits: restriction of personal allowances.

28.—(1) Where, for any year of assessment, farm land is occupied by an individual in respect of whom, by virtue of section 15 (3), subsection (1) of that section does not apply and—

(a) the rateable valuation of the farm land occupied by him exceeds £20, and

(b) he is chargeable to tax for that year of assessment in respect of income other than income from farming (hereinafter referred to as other income),

this section shall apply.

(2) In any case in which this section applies for any year of assessment, the aggregate amount of the deductions to be made from the total income of the individual concerned for that year of assessment in respect of personal reliefs claimed by him shall be reduced by whichever of the following amounts is the lowest:

(a) an amount equal to one-half of the aggregate amount of the said deductions,

(b) the amount arrived at by multiplying by eighty the amount by which the rateable valuation exceeds £20, or

(c) the total amount of the profits or gains for that year of assessment from farming farm land, computed in the same way as they would be computed if they were profits or gains chargeable to tax under Case I of Schedule D.

(3) Where the individual concerned shows that the actual profits or gains from farming are of such an amount that the tax payable by him for that year of assessment is greater than the tax appropriate to the other income, the tax so payable shall be reduced to the amount of tax appropriate to the other income.

(4) For the purposes of this section, the tax appropriate to the other income shall be so much of the tax as would be payable in respect of the individual's total income, if the actual profits or gains from farming were chargeable to tax in accordance with the provisions of section 15 (1), as bears to that tax the same proportion as the other income bears to such total income.

(5) (a) Where, by virtue of an application under section 197 of the Income Tax Act, 1967, tax is to be assessable and chargeable on the incomes of a husband and wife as if they were not married—

(i) the aggregate amount of the personal reliefs, the benefit flowing from which is to be allocated to the husband and wife, shall not exceed the total amount of the deductions in respect of those reliefs which are to be allowed in accordance with the provisions of this section; and

(ii) in the allocation of the said benefit between the husband and the wife in accordance with the provisions of section 193 of the said Income Tax Act, 1967, account shall be taken of any reduction in the total amount of the said deductions by virtue of the provisions of this section and the amount of benefit flowing to the husband or the wife in respect of each particular relief as specified in the said section 193 shall be reduced in the proportion which the total amount of the deductions in respect of personal reliefs allowable by virtue of this section bears to the total amount of the said allowances which, but for the provisions of this section, would be allowable.

(b) Where in accordance with the provisions of subsection (3) of the said section 193, the amount of relief allocated to the husband or the wife exceeds the tax chargeable on his or her income, as the case may be, any balance calculated for the purpose of that subsection shall be reduced by the amount of tax which would be chargeable on the income of the husband or the wife, as the case may be, if any profits or gains from farming were chargeable to tax in accordance with the provisions of this Chapter.

(6) In this section—

“personal reliefs” has the same meaning as in section 193 of the Income Tax Act, 1967.

Chapter III Restriction of Relief in Respect of Interest

29 Restriction on repayment of tax on interest in certain cases.

29.—The following section is hereby substituted for section 496 of the Income Tax Act, 1967—

“496.—(1) Subject to the provisions of this section—

(a) where interest payable in the State on an advance from a bank carrying on a bona fide banking business in the State is paid to the bank without deduction of tax out of profits or gains brought into charge to tax, the person by whom the interest is paid shall be entitled, on proof of the facts, to repayment of tax on the amount of the interest,

(b) a like repayment shall on the like proof be made in the case of interest payable in the State on an advance from a person who in the opinion of the Revenue Commissioners is bona fide carrying on business as a member of a stock exchange in the State or from any person who in the opinion of the said Commissioners is bona fide carrying on the business of a discount house in the State,

(c) a like repayment shall on the like proof be made in the case of yearly interest (including interest to which section 30 (1) or 50 (2) of the Finance Act, 1974 applies) charged with tax under Schedule D.

(2) In relation to any interest paid in respect of any period beginning on or after the 10th day of January, 1974, notwithstanding the provisions of subsection (1), no repayment of tax shall be made under this section—

(a) for the year of assessment 1973-74, on the excess of the interest over £500, or

(b) for the year of assessment 1974-75, or for any subsequent year of assessment, on the excess of the interest over £2,000:

Provided that paragraph (a) shall not apply to interest wholly and exclusively laid out or expended for the purposes of a trade or profession, or other business whose income consists wholly or mainly of profits or gains chargeable under Case V of Schedule D.

(3) Where, in relation to interest paid in respect of any period beginning on or after the 10th day of January, 1974, relief is claimed by a person by virtue of more than one of the following provisions, that is to say, subsection (2), section 76 (1) (c) or paragraph 1 (2) of Part III of Schedule 6, relief shall not be given to such person in respect of the part (if any) of the aggregate amount of interest paid by him that exceeds the appropriate amount specified in subsection (2).

(4) The provisions of subsection (2) shall not apply to interest on money borrowed to pay death duties.

(5) No repayment of tax shall be made under this section unless the Revenue Commissioners are satisfied that the relevant interest has been or will be brought into account in the statement delivered or to be delivered for the purposes of tax by the person making the advance on which the interest was paid.”.

30 Provision in relation to tax deducted from certain payments of interest made before passing of this Act.

30.—(1) This section applies to payments of interest (other than interest on a loan secured by an instalment promissory note of the kind referred to in section 50 (2) or interest to which section 31 (2) applies) in respect of any period beginning on or after the 10th day of January, 1974, made before the passing of this Act from which tax was deducted under section 433 or 434 of the Income Tax Act, 1967.

(2) Payments of interest to which this section applies shall be deemed to be payments not made out of profits or gains brought into charge, whether or not they are such payments, and subsections (2) to (5) of section 434 of the Income Tax Act, 1967, shall apply to the said payments as they apply to payments specified in subsection (1) of that section.

31 Interest payments by companies and to non-residents.

31.—(1) In this section “company” means any body corporate.

(2) Where any yearly interest charged with tax under Schedule D is paid—

(a) by a company otherwise than when paid in a fiduciary or representative capacity to a person whose usual place of abode is in the State, or

(b) by any person to another person whose usual place of abode is outside the State,

in respect of any period beginning on or after the 10th day of January, 1974, the person by or through whom the payment is made shall, on making the payment, deduct out of it a sum representing the amount of the tax thereon at the standard rate in force at the time of the payment and subsections (2) to (5) of section 434 of the Income Tax Act, 1967, shall apply to such payments as they apply to payments specified in subsection (1) of that section.

(3) Subject, as respects paragraph (a), to section 50 (4), subsection (2) shall not apply to—

(a) interest on a loan secured by an instalment promissory note of the kind referred to in section 50 (2), or

(b) interest paid in the State on an advance from a bank carrying on a bona fide banking business in the State, or

(d) interest paid by a company which has been authorised by the Revenue Commissioners to pay interest without deduction of income tax, or

(e) interest on any securities in respect of which the Minister for Finance has given a direction under section 466 of the Income Tax Act, 1967, or

(f) interest paid without deduction of tax by virtue of section 221 of the Income Tax Act, 1967.

32 Relief on certain bridging loans.

32.—(1) Where a person—

(a) disposes of his only or main residence and acquires another residence for use as his only or main residence,

(b) obtains a loan the proceeds of which are used to defray, in whole or in part, the cost of the acquisition or the disposal or both, and

(c) pays interest on the loan (and on any subsequent loan the proceeds of which are used to repay, in whole or in part, the first-mentioned loan or any such subsequent loan or to pay interest on any such loan) in respect of the period of twelve months from the date of the making of the first-mentioned loan, he shall be entitled, on proof of the facts, to repayment of tax under section 496 of the Income Tax Act, 1967, as amended by section 29, on the amount of that interest as if no other interest had been paid by him in respect of the aforementioned period of twelve months.

(2) Subsection (1) shall not apply to a loan the proceeds of which are applied for some other purpose before being applied for the purpose specified in that subsection.

33 Relief to companies on loans applied in acquiring interest in other companies.

33.—(1) (a) In this section and sections 34 and 35—

“ordinary share capital” has the meaning assigned to it by section 323 of the Income Tax Act, 1967;

“control” has the meaning assigned to it by section 16 of the Finance (Miscellaneous Provisions) Act, 1968;

“material interest”, in relation to a company, means the beneficial ownership of, or the ability to control, directly or through the medium of a connected company or connected companies or by any other indirect means, more than 5 per cent, of the ordinary share capital of the company.

(b) For the purposes of this section and sections 34 and 35 a company shall be regarded as connected with another company if it would be so regarded for the purposes of section 16 of the Finance (Miscellaneous Provisions) Act, 1968, and if it is such a company as is referred to in subsection (2) (a).

(2) This section applies to a loan to a company (referred to subsequently in this section and in section 35 (1) as the investing company) to defray money applied—

(a) in acquiring any part of the ordinary share capital of—

(i) a company which exists wholly or mainly for the purpose of carrying on a trade or trades or a company whose income consists wholly or mainly of profits or gains chargeable under Case V of Schedule D, or

(ii) a company whose business consists wholly or mainly of the holding of stocks, shares or securities of such a company as is referred to in subparagraph (i), or

(b) in lending to such a company as is referred to in paragraph (a) money which is used wholly and exclusively for the purposes of the trade or business of the company or of a connected company, or

(c) in paying off another loan where relief could have been obtained under this section for interest on that other loan if it had not been paid off (on the assumption, if the loan was free of interest, that it carried interest).

(3) Relief shall be given in respect of any payment of the interest by the investing company on the loan—

(a) if when the interest is paid the investing company has a material interest in the company or in a connected company, and

(b) if, during the period taken as a whole from the application of the proceeds of the loan until the interest was paid, at least one director of the investing company was also a director of the company or of a connected company, and

(c) if the investing company shows that in the period aforesaid it has not recovered any capital from the company or from a connected company apart from any amount taken into account under section 35.

34 Relief to individuals on loans applied in acquiring interest in companies.

34.—(1) This section applies to a loan to an individual to defray money applied—

(a) in acquiring any part of the ordinary share capital of—

(ii) a company whose business consists wholly or mainly of the holding of stocks, shares or securities of such a company as is referred to in subparagraph (i), or

(b) in lending to such a company as is referred to in paragraph (a) money which is used wholly and exclusively for the purpose of the trade or business of the company or of a connected company, or

(2) Relief shall be given in respect of any payment of the interest by the individual on the loan—

(a) if when the interest is paid he has a material interest in the company or in a connected company,

(b) if, during the period taken as a whole from the application of the proceeds of the loan until the interest was paid, he has worked for the greater part of his time in the actual management or conduct of the business of the company or of a connected company, and

(c) if he shows that in the period aforesaid he has not recovered any capital from the company or from a connected company, apart from any amount taken into account under section 35.

35 Rules relating to recovery of capital.

35.—(1) If at any time after the application of the proceeds of a loan to which section 33 or 34 applies the investing company or the individual (referred to subsequently in this section as the borrower) has recovered any amount of capital from the company concerned or from a connected company without using that amount in repayment of the loan, the borrower shall be treated for the purposes of this section as if he had at that time repaid that amount out of the loan, and so that out of the interest otherwise eligible for relief and payable for any period after that time there shall be deducted an amount equal to interest on the amount of capital so recovered. If part only of such a loan fulfils the conditions in section 33 or 34 so as to afford relief for interest on that part, the deduction to be made under this subsection shall be made wholly out of interest on that part.

(2) The borrower shall be treated as having recovered an amount of capital from the company or from a connected company if—

(a) the borrower receives consideration of that amount or value for the sale of any part of the ordinary share capital of the company or of a connected company or any consideration of that amount or value by way of repayment of any part of that ordinary share capital, or

(b) the company or a connected company repays that amount of a loan or advance from him, or

(c) the borrower receives consideration of that amount or value for assigning any debt due to him from the company or from a connected company.

In the case of a sale or assignment otherwise than by way of a bargain made at arm's length, the sale or assignment shall be deemed to be for consideration of an amount equal to the market value of what is disposed of.

(3) Sections 33 (3) and 34 (2) and subsections (1) and (2) shall apply to a loan within section 33 (2) (c) or 34 (1) (c) as if it, and any loan it replaces, were one loan, and—

(a) references to the application of the proceeds of the loan were references to the application of the proceeds of the original loan, and

(b) any restriction under subsection (1) which applied to any loan which has been replaced applied also to the loan which replaces it.

(4) Sections 33 (2) and 34 (1) shall not apply to a loan unless it is made in connection with the application of the money and either on the occasion of its application, or within what is in the circumstances a reasonable time from the application of the money, and those subsections shall not apply to a loan the proceeds of which are applied for some other purpose before being applied as described in those subsections.

(5) Interest eligible for relief under sections 33 and 34 shall be deducted from or set off against the income of the borrower for the year of assessment in which the interest is paid, and tax shall be discharged or repaid accordingly and such interest shall not be eligible for relief under any provision of the Income Tax Acts apart from those sections.

36 Relief to individuals on loans applied in acquiring interest in a partnership.

36.—(1) This section applies to a loan to an individual to defray money applied—

(a) in purchasing a share in a partnership, or

(b) in contributing money to a partnership by way of capital or a premium, or in advancing money to the partnership, where the money contributed or advanced is used wholly and exclusively for the purposes of the trade or profession carried on by the partnership, or

(2) Relief shall be given in respect of any payment of interest by the individual on the loan—

(a) if throughout the period from the application of the proceeds of the loan until the interest was paid he has personally acted in the conduct of the trade or profession carried on by the partnership as a partner therein, and

(b) if he shows that in that period he has not recovered any capital from the partnership, apart from any amount taken into account under the next following subsection.

(3) If at any time after the application of the proceeds of the loan the individual has recovered any amount of capital from the partnership without using that amount in repayment of the loan, he shall be treated for the purposes of this section as if he had at that time repaid that amount out of the loan, and so that out of the interest otherwise eligible for relief and payable for any period after that time there shall be deducted an amount equal to interest on the amount of capital so recovered. If part only of such a loan fulfils the conditions in this section, so as to afford relief for interest on that part, the deduction to be made under this subsection shall be made wholly out of interest on that part.

(4) The individual shall be treated as having recovered an amount of capital from the partnership if—

(a) he receives a consideration of that amount or value for the sale of any part of his interest in the partnership, or

(b) the partnership returns any amount of capital to him or repays any amount advanced by him, or

(5) Subsections (2), (3) and (4) shall apply to a loan within subsection (1) (c) as if it, and any loan it replaces, were one loan, and—

(a) references to the application of the proceeds of the loan were references to the application of the proceeds of the original loan, and

(b) any restriction under subsection (3) which applied to any loan which has been replaced applied also as respects the loan which replaces it.

(6) Subsection (1) shall not apply to a loan unless it is made in connection with the application of the money, and either on the occasion of its application, or within what is in the circumstances a reasonable time from the application of the money, and that subsection shall not apply to a loan the proceeds of which are applied for some other purpose before being applied as described in that subsection.

(7) Interest eligible for relief under this section shall be deducted from or set off against the income of the individual for the year of assessment in which the interest is paid, and tax shall be discharged or repaid accordingly, and such interest shall not be eligible for relief under any provision of the Income Tax Acts apart from this section.

37 Interest on borrowings to replace capital withdrawn in certain circumstances from a business.

37.—If at any time after the 10th day of January, 1974, a person borrows money to replace, in whole or in part, capital in any form formerly employed in any trade, profession or other business carried on by him tax in respect of the profits or gains of which is charged under Schedule D, and which capital was, after the 10th day of January, 1974, but within the five years preceding the date of replacement, withdrawn from such use for use otherwise than in connection with a trade, profession or other business carried on by him, interest on such borrowed money shall not be regarded as interest wholly and exclusively laid out or expended for the purposes of a trade, profession or other business.

38 Aggregation of interest paid by connected persons.

38.—(1) In relation to connected persons the references in section 496 (2) of the Income Tax Act, 1967, and sections 44 and 52 to £500 and £2,000 shall in the case of each such person be taken to be references to the proportion of £500 or £2,000, as the case may be, which the interest paid by that person bears to the aggregate of the interest paid by all the connected persons.

(2) For the purposes of this section a person is connected with an individual if that person is the individual's husband or wife and a company shall be regarded as connected with an individual or with another company if it would be so regarded for the purposes of section 16 of the Finance (Miscellaneous Provisions) Act, 1968.

39 Arrangements for payment of interest less tax or of fixed net amount.

39.—(1) It is hereby declared that any provision made before or after the passing of this Act, whether orally or in writing, for the payment of interest “less tax”, or using words to that effect, is to be construed, in relation to interest payable without deduction of tax, as if the words “less tax”, or the equivalent words, were not included.

(2) In relation to interest on which the recipient is chargeable to tax under Schedule D, and which is payable without deduction of tax, any provision, made before or after the passing of this Act, whether orally or in writing and however worded, for the payment of interest at such a rate (referred to subsequently in this subsection as the “gross rate”) as shall, after deduction of tax at the standard rate of tax for the time being in force, be equal to a stated rate, shall be construed as if it were a provision requiring the payment of interest at the gross rate.

40 Allowance of interest as a business expense.

40.—(1) In computing for the purposes of tax for the year 1974-75 or any subsequent year of assessment the profits or gains arising from a trade or profession in a basis period falling wholly or partly before the 10th day of January, 1974, there may, subject to section 61 of the Income Tax Act, 1967, be deducted—

(a) the gross amount of any annual interest paid under deduction of tax before the 10th day of January, 1974, in respect of a period ended before that date, and

(b) the amount of any interest paid to a bank or a person carrying on business as a member of a stock exchange or of a discount house relief for which was allowed under section 496 of the Income Tax Act, 1967, for the year of assessment in which the interest was paid.

(2) In this section “basis period” in relation to any year of assessment means the period the profits or gains of which are taken into account in charging tax under Case I or Case II of Schedule D on the profits or gains of the trade or profession for that year of assessment.

(3) It is hereby declared that, subject to subsection (1), relief in respect of any payment of interest shall not be given under the said section 496 and in computing the profits or gains of a trade or profession.

41 Tax avoidance: transactions associated with loans or credit.

41.—(1) This section applies as respects any transaction effected with reference to the lending of money or the giving of credit, or the varying of the terms on which money is lent or credit is given, or which is effected with a view to enabling or facilitating any such arrangement concerning the lending of money or the giving of credit.

This subsection has effect whether the transaction is effected between the lender or creditor and the borrower or debtor, or between either of them and a person connected with the other or between a person connected with one and a person connected with the other.

(2) If the transaction provides for the payment of any annuity or other annual payment, not being interest, being a payment chargeable to tax under Schedule D, the payment shall be treated for all the purposes of the Income Tax Acts and of the enactments relating to corporation profits tax as if it were a payment of annual interest.

(3) If the transaction is one by which the owner of any securities or other property carrying a right to income agrees to sell or transfer the property, and by the same or any collateral agreement—

(a) the purchaser or transferee, or a person connected with him, agrees that at a later date he will sell or transfer the same or any other property to the first-mentioned person, or a person connected with him, or

(b) the first-mentioned person, or a person connected with him, acquires an option, which he subsequently exercises, to buy or acquire the same or any other property from the said purchaser or transferee or a person connected with him,

then, without prejudice to the liability of any other person, the first-mentioned person shall be chargeable to tax under Case IV of Schedule D on an amount equal to any income which arises from the first-mentioned property at any time before the repayment of the loan or the termination of the credit.

(4) If under the transaction a person assigns, surrenders or otherwise agrees to waive or forego income arising from any property (without a sale or transfer of the property) then, without prejudice to the liability of any other person, he shall be chargeable to tax under Case IV of Schedule D on a sum equal to the amount of income assigned, surrendered, waived or foregone.

(5) If credit is given for the purchase price of any property, and the rights attaching to the property are such that, during the subsistence of the debt, the purchaser's rights to income from the property are suspended or restricted, he shall be treated for the purposes of subsection (4) as if he had surrendered a right to income of an amount equivalent to the income which he has in effect foregone by obtaining the credit.

(6) The amount of any income payable subject to deduction of tax at the standard rate shall be taken for the purposes of subsection (4) as the amount before deduction of that tax.

(7) References in this section to connected persons shall be construed in accordance with section 16 (2) of the Finance (Miscellaneous Provisions) Act, 1968.

42 Amendment of section 61 of Income Tax Act, 1967.

42.—(1) Section 61 (l) of the Income Tax Act, 1967, is hereby amended by the deletion of “any annual interest, or” and by the insertion after “payment” of “(other than interest)” and the said section 61 (l), as so amended, is set out in the Table to this section.

(2) This section shall apply for the year 1974-75 and subsequent years of assessment to any payment of annual interest whenever made and for the year 1973-74 to any payment of annual interest in respect of any period beginning on or after the 10th day of January, 1974.

TABLE

(l) any annuity, or other annual payment (other than interest) payable out of the profits or gains;

43 Amendment of section 75 of Income Tax Act. 1967.

43.—Section 75 of the Income Tax Act, 1967, is hereby amended by the addition of the following subsections—

“(3) Interest on a debt which having been payable subject to deduction of tax ceases at any time to be so payable shall be deemed to arise from a separate source acquired by the creditor at that time and subsection (1) shall not apply to such interest.

(4) Interest on a debt which having been payable in full begins at any time to be payable subject to deduction of tax shall be deemed to have arisen from a separate source which the creditor ceased to possess at that time and subsection (1) shall not apply to such interest.”.

44 Amendment of section 76 of Income Tax Act, 1967.

44.—In relation to annual interest in respect of any period beginning on or after the 10th day of January, 1974,section 76 (1) (c) of the Income Tax Act, 1967, shall not apply—

(a) for the year of assessment 1973-74, to the excess of the interest over £500, or

(b) for the year of assessment 1974-75, or for any subsequent year of assessment, to the excess of the interest over £2,000.

45 Amendment of section 77 of Income Tax Act, 1967.

45.—Section 77 (3) of the Income Tax Act, 1967, is hereby amended by the substitution for “subsection (2)” of “subsection (2) or (4)” and the said section 77 (3), as so amended, is set out in the Table to this section.

TABLE

(3) If in any year of assessment any person charged or chargeable in respect of income or profits under Case III of Schedule D ceases to possess the whole of such single source of income or profits as is mentioned in section 75 (1) or any of the sources the income of which is directed to be separately computed under subsection (2) or (4) of that section, section 58 (5) shall, subject to the necessary modifications, apply in any such case as if the cesser of the possession of such single source or separate sources, as the case may be, were the discontinuance of a trade.

46 Application of section 81 of Income Tax Act, 1967, to certain income arising outside State.

46.—Notwithstanding the foregoing provisions of this Chapter, income arising outside the State which if it had arisen in the State would be chargeable under Case V of Schedule D shall be deemed to be income to which the provisions of section 81 of the Income Tax Act, 1967, so far as they relate to deductions to be made by reference to subsection (5) (e) of that section, apply.

47 Amendment of section 219 of Income Tax Act, 1967.

47.—Section 219 of the Income Tax Act, 1967, is hereby amended by the substitution for subsection (1) of the following subsection:

“(1) It is hereby declared that in computing, for the purposes of Case I of Schedule D, the profits or gains of a society there are to be deducted as expenses any sums which—

(a) represent a discount, rebate, dividend, or bonus granted by the society to members thereof or other persons in respect of amounts paid or payable by or to them on account of their transactions with the society being transactions which are taken into acount in the said computation, and are calculated by reference to the said amounts or to the magnitude of the said transactions and not by reference to the amount of any share or interest in the capital of the society;

(b) are share or loan interest paid by the society being interest wholly and exclusively laid out or expended for the purposes of the trade.”.

Paragraph (b) shall apply for the year 1974-75 and subsequent years of assessment to any payment of annual interest whenever made and for the year 1973-74 to any payment of annual interest in respect of any period beginning on or after the 10th day of January, 1974.

48 Amendment of section 221 of Income Tax Act, 1967.

48.—Section 221 (2) of the Income Tax Act, 1967, is hereby amended—

(a) by the insertion after the first subparagraph of paragraph (c) of the following proviso:

“Provided that in a case to which section 220 does not apply no deduction shall be made in relation to interest in respect of any period beginning on or after the 10th day of January, 1974—

(a) for the year of assessment 1973-74, on the excess of the interest over £500, or

(b) for the year of assessment 1974-75, or for any subsequent year of assessment, on the excess of the interest over £2,000.”,

(b) by the insertion after paragraph (e) of the following proviso:

“Provided that in relation to interest in respect of any period beginning on or after the 10th day of January, 1974, the aggregate of the appropriate proportions of that interest shall not exceed—

(a) for the year of assessment 1973-74, the sum of £500, or

(b) for the year of assessment 1974-75, or for any subsequent year of assessment, the sum of £2,000.”, and

and the said paragraphs, as so amended, are set out in the Table to this section.

TABLE

(2) (c) Where in any year of assessment a society pays share interest or loan interest (other than loan interest in respect of which a claim such as is mentioned in paragraph (a) is made) without deduction of tax in accordance with subsection (1), it may claim, in a case in which section 220 applies, that the appropriate proportion of the total amount so paid, or, in any other case, that the total amount so paid, be deducted from its total income for that year and, where such a claim is made, any appropriate relief from tax shall be given by repayment or otherwise.

Provided that in a case to which section 220 does not apply no deduction shall be made in relation to interest in respect of any period beginning on or after the 10th day of January, 1974—

(a) for the year of assessment 1973-74, on the excess of the interest over £500, or

(b) for the year of assessment 1974-75, or for any subsequent year of assessment, on the excess of the interest over £2,000.

Section 307 (5) (6) shall apply to a claim under this paragraph as those subsections apply to a claim under section 307, except that it shall not be necessary to use a prescribed form.

(2) (e) In this subsection “the appropriate proportion” of any amount of interest or annual payment paid by a society in a year of assessment means the portion of that amount which bears to the whole the same proportion as the amount of the society's total income for the year bears to what would, but for section 220, have been the amount of the society's total income for that year.

Provided that in relation to interest in respect of any period beginning on or after the 10th day of January, 1974, the aggregate of the appropriate proportions of that interest shall not exceed—

(a) for the year of assessment 1973-74, the sum of £500, or

(b) for the year of assessment 1974-75, or for any subsequent year of assessment, the sum of £2,000.

(2) (g) Any reference in the foregoing provisions of this subsection to loan interest or other interest does not include a reference to interest which is allowable as a deduction in the computation of the profits or gains of a trade carried on by the society or as a deduction authorised under section 81 (5) (e).

49 Amendment of sections 231, 232 and 233 of Income Tax Act, 1967.

49.—(1) Sections 231 (4) (a), 232 (2) and 233 (2) (a) of the Income Tax Act, 1967, are hereby amended by the substitution of “an annual payment” for “a payment of interest” in each place where it occurs and the said sections 231 (4) (a), 232 (2) and 233 (2) (a), as so amended, are set out in the Table to this section.

(2) This section shall be deemed to have come into force and shall take effect as on and from the 6th day of April, 1973.

TABLE

(4) (a) Section 434 shall apply to any payment made in respect, or on account, of the excess as if such payment were an annual payment charged to tax under Schedule D not payable out of profits or gains brought into charge to tax, and tax shall accordingly be deducted by and recoverable from the person by or through whom the payment is made.

(2) Where, under a retirement benefits scheme in relation to which this section applies, any benefit is provided, otherwise than by way of non-commutable pension or annuity, on the death during his service of a director or employee and the total value of all benefits so provided under that scheme and under all other schemes exempt from the operation of section 227, subsisting in connection with the body corporate, exceeds the amount which would have satisfied the condition specified in section 229 (1) (i) section 434 shall apply to any payment made in respect, or on account, of such excess as if the payment were an annual payment charged to tax under Schedule D not payable out of profits or gains brought into charge to tax, and tax shall accordingly be deducted by and recoverable from the person by or through whom the payment is made.

(2) Where any contributions made by a director or employee under an approved scheme within the meaning of subsection (1) are repaid to him during his lifetime—

(a) section 434 shall apply to the amount of the contributions repaid as if it were an annual payment charged to tax under Schedule D not payable out of profits or gains brought into charge to tax, and tax shall accordingly be deducted by and recovered from the person by or through whom the repayment is made,

50 Restriction of sections 433 and 434 of Income Tax Act, 1967.

50.—(1) Subject to the provisions of subsection (2) and sections 30 and 31, sections 433 and 434 of the Income Tax Act, 1967, so far as they relate to interest of money, shall not apply to any such interest in respect of any period beginning on or after the 10th day of January, 1974.

(2) Subsection (1) shall not apply to interest on any loan secured by an instalment promissory note signed before the 6th day of April, 1974, under the terms of which the borrower promised to make periodic payments which include a sum representing interest after deduction of income tax therefrom at the rate for the time being in force.

(3) In subsection (2) “interest” means—

(a) in the case of a loan the terms of which provide for the payment of interest “less tax” or use words to that effect, the interest which would be payable if the words “less tax” or the equivalent words were not included, and

(b) in the case of a loan the terms of which provide for the payment of interest at such a rate (subsequently referred to as the gross rate) as, after deduction of tax at the rate for the time being in force, is equal to a stated rate, interest at the gross rate.

(4) Payments of such interest as is referred to in subsection (2) in respect of any period beginning on or after the 10th day of January, 1974, shall be deemed to be payments not made out of profits or gains brought into charge, whether or not they are such payments, and subsections (2) to (5) of section 434 of the Income Tax Act, 1967, shall apply to the said payments as they apply to payments specified in subsection (1) of that section.

51 Amendment of section 535 of Income Tax Act, 1967.

51.—(1) Section 535 (1) (b) of the Income Tax Act, 1967, is hereby amended by the deletion of “annual interest” and by the insertion after “annual payment” of “(other than interest)” and the said section 535 (1) (b), as so amended, is set out in the Table to this section.

TABLE

(1) (b) no deduction shall be made on account of any annuity or other annual payment (other than interest) to be paid out of such profits or gains in regard that a proportionate part of the tax is allowed to be deducted on making any such payment.

52 Restriction of Schedule 6 to Income Tax Act, 1967.

52.—In relation to annual interest in respect of any period beginning on or after the 10th day of January, 1974, paragraph 1 (2) of Part III of Schedule 6 to the Income Tax Act, 1967, shall not apply—

(a) for the year of assessment 1973-74, to the excess of the interest over £500, or

(b) for the year of assessment 1974-75, or for any subsequent year of assessment, to the excess of the interest over £2,000.

53 Application to corporation profits tax.

53.—(1) The foregoing provisions of this Chapter shall, with any necessary modifications, apply for the purposes of corporation profits tax.

(2) Section 53 (2) of the Finance Act, 1920, is hereby amended by the addition to the proviso of the following paragraph:

“(l) subject to section 53 (1) of the Finance Act, 1974, any deduction allowed in respect of interest paid in respect of any period beginning on or after the 10th day of January, 1974, not being interest wholly and exclusively laid out or expended for the purposes of a trade or profession, or other business the income from which consists wholly or mainly of profits or gains chargeable under Case V of Schedule D, shall not exceed an amount calculated at the rate of £2,000 per annum.”.

Chapter IV Anti-avoidance

54 Charge to tax in respect of certain dividends received by directors and employees.

54.—(1) In this section—

“director” has the same meaning as in section 119 of the Income Tax Act, 1967;

“emoluments” has the same meaning as in section 111 (4) of the Income Tax Act, 1967;

“employee” means a person employed by any body of persons;

“tax-relieved company” means a body corporate which has claimed and is entitled to relief from tax under Part XXV of the Income Tax Act, 1967.

(2) A person or body corporate shall, for the purposes of this section be regarded as connected with a tax-relieved company if that person or body corporate would be so regarded for the purposes of section 16 of the Finance (Miscellaneous Provisions) Act, 1968, and a person shall be regarded as connected with another person if that person would be so regarded for the purposes of the said section 16.

(3) Where, for any year of assessment, a person—

(a) who is a director or employee of a tax-relieved company or of a body corporate connected with that company, or

(b) who is employed by a person connected with that company,

receives no emoluments in respect of services rendered by him to or for the benefit of the said company or to or for the benefit of any person connected with that company or receives emoluments in respect of such services which, in the opinion of the Revenue Commissioners, are not adequate as consideration for the services so rendered, and receives a dividend in respect of shares held by him in the said company, so much of that dividend (in this section referred to as the relevant part of the dividend) as is, in the opinion of the Revenue Commissioners, in consideration of the services so rendered shall be deemed to be emoluments of that person and shall be chargeable to tax under Schedule E as emoluments paid to him on the date on which the said dividend was payable, and the amount of the emoluments to be so charged shall be the amount which, after deduction of tax at the rate appropriate to the dividend, is equal to the net amount payable of the relevant part of the dividend.

(4) Where tax has been deducted from a dividend referred to in subsection (3), so much of that tax as is appropriate to the relevant part of the dividend shall be allowed as a credit against any tax chargeable by virtue of the said subsection (3).

(5) In considering for the purpose of this section whether emoluments paid to any person by a company are or are not adequate as consideration for services rendered, the Revenue Commissioners shall have regard to—

(a) the nature of the services rendered by that person,

(b) the emoluments received by that person from the company for services so rendered at a time when he did not hold shares in the company or did not hold the shares in respect of which the dividend is paid which is the subject of their consideration by virtue of this section,

(d) any evidence tendered by or on behalf of the said person as to the adequacy of the emoluments in question.

(6) Where shares in respect of which a dividend is paid are held in a tax-relieved company by a person who is connected with another person (that other person being a person who if he held the shares and received the dividend would be a person to whom subsection (3) applies), then, for the purposes of the said subsection (3), the shares shall be regarded as being held by the second-mentioned person and the dividend shall be regarded as having been received by him in respect of the shares on the date on which the dividend was payable.

(7) In considering for the purpose of this section whether a dividend or part of a dividend is in consideration of services rendered, the Revenue Commissioners shall have regard to—

(a) all the classes of shares issued by the company concerned,

(b) the class or classes of shares in the said company held by the person aforesaid, the number of shares so held, the nominal value of, and the amount subscribed by him in respect of, such shares,

(d) whether shares of the class held by the person aforesaid are held by any other person and, if so, the number of shares so held, and

(e) any other matter which appears to them relevant for the purpose of forming an opinion under this subsection.

(8) An appeal shall lie to the Appeal Commissioners with respect to any opinion of the Revenue Commissioners under this section in like manner as an appeal would lie against an assessment to tax, and the provisions of the Income Tax Acts relating to appeals shall apply and have effect accordingly.

55 Transactions in certificates of deposit and assignable deposits.

55.—(1) Where, after the 3rd day of April, 1974, a person acquires a right to which this section applies, any gain arising to him from the disposal of that right or, except so far as it is a right to receive interest, from its exercise shall, if not falling to be taken into account as a trading receipt, be deemed to be annual profits or gains chargeable to tax under Case IV of Schedule D and shall be charged to tax accordingly.

(2) Where, on or before the 3rd day of April, 1974, a person acquired a right to which this section applies and disposes or disposed of, or exercises or exercised, the right after the said date, so much of any gain arising to him from that disposal or, except so far as it is a right to receive interest, from that exercise, as bears to the total amount of the gain the same proportion as the number of days from the 3rd day of April, 1974, to the date of the disposal or exercise bears to the total number of days from the date of the acquisition to the date of the disposal or exercise, shall, if not falling to be taken into account as a trading receipt, be deemed to be annual profits or gains chargeable to tax under Case IV of Schedule D and shall be charged to tax accordingly.

(3) Where a person sustains a loss in a transaction which, if profit had arisen from it, would be chargeable to tax by virtue of subsection (1) or (2), then, if he is chargeable to tax under Schedule C or D in respect of the interest payable on the amount of money the right to which has been disposed of, the amount of that interest shall be included in the amounts against which he may claim to set off the amount of his loss under section 310 of the Income Tax Act, 1967.

(4) For the purposes of this section, profits or gains shall not be treated as falling to be taken into account as a trading receipt by reason only that they are included in the computation required by section 214 of the Income Tax Act, 1967.

(5) This section applies to any right—

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