FINANCE ACT, 1976

AN ACT TO CHARGE AND IMPOSE CERTAIN DUTIES OF CUSTOMS AND INLAND REVENUE (INCLUDING EXCISE), TO AMEND THE LAW RELATING TO CUSTOMS AND INLAND REVENUE (INCLUDING EXCISE) AND TO MAKE FURTHER PROVISIONS IN CONNECTION WITH FINANCE. [27th May, 1976]

BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:

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

Chapter I Income Tax

1 Amendment of section 128 (penalties) of Income Tax Act, 1967.

1.—Section 128 of the Income Tax Act, 1967, is hereby amended—

• (a) by the insertion after paragraph (b) in subsection (4) of the following paragraph:

• “(bb) a certificate signed by an officer of the Revenue Commissioners which certifies that he has inspected the relevant records of the Revenue Commissioners and that it appears from them that, during a stated period, the defendant was an employer or a person whose name and address were registered in the register kept and maintained under Regulation 8 (4) of the Income Tax (Employments) Regulations, 1960, shall be evidence, until the contrary is proved, that the defendant was during that period an employer or, as the case may be, a person whose name and address were so registered,”,

and

• (b) by the substitution for “or paragraph (b)” in paragraph (c) of “, (b) or (bb)”, and the said paragraph, as so amended, is set out in the Table to this section.

TABLE

• (c) a certificate certifying as provided for in paragraph (a), (b) or (bb) and purporting to be signed by an officer of the Revenue Commissioners may be tendered in evidence without proof and shall be deemed until the contrary is proved to have been signed by an officer of the Revenue Commissioners.

2 Amendment of section 142 (dependent relatives) of Income Tax Act, 1967.

2.—Section 142 (1) (as amended by the Finance Act, 1975) of the Income Tax Act, 1967, shall have effect—

• (a) for the year 1975-76, as if—

• (i) for “£592”, in both places where it occurs, there were substituted “£605”, and

• (ii) for “£497” there were substituted “£510”,

and

• (b) for the year 1976-77 and each subsequent year of assessment, as if—

• (i) for “£592”, in both places where it occurs, there were substituted “£670”, and

• (ii) for “£497” there were substituted “£575”.

3 Amendment of section 174 (power to require production of accounts and books) of Income Tax Act, 1967.

3.—Section 174 of the Income Tax Act, 1967, is hereby amended—

• (a) in subsection (1)—

• (i) by the insertion after “required” of “by an inspector”,

• (ii) by the substitution of “the inspector is” for “the Revenue Commissioners are”,

• (iii) by the substitution of “an authorised officer may” for “the Revenue Commissioners may”,

• (iv) by the insertion in paragraph (a) after “inspector” of “or to the authorised officer”, and

• (v) by the substitution in paragraph (b) of “an authorised officer” for “any officer authorised by the Revenue Commissioners”;

• (b) in subsection (2), by the substitution of “authorised” for “other”, and

• (c) by the insertion after subsection (2) of the following subsection:

• “(3) In this section ‘an authorised officer’ means an inspector or other officer of the Revenue Commissioners authorised by them in writing to exercise the powers conferred by this section”,

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

TABLE

• (1) Where a person who has been duly required by an inspector to deliver a statement of the profits or gains arising to him from any trade or profession fails to deliver the statement, or where the inspector is not satisfied with the statement delivered by any such person, an authorised officer may serve on that person a notice in writing or notices in writing requiring him to do any of the following things, that is to say—

• (a) to deliver to an inspector or to the authorised officer copies of such accounts (including balance sheets) relating to the trade or profession as may be specified or described in the notice within such period as may be therein specified, including, where the accounts have been audited, a copy of the auditor's certificate;

• (b) to make available, within such time as may be specified in the notice, for inspection by an inspector or by an authorised officer all such books, accounts and documents in his possession or power as may be specified or described in the notice, being books, accounts and documents which contain information as to transactions of the trade or profession.

4 Amendment of section 197 (separate assessments to income tax) of Income Tax Act, 1967.

4.—Section 197 of the Income Tax Act, 1967, is hereby amended by the insertion after subsection (1) of the following subsection:

• “(1A) Where an application is made under subsection (1), that subsection shall have effect not only for the year of assessment for which it was made but also for each subsequent year of assessment:

Provided that, in relation to a subsequent year of assessment, the applicant may, by notice in writing given to the inspector before the 6th day of July in that year of assessment, withdraw the application and thereupon subsection (1) shall not have effect for the year of assessment in relation to which the notice was given or any subsequent year of assessment.”.

5 Amendment of section 316 (amount of assessment under section 434 to be allowed as a loss for certain purposes) of Income Tax Act, 1967.

5.—Section 316 of the Income Tax Act, 1967, is hereby amended, in relation to any claim for relief under the said section 316 made on or after the 30th day of March, 1976, by the insertion in subsection (2) after “1969” of “or section 30 (2), 31 (2) or 50 (4) of the Finance Act, 1974”, and the said subsection, as so amended, is set out in the Table to this section.

TABLE

• (2) This section shall not apply to any sum assessed under section 434 by virtue of Chapter II of Part XII or section 221 (2) (b), 288, 363, or 435 or section 25 (1) of the Finance Act, 1969 or section 30 (2), 31 (2) or 50 (4) of the Finance Act, 1974.

6 Amendment of section 477 (time for payment of tax) of Income Tax Act, 1967 and section 20 (interest on income tax and sur-tax in cases of fraud or neglect) of Finance Act, 1971.

6.—(1) Section 477 of the Income Tax Act, 1967, is hereby amended by the substitution, for subsections (1) and (2), of the following subsections:

• “(1) Subject to the provisions of this section, tax contained in an assessment for any year shall be payable on or before the 1st day of July in that year, except that tax included in an assessment for any year which is made on or after the 1st day of July shall be deemed to be due and payable on the day next after the day on which the assessment is made.

• (2) The following tax charged for any year, that is to say—

  • (a) tax charged under Schedule D on any individual in respect of the profits or gains of any trade or profession, and

  • (b) subject to the provisions of section 126, tax charged on any individual in respect of any office or employment,

  shall, instead of being payable on or before the 1st day of July in that year or on such other date as is specified in subsection (1), be payable in two equal instalments, the first instalment on or before the 1st day of July in that year or on such other day as aforesaid and the second instalment on or before the following 1st day of January, and the provisions of this Act as to the recovery of tax shall apply to each instalment of the tax, in the same manner as they apply to the whole amount of the tax:

  Provided that where the assessment is not made until after the said following 1st day of January, this subsection shall not have effect and the tax shall be due and payable as provided in subsection (1).

• (2A) This section shall have effect, as respects any assessment for the year 1976-77, as if—

  • (a) references to the 1st day of July were construed as references to the 1st day of October, and

  • (b) references to the 1st day of January were construed as references to the 1st day of April.”.

• (2) Section 20 (2) of the Finance Act, 1971, shall have effect as if—

• (a) in relation to any assessment for the year 1976-77, “October” were substituted for “January”, and

• (b) in relation to any assessment for the year 1977-78 or any subsequent year of assessment, “July” were substituted for “January”.

7 Amendment of section 497 (rate of tax at which repayments are to be made) of Income Tax Act, 1967.

7.—Section 497 of the Income Tax Act, 1967, is hereby amended by the insertion of the following additional proviso:

“Provided also that, in relation to repayments of tax made on or after the 30th day of March, 1976, the amount of tax to be repaid under this section to any person for any year shall not exceed a sum equal to the difference between the amount of tax paid by him, whether by deduction or otherwise, in respect of his income for that year and the amount of tax which would be payable by him for that year if his total income had been charged to tax in accordance with the provisions of this Act.”.

8 Amendment of section 525 (tax to be charged on consideration for certain restrictive covenants, etc.) of Income Tax Act, 1967.

8.—Section 525 (1) of the Income Tax Act, 1967, is hereby amended by the substitution for “as received by him after deduction of tax” of “as if it were a sum received by him after deduction of tax at the standard rate”.

9 Amendment of section 1 (increase in certain rates of income tax) of Finance (No. 2) Act, 1975.

9.—Subsections (1), (2) and (3) of section 1 of the Finance (No. 2) Act, 1975, are hereby amended by the substitution of “1976-77” for “1975-76” in each place where it occurs.

10 Personal reliefs.

10.—(1) Where a deduction falls to be made from the total income of an individual for the year 1976-77 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 subsection 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 from total income for 1975-76	Amount to be deducted from total income for 1976-77 and subsequent years
(1)	(2)	(3)
	£	£
Income Tax Act, 1967:
section 138
(married man)	920	1,010
(single person)	575	620
(widowed person)	635	685
section 141 (child)	230	240

• (2) Section 6 of the Finance Act, 1974, shall have effect subject to the provisions of this section.

• (3) Part I of the First Schedule shall have effect for the purpose of supplementing subsection (1).

11 Returns by married women.

11.—(1) Where an individual is required by notice, given under section 169 of the Income Tax Act, 1967, to deliver a statement in writing of the total income in respect of which he is chargeable to tax and that income is or includes income of his wife, he may, within twenty-one days from the date of the receipt of the notice, notify the inspector by whom the notice was given that the income in respect of which he is chargeable to tax is or includes income of his wife.

• (2) Where an inspector receives a notification under subsection (1) or where he is of opinion that the wife of the individual concerned is in receipt of income, he may, by notice given to the wife, require her to prepare and deliver to him, within the time limited by the notice and in the form required by the notice, a statement in writing, signed by her, setting out the amount of income arising to her from each and every source chargeable according to the respective schedules, estimated for the period specified in the notice and according to the provisions of the Income Tax Acts, whether or not she or her husband is the person chargeable to tax in respect of that income.

• (3) The delivery of a statement under subsection (2) shall not affect the provisions of section 192 of the Income Tax Act, 1967.

• (4) Schedule 15 to the Income Tax Act, 1967, is hereby amended by the insertion in column 2 thereof of “Finance Act, 1976, section 11”.

• (5) Section 169 of the Income Tax Act, 1967, is hereby amended—

• (a) by the substitution in subsection (1) of “within the time limited by such notice” for “within the period limited by such notice”, and

• (b) by the insertion in paragraph (b) of that subsection of “specified in the notice” after “period”,

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

TABLE

• (1) Every person chargeable under this Act, when required to do so by a notice given to him by an inspector shall, within the time limited by such notice, prepare and deliver to the inspector, a statement in writing as required by this Act, signed by him, containing—

• (b) the amount of the profits or gains arising to him, from each and every source chargeable according to the respective schedules, estimated for the period specified in the notice and according to the provisions of this Act.

12 Relief for unincorporated bodies in respect of increase in stock values.

12.—(1) In this section—

“accounting period”, in relation to a person, means a period of one year ending on the date to which the accounts of the person are usually made up:

Provided that where accounts have not been made up or where accounts have been made up for a greater or lesser period than one year, the accounting period shall be such period not exceeding one year as the Revenue Commissioners may determine;

“person” means a person who is resident in the State and not resident elsewhere but does not include a body corporate.

• (2)
• (a) The provisions of section 31 of and the Third Schedule to the Finance Act, 1975, other than the excepted provisions, shall with any necessary modifications apply in the case of a person as they apply in the case of a company.

• (b) In this subsection “the excepted provisions” means the following provisions of the Finance Act, 1975—

• (i) the definition of “accounting period” in section 31 (1),

• (ii) subsections (4) (a) (iii), (5) and (6) of the said section 31, and

• (iii) paragraph 3 of the Third Schedule.

• (3) Any deduction allowed by virtue of this section in computing a person's trading profits for an accounting period shall not have effect for any purpose of the Income Tax Acts for any year of assessment prior to the year 1974-75 or later than the year 1976-77.

• (4) A person shall not be entitled to a deduction under this section in respect of an assessment unless he makes a claim before—

• (a) the date on which the assessment becomes final and conclusive, or

• (b) the expiry of the period of six months beginning with the date of the passing of this Act,

whichever is the later.

• (5) The provisions of subsections (1), (2), (3) and (4) shall apply to a trade carried on by a partnership as they apply to a trade carried on by a person.

13 Surcharge on certain income of trustees.

13.—(1) This section applies to income arising to trustees in any year of assessment so far as it—

• (a) is income which is to be accumulated or which is payable at the discretion of the trustees or any other person, whether or not the trustees have power to accumulate it;

• (b) is neither, before being distributed, the income of any person other than the trustees nor treated for any of the purposes of the Income Tax Acts as the income of a settlor;

• (c) is not income arising under a trust established for charitable purposes only or income from investments, deposits or other property held for the purposes of a fund or scheme established for the sole purpose of providing relevant benefits within the meaning of section 13 of the Finance Act, 1972;

• (d) exceeds the income applied in defraying the expenses of the trustees in that year which are properly chargeable to income, or would be so chargeable but for any express provisions of the trust; and

• (e) is not distributed to one or more persons within that year of assessment or within eighteen months after the end of that year of assessment in such circumstances that the income distributed falls to be treated for the purposes of the Income Tax Acts as the income of the person or persons to whom it is distributed.

• (2)
• (a) Income to which this section applies shall, in addition to being chargeable to income tax at the standard rate for the year of assessment for which it is so chargeable, be charged for that year to an additional duty of income tax (hereinafter referred to as “a surcharge”) at the rate of 20 per cent.

• (b) Subject to subsection (3), the provisions of the Income Tax Acts shall apply in relation to a surcharge made under this section as they apply to income tax charged otherwise than by virtue of this section.

• (3) Where income in respect of which a surcharge is made is distributed, no relief from or repayment in respect of the surcharge shall be allowed or made to the person to whom the income is distributed.

• (4)
• (a) In this section “trustees” does not include personal representatives within the meaning of section 450 (2) of the Income Tax Act, 1967, but where personal representatives within the meaning of that section, on or before the completion of the administration of the estate of a deceased person, pay to trustees any sum representing income which, if the personal representatives were trustees within the meaning of this section, would be income to which this section applies, that sum shall be deemed to be paid to the trustees as income and to have borne income tax at the standard rate.

• (b) This subsection shall be construed together with Part XXIX of the Income Tax Act, 1967.

• (5) A notice given to trustees under any of the provisions specified in column 1 or 2 of Schedule 15 to the Income Tax Act, 1967, may require that a return of the income arising to them is to include particulars of the manner in which the income has been applied, including particulars as to the exercise by them of any discretion and of the persons in whose favour it has been so exercised.

14 Priority in bankruptcy and liquidation of certain sums.

14.—The following section is hereby substituted for section 11 of the Finance Act, 1968:

“11.—For the purposes of section 132 of the Income Tax Act, 1967, and section 285 of the Companies Act, 1963, the sums referred to in subsection (2) of the said section 132 and subsection (2) (a) (iii) of the said section 285 shall be deemed to include—

• (a) amounts of tax recoverable under section 7 and amounts of tax recoverable under section 8, and

• (b) amounts of tax deducted under section 17 (2) of the Finance Act, 1970, and amounts of tax recoverable under Regulation 12 of the Income Tax (Construction Contracts) Regulations, 1971,

which relate to a period or periods falling in whole or in part within the period of 12 months referred to in the said subsection (2) or the said subsection (2) (a) (iii), as may be appropriate, and in the case of any such amount for a period falling partly within and partly outside whichever of the said periods of 12 months is appropriate, it shall be lawful to apportion the total sum or amount according to the respective lengths of the periods falling within the period of 12 months and outside the period of 12 months in order to arrive at the amount of tax which relates to the said period of 12 months.”.

Chapter II Income Tax in Respect of Certain Emoluments

15 Extension of Chapter IV (income tax in respect of certain emoluments) of Part V of Income Tax Act, 1967.

15.—With effect as on and from the 6th day of April, 1976, Chapter IV of Part V of the Income Tax Act, 1967, shall apply to all emoluments assessable to income tax under Schedule E other than the emoluments specified in paragraphs (b) and (c) of section 125 of the said Act.

16 Transitional provisions.

16.—(1) (a) In this section—

“capital allowance” has the same meaning as in section 33 of the Finance Act, 1975;

“deduction in respect of contributions” means any deduction allowed by virtue of section 222, 224 or 233 of the Income Tax Act, 1967, or Chapter II of Part I of the Finance Act, 1972;

“deduction in respect of expenses” means a deduction allowed under Rule 3 or Rule 4 of the Rules (hereinafter referred to as the Rules of Schedule E) applicable to Schedule E contained in Schedule 2 to the Income Tax Act, 1967;

“emoluments” means—

• (i) in relation to the year 1975-76, emoluments assessable to tax under Schedule E for the year 1975-76 from which tax was deductible under any of the Rules of Schedule E, and

• (ii) in relation to each of the relevant years, emoluments assessable to tax under Schedule E for that year from which, but for the provisions of section 15, tax would be deductible under the Rules of Schedule E;

“relevant years” means the three years 1976-77, 1977-78 and 1978-79;

“tax” means income tax;

“tax appropriate to the emoluments” means, in relation to any individual, the amount of tax determined by the formula—

A
___ × C
A+B

where—

A is the amount of the individual's emoluments (hereinafter referred to as “net emoluments”) for a particular year of assessment (including, in the case of a married person, any emoluments of his wife which are deemed to be his income in accordance with the provisions of section 192 of the Income Tax Act, 1967) after deducting therefrom the aggregate of—

• (a) so much of each of the following as is to be taken into account in charging the emoluments to tax:

• (i) any deduction in respect of expenses;

• (ii) any deduction in respect of contributions; and

• (iii) any capital allowance;

and

• (b) so much of any loss as is, under the provisions of section 307 (4) (b) of the Income Tax Act, 1967, regarded as a deduction from those emoluments,

B is the aggregate of the individual's income, other than emoluments, for that year of assessment from all sources (including in the case of a married person, any income, other than emoluments, of his wife which is deemed to be his income in accordance with the provisions of section 192 of the Income Tax Act, 1967) after deducting from the income from each several source so much of any of the following amounts as is directly referable to that source:

• (i) any deduction in respect of expenses;

• (ii) any deduction in respect of contributions;

• (iii) any capital allowance; and

• (iv) any loss within the meaning of section 89 or Chapter I of Part XIX of the Income Tax Act, 1967,

C is the tax payable on the individual's total income for that year before taking account of any relief provided for by this section.

• (b) Where, in relation to any individual, the emoluments included in A in the formula in paragraph (a) arise from more than one source the tax appropriate to the emoluments from each source shall be determined separately and shall be an amount which bears the same proportion to the tax appropriate to the emoluments as the net amount of the emoluments from each source bears to A aforesaid.

• (2)
• (a) Where an individual is in receipt of emoluments for any period consisting of the whole or any part of the relevant years, he shall be entitled, in accordance with the provisions of subsection (4), to relief for that period in an amount (hereinafter referred to as “a remission”) equal to one-half of the tax appropriate to the emoluments for the year 1975-76:

Provided that the remission shall not exceed the aggregate of the tax appropriate to the emoluments for the relevant years.

• (b) Where the remission is in respect of emoluments arising from more than one source, the remission in respect of the emoluments from each source shall be an amount which bears the same proportion to the remission as the net amount of the emoluments from that source bears to A in the formula in subsection (1) (a):

Provided that the remission in respect of the emoluments from any one source shall not exceed the aggregate of the tax appropriate to the emoluments from that source for the relevant years.

• (3)
• (a) A woman who is in receipt of emoluments for any period consisting of the whole or any part of the relevant years shall be entitled to the remission in respect of tax on emoluments arising to her in the year 1975-76, if any, as an unmarried or widowed woman:

Provided that the aggregate of the remission due in respect of the emoluments arising to her as an unmarried or widowed woman and in respect of emoluments, if any, arising to her which are deemed to be her husband's income in accordance with the provisions of section 192 of the Income Tax Act, 1967, shall not exceed the aggregate of the tax appropriate to the emoluments arising to her for the relevant years (including any emoluments deemed to be her husband's emoluments in accordance with the provisions of section 192 of the Income Tax Act, 1967).

• (b) The remission due to a married woman in respect of emoluments arising to her in the year 1975-76 as an unmarried or widowed woman shall be given in priority to any remission due in respect of emoluments, if any, arising to her which are deemed to be her husband's income in accordance with the provisions of section 192 of the Income Tax Act, 1967.

• (c) Subject to the provisions of subsections (2) and (4), a widow shall be entitled to the remission, in whole or in part, in respect of any emoluments arising to her which were deemed to be her husband's income in accordance with section 192 of the Income Tax Act, 1967, to which her husband would have been entitled if he had not died.

• (4) The remission granted by virtue of the provisions of this section shall be allowed as to one-third of the amount thereof in each of the consecutive relevant years, commencing with the first, subject to the Revenue Commissioners being satisfied that tax appropriate to the emoluments arising in each of the said years amounting to not less than the said one-third of the remission has been paid by deduction or otherwise:

Provided that where one-third of the remission exceeds the tax appropriate to the emoluments for any of the said years the excess may be allowed as far as possible against tax payable for any one or more of the other relevant years after deducting that part of the remission allowable for that year by virtue of the provisions of this section.

• (5) Where any person receives, for any period consisting of the whole or any part of the relevant years, a pension or other superannuation allowance (hereinafter referred to as “a pension”) in respect of services for which an individual who has died was in receipt of emoluments for the year 1975-76, that person shall be entitled to any remission or any balance of any remission to which the individual, if he had not died and had been in receipt of emoluments for the whole or any part of the relevant years, would have been entitled in respect of emoluments other than emoluments of a wife deemed to be her husband's emoluments in accordance with the provisions of section 192 of the Income Tax Act, 1967:

Provided that the aggregate of the remission to which that person is entitled by virtue of this subsection and of any remission to which he is entitled by virtue of subsection (2) in respect of the said pension shall not exceed the tax appropriate to the pension for the relevant years.

• (6) For the purposes of this section, a pension in respect of services for which an individual was in receipt of emoluments for the year 1975-76 shall be deemed to arise from the same source as the said emoluments.

• (7) All such adjustments or repayments of tax shall be made as may be necessary to give effect to the provisions of this section.

• (8) Section 193 of the Income Tax Act, 1967, is hereby amended by the insertion after paragraph (d) in subsection (2) of the following paragraph:

• “(dd) so far as it flows from relief under section 16 of the Finance Act, 1976, in proportion to the net emoluments included in A in the formula in subsection (1) (a) of that section.”.

17 Treatment for tax purposes of certain unpaid remuneration.

17.—(1) In this section—

“accounting period”, in relation to a trade or profession, means a period of 12 months ending on the date up to which the accounts of the trade or profession are usually made up, and where accounts of the trade or profession have not been made up, such period not exceeding 12 months as the Revenue Commissioners may determine;

“date of cessation”, in relation to an office or employment, means the date on which a person ceases to hold the office or employment;

“date of commencement”, in relation to an office or employment, means the date on which a person commences to hold the office or employment;

“period of account”, in relation to a trade or profession, means any period, other than an accounting period, for which the accounts of the trade or profession have been made up;

“period of accrual”, in relation to remuneration in respect of an office or employment in a trade or profession, means the period beginning on—

• (a) the first day of an accounting period, or period of account, of the trade or profession, or

• (b) the date of commencement of the office or employment,

whichever is the later, and ending on—

• (c) the last day of an accounting period, or period or account, or

• (d) the date of cessation of the office or employment,

whichever is the earlier;

“relevant date” means—

• (a) in relation to an accounting period, the last day of the period,

• (b) in relation to a period of account—

• (i) where the period of account is less than 12 months, the last day of the period;

• (ii) where the period of account is more than 12 months, each 5th day of April within the period and the last day of the period;

“remuneration” includes all salaries, fees, wages, perquisites or profits whatsoever from an office or employment.

• (2) Where remuneration (hereinafter referred to as “unpaid remuneration”) which is deductible as an expense in computing the profits or income of a trade or profession for an accounting period or period of account for the purposes of Schedule D is unpaid at a relevant date—

• (a) the unpaid remuneration shall be deemed to be emoluments to which Chapter IV of Part V of the Income Tax Act, 1967, applies and shall be deemed to have been paid in accordance with the provisions of subsection (3), and

• (b) all the provisions of the said Chapter IV and of the regulations made thereunder and of sections 7, 8 and 9 of the Finance Act, 1968, shall, with any necessary modifications, apply to the unpaid remuneration as if it had been so paid.

• (3)
• (a) Unpaid remuneration shall be deemed to have accrued from day to day throughout the period of accrual and there shall be deemed to have been paid on each relevant date so much thereof as accrued up to that date or, if it is earlier, the date of cessation of the office or employment in respect of which the unpaid remuneration is payable—

• (i) where there was no preceding relevant date, from the beginning of the period of accrual or, if it is later, the date of commencement of the office or employment in respect of which the unpaid remuneration is payable, and

• (ii) where there was a preceding relevant date, from the day following that date or, if it is later, the said date of commencement.

• (b) Where, by virtue of the provisions of paragraph (a), unpaid remuneration would be deemed to have been paid on a date earlier than the 5th day of April, 1976, that remuneration shall be deemed to have been paid on the 5th day of April, 1976.

• (4) The provisions of this section shall not apply to:

• (a) emoluments to which section 125 (c) of the Income Tax Act, 1967, applies; or

• (b) unpaid remuneration which is paid before—

• (i) the date of expiry of 6 months after the date (hereinafter referred to as “the deemed date”) on which that remuneration is, by virtue of subsection (3), deemed to have been paid, or

• (ii) in case the period of account is one of more than 12 months, the date of expiry of 18 months from the first day of that period of account if the date of expiry is later than the deemed date.

Chapter III Taxation of Farming Profits

18 Amendment of section 21 (notional basis of assessment) of Finance Act, 1974.

18.—(1) Section 21 of the Finance Act, 1974, shall have effect in relation to the year 1976-77 as if for “1975-76”, in subsection (1), there were substituted “1976-77”.

• (2) The said section 21 of the Finance Act, 1974, is hereby amended by the substitution, for subsection (4), of the following subsections—

• “(4) In computing and charging, in accordance with the provisions of this section, profits or gains from farming farm land—

  • (a) no deduction shall be allowed other than the deductions specified in subsections (2) and (3), and

  • (b) the aggregate amount of the deductions to be allowed shall not exceed 40 times the rateable valuation of that farm land.

• (4A) Subsection (4) shall apply—

  • (a) as respects the year 1976-77, and

  • (b) as respects any year of assessment for which an individual elects as provided for in subsection (1) and makes, on or after the 30th day of March, 1976, a claim for relief under section 307, 308, 309 or 318 of the Income Tax Act, 1967.”.

19 Farm land occupied by certain persons.

19.—(1) Section 15 (3) of the Finance Act, 1974, shall not have effect for a year of assessment in the case of an individual or his wife if the individual or his wife at any time in that year of assessment occupies, either solely or in partnership with any other person or persons, farm land being farm land of which neither he nor his wife is the beneficial owner but which—

• (a) is owned (whether beneficially or otherwise) by a person connected with him, or

• (b) is land in respect of which—

• (i) no payment by way of rent or otherwise is made by him or by his wife for the occupation thereof, or

• (ii) a payment is made by him or by his wife which, having regard to values prevailing at the time, is less than the payment which could have been obtained in respect of that land on the basis that the negotiations for the payment had been at arm's length:

Provided that this section shall not apply in any case where the farm land is owned by an individual or his wife, if the individual or his wife is an individual to whom section 15 (3) of the Finance Act, 1974, applies for the said year of assessment.

• (2) For the purposes of this section a person shall be regarded as connected with an individual if he would be so regarded for the purposes of section 16 of the Finance (Miscellaneous Provisions) Act, 1968.

Chapter IV Payments to Sub-Contractors in the Construction Industry

20 Payments to sub-contractors before 6th December, 1976.

20.—In relation to any payment made on or after the 1st day of March, 1976, and before the 6th day of December, 1976, section 17 of the Finance Act, 1970, shall have effect as if—

• (a) in subsection (2) for “such payment” there were substituted “such payment, unless the sub-contractor produces to him a certificate, issued by the Revenue Commissioners under subsection (7), having affixed to it a seal which bears the words ‘Authenticated by Inspector of Taxes’ and is authenticated after the 28th day of January, 1976, by the signature of an inspector of taxes”, and

• (b) in subsection (7) for the words from “on production thereof” to the end of the subsection there were substituted “if it is produced by him to a principal and has affixed to it a seal that complies with subsection (2), entitle him to receive without deduction of tax any payment which is made to him by the principal.”.

21 Payments to sub-contractors on or after 6th December, 1976.

21.—In relation to any payment made on or after the 6th day of December, 1976, the Finance Act, 1970, is hereby amended by the substitution for section 17 of the following section:

“17.—(1) In this section—

‘certificate of authorisation’ means a certificate issued under subsection (7);

‘construction contract’ means a contract (not being a contract of employment) whereby a person (in this section referred to as ‘the contractor’) is liable to another person (in this section referred to as ‘the principal’)—

• (a) to carry out construction operations; or

• (b) to be answerable for the carrying out of such operations by others, whether under a contract with him or under other arrangements made or to be made by him; or

• (c) to furnish his own labour, or the labour of others, in the carrying out of such operations;

‘construction operations’ means operations of any of the following descriptions—

• (a) the construction, alteration, repair, extension, demolition or dismantling of buildings or structures;

• (b) the construction, alteration, repair, extension or demolition of any works forming, or to form, part of the land, including walls, road-works, power-lines, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water-mains, wells, sewers, industrial plant and installations for purposes of land drainage;

• (c) the installation in any building or structure of systems of heating, lighting, air-conditioning, sound-proofing, ventilation, power supply, drainage, sanitation, water supply, burglar or fire protection;

• (d) the external cleaning of buildings (other than cleaning of any part of a building in the course of normal maintenance); the internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, extension, repair or restoration;

• (e) operations which form an integral part of, or are preparatory to, or are for rendering complete such operations as are described above, including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works;

• (f) operations which form an integral part of, or are preparatory to, or are for rendering complete, the drilling for or extraction of minerals, oil, natural gas or the exploration or exploitation of natural resources;

• (g) the haulage for hire of materials, machinery or plant for use, whether used or not, in any of the aforesaid construction operations;

‘construction payments card’ has the meaning assigned to it by subsection (8);

‘construction tax deduction card’ has the meaning assigned to it by subsection (5);

‘proprietary director’ and ‘proprietary employee’ have the meanings assigned to them by section 226 of the Income Tax Act, 1967;

‘qualifying period’ means the period of three years, or such shorter period as the inspector may allow, ending on the 5th day of April in the year preceding the year of assessment in respect of which a certificate of authorisation is sought.

• (2) Subject to the provisions of this section, where in the performance of a construction contract, whether made before or after the commencement of this section, in the case of which the principal is—

  • (a) a person who, in respect of the whole or any part of the construction operations to which the contract relates, is himself the contractor under another construction contract, or

  • (b) a person carrying on a business which includes the erection of buildings, or

  • (c) a local authority, a public utility society within the meaning of section 2 of the Housing Act, 1966, or a body referred to in subparagraph (i) or (ii) of section 12 (2) (a) or section 19 or 45 of that Act, or

  • (d) a Minister of State, or

  • (e) any board established by or under statute, or

  • (f) a person who carries on any gas, water, electricity, hydraulic power, dock, canal or railway undertaking,

  the principal makes a payment to another person (whether the contractor or not and hereinafter referred to as ‘the subcontractor’), the principal shall deduct from the payment and pay to the Collector tax at the rate of 35 per cent. of the amount of such payment.

• (3) In computing, for the purposes of Schedule D, the profits or gains arising or accruing to a sub-contractor who receives a payment from which tax has been deducted in accordance with subsection (2), the payment shall be treated as being of an amount equal to the aggregate of the net amount received after deduction of the tax and the amount of the tax deducted.

• (4) In so far as a sub-contractor is chargeable to tax in respect of any profits or gains arising or accruing to him from a trade or vocation, he shall be treated as having paid on account of tax so chargeable any tax which was deducted from payments brought into account in the computation of those profits or gains and which has not been repaid or for which a set-off has not been given; and the Revenue Commissioners shall make regulations for giving effect to this subsection and those regulations shall in particular include provision—

  • (a) as to the manner in which, and the periods for which, tax deducted under this section is to be brought into account as a sum paid on account of the liability to tax of a sub-contractor,

  • (b) for repayment, on due claim made for a period (hereinafter referred to as the repayment period) commencing on the 6th day of April in a year of assessment and ending on the 5th day of the month following the date of the payment or, if the payment was made on or before the 5th day of a month, ending on the 5th day of that month, of such portion of the tax deducted from payments received by a sub-contractor during the repayment period (reduced by any amount of such tax repaid or set-off) as appears to the Revenue Commissioners to exceed the proportionate part of the amount of tax for which he is liable, or is estimated to be liable, for that year of assessment, and

  • (c) for repayments in cases where the total of the tax deducted from payments received by a sub-contractor and not repaid to him exceeds the aggregate of—

    • (i) the amount of tax for which he is liable, and

    • (ii) any amount which he is liable to remit—

      • (A) under the Value-Added Tax Act, 1972,

      • (B) under Chapter IV of Part V of the Income Tax Act, 1967, and

        • (C) in respect of pay-related contributions under the Social Welfare (Pay-Related Benefit) Act, 1973.

• (5) The Revenue Commissioners shall make regulations with respect to the assessment (including estimated assessment), charge, collection and recovery of tax deductible under subsection (2) and the regulations may, in relation to such tax, include any matters which might be included in regulations under section 127 of the Income Tax Act, 1967, in relation to tax deductible under Chapter IV of Part V of the said Act and, without prejudice to the generality of the foregoing, regulations under this subsection may include provision for—

  • (a) the issue, recall or cancellation of certificates of authorisation and the surrender of the certificates,

  • (b) the keeping by principals of such records as may be specified in the regulations, the keeping by principals of construction payments cards and the entry thereon of such particulars as may be specified in the regulations, the keeping by principals of cards (in this section referred to as ‘construction tax deduction cards’) in such form as may be prescribed by the regulations and containing particulars of any deductions under subsection (2) and the entry thereon of such other particulars as may be specified in the regulations, the making to the Revenue Commissioners of such returns relating to payments made by principals as may be specified in the regulations and the inspection of the said records (including the said cards);

  • (c) the keeping by sub-contractors of such records as may be specified in the regulations containing particulars of payments received by them, and the inspection of the said records;

  • (d) the completion by principals of certificates of tax deducted from payments made to sub-contractors;

  • (e) the sending to sub-contractors, in cases where tax was deducted under subsection (2) from payments made to them, of statements containing particulars of their liability (if any) to tax for a year of assessment.

• (6) The provisions of every enactment and of the Income Tax (Construction Contracts) Regulations, 1971, which apply to the recovery of any amount of tax which a principal of the kind referred to in subsection (2) is liable under this section and the said Regulations to pay to the Collector shall apply to the recovery of any amount of interest payable on that tax as if the said amount of interest were a part of that tax.

• (6A) Where an amount of tax which a person who is or is deemed to be a principal of the kind referred to in subsection (2) is liable under this section and any regulations under subsection (5) to pay to the Collector is not so paid, simple interest on the amount shall be paid by the person to the Collector and such interest shall be calculated from the date on which the amount became due for payment and at a rate of one per cent. for each month or part of a month during which the amount remains unpaid.

• (6B) Subsection (6A) shall apply to tax recoverable from a person by virtue of a notice under Regulation 12 (1) of the Income Tax (Construction Contracts) Regulations, 1971, as if the tax were tax which the person was liable under the said Regulations to remit for the last income tax month (within the meaning of the said Regulations) of the year, or, as appropriate, of the months ending in the accounting period, to which the notice relates.

• (7)

  • (a) The Revenue Commissioners shall, on application to them in that behalf by a person, issue to the person a certificate (referred to in this section as ‘a certificate of authorisation’) if they are satisfied—

    • (i) that the person is or is about to become a sub-contractor engaged in the business of carrying out construction contracts,

    • (ii) that the business is or will be carried on from a fixed place of business established in a permanent building and has or will have such equipment, stock and other facilities as, in the opinion of the Revenue Commissioners, are required for the purposes of the business,

    • (iii) that, in connection with the business, records to which section 6 (2) of the Finance Act, 1968, refers are being or will be kept, and any other records normally kept in connection with such a business are being or will be kept and are being or will be kept properly and accurately,

    • (iv) that—

      • (A) the person, any partnership in which he is or was a partner and any company (within the meaning of the Companies Act, 1963) of which he is or was a proprietary director or proprietary employee,

      • (B) in a case where the person is a partnership, each partner, and

        • (C) in a case where the person is a company, each director of the company and any person who is either the beneficial owner of, or able, directly or indirectly to control more than 15 per cent. of the ordinary share capital of the company,

        has throughout the qualifying period complied with all the obligations imposed on him by the Tax Acts, or the Acts relating to corporation profits tax in relation to—

        • (I) the payment or remittance of the taxes required to be paid or remitted under those Acts,

        • (II) the delivery of returns, and

        • (III) requests to supply to an inspector accounts of, or other information about, any business carried on by the said individual, partnership or company, as the case may be,

    • (v) that there is good reason to expect that the said person, partnership or company will comply with the obligations referred to in subparagraph (iii) in relation to periods ending after the date of termination of the qualifying period.

  • (b) A person in respect of whom the Revenue Commissioners are not satisfied in relation to any one or more of the matters specified in subparagraphs (i) to (iv) of paragraph (a) shall nevertheless, for the purposes of the issue of a certificate of authorisation, be treated as a person in respect of whom they are so satisfied if the Revenue Commissioners are of the opinion that, in all the circumstances, his failure ought to be disregarded for those purposes.

  • (c) In this subsection ‘the Acts relating to corporation profits tax’ means Part V of the Finance Act, 1920, and the enactments amending or extending that Part.

• (8)

  • (a) Where a sub-contractor to whom a certificate of authorisation has been issued produces it to a principal, the principal shall apply to the Revenue Commissioners for a card (in this section referred to as ‘a construction payments card’) in respect of the sub-contractor

  • (b) If, on such application, the Revenue Commissioners are satisfied that a construction payments card in respect of the sub-contractor aforesaid ought to be issued, to the principal aforesaid, they shall issue such a card to such principal who, upon receiving the card, shall, subject to the provisions of subsection (9), be entitled during the income tax year (or the unexpired portion thereof) to which the sub-contractor's certificate of authorisation relates to make payments to the sub-contractor named in the card without deduction of tax.

• (9)

  • (a) Where it appears to the Revenue Commissioners that—

    • (i) a certificate of authorisation was issued on the basis of false or misleading information,

    • (ii) a certificate of authorisation would not have been issued if information, obtained subsequent to its issue, had been available at the date of its issue,

    • (iii) a person to whom a certificate of authorisation was issued has permitted it to be misused,

    • (iv) a person to whom a certificate of authorisation was issued has failed to comply with any of the obligations imposed on him by the Tax Acts or by any regulations made thereunder, or

    • (v) the business of carrying out construction contracts in relation to which the certificate of authorisation was issued has ceased to be carried on by the person to whom the certificate was issued,

    they may, at any time, cancel the certificate and give notice in writing to that effect to any principal.

  • (b) Where a principal receives a notice under paragraph (a), he shall—

    • (i) deduct tax, in accordance with the provisions of subsection (2), from any payments made to the person to whom the notice relates on or after the date of receipt of the notice, and

    • (ii) return to the Revenue Commissioners any construction payments cards issued to him in relation to the person aforesaid and any construction tax deduction card kept by him in relation to such person.

  • (c) The Revenue Commissioners shall advise a person in relation to whom a notice under paragraph (a) was issued of the issue of such notice and shall require him to return to them forthwith the certificate of authorisation issued to him.

• (10)

  • (a) Where any person—

    • (i) for the purpose of obtaining a certificate of authorisation makes any false statement or furnishes any document which is false in a material particular,

    • (ii) disposes of a certificate of authorisation otherwise than by the return of the said certificate to the Revenue Commissioners,

    • (iii) fails to return a certificate of authorisation to the Revenue Commissioners when required to do so pursuant to subsection (9) (c),

    • (iv) is in possession of a certificate of authorisation that was not issued to him by the Revenue Commissioners, or

    • (v) produces to a principal a certificate of authorisation after he has been advised by the Revenue Commissioners of the issue of a notice under subsection (9) (c),

    he shall be guilty of an offence and shall be liable, on summary conviction, to a fine of £500 or, at the discretion of the court, to imprisonment for a term not exceeding 6 months or to both the fine and the imprisonment.

  • (b) Any person who aids, abets, counsels or procures—

    • (i) the obtaining of a certificate of authorisation by means of a false statement,

    • (ii) the use by any person, other than the person to whom it was issued by the Revenue Commissioners, of a certificate of authorisation, or

    • (iii) the production to a principal of a document that is not a certificate of authorisation but purports to be such a certificate,

    shall be guilty of an offence and shall be liable, on summary conviction, to a fine of £500 or, at the discretion of the court, to imprisonment for a term not exceeding 6 months or to both the fine and the imprisonment.

  • (c) Any person—

    • (i) who fails to enter on a construction payments card or construction tax deduction card such particulars as are required to be entered thereon by virtue of this section and any regulations made thereunder,

    • (ii) who fails to return to the Revenue Commissioners the said construction payments card or construction tax deduction card pursuant to subsection (9) (b),

    • (iii) who returns to the Revenue Commissioners any such card on which are entered particulars which are incorrect in any material particular, or

    • (iv) who fails to comply with any provision of regulations made under this section requiring him to keep or produce any records or documents,

    shall be guilty of an offence and shall be liable, on summary conviction, to a fine of £500.

• (11) Every regulation made under this section shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next twenty-one days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

• (12) A person carrying on a business shall not be deemed to be a person of a kind specified in subsection (2) (b) by reason only of the fact that, in the course of that business, he erects buildings for the use or occupation of himself or employees of his.

• (13) In relation to a case where a sub-contractor is chargeable to corporation tax, unless the context otherwise requires, references in this section to tax shall include references to corporation tax and references to a year of assessment shall include references to an accounting period.”.

Chapter V Benefits in Kind

22 Extension of charge to tax under section 52 (Schedule D) of Income Tax Act, 1967.

22.—(1) Where a person (in this section referred to as “the employee”) holds an office or employment and—

• (a) the profits or gains arising to him from that office or employment are, by virtue of section 52 of the Income Tax Act, 1967, chargeable to tax under Case III of Schedule D, and

• (b) he receives a sum in respect of expenses or derives a benefit, being a sum or benefit to which this section applies,

the profits or gains from that office or employment assessable to tax shall include the specified amount and shall be charged to tax accordingly.

• (2) This section applies to any sum received or benefit derived by the employee in respect of which there would be a charge to tax by virtue of Chapter III of Part V of the Income Tax Act, 1967, if the office or employment held by him were one the profits or gains from which were chargeable to tax under Schedule E.

• (3) The specified amount referred to in subsection (1) is the amount which would by virtue of the said Chapter III be chargeable to tax in respect of the sum or benefit to which this section applies if the profits or gains from the office or employment referred to in that subsection were chargeable to tax under Schedule E.

23 Benefit in kind: minimum charge to tax in respect of use of vehicle.

23.—Where, by virtue of section 117 of the Income Tax Act, 1967, a charge to tax falls to be made on any person in respect of the benefit derived by him from the provision of a vehicle within the meaning of section 30 of the Finance Act, 1973, the amount to be charged to tax in respect of that benefit shall not, for the year 1976-77 or any subsequent year of assessment, be less than the greater of the following two amounts—

• (a) £300, or

• (b) 15 per cent. of the relevant cost of the vehicle within the meaning of section 32:

Provided that the amounts specified in paragraphs (a) and (b) shall, in a case where the vehicle is provided for part only of a year of assessment, be reduced in the proportion which that part of the year bears to the said year.

Chapter VI Income Tax, Sur-Tax, Corporation Profits Tax, Corporation Tax and Capital Gains Tax

24 Amendment of sections 31 (income tax on certain dividends) and 37 (corporation profits tax on certain dividends) of Finance Act, 1973.

24.—Sections 31 and 37 of the Finance Act, 1973, are hereby amended—

• (a) by the substitution of “to which this section applies” for—

• (i) “set forth in the Second Schedule” in the said section 31, and

• (ii) “set forth in the Second Schedule to this Act” in the said section 37;

• (b) by the substitution of “1976” for “1975”; and

• (c) by the addition thereto of the following subsection—

• “(2) This section applies to the Agreement, set forth in the Second Schedule, as extended by the Agreement set forth in the Schedule to the Double Taxation Relief (Taxes on Income) (United Kingdom) Order, 1975.”,

and the said sections 31 and 37, as so amended, are set out in the Table to this section.

TABLE

31.—(1) Subject to the provisions of sections 76 and 77 of the Income Tax Act, 1967, as modified by Part III of Schedule 6 to that Act, where income tax is chargeable under Case III of Schedule D in respect of income which is a dividend, within the meaning of Article 1 of the Agreement to which this section applies being a dividend paid on or after the 6th day of April, 1973, and not later than the 5th day of April, 1976, the income so chargeable to income tax shall include the amount of the tax credit for the payment of which provision is made in the said Article 1.

• (2) This section applies to the Agreement, set forth in the Second Schedule, as extended by the Agreement set forth in the Schedule to the Double Taxation Relief (Taxes on Income) (United Kingdom) Order, 1975.

37.—(1) Where profits chargeable to corporation profits tax under section 52 of the Finance Act, 1920, include a dividend, within the meaning of Article 1 of the Agreement to which this section applies, being a dividend paid on or after the 6th day of April, 1973, and not later than the 5th day of April, 1976, the profits so chargeable shall include the amount of any tax credit appropriate to the dividend for the payment of which provision is made in the said Article 1.

• (2) This section applies to the Agreement, set forth in the Second Schedule, as extended by the Agreement set forth in the Schedule to the Double Taxation Relief (Taxes on Income) (United Kingdom) Order, 1975.

25 Payments under Employment Premium Act, 1975.

25.—Payments by the Minister for Labour under the Employment Premium Act, 1975, whether made before or after the commencement of this Part, shall be disregarded for all the purposes of the Tax Acts and the enactments relating to corporation profits tax.

26 Amendment of section 31 (relief for companies in respect of increase in stock values) of Finance Act, 1975.

26.—(1) The Finance Act, 1975, is hereby amended—

• (a) in section 31—

• (i) by the substitution in subsection (1) in the definition of “accounting period” of “1976” for “1975”,

• (ii) by the insertion in subsection (1) after the definition of “company” of:

“‘period of account’ has the meaning assigned to it by paragraph 6 (1) of the Third Schedule;” and

• (iii) by the addition thereto of the following subsections:

• “(7)

  • (a) Where a company has acquired or disposed of trading stock otherwise than in the normal conduct of the trade in question, the company shall be treated, for the purposes of this section and the Third Schedule, as having, at the beginning or end of the relevant period of account, trading stock of such value as appears to the inspector (or, on appeal, to the Appeal Commissioners) to be reasonable and just having regard to all the circumstances of the case.

  • (b) Where the value of a company's trading stock at the beginning of a period of account is not calculated on the basis used for the calculation of the value of the trading stock at the end of that period, the value of the trading stock at the beginning of that period shall, for the purposes of this section and the Third Schedule, be treated as being what it would have been if it had been calculated on that basis.

• (8) In any case where a company is entitled by virtue of this section to a deduction which has effect for an accounting period which ends on a date in the period from the 6th day of April, 1975, to the 5th day of April, 1976, the value of its trading stock at the beginning of the period of account immediately following the period of account the end of which coincides with the end of that accounting period or which is current at the end of that accounting period shall, for all the purposes of the Income Tax Acts and of the enactments relating to corporation profits tax, other than this section, be treated as reduced by the amount of the said deduction.”;

• (b) by the insertion after the said section 31 of the following section:

“31A—(1) In this section—

‘accounting period’, in relation to a company, means an accounting period determined in accordance with the provisions of section 9 of the Corporation Tax Act, 1976, which ends on a date in the period from the 6th day of April, 1975, to the 5th day of April, 1976;

‘trade’ means a trade which is carried on in the State and which during an accounting period consists wholly or mainly of any of the following classes of trading operations—

• (a) the manufacture of goods,

• (b) the carrying out of construction operations within the meaning of section 17 of the Finance Act, 1970,

• (c) farming, or

• (d) the sale of machinery or plant (excluding vehicles suitable for the conveyance by road of persons) or goods to a person engaged in a trade consisting wholly or mainly of trading operations of a class specified in paragraph (a), (b) or (c) for use for the purposes of that trade;

‘trading income’, in relation to any trade, means the income from the trade computed in accordance with the rules applicable to Case I of Schedule D before any set-off or reduction of income by virtue of section 16 or 18 of the Corporation Tax Act, 1976, and before any deduction or addition by virtue of section 14 of that Act;

‘trading stock’, in relation to any trade, has the same meaning as in section 62 of the Income Tax Act, 1967, and in determining the value of a company's trading stock at any time for the purposes of a deduction under this section, to the extent that, at or before that time, any payments on account have been received by the company in respect of any trading stock, the value of that stock shall be reduced accordingly.

• (2) Subject to the following provisions of this section, if—

  • (a) a company which is resident in the State carries on in an accounting period a trade in respect of which it is within the charge to corporation tax under Case I of Schedule D, and

  • (b) the value of the company's trading stock at the end of the accounting period (in this section referred to as its ‘closing stock value’) exceeds the value of its trading stock at the beginning of the accounting period (in this section referred to as its ‘opening stock value’),

  the company shall, in the computation for the purposes of corporation tax of its trading income, be entitled to a deduction under this section by reference to the amount of that excess as if the deduction were a trading expense incurred in the accounting period; and in the following provisions of this section the amount of that excess is referred to as the company's ‘increase in stock value’.

• (3) The Fifth Schedule shall have effect for the purpose of supplementing this section.

• (4)

  • (a) In any case where a company is entitled to a deduction under this section, that deduction shall be an amount equal to its increase in stock value in an accounting period less 20 per cent. of its trading income for that period:

  Provided that—

  - (i) in no case shall the amount of the deduction as so computed exceed the amount of the company's trading income for that period, and
  
  - (ii) the company's trading income to be taken into account in computing a deduction shall be that income before any deduction is made under this section or the Fifth Schedule.
  

  • (b) There shall be made such reductions of assessments or repayments of tax as may in any case be required in order to give effect to this section.

• (5) A company shall not be entitled to a deduction by virtue of this section in computing its trading income for an accounting period unless it makes a claim for the deduction before—

  • (a) the date on which the assessment for the accounting period becomes final and conclusive, or

  • (b) the expiry of the period of six months beginning with the date of the passing of the Finance Act, 1976,

  whichever is the later.

• (6)

  • (a) Where a company has acquired or disposed of trading stock otherwise than in the normal conduct of the trade in question, the company shall be treated, for the purposes of this section and the Fifth Schedule, as having, at the beginning or end of the relevant period of account, trading stock of such value as appears to the inspector (or, on appeal, to the Appeal Commissioners) to be reasonable and just having regard to all the circumstances of the case.

  • (b) Where the value of a company's trading stock at the beginning of a period of account is not calculated on the basis used for the calculation of the value of the trading stock at the end of that period, the value of the trading stock at the beginning of that period shall, for the purposes of this section and the Fifth Schedule, be treated as what it would have been if it had been calculated on that basis.

• (7) Where a company is entitled by virtue of this section to a deduction for any accounting period the value of its trading stock at the beginning of the period of account immediately following the period of account the end of which coincides with the end of that accounting period or which is current at the end of that accounting period shall for all the purposes of the Tax Acts, other than this section, be treated as reduced by the amount of the said deduction.” and

• (c) by the insertion of the following Schedule: