Corporation Tax Act , 1976

(2) Accordingly where any such election or act is required to be made or done, if at all, at a particular time, no provision of this Act amending the enactment under which it is made or done so as to specify a different time in relation to corporation tax (whether by substituting a reference to the first accounting period for a reference to the first year of assessment in which anything takes place, or otherwise) shall be taken, unless the contrary intention appears, to invalidate any election or act duly made or done nor, where the time has passed for making or doing it for income tax, to extend the time in relation to corporation tax; but nothing in this section shall take away any right of revocation or variation.

PART XVI Savings, Transitions, etc.

173 Commencement of corporation tax for existing companies, and transition from income tax.

173.—(1) A company not within the charge to income tax for the year 1975-76 in respect of a source of income shall not come within the charge to corporation tax in respect of that source for any period before the end of that year, and for this purpose a company shall be regarded as not having been within the charge to income tax for the year 1975-76 if it was entitled for that year, under agreements between the Government and the United Kingdom Government in respect of double income tax, to exemption from income tax in respect of profits or income arising in the State.

(2) Where a company is within the charge to income tax for the year 1975-76 in respect of a source of income, the company shall not come within the charge to corporation tax in respect of that source for any period before the end of that year, unless the charge to income tax for that year falls to be ascertained by reference to a period ending before the end of that year and the company possesses the source at the end of that year, but shall in that case be within the charge to corporation tax in respect of the source from the end of the basis period for income tax for that year or, if it is later, the end of the basis period for the year 1974-75.

(3) In this section any reference to the basis period for the year 1974-75 or 1975-76 is, in relation to any source of income, a reference to the period on the income of which the income tax (if any) chargeable for that year falls to be finally computed in respect of the source or, where by virtue of any provision of the Income Tax Acts the income of any other period is to be taken to be the income of the said period, that other period.

(4) Where a company is within the charge to income tax in respect of a trade on the 5th day of April, 1976, and continues to carry on the trade after that date, section 12 (2) (miscellaneous special rules for computation of income) shall not apply to treat the trade as permanently discontinued and a new trade as set up and commenced on the company first coming within the charge to corporation tax in respect of that trade.

(5) Where, in the case of a trade carried on by a company, the year 1974-75 or the year 1975-76 is the year next but one after the year of assessment in which the trade is set up and commenced and the company makes a claim under section 58 (4) of the Income Tax Act, 1967 (basis of assessment), the end of the basis period for income tax for the purpose of subsection (2) shall, if the year of claim is 1974-75 be taken to be the 5th day of April, 1975, and shall, if the year of claim is 1975-76, be taken to be the 5th day of April, 1976.

(6) Section 58 (5) (a) (ii) of the Income Tax Act, 1967, as amended by section 3 of the Finance Act, 1971 (period of computation of profits on discontinuance of trade), shall not apply in relation to income tax for any year of assessment on the discontinuance after the 5th day of April, 1976, of a trade carried on by a company; nor shall either section 77 (3) of the Income Tax Act, 1967 (basis of assessment under Case III of Schedule D), or section 81 (3) (b) of the Income Tax Act, 1967, as substituted by section 22 of the Finance Act, 1969 (basis of assessment under Case V of Schedule D), apply in the case of a company in relation to income tax for the year 1975-76, unless that year is the last year in which the company possesses the source.

174 Winding up of corporation profits tax.

174.—(1) There shall be disregarded for the purposes of corporation profits tax for any accounting period profits in respect of which a company is within the charge to corporation tax, and all amounts which would be deductible in computing any such profits for corporation profits tax purposes (in so far as they are also deductible in computing other profits for those purposes) and which are deductible for corporation tax, except that if that company is within the charge to corporation tax in respect of the profits for part only of the accounting period, this subsection shall apply in relation to that part, and there shall be made the like apportionments between that part and the remainder, as if the two parts were separate accounting periods.

(2) Section 69 (6) of the Finance Act, 1959 (which provides for capital allowances and charges to be made in the case of businesses not chargeable to income tax), shall not have effect for the making of deductions or additions by reference to the period after the year 1975-76.

(3) Where, apart from this provision, corporation profits tax would be chargeable in accordance with this section on profits of any trade or business, the company chargeable may, by notice in writing given to the Revenue Commissioners before the 6th day of April, 1978, or within such longer time as the Revenue Commissioners may in any case allow, elect that this section, except subsection (2), shall not have effect in relation to that company:

Provided that where for any accounting period an election is made under this subsection, all amounts which under section 25 of the Finance Act, 1964 (relief in respect of certain losses), could be deducted from or set off against profits of the company's trade or business for that accounting period, computed without regard to this subsection, shall be deemed to have been so deducted or set off and shall not be included in the computation of any relevant deficiency for the purposes of section 184.

175 Capital gains tax losses accruing before 6th April, 1976.

175.—Any losses of a company which are allowable against chargeable gains for the purposes of capital gains tax in respect of the year of assessment 1974-75 or 1975-76, in so far as they cannot be allowed against chargeable gains for the purposes of that tax, shall be treated for the purposes of corporation tax as if they were allowable losses accruing to the company while within the charge to corporation tax.

176 Transitional relief for existing companies on cessation of trade, etc.

176.—(1) Where a company is, in respect of any source of income, within the charge to corporation tax under any relevant Case of Schedule D during the year 1975-76 and ceases to possess that source at any time between that year and the year 1981-82, then subject to the provisions of this section the company shall be entitled to relief from tax in respect of any amount by which, if the company had ceased to possess the source on the 5th day of April, 1976, the taxed income from the source during the cessation period would have been less than the actual taxed income during that period.

(2) Relief under this section shall be an allowance equal to whichever is the less of—

(a) the amount referred to in subsection (1); and

(b) an amount equal to the appropriate fraction of the taxed income from the source during a period equal in length to the cessation period but ending when the company ceases to possess the source:

Provided that if the company ceases to possess the source in the year 1978-79 the allowance shall be reduced by one-fourth, if in the year 1979-80 by one-half, and if in the year 1980-81 by three-fourths.

(3) Where a company is entitled to an allowance under this section in respect of any source of income, then for the purpose of any liability of the company to corporation tax or income tax (but not for any other purpose) the amount of the income arising to the company from the source shall be treated as reduced by the amount of the allowance (the reduction being made, as far as may be, in the income arising in accounting periods for which the company is chargeable to corporation tax in respect of the source and, subject to that, in the income chargeable to income tax before the year 1976-77, and being made, as far as may be, in the income of a later rather than in that of an earlier period or year) and relief under this section shall be given in priority to any other relief.

(4) For purposes of this section “taxed income” means, in relation to any source, the amount of the income falling to be included in assessments for the purpose of charging the company to income tax or corporation tax in respect of the source.

(5) For purposes of this section, the relevant Cases of Schedule D are Cases I, II, III and V; and in relation to any source of income—

(a) “the cessation period” means the period over which assessments to income tax might have been revised on the company ceasing to possess the source on the 5th day of April, 1976 (and accordingly is three years for Cases I and II and two years for Cases III and V); and

(b) “the appropriate fraction” is such fraction of the cessation period as falls after the time when the company is first within the charge to corporation tax in respect of the source (and accordingly is, for Cases III and V, one-half).

(6) (a) (i) Except in so far as the context otherwise requires, references in this section to a company ceasing to possess a source of income shall, in relation to a trade, include the company ceasing in respect of the trade to be within the charge to corporation tax under Case I or II of Schedule D; and references to a company carrying on a trade or any part or activities of a trade are references to its doing so in such circumstances as to be within that charge to tax.

(ii) For purposes of this section the cessation period in relation to a trade shall be taken to be three years, notwithstanding that the trade has been carried on for less than three years before the year 1976-77; but where the appropriate fraction (that is to say the appropriate fraction under subsection (2) (b)) is to be applied to income from a trade which has been carried on by the company for a period less than three years, the appropriate fraction shall be increased in the proportion which a period of three years bears to that less period.

(iii) For purposes of this section, section 173 (7) shall apply in relation to the whole period after the trade was set up and commenced as, for other purposes of corporation tax, it applies from the end of the basis period for the year 1975-76, but (notwithstanding anything in section 173 (7)) any allowance to the company in respect of the trade, in so far as it cannot be given to the company, shall be given to the company's predecessors.

(b) (i) The following subparagraphs shall apply to the computation of a company's income from a trade for the purposes of this section.

(ii) No regard shall be had to any allowance or charge falling to be made in taxing the trade.

(iii) In determining what the taxed income from the trade would have been if the company had ceased to possess the trade as a source of income at the end of the year 1975-76, the computation shall be made, if need be, by division and apportionment or aggregation of income for accounting periods, including any period extending beyond the end of that year, and without regard to the operation of any enactment which would affect the computation on an actual discontinuance of the trade except section 58 (5) (a) of the Income Tax Act, 1967, and section 3 of the Finance Act, 1971.

(iv) Where the taxed income referred to in subsection (1) (whether the actual income or the income as on a cessation) falls to be ascertained partly by reference to a period in which the company incurred a loss in the trade, that income shall be ascertained as if there had been no such loss (nor any income) in that period, but in ascertaining for purposes of subsection (2) (b) the taxed income for any period losses incurred in that period and any part of a loss apportionable to that period shall be deducted from income.

(c) (i) If a company on ceasing at any time to possess a trade as a source of income continues to carry on any of the activities of the trade as activities of another trade, the company shall be disentitled as at that time to such part of the allowance in respect of the first-mentioned trade as is referable to those activities.

(ii) Where within two years after the time when a company ceases to possess a trade as a source of income—

(I) the trade or any part of it is carried on by the company or by an associated company; or

(II) the activities of the trade or part of them are carried on by an associated company as activities of another trade;

the company shall be disentitled as from that time to the allowance in respect of the first-mentioned trade:

Provided that where this subparagraph applies by reason only of part of the trade or part of its activities being carried on by an associated company the company shall be so disentitled only to such part of the allowance as is referable to that part of the trade or activities.

(iii) Where a company ceases at any time to carry on part of a trade, and within two years after that time that part of the trade or the activities of it are carried on by an associated company as its trade or part of its trade, the company shall be treated as having been, as from that time, disentitled to such part of any allowance in respect of the trade as is referable to that part of the trade or those activities.

(iv) Where by reason of a company carrying on a trade or part of a trade, or carrying on any activities in the course of a trade, that company or another company becomes disentitled to an allowance or part of an allowance, the allowance shall attach or remain attached to that trade (whether or not in the year 1975-76 that trade was being carried on by that company or at all).

(v) Where under subparagraph (iv) an allowance or part of an allowance in respect of a trade attaches to another trade, the allowance or that part of it shall, except as regards amount, be treated for all purposes as an allowance in respect of the trade, but the amount shall not be affected except as follows—

(I) the appropriate fraction shall be applied to the taxed income from that other trade, and the proviso to subsection (2) shall apply to that other trade; and

(II) the aggregate amount of the allowances to be given in respect of the trade on a company ceasing to possess it as a source of income, if there are more than one such allowance, shall not exceed the amount specified by subsection (2) (b) for that one of the allowances having the highest appropriate fraction.

(vi) For purposes of this paragraph the part of an allowance referable to any part of a trade or to any activities of a trade shall be determined, in relation to an event occurring at any time, by taking the amount of the allowance (as if on the company ceasing at that time to possess the trade as a source of income) and by apportioning that amount between that part or those activities of the trade and the remainder, according to the proportion in which the taxed income of the company from the trade is attributable thereto during the period of three years ending with that event (or any shorter period during which the company has carried on the trade), or, if there is no such taxed income, then by apportioning it in such other manner as may in the circumstances be just; but for determining the part of the allowance which is attached to a trade after that event the amount of the allowance shall be taken without regard to paragraph (b) of or the proviso to subsection (2).

(vii) Where under this paragraph a company becomes disentitled to an allowance or part of an allowance after the allowance or that part of it has been given to it or to another company, the allowance or part so given shall be withdrawn to the extent necessary to give effect to this paragraph.

(viii) For purposes of this paragraph a company is to be treated as another's “associated company” at a given time if at that time, or at any time within one year before or two years afterwards, one of the two has control of the other or both are under the control of the same person or persons (“control” having for this purpose the same meaning as in section 102).

(7) There shall be made any such adjustments of any person's liability to corporation tax or income tax, whether by way of repayment of tax, assessment or otherwise, as may be necessary to give effect to this section, and any such adjustment may be made at any time not later than ten years after the event giving rise to the adjustment.

177 Relief from corporation tax on interest on certain loans.

177.—(1) Where, for purposes of corporation tax, the income of a company for an accounting period includes interest payable on or after the 6th day of April, 1976, in respect of a permanent loan the company shall be entitled, on due claim, to have its liability to corporation tax for the accounting period reduced as provided by subsection (3).

(2) For the purposes of this section “permanent loan” means a loan of a permanent character made under an agreement entered into before the 27th day of November, 1975, and which under the agreement is—

(a) secured by mortgage or debenture or otherwise on the assets or income of a company, and

(b) if subject to repayment is subject to repayment at not less than three months' notice:

Provided that a loan shall not be regarded as a permanent loan for the purposes of this section if under the terms of the loan agreement the rate of interest or other conditions of the loan could be altered during the currency of the loan.

(3) The reduction referred to in subsection (1) shall be determined in accordance with section 184 (3), apart from the proviso, as if the interest were a relevant deficiency within the meaning of subsection (1) of that section.

(4) Where, in computing the reduction provided for by subsection (3), the appropriate amount as determined in accordance with section 184 (3) (a) (ii), is the company's income for the accounting period the excess of such interest as is mentioned in subsection (1) for the accounting period over that income shall, for the purposes of this section, be aggregated with the amount of any such interest for the next succeeding accounting period and relief shall be allowed for the said period in respect of the aggregated amount; and if that aggregated amount exceeds the income for the said period the excess shall be carried forward to the accounting period next succeeding the said period and so on.

(5) A claim under this section shall be made to the inspector within two years from the end of the accounting period.

178 Dividends and other distributions at gross rate or of gross amount.

178.—(1) Where any right or obligation created before the 6th day of April, 1976, is expressed by reference to a dividend at a gross rate or of a gross amount, that right or obligation shall, in relation to a dividend payable on or after that date, take effect as if the reference were to a dividend of an amount determined by the formula

A D
D _____
100

where—

A is the standard rate per cent. for the year 1976-77, and

D is an amount equal to a dividend at that gross rate or of that gross amount.

(2) Subsection (1) shall apply with the necessary modifications to a dividend partly at a gross rate or of a gross amount and shall apply to any distribution other than a dividend as it applies to a dividend.

179 Set-off of losses against franked investment income.

179.—(1) In this section “straddling period” means an accounting period of a company for which it is within the charge to corporation tax in respect of a source of income and which begins before the 6th day of April, 1976, and ends after the 5th day of April, 1976.

(2) Where for an accounting period which is—

(a) an accounting period for which the company is within the charge to corporation tax in respect of a source of income and which ends before the 6th day of April, 1976, or

(b) a straddling period,

and in that accounting period, and before the 6th day of April, 1976, the company receives a distribution from a company which is resident in the State (other than a distribution which is deemed under Part IX to have been made on the 6th day of April, 1976), the company may make a claim for that accounting period under section 25 (set-off of losses etc. against franked investment income) or 26 (set-off of loss brought forward or terminal loss against franked investment income in the case of financial concerns) as if references in those sections to franked investment income and payment of a tax credit were, respectively, references to dividends received under deduction of income tax and repayment of income tax:

Provided that any income tax repayable by virtue of this section shall be in substitution for, and not in addition to, any amount of income tax repayable by virtue of some other provision of the Income Tax Acts in respect of the same income.

(3) Section 25 (5) shall, with the necessary modifications, apply to any repayment of income tax made to a company under this section as it applies to the recovery of a tax credit.

180 Commencement of surcharge on close companies.

180.—(1) Sections 101 and 162 (surcharges on close companies) shall not have effect as regards any accounting period or part of an accounting period falling before the 6th day of April, 1976.

(2) As regards income arising to a company on or before the 5th day of April, 1976, Chapter II of Part XXXVI of the Income Tax Act, 1967, shall continue to have effect, and the income of a company to be taken into account under that Chapter shall include income chargeable to corporation tax.

(3) Where a period of account or an accounting period of a company falls partly in the year 1975-76 and partly in the year 1976-77 the two parts shall for the purposes of the said Chapter II or, as the case may be, sections 101 and 162 be dealt with as separate accounting periods and any dividends for any such period of account or accounting period shall be apportioned according to the proportion which the income of the part falling in the year 1975-76, computed as for the said Chapter II (but less income tax at the standard rate or that rate as reduced by reference to any relief granted to the company) bears to the distributable income for the part falling in the year 1976-77.

181 Income tax relief for losses incurred in 1974-75 and 1975-76.

181.—(1) Where a company claims relief under section 307 of the Income Tax Act, 1967 (right to repayment of tax by reference to losses), for the year 1974-75 or the year 1975-76 the question whether the company has sustained a loss in a trade in that year, and any question as to the amount of a loss so sustained, shall not be affected by the company being within the charge to corporation tax in respect of the trade for the whole or part of that year, but the amount of loss incurred in the trade in an accounting period falling wholly or partly within that year shall, for the purposes of corporation tax, be reduced by an amount equal to the amount of loss which, in respect of the said accounting period, was taken into account in determining the amount of loss in respect of which relief was allowed under the said section 307.

(2) Section 318 of the Income Tax Act, 1967 (option to treat capital allowances as creating or augmenting loss), shall apply in relation to a claim by a company under section 307 of that Act for the year 1975-76 and for the purposes of the said section 318, as applied by this subsection, the company shall be treated, in a case where the year 1975-76 is not the basis year for the year itself, on the footing that—

(a) section 1 (2) (introduction for companies of corporation tax) did not apply in relation to the trade in question, and

(b) the period on the profits or gains of which income tax for the year 1976-77 would fall to be finally computed were the twelve months starting at the time at which the company came within the charge to corporation tax in respect of the trade,

and relief under the said section 318 may be given accordingly by reference to what, on that footing, would have been the company's capital allowances for the year 1976-77 for income tax purposes.

(3) The total amount of allowances in respect of capital expenditure which under section 14 (deductions and additions for capital allowances and charges) fall to be treated as trading expenses of a trade for the appropriate accounting periods for which the company is within the charge to corporation tax in respect of the trade shall be reduced by an amount equal to the amount of capital allowances which by virtue of subsection (2) of this section is deducted in determining the amount of loss in respect of which relief is allowed under section 307 of the Income Tax Act, 1967; and the appropriate accounting periods shall be accounting periods falling wholly or partly within the year 1975-76, the reduction being made in an earlier, rather than a later, accounting period.

(4) For purposes of this section “trade” includes profession or employment, the occupation of lands for the purposes of husbandry only and the occupation of woodlands managed on a commercial basis and with a view to the realisation of profits.

182 Relief in respect of unrelieved losses and capital allowances carried forward from the year 1975-76.

182.—(1) In this section—

“relevant amount” means, in relation to a company, the aggregate of the following amounts—

(a) such part of any loss, including any amount to be treated as a loss under section 316 of the Income Tax Act, 1967 (amount of assessment under section 434 of the Income Tax Act, 1967, to be allowed as a loss for certain purposes), incurred by the company in a trade before the date on which the company comes within the charge to corporation tax in respect of the trade and which, but for this Act, could be carried forward to the year 1976-77 under section 309 of the Income Tax Act, 1967 (right to carry forward losses to future years), and

(b) such part of any capital allowance to which the company which carries on the trade was entitled in charging the profits or gains of the trade for years prior to the year 1976-77 and to which effect has not been given by way of relief before that year;

“relevant corporation tax” for an accounting period means the corporation tax which, apart from sections 58 (basis of relief from corporation tax for export profits), 184 and this section, is chargeable for the accounting period exclusive of the corporation tax charged on the company's chargeable gains for the accounting period.

(2) Relief, as provided in subsection (3), shall be allowed in respect of a relevant amount against corporation tax payable by the company and such relief shall be given as far as possible from the tax payable for the first accounting period for which the company is within the charge to corporation tax in respect of the trade and, in so far as it cannot be so given, from the tax payable for the next accounting period and so on.

(3) The relief for an accounting period shall be an amount calculated by applying to that part of the relevant amount in respect of which relief from tax has not been allowed a rate equal to the standard rate for the year of assessment in which the accounting period ends:

Provided that—

(a) the amount to which the said rate is applied shall not exceed the amount of income from the trade which is included in chargeable profits for the accounting period reduced by the amount, if any, which is included in charges on income paid by the company in the accounting period in respect of payments made wholly and exclusively for the purposes of the trade;

(b) where the corporation tax payable by the company for an accounting period is reduced by virtue of a claim under Part IV (Profits from Export of Certain Goods), the relief to be given under this section for the accounting period shall be reduced in the same proportion as the corporation tax payable by the company for the accounting period so far as it is attributable to the income from the trade is so reduced; and the corporation tax attributable to the income from the trade shall be an amount equal to the same proportion of the relevant corporation tax for the accounting period as the income from the trade for the accounting period bears to the total income brought into charge to corporation tax;

(c) the amount of a reduction made for an accounting period under paragraph (b) of this proviso shall, for the purposes of section 64 (distributions out of export profits), be deemed to be a reduction of the amount of relief allowed under section 58.

(4) Relief under this section shall not be allowed against corporation tax payable by a company which by virtue of agreements between the Government and the United Kingdom Government in respect of double income tax was entitled to exemption from income tax for the year 1975-76 in respect of income arising in the State.

183 Relief in respect of losses or deficiencies within Case IV or V of Schedule D.

183.—Where a company is entitled to relief under section 89 (relief under Case V for losses) or 310 (relief under Case IV for losses) of the Income Tax Act, 1967, or would be entitled to relief under the said section 310 if section 237 (5) of the Income Tax Act, 1967, had not been enacted, for the year 1975-76 or an earlier year of assessment in respect of a loss within Case IV of Schedule D or a deficiency or an excess of deficiencies within Case V of Schedule D, with the addition of any associated capital allowances in each case, and because of an insufficiency of income of the description concerned relief could not be fully granted to the company under those sections for any of those years of assessment, the unrelieved amount of loss, deficiency or excess of deficiencies (with the addition of any unrelieved associated capital allowances), as the case may be, shall be treated as if it were a loss in a trade carried on by the company and, if the company so requires, may be relieved under section 182 against income of the same description of the company within the charge to corporation tax as if that income were income of the same trade and section 182 shall apply accordingly, with any necessary modifications:

Provided that—

(a) a loss within Case IV of Schedule D, with the addition of any associated capital allowances, shall be relieved under this section only against income of the company chargeable to corporation tax under Case IV of Schedule D, and similarly a deficiency or an excess of deficiencies within Case V of Schedule D, with the addition of any associated capital allowances, shall be relieved only against income of the company chargeable to corporation tax under Case V of Schedule D; and

(b) so much of any deficiency or so much of any amount treated as a loss as under section 62 of the Finance Act, 1974 (taxation of rents: restriction in respect of certain rent and interest), could not be carried forward or set against profits or gains for income tax purposes if that tax had continued, shall be treated as not being a deficiency or loss for the purposes of this section.

184 Relief in respect of corporation profits tax losses.

184.—(1) In this section, subject to the proviso to section 174 (3), “relevant deficiency” means, in relation to a company, the aggregate of the following amounts—

(a) the total of the amounts which, under section 25 of the Finance Act, 1964, could (on the footing that for corporation profits tax purposes an accounting period of the company ended on the 5th day of April, 1976, and a new accounting period commenced on the 6th day of April, 1976, and the enactments in relation to corporation profits tax mentioned in the Third Schedule had not been repealed) be deducted from or set off against profits of the company's business in an accounting period commencing on the 6th day of April, 1976; and

(b) the total of the amounts by which, under section 181 (1) (3), losses and allowances in respect of capital expenditure are reduced for the purposes of corporation tax:

Provided that any loss or any excess of deficiencies over surpluses which if such loss or excess were a profit or an excess of surpluses over deficiencies would be chargeable to corporation tax on the company for the accounting period shall not be taken into account for the purposes of paragraph (a).

(2) Relief, as provided in subsection (3), shall be allowed in respect of a relevant deficiency against corporation tax payable by the company and such relief shall be given as far as possible from the tax payable for the first accounting period for which the company is within the charge to corporation tax and, in so far as it cannot be so given, from the tax payable for the next accounting period and so on:

Provided that relief shall not be allowed against corporation tax payable for any accounting period against the profits of which (if this Act had not been enacted and if the enactments in relation to corporation profits tax referred to in the Third Schedule had not been repealed) a loss incurred prior to the 6th day of April, 1976, could not be set off under section 25 of the Finance Act, 1964.

(3) (a) For the purposes of this subsection—

(i) the income of a company for an accounting period is its income charged to corporation tax for that period as defined in section 28 (8) (reduction of corporation tax liability of small companies),

(ii) the appropriate amount is the smaller of the amount of the relevant deficiency in respect of which relief has not been allowed and the amount of the company's income for the accounting period.

(b) The relief for an accounting period shall be an amount determined by the formula A B

where—

A is the excess of the amount of corporation tax which, apart from this section, section 58 (basis of relief from corporation tax for export profits) and section 182, is chargeable for the accounting period over an amount calculated by applying a rate equal to the standard rate for the year of assessment in which the accounting period ends to the amount of the company's income for the accounting period, and

B is the excess of the amount of corporation tax which, apart from sections 58, 182 and this section, would be chargeable for the accounting period if the amount of the company's income for the accounting period were reduced by the appropriate amount over an amount calculated by applying a rate equal to the standard rate for the year of assessment in which the accounting period ends to the amount of the company's income for the accounting period as reduced by the appropriate amount:

Provided that—

(i) where the corporation tax payable by a company for an accounting period is reduced by virtue of a claim under section 58 (1) the amount of relief to be allowed under the foregoing provisions of this section shall be reduced in the proportion which the corporation tax referable to the income attributable to the excess referred to in section 58 (1) (c) bears to the relevant corporation tax;

(ii) where the corporation tax payable by a company for an accounting period is reduced by virtue of a claim under section 58 (3) the amount of relief to be allowed under the foregoing provisions of this section shall be reduced in the proportion which the corporation tax referable to the income from the sale of goods exported bears to the relevant corporation tax; and

(iii) the amount of a reduction made for an accounting period under paragraph (i) or (ii) of this proviso shall, for the purposes of section 64, be deemed to be a reduction of the amount of relief allowed under section 58.

For the purposes of this proviso “corporation tax referable to the income attributable to the excess”, “corporation tax referable to the income from the sale of goods exported” and “relevant corporation tax” have the meanings assigned to them in section 58.

(4) Subsections (2) and (3) shall not apply to a company which by virtue of agreements between the Government and the United Kingdom Government in respect of double income tax was entitled to exemption from income tax for the year 1975-76 in respect of income arising in the State but in such case the relevant deficiency shall be set off against income coming within the charge to corporation tax for the accounting period commencing on the 6th day of April, 1976, and in so far as the relevant deficiency cannot be so set off it shall be set off against income coming within the charge to corporation tax for the next succeeding accounting period and so on:

Provided that a relevant deficiency shall not be set off against income arising in any accounting period against the profits of which (if this Act had not been enacted and if the enactments in relation to corporation profits tax mentioned in the Third Schedule had not been repealed) a loss incurred prior to the 6th day of April, 1976, could not be set off under section 25 of the Finance Act, 1964.

185 Terminal losses.

185.—Where a company carrying on a trade on the 6th day of April, 1976, ceases to do so within four years of coming within the charge to corporation tax in respect of it, section 18 (relief for terminal loss in trade) shall apply, with any necessary modifications, so as to enable relief to be given under that section against income tax for years of assessment before 1976-77 in so far as relief cannot be given against corporation tax, but so that—

(a) where relief is given against income tax, section 313 of the Income Tax Act, 1967 (amount of profits or gains for terminal loss relief), shall apply as it applies in relation to the corresponding relief under section 311 (terminal loss relief) of that Act; and

(b) where section 18 has effect by virtue of this section to reduce the profits of any period and income tax for more than one year of assessment has been computed wholly or partly by reference to those profits, such adjustments shall be made as may be necessary to prevent relief being given more than once.

186 Transitional relief in respect of certain payments and management expenses.

186.—The provisions of the Fifth Schedule shall have effect for the purpose of granting transitional relief in respect of certain payments and expenses of management.

187 Repayment of corporation profits tax.

187.—Where after the 5th day of April, 1976, any company has received repayment of any amount previously paid by it by way of corporation profits tax and in respect of which or part of which a deduction was made in computing profits or gains for purposes of income tax, the amount repaid shall, to the extent that it was so deducted, be treated as income of the accounting period in which the repayment is received and shall, notwithstanding the provisions of section 1 (introduction for companies of corporation tax), be charged to corporation tax at a rate equal to the standard rate for the year of assessment in which the accounting period ends.

188 Short title and construction.

188.—(1) This Act may be cited as the Corporation Tax Act, 1976.

(2) This Act, so far as it relates to income tax, shall be construed together with the Income Tax Acts, and, so far as it relates to capital gains tax, shall be construed together with the Capital Gains Tax Act, 1975.

FIRST SCHEDULE Adaptation of System of Capital Allowances

(2) “Chargeable period” means an accounting period of a company or a year of assessment; and

(a) a reference to a “chargeable period or its basis period” is a reference to the chargeable period if it is an accounting period and to the basis period for it if it is a year of assessment;

(b) a reference to a “chargeable period related to” expenditure, or a sale or other event, is a reference to the chargeable period in which, or to that in the basis period for which, the expenditure is incurred or the sale or other event takes place, and means the latter if, but only if, the chargeable period is a year of assessment.

(3) “Tax”, notwithstanding the definition in section 1 of the Income Tax Act, 1967, where neither corporation tax nor income tax is specified, means either of those taxes, and references to tax for a chargeable period shall be construed, in relation to corporation tax, as referring to the tax for any financial year which is chargeable in respect of that period.

(4) A reference to allowances or charges being made in taxing a trade is a reference to their being made in computing the trading income for corporation tax or in charging the profits or gains of the trade to income tax.

(5) Where it is provided that writing-down allowances shall be made in respect of any expenditure during a writing-down period of a specified length, there shall for any chargeable period wholly or partly comprised in the writing-down period be made an allowance equal to the appropriate fraction of the expenditure; and, subject to any provision to the contrary, the appropriate fraction is such fraction of the writing-down period as falls within the chargeable period:

Provided that the aggregate amount of the allowances made whether to the same or to different persons, together with the amount of any initial allowance (but not any investment allowance), shall not exceed the amount of the expenditure.

(6) Where the reference is partly to years of assessment before the year 1976-77—

(a) “writing-down allowance” includes an annual allowance, and

(b) an allowance on account of wear and tear of machinery or plant includes a deduction on account of wear and tear of machinery or plant,

in the sense which in the context those expressions had immediately before the commencement of this Act.

(7) Where any enactment which is referred to in subparagraph (1) provides for the amount of a writing-down allowance or an allowance on account of wear and tear of machinery or plant to be determined by a fraction or percentage, specified numerically, of any expenditure or other sum, or by reference to a percentage determined or deemed to be determined for a chargeable period of one year, then for a chargeable period of less than a year the fraction or percentage shall be proportionately reduced.

(a) references to a previous chargeable period or to a subsequent chargeable period, or to a time before, or a time after, a chargeable period, shall have effect in relation to a company as if the year 1975-76 or any earlier year of assessment preceded that company's first accounting period for corporation tax;

(b) in a case where an event gives rise to any allowance or charge as taking place in a chargeable period, an event taking place in the year 1974-75 or 1975-76 at a time falling also in a company's accounting period for corporation tax shall be taken into account as happening in that year and shall not be again taken into account, so as to duplicate the allowance or charge, as happening in the accounting period.

(2) Where it is provided that writing-down allowances are to be made for a specified period, allowances may be made for accounting periods of a company falling wholly or partly within the year 1974-75 or 1975-76, notwithstanding that allowances are also made for that year and, in reckoning the period for which allowances are to be made, the periods for which allowances are so made shall be added together, notwithstanding that the same time is (according to the calendar) counted twice.

(3) Subject to subparagraph (2), this paragraph shall not be taken to require any time to be counted twice in reckoning duration.

“241.—(1) Subject to the provisions of this Act, where a person carrying on a trade in any chargeable period has incurred capital expenditure on the provision of machinery or plant for the purposes of the trade, an allowance shall be made to him for that chargeable period on account of the wear and tear of any of the machinery or plant which belongs to him and is in use for the purposes of the trade at the end of that chargeable period or its basis period and the amount of the allowance shall be a sum equal to five-fourths of the amount considered by the Appeal Commissioners to be just and reasonable, as representing the diminished value by reason of wear and tear of the said machinery or plant during the chargeable period, and such allowance shall be made in taxing the trade:

Provided that where a person is carrying on a trade which consists of or includes the working of a mine or quarry or the smelting of ore, the allowance to be made under this subsection in respect of machinery or plant belonging to him and used in connection with the working of the mine or quarry or the smelting of the ore shall, if the person so elects, be such sum as is considered just and reasonable having regard to the period at the expiration of which the mine or quarry is likely to cease to be worked or the smelting of ore is likely to be discontinued and the probable value of the machinery or plant at the expiration of that period to the person carrying on the trade:

Provided also that the allowance to be made under this subsection—

(a) in respect of a vehicle suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles, or

(b) by virtue of an election under the first proviso to this subsection,

shall be computed as if ‘five-fourths’ in this subsection were deleted.

(2) Where machinery or plant is let to the person by whom the trade is carried on, on the terms of his being bound to maintain the same and deliver it over in good condition at the end of the lease, and provided that the burden of the wear and tear of the machinery or plant will in fact fall directly on him, then, for the purposes of this section, the capital expenditure on the provision of the machinery or plant shall be deemed to have been incurred by that person and the machinery or plant shall be deemed to belong to him.

(3) Where full effect cannot be given to any such allowance in any year owing to there being no profits or gains chargeable for that year, or owing to the profits or gains chargeable being less than the allowance, the allowance or part of the allowance to which effect has not been given, as the case may be, shall, for the purpose of making the assessment for the following year, be added to the amount of the allowance for wear and tear for that year, and deemed to be part of that allowance, or, if there is no such allowance for that year, be deemed to be the allowance for that year, and so on for succeeding years.

(4) Any claim in respect of the aforesaid allowance shall be included in the annual statement required to be delivered under this Act of the profits or gains of the trade for which the machinery or plant is used.

(5) Where machinery or plant is let upon such terms that the burden of the wear and tear thereof falls directly on the lessor, he shall be entitled, on making a claim to the inspector within twelve months after the end of the chargeable period, to an allowance on account of the wear and tear of the machinery or plant equal to the amount which might have been allowed if, during the period of the letting, the machinery or plant were in use for the purposes of a trade carried on by him.

(6) No allowance for wear and tear, or repayment on account of any such allowance, shall be made for any chargeable period if the allowance, when added to—

(a) the allowances on that account, and

(b) any initial allowances in relation to the machinery or plant under Chapter I of Part XV,

made for any previous chargeable periods to the person by whom the trade is carried on, will make the aggregate amount of the allowances exceed the actual cost to that person of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by way of renewal, improvement or reinstatement.

(7) Where an allowance is to be made to any person as representing the diminished value by reason of wear and tear during the chargeable period of any machinery or plant, the value at the commencement of that chargeable period of such machinery or plant shall be taken to be the actual cost to that person of such machinery or plant reduced by the total of any allowances made on account of wear and tear and any initial allowances made under Chapter I of Part XV for previous chargeable periods.

(8) Where an application is made to the Revenue Commissioners for the alteration of the amount of any allowance for wear and tear, the Revenue Commissioners, unless they are of opinion that the application is frivolous or vexatious, shall refer the case to the Board of Referees, and that Board shall, if they are satisfied that the application is made by or on behalf of any considerable number of persons engaged in any class of trade or business, take the application into their consideration and determine the allowance to be made.

In this subsection the expression ‘Board of Referees’ means a Board of Referees to be appointed for the purpose of this subsection by the Minister for Finance.

(9) (a) In the case of a person to whom under this section an allowance falls to be made in taxing his trade, his basis period for any year of assessment shall be the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D in respect of the trade in question or, where, by virtue of any provision of this Act, the profits or gains of any other period are to be taken to be the profits or gains of the said period, that other period.

(b) In the case of a person to whom an allowance under this section falls to be made by discharge or repayment of tax, his basis period for any year of assessment shall be the year of assessment itself.

(10) The preceding provisions of this section shall, with any necessary modifications, apply in relation to professions, employments and offices as they apply in relation to trades.”.

“242.—The provisions of this Act relating to the allowance to be made in respect of diminished value by reason of wear and tear shall have effect as if the references therein to diminished value by reason of wear and tear during the chargeable period of any machinery or plant included references to diminished value by reason of any machinery or plant having been temporarily out of use at any time during the chargeable period through circumstances attributable directly or indirectly, to the national emergency to which the resolution passed by each House of the Oireachtas on the 2nd day of September, 1939, related (including circumstances continuing after the termination of that emergency).”.

“243.—(1) In estimating the profits or gains of any trade, profession, employment or office there shall, if the person carrying on or holding the same so elects by notice in writing to the inspector, be allowed to be deducted as expenses incurred in any chargeable period so much of any amount expended in that chargeable period in replacing any machinery or plant provided before the 15th day of April, 1959, which has become obsolete as is equivalent to the cost of the machinery or plant replaced after deducting from that cost the total amount of any allowances which have at any time been made in taxing the trade or in charging the profits or gains of the profession, employment or office on account of the wear and tear of that machinery and plant, any initial allowances made in respect of that machinery and plant under Chapter I of Part XV and any sum realised by the sale of that machinery or plant.

(2) The provisions of sections 279 and 280 shall apply for the purpose of determining the amount which, under subsection (1), is to be allowed to be deducted as expenses in estimating the profits or gains of the trade, profession, employment or office as they apply for the purpose of determining the amount of a balancing allowance under Chapter II of Part XVI.”.

“244.—(1) In this section—

the expression ‘scientific research’ means any activities in the fields of natural or applied science for the extension of knowledge;

the word ‘asset’ includes a part of an asset;

the expression ‘expenditure on scientific research’ does not include any expenditure incurred in the acquisition of rights in, or arising out of, scientific research.

(2) Where a person carrying on a trade either—

(a) incurs, on or after the 6th day of April, 1946, non-capital expenditure on scientific research relating to the trade, or

(b) pays, on or after that date, any sum to a body carrying on scientific research and approved for the purposes of this section by the Minister for Finance or to an Irish university, in order that such body or university may undertake scientific research relating to the trade,

then, the expenditure so incurred or the sums so paid shall be deducted as an expense in computing the profits or gains of the trade.

(2A) Where, on or after the 6th day of April, 1968, a person carrying on a trade—

(a) incurs non-capital expenditure on scientific research or pays any sum to a body or university referred to in subsection (2) (b) in order that the body or university may undertake scientific research, and

(b) the expenditure so incurred or the sum so paid is not deductible as an expense under subsection (2) because the scientific research is not related to any trade being carried on by the person,

then, the expenditure so incurred or the sums so paid shall be deducted as an expense in computing the profits or gains of the person's trade.

(3) Where—

(a) on or after the 6th day of April, 1946, a person incurs capital expenditure on scientific research, and

(b) either—

(i) he is then carrying on a trade to which such expenditure relates, or

(ii) he subsequently sets up and commences a trade which is related to such research, and

(c) he applies to the inspector for an allowance under this subsection in respect of the said expenditure, and

(d) he so applies—

(i) in case the expenditure was incurred by him while carrying on the trade, within twelve months after the end of the chargeable period in which it was incurred, or

(ii) in case the expenditure was incurred by him before the setting up and commencement of the trade, within twelve months after the end of the chargeable period in which the trade was set up and commenced,

then, subject to the provisions of this section, there shall be made in taxing the trade for the chargeable period mentioned in whichever of subparagraphs (i) and (ii) of paragraph (d) is applicable, and for each of the following chargeable periods, an allowance equal to the same fraction of the expenditure as the chargeable period is of five years but so that the aggregate of the allowances made shall not exceed the amount of the expenditure:

Provided that, where, on or after the 6th day of April, 1968, a person carrying on a trade incurs capital expenditure on scientific research in respect of which an allowance cannot be made under the foregoing provisions of this subsection because the scientific research is not related to any trade being carried on by that person, there shall be made in taxing that person's trade for the chargeable period in which the expenditure was incurred an allowance equal to the amount of the expenditure.

(4) Where an asset, representing capital expenditure on scientific research, ceases at any time from any cause whatever to be used for such research, relating to the trade carried on by the person who incurred the expenditure, then—

(a) no allowance under this section in respect of that expenditure shall be made for any chargeable period after that in which the cessation takes place;

(b) if the total of the following, namely, the allowances already made under this section in respect of that expenditure and the value of the asset immediately before the cessation, is less than the said expenditure, there shall be made in taxing the trade for the chargeable period in which the cessation takes place an additional allowance equal to the amount of the deficiency;

(c) if the said total exceeds the said expenditure, the amount of the excess or the total of the allowances so made, whichever is the less, shall be treated as a trading receipt of the trade accruing immediately before the cessation;

(d) in the application of section 241 to an allowance made in respect of the asset for any chargeable period after that in which the cessation takes place, the actual cost of the asset shall be treated as being reduced by the total of the allowances made in respect of the asset under this section; and

(e) in the application of section 243 to any such allowance, the cost of the asset shall be treated as being reduced by the said total.

(5) In relation to capital expenditure on scientific research incurred on or after the 6th day of April, 1965, this section shall have effect—

(a) as if in subsection (3) the words ‘an allowance equal to the amount of the expenditure’ were substituted for the words ‘and for each of the following chargeable periods, an allowance equal to the same fraction of the expenditure as the chargeable period is of five years but so that the aggregate of the allowances made shall not exceed the amount of the expenditure’,

(b) as if paragraphs (a), (b) and (e) of subsection (4) were omitted and the following paragraph were substituted for paragraph (c)—

‘(c) an amount equal to the allowance made under this section in respect of that expenditure, or, if the value of the asset immediately before the cessation is less than that allowance, equal to that value, shall be treated as a trading receipt of the trade accruing immediately before the cessation;’,

(c) as if ‘the amount of the allowance effectively made’ were substituted for ‘the total of the allowances made’ in subsection (4) (d).

(6) Where an allowance under this section is made to a person for any chargeable period in respect of expenditure represented wholly or partly by assets, then, for that chargeable period no allowance in respect of those assets shall be made to that person under section 67, 241, 243 or 306.

(7) Section 241 (3) shall appply in relation to an allowance under subsection (3) of this section as it applies in relation to allowances in respect of wear and tear of machinery and plant.

(8) For the purposes of this section expenditure shall not be regarded as incurred by a person in so far as it is, or is to be, met directly or indirectly out of moneys provided by the Oireachtas or by any person other than the first-mentioned person.

(9) The same expenditure shall not be taken into account for any of the purposes of this section in relation to more than one trade.”.

“245.—(1) In this section—

‘mine’ means an underground excavation made for the purpose of getting minerals:

Provided that in relation to capital expenditure within the meaning of the section incurred on or after the 6th day of April, 1960, ‘mine’ means a mine which is operated for the purpose of obtaining, whether by underground or surface working, any scheduled mineral, mineral compound or mineral substance as defined in section 2 of the Minerals Development Act, 1940;

references to capital expenditure incurred in connection with a mine shall be construed as references to capital expenditure incurred—

(a) in the development of the mine on searching for or on discovering and testing mineral deposits or winning access thereto, or

(b) on the construction of any works which are of such a nature that when the mine has ceased to be operated they are likely to have so diminished in value that their value will be little or nothing,

but as excluding references to—

(c) any expenditure on the acquisition of the site of the mine or of the site of any such works or of rights in or over any such site, or

(d) any expenditure on the acquisition of, or of rights over, the deposits, or

(e) any expenditure on works constructed wholly or mainly for subjecting the raw product of the mine to any process except a process designed for preparing the raw product for use as such;

references to assets representing capital expenditure incurred in connection with a mine shall—

(a) be construed as including, in relation to expenditure on searching for, discovering and testing deposits, references to any information or other results obtained from any search, exploration or enquiry upon which the expenditure was incurred, and

(b) be construed as also including references to any part of such assets, and

(c) be construed as also including, in the case of any such assets destroyed or damaged, references to any insurance moneys or other compensation moneys in respect of such destruction or damage.

(2) Expenditure shall not, for the purposes of this section, be regarded as having been incurred by a person carrying on the trade of working a mine in so far as it has been or is to be met directly or indirectly out of moneys provided by the Oireachtas or by any other person (not being a person who has carried on the trade of working that mine).

(3) Any person, who carries on the trade of working a mine and who has, on or after the 6th day of April, 1946, incurred any capital expenditure in connection with the said mine, may apply for an allowance (in this section referred to as a mine development allowance) in respect of such capital expenditure.

(4) Application for a mine development allowance for any chargeable period may be made to the inspector not later than twelve months after the end of such period.

(5) The following provisions shall have effect in relation to the amount of a mine development allowance for any chargeable period in respect of any capital expenditure incurred in connection with a mine—

(a) the inspector shall estimate to the best of his judgment the life (in this subsection referred to as the estimated life) of the deposits, but shall not estimate such life at more than twenty years,

(b) the inspector shall then estimate the amount of the difference (in this subsection referred to as the estimated difference) between the said capital expenditure and the amount which, in his opinion, the assets representing the said capital expenditure are likely to be worth at the end of the estimated life,

(c) the inspector shall, subject to the provisions of this section, allow, as the mine development allowance for the said chargeable period, an amount equal to a sum which bears to the estimated difference the same proportion as the length of the said chargeable period bears to the length of the estimated life,

(d) if the said capital expenditure was incurred during the said chargeable period, then the said chargeable period shall, for the purposes of paragraph (c), be taken to comprise so much only of the said chargeable period as is subsequent to the date on which the said capital expenditure was incurred:

Provided that the total of the allowances shall not exceed the estimated difference.

(6) A mine development allowance to any person carrying on the trade of working a mine shall be made in taxing that trade and section 241 (3) shall apply in relation to the allowance as it applies in relation to allowances for wear and tear of machinery and plant.

(7) A mine development allowance shall not be made in respect of any capital expenditure incurred in connection with a mine in any case where the asset representing such capital expenditure is an asset in respect of which an allowance could be made under section 241, 243 or 306.

(8) Where a mine development allowance for any chargeable period has been made in respect of capital expenditure incurred in connection with a mine, then, for that chargeable period section 67 shall not apply as respects any such asset.

(9) Any capital expenditure incurred, on or after the 6th day of April, 1946, in connection with a mine by a person about to carry on the trade of working the said mine but before commencing such trade shall for the purposes of this section, be treated as if it had been incurred on the first day of the commencement of such trade.

(10) Where mine development allowances in respect of capital expenditure incurred in connection with a mine have been made and the mine has finally ceased to be operated—

(a) the inspector shall review the said mine development allowances,

(b) if, on such review, it appears that the amount of the difference (in this subsection referred to as the said difference) between the said capital expenditure and the amount which the assets, representing the said capital expenditure at such cessation, were worth at such cessation exceeds the total of the said mine development allowances, then further mine development allowances totalling in amount the excess may be made for any chargeable period (being the chargeable period in which the said mine has finally ceased to be operated or any previous chargeable period) so however that the total of such further mine development allowances shall not amount to more than the said excess, and if necessary effect may be given to this paragraph by way of repayment,

(c) if, on such review, it appears that the said difference is less than the total of the said mine development allowances, then, the deficiency or the total of the said mine development allowances, whichever is the less, shall be treated as a trading receipt of the trade of working the said mine accruing immediately before such cessation.

(11) Where the person (in this subsection referred to as the vendor) carrying on the trade of working a mine sells to any other person (not being a person who succeeds the vendor in the said trade) any asset representing capital expenditure incurred in connection with the said mine and by reference to which mine development allowances have been made, the following provisions shall have effect—

(a) if the total of the said mine development allowances when added to the sum realised on the sale of the said asset is less than the said capital expenditure, by any amount (in this subsection referred to as the unexhausted allowance), then, further mine development allowances may be granted to the vendor in respect of any chargeable period (being the chargeable period of such sale or any previous chargeable period), so however that the total of such further mine development allowances shall not exceed the unexhausted allowance,

(b) if the total of the said mine development allowances when added to the sum realised on the sale of the said asset exceeds the said capital expenditure, then, the amount of such excess or the said total of the mine development allowances, whichever is the less, shall be treated as a trade receipt of the said trade accruing immediately before the said sale.

(12) Where—

(a) mine development allowances in respect of capital expenditure incurred in connection with a mine have been made to a person (in this subsection referred to as the original trader) carrying on the trade of working the mine, and

(b) another person (in this subsection referred to as the successor) succeeds to the said trade,

mine development allowances may continue to be made in respect of the said capital expenditure to the successor, but in no case shall the amount of such allowances exceed the amount to which the original trader would have been entitled if he had continued to carry on the said trade.

(13) Where for any chargeable period a company is entitled to relief from tax by virtue of Chapter II or Chapter III of Part XXV then, for the purposes of subsections (5), (10), (11) and (12), there shall be deemed to have been made, for that chargeable period in respect of any expenditure, the full mine development allowance which, on due claim, could have been made for that chargeable period in respect of that expenditure, unless that allowance has in fact been made.

(14) An appeal to the Appeal Commissioners shall lie on any question arising under this section in like manner as an appeal would lie against an assessment and the provisions of this Act relating to appeals shall apply and have effect accordingly.”.

“246.—(1) Where a person carrying on a trade incurs capital expenditure on the purchase of a new ship for the purposes of the trade, there shall be made to him, for the chargeable period related to the expenditure, an allowance (in this Chapter referred to as a shipping investment allowance) equal to two-fifths of the expenditure, and such allowance shall be made in taxing the trade and shall be in substitution for and not in addition to an initial allowance under Chapter I of Part XV other than an initial allowance made by virtue of section 251 (4) of this Act.

(1A) (a) A shipping investment allowance shall not be made under subsection (1) in respect of any capital expenditure which is taken into account for the purposes of any grant made towards that expenditure by the Minister for Transport and Power under the Shipping Investment Grants Act, 1969.

(b) Where a shipping investment allowance has been made under subsection (1) in respect of capital expenditure which is taken into account for the purposes of such a grant as is mentioned in paragraph (a), the shipping investment allowance shall be withdrawn and all such additional assessments and adjustments of assessments shall be made as may be necessary as a consequence of the withdrawal of a shipping investment allowance or the substitution therefor of an initial allowance under Chapter I of Part XV.

(2) For the purposes of this Chapter, the day on which any expenditure is incurred shall be taken to be the day when the sum in question becomes payable.

(3) Any claim by a person for an allowance under this section in taxing his trade shall be included in the annual statement required to be delivered under this Act of the profits or gains thereof and shall be accompanied by a certificate signed by the claimant, which shall be deemed to form part of the claim, stating that the expenditure was incurred on the purchase of a new ship and giving such particulars as show that the allowance falls to be made.

(4) In this section and the subsequent sections of this Chapter ‘new’ means unused and not secondhand.”.

“247.—(1) For the purposes of ascertaining the amount of any allowance to be made to any person under section 241 (1) as representing the diminished value by reason of wear and tear during the chargeable period of any ship, no account shall be taken of a shipping investment allowance in determining the value of the ship at the commencement of the chargeable period.

(2) In section 241 (6) ‘the allowances on that account, and’, and the expression ‘the allowances’ where that expression occurs before ‘exceed the actual cost’, shall each be construed as not including a reference to any shipping investment allowance made to the person by whom the trade is carried on.

(3) Section 243 shall be taken as not requiring a deduction of any shipping investment allowance from the cost of any ship for the purposes of that section.”.

“248.—Section 241 (3) shall apply in relation to a shipping investment allowance as it applies in relation to an allowance in respect of wear and tear of machinery or plant.”.

“249.—(1) In this Chapter, as it applies for income tax purposes, ‘basis period’ has the meaning assigned to it by the following provisions of this section.

(2) In the case of a person to whom an allowance falls to be made under this Chapter, his basis period for any year of assessment shall be the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D in respect of the trade in question or, where, by virtue of any provision of this Act, the profits or gains of any other period are to be taken to be the profits or gains of the said period, that other period:

Provided that, in the case of any trade—

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

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

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

(3) (a) Any reference in the proviso to subsection (2) to the permanent discontinuance of a trade shall be construed as including a reference to the occurring of any event which, under any of the provisions of this Act, is to be treated as equivalent to the permanent discontinuance of a trade.

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

“251.—(1) Subject to the provisions of this Act, where a person carrying on a trade the profits or gains of which are chargeable under Case I of Schedule D, incurs capital expenditure on the provision, for the purposes of the trade, of new machinery or new plant, other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles, there shall be made to him, for the chargeable period related to the expenditure, an allowance (in this Chapter referred to as an initial allowance) equal to one-fifth of the expenditure, and such allowance shall be made in taxing the trade.

(2) Any expenditure incurred for the purposes of a trade by a person about to carry it on shall be treated for the purposes of subsection (1) as if it had been incurred by that person on the first day on which he does carry it on.

(3) Subsections (1) and (2) shall not apply to any expenditure incurred before the 6th day of April, 1956.

(4) Notwithstanding anything in the preceding provisions of this section, this Chapter shall have effect—

(a) in relation to capital expenditure incurred on or after the 14th day of December, 1961, and before the 1st day of April, 1967, as if ‘two-fifths’ were substituted for ‘one-fifth’ in subsection (1),

(b) in relation to capital expenditure incurred on or after the 1st day of April, 1967, and before the 1st day of April, 1968, as if ‘one-half’ were substituted for ‘one-fifth’ in subsection (1),

(c) in relation to capital expenditure incurred on or after the 1st day of April, 1968, and before the 1st day of April, 1971, as if ‘three-fifths’ were substituted for ‘one-fifth’ in subsection (1), and

(d) in relation to capital expenditure incurred on or after the 1st day of April, 1971, and before the 1st day of April, 1977, as if ‘five-fifths’ were substituted for ‘one-fifth’ in subsection (1).

(5) Any claim by a person for an allowance under this section in taxing his trade shall be included in the annual statement required to be delivered under this Act of the profits or gains thereof and shall be accompanied by a certificate signed by the claimant, which shall be deemed to form part of the claim, stating that the expenditure was incurred on new machinery or new plant and giving such particulars as show that the allowance falls to be made.

(6) In this section ‘new’ means unused and not secondhand, provided that a ship shall be deemed to be new even if it has been used or is secondhand.”.

“252.—Section 241 (2) (3) (5) shall apply in relation to an initial allowance as those subsections apply in relation to allowances in respect of wear and tear of machinery or plant.”.

“254.—(1) (a) Subject to the provisions of this Act, where a person incurs capital expenditure on the construction of a building or structure which is to be an industrial building or structure occupied for the purposes of a trade carried on either by him or by such a lessee as is mentioned in paragraph (b) there shall be made to the person who incurred the expenditure, for the appropriate chargeable period, an allowance (in this Chapter referred to as an industrial building allowance) equal to one-tenth thereof.

(b) The lessee referred to in paragraph (a) is a lessee occupying the building or structure on the construction of which the expenditure was incurred under a lease to which the relevant interest is reversionary.

(c) In this subsection—

‘appropriate chargeable period’ means, in relation to any person who has incurred expenditure on the construction of a building or structure, the chargeable period related to the expenditure or, if it is later, the chargeable period related to the event (which shall be regarded as an event within the meaning of paragraph 1 (2) (b) of the First Schedule to the Corporation Tax Act, 1976), such event being the commencement of the tenancy in a case in which the first use to which the building or structure is put is a use by a person occupying it by virtue of a tenancy to which the relevant interest is reversionary;

‘lease’ and ‘lessee’ have the same meanings as in Part XVI;

‘the relevant interest’ has the same meaning as in Chapter I of Part XVI.

(d) (i) Except in the case mentioned in subparagraph (ii), any industrial building allowance made to a person shall be made to him in taxing his trade or in charging his income under Case V of Schedule D as the case may require.

(ii) An industrial building allowance shall be made to a person by discharge or repayment of tax if his interest in the building or structure is subject to any lease when the expenditure is incurred or becomes subject to any lease before the building or structure is first used for any purpose and, where it is so made, subsection (5) shall not apply:

Provided that this subparagraph shall not apply as respects income chargeable under Case V of Schedule D.

(e) Section 267 (5) and section 296 shall have effect in relation to an industrial building allowance which is to be made in charging income under Case V of Schedule D or by discharge or repayment of tax as they have effect in relation to an allowance under Chapter I of Part XVI which is to be so made.

(2) Notwithstanding anything in subsection (1), in relation to capital expenditure incurred on or after the 14th day of December, 1961, and before the 1st day of April, 1975, this Chapter shall have effect as if ‘one-fifth’ were substituted for ‘one-tenth’ in subsection (1):

Provided that this subsection shall not have effect in relation to capital expenditure incurred on or after the 1st day of January, 1960, on the construction of a building or structure which falls to be regarded as an industrial building or structure by reason of its use for the purposes of the trade of hotel-keeping or in relation to capital expenditure incurred on the construction of a building or structure in respect of which an allowance under this Chapter falls to be made by virtue of section 255 (1) (c).

(2A) Notwithstanding anything contained in subsections (1) and (2), this Chapter shall have effect—

(a) in relation to capital expenditure incurred on or after the 16th day of January, 1975, and before the 1st day of April, 1977, on the construction of a building or structure in respect of which an allowance under this Chapter falls to be made by reason of its use for a purpose specified in paragraph (a) or (b) of section 255 (1), as if ‘one-half’ were substituted for ‘one-tenth’, and

(b) in relation to capital expenditure incurred on or after the 6th day of April, 1974, on the construction of a building or structure in respect of which an allowance under this Chapter falls to be made by reason of its use for a purpose specified in paragraph (c) of section 255 (1), as if ‘one-fifth’ were substituted for ‘one-tenth’.

(3) Notwithstanding any other provision of this section, no industrial building allowance shall be made in respect of any expenditure on a building or structure if the building or structure, when it comes to be used, is not an industrial building or structure, and where an industrial building allowance has been granted in respect of any expenditure on any such building or structure, any necessary additional assessments may be made to give effect to this subsection.

(4) For the purposes of this section—

(a) any expenditure incurred for the purposes of a trade by a person about to carry it on shall be treated as if it had been incurred by that person on the first day on which he does carry it on, and

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

(5) Section 241 (3) shall apply in relation to an allowance under this section as it applies in relation to an allowance in respect of wear and tear of machinery or plant.

(6) Any claim by a person for an allowance under this section in charging profits or gains of any description shall be included in the annual statement required to be delivered under this Act of those profits or gains and shall be accompanied by a certificate signed by the claimant, which shall be deemed to form part of the claim, stating that the expenditure was incurred on the construction of an industrial building or structure and giving such particulars as show that the allowance falls to be made.”.

“256.—A reference in this Chapter to expenditure incurred on the construction of a building or structure does not include—

(a) any expenditure incurred on the acquisition of, or of rights in or over, any land, or

(b) any expenditure on the provision of machinery or plant or on any asset which is treated for any chargeable period as machinery or plant, or

(c) any expenditure in respect of which an allowance is or may be made, for the same or for any other chargeable period under section 244 (3) or under section 245.”.

“258.—In relation to industrial building allowances for chargeable periods beginning on or after the 6th day of April, 1959, other than amounts carried forward from any year of assessment ended before that date, the following provisions of this Chapter shall have effect as from the commencement of the Finance (Miscellaneous Provisions) Act, 1956—

(a) section 255 (1) (b) section 255 (2),

(b) section 256 (b) (c), and

(c) section 257.”.

“259.—An appeal to the Appeal Commissioners shall lie on any question arising under this Chapter in like manner as an appeal would lie against an assessment to tax, and the provisions of this Act relating to appeals shall apply and have effect accordingly.”.

“260.—For the purposes of sections 251 and 254, capital expenditure shall not include any expenditure which is allowed to be deducted in computing, for the purposes of tax, the profits or gains of a trade or profession carried on by the person incurring the expenditure.”.

“262.—(1) In this Part, as it applies for income tax purposes, ‘basis period’ has the meaning assigned to it by the following provisions of this section.

(2) In the case of a person to whom an allowance falls to be made under this Part, his basis period for any year of assessment shall be the period on the profits or gains of which income tax for that year falls to be finally computed under Case I or Case II of Schedule D in respect of the trade or profession in question or under Case V of Schedule D in respect of income arising from rents or receipts in respect of premises or easements or, where, by virtue of any provision of this Act, the profits or gains or income of any other period are to be taken to be the profits or gains or income of the said period, that other period:

Provided that—

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

(b) where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment, then, unless the second-mentioned year of assessment is the year of the permanent discontinuance of the trade or profession or of the cessation of the single source of profits or gains mentioned in section 81 (2), the interval shall be deemed to be part of the second basis period; and

(c) where there is an interval between the end of the basis period for the year of assessment preceding that in which the trade or profession is permanently discontinued or the said single source ceases and the basis period for the year in which the permanent discontinuance or the cessation occurs, the interval shall be deemed to form part of the first basis period.

(3) (a) Any reference in the proviso to subsection (2) to the permanent discontinuance of a trade or profession shall be construed as including a reference to the occurring of any event which, under any of the provisions of this Act, is to be treated as equivalent to the permanent discontinuance of a trade or profession.

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

(4) Nothing in subsection (2) or (3) applies in relation to an allowance under Chapter II falling to be made to a person by discharge or repayment of tax and, in relation to that allowance, his basis period for any year of assessment shall be the year of assessment itself.”.

“264.—(1) Subject to the provisions of this Part, where—

(a) any person is, at the end of a chargeable period or its basis period, entitled to an interest in a building or structure to which this section applies,

(b) at the end of the said chargeable period or its basis period, the building or structure is an industrial building or structure, and

(c) that interest is the relevant interest in relation to the capital expenditure incurred on the construction of that building or structure,

an allowance (in this Chapter referred to as a writing-down allowance) equal to one-fiftieth of that expenditure shall be made to him for that chargeable period:

Provided that—

(i) in relation to a building or structure the capital expenditure on the construction of which has been incurred on or after the 1st day of January, 1960, and which falls to be regarded as an industrial building or structure by reason of its use for the purposes of the trade of hotel-keeping and in relation to a building or structure which falls to be regarded as an industrial building or structure by reason of its use for the purposes of growing fruit, vegetables or other produce in the course of a trade of market gardening within the meaning of section 54, this Part shall have effect as if ‘one-tenth’ were substituted for ‘one-fiftieth’ in the foregoing provisions of this subsection, and

(ii) in relation to capital expenditure incurred on or after the 16th day of January, 1975, and before the 1st day of April, 1977, this Part shall have effect as if ‘one-twenty-fifth’ were substituted for ‘one-fiftieth’ in the foregoing provisions of this subsection.

(2) A building or structure is one to which this section applies, if, and only if, the capital expenditure incurred on the construction of it has been incurred on or after the 30th day of September, 1956.

(3) Where, at any time on or after the 15th day of April, 1959, the interest in a building or structure which is the relevant interest in relation to any expenditure is sold while the building or structure is an industrial building or structure, then (subject to any further adjustment under this subsection on a later sale) the writing-down allowance for any chargeable period, if that chargeable period or its basis period ends after the time of the sale, shall be the residue (as defined in the provisions of this Chapter relating to the writing off of expenditure) of that expenditure immediately after the sale, reduced in the proportion (if it is less than one) which the length of the chargeable period bears to the part unexpired at the date of the sale of the period of fifty years beginning with the time when the building or structure was first used:

Provided that—

(i) in relation to a building or structure the capital expenditure on the construction of which has been incurred on or after the 1st day of January, 1960, and which falls to be regarded as an industrial building or structure within the meaning of section 255 (1) by reason of its use for a purpose specified in paragraph (c) or (d) of that subsection, this Part shall have effect as if ‘ten years’ were substituted for ‘fifty years’ in the foregoing provisions of this subsection, and