Finance Act , 1986

PART I Income Tax, Corporation Tax and Capital Gains Tax

Chapter I Income Tax

1 Amendment of section 2 (age exemption) of Finance Act, 1980.

1.—Section 2 of the Finance Act, 1980, is hereby amended, as respects the year 1986-87 and subsequent years of assessment, by the substitution in subsection (6) of “£6,300” for “£6,000” (inserted by the Finance Act, 1985), of “£7,350” for “£7,000” (inserted by the Finance Act, 1985), of “£3,150” for “£3,000” (inserted by the Finance Act, 1985) and of “£3,675” for “£3,500” (inserted by the Finance Act, 1985), and the said subsection (6), as so amended, is set out in the Table to this section.

TABLE

(6) In this section “the specified amount” means—

(a) in a case where the individual would, apart from this section, be entitled to a deduction specified in paragraph (a) of the said section 138, £6,300:

Provided that, if at any time during the year of assessment either the individual or his spouse was of the age of seventy-five years or upwards, “the specified amount” means £7,350;

(b) in any other case, £3,150:

Provided that, if at any time during the year of assessment the individual was of the age of seventy-five years or upwards, “the specified amount” means £3,675.

2 Alteration of rates of income tax.

2.—Section 2 of the Finance Act, 1984, is hereby amended, as respects the year 1986-87 and subsequent years of assessment, by the substitution of the following Table for the Table to the said section:

“TABLE

PART I

Part of taxable income	Rate of tax		Description of rate
(1)	(2)		(3)
The first £4,700	35 per cent.		the standard rate
The next £2,800	48 per cent.	}	the higher rates
The remainder	58 per cent.

PART II

Part of taxable income	Rate of tax		Description of rate
(1)	(2)		(3)
The first £9,400	35 per cent.		the standard rate
The next £5,600	48 per cent.	}	the higher rates
The remainder	58 per cent.

”

3 Personal reliefs.

3.—(1) Where a deduction falls to be made from the total income of an individual for the year 1986-87 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 1985-86	Amount to be deducted from total income for 1986-87 and subsequent years
(1)	(2)	(3)
	£	£
Income Tax Act, 1967:
section 138
(married man)	3,800	4,000
(widowed person)	2,400	2,500
(widow bereaved in the year of assessment)	3,800	4,000
(single person)	1,900	2,000
section 138A
(additional allowance for widows and others in respect of children)
(widowed person)	1,400	1,500
(others)	1,900	2,000
section 138B
(employee allowance)	600	700
Finance Act, 1974:
section 8
(age allowance, single or widowed person)	100	200
(age allowance, married man)	200	400

(2) Section 2 of the Finance Act, 1981, section 2 of the Finance Act, 1982, and sections 3 and 4 of the Finance Act, 1985, shall have effect subject to the provisions of this section.

(3) The First Schedule shall have effect for the purposes of supplementing subsection (1).

4 Amendment of section 141 (children) of Income Tax Act, 1967.

4.—The Income Tax Act, 1967, is hereby amended, as respects the year 1986-87 and subsequent years of assessment, by the substitution of the following section for section 141:

“Incapacitated children.

141.—(1) If the claimant proves that he has living at any time during the year of assessment any child—

(a) who is under the age of 16 years and is permanently incapacitated by reason of mental or physical infirmity, or

(b) who, if over the age of 16 years at the commencement of that year, is permanently incapacitated by reason of mental or physical infirmity from maintaining himself and had become so permanently incapacitated before he had attained the age of 21 years or had become so permanently incapacitated after attaining the age of 21 years but while he had been in receipt of full-time instruction at any university, college, school or other educational establishment,

he shall, subject to the provisions of this section, be entitled in respect of each such child to a deduction of £600:

Provided that—

(i) a child who is under the age of 16 years shall be regarded as permanently incapacitated by reason of mental or physical infirmity only if the infirmity is such that there would be a reasonable expectation that, if the child were over the age of 16 years, he would be incapacitated from maintaining himself,

(ii) in the case of a child to whom paragraph (b) applies, the deduction shall be £600 or the amount expended by the claimant in the year of assessment on the maintenance of the child, whichever is the lesser, and

(iii) any deduction under this subsection shall be in substitution for, and not in addition to, any deduction to which the claimant might be entitled in respect of the same child under section 142.

(2) If the claimant proves that for the year of assessment he has the custody of and maintains at his own expense any child who, but for the fact that he is not a child of the claimant, would be such a child as is referred to in subsection (1) and that neither he nor any other individual is entitled to a deduction in respect of the same child under subsection (1) or under any of the other provisions of this Part, or, if any other individual is entitled to such a deduction, that that other individual has relinquished his claim thereto, he shall be entitled in respect of the child to the same deduction as if the child were a child of his.

(3) (a) The reference in subsection (1) to a child receiving full-time instruction at an educational establishment shall include a reference to a child undergoing training by any person (hereafter in this subsection referred to as ‘the employer’) for any trade or profession in such circumstances that the child is required to devote the whole of his time to the training for a period of not less than two years.

(b) For the purpose of a claim in respect of a child undergoing training the inspector may require the employer to furnish particulars with respect to the training of the child in such form as may be prescribed by the Revenue Commissioners.

(4) No deduction shall be allowed under this section in respect of any child who is entitled in his own right to an income exceeding £720 a year, except that, if the amount of the excess is less than the deduction which apart from this subsection would be allowable, a deduction reduced by that amount shall be allowed:

Provided that in calculating the income of the child for the purposes of the foregoing provision no account shall be taken of any income to which the child is entitled as the holder of a scholarship, bursary, or other similar educational endowment.

(5) If any question arises as to whether any person is entitled to an allowance under this section in respect of a child who is over the age of 21 years as being a child who had become permanently incapacitated by reason of mental or physical infirmity from maintaining himself after attaining that age but while in receipt of such full-time instruction as aforesaid, the Revenue Commissioners may consult the Minister for Education.

(6) Where, for any year of assessment, two or more individuals are or would, but for the provisions of this subsection, be entitled under this section to relief in respect of the same child, the following provisions shall have effect, that is to say:—

(a) only one deduction under this section shall be allowed in respect of such child;

(b) where such child is maintained by one parent only, that parent only shall be entitled to claim such deduction;

(c) where such child is maintained jointly by both parents, each parent shall be entitled to claim such part of such deduction as is proportionate to the amount expended by him or her on the maintenance of such child; and

(d) in ascertaining for the purposes of this subsection whether a parent maintains a child and, if so, to what extent, any payment made by such parent for or towards the maintenance of such child which such parent is entitled to deduct in computing his or her total income for the purposes of this Act shall be deemed not to be a payment for or towards the maintenance of such child.

(7) In the preceding provisions of this section ‘child’ includes a stepchild and an illegitimate child whose parents have married each other after his birth and a child in respect of whom an adoption order under the Adoption Acts, 1952 to 1976, is in force.”.

5 Amendment of section 12 (relief for health expenses) of Finance Act, 1967.

5.—Section 12 of the Finance Act, 1967, is hereby amended, as respects the year 1986-87 and subsequent years of assessment, by the insertion, in the definition of “dependant” in subsection (1), of the following after paragraph (b):

“and

(c) a child who, for the year of assessment—

(i) (I) is under the age of 16 years, or

(II) if over the age of 16 years at the commencement of the year of assessment, is receiving full-time instruction at any university, college, school or other educational establishment, and

(ii) is a child of the individual or, not being such a child, is in the custody of the individual and is maintained by the individual at his own expense for the whole or part of the year of assessment:

Provided that the provisions of subsections (3), (4), (5) and (7) of section 141 (inserted by the Finance Act, 1986) shall, with any necessary modifications, apply for the purposes of determining whether relief is to be granted under this section as they apply in determining whether a deduction is to be allowed under that section, except that in a case where the child's income exceeds the amount specified in the said subsection (4) relief under this section shall not be allowed;”.

6 Amendment of section 6 (special allowance in respect of P.R.S.I. for 1982-83) of Finance Act, 1982.

6.—Section 6 of the Finance Act, 1982, shall have effect for the purpose of ascertaining the amount of income on which an individual referred to therein is to be charged to income tax for the year 1986-87, as if in subsection (2)—

(a) “1986-87” were substituted for “1982-83”, and

(b) “£286” were substituted for “£312”, in each place where it occurs.

7 Amendment of section 8 (permanent health benefit schemes) of Finance Act, 1979.

7.—Section 8 of the Finance Act, 1979, is hereby amended by the insertion after subsection (5) of the following subsection:

“(6) (a) A policy of permanent health insurance, sickness insurance or other similar insurance issued in respect of an insurance made on or after the 6th day of April, 1986, shall be a permanent health benefit scheme within the meaning of this section if it conforms with a form which, at the time the policy is issued, is either—

(i) a standard form approved by the Revenue Commissioners as a standard form of permanent health benefit scheme; or

(ii) a form varying from a standard form so approved in no other respect than by making such alterations thereto as are, at the time the policy is issued, approved by the Revenue Commissioners as being compatible with a permanent health benefit scheme when made to that standard form and satisfying any conditions subject to which the alterations are so approved.

(b) In approving a policy as a standard form of permanent health benefit scheme in pursuance of paragraph (a), the Revenue Commissioners may disregard any provision of the policy which appears to them insignificant.”.

8 Relief for gifts to Cospóir.

8.—(1) In this section—

“Cospóir” means the National Sports Council (an Chomhairle Náisiúnta Spóirt) which was established by the Minister of State at the Department of Education on the 10th day of February, 1978;

“tax” means income tax or corporation tax, as the case may be.

(2) (a) This section applies to a gift of money which, on or after the 6th day of April, 1986, is made to the Minister for Education for the benefit of Cospóir and is not deductible in computing for the purposes of tax the profits or gains of a trade or profession or is not income to which the provisions of section 439 of the Income Tax Act, 1967, apply.

(b) The Revenue Commissioners may consult with the Minister for Education in relation to any question which may arise in connection with paragraph (a).

(3) Where a person proves that he has made a gift to which this section applies and claims relief from tax by reference thereto, the provisions of subsection (4) or, as the case may be, subsection (5) shall apply:

Provided that, in determining the net amount of the gift for the purposes of those subsections, the amount or value of any consideration received by the said person as a result of making the gift, whether received directly or indirectly from Cospóir or any other person, shall be deducted from the amount of the gift.

(4) For the purposes of income tax for the year of assessment in which a person makes a gift to which this section applies, the net amount thereof shall, subject to subsection (5), be deducted from or set off against any income of the person chargeable to income tax for that year and tax shall, where necessary, be discharged or repaid accordingly; and the total income of the person or, where the person is a wife whose husband is assessed to income tax in accordance with the provisions of section 194 (inserted by the Finance Act, 1980) of the Income Tax Act, 1967, the total income of the husband shall be calculated accordingly:

Provided that relief under this section shall not be given to a person for a year of assessment—

(a) if the net amount of the gift (or the aggregate of the net amounts of gifts) made by him in that year, being a gift or gifts, as the case may be, to which this section applies, does not exceed £100, or

(b) to the extent to which the net amount of the gift (or the aggregate of the net amounts of gifts) made by him in that year, being a gift or gifts, as the case may be, to which this section applies, exceeds £10,000.

(5) Where a gift to which this section applies is made by a company—

(a) the net amount thereof shall, for the purposes of corporation tax, be deemed to be a loss incurred by the company in a separate trade in the accounting period of the company in which the gift is made, and

(b) the references in the proviso to subsection (4) to a year of assessment shall be construed as references to an accounting period of the company.

9 Tax treatment of directors of companies and employees granted rights to acquire shares or other assets.

9.—(1) (a) In this section, save where the context otherwise requires—

“company” has the meaning assigned to it by section 1 of the Corporation Tax Act, 1976;

“director” and “employee” have the meanings respectively assigned to them by section 13 (1) of the Finance Act, 1972;

“right” means a right to acquire any asset or assets including shares in any company;

“market value” shall be construed in accordance with section 49 of the Capital Gains Tax Act, 1975;

“shares” includes securities (within the meaning of Part IX of the Corporation Tax Act, 1976) and stock.

(b) In this section—

(i) references to the release of a right include references to agreeing to the restriction of the exercise of the right;

(ii) any question whether a person is connected with another shall be determined in accordance with the provisions of section 157 of the Corporation Tax Act, 1976;

(iii) a person shall be regarded as acquiring a right as a director of a company or as an employee—

(I) if by reason of his office or employment it is granted to him, or to another person who assigns the right to him, and

(II) if section 76 (3) of the Income Tax Act, 1967, does not apply in charging to tax the profits or gains of that office or employment,

and clauses (I) and (II) shall apply to a right granted by reason of a person's office or employment before he has commenced to hold it or after he has ceased to hold it as they would apply if he had commenced to hold the office or employment or had not ceased to hold the office or employment, as the case may be.

(2) Where a person realises a gain by the exercise of, or by the assignment or release of, a right obtained by that person on or after the 6th day of April, 1986, as a director of a company or employee, he shall be chargeable to tax under Schedule E for the year of assessment in which the gain is so realised on an amount equal to the amount of his gain, as computed in accordance with this section.

(3) Subject to subsection (5), where tax may by virtue of this section become chargeable in respect of any gain which may be realised by the exercise of a right, tax shall not be chargeable under any other provision of the Tax Acts in respect of the receipt of the right.

(4) The gain realised by—