Finance Act , 1986

33.—(1) Notwithstanding any other provision of the Tax Acts, this section shall have effect for the purpose of regulating the time and manner in which appropriate tax in relation to a payment of relevant interest shall be accounted for and paid.

(2) Subject to subsection (5), a relevant deposit taker shall, for the year 1986-87 and for each subsequent year of assessment, make, within 15 days from the end of the year of assessment, a return to the Collector-General of the relevant interest paid by it in that year and of the appropriate tax in relation to the payment of that interest.

(3) The appropriate tax in relation to a payment of relevant interest which is required to be included in a return shall be due at the time by which the return is to be made and shall be paid by the relevant deposit taker to the Collector-General, and the appropriate tax so due shall be payable by the relevant deposit taker without the making of an assessment; but appropriate tax which has become due as aforesaid may be assessed on the relevant deposit taker without the making of an assessment; but appropriate tax which has become due as aforesaid may be assessed on the relevant deposit taker (whether or not it has been paid when the assessment is made) if that tax or any part of it is not paid on or before the due date.

(4) Notwithstanding subsection (3), a relevant deposit taker shall, for each year of assessment (being the year 1986-87 or any subsequent year of assessment) pay to the Collector-General within 15 days from the 5th day of October in that year of assessment an amount on account of appropriate tax which shall be not less than the amount of appropriate tax which would be due and payable by it for that year of assessment in accordance with the said subsection (3) if the total amount of the relevant interest which had accrued (interest being, for this purpose, treated, if not otherwise so treated, as accruing from day to day) in the period commencing on the 6th day of April and ending on the 5th day of October in that year of assessment on all relevant deposits held by the relevant deposit taker in that period (and no more) had been paid by it in that year of assessment; and any amount on account of appropriate tax so paid by the relevant deposit taker for a year of assessment shall be treated as far as may be as a payment on account of any appropriate tax due and payable by it for that year of assessment under the said subsection (3):

Provided that, where the amount on account of appropriate tax paid by a relevant deposit taker for a year of assessment under this subsection exceeds the amount of appropriate tax due and payable by it for that year of assessment under the said subsection (3), the excess shall be carried forward and shall be set off against any amount due and payable under this subsection or the said subsection (3) by the relevant deposit taker for any subsequent year of assessment (any such set-off being effected as far as may be against an amount so due and payable at an earlier date rather than at a later date).

(5) (a) Any amount on account of appropriate tax payable by a relevant deposit taker under subsection (4) shall be so payable without the making of an assessment,

(b) all the provisions of this Chapter relating to the collection and recovery of appropriate tax shall apply with any necessary modifications to the collection and recovery of any amount on account of appropriate tax, and

(c) a return required to be made by a relevant deposit taker for a year of assessment shall contain a statement of the amount of interest in respect of which an amount on account of appropriate tax is due and payable by the relevant deposit taker for that year of assessment and of the amount on account of appropriate tax so due and payable; and a return shall be so required to be made by a relevant deposit taker for a year of assessment notwithstanding that no relevant interest was paid by it in that year of assessment.

(6) If it appears to the inspector that there is any amount of appropriate tax in relation to a payment of relevant interest which ought to have been and has not been included in a return, or if the inspector is dissatisfied with any return, he may make an assessment on the relevant deposit taker to the best of his judgment; and any amount of appropriate tax in relation to a payment of relevant interest due under an assessment made by virtue of this subsection shall be treated for the purposes of interest on unpaid tax as having been payable at the time when it would have been payable if a correct return had been made.

(7) Where any item has been incorrectly included in a return as a payment of relevant interest, the inspector may make such assessments, adjustments or set-offs as may in his judgment be required for securing that the resulting liabilities to tax (including interest on unpaid tax) whether of the relevant deposit taker or any other person are, so far as possible, the same as they would have been if the item had not been so included.

(8) (a) Any appropriate tax assessed on a relevant deposit taker under this Chapter shall be due within one month after the issue of the notice of assessment (unless that tax or any amount treated as an amount on account of it is due earlier under subsection (3) or (4)) subject to any appeal against the assessment, but no such appeal shall affect the date when any amount is due under the said subsection (3) or (4), and

(b) on the determination of an appeal against an assessment under this Chapter any appropriate tax overpaid shall be repaid.

(9) (a) All the provisions of the Income Tax Acts relating to—

(i) assessments to income tax,

(ii) appeals against such assessments (including the rehearing of appeals and the statement of a case for the opinion of the High Court), and

(iii) the collection and recovery of income tax,

shall, so far as they are applicable, apply to the assessment, collection and recovery of appropriate tax;

(b) any amount of appropriate tax or amount on account of appropriate tax payable in accordance with this Chapter without the making of an assessment shall carry interest at the rate of 1.25 per cent. for each month or part of a month from the date when the amount becomes due and payable until payment;

(c) the provisions of subsections (3) to (5) of section 550 of the Income Tax Act, 1967, shall apply in relation to interest payable under paragraph (b) as they apply in relation to interest payable under the said section 550;

(d) in its application to any appropriate tax charged by any assessment made in accordance with this Chapter, section 550 of the Income Tax Act, 1967, shall have effect with the omission of the proviso to subsection (1) and subsections (2) and (2A); and

(e) notwithstanding anything in the Income Tax Acts, the provisions of section 419 of the Income Tax Act, 1967, and section 30 of the Finance Act, 1976, shall not apply in relation to any appropriate tax which is charged by an assessment made in accordance with this Chapter.

(10) Every return shall be in a form prescribed by the Revenue Commissioners and shall include a declaration to the effect that the return is correct and complete.

34 Amendment of section 31 (building societies) of Corporation Tax Act, 1976.

34.—As respects the year 1986-87 and any subsequent year of assessment—

(a) subsections (1) to (3) and (6) of section 31 of the Corporation Tax Act, 1976, shall cease to have effect, and

(b) subsections (4) and (9) of that section shall have effect as if the references therein to arrangements made under that section being in force or being entered into by a building society were omitted.

35 Taxation of relevant interest, etc.

35.—(1) Notwithstanding anything in the Tax Acts—

(a) no part of any interest paid by a building society on or after the 6th day of April, 1986, in respect of any shares in the society shall be treated for the purposes of the Corporation Tax Acts as a distribution of the society or as franked investment income of any company resident in the State,

(b) save as is otherwise provided for in section 39, no repayment of appropriate tax in respect of any relevant interest shall be made to any person receiving or entitled to the payment of the relevant interest who is not a company within the charge to corporation tax in respect of the payment,

(c) the amount of any payment of relevant interest shall be regarded as income chargeable to tax under Case IV of Schedule D and under no other Case or Schedule and shall be taken into account in computing the total income of the person entitled to that amount, but, subject to paragraph (d), no assessment to income tax shall be made in respect of any relevant interest on the person receiving or entitled to the payment of the relevant interest,

(d) paragraph (c) shall not prevent an assessment in respect of income tax at the higher rates or in respect of a surcharge under section 13 of the Finance Act, 1976, on any relevant interest in respect of which appropriate tax is deductible, and

(e) section 4 of the Finance Act, 1974, shall have effect as if a reference to appropriate tax deductible by virtue of this Chapter were contained in paragraph (a) of that section.

(2) Where a deposit which is a source of income of any person (hereafter in this section referred to as the “lender”) who is chargeable to income tax in respect of any interest payable on the deposit is not a taxed-interest deposit within the meaning of subsection (4) but at any time becomes such a deposit, then, notwithstanding section 75 of the Income Tax Act, 1967, section 77 (3) of that Act shall apply as if the deposit were a source of income which is directed to be separately computed under subsection (2) of the said section 75 and as if the deposit were a source of income which the lender ceased to possess immediately before it became such a taxed-interest deposit:

Provided that, in the case of a deposit which becomes a taxed-interest deposit on the 6th day of April, 1986, the said section 77 (3) shall not apply so as to require any adjustment of the total income of a lender in so far as that income includes any interest paid in respect of that deposit for any year of assessment prior to the year 1985-86.

(3) Where a deposit which is a source of income of a lender ceases to be a taxed-interest deposit within the meaning of subsection (4) then, notwithstanding section 75 of the Income Tax Act, 1967, subsections (1) and (2) of section 77 of that Act shall apply, as respects the year of assessment in which it so ceases and the next subsequent year of assessment, as if the deposit were a source of income which is directed to be separately computed under subsection (2) of the said section 75 and as if the deposit were a new source of income acquired by the lender immediately after it ceased to be such a taxed-interest deposit.

(4) For the purposes of subsections (2) and (3), a deposit is at any time a taxed-interest deposit if, were the relevant deposit taker who holds it to make a payment of interest in respect of it at that time, the said relevant deposit taker would be required to deduct the appropriate tax out of the payment.

(5) Section 344 of the Income Tax Act, 1967, shall not have effect as respects any relevant interest.

36 Statement furnished by relevant deposit taker.

36.—A relevant deposit taker shall, when requested to do so by any person entitled to any relevant interest on a relevant deposit held by the relevant deposit taker, furnish to that person, as respects any payment of such relevant interest, a statement showing—

(a) the amount of that payment,

(b) the amount of appropriate tax deducted therefrom,

(c) the net amount of the payment, and

(d) the date of the payment.

37 Declarations relating to deposits of non-residents.

37.—(1) The declaration referred to in paragraph (f) (ii) of the definition of “relevant deposit” in section 31 (1) is a declaration in writing to a relevant deposit taker which—

(a) is made by a person (hereafter in this section referred to as “the declarer”) to whom any interest on the deposit in respect of which the declaration is made is payable by the relevant deposit taker, and is signed by the declarer,

(b) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(c) declares that at the time when the declaration is made the person who is beneficially entitled to the interest in relation to the said deposit is not, or, as the case may be, all of the persons who are so entitled are not, ordinarily resident in the State,

(d) contains as respects the person, or, as the case may be, each of the persons, mentioned in paragraph (c)—

(i) the name of the person,

(ii) the address of his principal place of residence, and

(iii) the name of the country in which he is ordinarily resident at the time the declaration is made,

(e) contains an undertaking by the declarer that if the person, or, as the case may be, any of the persons, referred to in paragraph (c) becomes ordinarily resident in the State, the declarer will notify the relevant deposit taker accordingly, and

(f) contains such other information as the Revenue Commissioners may reasonably require for the purposes of this Chapter:

Provided that—

(i) subject to subsections (3) and (4), where, in relation to a deposit, a notice was served, on or before the 29th day of January, 1986, on a relevant deposit taker under section 175 (4) of the Income Tax Act, 1967, the notice shall, at all times before the 6th day of April, 1987, be deemed for the purposes of this Chapter, apart from subsection (2), to be, as respects that deposit, a declaration of the kind mentioned in this section, and

(ii) a declaration made before the passing of this Act in a form authorised by the Revenue Commissioners under paragraph (22) of Financial Resolution No. 12 passed by Dáil Éireann on the 30th day of January, 1986, shall be deemed for all the purposes of this Chapter to be a declaration of the kind mentioned in this section.

(2) (a) A relevant deposit taker shall—

(i) keep and retain for the longer of the following periods, that is to say—

(I) a period of six years, and

(II) a period which, in relation to the deposit in respect of which the declaration is made, ends not earlier than three years after the date on which the deposit is repaid or, as the case may be, becomes a relevant deposit, and

(ii) on being so required by notice given to it in writing by an inspector, make available to the inspector, within the time specified in the notice,

all declarations of the kind mentioned in this section which have been made in respect of deposits held by the relevant deposit taker.

(b) The inspector may examine or take extracts from or copies of any declarations made available to him under paragraph (a).

(3) Where, on a day (hereafter in this subsection referred to as “the relevant day”) after the 29th day of January, 1986, the amount of a deposit is reduced to less than three-quarters of the amount of the deposit on the 29th day of January, 1986, paragraph (i) of the proviso to subsection (1), if it would, apart from this subsection, have effect as respects the deposit, shall not so have effect at any time on or after the relevant day.

(4) Where a notice (hereafter in this subsection referred to as “the relevant notice”) of the kind mentioned in paragraph (i) of the proviso to subsection (1) was served on a relevant deposit taker on or before the 29th day of January, 1986, in relation to a deposit and, at any time after the 5th day of April, 1986, but before a declaration of the kind mentioned in this section has been made in respect of the deposit, the deposit ceases to be held by the relevant deposit taker, then a declaration of the kind mentioned in this section shall be made, in respect of that deposit, to the relevant deposit taker by the person to whom any interest on the deposit was payable at any time after the 29th day of January, 1986 (or, if there is more than one such person, the declaration may be made by any one of those persons):

Provided that, if a declaration is not so made in respect of the deposit, the relevant notice shall be deemed, for the purposes of subsection (2), to be, as respects the deposit, a declaration of the kind mentioned in this section.

38 Declarations relating to deposits of charities.

38.—(1) The declaration referred to in paragraph (g) (ii) of the definition of “relevant deposit” in section 31 (1) is a declaration in writing to a relevant deposit taker which—

(a) is made by a person (hereafter in this section referred to as “the declarer”) to whom any interest on the deposit in respect of which the declaration is made is payable by the relevant deposit taker, and is signed by the declarer,

(b) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(c) declares that at the time when the declaration is made the interest on the deposit in respect of which the declaration is made—

(i) (I) forms part of the income of a body of persons or trust which is treated by the Revenue Commissioners as a body or trust established for charitable purposes only, or

(II) is, according to the rules or regulations established by statute, charter, decree, deed of trust or will, applicable to charitable purposes only and is so treated by the Revenue Commissioners, and

(ii) will be applied to charitable purposes only,

(d) contains the name and address of the person, or, as the case may be, of each of the persons entitled, in respect of the interest in relation to the deposit, to exemption—

(i) from income tax under Schedule D by virtue of paragraph (b) of section 333 (1) of the Income Tax Act, 1967, or

(ii) as the case may be, from corporation tax by virtue of the exemption conferred by the said paragraph (b) of the said section 333 (1) as it has effect for the purposes of corporation tax under section 11 (6) of the Corporation Tax Act, 1976,

(e) contains an undertaking by the declarer that if the person, or, as the case may be, any of the persons, referred to in paragraph (d) ceases to be so exempt in respect of that interest, the declarer will notify the relevant deposit taker accordingly, and

(f) contains such other information as the Revenue Commissioners may reasonably require for the purposes of this Chapter.

(2) Subsection (2) of section 37 shall have effect as respects declarations of the kind mentioned in this section as it has effect as respects declarations of the kind mentioned in that section.

39 Repayment of appropriate tax in certain cases.

39.—(1) Notwithstanding section 35 (1) (b), repayment of appropriate tax in respect of any relevant interest shall be made to a person who is entitled to exemption in respect of that interest—

(a) from income tax under Schedule D by virtue of paragraph (b) of section 333 (1) of the Income Tax Act, 1967, or

(b) as the case may be, from corporation tax by virtue of the exemption conferred by the said paragraph (b) of the said section 333 (1) as it has effect for the purposes of corporation tax under section 11 (6) of the Corporation Tax Act, 1976.

(2) Where, in the year 1986-87 or any subsequent year of assessment (hereafter in this section referred to as “the relevant year”), the total income of a relevant person includes any relevant interest and, apart from section 35 (1) (b), the relevant person would be entitled to repayment of the whole or any part of the appropriate tax deducted from the relevant interest, then, notwithstanding section 35 (1) (b), the repayment to which the relevant person would be so entitled may be made to him on the making by him to the inspector, not earlier than the end of the relevant year, of a claim in that behalf.

(3) In subsection (2) “relevant person” means an individual who proves to the satisfaction of the inspector, or, on appeal, to the Appeal Commissioners, that—

(a) at some time during the relevant year he or his spouse was of the age of sixty-five years or upwards, or

(b) throughout the relevant year he or his spouse was, or as on and from some time during the relevant year he or his spouse became, permanently incapacitated by reason of mental or physical infirmity from maintaining himself or herself.

40 Penalties.

40.—(1) Schedule 15 to the Income Tax Act, 1967, is hereby amended by the insertion—

(a) in column 2 of “Finance Act, 1986, section 33 (2)”,

and

(b) in column 3 of “Finance Act, 1986, section 32 (1)”.

(2) Section 94 (2) of the Finance Act, 1983, is hereby amended by the insertion after paragraph (d) of the following paragraph:

“(dd) (i) fails to make any deduction required to be made by him under section 32 (1) of the Finance Act, 1986,

(ii) fails, having made the deduction, to pay the sum deducted to the Collector-General within the time specified in that behalf in section 33 (3) of that Act, or

(iii) fails to pay to the Collector-General an amount on account of appropriate tax (within the meaning of Chapter IV of Part I of that Act) within the time specified in that behalf in section 33 (4) of that Act,”.

Chapter V Urban Renewal: Relief from Income Tax and Corporation Tax

41 Interpretation (Chapter V), etc.

41.—(1) In this Chapter—

“the Custom House Docks Area” means the area described in Part II of the Fourth Schedule;

“designated area” means the Custom House Docks Area or any other area described in Part III, IV, V, VI or VII of the Fourth Schedule, and a reference to a designated area of a county borough shall, save where otherwise specifically provided, be construed as a reference to the part or parts of that county borough described in the appropriate Part or Parts of that Schedule.

(2) As respects the application of this Chapter to any expenditure incurred in relation to, or rent payable in respect of, any premises the site of which is wholly within the Custom House Docks Area—

“the specified day” means the day appointed by the Minister for Finance by order to be the specified day for the purposes of this Chapter;

“the specified period” means the period of five years commencing on the specified day.

(3) The Fourth Schedule shall have effect for the purposes of supplementing this Chapter.

42 Allowance in relation to construction of certain commercial premises.

42.—(1) In this section—

“multi-storey car-park” has the meaning given to it by section 25 of the Finance Act, 1981;

“qualifying period” means the period commencing on the 23rd day of October, 1985, and ending on the 31st day of May, 1989, or, where section 41 (2) applies, the specified period;

“qualifying premises” means a building or structure the site of which is wholly within a designated area and which—

(a) apart from this section is not an industrial building or structure within the meaning of section 255 (1) of the Income Tax Act, 1967, and

(b) (i) is in use for the purposes of a trade or profession, or

(ii) whether or not it is so used, is let on bona fide commercial terms for such consideration as might be expected to be paid in a letting of the building or structure which was negotiated on an arm's length basis,

but does not include any building or structure in use as, or as part of, a dwelling-house;

references to sections 254, 264 and 265 of the Income Tax Act, 1967, are references to those sections as inserted by the Corporation Tax Act, 1976.

(2) Subject to the modifications provided for in subsections (3) to (7), all the provisions of the Tax Acts relating to the making of allowances or charges in respect of capital expenditure on the construction of an industrial building or structure shall, notwithstanding anything to the contrary therein, apply—

(a) as if a qualifying premises were, at all times at which it is a qualifying premises, a building or structure in respect of which an allowance falls to be made for the purposes of income tax or corporation tax, as the case may be, under Chapter II of Part XV or under Chapter I of Part XVI of the Income Tax Act, 1967, by reason of its use for a purpose specified in section 255 (1) (a) of that Act, and

(b) where any activity carried on in the qualifying premises is not a trade, as if it were a trade:

Provided that an allowance shall be given by reason of this subsection in respect of any capital expenditure incurred on the construction of a qualifying premises only in so far as that expenditure is incurred in the qualifying period.

(3) For the purposes of subsection (2) the references to the 1st day of April, 1988 (as provided for by section 20 of the Finance Act, 1985) in the provisions of the Income Tax Act, 1967, specified in the Table to this subsection, shall be deemed to be references to the 1st day of June, 1989, or, where section 41 (2) applies, to the day next following the end of the specified period.

TABLE

Subsection (2A) (a) of section 254 (industrial building allowance)

Paragraph (ii) of the proviso to subsection (1) and paragraph (ii) of the proviso to subsection (3) of section 264 (annual allowances)

Paragraph (iii) of the proviso to subsection (1) of section 265 (balancing allowances and balancing charges)

(4) As respects a qualifying premises the site of which is wholly within a designated area of Dublin other than the Custom House Docks Area, any allowance or charge which, apart from this subsection, would fall to be made under subsection (2) in respect of capital expenditure on the construction of the qualifying premises shall be reduced to one-half of the amount which, apart from this subsection, would be the amount of that allowance or charge; and for the purposes of this subsection the amount of an allowance or charge so falling to be reduced to one-half thereof shall be computed as if—

(a) this subsection had not been enacted, and

(b) effect had been given to all allowances taken into account in so computing that amount:

Provided that nothing in this section shall affect the operation of section 265 (5) of the Income Tax Act, 1967.

(5) Subject to subsection (6), section 25 of the Finance Act, 1981, shall not have effect as respects a qualifying premises which is a multi-storey car-park in relation to which any allowance in respect of expenditure incurred on its construction falls to be made under subsection (2).

(6) Subsections (2) and (4) shall not apply as respects any capital expenditure which—

(a) is incurred before the 1st day of April, 1988, on the construction of a multi-storey car-park the site of which is wholly within a designated area of Dublin other than the Custom House Docks Area, and

(b) is relevant expenditure within the meaning of section 25 of the Finance Act, 1981.

(7) For the purposes only of determining, in relation to a claim for an allowance by virtue of subsection (2), whether and to what extent capital expenditure incurred on the construction of a qualifying premises is incurred in the qualifying period, only such an amount of that capital expenditure as is determined by the inspector, according to the best of his knowledge and judgment, to be properly attributable to work on the construction of the premises which was actually carried out during the qualifying period shall (notwithstanding any other provision of the Tax Acts as to the time when any capital expenditure is, or is to be treated as, incurred) be treated as having been incurred in that period:

Provided that any amount which, by virtue of this subsection, is determined by the inspector may be amended by the Appeal Commissioners or by the Circuit Court on the hearing, or the rehearing, of an appeal against that determination.

43 Deduction for certain expenditure on the provision of rented residential accommodation.

43.—(1) In this section—

“construction or conversion expenditure” means expenditure in respect of which, if it were incurred in the qualifying period, relief would fall to be given under subsection (2) of the principal section otherwise than by virtue of section 21 of the Finance Act, 1985;

“expenditure to which this section applies” means construction or conversion expenditure incurred in the specified period in relation to a qualifying premises the site of which is wholly within the Custom House Docks Area; and, for the purposes of determining whether and to what extent such expenditure was so incurred in the specified period, subsection (1) (b) of the principal section shall have effect as if the references in subparagraph (i) thereof to the qualifying period were references to the specified period and with any other necessary modifications;

“the principal section” means section 23 of the Finance Act, 1981.

(2) This section shall be construed together with the principal section.

(3) The principal section and section 24 of the Finance Act, 1981, shall have effect as respects expenditure to which this section applies as if—

(a) the following definition were substituted for the definition of “qualifying period” in subsection (1) (a) of the principal section:

“‘qualifying period’ means the specified period within the meaning of section 41 of the Finance Act, 1986;”,

(b) for the purposes of the definition of “qualifying premises” in the said subsection (1) (a), the reference in subsection (2) of section 29 of the Finance Act, 1983, to expenditure to which that section applies were a reference to expenditure to which this section applies,

(c) in subsections (1) and (2) of section 22 of the Finance Act, 1985, the specified period were substituted for the period mentioned therein, and

(d) the provisions of the Tax Acts set out in the Table to this subsection had not been enacted.

TABLE

Subsections (3) and (4) of section 29 of the Finance Act, 1983

The said subsections (3) and (4) as they are applied by section 30 (1) of the Finance Act, 1983

Section 21 of the Finance Act, 1985

44 Allowance to owner-occupiers in respect of certain premises.

44.—(1) (a) In this section—

“qualifying expenditure”, in relation to an individual, means, subject to paragraph (c), an amount equal to the amount of the expenditure incurred by the individual in the qualifying period on the construction of a qualifying premises which is a qualifying owner-occupied dwelling in relation to the individual after deducting from that amount of expenditure any sum in respect of or by reference to that expenditure, or in respect of or by reference to the qualifying premises or construction work in respect of which it was incurred, which the individual has received, or is entitled to receive, directly or indirectly, from the State, any board established by statute or any public or local authority;

“qualifying owner-occupied dwelling”, in relation to an individual, means a qualifying premises, the site of which is wholly within a designated area other than the Custom House Docks Area and which is first used, after the qualifying expenditure has been incurred, by that individual as his only or main residence;

“qualifying premises” shall be construed in accordance with paragraph (b);

“qualifying period” means the period commencing on the 23rd day of October, 1985, and ending on the 31st day of May, 1989;

“refurbishment” has the same meaning as in section 21 of the Finance Act, 1985.

(b) A premises which would be a qualifying premises for the purposes of section 23 of the Finance Act, 1981, as it applies to expenditure to which section 29 of the Finance Act, 1983, applies, if—

(i) clause (iv) of the definition of “qualifying premises” in the said section 23 were deleted, and

(ii) subsection (8) of that section had not been enacted,

shall be a qualifying premises for the purposes of this section, and all the provisions of the said section 23 in so far as they apply for the purpose of determining whether a premises is a qualifying premises shall, subject to the modifications mentioned in subparagraphs (i) and (ii) and with any other necessary modifications, apply for the purposes of this section.

(c) A person shall be regarded as having incurred expenditure in the qualifying period on the construction of a qualifying premises to the extent that he would be regarded as having incurred expenditure on the construction or refurbishment of that premises for the purposes of section 23 of the Finance Act, 1981, if for the definition of “qualifying period” in that section and in section 21 of the Finance Act, 1985, there were substituted the definition of “qualifying period” in this section, and all the provisions of the said sections 23 and 21 in so far as they apply for the purpose of determining the amount of expenditure incurred in the qualifying period on the construction or refurbishment of a qualifying premises shall, subject to the aforesaid modification of the definition of “qualifying period” and with any other necessary modifications, apply for the purposes of this section.

(d) For the purposes of this section, other than for the purposes of determining whether and to what extent expenditure on the construction or refurbishment of a qualifying premises is incurred in the qualifying period, expenditure incurred on the construction or refurbishment of a qualifying premises shall be deemed to have been incurred on the earliest date after the expenditure was actually incurred that the premises is in use as a dwelling.

(e) (i) Where the qualifying expenditure in relation to a qualifying premises is incurred by two or more persons, each of those persons shall be treated as having incurred only such amount of the expenditure as the inspector, to the best of his knowledge and judgment, considers to be just and reasonable and the expenditure shall be apportioned accordingly.

(ii) An apportionment made under subparagraph (i) may be amended by the Appeal Commissioners or by the Circuit Court on the hearing, or the rehearing, of an appeal against any deduction granted on the basis of the apportionment.

(2) Where an individual, having made a claim in that behalf, proves that he has incurred qualifying expenditure in a year of assessment, he shall be entitled, for that year of assessment and for any of the nine immediately subsequent years of assessment in which the qualifying premises in respect of which the expenditure was incurred is the only or main residence of the individual, to have a deduction made from his total income of an amount equal to 5 per cent. of the amount of the qualifying expenditure.

(3) An appeal to the Appeal Commissioners shall lie on any question arising under this section, other than a question on which an appeal lies under section 18 of the Housing (Miscellaneous Provisions) Act, 1979, in like manner as an appeal would lie against an assessment to income tax and the provisions of the Income Tax Acts relating to appeals shall apply and have effect accordingly.

(4) All such provisions of the Income Tax Acts as apply in relation to the deductions specified in sections 138 to 143 of the Income Tax Act, 1967, shall, with any necessary modifications, apply in relation to deductions under this section.

(5) Section 198 (1) (a) of the Income Tax Act, 1967, is hereby amended by the insertion of the following subparagraph after subparagraph (x) (inserted by section 19):

“(xi) so far as it flows from relief under section 44 of the Finance Act, 1986, in the proportions in which they incurred the expenditure giving rise to the relief,”.

45 Double rent allowance as a deduction in computing trading income.

45.—(1) (a) In this section—

“lease”, “lessee”, “lessor” and “rent” have the meanings respectively assigned to them by Chapter VI of Part IV of the Income Tax Act, 1967;

“qualifying lease” means a lease in respect of a qualifying premises granted in the qualifying period on bona fide commercial terms by a lessor to a lessee who is not connected with the lessor, or with any other person who is entitled to a rent in respect of the qualifying premises, whether under that lease or any other lease;

“qualifying period” means the period commencing on the 23rd day of October, 1985, and ending on the 31st day of May, 1989, or, where section 41 (2) applies, the specified period;

“qualifying premises” means a building or structure the site of which is wholly within a designated area and—

(i) (I) which is an industrial building or structure within the meaning of section 255 (1) of the Income Tax Act, 1967, or

(II) in respect of which an allowance falls to be made for the purposes of income tax or corporation tax, as the case may be, under Chapter II of Part XV or under Chapter I of Part XVI of that Act, by reason of section 42, and

(ii) which is let on such terms as are referred to in paragraph (b) (ii) of the definition of “qualifying premises” in the said section 42;

“relevant rental period”, in relation to a qualifying premises, means the period of ten years commencing on the day on which rent in respect of that premises is first payable under any qualifying lease.

(b) A person shall be regarded for the purposes of this section as connected with another person if he would be so regarded for the purposes of section 16 of the Finance (Miscellaneous Provisions) Act, 1968.

(2) Where, in the computation of the amount of the profits or gains of a trade or profession, a person is, apart from this section, entitled to any deduction (hereafter in this subsection referred to as “the first-mentioned deduction”) on account of rent in respect of a qualifying premises occupied by him for the purposes of that trade or profession which is payable by him in the relevant rental period in relation to that qualifying premises under a qualifying lease, he shall be entitled in that computation to a further deduction equal to the amount of the first-mentioned deduction.

Chapter VI Income Tax, Corporation Tax and Capital Gains Tax

46 Limited partnerships: relief restrictions.

46.—(1) In this section—

“the aggregate amount”, in relation to a trade, means—

(a) in the case of an individual, the aggregate of amounts given or allowed to him at any time under any of the specified provisions—

(i) in respect of a loss sustained by him in the trade, or of interest paid by him by reason of his participation in the trade, in any relevant year of assessment, or

(ii) as an allowance falling to be made to him for any relevant year of assessment either in taxing the trade or by way of discharge or repayment of tax to which he is entitled by reason of his participation in the trade,

and

(b) in the case of a company, the aggregate of amounts given or allowed to the company (hereafter in this section referred to as the “partner company”) or to another company at any time under any of the specified provisions—

(i) in respect of a loss incurred by the partner company in the trade, or of charges paid by it or another company by reason of its participation in the trade, in any relevant accounting period, or

(ii) as an allowance falling to be made to the partner company for any relevant accounting period either in taxing the trade or by way of discharge or repayment of tax to which it is entitled by reason of its participation in the trade;

“limited partner”, in relation to a trade, means—

(a) a person who is carrying on the trade as a limited partner in a limited partnership registered under the Limited Partnerships Act, 1907,

(b) a person who is carrying on the trade as a general partner in a partnership, who is not entitled to take part in the management of the trade and who is entitled to have his liabilities, or his liabilities beyond a certain limit, for debts or obligations, incurred for the purposes of the trade, discharged or reimbursed by some other person, or

(c) a person who carries on the trade jointly with others and who, under the law of any territory outside the State, is not entitled to take part in the management of the trade and is not liable beyond a certain limit for debts or obligations incurred for the purposes of the trade;

“relevant accounting period” means an accounting period of the partner company which ends on or after the specified date and at any time during which it carried on the trade as a limited partner;

“the relevant time” means—

(a) in the case of an individual, the end of the relevant year of assessment in which the loss is sustained or the interest is paid, or for which the allowance falls to be made (except that where he ceased to carry on the trade during that year of assessment it is the time when he so ceased), and

(b) in the case of a partner company, the end of the relevant accounting period in which the loss is incurred or the charges are paid, or for which the allowance falls to be made (except that where the partner company ceased to carry on the trade during that accounting period it is the time when it so ceased);

“relevant year of assessment” means a year of assessment which ends after the specified date and at any time during which the individual carried on the trade as a limited partner;

“the specified date” means the 22nd day of May, 1985;

“the specified provisions” means—

(a) in the case of an individual—

(i) section 296 of the Income Tax Act, 1967,

(ii) section 307 of that Act, and

(iii) Chapter III of Part I of the Finance Act, 1974,

and

(b) in the case of a company, the following provisions of the Corporation Tax Act, 1976—

(i) section 10,

(ii) section 14 (6),

(iii) section 16 (2),

and

(iv) subsections (1), (2) and (6) of section 116.

(2) (a) Where, in the case of an individual who is a limited partner in relation to a trade, an amount may, apart from this section, be given or allowed under any of the specified provisions—

(i) in respect of a loss sustained by him in the trade or of interest paid by him by reason of his participation in the trade, in a relevant year of assessment, or

(ii) as an allowance falling to be made to him for a relevant year of assessment either in taxing the trade or by way of discharge or repayment of tax to which he is entitled by reason of his participation in the trade,

such an amount may be given or allowed, otherwise than against income consisting of profits or gains arising from the trade, only to the extent that the amount given or allowed or, as the case may be, the aggregate amount in relation to that trade, does not exceed the amount of his contribution to the trade as at the relevant time.

(b) Where, in the case of a partner company which is a limited partner in relation to a trade, an amount may, apart from this section, be given or allowed under any of the specified provisions—

(i) in respect of a loss sustained by the partner company in the trade, or of charges paid by the partner company or another company by reason of its participation in the trade, in a relevant accounting period, or

(ii) as an allowance falling to be made to the partner company for a relevant accounting period either in taxing the trade or by way of discharge or repayment of tax to which it is entitled by reason of its participation in the trade,

such an amount may be given or allowed to the partner company, otherwise than against profits or gains arising from the trade, or to another company, only to the extent that the amount given or allowed, or, as the case may be, the aggregate amount does not exceed the partner company's contribution to the trade as at the relevant time.

(3) (a) A person's contribution to a trade at any time is the aggregate of—

(i) the amount which he has contributed to it as capital and has not subsequently, either directly or indirectly, drawn out or received back from the partnership or from a person connected with the partnership (other than anything, in relation to expenditure which he has incurred on behalf of the partnership trade or in providing facilities for the partnership trade, which he is or may be entitled so to draw out or receive back at any time when he carries on the trade as a limited partner or which he is or may be entitled to require another person to reimburse to him), and

(ii) the amount of any profits or gains of the trade to which he is entitled but which he has not received in money or money's worth.

(b) A person shall, for the purposes of paragraph (a), be treated as having received back an amount which he has contributed to the partnership if—

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

(ii) the partnership or any person connected with the partnership repays that amount of a loan or an advance from him, or

(iii) the person receives that amount of value for assigning any debt due to him from the partnership or from any person connected with the partnership.

(4) To the extent that an allowance is taken into account in computing profits or gains or losses in the year of loss by virtue of section 318 of the Income Tax Act, 1967, it shall, for the purposes of this section, be treated as falling to be made in the year of loss (and not in the year of assessment for which the year of loss is the basis year).

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

47 Amendment of section 16 (gifts to President's Award Scheme) of Finance Act, 1985.

47.—Section 16 of the Finance Act, 1985, is hereby amended by the substitution in subsection (1) (b) (i) of “1987” for “1986” and the said subsection (1) (b) (i), as so amended, is set out in the Table to this section.

TABLE

(i) is made on or before the 5th day of April, 1987, to the trustees of the President's Award Scheme to be applied by them for the purposes of that scheme, and

48 Surcharge for late submission of returns.

48.—(1) (a) In this section—

“return of income” means a return, statement, declaration or list which a person is required to deliver to the inspector by reason of a notice which is given by the inspector under any one or more of the specified sections;

“specified date” means, in relation to a return of income for a year of assessment or accounting period—

(i) (I) as respects the year 1986-87, the 31st day of December, 1987,

(II) as respects the year 1987-88 or any subsequent year of assessment, the 31st day of December in the year,

(III) as respects accounting periods ending in the year beginning on the 6th day of April, 1986, and ending on the 5th day of April, 1987, the 31st day of December, 1987, and

(IV) as respects accounting periods ending on or after the 6th day of April, 1987, the last day of the period of nine months commencing on the day next after the end of the accounting period, or

(ii) the last day of the period of six months commencing on the day next after the date on which the person is required by notice to deliver the return of income,

whichever is the later;

“specified sections” means—

(i) sections 70, 94 (a), 94 (d), 169, 170, 172 and 197 of the Income Tax Act, 1967,

(ii) section 11 of the Finance Act, 1976, and

(iii) section 143 of the Corporation Tax Act, 1976;

“tax” means income tax, corporation tax or capital gains tax as may be appropriate.

(b) For the purposes of this section—

(i) where a person fraudulently or negligently delivers an incorrect return of income on or before the specified date in relation to the return of income, he shall be deemed to have failed to deliver the return of income on or before that date unless the error in the return of income is remedied on or before that date,

(ii) where a person delivers an incorrect return of income on or before the specified date in relation to that return of income but does so neither fraudulently nor negligently and it comes to his notice (or, if he has died, to the notice of his personal representatives) that it is incorrect, he shall be deemed to have failed to deliver the return of income on or before the specified date in relation to the return of income unless the error in the return of income is remedied without unreasonable delay,

(iii) where a person delivers a return of income on or before the specified date in relation to the return of income but the inspector, by reason of being dissatisfied with any statement of profits or gains arising to the person from any trade or profession which is contained in the return of income, requires the person, by notice in writing served on him under section 174 of the Income Tax Act, 1967, to do any thing, the person shall be deemed not to have delivered the return of income on or before the specified date unless he does that thing within the time specified in the notice,

(iv) references to such of the specified sections as are applied, subject to any necessary modifications, in relation to capital gains tax by paragraph 3 of Schedule 4 to the Capital Gains Tax Act, 1975, shall be construed as including references to those sections as so applied, and

(v) references to a return of income for a year of assessment or in relation to a year of assessment shall be construed as references to a return of income requiring a statement or particulars of any income of the year ended on the 5th day of April immediately preceding the commencement of that year of assessment.

(2) Where, in relation to a year of assessment (being the year 1986-87 or any subsequent year of assessment) or accounting period (being an accounting period ending on or after the 6th day of April, 1986), a person who is required to deliver a return of income to the inspector fails to deliver the return of income, on or before the specified date in relation to the return of income, any amount of tax for that year of assessment or accounting period which, apart from this section, is or would be contained in an assessment to tax made or to be made on a person (hereafter in this subsection referred to as the “chargeable person”) who is chargeable to tax for that year of assessment or accounting period on or by reference to the whole or any part of the income, profits or chargeable gains which is contained in or returned in the return of income, or which would be so contained in or returned in the return of income if it were delivered, shall be increased by an amount (hereafter in this subsection referred to as the “surcharge”) equal to 10 per cent. of that amount of tax and, if the tax contained in the assessment to tax is not the amount of tax as so increased, all the provisions of the Tax Acts and the Capital Gains Tax Acts, apart from this section but including in particular those relating to the collection and recovery of tax and the payment of interest on unpaid tax, shall apply as if the tax contained in the assessment to tax were the amount of tax as so increased:

Provided that, in determining the amount of the surcharge, the tax contained in the assessment to tax shall be deemed to be reduced by the aggregate of—

(a) any tax deducted by virtue of any of the provisions of the Tax Acts or the Capital Gains Tax Acts from any income, profits or chargeable gains, charged in the assessment to tax in so far as that tax has not been repaid or is not repayable to the chargeable person and in so far as the tax so deducted may be set off against the tax contained in the assessment to tax,

(b) the amount of any tax credit to which the chargeable person is entitled in respect of any income, profits or chargeable gains charged in the assessment to tax, and

(c) any other amounts which are set off in the assessment to tax against the tax contained therein.

49 Amendment of section 30 (appeals against assessments and payments on account) of Finance Act, 1976.

49.—Section 30 of the Finance Act, 1976, is hereby amended by the substitution, in subsection (1), of the following definition for the definition of “the appropriate amount” (inserted by the Finance Act, 1984):

“‘the appropriate amount’ means—

(a) in the case of an assessment to income tax (other than an assessment to an amount representing income tax for the purposes of section 31(1) (a) of the Corporation Tax Act, 1976) for the year 1984-85 or 1985-86, 85 per cent. of the amount of tax found to be chargeable by the assessment on the determination of the appeal,

(b) in the case of—

(i) an assessment to income tax or capital gains tax for the year 1986-87 or any subsequent year of assessment, or

(ii) an assessment to corporation tax for an accounting period ending on or after the 6th day of April, 1986,

90 per cent. of the amount of the tax found to be chargeable by the assessment on the determination of the appeal, and

(c) in the case of any other assessment to tax, 80 per cent. of the amount of tax found to be chargeable by the assessment on the determination of the appeal;”.

50 Capital allowances for, and deduction in respect of, vehicles.

50.—(1) (a) Sections 25 to 29 of the Finance Act, 1973, shall have effect, in relation to expenditure incurred on the provision or hiring of a vehicle to which those sections apply, as if for “£2,500”, in each place where it occurs in those sections, there were substituted “£4,000”.

(b) The reference in paragraph (a) to expenditure incurred on the provision or hiring of a vehicle does not include—

(i) as respects the said sections 25 to 27, a reference to expenditure incurred before the 6th day of April, 1986, or incurred within twelve months after that day under a contract entered into before that day, and

(ii) as respects subsections (2) and (3) of the said section 28 and the said section 29, a reference to expenditure under a contract entered into before the said 6th day of April, 1986.

(2) Section 32 of the Finance Act, 1976, shall have effect, in relation to qualifying expenditure (within the meaning of that section) incurred in respect of a period subsequent to the 5th day of April, 1986, as if for “£3,500”, in each place where it occurs, there were substituted “£4,000”.

51 Amendment of section 25 (allowance for certain expenditure on construction of multi-storey car-parks) of Finance Act, 1981.

51.—(1) Section 25 of the Finance Act, 1981, is hereby amended by the substitution in subsection (1), in the definition of “relevant expenditure”, of “1988” for “1987” (inserted by the Finance Act, 1984), and the said definition, as so amended, is set out in the Table to this subsection.

TABLE

“relevant expenditure” means capital expenditure incurred on or after the 29th day of January, 1981, and before the 1st day of April, 1988, on the construction of a multi-storey car-park.

(2) The said section 25 is hereby further amended by the substitution of the following subsection for subsection (2) (inserted by the Finance Act, 1984):

“(2) All the provisions of the Tax Acts (other than section 25 of the Finance Act, 1978) relating to the making of allowances or charges in respect of capital expenditure on the construction of an industrial building or structure shall apply to relevant expenditure as if it were expenditure incurred on the construction of a building or structure in respect of which an allowance falls to be made for the purposes of income tax or corporation tax, as the case may be, under Chapter II of Part XV or under Chapter I of Part XVI of the Income Tax Act, 1967, by reason of its use for a purpose specified in section 255 (1) (a) of that Act.”.

52 Capital allowances: treatment of grants, etc.

52.—(1) (a) Subject to paragraph (b), where an allowance falls to be made for the purposes of income tax or corporation tax, as the case may be, under section 241 or 251 of the Income Tax Act, 1967, and the capital expenditure incurred on the provision of the machinery or plant in respect of which the allowance falls to be made was incurred on or after the 29th day of January, 1986, the following provisions shall apply:—

(i) 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, and

(ii) the actual cost of any machinery or plant to any person shall, for the purposes of the said section 241, be taken to be the amount of capital expenditure incurred on the provision of such machinery or plant less any such expenditure as is referred to in subparagraph (i).

(b) Paragraph (a) shall not have effect in relation to any capital expenditure which is or is to be met in the manner mentioned in paragraph (a) (i)—

(i) under the terms of an agreement finally approved on or before the 29th day of January, 1986, by a Department of State, any board established by statute or any public or local authority, or

(ii) under the terms of an agreement which—

(I) is the subject of negotiations which were in progress on the 29th day of January, 1986, with a Department of State, any board established by statute or any public or local authority, and

(II) is finally approved by such Department, board or authority not later than the 31st day of December, 1986.

(2) Section 264 of the Income Tax Act, 1967, is hereby amended by the insertion after subsection (3) of the following subsection:

“(3A) In ascertaining the writing-down allowance falling to be made to a person under subsection (3), the residue of expenditure mentioned in that subsection shall, where it exceeds the amount of expenditure incurred by that person in respect of the sale, be taken to be the amount of expenditure so incurred.”.

53 Application of section 40 (capital allowances for certain leased assets) of Finance Act, 1984.

53.—Section 40 of the Finance Act, 1984, is hereby amended, as respects machinery or plant provided for leasing on or after the 13th day of May, 1986—

(a) in subsection (1), by the insertion after the definition of “chargeable period or its basis period” of the following definition:

“‘lessee’ and ‘lessor’, in relation to machinery or plant provided for leasing, mean, respectively, the person to whom the machinery or plant is or is to be leased and the person providing the machinery or plant for leasing and ‘lessee’ and ‘lessor’ include, respectively, the successors in title of a lessee or a lessor;”,

(b) in subsection (1), in the definition of “the specified capital allowances”, by the insertion after “subsection (6)” of “, (7) or (8)”, and the said definition, as so amended, is set out in the Table to this section,

(c) in subsection (5), by the insertion after “subsection (6)” of “or (7)”, and the said subsection, as so amended, is set out in the Table to this section, and

(d) by the deletion of subsection (6) and the substitution therefor of the following subsections:

“(6) References in this section to machinery or plant to which this subsection applies are references to machinery or plant provided on or after the 25th day of January, 1984, for leasing where the expenditure incurred on the provision of the machinery or plant was incurred under an obligation entered into by the lessor and the lessee—

(a) before the 25th day of January, 1984, or

(b) before the 1st day of March, 1984, pursuant to negotiations which were in progress between the lessor and the lessee before the 25th day of January, 1984.

(7) References in this section to machinery or plant to which this subsection applies are references to machinery or plant provided on or after the 25th day of January, 1984, for leasing where the expenditure incurred on the provision of the machinery or plant (or, in the case of a film to which section 6 or 7 of the Irish Film Board Act, 1980, applies, the cost of the making of the film) has been or is to be met directly or indirectly, wholly or partly, by the Industrial Development Authority, the Irish Film Board, the Shannon Free Airport Development Company Limited, or Údarás na Gaeltachta:

Provided that this subsection shall not apply to machinery or plant provided for leasing on or after the 13th day of May, 1986, unless—

(a) the machinery or plant is a film to which section 6 or 7 of the Irish Film Board Act, 1980, applies, or

(b) the expenditure incurred on the provision of the machinery or plant (not being a film of the kind mentioned in paragraph (a)) was incurred under an obligation entered into by the lessor and the lessee before—

(i) the 13th day of May, 1986, or

(ii) the 1st day of September, 1986, pursuant to negotiations which were in progress between the lessor and the lessee before the 13th day of May, 1986.

(8) (a) The reference in the definition of ‘the specified capital allowances’ in subsection (1) to machinery or plant to which this subsection applies is a reference to machinery or plant (not being a film of the kind mentioned in paragraph (a) of the proviso to subsection (7)) provided on or after the 13th day of May, 1986, for leasing by a lessor to a lessee (who is not a person connected with the lessor) under a lease the terms of which include an undertaking given by the lessee that, during a period (hereafter in this section referred to as ‘the relevant period’) which is not less than three years and which commences on the day on which the machinery or plant is first brought into use by the lessee, the machinery or plant so provided will be used by the lessee for the purposes only of a specified trade carried on in the State by the lessee:

Provided that any machinery or plant in respect of which such an undertaking has been given by a lessee, and which at any time has been treated as machinery or plant to which this subsection applies, shall at any later time cease to be machinery or plant to which this subsection applies if, at that later time, it appears to the inspector (or, on appeal, to the Appeal Commissioners) that the undertaking has not been fulfilled by the lessee; and, where any machinery or plant so ceases to be machinery or plant to which this subsection applies, such assessments or adjustments of assessments shall be made to recover from the lessor any relief from tax given to the lessor because the machinery or plant was treated as machinery or plant to which this subsection applies.

(b) This subsection shall not apply to machinery or plant provided for leasing on or after the 13th day of May, 1986, if the expenditure incurred on the provision of the machinery or plant was incurred under an obligation entered into by the lessor and the lessee before—

(i) the 13th day of May, 1986, or

(ii) the 1st day of September, 1986, pursuant to negotiations which were in progress between the lessor and the lessee before the 13th day of May, 1986.

(9) For the purposes of subsections (6), (7) and (8)—

(a) an obligation shall be treated as having been entered into before a particular date, if, but only if, before that date, there was in existence a binding contract in writing under which that obligation arose, and

(b) negotiations pursuant to which an obligation was entered into shall not be regarded as having been in progress between a lessor and a lessee before a particular date unless, on or before that date, preliminary commitments or agreements in relation to that obligation had been entered into between the lessor and the lessee.

(10) In subsection (8) (a), ‘specified trade’, in relation to a lessee, means a trade which, throughout the relevant period, consists wholly or mainly of—

(a) the manufacture of goods (including activities which would, if the borrower were to make a claim for relief in respect of the trade under Chapter VI of Part I of the Finance Act, 1980, fall to be regarded for the purposes of that Chapter as the manufacture of goods), or

(b) exempted trading operations within the meaning of Part V (Profits from Trading within Shannon Airport) of the Corporation Tax Act, 1976:

Provided that a trade shall be regarded, as respects the relevant period, as consisting wholly or mainly of particular activities if, but only if, the total amount receivable by the lessee from sales made or, as the case may be, in payment for services rendered in the course of those activities in the relevant period is not less than 75 per cent. of the total amount receivable by the lessee from all sales made or, as the case may be, in payment for all services rendered in the course of the trade in the relevant period.

(11) Section 157 of the Corporation Tax Act, 1976, shall apply for the purposes of subsection (8) (a), save that, for the purposes of determining whether a person is connected with another person whose profits or gains are chargeable to income tax, the provisions of section 16 (3) of the Finance (Miscellaneous Provisions) Act, 1968, shall apply.”.

TABLE

“the specified capital allowances” means capital allowances in respect of—

(i) expenditure incurred on machinery or plant provided on or after the 25th day of January, 1984, for leasing in the course of a trade of leasing, or

(ii) the diminished value of such machinery or plant by reason of wear and tear,

other than capital allowances in respect of machinery or plant to which subsection (6), (7) or (8) applies;

(5) The proviso to subsection (1) of section 296 of the Income Tax Act, 1967, and sections 14 (6) and 116 (2) of the Corporation Tax Act, 1976, shall not have effect in relation to capital allowances—

(a) in respect of expenditure incurred on or after the 25th day of January, 1984, on the provision of machinery or plant, or

(b) in respect of the diminished value of machinery or plant by reason of wear and tear if that machinery or plant was first acquired on or after the 25th day of January, 1984, by the person to whom the capital allowances are to be or have been made,

other than capital allowances in respect of machinery or plant to which subsection (6) or (7) applies.

Chapter VII Corporation Tax

54 Amendment of section 84A (limitation on meaning of “distribution”) of Corporation Tax Act, 1976.

54.—Section 84A (inserted by the Finance Act, 1984) of the Corporation Tax Act, 1976, is hereby amended by the insertion after subsection (9) of the following subsection:

“(10) (a) This subsection applies to any interest or other distribution which, apart from this subsection, would be a distribution for the purposes of this Act, other than any interest or other distribution which is paid by the borrower under an obligation entered into—

(i) before the 13th day of May, 1986, or

(ii) before the 1st day of September, 1986, pursuant to negotiations which were in progress between the borrower and a lender before the 13th day of May, 1986.

(b) Subsection (2) shall have effect as respects any interest or other distribution to which this subsection applies as if paragraph (c) of subsection (3) were omitted.

(c) For the purposes of paragraph (a)—

(i) an obligation shall be treated as having been entered into before a particular date if, but only if, before that date there was in existence a binding contract in writing under which that obligation arose, and

(ii) negotiations pursuant to which an obligation was entered into shall not be regarded as having been in progress before the 13th day of May, 1986, unless, on or before that date, preliminary commitments or agreements in relation to that obligation had been entered into between the lender referred to in that paragraph and the borrower.”.

55 Amendment of certain time limits.

55.—(1) The Corporation Tax Act, 1976, is hereby amended—

(a) in subsection (5) of section 25 and in subsection (4) of section 26 by the deletion of “and this assessment shall be made not later than two years from the end of the subsequent accounting period”, and

(b) by the insertion in subsection (4) of section 26 after “the said tax credit” of “and the time limit for a claim under this subsection shall be two years from the end of the subsequent accounting period”,

and the said subsection (5) (apart from the proviso) and the said subsection (4), as so amended, are set out in the Table to this subsection.

TABLE

(5) Where a company has obtained payment of a tax credit on a claim under this section or under section 15 (4) and apart from such a claim any amount could be set off against or deducted from profits of a subsequent accounting period, then the company may claim that the amount shall be so set off or deducted but in that case to the extent to which the amount was used to obtain payment of a tax credit, such tax credit shall be recoverable from the company by an assessment on it to income tax under Case IV of Schedule D for the year of assessment in which the subsequent accounting period ends on an amount the income tax on which at the standard rate for the said year of assessment is equal to the amount of the said tax credit:

(4) Where a company has obtained payment to it of a tax credit by virtue of this section on a claim under section 16 (1) and apart from such a claim a loss could be set off against or deducted from profits of a subsequent accounting period, then the company may claim that the loss shall be so set off or deducted but, in that case, to the extent to which the loss was used to obtain payment of a tax credit, such tax credit shall be recovered from the company by an assessment on it to income tax under Case IV of Schedule D for the year of assessment in which the subsequent accounting period ends on an amount the income tax on which at the standard rate for the said year of assessment is equal to the amount of the said tax credit and the time limit for a claim under this subsection shall be two years from the end of the subsequent accounting period.

(2) This section shall have effect—

(a) as respects subsection (1) (a), in relation to any assessment made under section 25 (5) or 26 (4) of the Corporation Tax Act, 1976, for the purpose of recovering a tax credit from a company consequent on the making by the company, on or after the 4th day of April, 1986, of a claim under the said section 25 (5) or 26 (4), as the case may be, and

(b) as respects subsection (1) (b), in relation to any claim under the said section 26 (4) made on or after the date of the passing of this Act.

56 Shannon Airport: revocation of certain certificates.

56.—(1) Section 70 of the Corporation Tax Act, 1976, is hereby amended—

(a) in subsection (2), by the insertion after “subsection (4)” of “or (4A)”, and

(b) by the insertion after subsection (4) of the following subsection:

“(4A) Where, in the case of a company in relation to which a certificate under subsection (2) has been given, the Minister is of opinion that any activity of the company has had, or may have, an adverse effect on the use or development of the airport or is otherwise inimical to the development of the airport, then—

(a) the Minister may, by notice in writing served by registered post on the company, require the company to desist from such activity with effect from such date as may be specified in the notice, and

(b) if the Minister is not satisfied that the company has complied with the requirements of the said notice, he may, by a further notice in writing served by registered post on the company, revoke the certificate with effect from such date as may be specified in the said further notice.”,

and the said subsection (2) (other than the proviso), as so amended, is set out in the Table to this subsection.

TABLE

(2) Subject to subsections (5) and (6), the Minister may give a certificate certifying that such trading operations of a qualified company as are specified in the certificate are, with effect as from their commencement, exempted trading operations for the purposes of this Part, and any certificate so given shall, unless it is revoked under subsection (4) or (4A), remain in force until the 5th day of April, 1990:

(2) Section 39A (inserted by the Finance Act, 1981) of the Finance Act, 1980, is hereby amended—

(a) in subsection (2), by the insertion after “subsection (4)” of “or (4A)”, and

(b) by the insertion after subsection (4) of the following subsection:

“(4A) Where, in the case of a company in relation to which a certificate under subsection (2) has been given, the Minister is of opinion that any activity of the company has had, or may have, an adverse effect on the use or development of the airport or is otherwise inimical to the development of the airport, then—

(a) the Minister may, by notice in writing served by registered post on the company, require the company to desist from such activity with effect from such date as may be specified in the notice, and

(b) if the Minister is not satisfied that the company has complied with the requirements of the said notice, he may, by a further notice in writing served by registered post on the company, revoke the certificate with effect from such date as may be specified in the said further notice.”,

and the said subsection (2) (other than the proviso), as so amended, is set out in the Table to this subsection.

TABLE

(2) Subject to subsections (5) and (6), the Minister may give a certificate certifying that such trading operations of a qualified company as are specified in the certificate are, with effect from a date to be specified in the certificate, relevant trading operations for the purpose of this section, and any certificate so given shall, unless it is revoked under subsection (4) or (4A), remain in force until the 31st day of December, 2000:

57 Amendment of section 155 (interpretation) of Corporation Tax Act, 1976.

57.—(1) Section 155 of the Corporation Tax Act, 1976, is hereby amended by the substitution of the following subsection for subsection (10):

“(10) References in the Corporation Tax Acts to—

(a) profits brought into charge to corporation tax are references to the amount of those profits chargeable to corporation tax before any deduction therefrom for charges on income, expenses of management or other amounts which can be deducted from or set against or treated as reducing profits of more than one description,

(b) total income brought into charge to corporation tax are references to the amount, calculated before any such deduction as is mentioned in paragraph (a), of the total income from all sources included in any profits brought into charge to corporation tax, and

(c) an amount of profits on which corporation tax falls finally to be borne are references to the amount of those profits after making all deductions and giving all reliefs that for the purposes of corporation tax are made or given from or against those profits, including deductions and reliefs which under any provision are treated as reducing them for those purposes.”.

(2) This section shall have effect as respects—

(a) accounting periods ending on or after the 4th day of April, 1986, and

(b) any other accounting period in relation only to any claim for relief from corporation tax under section 58 of the Corporation Tax Act, 1976, or section 41 of the Finance Act, 1980, which is made on or after that date.

58 Reduction of corporation tax in relation to interest on certain loans to farmers.

58.—(1) In this section—

“the participating bank” means Allied Irish Banks, p.l.c.;

“qualifying farmer” means a farmer who has been accepted as eligible for inclusion in the 1985 scheme;

“relevant accounting period” means an accounting period or part of an accounting period falling within the period from the 1st day of April, 1985, to the 31st day of March, 1986;

“relief from interest”, in relation to a relevant accounting period of the participating bank, means the amount by which B exceeds A where—

A is the amount of interest paid by qualifying farmers to the bank during that period in respect of loans the rate of interest on which falls to be reduced under the 1985 scheme, and

B is the amount of interest which would have fallen to be paid by those farmers to the bank during the said period in respect of the said loans if that interest had not been reduced under the 1985 scheme;

“the 1985 scheme” means the scheme known as the Reduced Interest Scheme for Farmers in Severe Financial Difficulty, 1985.

(2) Subject to subsection (3), where the participating bank claims and proves that relief from interest was allowed by it during a relevant accounting period, the corporation tax payable by the bank for the accounting period which coincides with or includes the relevant accounting period shall be reduced by an amount determined by the formula

C D _____ 5

where—

C is the amount of the relief from interest allowed by the participating bank during the relevant accounting period, and

D is the amount of corporation tax which, under sections 1 (1) and 6 (3) of the Corporation Tax Act, 1976, would be chargeable for the accounting period which coincides with or includes the relevant accounting period on an amount of profits equal to C.

(3) (a) A reduction, under subsection (2), of corporation tax payable by the participating bank shall be made in respect only of relief from interest which has been certified by the Minister for Agriculture to be relief from interest allowed in accordance with the conditions and regulations of the 1985 scheme.

(b) If any relief from interest (hereafter in this paragraph referred to as “disallowed relief”) allowed by the participating bank has been certified by the Minister for Agriculture to be relief from interest allowed in accordance with the conditions and regulations of the 1985 scheme and is subsequently certified by the Minister for Agriculture to be relief from interest which did not fall to be allowed in accordance with those conditions and regulations, the participating bank shall not be entitled in respect of the disallowed relief to any reduction under subsection (2) of corporation tax payable by it and, if any such reduction has been made in respect of any such disallowed relief, there shall be made such additional assessments or adjustments of assessments as may be required to recover that reduction.

59 Amendment of provisions relating to taxation of assurance companies.

59.—The Corporation Tax Act, 1976, is hereby amended—

(a) in section 33, as respects accounting periods ending after the date of the passing of this Act, by the insertion after subsection (1) of the following subsections:

“(1A) Where the life assurance business of an assurance company includes more than one of the following classes of business, that is to say:

(a) pension business,

(b) general annuity business, and

(c) life assurance business (excluding such pension business and general annuity business),

then, for the purposes of this Act, the business of each such class shall be treated as though it were a separate business and subsection (1) shall apply separately to each such class of business:

Provided that any amount of such an excess as is referred to in section 15 (2) and which is carried forward from an accounting period ending before the date of the passing of the Finance Act, 1986, may, for the purposes of section 15 (1), be deducted in computing the profits of the company for a later accounting period in respect of such of the said classes of business as the company may elect; but any amount so deducted in computing the profits from one of the said classes of business shall not be deducted in computing the profits of the company from another of the said classes of business.

(1B) Relief under subsection (1) shall not be given for any amount of stamp duty (except any part of such amount as is referable to pension business) charged under paragraph (c) of subsection (8) (inserted by the Finance Act, 1984) of section 92 of the Finance Act, 1982, on any statement delivered by a company in pursuance of paragraph (b) of the said subsection (8) in respect of any quarter commencing after the date of the passing of the Finance Act, 1986.”,

(b) in section 39, by the insertion after subsection (4) of the following subsection:

“(4A) Notwithstanding any other provision of the Corporation Tax Acts, any annuity which is paid by a company and is referable to its excluded annuity business—

(a) shall not be treated as a charge on income for the purposes of the Corporation Tax Acts;

(b) shall be deductible in computing for the purposes of Case I of Schedule D the profits of the company in respect of its life assurance business.”,

(c) in section 40, as respects accounting periods ending after the date of the passing of this Act, by the insertion after subsection (1) of the following subsection:

“(1A) Notwithstanding any other provision of the Corporation Tax Acts, any annuities which under subsection (1) are treated as charges on income of a company (hereafter in this subsection referred to as ‘the first-mentioned company’) for an accounting period shall not be allowed as deductions against any profits (whether of the first-mentioned company or of any other company) other than against that part of the total profits (including, where a claim is made under section 25 for the purposes mentioned in subsection (2) (b) of that section, any franked investment income) arising in that accounting period to the first-mentioned company from its general annuity business.”,

and

(d) in section 50, as respects accounting periods ending after the date of the passing of this Act—

(i) in subsection (2), by the deletion of the definition of “general annuity business” and the substitution therefor of the following definitions:

“‘excluded annuity business’, in relation to an assurance company, means annuity business which—

(a) is not pension business, or the liability of the company in respect of which is not taken into account in determining the foreign life assurance fund (within the meaning of section 42 (5)) of the company, and

(b) arises out of a contract for the granting of an annuity on human life being a contract which was effected, extended or varied on or after the 6th day of May, 1986, and which fails to satisfy any one or more of the following conditions, that is to say:

(i) the annuity shall be payable (whether or not its commencement is deferred for any period) until the end of a human life or for a period ascertainable only by reference to the end of a human life (whether or not continuing after the end of a human life),

(ii) the amount of the annuity shall be reduced only on the death of a person who is an annuitant under the contract or by reference to a bona fide index of prices or investment values, and

(iii) the policy document evidencing the contract shall expressly and irrevocably prohibit the company from agreeing to commutation, in whole or in part, of any annuity arising under the contract;

‘general annuity business’ means any annuity business which is not—

(a) excluded annuity business, or

(b) pension business,

and ‘pension business’ shall be construed in accordance with subsections (3) and (4);”,

and

(ii) in subsection (3), by the deletion of paragraph (b) and the substitution therefor of the following paragraph:

“(b) allocating to general annuity business all other annuity business except excluded annuity business,”.

Chapter VIII Capital Gains Tax

60 Alteration of rates of capital gains tax.

60.—(1) Subsection (3) (inserted by the Finance Act, 1982) of section 3 of the Capital Gains Tax Act, 1975, is hereby amended, as respects chargeable gains accruing on any disposal made on or after the 6th day of April, 1986, by the substitution of the following paragraphs for paragraph (c):

“(c) 35 per cent. where his period of ownership of the asset is more than three years but not more than six years, or

(d) in any other case, 30 per cent.,”

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

TABLE

(3) Except as otherwise provided for by the Capital Gains Tax Acts, the rate of capital gains tax in respect of chargeable gains accruing to a person on the disposal of an asset shall be—

(a) 60 per cent. where his period of ownership of the asset is not more than one year,

(b) 50 per cent. where his period of ownership of the asset is more than one year but not more than three years,

(c) 35 per cent. where his period of ownership of the asset is more than three years but not more than six years, or

(d) in any other case, 30 per cent.,

and any reference in those Acts to the rate specified in this section shall be construed accordingly.

(2) In subsection (1) “disposal” does not include a relevant disposal within the meaning of section 36 (1) of the Finance Act, 1982.

61 Disposal of shares on the Smaller Companies Market and certain other shares.

61.—(1) In this section—

“qualifying period” means the period of three years commencing on the 4th day of April, 1986;

“qualifying shares” means—

(a) in subsection (2), shares of a kind which are dealt in on the Smaller Companies Market of the Irish Stock Exchange (hereafter in this section referred to as “the relevant market”) and which are not dealt in otherwise on the Irish Stock Exchange or on any other stock exchange, and

(b) in subsection (3), shares forming part of the ordinary share capital of a public company within the meaning of section 2 (1) of the Companies (Amendment) Act, 1983, which has issued shares in respect of which relief has been given under—

(i) Chapter III of Part I of the Finance Act, 1984, or

(ii) Chapter III of this Part,

and which are not dealt in on a recognised stock exchange.

(2) Notwithstanding section 3 (3) of the Capital Gains Tax Act, 1975, the rate of capital gains tax in respect of chargeable gains accruing to a person on the disposal on the relevant market in the qualifying period of shares which, at the time of the disposal, are qualifying shares shall be 30 per cent.

(3) Notwithstanding section 3 (3) of the Capital Gains Tax Act, 1975, the rate of capital gains tax in respect of chargeable gains accruing to a person on the disposal in the qualifying period of shares which, at the time of disposal, are qualifying shares shall be 30 per cent.

(4) In subsections (2) and (3) “disposal” does not include a relevant disposal within the meaning of section 36 (1) of the Finance Act, 1982.

PART II Customs and Excise

62 Interpretation (Part II).

62.—In this Part “the Order of 1975” means the Imposition of Duties (No. 221) (Excise Duties) Order, 1975 (S.I. No. 307 of 1975).

63 Tobacco products.

63.—(1) In this section and in the Fifth Schedule “cigarettes”, “cigars”, “cavendish or negrohead”, “hard pressed tobacco”, “other pipe tobacco”, “smoking tobacco”, “chewing tobacco” and “tobacco products” have the same meanings as they have in the Finance (Excise Duty on Tobacco Products) Act, 1977, as amended by the Imposition of Duties (No. 243) (Excise Duty on Tobacco Products) Order, 1979 (S.I. No. 296 of 1979).

(2) The duty of excise on tobacco products imposed by section 2 of the Finance (Excise Duty on Tobacco Products) Act, 1977, shall be charged, levied and paid, as on and from the 30th day of January, 1986, at the several rates specified in the Fifth Schedule in lieu of the several rates specified in the Second Schedule to the Finance Act, 1985.

64 Cider and perry.

64.—(1) In the Sixth Schedule—

“actual alcoholic strength by volume” means the number of volumes of pure alcohol contained at a temperature of 20C in 100 volumes of the product at that temperature;

“ vol” means alcoholic strength by volume.

(2) The duty of excise on cider and perry imposed by paragraph 8 (2) of the Order of 1975 shall be charged, levied and paid, as on and from the 30th day of January, 1986, at the several rates specified in the Sixth Schedule in lieu of the several rates specified in the Fifth Schedule to the Finance Act, 1984, as amended by section 28 of the Finance Act, 1985.

(3) Paragraph 8 of the Order of 1975 shall be amended, as on and from the 1st day of July, 1986, by the insertion of the following subparagraph after subparagraph (2):

“(3) The Revenue Commissioners may, subject to compliance with such conditions as they may think fit to impose for securing payment of the duty of excise imposed by subparagraph (2) of this paragraph on cider and perry imported into the State, permit payment of the said duty to be deferred to a day not later than the last day of the month following that in which the said duty is charged.”.

65 Hydrocarbons.

65.—(1) In this section “the Order of 1986” means the Imposition of Duties (No. 281) (Hydrocarbons) Order, 1986 (S.I. No. 3 of 1986).

(2) The duty of excise on mineral hydrocarbon light oil imposed by paragraph 11 (1) of the Order of 1975 shall be charged, levied and paid, as on and from the 30th day of January, 1986, at the rate of £27.37 per hectolitre in lieu of the rate specified in paragraph 4 (1) of the Order of 1986.

(3) The duty of excise on hydrocarbon oil imposed by paragraph 12 (1) of the Order of 1975 shall be charged, levied and paid, as on and from the 30th day of January, 1986, at the rate of £21.09 per hectolitre in lieu of the rate specified in paragraph 4 (2) of the Order of 1986.

66 Spirits.

66.—(1) In the Seventh Schedule “alcohol” means pure ethyl alcohol.

(2) The duty of excise on spirits imposed by paragraph 4 (2) of the Order of 1975 shall be charged, levied and paid, as on and from the 30th day of January, 1986, at the several rates specified in the Seventh Schedule in lieu of the several rates specified in the Schedule to the Imposition of Duties (No. 270) (Spirits) Order, 1984 (S.I. No. 252 of 1984).

(3) Subject to subsection (4), nothing in this section shall operate to relieve from or to prejudice or affect the additional duty of excise in respect of immature spirits imposed by paragraph 4 (2) of the Order of 1975 and the third column of the First Schedule to that Order, as amended by paragraph 4 (2) of the Imposition of Duties (No. 244) (Excise Duties on Spirits, Beer and Hydrocarbon Oils) Order, 1979 (S. I. No. 415 of 1979), and the third column of the First Schedule to that Order.

(4) With effect on or after the 1st day of July, 1986—

(a) the additional duty of excise in respect of immature spirits mentioned in subsection (3), and

(b) the additional duty of excise on spirits imposed by paragraph 4 (4) of the Order of 1975,

shall not be charged or levied.

67 Beer.

67.—(1) Subject to paragraph 4 of the Imposition of Duties (No. 258) (Beer) (No. 2) Order, 1982 (S.I. No. 37 of 1982), the duty of excise on beer imposed by paragraph 7(1) of the Order of 1975 shall be charged, levied and paid, as on and from the 30th day of January, 1986, at the rate of £149.347 for, in the case of all beer brewed within the State, every 36 gallons of worts of a specific gravity of 1,055 degrees, and, in the case of all imported beer, every 36 gallons of beer of which the worts were before fermentation of a specific gravity of 1,055 degrees, in lieu of the rate specified in section 69(1) of the Finance Act, 1984.

(2) Subject to paragraph 5 of the Imposition of Duties (No. 271) (Beer) Order, 1984 (S.I. No. 352 of 1984), the drawback on beer provided for in paragraph 7(3) of the Order of 1975 shall, as respects beer on which it is shown to the satisfaction of the Revenue Commissioners that duty at the rate specified in subsection (1) has been paid, be calculated, according to the original specific gravity of the beer, at the rate of £149.347 on every 36 gallons of beer of which the original specific gravity was 1,055 degrees.