FINANCE ACT, 1986

• (5) Notwithstanding paragraph (b) of subsection (3), where the Revenue Commissioners are satisfied that any money which appeared to them under the terms of the said paragraph (b) to be intended for use for a qualifying research and development project was not used for such a project and was not intended for such use, they may give notice in writing to that effect to the research and development company and thereupon the company shall be deemed not to be carrying out and never to have carried out the qualifying research and development project.

24 Taxation of a qualifying research and development company.

24.—The carrying out of a qualifying research and development project by a qualifying research and development company shall be deemed, for all the purposes of the Tax Acts other than the purposes of section 22, to be the carrying on of a trade (hereafter in this section referred to as “the manufacturing trade”), separate from any other trade which the company may at any time carry on, which consists wholly of the manufacture of goods within the meaning of Chapter VI of Part I of the Finance Act, 1980, and, notwithstanding anything to the contrary in the Tax Acts or elsewhere—

• (a) any amount expended by the company in the course of the carrying out of a qualifying research and development project and for which an allowance, relief or deduction would not otherwise be available, directly or indirectly, under the Tax Acts on the basis that the carrying out of the qualifying research and development project is the carrying on of a trade, shall be deemed to be an amount expended for the purposes of the manufacturing trade, and

• (b) any amount received by the company, no matter in what form and no matter how described, by reason of the carrying out of, or in consequence of the carrying out of, or otherwise in connection with the carrying out of, the qualifying research and development project shall be deemed to be a trading receipt of the manufacturing trade for the accounting period in which it is received,

and the manufacturing trade shall be deemed to be carried on by the company so long as it is entitled to receive any amount referred to in paragraph (b).

25 Disposal of shares.

25.—(1) Where an individual disposes of any eligible shares before the end of the relevant period, then—

• (a) in a case where the disposal is otherwise than by way of a bargain made at arm's length, he shall not be entitled to any relief in respect of those shares, and

• (b) in any other case, the amount of relief to which he is entitled in respect of those shares shall be reduced by the amount or value of the consideration which he receives for them.

• (2) Subsection (1) shall not apply to a disposal made by a wife to her husband at a time when she is treated as living with him for income tax purposes as provided in section 192 (inserted by the Finance Act, 1980) of the Income Tax Act, 1967, or to a disposal made at such a time by him to her; but where shares issued to one of them have been transferred to the other by a transaction inter vivos—

• (a) that subsection shall apply on the disposal of the shares by the transferee to a third person, and

• (b) if at any time the wife ceases to be treated as living with her husband for the aforementioned purposes, and any of those shares have not been disposed of by the transferee before that time, any assessment for withdrawing relief in respect of those shares shall be made on the transferee.

• (3) Where an individual holds ordinary shares of any class in a qualifying research and development company and the relief has been given in respect of some shares of that class but not others, any disposal by him of ordinary shares of that class in the company shall be treated for the purposes of this section as relating to those in respect of which relief has been given under this Chapter rather than to others.

• (4) Where relief has been given to an individual in respect of shares of any class in a qualifying research and development company which have been issued to him at different times, any disposal by him of shares of that class shall be treated for the purposes of this section as relating to those issued earlier rather than to those issued later.

• (5) Where shares in respect of which the relief was given have by virtue of any such allotment as is mentioned in subparagraph (1) (a) (i) of paragraph 2 of Schedule 2 to the Capital Gains Tax Act, 1975 (not being an allotment for payment) fallen to be treated under subparagraph (2) of that paragraph as the same asset as a new holding—

• (a) the new holding shall be treated for the purposes of subsection (3) as shares in respect of which the relief has been given, and

• (b) a disposal of the whole or part of the new holding shall be treated for the purposes of this section as a disposal of the whole or a corresponding part of those shares.

• (6) Shares in a company shall not be treated for the purposes of this section as being of the same class unless they would be so treated if dealt in on a stock exchange in the State.

• (7) Where a qualifying research and development company is wound up or dissolved, it shall, for the purposes of this section, in the case of any individual, be treated as a disposal before the end of the relevant period of the individual's eligible shares in the company for an arm's length price equal to the amount to which the individual is entitled on the winding up or dissolution in respect of any money subscribed for eligible shares in so far as that money has not been used for a qualifying research and development project.

26 Prevention of misuse.

26.—An individual is not entitled to relief in respect of any shares unless the shares were subscribed for and issued for bona fide commercial purposes and not as part of a scheme or arrangement the main purpose or one of the main purposes of which was the avoidance of tax.

27 Claims.

27.—(1) A claim for the relief in respect of eligible shares issued by a qualifying research and development company in any year of assessment shall be made—

• (a) not earlier than the 1st day of January, 1987, or, if later, the end of the period mentioned in section 18 (4) (a), and

• (b) not later than two years after the end of that year of assessment or, if the period mentioned in section 18 (4) (a) ended after the end of that year, not later than two years after the end of that period.

• (2) A claim for relief in respect of eligible shares in a qualifying research and development company shall not be allowed unless it is accompanied by a certificate issued by the company in such form as the Revenue Commissioners may direct and certifying that the conditions for the relief, so far as applying to the qualifying research and development company, the qualifying sponsoring company and the qualifying research and development project, are satisfied in relation to those shares.

• (3) Before issuing a certificate for the purposes of subsection (2) a qualifying research and development company shall furnish the inspector with a statement to the effect that it satisfies the conditions for relief, so far as they apply in relation to the company, the qualifying sponsoring company and the qualifying research and development project, and has done so at all times since the beginning of the relevant period.

• (4) No such certificate shall be issued without the authority of the inspector or where the qualifying research and development company or the qualifying sponsoring company, or a person connected with either company, has given notice to the inspector under section 29 (2).

• (5) Any statement under subsection (3) shall contain such information as the Revenue Commissioners may reasonably require, shall be in such form as the Revenue Commissioners may direct and shall contain a declaration that it is correct to the best of the qualifying research and development company's knowledge and belief.

• (6) Where a qualifying research and development company has issued a certificate for the purposes of subsection (2) or furnished a statement under subsection (3) and—

• (a) the certificate or statement was made fraudulently or negligently, or

• (b) the certificate was issued in contravention of subsection (4),

the company shall be liable to a penalty not exceeding £500 or, in the case of fraud, £1,000, and such penalty may, without prejudice to any other method of recovery, be proceeded for and recovered summarily in the same manner as in summary proceedings for recovery of any fine or penalty under any Act relating to the excise.

• (7) For the purpose of regulations made under section 127 of the Income Tax Act, 1967, no regard shall be had to the relief unless a claim for it has been duly made and admitted.

• (8) For the purposes of section 550 of the Income Tax Act, 1967, tax charged by an assessment—

• (a) shall be regarded as due and payable notwithstanding that relief from the tax (whether by discharge or repayment) is subsequently given on a claim for the relief, but

• (b) shall, unless paid earlier or due and payable later, be regarded as paid, to the extent that relief from tax is due under this Chapter, on the date of the making of the claim on which the relief is given,

and section 551 of that Act shall not apply in consequence of any discharge or repayment for giving effect to the relief.

28 Assessments for withdrawing relief.

28.—(1) Where any relief has been given which is subsequently found not to have been due, it shall be withdrawn by the making of an assessment to tax under Case IV of Schedule D for the year of assessment for which the relief was given.

• (2) Where any relief given in respect of shares for which either a husband or his wife has subscribed and which were issued while he was assessed in accordance with the provisions of section 194 (inserted by the Finance Act, 1980) of the Income Tax Act, 1967, falls to be withdrawn by virtue of a subsequent disposal of those shares by the person who subscribed for them and at the time of the disposal the husband is not so assessable, any assessment for withdrawing that relief shall be made on the person making the disposal and shall be made by reference to the reduction of tax flowing from the amount of the relief regardless of any allocation of that reduction under section 198 (1) or (2) (inserted by the Finance Act, 1980) of the Income Tax Act, 1967, or any allocation of a repayment of tax under section 195A (inserted by the Finance Act, 1983) of the Income Tax Act, 1967.

• (3) Subject to the following provisions of this section, any assessment for withdrawing relief which is made by reason of an event occurring after the date of the claim may be made within ten years after the end of the year of assessment in which that event occurs.

• (4) No assessment for withdrawing relief in respect of shares issued to any person shall be made by reason of any event occurring after his death.

• (5) Where a person has, by a disposal or disposals to which section 25 (1) (b) applies, disposed of all the ordinary shares issued to him by a qualifying research and development company, no assessment for withdrawing relief in respect of any of those shares shall be made by reason of any subsequent event unless it occurs at a time when he is connected with the qualifying sponsoring company within the meaning of section 20.

• (6) Subsection (3) is without prejudice to the proviso to section 186 (2) (a) of the Income Tax Act, 1967.

• (7) In its application to an assessment made by virtue of this section, section 550 of the Income Tax Act, 1967, shall have effect as if the date on which the tax charged by the assessment becomes due and payable were—

• (a) in the case of relief withdrawn by virtue of section 20, 21, 22 or 23 in consequence of any event after the grant of the relief, the date of that event,

• (b) in the case of relief withdrawn by virtue of section 25 (1) in consequence of a disposal after the grant of the relief, the date of the disposal,

• (c) in the case of relief withdrawn by virtue of section 26—

• (i) so far as effect has been given to the relief in accordance with regulations under section 127 of the Income Tax Act, 1967, the 5th day of April in the year of assessment in which effect was so given, and

• (ii) so far as effect has not been so given, the date on which the relief was granted.

• (8) For the purposes of subsection (7) the date on which the relief is granted is the date on which a repayment of tax for giving effect to the relief was made or, if there was no such repayment, the date on which the inspector issued a notice to the claimant showing the amount of tax payable after giving effect to the relief.

29 Information.

29.—(1) Where an event occurs by reason of which any relief given to an individual falls to be withdrawn by virtue of section 20 or 25, the individual shall, within sixty days of his coming to know of the event, give a notice in writing to the inspector containing particulars of the event.

• (2) Where an event occurs by reason of which any relief in respect of any shares in a company falls to be withdrawn by virtue of section 21, 22, 23 or 26—

• (a) the qualifying research and development company or the qualifying sponsoring company, as the case may be, and

• (b) any person connected with that company who has knowledge of that matter,

shall within sixty days of the event or, in the case of a person within paragraph (b), of his coming to know of it, give a notice in writing to the inspector containing particulars of the event.

• (3) If the inspector has reason to believe that a person has not given a notice which he is required to give under subsection (1) or (2) in respect of any event, the inspector may by notice in writing require that person to furnish him within such time (not being less than sixty days) as may be specified in the notice with such information relating to the event as the inspector may reasonably require for the purposes of this Chapter.

• (4) Where relief is claimed in respect of shares in a qualifying research and development company and the inspector has reason to believe that it may not be due by reason of any such arrangement or scheme as is mentioned in section 21 (6) or 26, he may by notice in writing require any person concerned to furnish him within such time (not being less than sixty days) as may be specified in the notice with—

• (a) a declaration in writing stating whether or not, according to the information which that person has or can reasonably obtain, any such arrangement or scheme exists or has existed, and

• (b) such other information as the inspector may reasonably require for the purposes of the provision in question and as that person has or can reasonably obtain.

• (5) References in subsection (4) to the person concerned are, in relation to section 26, references to the claimant and, in relation to section 21 (6) and 26, references to the qualifying research and development company or the qualifying sponsoring company, as the case may be, and to any person controlling that company.

• (6) Where relief has been claimed in respect of shares in a qualifying research and development company, any person who holds or has held shares in the company and any person on whose behalf any such shares are or were held shall, if so required by the inspector, state whether the shares which are or were held by him or on his behalf are or were held on behalf of any person other than himself and, if so, the name and address of that person.

• (7) No obligation as to secrecy imposed by statute or otherwise shall preclude the inspector from disclosing to a qualifying research and development company that relief has been given or claimed in respect of a particular number or proportion of its shares.

• (8) Schedule 15 to the Income Tax Act, 1967, is hereby amended by the insertion—

• (a) in column 2 of “Finance Act, 1986, section 29 (3) and (4)”; and

• (b) in column 3 of “Finance Act, 1986, section 29 (1) and (2)”.

30 Capital gains tax.

30.—(1) The sums allowable as deductions from the consideration in the computation for the purposes of capital gains tax of the gain or loss accruing to an individual on the disposal of shares in respect of which any relief has been given and not withdrawn shall be determined without regard to that relief, except that where those sums exceed the consideration they shall be reduced by an amount equal to—

• (a) the amount of that relief, or

• (b) the excess,

whichever is the less, but the foregoing provisions of this subsection shall not apply to a disposal falling within section 13 (5) of the Capital Gains Tax Act, 1975.

• (2) In relation to shares in respect of which relief has been given and not withdrawn, any question—

• (a) as to which of any such shares issued to a person at different times a disposal relates, or

• (b) whether a disposal relates to such shares or to other shares,

shall for the purposes of capital gains tax be determined as for the purposes of section 25.

• (3) Where an individual holds ordinary shares in a company and the relief has been given in respect of some but not others, then, if there is within the meaning of paragraph 2 (1) of Schedule 2 to the Capital Gains Tax Act, 1975, a reorganisation affecting those shares, paragraph 2 (2) of that Schedule shall apply separately to the shares in respect of which the relief has been given and to the other shares (so that the shares of each kind are treated as a separate holding of original shares and identified with a separate new holding).

• (4) There shall be made all such adjustments of capital gains tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the relief being given or withdrawn.

Chapter IV Interest Payments by Certain Deposit Takers

31 Interpretation (Chapter IV).

31.—(1) In this Chapter—

“amount on account of appropriate tax” shall be construed in accordance with section 33 (4);

“appropriate tax”, in relation to a payment of relevant interest, means a sum representing income tax on the amount of that payment at the standard rate in force at the time of the payment;

“building society” means a society within the meaning of the Building Societies Acts, 1976 to 1983;

“deposit” means a sum of money paid to a relevant deposit taker on terms under which it will be repaid with or without interest and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person to whom it is made;

“interest” means any interest of money whether yearly or otherwise, including any amount whether or not described as interest paid in consideration of the making of a deposit, and, as respects a building society, includes any dividend or other distribution in respect of shares in the society:

Provided that any amount consisting of an excess of the amount received on the redemption of any holding of A.C.C. Bonus Bonds — First Series, issued by the Agricultural Credit Corporation, p.l.c., over the amount paid for the holding shall not be treated as interest for the purposes of this Chapter;

“relevant deposit” means a deposit held by a relevant deposit taker other than a deposit—

• (a) which is made by, and the interest on which is beneficially owned by—

• (i) a relevant deposit taker,

• (ii) the Central Bank of Ireland, or

• (iii) the Insurance Corporation of Ireland, p.l.c.,

• (b) which is a debt on a security which is issued by the relevant deposit taker and is listed on a stock exchange,

• (c) which, in the case of a relevant deposit taker resident in the State for the purposes of corporation tax, is held at a branch of the relevant deposit taker situated outside the State,

• (d) which, in the case of a relevant deposit taker not resident in the State for the purposes of corporation tax, is held otherwise than at a branch of the relevant deposit taker situated in the State,

• (e) which is a deposit denominated in a foreign currency,

• (f) in respect of which—

• (i) no person who is ordinarily resident in the State is beneficially entitled to any interest, and

• (ii) a declaration of the kind mentioned in section 37 has been made to the relevant deposit taker, or

• (g) (i) the interest on which is exempt—

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

• (II) 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,

as the case may be, and

• (ii) in respect of which a declaration of the kind mentioned in section 38 has been made to the relevant deposit taker;

“relevant deposit taker” means any of the following persons, that is to say:

• (a) a person who is a holder of a licence granted under section 9 of the Central Bank Act, 1971,

• (b) a building society,

• (c) a trustee savings bank within the meaning of the Trustee Savings Banks Acts, 1863 to 1979,

• (d) the Agricultural Credit Corporation, p.l.c.,

• (e) the Industrial Credit Corporation, p.l.c.,

and

• (f) the Post Office Savings Bank;

“relevant interest” means interest paid on or after the 6th day of April, 1986, in respect of a relevant deposit;

“return” means a return under section 33 (2).

• (2) For the purposes of this Chapter—

• (a) any amount which is credited as interest in respect of a relevant deposit shall be treated as a payment of interest, and references in this Chapter to relevant interest being paid shall be construed accordingly,

• (b) any reference in this Chapter to the amount of a payment of relevant interest shall be construed as a reference to the amount which would be the amount of that payment if no appropriate tax were to be deducted therefrom, and

• (c) a deposit is held at a branch of a relevant deposit taker if it is recorded in its books as a liability of that branch.

32 Deduction of tax from relevant interest.

32.—(1) Where a relevant deposit taker makes a payment of relevant interest it shall deduct out of the amount of the payment the appropriate tax in relation to the payment; and the person to whom such payment is made shall allow such deduction upon the receipt of the residue of the payment; and the relevant deposit taker shall be acquitted and discharged of so much money as is represented by the deduction as if that amount of money had actually been paid to the person.

• (2) A relevant deposit taker shall treat every deposit made with it as a relevant deposit unless satisfied that it is not a relevant deposit; but where it has satisfied itself that a deposit is not a relevant deposit it shall be entitled to continue to so treat the deposit until such time as it is in possession of information which can reasonably be taken to indicate that the deposit is, or may be, a relevant deposit.

• (3) Any payment of relevant interest which is within subsection (1) shall be treated as not being within section 31 of the Finance Act, 1974.

33 Returns and collection of appropriate tax.

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.