Finance Act , 1993

Type Act

Publication 1993-06-17

State In force

Source Irish Statute Book

articles 143

(ii) the part of taxable income on which he is charged to income tax at the standard rate,

shall, as respects the year of assessment for which he is to be charged to income tax in respect of the relevant interest, be increased by the amount of that payment, and

(cc) 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.”,

and

(i) by the insertion, in subsection (1), of the following paragraph after paragraph (c):

“(cc) all moneys held in the account shall be subject to the same terms;”, and

(ii) by the substitution of the following subsection for subsection (4):

“(4) Section 35 shall apply and have effect in relation to any relevant interest paid in respect of any relevant deposit held in a special savings account as if the following paragraph were substituted for paragraph (c) of subsection (1):

‘(c) the amount of any payment of relevant interest (being relevant interest paid in respect of any relevant deposit held in a special savings account) shall not, except for the purposes of a claim to repayment under section 39 (2) in respect of the appropriate tax deducted from such relevant interest, be reckoned in computing total income for the purposes of the Income Tax Acts,’.”.

(2) Subsection (4) of section 37A (inserted by the Finance Act, 1992) of the Finance Act, 1986, shall apply and have effect in respect of any relevant interest paid in the period to the 5th day of April, 1993, in respect of any relevant deposit held in a special savings account as if, in paragraph (b), “and (e)” had not been enacted.

16 Limits to special investments.

16.—(1) An individual shall not at the same time have a beneficial interest in investments of more than one of the following classes of investment—

(a) special savings accounts within the meaning of section 31 (1) (as amended by the Finance Act, 1993) of the Finance Act, 1986 (such an account being referred to subsequently in this section as “a special savings account”);

(b) special investment policies within the meaning of section 36 A (1) (inserted by section 11) of the Corporation Tax Act, 1976;

(d) special portfolio investment accounts within the meaning of section 14:

Provided that—

(i) an individual, whether married or not, who does not have a joint interest in an investment of a class mentioned in this subsection may have a beneficial interest, that is not a joint interest, in two such investments, being a special savings account and an investment of a class mentioned in paragraph (b), (c) or (d), during a period throughout which—

(I) as respects the special savings account, the condition specified in section 37A (1) (e) (inserted by the Finance Act, 1992) of the Finance Act, 1986, would be satisfied if “£25,000” were substituted for “£50,000” in the said paragraph (e), and

(II) as respects the other investment, the condition specified in section 36A (3) (b) (inserted by section 11) of the Corporation Tax Act, 1976, or section 13 (3) (b) or 14 (2) (b) relevant to that investment would be satisfied if “£25,000” were substituted for “£50,000” in paragraph (b) of the appropriate provision aforesaid, and

(ii) a couple married to each other, neither of whom has an interest, that is not a joint interest, in an investment of a class mentioned in this subsection, may have a joint beneficial interest—

(I) in two such investments, being a special savings account and an investment of a class mentioned in paragraph (b), (c) or (d), or

(II) in three or four such investments, being one or two special savings accounts and one or two other investments of a class (which need not be the same class where there are two investments) mentioned in paragraph (b), (c) or (d), during a period throughout which—

(A) as respects the special savings account or accounts, as the case may be, the condition specified in the said section 37A (1) (e) would be satisfied if “£25,000” were substituted for “£50,000” in the said paragraph (e), and

(B) as respects the other investment or investments, as the case may be, the condition specified in the said section 36A (3) (b) or section 13 (3) (b) or 14 (2) (b) relevant to that investment or to each of those investments, as the case may be, would be satisfied if “£25,000” were substituted for “£50,000” in paragraph (b) of the appropriate provision aforesaid.

(2) So long as an individual has a beneficial interest—

(a) held otherwise than jointly in two investments of a class mentioned in subsection (1), or

(b) held jointly in three or four such investments,

then, any provision of the Tax Acts, which would, apart from this subsection, have the effect, at any time, of restricting any of those investments to an investment the value of which does not exceed £50,000, shall apply to that investment as if the reference to £50,000 in the provision were a reference to £25,000.

(3) Where an individual holds a beneficial interest otherwise than jointly in an investment of a class mentioned in subsection (1), a declaration under the Tax Acts made by him in connection with that investment shall contain—

(a) a statement by him as to whether or not he has, on the day on which he makes the declaration, a beneficial interest in another investment of a class so mentioned, and

(b) if the statement is to the effect that he has no such beneficial interest, an undertaking by him that, if on a day subsequent to the day on which he makes the declaration he acquires such a beneficial interest while retaining his beneficial interest in the investment in respect of which he made the declaration, he will immediately notify in writing the person to whom he has made the declaration—

(i) that he has acquired a beneficial interest in a second such investment, and

(ii) of the date of the acquisition.

(4) Where an individual holds a beneficial interest jointly in an investment of a class mentioned in subsection (1), a declaration under the Tax Acts made by him in connection with that investment shall contain—

(a) a statement by him as to whether or not he has, on the day on which he makes the declaration, a joint beneficial interest in more than two investments of a class so mentioned, and

(b) if the statement is to the effect that he has no such beneficial interest, an undertaking by him that, if on a day subsequent to the day on which he makes the declaration he acquires a joint beneficial interest in a third investment of such a class while retaining a joint beneficial interest in the investment in respect of which he made the declaration and in another investment of such a class as aforesaid, he will immediately notify in writing the person to whom he has made the declaration—

(i) that he has acquired a beneficial interest in a third such investment, and

(ii) of the date of the acquisition.

17 Undertakings for collective investment.

17.—(1) (a) In this section and section 18—

“chargeable period” means an accounting period of an undertaking for collective investment which is a company or, as respects such an undertaking which is not a company, a year of assessment;

“designated assets” means—

(i) land, or

(ii) shares in a company resident in the State which are not shares—

(I) listed in the official list, or

(II) dealt in on the smaller companies market, or the unlisted securities market,

of the Irish Stock Exchange;

“designated undertaking for collective investment” means an undertaking for collective investment which, on the 25th day of May, 1993, owned designated assets for which it gave consideration (determined in accordance with section 9 of the Capital Gains Tax Act, 1975) the aggregate of which is not less than 80 per cent. of the aggregate of the consideration (as so determined) which it gave for the total assets it owned at that date;

“distribution” has the same meaning as it has for the purposes of the Corporation Tax Acts;

“guaranteed undertaking for collective investment” means an undertaking for collective investment all of the issued units of which, on the 25th day of May, 1993, are units in respect of each of which the undertaking will make one payment only, being a payment—

(i) to be made on a specified date in cancellation of those units, and

(ii) which is the aggregate of—

(I) a fixed amount, and

(II) an amount, which may be nil, determined by a stock exchange index or indices;

“relevant Regulations” means the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 1989 (S.I. No. 78 of 1989);

“undertaking for collective investment”, subject to paragraph (b), means—

(i) a unit trust scheme, other than—

(I) a special investment scheme within the meaning of section 13, or

(II) a unit trust mentioned in section 31 (4) of the Capital Gains Tax Act, 1975,

which is, or is deemed to be, an authorised unit trust scheme within the meaning of the Unit Trusts Act, 1990, and which has not had its authorisation under that Act revoked,

(ii) any other undertaking which is an undertaking for collective investment in transferable securities within the meaning of the relevant Regulations, being an undertaking which holds an authorisation issued pursuant to the relevant Regulations and that authorisation has not been revoked, or

(iii) any authorised investment company within the meaning of Part XIII of the Companies Act, 1990, which—

(I) has not had its authorisation under that Part of the said Act revoked, and

(II) has been designated in that authorisation as an investment company which may raise capital by promoting the sale of its shares to the public and has not ceased to be so designated,

which is neither an offshore fund within the meaning of section 65 (1) of the Finance Act, 1990, nor a specified collective investment undertaking within the meaning of section 18 (as amended by this Act) of the Finance Act, 1989;

“unit” includes a share and any other instrument granting an entitlement—

(i) to a share of the investments or relevant profits of, or

(ii) to receive a distribution from,

an undertaking for collective investment;

“unit holder” means, in relation to an undertaking for collective investment, any person who by reason of the holding of a unit, or under the terms of a unit, in the undertaking is entitled to a share of any of the investments or relevant profits of, or to receive a distribution from, the undertaking;

“standard rate” has the meaning assigned to it by section 1 (1) of the Income Tax Act, 1967;

“standard rate per cent.” has the meaning assigned to it by section 155 (5) of the Corporation Tax Act, 1976.

(b) For the purposes of this section and section 18, references to an undertaking for collective investment in those sections, other than in this paragraph, shall be construed so as to include a reference to a trustee, management company or other such person who—

(i) is authorised to act on behalf, or for the purposes, of the undertaking, and

(ii) habitually does so,

to the extent that such construction brings into account for the said purposes any matter relating to the undertaking, being a matter which would not otherwise be brought into account for those purposes.

(i) as respects an undertaking for collective investment which is a company, where an accounting period of the company begins before the 6th day of April, 1994, and ends on or after that day, it shall be divided into two parts, one beginning on the day on which the accounting period begins and ending on the 5th day of April, 1994, and the other beginning on the 6th day of April, 1994, and ending on the day on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods of the company, and

(ii) without prejudice to the provisions of section 29 (2) of the Finance Act, 1984, any attribution of income or chargeable gains of such an undertaking to periods treated as separate accounting periods by virtue of subparagraph (i) shall be made—

(I) as respects such income, on the basis of the time that income arises to the undertaking, and

(II) as respects such capital gains, on the basis of the time of disposal of the assets concerned,

and section 155 (13) of the Corporation Tax Act, 1976, shall not have effect for the purpose of such attribution.

(2) (a) Other than in the case of subsections (7) to (9) of section 18 (as amended by this Act) of the Finance Act, 1989, that section shall not apply, and the following provisions of this section shall apply, to an undertaking for collective investment as respects the chargeable periods of the undertaking ending on or after—

(i) the 6th day of April, 1994, if the undertaking was carrying on a collective investment business on the 25th day of May, 1993, or

(ii) the 25th day of May, 1993, if the undertaking was not carrying on such a business at that date.

(b) As respects an undertaking for collective investment which is a company, the corporation tax which is chargeable on its profits on which corporation tax falls finally to be borne for a chargeable period shall be reduced, for all the purposes of the Tax Acts, so that, before it is reduced by any credit, relief or other reduction under those Acts (other than under this section), it is the standard rate, for the year of assessment in which the chargeable period falls, of those profits:

Provided that, for the purposes of the foregoing provision of this paragraph, where part of the chargeable period falls in one year of assessment (referred to hereafter in this proviso as the “first-mentioned year of assessment”) and the other part falls in the year of assessment succeeding the first-mentioned year of assessment and different standard rates are in force for each of those years, “the standard rate” shall be deemed to be a rate per cent. calculated by the formula—

	(A C) __ E		(B D) __ E

where—

A is the standard rate per cent. in force for the first-mentioned year of assessment,

B is the standard rate per cent. in force for the year of assessment succeeding the first-mentioned year of assessment,

C is the length of that part of the chargeable period falling in the first-mentioned year of assessment,

D is the length of that part of the chargeable period falling in the year of assessment succeeding the first-mentioned year of assessment, and

E is the length of the chargeable period.

(i) the capital gains tax which is chargeable on the chargeable gains accruing in a year of assessment to the undertaking shall be reduced so that the amount of such tax, before it is reduced by any credit, relief or other deduction under any provision, other than under this section, of the Tax Acts or the Capital Gains Tax Acts, is the standard rate, for the year of assessment, of the chargeable gains accruing to the undertaking, and

(ii) only so much of income arising or gains accruing to the undertaking shall be chargeable to income tax or capital gains tax, as the case may be, as is, or is to be—

(I) paid to, or

(II) accumulated or invested for the benefit of,

unit holders in the undertaking or as would be so paid, accumulated or invested if any gains accruing to the scheme by virtue of subsection (4) were gains on an actual disposal of the assets concerned.

(3) (a) (i) Section 2 of the Corporation Tax Act, 1976, shall not have effect as respects a distribution received by an undertaking for collective investment which is a company; and the income represented by the distribution shall be equal to the aggregate of the distribution and the amount of the tax credit in respect of the distribution.

(ii) Where an undertaking for collective investment which is a company is entitled to a tax credit in respect of a distribution which is chargeable, by virtue of subparagraph (i), to corporation tax—

(I) it may set the credit against the corporation tax, as reduced by virtue of subsection (2) (b), chargeable on its profits for the chargeable period in which the distribution is made and, where the credit exceeds that corporation tax, the excess shall be paid to it, and

(II) notwithstanding the provisions of sections 24 and 155 of the Corporation Tax Act, 1976, the income represented by the distribution shall not be franked investment income for the purposes of sections 15 and 25 of that Act.

(b) Where a company resident in the State makes a distribution to an undertaking for collective investment which is not a company, the tax credit, if any, attaching to the distribution shall be set against—

(i) the income tax chargeable in respect of income arising to, or

(ii) the capital gains tax, as reduced by subsection (2) (c) (i), chargeable in respect of chargeable gains accruing to,

the undertaking for the year of assessment in which the distribution is made and—

(I) where the credit exceeds the aggregate of that income tax and capital gains tax, the excess shall be paid to the undertaking, and

(II) a payment shall not be made, in respect of the credit, under section 88 (4) of the Corporation Tax Act, 1976.

(c) Notwithstanding any provision of that Chapter, Chapter IV of Part I of the Finance Act, 1986, shall apply to a deposit, within the meaning of the Chapter, which is for the time being beneficially owned by an undertaking for collective investment which is not a company as if such a deposit were not a relevant deposit, within the meaning of the Chapter.

(4) (a) Every asset (other than assets to which subsection (5) (a) (ii) relates) of an undertaking for collective investment on the day on which a chargeable period of the undertaking ends shall, subject to the subsequent provisions of this subsection, be deemed to have been disposed of and immediately reacquired by the undertaking at the asset's market value on the said day.

(b) Subject to paragraphs (c) and (d), chargeable gains or allowable losses, which would otherwise accrue to an undertaking for collective investment on disposals deemed by virtue of paragraph (a) to have been made in a chargeable period (other than a period in which the collective investment business of the undertaking concerned ceases) of the undertaking, shall be treated, subject to subparagraphs (ii) and (iii), as not accruing to it, and instead—

(i) there shall be ascertained the difference (hereafter in this subsection referred to as “the net amount”) between the aggregate of those gains and the aggregate of those losses, and

(ii) one-seventh of the net amount shall be treated as a chargeable gain or, where it represents an excess of losses over gains, as an allowable loss accruing to the undertaking on disposals of assets deemed to be made in the chargeable period, and

(iii) a further one-seventh shall be treated as a chargeable gain or, as the case may be, as an allowable loss accruing on disposals of assets deemed to be made in each succeeding chargeable period until the whole amount has been accounted for.

(c) For any chargeable period of less than one year, the fraction of one-seventh referred to in paragraph (b) (iii) shall be proportionately reduced; and where this paragraph has had effect, in relation to any chargeable period before the last such period for which paragraph (b) (iii) applies, the fraction treated as accruing in that last chargeable period shall be reduced so as to secure that no more than the whole of the net amount has been accounted for.

(d) Where the collective investment business of the undertaking concerned ceases before the beginning of the last of the chargeable periods for which paragraph (b) (iii) would apply in relation to a net amount, the fraction of that amount that is treated as accruing in the chargeable period in which the business ceases shall be such as to secure that the whole of the net amount has been accounted for.

(5) Notwithstanding any provision of the Capital Gains Tax Acts, for the purposes of computing chargeable gains accruing to an undertaking for collective investment—

(a) (i) section 3 of the Capital Gains Tax (Amendment) Act, 1978, and

(ii) section 19 of the Capital Gains Tax Act, 1975, as it applies to assets specified in that section or in any other provision of the Capital Gains Tax Acts,

shall not have effect,

(b) paragraph 14 of Schedule 1 to the Capital Gains Tax Act, 1975, shall, as respects—

(i) subparagraphs (1) and (2), and

(ii) subparagraph (3), in so far as a chargeable gain is not thereby disregarded for the purposes of that subparagraph,

apply as if subsection (4), paragraph (a) (ii) and paragraph (c) had not been enacted, and

(c) if the undertaking was carrying on a collective investment business on the 25th day of May, 1993, it shall be deemed to have acquired each of the assets it holds on the 5th day of April, 1994, apart from assets referred to in paragraph (a) (ii), at the asset's market value at that date.

(6) Subject to subsection (4) (b), where an undertaking for collective investment incurs allowable losses on disposals or deemed disposals of assets in a chargeable period, the amount (if any) by which the aggregate of such allowable losses exceeds the aggregate of chargeable gains on such disposals in the chargeable period, shall—

(a) be disregarded for the purposes of subsection (1) of section 5 of the Capital Gains Tax Act, 1975,

(b) be treated as reducing the income chargeable to income tax or corporation tax arising to the undertaking in that chargeable period, and

(c) to the extent that it is not treated as reducing income arising to the undertaking in the said chargeable period, be treated, for the purposes of the Capital Gains Tax Acts and this subsection, as an allowable loss incurred on a disposal of an asset deemed to be made in the next subsequent chargeable period.

(7) Notwithstanding any provision of the Tax Acts or the Capital Gains Tax Acts, unit holders in an undertaking for collective investment shall not be entitled to any credit for, or repayment of, any income tax, capital gains tax, or corporation tax paid in respect of income arising to, capital gains accruing to or profits of the undertaking.

(8) Notwithstanding subsection (2), the provisions of this section (other than this subsection) and section 18 shall be construed and have effect as respects designated undertakings for collective investment and guaranteed undertakings for collective investment as if—

(a) every reference therein to the 5th day of April, 1994, were a reference to the 5th day of April, 1998, and

(b) every reference therein to the 6th day of April, 1994, were a reference to the 6th day of April, 1998,

and, as respects such an undertaking, those provisions shall not have effect except as so construed:

Provided that—

(i) if the aggregate of the consideration (determined in accordance with section 9 of the Capital Gains Tax Act, 1975) given for the designated assets owned, at any time after the 25th day of May, 1993, and before the 5th day of April, 1997, by a designated undertaking for collective investment is less than 80 per cent. of the aggregate of the consideration (as so determined) given for the total assets owned by the undertaking at that time, or

(ii) if at any time before the 5th day of April, 1997, a guaranteed undertaking for collective investment makes any payment to unit holders in the undertaking which is not a payment in cancellation of those units,

this subsection (other than this proviso) shall have effect and be construed as respects that undertaking as if—

(I) each reference therein to the 5th day of April, 1998, were a reference to the 5th day of April, and

(II) each reference therein to the 6th day of April, 1998, were a reference to the 6th day of April,

next subsequent to that said time.

18 Taxation of unit holders in undertakings for collective investment.

18.—(1) Subject to subsection (4), any payment made on or after the 6th day of April, 1994, in money or money's worth, to a unit holder by an undertaking for collective investment by reason of rights conferred on the holder as a result of holding units in the undertaking, shall not be reckoned in computing—

(a) total income for the purposes of the Income Tax Acts, or

(b) total income brought into charge to corporation tax for the purposes of the Corporation Tax Acts,

of the holder.

(2) Subject to subsections (3) and (4), as respects a disposal on or after the 6th day of April, 1994, of units in an undertaking for collective investment—

(a) no chargeable gain shall accrue on the disposal if the person disposing of the units acquired them on or after that date, and

(b) if the person disposing of the units acquired them before that date the chargeable gains on the disposal shall be computed as if—

(i) the consideration for the disposal were the market value of the units on the 5th day of April, 1994:

Provided that subparagraph (i) shall not apply in relation to the disposal of units—

(I) if, as a consequence of the application of subparagraph (i), a gain would accrue on that disposal to the person making the disposal and either a smaller gain or loss would so accrue if that subparagraph did not apply, or

(II) if, as a consequence of the application of subparagraph (i), a loss would so accrue and either a smaller loss or a gain would accrue if that subparagraph did not apply,

and, accordingly, in a case to which paragraph (I) or (II) of this proviso applies, the amount of the gain or loss accruing on the disposal shall be computed without regard to the provisions of subparagraph (i) (other than this proviso) but, in a case where this proviso would otherwise substitute a loss for a gain or a gain for a loss, it shall be assumed, in relation to the disposal, that the units were acquired by the person disposing of them for a consideration such that neither a gain nor a loss accrued to him on making the disposal,

and

(ii) for the purposes of selecting the appropriate multiplier (within the meaning of section 3 of the Capital Gains Tax (Amendment) Act, 1978), the disposal were made in the year 1993-94,

and, for the purposes of this subsection, references to units shall be construed as including a reference to an interest in units and the provisions of the subsection shall have effect, with any necessary modification, accordingly.

(3) (a) Where a person disposing of units in an undertaking for collective investment acquired them—

(i) on or after the 6th day of April, 1994, and

(ii) in such circumstances that by virtue of any enactment other than section 3 (3) of the Capital Gains Tax (Amendment) Act, 1978, he and the person from whom he acquired them (hereafter in this subsection referred to as “the previous owner”) fell to be treated for the purposes of the Capital Gains Tax Act, 1975, as if his acquisition were for a consideration of such an amount as would secure that, on the disposal under which he acquired it, neither a gain nor a loss accrued to the previous owner,

then, the previous owner's acquisition of the interest shall be treated as his acquisition of it.

(b) If the previous owner acquired the units disposed of on or after the 6th day of April, 1994, and in circumstances similar to those referred to in paragraph (a), then, his predecessor's acquisition of the units shall be treated for the purposes of this section as the previous owner's acquistion, and so on back through previous acquisitions in similar circumstances until the first such acquisition before the 6th day of April, 1994, or, as the case may be, until an acquisition on a disposal on or after that date.

(4) If an undertaking for collective investment was not carrying on a collective investment business on the 25th day of May, 1993, this section shall apply as respects payments by, or disposals of units in, that undertaking as if—

(a) “on or after the 6th day of April, 1994,” were deleted from subsections (1) and (2), and

(b) paragraph (b) were deleted from subsection (2).

19 Amendment of section 31 (unit trusts) of the Capital Gains Tax Act, 1975.

19.—Section 31 of the Capital Gains Tax Act, 1975, is hereby amended in subsection (4) by the insertion after “residence” of “or by virtue of section 18 (2) of the Finance Act, 1993”.

20 Amendment of section 18 (taxation of collective investment undertakings) of Finance Act, 1989.

20.—Section 18 (as amended by the Finance Act, 1991) of the Finance Act, 1989, is hereby amended—

(a) in subsection (1) by the substitution for paragraph (b) of the definition of a “specified collective investment undertaking” of the following paragraph:

“(b) save to the extent that such units are held by the undertaking itself, the qualifying management company of the undertaking or by another specified collective investment undertaking, all the holders of units in the undertaking are persons resident outside the State;”,

and

(b) by the deletion of subsection (10).

21 Life assurance companies: amendment of section 29 (taxation of income deemed to arise on certain sales of securities) of Finance Act, 1984.

21.—Section 29 of the Finance Act, 1984, is hereby amended, as respects accounting periods beginning on or after the 1st day of January, 1993, in paragraph (b) of subsection (2A) by the deletion of “unless the trade consists wholly or partly of a life business the profits of which are not assessed to corporation tax under Case I of Schedule D for that accounting period” and the said paragraph (b), as so amended, is set out in the Table to this section.

TABLE

(b) If the owner is a person carrying on a trade which consists wholly or partly of dealing in securities the profits of which are chargeable to income tax or corporation tax under Case I of Schedule D for the year of assessment or, as the case may be, the accounting period in respect of which the consideration for the sale is taken into account in computing for the purposes of assessment to income tax or corporation tax for that year or accounting period the profits of the trade, or

22 Life assurance companies: amendment of section 16 (relief for trading losses other than terminal losses) of Corporation Tax Act, 1976.

22.—Section 16 of the Corporation Tax Act, 1976, is hereby amended as respects accounting periods ending on or after the 1st day of January, 1993, by the insertion of the following proviso to subsection (5)—

“Provided that where expenses of management of an assurance company (within the meaning of section 50) are deductible under section 15 from the profits of the accounting period in which they were incurred, or of any accounting period subsequent to that period, those expenses shall not be taken into account in computing a loss incurred in a trade of the company.”.

23 Amendment of section 33A Corporation Tax Act, 1976.

23.—Section 33A (inserted by section 44 of the Finance Act, 1992) of the Corporation Tax Act, 1976, is hereby amended, as respects accounting periods ending on or after the 1st day of January, 1992, by the insertion in subsection (1) after “(in whatever manner described)” of “and excluding any payment of rent in respect of which a deduction is to be made twice by virtue of section 45 (as amended by the Finance Act, 1993) of the Finance Act, 1986, in the computation of profits or gains”, and the said subsection (1), as so amended, is set out in the Table to this section.

TABLE

(1) For the purposes of this section and subject to subsections (2), (3) and (4), the acquisition expenses for any period of an assurance company carrying on life assurance business shall be such of the following expenses of management, including commissions (in whatever manner described) and excluding any payment of rent in respect of which a deduction is to be made twice by virtue of section 45 of the Finance Act, 1986, in the computation of profits or gains, as are for that period attributable to the company's life assurance business (excluding pension business and general annuity business), that is to say:

(a) expenses of management which are disbursed solely for the purpose of the acquisition of business, and

(b) so much of any other expenses of management which are disbursed partly for the purpose of the acquisition of business and partly for other purposes as are properly attributable to the acquisition of business,

reduced by—

(i) any repayment or refund receivable in the period of the whole or part of management expenses falling within paragraph (a) or (b) and disbursed by the company (for that period or any earlier period), and

(ii) reinsurance commission earned by the company in that period which is referable to life assurance business (excluding pension business and general annuity business).

24 Foreign life assurance and deferred annuities: taxation and returns.

24.—Part IV of the Capital Gains Tax Act, 1975, is hereby amended by the insertion after section 20 of the following section:

“20A.—(1) (a) (i) Subsection (2) applies to any policy of assurance or contract for a deferred annuity on the life of any person which is a policy issued or a contract made, as the case may be, on or after the 20th day of May, 1993, otherwise than by an assurance company which is—

(I) resident in the State, or

(II) chargeable under Case III of Schedule D, by virtue of section 43 of the Corporation Tax Act, 1976, in respect of its income from the investment of its life assurance fund.

(ii) In this paragraph ‘assurance company’ and ‘life assurance fund’ have the meanings assigned to them, respectively, in section 50 (2) of the Corporation Tax Act, 1976.

(b) (i) For the purposes of this section, a policy of assurance or contract for a deferred annuity on the life of any person, being a policy issued or a contract made before the 20th day of May, 1993, shall be treated as a policy issued or contract made, as the case may be, after that date if there is a variation of the policy or contract on or after that date which directly or indirectly increases the benefits secured by, or extends the term of, the policy or contract, as the case may be.

(ii) For the purposes of subparagraph (i), if a policy of assurance which was issued, or a contract which was made, before the 20th day of May, 1993, provides an option to have another policy or contract substituted for it or to have any of its terms changed, then any change in the terms of the policy or contract which is made in pursuance of the option shall be deemed to be a variation of the policy or contract, as the case may be.

(c) Subject to subsection (2), this section shall be construed together with subsections (3) and (4) of section 20, as if the said subsection (3) were not subject to subsection (2) of section 20.

(2) (a) In this subsection ‘a relevant gain’ means a chargeable gain arising on a disposal of, or an interest in, the rights under any policy of assurance or contract for a deferred annuity to which this subsection applies, including a disposal by a person who is not the original beneficial owner of those rights and who acquired them, or an interest in them, for a consideration in money or money's worth.

(b) Section 20 (2) shall not have effect in respect of any disposal of, or any interest in, the rights under any policy of assurance or contract for a deferred annuity to which this subsection applies.

(c) A relevant gain shall be computed as if section 3 of the Capital Gains Tax (Amendment) Act, 1978, had not been enacted.

(d) Notwithstanding section 5 (1), the total amount of chargeable gains accruing to a person chargeable in a year of assessment, after deducting any allowable losses, shall not be less than the total amount of any relevant gains accruing to the person in that year and, accordingly, any deduction for allowable losses made in computing the total amount of chargeable gains so accruing shall not exceed the total amount of chargeable gains so accruing which are not relevant gains.

(e) Notwithstanding section 13 (4) or 16, an individual shall be charged to capital gains tax on the amount of any relevant gains accruing to him.

(3) As respects a policy of assurance or a contract for a deferred annuity to which subsection (2) applies, section 230 of the Finance Act, 1992, shall apply, with any necessary modification—

(a) to every person carrying on in the State a trade or business in the ordinary course of the operations of which he acts as an intermediary in or in connection with the issue of such a policy, or the making of such a contract, in the same manner as it applies to every intermediary within the meaning of that section, and

(b) to a person resident or ordinarily resident in the State who is entitled to any amount payable under such a policy or contract, being an amount payable otherwise than in the event of the death of a person specified in the terms of the policy or the contract, as the case may be, in the same manner as it applies to a person resident in the State opening an account, in which a deposit which he beneficially owns is held, at a location outside the State,

as if references in that section to—

(i) a deposit were references to any payment made by a person resident or ordinarily resident in the State in respect of such a policy or contract;

(ii) a foreign account were references to such a policy or contract;

(iii) the opening of a foreign account were references to the issue of such a policy or the making of such a contract; and

(iv) a relevant person were references to a person who in the normal course of his trade or business would issue such a policy or make such a contract.”.

Chapter V Investment Incentive Schemes

25 Amendment of Chapter III (Income Tax: Relief for Investment in Corporate Trades) of Part I of Finance Act, 1984.

25.—Chapter III of Part I of the Finance Act, 1984, is hereby amended—

(a) in subsection (1) of section 11—

(i) by the insertion of the following definition after the definition of “factory building” (inserted by the Finance Act, 1990):

“‘full-time employee’ and ‘full-time director’ have the meanings assigned to them by section 8 of the Finance Act, 1978;”,

and

(ii) by the insertion of the following definitions after the definition of “ordinary shares”:

“‘relevant company’, in relation to a specified individual, means a qualifying company incorporated on or after the passing of the Finance Act, 1993—

(a) in which he makes a relevant investment,

(b) with which he commences a relevant employment, and

‘relevant employment’, in relation to a specified individual, means employment throughout the relevant period by a relevant company where the individual is a full-time employee or full-time director of the company;

‘relevant investment’, in relation to a specified individual, means the amount, or the aggregate of the amounts, subscribed by him for eligible shares in a relevant company in the year of assessment in which he commences relevant employment with the company;

‘relevant shares’ means eligible shares issued in respect of a relevant investment;

‘relevant trading operations’ means qualifying trading operations (other than such operations as are referred to in subparagraph (iiib) (inserted by the Finance Act, 1990) of paragraph (a) of subsection (2) of section 16) to be carried on by a relevant company in respect of which a certificate has been issued by an industrial development agency or by Bord Fáilte Éireann (hereinafter referred to as ‘the Bord’), as may be appropriate, certifying that the agency or the Bord, as may be the case, is, on the basis of such information as is supplied to it by the company or which it may reasonably require the company to furnish, satisfied that the carrying on of such operations by the company is, or will be, a bona fide new venture which, having regard to—

(a) the potential for the creation of additional sustainable employment, and

(b) the desirability of minimising the displacement of existing employment,

may be eligible, based on guidelines agreed, with the consent of the Minister for Finance, between (as may be appropriate in the circumstances)—

(i) the agency and the Minister for Enterprise and Employment or the Minister for Arts, Culture and the Gaeltacht, or

(ii) the Bord and the Minister for Tourism and Trade,

to be grant-aided under a scheme of assistance administered by such agency or the Bord:

Provided that—

(I) the carrying on of such qualifying trading operations shall not be regarded as not being a bona fide new venture by reason only that they were carried on as, or as part of, a trade by another person at any time before the issue of the relevant shares in respect of which relief is claimed, and

(II) such a certificate shall not be issued—

(A) by the Bord where the value of the relevant company's interests in land and buildings (excluding fixtures and fittings) is or is intended to be greater than half the value of its assets as a whole, or

(B) unless the relevant company undertakes in writing to furnish the agency or the Bord, as may be appropriate, when requested to do so with such details in relation to the carrying on of the relevant trading operations as the agency or the Bord may specify;

‘specified individual’ means an individual qualifying for relief who—

(a) exercises a relevant employment, and

(b) in each of the three years of assessment immediately prior to the year of assessment in which such employment commences—

(i) was, in respect of not less than 75 per cent. of his total income, if any, chargeable to tax under Schedule E, and

(ii) was not otherwise chargeable to tax in respect of income in excess of £5,000,

and

(c) throughout the relevant period possesses at least 15 per cent. of the issued ordinary share capital of the relevant company concerned, and

(d) at the date of the commencement of the relevant employment or within the period of 12 months immediately preceding that date, either directly or indirectly, does not possess or has not possessed, or was not or is not entitled to acquire, more than 15 per cent. of—

(i) the issued ordinary share capital of any other company, or

(ii) the loan capital (within the meaning of section 14 (5)) and the issued share capital of any other company, or

(iii) the voting power in any other company:

Provided that an individual shall not be regarded as ceasing to comply with paragraph (a) or (c) if he does so by reason of the relevant company concerned being wound up or dissolved without winding up before the end of the appropriate relevant period but only if it is shown that the winding up or dissolution is for bona fide commercial reasons 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.”,

(b) in section 12—

(i) in paragraph (c) of subsection (1), by the substitution of the following proviso for the proviso inserted by the Finance Act, 1990:

“Provided that where the money raised was used, is being used or is intended to be used—

(i) for the purpose of the construction and the leasing of an advance factory building, the aforementioned evidence shall include a certificate by an industrial development agency certifying that it has satisfied itself—

(I) that the building is or will be an advance factory building, and

(II) that—

(A) the advance factory building is or will be situated in an area which, on the basis of guidelines agreed between it and the Minister for Enterprise and Employment or the Minister for Arts, Culture and the Gaeltacht (as may be appropriate in the circumstances) and with the consent of the Minister for Finance, was or is in particular need of development and of the creation of opportunities for employment, and

(B) the construction of the advance factory building contributes or will contribute significantly to meeting those needs,

(ii) for the purpose of qualifying trading operations such as are referred to in subparagraph (iiic) (inserted by the Finance Act, 1993) of paragraph (a) of subsection (2) of section 16 (hereafter in this proviso referred to as ‘the operations’) the aforementioned evidence shall include a certificate by an industrial development agency certifying that it is satisfied that the operations—

(I) have the potential to result in the commencement of qualifying trading operations such as are referred to in subparagraphs (i) (as amended by the Finance Act, 1990), (ii) (inserted by the Finance Act, 1990) and (iiia) (inserted by the Finance Act, 1988) of the said paragraph (a), and

(II) have commenced, and

(iii) for the purposes of a relevant investment, the aforementioned evidence shall include the certificate referred to in the definition of relevant trading operations (inserted by the Finance Act, 1993) in section 11(1).”,

(ii) in subsection (3), by the insertion, as respects a subscription for eligible shares made on or after the passing of this Act, of the following additional proviso:

“Provided also that a specified individual may, in relation to one, and only one, relevant investment made by him, elect, by notice in writing to the inspector, to have the relief due given as a deduction from his total income for any one of the five years of assessment immediately prior to the year of assessment in which the relevant shares are issued which he nominates for that purpose and, accordingly, subject to section 13 and paragraphs (a) and (b), for the purposes of granting such relief, but for no other purpose of this Chapter, the shares shall be deemed to have been issued in the year of assessment so nominated, and—

(a) where any of the years of assessment following the year of assessment nominated as aforesaid precede the year of assessment in which the relevant shares are, in fact, issued, subsections (2A), (2B) and (2C) (inserted by the Finance Act, 1987) of section 13 shall not operate to give relief in more than two such years of assessment which shall be nominated by the specified individual for that purpose, and

(b) to the extent that the amount of the relief which would be due in respect of the relevant investment by virtue of the said subsections (2A), (2B) and (2C) has not been given in accordance with the foregoing provisions, it shall, subject to the provisions of the aforesaid subsections, be given for the year of assessment in which the relevant shares are, in fact, issued or, if appropriate, a subsequent year of assessment.”,

(iii) in subsection (4)—

(I) by the substitution of the following paragraph for paragraph (a):

“(a) (i) in the case of a relevant investment, unless and until the company commences to carry on the trade, and

(ii) in any other case, unless and until the company has carried on the trade for four months, and”,

and

(II) by the insertion of the following additional proviso:

“Provided also that, in the case of qualifying trading operations to which section 16 (2) (a) (iiic) (inserted by the Finance Act, 1993) relates, the trade shall be deemed to have commenced on the date on which the certificate referred to in paragraph (ii) of the proviso (inserted by the Finance Act, 1993) to paragraph (c) of subsection (1) of section 12 was issued.”,

(iv) by the substitution of the following subsection for subsection (5):

“(5) Subject to subsection (4) (a) (inserted by the Finance Act, 1993), a claim for relief may be allowed at any time if the conditions for the relief are then satisfied.”,

(v) in subsection (7)—

(I) in paragraph (a), by the substitution for “shares; and” of “shares;”,

(II) in paragraph (b), by the substitution for “such a trade.” of “such a trade;”, and

(III) by the addition after paragraph (b) of the following paragraphs:

“(c) as respects a relevant employment, the period beginning on the date on which the shares are issued or, if later, the date on which the employment commences and ending 12 months after that date; and

(d) as respects a specified individual, the period beginning with the date on which the shares are issued and ending either two years after that date or, where the company was not at that date carrying on relevant trading operations, two years after the date on which it subsequently began to carry on such operations.”,

and

(vi) by the substitution of the following subsection for subsection (11) (inserted by the Finance Act, 1991):

“(11) This section applies only where the shares concerned are issued in the period commencing on the 6th day of April, 1984, and ending on the 5th day of April, 1996.”,

(i) as respects subscriptions for eligible shares made on or after the 24th day of February, 1993, by the deletion of the proviso (inserted by the Finance Act, 1991) to subsection (2), and

(ii) by the substitution in the provisos to subsections (2A) and (2B) (inserted by the Finance Act, 1987) of “the year 1995-96” for “the year 1992-93” (inserted by the Finance Act, 1991), and the said provisos, as so amended, are set out, respectively, in the Table to this section,

(d) in section 13A (inserted by the Finance Act, 1989), as respects eligible shares issued on or after the 6th day of May, 1993—

(i) in subsection (1) (inserted by the Finance Act, 1991)—

(I) by the substitution of “the 6th day of May, 1993” for “the 30th day of January, 1991”, and

(II) by the substitution of “£1,000,000” for “£500,000” in both places where it occurs,

and

(ii) in subsection (1A) (inserted by the Finance Act, 1991)—

(I) by the substitution of “the 6th day of May, 1993” for “the 12th day of March, 1991”, and

(II) by the substitution of “£1,000,000” for “£500,000” in both places where it occurs,

(e) in section 14, by the insertion, as respects eligible shares issued on or after the passing of the Finance Act, 1993, of the following subsection after subsection (7):

“(7A) An individual shall not be connected with a company by reason only of the provisions of subsection (4), (6) or (7)—

(a) if, throughout the relevant period, the aggregate of all amounts subscribed for the issued share capital and the loan capital (within the meaning of subsection (5)) of the company does not exceed £150,000, or

(b) in the case of a specified individual, by virtue only of a relevant investment in respect of which he has been given relief in accordance with the provisions of the second proviso (inserted by the Finance Act, 1993) to subsection (3) of section 12:

Provided that relief granted to an individual in respect of a subscription for eligible shares at a time when by virtue of this subsection he was not connected with the company shall not be withdrawn by reason only that he subsequently became connected with the company by virtue of the said subsection (4), (6) or (7).”,

(f) in section 15, by the insertion in subsection (8) after “is not a qualifying company if” of “in the case of a relevant company, any transactions in the relevant period between the company and another company (being the immediate former employer of the individual), or a company which controls or is under the control of that other company, is otherwise than by way of a transaction at arm's length, or if”,

(g) in section 16—

(i) in paragraph (a) of subsection (2)—

(I) by the insertion in subparagraph (i) of the following additional proviso:

“Provided also that the production of a film (within the meaning of section 35 of the Finance Act, 1987) shall not, as respects a subscription for eligible shares made on or after the 6th day of May, 1993, be regarded as qualifying trading operations for the purposes of this Chapter,”, and

(II) by the insertion of the following subparagraph after subparagraph (iiib) (inserted by the Finance Act, 1990):

“(iiic) in respect of a subscription for eligible shares made on or after the passing of the Finance Act, 1993, the research and development or other similar activity undertaken with a view to the carrying on of trading operations referred to in subparagraphs (i) (as amended by the Finance Act, 1990), (ii) (inserted by the Finance Act, 1990) and (iiia) (inserted by the Finance Act, 1988),”,

and

(ii) by the substitution of the following paragraph for paragraph (b) of subsection (4) (inserted by the Finance Act, 1990):

“(b) as including—

(i) the construction and leasing of an advance factory building, and

(ii) the research and development or other similar activity as is referred to in subparagraph (iiic) (inserted by the Finance Act, 1993) of paragraph (a) of subsection (2):”,

(h) in subsection (1) of section 22, by the substitution of the following paragraph for paragraph (a):

“(a) not earlier than—

(i) in the case of a relevant investment, the date on which the company commences to carry on the trade, and

(ii) in any other case, the end of the period of four months mentioned in section 12 (4) (a) (ii) (inserted by the Finance Act, 1993),

and”,

and

(i) in subsection (7) of section 23—

(i) in paragraph (d) (ii) by the substitution for “was granted.” of “was granted;”, and

(ii) by the addition of the following paragraph after paragraph (d):

“(e) in the case of relief withdrawn by virtue of—

(i) a specified individual ceasing to hold a relevant employment, or

(ii) an individual ceasing to be a specified individual,

the date of the cessation.”.

TABLE

Provided that this subsection shall not apply or have effect for any year of assessment subsequent to the year 1995-96.

26 Amendment of section 12 (relief for new shares purchased on issue by employees) of Finance Act, 1986.

26.—As respects the year of assessment 1993-94 and subsequent years of assessment, section 12 of the Finance Act, 1986, is hereby amended by the substitution, in the proviso to subsection (2), of “£3,000” for “£750”, and the said proviso, as so amended, is set out in the Table to this section.

TABLE

Provided that a deduction shall not be given to the extent to which the amount subscribed by an eligible employee for eligible shares issued to him in all years of assessment exceeds £3,000.

27 Relief for individuals on certain reinvestment.

27.—(1) In this section—

“eligible shares”, “ordinary shares” and “unquoted company” have, respectively, the meanings assigned to them in Chapter III of Part I of the Finance Act, 1984;

“full-time working officer or employee”, in relation to one or more companies, means any officer or employee who devotes substantially the whole of his time to the service of that company, or those companies taken together, in a managerial or technical capacity;

“holding company” means a company whose business consists wholly or mainly in the holding of shares in, or securities of, one or more companies which are trading companies and which are its 51 per cent. subsidiaries;

“ordinary share capital”, in relation to a company, has the meaning assigned to it in section 155 of the Corporation Tax Act, 1976;

“the original holding” has the meaning assigned to it in subsection (2);

“personal company”, in relation to an individual, means any company the voting rights in which are exercisable by the individual as respects not less than 15 per cent. of the total voting rights;

“the re-investor” has the meaning assigned to it in subsection (2);

“the specified period” has the meaning assigned to it in subsection (5) (b);

“trading company” means a company whose business consists wholly or mainly of the carrying on of a trade or trades;

“trading group” means a holding company and one or more trading companies which are 51 per cent. subsidiaries of the holding company;

“51 per cent. subsidiary” has the meaning assigned to it in section 156 of the Corporation Tax Act, 1976.

(2) Subject to the provisions of this section, if the consideration which an individual (hereafter in this section referred to as “the re-investor”) obtains for any material disposal by him of shares in or securities of any company (hereafter in this section referred to as “the original holding”) is applied by him, within the period of 3 years from the date of that disposal, in acquiring a qualifying investment, he shall, on making a claim in that behalf, be treated for the purposes of the Capital Gains Tax Acts as if the chargeable gain accruing on the disposal of the original holding did not accrue until he disposes of the qualifying investment:

Provided that—

(a) if the disposal of the qualifying investment is a material disposal for the purposes of this section, and

(b) if the consideration for that disposal is applied by the re-investor, within the period of 3 years from the date of that disposal, in acquiring another qualifying investment,

the re-investor shall be treated as if the chargeable gain accruing on the disposal of the original holding did not accrue until he disposes of the other qualifying investment and any further qualifying investment which is acquired in a similar manner.

(3) Subsection (2) shall not apply if part only of the amount or value of the consideration for the material disposal of the original holding is applied, within the period of 3 years from the date of that disposal, in acquiring a qualifying investment, but, if all of the amount of that consideration except for a part which is less than the amount of the gain accruing on the disposal is so applied, then, the re-investor shall, on making a claim in that behalf, be treated for the purposes of the Capital Gains Tax Acts as if the amount of the gain accruing on the disposal were reduced to the amount of the consideration not applied in acquiring a qualifying investment and the balance of the gain shall be treated as if it did not accrue until the re-investor disposes of the qualifying investment.

(4) For the purposes of this section, the disposal of shares in or securities of a company shall be a material disposal if—

(a) throughout the period of 3 years ending with the date of the disposal, or

(b) in a case where the company commenced to trade at any time in the period mentioned in paragraph (a), throughout the period beginning at that time and ending with the date of the disposal,

the following conditions are satisfied, that is to say—

(i) the company has been a trading company or a holding company,

(ii) the company has been an unquoted company,

(iii) the company has been the re-investor's personal company, and

(iv) the re-investor has been a full-time working officer or employee of the company or, if that company is a member of a trading group, of one or more companies which are members of the trading group.

(5) For the purposes of this section, an individual shall be regarded as acquiring a qualifying investment where he acquires any eligible shares in a qualifying company if—

(a) he holds not less than 5 per cent. of the ordinary share capital of the company at any time in the period beginning on the date of the acquisition of the eligible shares and ending on the date which is one year after the date of the disposal of the original holding (hereafter in this subsection referred to as “the initial period”),

(b) he holds not less than 15 per cent. of the ordinary share capital of the company at any time in the period beginning on the date of the acquisition of the eligible shares and ending on the date which is 3 years after the date of the disposal of the original holding (hereafter in this section referred to as “the specified period”),

(i) the company in which the original holding has subsisted, or

(ii) a company that was a member of the same trading group as the company mentioned in subparagraph (i),

and

(d) he becomes, at any time within the initial period, and is throughout the period beginning at that time and—

(i) ending at the end of the specified period, or

(ii) in a case where the company is wound up or dissolved without winding up and the conditions mentioned in the proviso to paragraph (b) of subsection (6) are satisfied, ending at the time of the commencement of the winding up or dissolution of the company,

a full-time working officer or employee of the company.

(6) (a) For the purposes of this section and subject to paragraph (b), a company shall be a qualifying company if it is incorporated in the State and if—

(i) it is throughout the specified period—

(I) an unquoted company which is resident in the State and not resident elsewhere, and

(II) a company which exists wholly for the purposes of carrying on wholly or mainly in the State of one or more qualifying trades,

and

(ii) it is not, at any time in the specified period—

(I) under the control of another company (or of another company and any person connected with that other company), or

(II) without being under the control of it, a 51 per cent. subsidiary of another company.

(b) A company ceases to be a qualifying company if, at any time in the specified period, a resolution is passed, or an order is made, for the winding up of the company (or in the case of a winding up otherwise than under the Companies Act, 1963, any other act is done for the like purpose) or the company is dissolved without winding up:

Provided that a company shall be deemed not to have ceased to be a qualifying company solely by virtue of the application of this paragraph where—

(i) it is shown that the winding up or dissolution is for bona fide commercial reasons and does not form part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of income tax, corporation tax or capital gains tax, and

(ii) the company's net assets, if any, are distributed to its members within 3 years from the commencement of the dissolution or the winding up.

(7) Section 16 (as amended by this Act) of the Finance Act, 1984, shall apply for the purposes of this section as if references therein to the relevant period were references to the specified period.

(8) A claim for relief under this section may be made after the making of a material disposal and the acquisition of eligible shares in a qualifying company if all the conditions for the relief are or will be satisfied, but the relief shall be withdrawn if, by reason of the subsequent happening of any event or failure of an event to happen which at the time the relief was claimed was expected to happen, the individual by whom the relief was claimed is not entitled to the relief so claimed.

(9) The withdrawal of relief under subsection (8) shall be made—

(a) for the year of assessment in which the happening, or failure to happen, as the case may be, of the event giving rise to the withdrawal of the relief occurred, and

(b) in accordance with the provisions of subsection (10),

and both—

(i) details of the happening, or the failure to happen, as the case may be, of the event giving rise to the withdrawal of relief, and

(ii) the amount to be treated as a gain under subsection (10),

shall be included in the return required to be made by the individual concerned under section 10 of the Finance Act, 1988, for that year of assessment.

(10) (a) Notwithstanding any other provision of the Capital Gains Tax Acts, where relief falls to be withdrawn under subsection (8) for any year of assessment, such amount (hereafter in this subsection referred to as “the relevant amount”) of the chargeable gain which accrued to the re-investor on the disposal of the original holding as was treated under subsection (2) or (3) as not accruing at that time—

(i) reduced in accordance with paragraph (b), and

(ii) increased in accordance with paragraph (c),

shall be treated as a gain which accrued in that year of assessment.

(b) The amount by which the relevant amount is to be reduced under subparagraph (i) of paragraph (a) is an amount equal to the aggregate of—

(i) to the extent that such excess has not been deducted in years of assessment subsequent to the year of assessment in which the disposal of the original holding occurred, the excess of the amount of the losses which would have fallen to be deducted under section 5 (1) of the Capital Gains Tax Act, 1975, in the year of assessment in which the disposal of the original holding occurred, if relief under this section had not been claimed, over the amount of such losses which were so deducted in that year, and

(ii) any amount of chargeable gains in the year of assessment in which the disposal of the original holding occurred in respect of which the re-investor would not, by virtue of section 16 of the Capital Gains Tax Act, 1975, have been charged to capital gains tax, if relief under this section had not been claimed.

(c) The amount by which the relevant amount is to be increased under subparagraph (ii) of paragraph (a) is an amount determined by the formula—

	G R M ___ 100

where—

G is the relevant amount reduced in accordance with paragraph (b),

R is the rate per cent. specified in subsection (1) of section 550 of the Income Tax Act, 1967, and

M is the number of months in the period beginning on the date on which capital gains tax for the year of assessment in which the disposal of the original holding occurred was due and payable and ending on the date on which capital gains tax for the year of assessment for which the withdrawal of relief falls to be made is due and payable.

(11) A chargeable gain or the balance of a chargeable gain which, under the provisions of subsection (2) or (3), as may be appropriate, is treated as accruing at a date later than the date of the disposal on which it accrued shall not be so treated for the purposes of section 3 of the Capital Gains Tax (Amendment) Act, 1978.

(12) Without prejudice to the provisions of the Capital Gains Tax Acts providing generally for apportionments, where consideration is given for the acquisition or disposal of any assets some or part of which are shares or other securities to the acquisition or disposal of which a claim under this section relates and some or part of which are not, the consideration shall be apportioned in such manner as is just and reasonable.

(13) This section shall not apply unless the acquisition of a qualifying investment was made for bona fide commercial reasons and not wholly or partly for the purposes of realising a gain from the disposal of the qualifying investment.

(14) Section 157 of the Corporation Tax Act, 1976, shall apply for the purposes of this section.

(15) This section shall apply as respects disposals made on or after the 6th day of May, 1993.

Chapter VI Income Tax, Corporation Tax and Capital Gains Tax

28 Farming: amendment of provisions relating to relief in respect of increase in stock values.

28.—(1) Section 31A (inserted by the Finance Act, 1976) of the Finance Act, 1975, is hereby amended by the substitution in paragraph (iv) (inserted by the Finance Act, 1979) of the proviso to subsection (4) (a) of “1995” for “1992” (inserted by the Finance Act, 1991) and the said paragraph (iv), as so amended, is set out in the Table to this subsection.

TABLE

(iv) a deduction shall not be allowed under the provisions of this section in computing a company's trading income for any accounting period which ends on or after the 6th day of April, 1995.

(2) Section 12 of the Finance Act, 1976, is hereby amended by the substitution in subsection (3) of “1994-95” for “1992-93” (inserted by the Finance Act, 1991) and the said subsection (3), as so amended, is set out in the Table to this subsection.

TABLE

(3) Any deduction allowed by virtue of this section in computing a person's trading profits for an accounting period shall not have effect for any purpose of the Income Tax Acts for any year of assessment prior to the year 1974-75 or later than the year 1994-95.

(3) (a) In the case of a company, as respects any accounting period which ends on or after the 6th day of April, 1993—

(i) subsection (2) of section 13 of the Finance Act, 1982, is hereby amended by the substitution of “25 per cent.” for “eleven-tenths”,

(ii) the provisions of subsections (5), (7), (8), (9) and (10) of section 31A of the Finance Act, 1975, shall cease to apply and have effect, and

(iii) a company shall not be entitled to a deduction under the said section 31A unless a written claim for such a deduction is made on or before the specified return date (within the meaning of section 9 of the Finance Act, 1988) for the chargeable period within the meaning of paragraph 1 of the First Schedule to the Corporation Tax Act, 1976.

(b) In the case of a person within the meaning of section 12 of the Finance Act, 1976, as respects the year of assessment 1993-94 and any subsequent year of assessment—

(i) subsection (1) of section 13 of the Finance Act, 1982, is hereby amended by the substitution of “25 per cent.” for “eleven-tenths”,

(ii) the provisions of subsections (4), (5), (6) and (8) of the said section 12 shall cease to apply and have effect, and

(iii) a person shall not be entitled to a deduction under the said section 12 unless a written claim for such a deduction is made on or before the specified return date (within the meaning of section 9 of the Finance Act, 1988) for the chargeable period within the meaning of paragraph 1 of the First Schedule to the Corporation Tax Act, 1976.

(4) This section shall have effect only as respects a trade of farming.

29 Application of section 19 (relief for expenditure on significant buildings) of Finance Act, 1982.

29.—(1) In this section, except where otherwise provided—

“approved building” has the meaning assigned to it by section 19 of the Finance Act, 1982;

“approved garden” means a garden (other than a garden being land occupied or enjoyed with an approved building as part of its garden or grounds of an ornamental nature) which, on application to them in that behalf by a person who owns or occupies the garden, is determined—

(a) by the Commissioners of Public Works in Ireland, to be a garden which is intrinsically of significant horticultural, scientific, historical, architectural or aesthetic interest, and

(b) by the Revenue Commissioners, to be a garden to which reasonable access is afforded to the public;

“qualifying expenditure”, in relation to an approved garden, means expenditure on the maintenance or restoration of the garden.

(2) In respect of qualifying expenditure incurred on or after the 6th day of April, 1993, section 19 of the Finance Act, 1982, shall, with any necessary modifications, apply and have effect in relation to an approved garden as it applies and has effect in relation to qualifying expenditure (within the meaning of the said section 19) incurred in relation to an approved building.

30 Amendment of Chapter V (Urban Renewal: Relief from Income Tax and Corporation Tax) of Part I of Finance Act, 1986.

30.—(1) Chapter V of Part I of the Finance Act, 1986, is hereby amended—

(a) in section 42—

(i) in subsection (1), by the substitution in the definition of “qualifying period” (inserted by section 29 (b) (i) of the Finance Act, 1992) of “the 30th day of November, 1993” for “the 31st day of May, 1993”, in each place where it occurs, and of “the 31st day of July, 1994” for “the 31st day of May, 1994”, and

(ii) in subsection (2), by the insertion of the following additional proviso to that subsection:

“Provided also that, notwithstanding section 265 (1) of the Income Tax Act, 1967, no balancing charge shall be made in relation to a qualifying premises by reason of any of the events specified in the said section 265 (1)—

(i) which occurs more than thirteen years after the qualifying premises was first used, or

(ii) in a case where section 26 of the Finance Act, 1991, applies and has effect, which occurs more than thirteen years after the capital expenditure on refurbishment of the qualifying premises was incurred.”,

(b) in section 44 (1), by the substitution in the definition of “qualifying period” (inserted by section 29 (c) of the Finance Act, 1992) of “the 30th day of November, 1993” for “the 31st day of May, 1993”, in each place where it occurs, and of “the 31st day of July, 1994” for “the 31st day of May, 1994”, and

(i) in subsection (1) (a)—

(I) by the insertion of the following definition before the definition of “qualifying lease”:

“‘market value’, in relation to a building or structure, means the price which the unencumbered fee simple of the building or structure would fetch if sold in the open market in such manner and subject to such conditions as might reasonably be calculated to obtain for the vendor the best price for the building or structure, less the part of that price which would be attributable to the acquisition of, or of rights in or over, the land on which the building or structure is constructed;”,

(II) by the substitution in the definition of “qualifying period” (inserted by section 29 (d) (i) of the Finance Act, 1992) of “the 30th day of November, 1993” for “the 31st day of May, 1993”, in each place where it occurs, and of “the 31st day of July, 1994” for “the 31st day of May, 1994”,

(III) by the addition of the following proviso to the definition of “qualifying premises”:

“Provided that, where capital expenditure is incurred in the qualifying period on the refurbishment 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 the said Chapter II of Part XV or under the said Chapter I of Part XVI, the building or structure shall not be regarded as a qualifying premises unless the total amount of the expenditure so incurred is not less than an amount which is equal to 10 per cent. of the market value of the building or structure immediately before the said expenditure is incurred;”,

and

(IV) by the addition of the following definition after the definition of “qualifying premises”:

“‘refurbishment’, in relation to a building or structure, means any work of construction, reconstruction, repair or renewal, including the provision or improvement of water, sewerage or heating facilities, carried out in the course of repair or restoration, or maintenance in the nature of repair or restoration, of the building or structure.”,

and

(ii) in subsection (2), by the substitution of the following paragraph for paragraph (b) of the proviso (inserted by section 32 of the Finance Act, 1990) to that subsection:

“(b) where a person holds an interest in a qualifying premises out of which interest a qualifying lease is created (directly or indirectly) in respect of that qualifying premises and in respect of the qualifying lease a claim for a further deduction under this section is made, and either he or a person who is connected with him—

(i) takes under a qualifying lease a qualifying premises (hereafter in this proviso referred to as ‘the second-mentioned premises’) which is occupied by him or the person who is connected with him, as the case may be, for the purposes of a trade or profession, and

(ii) is, apart from this section, entitled, in the computation of the amount of the profits or gains of that trade or profession, to a deduction on account of rent in respect of the second-mentioned premises,

then, unless he or the person who is connected with him, as the case may be, shows that the taking on lease of the second-mentioned premises was not undertaken for the sole or main benefit of obtaining a further deduction on account of rent under the provisions of this section, he or the person who is connected with him, as the case may be, shall not be entitled in the computation of the amount of the profits or gains of that trade or profession to any further deduction on account of rent in respect of the second-mentioned premises.”.

(2) (a) Paragraph (a) of subsection (1), other than subparagraph (i) of that paragraph, shall take effect as on and from the 6th day of May, 1993.

(b) Paragraph (c) of subsection (1), other than subparagraph (i) (II) of that paragraph, shall take effect as respects rent payable in relation to any qualifying premises under a qualifying lease entered into on or after the 6th day of May, 1993.

31 Amendment of section 4 (relief for expenditure on certain buildings in designated areas) of Finance Act, 1989.

31.—Section 4 of the Finance Act, 1989, is hereby amended, in subsection (1), by the substitution in the definition of “qualifying period” of “31st day of July, 1994” for “31st day of May, 1994” (inserted by section 31 of the Finance Act, 1992).

32 Amendment of Chapter VII (Urban Renewal: Temple Bar and Other Areas) of Part I of Finance Act, 1991.

32.—Chapter VII (as amended by section 34 of the Finance Act, 1992) of Part I of the Finance Act, 1991, is hereby amended—

(a) in subsection (1) (a) of section 56, by the substitution in the definition of “qualifying period” in subparagraph (ii) of “the 30th day of November, 1993” for “the 31st day of May, 1993”, in each place where it occurs, and of “the 31st day of July, 1994” for “the 31st day of May, 1994”;

(b) in section 57, by the substitution of “the 31st day of July, 1994” for “the 31st day of May, 1994” in subsection (1) (b) (ii) and in the definition of “qualifying period” in subsection (3) (a) (ii); and

(c) in section 58, by the substitution of “the 31st day of July, 1994” for “the 31st day of May, 1994” in both subsections (1) (b) (ii) and (3) (b) (i) and in the definition of “qualifying period” in subsection (3) (b) (ii).

33 Amendment of section 51 (application of certain allowances in relation to certain areas and certain expenditure) of Finance Act, 1988.

33.—(1) Section 51 of the Finance Act, 1988, is hereby amended, in subsection (1), by the substitution of the following paragraph for paragraph (a):

“(a) machinery or plant or an industrial building provided for use for the purposes of trading operations which are relevant trading operations within the meaning of section 39A (inserted by the Finance Act, 1981) or section 39B (inserted by the Finance Act, 1987) of the Finance Act, 1980, but excluding machinery or plant or an industrial building provided by a lessor to a lessee other than in the course of the carrying on by the lessor of the said relevant trading operations;”.

(2) Subsection (1) shall apply and have effect in relation to capital expenditure which is incurred on the provision of machinery or plant or an industrial building on or after the 6th day of May, 1993.

34 Captial allowances: treatment of grants, etc.

34.—(1) The Income Tax Act, 1967, is hereby amended—

(a) in section 254, by the substitution of the following paragraph for paragraph (b) of subsection (4):

“(b) expenditure shall not be regarded as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State or by any person other than the first-mentioned person.”,

(b) in section 303, by the substitution of the following subsection for subsection (3) (including the proviso thereto):

“(3) Expenditure shall not be regarded for any of the purposes of this Part 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 or by any person other than the first-mentioned person.”,

and

(2) Section 22 of the Finance Act, 1974, is hereby amended by the substitution of the following subsection for subsection (11):

“(11) Expenditure shall not be regarded for any of the purposes of this section 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 or by any person other than the first-mentioned person.”.

(3) Section 52 of the Finance Act, 1986, is hereby amended by the substitution, in paragraph (a) of subsection (1), of the following subparagraph for subparagraph (i):

“(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 or by any person other than the first-mentioned person, and”.

(4) This section shall apply and have effect as respects expenditure incurred on or after the 6th day of May, 1993.

35 Transfer of shares held by certain societies to members of society.

35.—(1) (a) In this section—

“company” has the meaning assigned to it by section 2 (1) of the Capital Gains Tax Act, 1975;

“consideration” means consideration in money or money's worth;

“control”, in relation to a company, has the meaning assigned to it by section 102 of the Corporation Tax Act, 1976;

“society” means a society registered under the Industrial and Provident Societies Acts, 1893 to 1978, which is an agricultural society or a fishery society within the meaning of section 18 of the Finance Act, 1978.

(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 Part IV of the Finance (Miscellaneous Provisions) Act, 1968, by virtue of section 16 (3) of that Act.

(2) (a) Where, on or after the 6th day of April, 1993, a society, being a society which, at any time on or after that date, controls, or has had control of, a company, transfers to the members of the society shares owned by it in the company (hereafter in this section referred to as “the transfer”) and—

(i) the transfer, in so far as it relates to any member, is in respect of and in proportion to, or as nearly as may be in proportion to, that member's holding of shares in the society immediately before the transfer (hereafter in this section referred to as “the original shares”),

(ii) no consideration (apart from the consideration given by the members represented by the cancellation of the original shares referred to in subparagraph (iii)) for, or in connection with, the transfer is given to, or received from, any member (or any person who is connected with that member) by the society (or any person who is connected with the society), and

(iii) upon the transfer, or as soon as possible thereafter, the original shares (or the appropriate number of those shares) of each member are cancelled without any consideration (apart from the consideration given to the members represented by the transfer to the members of the shares in the company) for, or in connection with, such cancellation being given to, or received from, any member (or any person who is connected with that member) by the society (or any person who is connected with the society), and, where the original shares (or the appropriate number of those shares) have been issued to a member at different times, any cancellation of such shares shall involve those issued earlier rather than those issued later,

then, subject to subsection (5), subsections (3) and (4) shall apply and have effect.

(b) In paragraph (a) and subsection (4), the appropriate number, in relation to a member's original shares, means such portion (or as near as may be to such portion) of the total number of the referable shares owned by the member at the time of the transfer as bears to that number the same proportion as the total number of shares in the company which are subject to the transfer bears to the total number of shares in the company owned by the society immediately before the transfer; and the number of the referable shares owned by a member shall be an amount determined by the formula—

	A B ______ C		D __ B

where—

A is the market value of the shares in the company owned by the society immediately before the transfer,

B is the total number of the shares in the society which are in issue immediately before the transfer,

C is the market value of the total assets (including the shares in the company) of the society immediately before the transfer, and

D is the number of shares in the society owned by the member immediately before the transfer.

(3) For the purposes of the Corporation Tax Acts, the transfer shall be treated—

(a) as not being a distribution within the meaning of Part IX of the Corporation Tax Act, 1976, and

(b) as being for a consideration of such amount as would secure that, for the purposes of charging the gain on the disposal by the society of the shares owned by it in the company, neither a gain nor a loss would accrue to the society.

(4) For the purposes of the Capital Gains Tax Acts—

(a) the cancellation of the original shares (or the appropriate number of those shares) shall not be treated as involving any disposal of those shares, and

(b) each member shall be treated as if the shares transferred to him in the course of the transfer were acquired by him at the same time and for the same consideration at which the original shares (or the appropriate number of those shares) were acquired by him and, for the purposes of giving effect to this paragraph, where the original shares (or the appropriate number of those shares) have been issued to a member at different times, there shall be made all such apportionments as are, in the circumstances, just and reasonable.

(5) This section shall not apply or have effect unless it is shown that the transfer is effected for bona fide commercial reasons and does not form part of any arrangement or scheme of which the main purpose, or one of the main purposes, is avoidance of liability to corporation tax or capital gains tax.

(6) In a case where this section applies and has effect, the society concerned shall include in the return required to be made by it under section 143 of the Corporation Tax Act, 1976, a statement of the total number of shares cancelled in accordance with subsection (2) (a) (iii).

36 Amendment of section 56 (taxation of shares issued in lieu of cash dividends) of Finance Act, 1974.

36.—(1) Section 56 of the Finance Act, 1974, is hereby amended, as respects any option exercised on or after the 1st day of June, 1993—

(a) by the substitution for subsection (1) of the following subsection—

“(1) In this section—

‘company’ means any body corporate;

‘share’ means share in the share capital of a company and, other than in the definition of ‘quoted company’, includes stock and any other interest in the company;

‘quoted company’ means a company whose shares, or any class of whose shares—

(a) are listed in the official list of the Irish Stock Exchange or any other stock exchange, or

(b) are dealt in on the smaller companies market, the unlisted securities market or the exploration securities market of the Irish Stock Exchange or on any similar or corresponding market of any other stock exchange.”,

and

(b) in subsection (2) by the substitution for “company”, where it is first-mentioned, of “company which is not a quoted company”,

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

(2) Subsection (4) of section 56 of the said Act shall apply for the purposes of this section as it applies for the purposes of that section.

TABLE

(2) If any person, as a consequence of the exercise, whether before, on or after the declaration of a distribution of profits by a company which is not a quoted company, of an option to receive in respect of shares in the company either a sum in cash or additional share capital of the company, receives such additional share capital, he shall be deemed to have received from the company, instead of such share capital, income equal to the sum he would have received if he had received the distribution in cash instead.

37 Údarás na Gaeltachta and small enterprise grants.

37.—(1) A grant to which this section applies shall be disregarded for all the purposes of the Tax Acts.

(2) This section applies to a grant made on or after the 1st day of April, 1993, under section 10 (5) (a) of the Údarás na Gaeltachta Act, 1979, or section 21 (5) (a) (as amended by the Industrial Development (Amendment) Act, 1991) of the Industrial Development Act, 1986, being an employment grant—

(a) in the case of the said section 10 (5) (a), under the scheme known as “Deontais Fhostaíochta ó Údarás na Gaeltachta do Thionscnaimh Sheirbhíse Idir-Náisiúnta” or the scheme known as “Deontais Fhostaíochta ó Údarás na Gaeltachta do Thionscail Bheaga Dhéantúsaíochta”, or

(b) in the case of the said section 21 (5) (a), under the scheme known as “Scheme Governing the Making of Employment Grants to Small Industrial Undertakings”.

38 Market Development Fund and Employment Subsidy Scheme.

38.—(1) A payment to which this section applies shall be disregarded for all the purposes of the Tax Acts.

(2) This section applies to any payment made, whether before or after the passing of this Act, to an employer in respect of a person employed by him, being a payment made under—

(a) the Market Development Fund, being a fund established on the 6th day of October, 1992, and administered by An Bord Tráchtála—The Irish Trade Board, or

(b) the Employment Subsidy Scheme, being a scheme established on the 1st day of February, 1992, and administered by An Foras Áiseanna Saothair.

Chapter VII Corporation Tax

39 Amendment of section 6 (general scheme of corporation tax) of Corporation Tax Act, 1976.

39.—(1) Section 6 of the Corporation Tax Act, 1976, is hereby amended in subsection (4) (inserted by the Finance Act, 1985)—

(a) by the substitution of “six months” for “seven months” (inserted by the Finance Act, 1990), and

(b) by the addition of the following proviso to that subsection:

“Provided that where the last day of the period within which the corporation tax falls to be paid is a day after the 28th day of the month in which that period ends the corporation tax shall be paid not later than the 28th day of the said month.”.

(2) This section shall apply and have effect as respects accounting periods ending on or after the 1st day of May, 1993.

40 Amendment of section 18 (date for payment of tax) of Finance Act, 1988.

40.—As respects accounting periods ending on or after the 1st day of May, 1993, section 18 of the Finance Act, 1988, is hereby amended in subsection (1) (inserted by the Finance Act, 1991)—

(a) by the substitution of the following paragraph for paragraph (c):

“(c) where the chargeable period is an accounting period of a company, within the period of 6 months from the end of the accounting period:

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