Finance Act , 1996

(11) (a) A claim to relief under this section may be allowed at any time after the time specified in paragraph (b) in respect of the payment of a sum to a qualifying company, which, if it is used, within two years of its being paid, by the qualifying company for the production of a qualifying film, will be a relevant investment, if all the conditions for relief are or will be satisfied, but the relief shall be withdrawn if, by reason of the happening of any subsequent event including the revocation by the Minister of a certificate under subsection (2) or the failure of an event to happen which at the time the relief was given was expected to happen, the company or the individual, as the case may be, making the claim was not entitled to the relief allowed.

(b) The time referred to in paragraph (a) is the time at which all of the following events have occurred, that is to say—

(i) the payment in respect of which relief is claimed has been made, and

(ii) in relation to the qualifying film the principal photography has commenced, the first animation drawings have commenced or the first model movement has commenced, as appropriate.

(12) A claim for relief in respect of a relevant investment in a 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 company and the qualifying film, are or will be satisfied in relation to that investment.

(13) Before issuing a certificate for the purposes of subsection (12), a company shall furnish the authorised officer with—

(a) a statement to the effect that it satisfies or will satisfy the conditions for the relief, so far as they apply in relation to the company and a film,

(b) a copy of any notification required to be given to the Minister under subsection (2) (b) (iii),

(c) a copy of the certificate, including a copy of any notice given by the Minister amending, revoking or adding a condition to that certificate, under subsection (2) in respect of the film, and

(d) such other information as the Revenue Commissioners may reasonably require.

(14) A certificate to which subsection (12) relates shall not be issued without the authority of the authorised officer.

(15) Any statement under subsection (13) shall—

(a) contain such information as the Revenue Commissioners may reasonably require,

(b) be in such form as the Revenue Commissioners may direct, and

(c) contain a declaration that it is correct to the best of the company's knowledge and belief.

(16) Where a company has issued a certificate for the purposes of subsection (12), or furnished a statement under subsection (13), and either—

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

(b) the certificate was issued in contravention of subsection (14),

then—

(i) the company shall be liable to a penalty not exceeding £500 or, in the case of fraud, not exceeding £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, and

(ii) no relief shall be given under the provisions of this section and if any such relief has been given, it shall be withdrawn.

(17) 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.

(18) An allowable investor company or a qualifying individual shall not be entitled to relief in respect of a relevant investment unless the relevant investment—

(a) has been made 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 is the avoidance of tax,

(b) has been, or will be, used in the production of a qualifying film, and

(c) is made at the risk of the allowable investor company or the qualifying individual, as the case may be, and—

(i) in a case where it is made by an allowable investor company, neither the company nor any person who would be regarded as connected with the company, or

(ii) in a case where it is made by a qualifying individual, neither the individual nor any person who would be regarded as connected with the individual,

is entitled to receive any payment, in money or money's worth, or other benefit directly or indirectly borne by, or attributable to, the qualifying company other than a payment made on an arm's length basis for goods or services supplied or a payment out of the proceeds of exploiting the film to which the allowable investor company or the qualifying individual, as the case may be, is entitled under the terms subject to which the relevant investment is made.

(19) Where any relief has been given under this section which is subsequently found not to have been due or is to be withdrawn by virtue of subsection (11) or (16), it shall be withdrawn by making an assessment to corporation tax or income tax, as the case may be, under Case IV of Schedule D for the accounting period or accounting periods, or the year of assessment or years of assessment, as the case may be, in which relief was given and, notwithstanding anything in the Tax Acts, such an assessment may be made at any time.

(20) (a) Subject to paragraph (c), where an allowable investor company is entitled to relief under this section in respect of any sum, or any part of a sum, or would be so entitled on making due claim, as a relevant deduction from its total profits for any accounting period, it shall not be entitled to any relief for that sum or any part of a sum, in computing its income or profits, or as a deduction from its income or profits, for any accounting period under any other provision of the Corporation Tax Acts or the Capital Gains Tax Acts.

(b) Subject to paragraph (c), where a qualifying individual is entitled to relief under this section in respect of any sum, or any part of a sum, or would be so entitled on making due claim, as a relevant deduction from the individual's total income for any year of assessment—

(i) the individual shall not be entitled to any relief for that sum or part in computing the individual's total income, or as a deduction from the individual's total income, for any year of assessment under any other provision of the Income Tax Acts, and

(ii) so much of that sum or part as is equal to the amount of the relevant deduction given in relation thereto shall be treated as a sum which, by reason of paragraph 4 of Schedule 1 to the Capital Gains Tax Act, 1975, is to be excluded from the sums allowable as a deduction in the computation of gains and losses for the purposes of the Capital Gains Tax Acts.

(c) Where an allowable investor company or a qualifying individual has made a relevant investment by way of a subscription for new ordinary shares of a qualifying company and none of those shares are disposed of by the allowable investor company or the qualifying individual, as the case may be, within one year of their acquisition by that company or that individual, as the case may be, then the sums allowable as deductions from the consideration in the computation for the purpose of capital gains tax of the gain or loss accruing to the company or the individual, as the case may be, on the disposal of those shares shall be determined without regard to any relief under this section which the company or the individual, as the case may be, has obtained, or would be entitled on due claim to obtain, except that where those sums exceed the consideration they shall be reduced by an amount equal to—

(i) the amount of the relevant deduction allowed to the allowable investor company or the qualifying individual, as the case may be, under this section in respect of the subscription for those shares, or

(ii) the amount of the excess, whichever is the lesser amount:

Provided that, if the disposal of shares is by a qualifying individual, and the disposal falls within section 13 (5) of the Capital Gains Tax Act, 1975, the preceding provisions of this paragraph shall not apply.

(d) For the purposes of this subsection ‘new ordinary shares’ means new ordinary shares forming part of the ordinary share capital of a qualifying company which, throughout the period of one year commencing on the date such shares are issued, carry no present or future preferential right to dividends, or to a company's assets on its winding up, and no present or future preferential right to be redeemed.

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

(22) In the case of an individual, all such provisions of the Income Tax Acts as apply in relation to the deductions specified in sections 138 to 142 of the Income Tax Act, 1967, shall, with any necessary modifications, apply in relation to relief under this section.”.

(2) (a) Where an allowable investor company has in the period of twelve months ending on the 22nd day of January, 1997, paid a sum of money to which subsection (3) applies then the reference in subsection (4) of section 35 (inserted by subsection (1)) to £6,000,000 shall, in respect of that period, be construed as a reference to £6,000,000 less the amount or if there is more amounts than one the aggregate of such amounts, of such sums of money, and

(b) where a qualifying individual has in the year of assessment 1995-96 paid a sum of money to which subsection (3) applies, the reference in subsection (7) of section 35 (inserted by subsection (1)) to £25,000 shall, in respect of that year of assessment, be construed as a reference to £25,000 less that amount or, if there is more amounts than one the aggregate of such amounts, of such sums of money.

(3) Subsection (1) shall not apply as respects a sum of money which is paid on or after the 23rd day of January, 1996, and on or before the 31st day of March, 1996, where the sum of money is paid in respect of shares in a qualifying company, and—

(a) the Minister for Arts, Culture and the Gaeltacht had received before the 23rd day of January, 1996, an application in writing to give a certificate to the company stating, in relation to a film to be produced by the company, that the film is a qualifying film, and

(b) where a certificate is given by the Minister to the company after the 23rd day of January, 1996, it includes a statement that the Minister had received the said application before that date.

(4) As respects a sum of money—

(a) to which subsection (1) does not apply by virtue of subsection (3), or

(b) which is paid before the 23rd day of January, 1996,

the provisions of section 35 of the Finance Act, 1987, which were in force immediately prior to the 23rd day of January, 1996, shall continue to have effect:

Provided that where the sum of money is a sum of money paid on or after the 6th day of April, 1995, or it is a sum of money to which subsection (3) applies and the sum of money is used for the purpose of enabling the qualifying company to produce a qualifying film in respect of which an application (to give a certificate under subsection (1A)) had not been received by the Minister before the 23rd day of January, 1996, the provisions shall have effect as if—

(i) subsection (2) was amended by the substitution for “a deduction of the amount of that investment” of “a deduction of an amount equal to 80 per cent. of that investment”, and

(ii) subsection (3A) was amended by the substitution for “a deduction of the amount of that investment” of “a deduction of an amount equal to 80 per cent. of that investment”.

32 Treatment of patent royalties and related distributions.

32.—(1) Section 34 of the Finance Act, 1973, is hereby amended in subsection (1) in the definition of “income from a qualifying patent” by the insertion after paragraph (a) of the following proviso:

“Provided that where the royalty or other sum exceeds the royalty or other sum which would have been paid if the payer of the royalty or other sum and the beneficial recipient thereof were independent persons acting at arm's length, the excess shall not be income from a qualifying patent,”.

(2) Section 170 of the Corporation Tax Act, 1976, is hereby amended—

(a) in subsection (1) by the substitution for the definition of “disregarded income” of the following definition:

“‘disregarded income’ means—

(a) income from a qualifying patent which by virtue of subsection (2) of section 34 of the Finance Act, 1973 (income from patent royalties) has been disregarded for the purposes of income tax, and

(b) income from a qualifying patent which by virtue of subsection (2) of section 34 of the Finance Act, 1973, and subsection (6) of section 11 has been disregarded for the purposes of corporation tax,

but does not include income from a qualifying patent (in this section referred to as ‘specified income’) which would not be income from a qualifying patent if paragraph (a) of the definition of ‘income from a qualifying patent’ in subsection (1) of the said section 34 had not been enacted;”,

and

(b) by the insertion after subsection (3A) of the following subsection:

“(3B) (a) Where for an accounting period a company makes one or more distributions out of specified income, so much of the amount of that distribution, or the aggregate of such distributions, as does not exceed the amount of aggregate expenditure on research and development incurred by the company in relation to the accounting period shall be treated as a distribution made out of disregarded income:

Provided that—

(I) subject to paragraph (II), if in an accounting period the beneficial recipient (hereafter in this proviso referred to as ‘the recipient’) of the specified income shows in writing to the satisfaction of the Revenue Commissioners that the specified income is income from a qualifying patent in respect of an invention which—

(A) involved radical innovation, and

(B) was patented for bona fide commercial reasons and not primarily for the purpose of avoiding liability to taxation,

the Revenue Commissioners shall, after consideration of any evidence in relation to the matter which the recipient submits to them and after such consultations (if any) as may seem to them to be necessary with such persons as in their opinion may be of assistance to them, determine whether all distributions made out of specified income accruing to the recipient for that accounting period and all subsequent accounting periods are to be treated as distributions made out of disregarded income and the recipient shall be notified in writing of the determination,

(II) a recipient aggrieved by the determination of the Revenue Commissioners may, by notice in writing given to the Revenue Commissioners within thirty days of the date of notification advising of the determination, appeal to the Appeal Commissioners and the Appeal Commissioners shall hear and determine the appeal made to them as if it were an appeal against an assessment to income tax and all the provisions of the Income Tax Act, 1967, relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

(b) The Revenue Commissioners may nominate any of their officers to perform any acts and discharge any functions, authorised by this subsection to be performed or discharged by the Revenue Commissioners and references in this subsection to the Revenue Commissioners shall, with any necessary modifications, be construed as including references to an officer so nominated.

(c) In this subsection—

‘the amount of aggregate expenditure on research and development incurred by a company in relation to an accounting period’ means the amount of expenditure on research and development activities incurred in the State by the company in the accounting period and the previous two accounting periods:

Provided that where in an accounting period a company incurs expenditure on research and development activities and not less than 75 per cent. of the expenditure was incurred in the State, all of the expenditure shall be deemed to have been incurred in the State;

‘the amount of the expenditure on research and development activities’, in relation to expenditure incurred by a company in an accounting period, means non-capital expenditure incurred by the company being the aggregate of the amounts of—

(i) such part of the emoluments paid by the company to employees of the company engaged in carrying out research and development activities related to the company's trade as is laid out for the purposes of the said activities,

(ii) expenditure incurred by the company on materials or goods used solely by the company in the carrying out of research and development activities related to the company's trade, and

(iii) a sum paid to another person, not being a person connected with the company, in order that such person may carry out research and development activities related to the company's trade:

Provided that where the company (hereafter in this proviso referred to as the ‘first company’) is a member of a group then for the purposes of this section the amount of expenditure on research and development activities incurred in an accounting period by another company which in the accounting period is a member of the group shall, on a joint election in writing being made on that behalf by the first company and the other company, be treated as being expenditure incurred on research and development activities in the accounting period by the first company and not by the other company;

‘research and development activities’ has the same meaning as in paragraph (a) of subsection (1) of section 59 of the Finance Act, 1995.

(d) In this subsection—

(i) two companies shall be deemed to be members of a group if both are wholly or mainly under the control of the same individual or individuals or if one is a 75 per cent. subsidiary of another or both are 75 per cent. subsidiaries of a third company:

Provided that in determining whether one company is a 75 per cent. subsidiary of another, the other company shall be treated as not being the owner—

(I) of any share capital which it owns directly in a company if a profit on sale of the shares would be treated as a trading receipt of its trade, or

(II) of any share capital which it owns indirectly, and which is owned directly by a company for which a profit on the sale of the shares would be a trading receipt,

(ii) a company shall be wholly or mainly under the control of an individual or individuals if not less than 75 per cent. of the ordinary share capital of the company is owned directly or indirectly by the individual or, as the case may be, by individuals, each of whom own directly or indirectly part of that share capital,

(iii) sections 108 to 114 of the Corporation Tax Act, 1976, shall apply for the purposes of this paragraph as they apply for the purposes of Part XI of that Act and where two companies are deemed to be members of a group by reason that both are wholly or mainly under the control of the same individual or individuals those sections shall apply as they would apply for the purposes of the said Part if the references in those sections to a parent company included a reference to an individual or individuals who hold shares in a company.”.

(3) This section shall apply—

(a) as respects subsection (1), to a royalty or other sum paid on or after the 23rd day of April, 1996, and

(b) as respects subsection (2), to a distribution made out of specified income accruing to a company on or after the 28th day of March, 1996.

33 Amendment of section 31 (interest payments by companies and to non-residents) of Finance Act, 1974.

33.—(1) Section 31 of the Finance Act, 1974, is hereby amended by the substitution for paragraph (cc) (inserted by the Finance Act, 1988) of subsection (3) of the following:

“(cc) interest paid to a person whose usual place of abode is outside the State by—

(i) a company in the course of carrying on 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, or

(ii) a specified collective investment undertaking within the meaning of section 18 (as amended by section 35 of the Finance Act, 1996) of the Finance Act, 1989,

or”.

(2) This section shall apply and have effect as on and from the 28th day of March, 1996.

34 Allowance for mine rehabilitation expenditure.

34.—The Finance (Taxation of Profits of Certain Mines) Act, 1974, is hereby amended by the insertion, after section 8, of the following section:

“8A.—(1) (a) In this section—

‘integrated pollution control licence’ means a licence granted under section 83 of the Environmental Protection Agency Act, 1992;

‘mine rehabilitation fund’, in relation to a qualifying mine, means a fund—

(i) which consists of amounts paid by a person who is carrying on the trade of working a qualifying mine to another person (hereafter in this section referred to as the ‘fund holder’) who is not connected with the first-mentioned person,

(ii) which is obliged to be maintained under the terms—

(I) of a State mining facility, or

(II) of any other agreement in writing to which the Minister is a party and to which the State mining facility is subject,

(iii) the sole purpose of which is to have available at the time a qualifying mine ceases to be worked such amount as is specified in a certificate given by the Minister under subsection (2) as being the amount which, in the Minister's opinion, could reasonably be expected to be necessary to meet rehabilitation expenditure in relation to the qualifying mine, and

(iv) no part of which may be paid to the person, or a person connected with that person, who is working, or has worked the qualifying mine except where—

(I) the fund holder has been authorised in writing by the Minister, and by either or both the relevant local authority and the Environmental Protection Agency, to make a payment to the person, or the connected person, as the case may be, for the purposes of incurring rehabilitation expenditure in relation to the qualifying mine, or

(II) an amount may be paid to the person, or the connected person, as the case may be, after a certificate of completion of rehabilitation in relation to the qualifying mine has been submitted to, and approved by—

(A) the Minister, and

(B) either or both the relevant local authority and the Environmental Protection Agency;

‘the Minister’ means the Minister for Transport, Energy and Communications;

‘qualifying mine’ means a mine that is being worked for the purpose of obtaining scheduled minerals, dolomite and dolomitic limestone, calcite and gypsum, or any of those minerals;

‘rehabilitation expenditure’ means expenditure incurred, in connection with the rehabilitation of the site of a mine, or part of a mine, in order to comply with any condition—

(i) of a State mining facility,

(ii) subject to which planning permission for development consisting of the mining and working of minerals was granted, or

(iii) subject to which an integrated pollution control licence for an activity specified in the First Schedule to the Environmental Protection Agency Act, 1992, was granted,

by a person who has ceased to work the mine;

‘rehabilitation’ includes landscaping and the carrying out of any activities which take place after the mine ceases to be worked and which are required by a condition subject to which planning permission for development consisting of the mining and working of minerals, or an integrated pollution control licence, was granted;

‘relevant local authority’, in relation to a qualifying mine, means the council of a county or the corporation of a county or other borough or, where appropriate, the urban district council, in whose functional area the mine is situated;

‘relevant payments’ means payments specified in accordance with paragraph (b) (iii) of subsection (2) in a certificate given under that subsection and which are paid at or about the time specified in the certificate;

‘State mining facility’, in relation to a mine, means a State mining lease, a State mining licence or a State mining permission granted by the Minister in relation to the mine.

(b) For the purposes of this section—

(i) any reference to the site of a mine includes a reference to land used in connection with the working of the mine, and

(ii) the net cost to any person of the rehabilitation of the site of a mine is the excess, if any, of rehabilitation expenditure over any receipts which are attributable to the rehabilitation (whether for spoil or other assets removed from the site or for tipping rights or otherwise).

(2) (a) Where in relation to a fund the Minister is of the opinion that—

(i) the matters set out in paragraphs (i), (ii) and (iv) of the definition of ‘mine rehabilitation fund’ are satisfied, and

(ii) the sole purpose of the fund is to have available at the time a qualifying mine ceases to be worked such amount as could reasonably be expected to be necessary to meet rehabilitation expenditure in relation to the qualifying mine,

the Minister may give a certificate to that effect.

(b) A certificate given under paragraph (a) shall, in addition to the information specified in that paragraph, specify—

(i) the number of years, being the Minister's opinion of the life (hereafter in this section referred to as the ‘estimated life of the mine’) of the mine remaining at the time the certificate is given,

(ii) the amount which, in the Minister's opinion, could reasonably be expected to be necessary to meet rehabilitation expenditure in relation to the qualifying mine, and

(iii) the amounts (hereafter in this section referred to as the ‘scheduled payments’) which are required to be paid to the fund holder, and the times at which such amounts are to be paid, so as to achieve the purpose specified in paragraph (a)(ii).

(c) The Minister may, by notice in writing given to a person to whom a certificate has been given under this section, amend the certificate.

(3) (a) An allowance equal to so much of any rehabilitation expenditure in relation to a qualifying mine as does not exceed the net cost of the rehabilitation of the site of the mine shall be made to a person under this section for the chargeable period related to the expenditure.

(b) Expenditure incurred by a person after the person ceases to carry on the trade of working a qualifying mine shall be treated as having been incurred on the last day on which the person carried on the trade.

(4) Where the Minister has issued a certificate under subsection (2) in respect of a mine rehabilitation fund related to a qualifying mine, an allowance shall be made to the person who—

(a) is working the qualifying mine, and

(b) is obliged to make relevant payments to the fund holder in relation to the fund,

for any chargeable period which falls wholly or partly into the period (hereafter in this subsection referred to as the ‘funding period’) commencing on the date on which the Minister gives the certificate and ending at the end of the estimated life of the mine and the amount of the allowance shall be an amount determined by the formula—

N1 E __ __ 12L

where—

E is the aggregate of scheduled payments,

N is the number of months in the chargeable period, or the part of the chargeable period falling into the funding period, and

L is the number of years in the estimated life of the mine:

Provided that—

(i) the aggregate of the amounts of allowances under this subsection for a chargeable period and all preceding chargeable periods shall not exceed the aggregate of the amounts of relevant payments made in the chargeable period or its basis period and in all preceding chargeable periods or their basis periods, and

(ii) where effect cannot be given to an allowance, or part of an allowance, under this subsection for a chargeable period by virtue of paragraph (i), the allowance or the part of the allowance, as the case may be, shall be added to the amount of an allowance under this subsection for the following chargeable period and, subject to paragraph (i), shall be deemed to be part of the allowance for that period, or, if there is no such allowance for that period, shall be deemed to be the allowance for that period, and so on for succeeding periods.

(5) Where the Minister by notice in writing amends a certificate under subsection (2) (c) in a chargeable period or its basis period—

(a) if the aggregate of the amounts of allowances made under subsection (4) for the chargeable period and all preceding chargeable periods exceeds the aggregate of the amounts of allowances which would have been made under that subsection for those chargeable periods if the certificate had been amended in accordance with the notice at the time the certificate was given, an amount equal to the amount of the excess shall be treated as a trading receipt of the chargeable period in which, or in the basis period for which, the certificate was amended, and

(b) if the aggregate of the amounts of allowances which would have been made under subsection (4) for the chargeable period and all preceding chargeable periods if the certificate had been amended in accordance with the notice at the time the certificate was given exceeds the aggregate of the amounts of allowances made under that subsection for those chargeable periods, the allowance under subsection (4) for the chargeable period shall, subject to paragraph (i) of the proviso to subsection (4), be increased by an amount equal to the excess.

(6) (a) Subject to paragraph (b), an amount received by a person who is working, or has worked a qualifying mine, or by a person connected with such a person, from the fund holder of a mine rehabilitation fund in relation to the qualifying mine, or otherwise in connection with the mine rehabilitation fund, shall, in accordance with this section, be treated as trading income of the person.

(b) The amount to be treated as trading income for a chargeable period shall not exceed the excess of the aggregate of the amounts of allowances made under subsections (4) and (5) in that chargeable period and in any preceding chargeable periods over the aggregate amounts treated under this subsection or subsection (5) as trading income for all preceding chargeable periods.

(c) An amount which falls to be treated under this subsection as trading income of a person shall be treated as income of—

(i) where the amount is received at any time when the person is working the qualifying mine, the chargeable period in which, or in the basis period for which, the amount is received, and

(ii) in any other case, the chargeable period in which the mine ceases to be worked.

(d) Notwithstanding paragraph (c), where an amount falls to be treated as income of a chargeable period in accordance with subparagraph (ii) of that paragraph, the amount shall be assessed for the chargeable period in which, or in the basis period for which, the amount is received and details of the receipt of the amount shall be included in the return required to be made by the person under section 10 of the Finance Act, 1988, for that chargeable period.

(7) Where a person (hereinafter in this subsection referred to as the ‘first-mentioned person’) ceases to work a qualifying mine and any obligations of the first-mentioned person to rehabilitate the site of the mine are transferred to any other person the other person shall be treated for the purposes of this section as if that other person had worked the qualifying mine and as if everything done to or by the first-mentioned person had been done to or by that other person.

(8) As respects any person who incurs rehabilitation expenditure in respect of which an allowance is made under subsection (3)—

(a) rehabilitation expenditure shall not be deductible in computing income of the person for any purpose of income tax or corporation tax,

(b) an allowance shall not be made under any provision of the Tax Acts, other than this section, in respect of the expenditure, and

(c) to the extent that any receipts are, under subsection (1) (b) (ii), taken into account to determine the net cost of the rehabilitation of the site of a mine, those receipts shall not constitute income of the person for any purpose of income tax or corporation tax.

(9) An allowance made to a person who is carrying on a trade of working a mine under this section shall be made in taxing that trade and section 241 (3) of the Income Tax Act, 1967, shall apply in relation to an allowance under subsection (4) as it applies in relation to allowances for wear and tear of machinery and plant.

(10) Section 131 shall apply for the purposes of this section.”.

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

35.—(1) Section 18 (as amended by the Finance Act, 1995) of the Finance Act, 1989, is hereby amended in subsection (1)—

(a) by the insertion after the definition of “return” of the following definition:

“‘specified company’ means a company—

(a) which is—

(i) a qualified company carrying on relevant trading operations (within the meaning of section 39B of the Finance Act, 1980), or

(ii) a qualified company carrying on relevant trading operations (within the meaning of section 39A of the Finance Act, 1980) so long as the relevant trading operations within the meaning of the said section 39A could be certified by the Minister for Finance as relevant trading operations for the purposes of section 39B of the Finance Act, 1980, if they were carried on in the Area (within the meaning of the said section 39B) rather than in the airport (within the meaning of section 39A),

and

(b) not more than 25 per cent. of the share capital of which is owned directly or indirectly by persons resident in the State;”,

and

(b) by the insertion in paragraph (b) of the definition of “specified collective investment undertaking” after “Corporation Tax Act, 1976,” of “a specified company”.

(2) This section shall apply and have effect as on and from the 28th day of March, 1996.

36 Amendment of section 13 (special investment schemes) of Finance Act, 1993.

36.—(1) Section 13 of the Finance Act, 1993, is hereby amended in subsection (8) by the insertion after paragraph (b) of the following paragraph:

“(bb) (i) Where in a year of assessment (in this paragraph referred to as ‘the first year of assessment’) any securities which are assets subject to any trust created in pursuance of a special investment scheme are disposed of and in the immediately following year of assessment interest becoming payable in respect of the securities is receivable by the special investment scheme, then, for the purposes of computing the chargeable gains for the first year of assessment the price paid by the management company or the trustee for the securities shall be treated as reduced by the appropriate amount in respect of the interest:

Provided that where for a year of assessment the provisions of this paragraph apply so as to reduce the price paid for securities, the amount by which the price paid for the securities is reduced shall be treated as a loss arising, in the immediately following year of assessment, from the disposal of the securities.

(ii) In this paragraph—

‘the appropriate amount in respect of the interest’ means the appropriate amount in respect of the interest which would be determined in accordance with Schedule 11 to the Income Tax Act, 1967, if the management company or the trustee was the first buyer and the management company or the trustee carried on a trade to which section 368 (1) of the said Act applies:

Provided that in determining the appropriate amount in respect of the interest in accordance with the said Schedule 11, paragraph 3 (4) of that Schedule shall apply as if there were deleted ‘in the opinion of the Appeal Commissioners’;

‘securities’ has the same meaning as in subsection (1) of section 29 of the Finance Act, 1984.”.

(2) This section shall apply and have effect as respects a disposal on or after the 28th day of March, 1996.

37 Amendment of section 14 (special portfolio investment accounts) of Finance Act, 1993.

37.—(1) Section 14 of the Finance Act, 1993, is hereby amended—

(a) in subsection (1) in the definition of “designated broker” by the insertion after “the Irish Stock Exchange” of “or is a member firm (which carries on a trade in the State through a branch or agency) of a stock exchange of any other Member State of the European Union”, and

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

“(bb) (i) Where in a year of assessment (hereafter in this paragraph referred to as ‘the first year of assessment’) securities which are assets of a special portfolio investment account are disposed of and in the immediately following year of assessment interest becoming payable in respect of the securities is receivable by the special portfolio investment account, then, for the purposes of computing the relevant income or gains for the first year of assessment, the price paid by the designated broker for the securities shall be treated as reduced by the appropriate amount in respect of the interest:

Provided that where for a year of assessment the provisions of this paragraph apply so as to reduce the price paid for securities, the amount by which the price paid for the securities is reduced shall be treated as a loss arising, in the immediately following year of assessment, from the disposal of the securities.

(ii) In this paragraph—

‘the appropriate amount in respect of the interest’ means the appropriate amount in respect of the interest which would be determined in accordance with Schedule 11 to the Income Tax Act, 1967, if the designated broker were the first buyer and the designated broker carried on a trade to which section 368 (1) of that Act applies:

Provided that in so determining the appropriate amount in respect of the interest in accordance with the said Schedule 11, paragraph 3 (4) of that Schedule shall apply as if there were deleted ‘in the opinion of the Appeal Commissioners’;

‘securities’ has the same meaning as in subsection (1) of section 29 of the Finance Act, 1984.”.

(2) This section shall apply and have effect as respects a disposal on or after the 28th day of March, 1996.

38 Amendment of section 17 (undertakings for collective investment) of Finance Act, 1993.

38.—(1) Section 17 (as amended by section 57 of the Finance Act, 1994) of the Finance Act, 1993, is hereby amended—

(a) by the insertion after the proviso to paragraph (b) of subsection (2) of the following additional proviso to that paragraph:

“Provided also that in computing profits for the purposes of the foregoing provisions of this paragraph, subsection (1A) of section 13 shall apply as if the rate per cent. of capital gains tax specified in subsection (3) of section 3 of the Capital Gains Tax Act, 1975, were the rate per cent. of corporation tax specified in paragraph (b) of subsection (1) of section 1.”,

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

“(e) Where in a chargeable period an undertaking for collective investment incurs a loss on the disposal (hereafter in this paragraph referred to as the ‘first-mentioned disposal’) of an asset the gain or loss in respect of a deemed disposal of which was included in a net amount to which paragraph (b) (ii) applied for any preceding chargeable period, so much of the allowable loss on the first-mentioned disposal as is equal to the excess of the amount of the loss over the amount which, if paragraph (a) had not been enacted, would have been the allowable loss on the first-mentioned disposal shall be treated for purposes of paragraph (b) as an allowable loss which would otherwise accrue to the undertaking for collective investment on disposals deemed by virtue of paragraph (a) to have been made in the chargeable period.”,

and

(c) by the insertion after subsection (6) of the following subsection:

“(6A) (a) Where in a chargeable period an undertaking for collective investment disposes of any securities and in the immediately following chargeable period or its basis period interest becoming payable in respect of the securities is receivable by the undertaking for collective investment, then, the gain or loss accruing on the disposal shall be computed as if the price paid by the undertaking for collective investment for the securities was reduced by the appropriate amount in respect of the interest:

Provided that where for a chargeable period the provisions of this paragraph apply so as to reduce the price paid for securities, the amount by which the price paid for the securities is reduced shall be treated as a loss arising, in the immediately following chargeable period, from the disposal of the securities.

(b) In this paragraph—

‘the appropriate amount in respect of the interest’ means the appropriate amount in respect of the interest which would be determined in accordance with Schedule 11 to the Income Tax Act, 1967, if the undertaking for collective investment was the first buyer and it carried on a trade to which section 368 (1) of the said Act applies:

Provided that in determining the appropriate amount in respect of the interest in accordance with the said Schedule 11, paragraph 3 (4) of that Schedule shall apply as if there were deleted ‘in the opinion of the Appeal Commissioners’;

‘securities’ has the same meaning as in subsection (1) of section 29 of the Finance Act, 1984.”.

(2) This section shall apply and have effect—

(a) as respects paragraph (a) of subsection (1), for accounting periods ending on or after the 1st day of April, 1995, and

(b) as respects paragraphs (b) and (c) of subsection (1), in relation to a disposal on or after the 28th day of March, 1996.

39 Exemption of bodies designated under section 4 of Securitisation (Proceeds of Certain Mortgages) Act, 1995, from certain tax provisions.

39.—(1) In this section “designated body” means a body designated under section 4 (1) of the Securitisation (Proceeds of Certain Mortgages) Act, 1995.

(2) Notwithstanding any provision of the Tax Acts, income arising to a designated body shall be exempt from income tax and corporation tax.

(3) Any stock or other forms of security issued by a designated body shall be deemed to be securities issued under the authority of the Minister within the meaning of section 466 of the Income Tax Act, 1967, and that section shall apply accordingly.

(4) Section 474 of the Income Tax Act, 1967, is hereby amended by the insertion in subsection (1) after “Finance Act, 1994” (inserted by section 161 of the Finance Act, 1994) of “, or section 39 of the Finance Act, 1996”.

(5) Section 19 of the Capital Gains Tax Act, 1975, is hereby amended in subsection (1) by the insertion after paragraph (b) of the following paragraph:

“(bb) securities issued by a designated body within the meaning assigned by section 1 of the Securitisation (Proceeds of Certain Mortgages) Act, 1995;”.

(6) Section 23 of the Capital Gains Tax Act, 1975, shall apply to a gain accruing to a designated body as it does to a gain accruing to a body specified in that section.

(7) Section 14 of the Securitisation (Proceeds of Certain Mortgages) Act, 1995, is hereby repealed and shall be deemed never to have had effect.

(8) This section shall be deemed to have come into operation on the 30th day of November, 1995.

40 Treatment under Tax Acts of certain employment grants and recruitment subsidies.

40.—(1) An employment grant or recruitment subsidy to which this section applies shall be disregarded for all the purposes of the Tax Acts.

(2) This section applies to an employment grant or recruitment subsidy made to an employer in respect of a person employed by him or her, under—

(a) the Back to Work Allowance Scheme, being a scheme established on the 1st day of October, 1993, and administered by the Minister for Social Welfare,

(b) any scheme which may be established by the Minister for Enterprise and Employment with the approval of the Minister for Finance for the purposes of promoting the employment of individuals who have been unemployed for three years or more and which is to be administered by An Foras Áiseanna Saothair,

(c) paragraph 13 of Annex B to an operating agreement between the Minister for Enterprise and Employment and a County Enterprise Board, being a board specified in the Schedule to the Industrial Development Act, 1995,

(d) the European Union Leader II Community Initiative 1994 to 1999, and which is administered in accordance with operating rules determined by the Minister for Agriculture, Food and Forestry,

(e) the European Union Operational Programme for Local Urban and Rural Development which is to be administered by the company incorporated under the Companies Acts, 1963 to 1990, on the 14th day of October, 1992, as Area Development Management Limited,

(f) the Special European Union Programme for Peace and Reconciliation in Northern Ireland and the Border Counties of Ireland which was approved by the European Commission on the 28th day of July, 1995,

(g) the Joint Northern Ireland/Ireland INTERREG Programme 1994 to 1999, which was approved by the European Commission on the 27th day of February, 1995, or

(h) any initiatives of the International Fund for Ireland which was designated by the International Fund for Ireland (Designation and Immunities) Order, 1986 (S.I. No. 394 of 1986) as an organisation to which Part VIII of the Diplomatic Relations and Immunities Act, 1967, applies.

(3) This section shall apply and have effect as on and from the 6th day of April, 1996.

41 Amendment of section 17 (tax deduction from payments to subcontractors) of Finance Act, 1970.

41.—As respects relevant contracts (within the meaning of section 17 of the Finance Act, 1970) entered into on or after the passing of this Act, section 17 (inserted by the Finance Act, 1976) of the Finance Act, 1970, is hereby amended—

(a) in subsection (1), by the insertion of the following proviso to the definition of “relevant contract”:

“Provided that a separate relevant contract shall be deemed to exist between the principal and each individual member of a gang or group of persons, including a partnership in respect of which the principal has not received a relevant payments card, where relevant operations are performed collectively by the gang or group, notwithstanding that any payment or part of a payment in respect of such relevant operations is made by the principal to one or more of the gang or group or to some other person;”,

(b) in subsection (2), by the insertion after “the principal makes a payment” of “or is deemed to make a payment pursuant to subsection (2A)”,

(c) by the insertion of the following subsection after subsection (2):

“(2A) Where relevant operations are performed by a gang or group of persons, including a partnership in respect of which the principal has not received a relevant payments card, and notwithstanding that any payment or part of a payment in respect of such relevant operations is made by the principal to one or more of the gang or group or to some other person, then such payment or part of a payment shall be deemed, for the purposes of this section and any regulations made thereunder, to have been made by the principal to the individual members of that gang or group in the proportions in which the payment or any amount in respect of the payment is to be divided amongst them.”,

and

(d) in paragraph (d) of subsection (5), by the insertion after “certificates of tax deducted from payments made to subcontractors” of “and the entry thereon of such particulars as may be specified in the regulations”.

42 Provisions supplemental to section 33 of Finance Act, 1986, relating to interest payments by certain deposit takers.

42.—The Finance Act, 1986, is hereby amended by the insertion of the following section after section 33:

“33A.—(1) In this section—

‘specified deposit’ means a relevant deposit made on or after the 28th day of March, 1996, in respect of which specified interest is payable other than such a deposit—

(a) which is held in a special savings account, or

(b) in respect of which—

(i) the interest payable is, to any extent, linked to, or determined by, changes in a stock exchange index or any other financial index,

(ii) arrangements were, or were being put, in place by the relevant deposit taker prior to the 28th day of March, 1996, to accept such a deposit, and

(iii) the deposit is made on or before the 7th day of June, 1996;

‘specified interest’ means interest in respect of a specified deposit other than so much of the amount of that interest as—

(a) is payable annually or at more frequent intervals, or

(b) cannot be determined until the date of payment of such interest, notwithstanding that the terms under which the deposit was made are complied with fully.

(2) Subject to the following provisions of this section, specified interest shall, for the purposes of section 33, be deemed—

(a) to accrue from day to day, and

(b) to be relevant interest paid by the relevant deposit taker in each year of assessment to the extent that—

(i) it is deemed to accrue in that year of assessment, and

(ii) it is not paid in that year of assessment,

and the relevant deposit taker shall account for appropriate tax accordingly:

Provided that—

(a) specified interest deemed to so accrue in the period from the 28th day of March, 1996, to the 5th day of April, 1996, shall be deemed to accrue in the year of assessment 1996-97, and

(b) the amount of specified interest deemed, to be relevant interest paid by a relevant deposit taker in any year of assessment by virtue of this subsection shall not be less than such amount as would be deductible in respect of interest or any other amount payable on the specified deposit in computing the income of the relevant deposit taker for the year of assessment if the year of assessment were an accounting period of the relevant deposit taker.

(3) Where, apart from that subsection, a relevant deposit taker makes a payment of relevant interest which is, or includes, specified interest it shall—

(a) deduct out of the whole of the amount of that payment the appropriate tax in relation to the payment in accordance with section 32, and

(b) account for that appropriate tax under section 33,

and the said appropriate tax shall be due and payable by the relevant deposit taker in accordance with section 33:

Provided that so much of the amount of appropriate tax paid by the relevant deposit taker by virtue of subsection (2) as is referable to specified interest included in the said payment of relevant interest shall be set off against any amount of appropriate tax due and payable by it for the year of assessment in which that payment of interest is made or against any amount, or amount on account of, appropriate tax due and payable by it for a year of assessment subsequent to that year (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).

(4) Subsection (2) shall not apply for a year of assessment where, for that year of assessment and all preceding years of assessment—

(a) in accordance with the provisions of section 33 (4) of this Act or section 7 (4) of the Finance Act, 1987, as may be appropriate, a relevant deposit taker makes a payment on account of appropriate tax in respect of specified interest as if, in relation to each specified deposit held by it, the references—

(i) in the said section 33 (4), to the period beginning on the 6th day of April, and ending on the 5th day of October in the year of assessment, and

(ii) in the said section 7 (4), where it occurs in the meaning assigned to ‘A’, to the period of twelve months ending on the 5th day of October in the relevant year,

were a reference to the period beginning on the date on which the specified deposit was made and ending on the 5th day of October in the year of assessment, and

(b) the full amount payable on account of appropriate tax by the relevant deposit taker in that year of assessment in accordance with the provisions of section 33 (4) of this Act or section 7 (4) of the Finance Act, 1987, including any amount payable in accordance with the said sections as modified by paragraph (a), before set off of any amount on account of appropriate tax paid in an earlier year of assessment, does not exceed the appropriate tax payable by the relevant deposit taker for that year of assessment.”.

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

43.—(1) Section 51 (as amended by the Finance Act, 1995) of the Finance Act, 1988, is hereby amended in paragraph (a) in subsection (1) by the substitution for “provided for use for the purposes of trading operations” of “provided by a company for use for the purposes of trading operations carried on by it”.

(2) This section shall apply and have effect as respects machinery or plant or an industrial building provided on or after the 23rd day of April, 1996.

Chapter IV Corporation Tax

44 Reduced rate of corporation tax for certain income.

44.—The Corporation Tax Act, 1976, is hereby amended by the insertion after section 28 of the following section:

“28A.—(1) Notwithstanding section 1, so much of the profits of a company for an accounting period ending on or after the 1st day of April, 1996, that does not exceed the lower of either—

(a) the specified amount in relation to the accounting period, or

(b) the income of the company for the accounting period,

shall be charged to corporation tax as if the rate of corporation tax for the financial year 1996 and each subsequent financial year were 30 per cent.

(2) For the purposes of subsection (1) and subject to subsections (3) and (4), the specified amount in relation to an accounting period of a company shall be an amount determined by the formula—

N1 £50,000 __ __ 12A

where—

N is the number of months in the accounting period, and

A is one plus the number of associated companies which the company has in the accounting period.

(3) Where, in the case of a company which has one or more associated companies in an accounting period—

(a) the accounting period of the company ends and on a date on which accounting periods of all of the associated companies end, and

(b) the company and all of the associated companies jointly elect in writing that this subsection shall apply,

then—

(i) the specified amount under subsection (2) shall be computed as if, in relation to the accounting period, the company and all of the associated companies were a single company (with no associated companies) with an accounting period ending on that date and beginning at the earliest date on which the accounting period of the company, or of any of the associated companies, begins, and

(ii) the specified amount computed under paragraph (i) shall be allocated to the accounting period of the company and to the accounting periods of its associated companies in such manner as is specified in the election, and the amount so allocated to a company shall be deemed to be the specified amount in relation to the accounting period of the company:

Provided that—

(I) the aggregate of amounts allocated under paragraph (ii) for an accounting period shall not exceed the specified amount computed under paragraph (i), and

(II) the amount allocated to an accounting period of a company shall not exceed the amount which would have been the specified amount in relation to the accounting period if the company had no associated companies in the accounting period.

(4) Where, in the case of a company which has one or more associated companies in an accounting period, the end of the accounting period of the company and the end of an accounting period of each of its associated companies do not coincide—

(a) subsection (3) shall apply as respects any period (hereafter in this subsection referred to as a ‘relevant period’) which falls into the accounting period of the company and an accounting period of each of the associated companies as if the relevant period were an accounting period of the company and of the associated companies,

(b) the amount allocated to any company in respect of a relevant period shall be deemed to be the specified amount in relation to that period, and

(c) where an amount has been allocated to a company in respect of a relevant period falling into an accounting period of the company, the specified amount for the accounting period of the company shall be the aggregate of—

(i) any specified amounts in relation to relevant periods falling into the accounting period, and

(ii) the amounts which would be the specified amounts in relation to any periods (which are not relevant periods) within the accounting period if each of those periods was treated as an accounting period:

Provided that the specified amount in relation to an accounting period of a company shall not exceed the amount which would be the specified amount in relation to the accounting period if the company had no associated companies in the accounting period.

(5) (a) In applying this section to any accounting period of a company, an associated company which—

(i) has not carried on any trade or business at any time in that accounting period or, if an associated company during part only of that accounting period, at any time in that part of that accounting period, or

(ii) has no income within the charge to corporation tax in the State in the accounting period,

shall be disregarded and for the purposes of this section a company is to be treated as an ‘associated company’ of another at a given time if at that given time one of the two has control of the other or both are under the control of the same person or persons.

(b) In this subsection ‘control’ shall be construed in accordance with section 102.

(6) In determining how many associated companies a company has in an accounting period or whether a company has an associated company in an accounting period, an associated company shall be counted even if it was an associated company for part only of the accounting period, and two or more associated companies shall be counted even if they were associated companies for different parts of the accounting period.

(7) For the purposes of this section, the income of a company for an accounting period shall be taken to be an amount determined by the formula—

I—M

where—

I is the amount of the company's profits for the accounting period on which corporation tax falls finally to be borne exclusive of the part of the profits attributed to chargeable gains; and that part shall be taken to be the amount brought into the company's profits for that period for the purposes of corporation tax in respect of chargeable gains before any deduction for charges on income, expenses of management or other amounts which can be deducted from or set against or treated as reducing profits of more than one description, and

M is the amount of the company's income from the sale of goods for the purpose of section 41 of the Finance Act, 1980.

(8) (a) A company shall include in the return which is required to be delivered under section 10 of the Finance Act, 1988—

(i) a statement specifying—

(I) the amount of its profits which is to be charged to corporation tax at the rate specified in subsection (1), and

(II) the number of companies which are its associated companies in relation to the accounting period,

and

(ii) a copy of any election made under subsection (3) or (4).

(b) A company which has specified an amount under paragraph (a) shall not be entitled to alter the amount so specified.

(9) Where an accounting period of a company begins before the 1st day of April, 1996, 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 31st day of March, 1996, and the other beginning on the 1st day of April, 1996, and ending on the day on which the accounting period ends, and both parts shall be treated for the purpose of this section as if they were separate accounting periods of the company.

(10) Where any part of the profits of an accounting period of a company are charged to corporation tax in accordance with this section then—

(a) for the purposes of section 41 of the Finance Act, 1980, the relevant corporation tax in relation to the accounting period shall be reduced by an amount determined by the formula—

R ___ S 100

where—

R is the rate per cent. specified in subsection (1) in relation to the accounting period, and

S is the specified amount in relation to the accounting period, and

(b) notwithstanding the provisions of subsection (10) (b) of section 155 of the Corporation Tax Act, 1976, in determining the income of a company, referred to in the expression ‘total income brought into charge to corporation tax’, for the accounting period for the purposes of subsection (2) of the said section 41, it shall be the sum determined by the said subsection (10) (b) for that period reduced—

(i) in accordance with sections 10A and 16A, and

(ii) by the specified amount in relation to the accounting period.”.

45 Amendment of section 12A (foreign currency: computation of income and chargeable gains) of Corporation Tax Act, 1976.

45.—(1) Section 12A (inserted by the Finance Act, 1994) of the Corporation Tax Act, 1976, is hereby amended—

(a) in subsection (1) (a) by the insertion after the definition of “relevant contract” of the following definition:

“‘relevant tax contract’, in relation to an accounting period of a company, means any contract entered into by the company for the purpose of eliminating or reducing the risk of loss being incurred by the company due to a change in the value of money payable in discharge of a liability of the company to corporation tax for the accounting period being a change resulting directly from a change in a rate of exchange of the functional currency (within the meaning of section 14A) of the company for the currency of the State;”, and

(b) by the addition after subsection (3) of the following subsection:

“(4) Notwithstanding section 13, so much of the amount of any gain or loss arising to a company which carries on a trade in the State in an accounting period as—

(a) is attributable to any relevant tax contract in relation to the accounting period,

(b) results directly from a change in a rate of exchange, and

(c) (i) where it is a gain, does not exceed the amount of the loss which, if the company had not entered into the relevant tax contract, would have been incurred by the company, and

(ii) where it is a loss, does not exceed the amount of the gain which, if the company had not entered into the relevant tax contract, would have arisen to the company,

due to a change in the value of money payable in discharge of a liability of the company to corporation tax for the accounting period,

shall not be a chargeable gain or an allowable loss, as the case may be, of the company.”.

(2) This section shall apply and have effect as respects accounting periods ending on or after the 1st day of April, 1996.

46 Amendment of section 33A (acquisition expenses) of Corporation Tax Act, 1976.

46.—Section 33A (inserted by the Finance Act, 1992) of the Corporation Tax Act, 1976, is hereby amended in subsection (1) (as amended by the Finance Act, 1993) by the insertion after “Finance Act, 1986,” of “or section 42 of the Finance Act, 1994,”.

47 Amendment of section 35A (chargeable gains of life business) of Corporation Tax Act, 1976.

47.—(1) Section 35A (inserted by section 11 (d) of the Finance Act, 1993) of the Corporation Tax Act, 1976, is hereby amended by the insertion after subsection (1) of the following:

“(1A) (a) Where in an accounting period a company disposes of any securities and in the immediately following accounting period interest becoming payable in respect of the securities is receivable by the company, the gain or loss accruing on the disposal shall be computed as if the price paid by the company for the securities was reduced by the appropriate amount in respect of the interest:

Provided that where for an accounting period the provisions of this paragraph apply so as to reduce the price paid for securities, the amount by which the price paid for the securities is reduced shall be treated as a loss arising, in the immediately following accounting period, from the disposal of the securities.

(b) In this subsection—

‘the appropriate amount in respect of the interest’ means the appropriate amount in respect of the interest which would be determined in accordance with Schedule 11 to the Income Tax Act, 1967, if the company were the first buyer and it carried on a trade to which section 368 (1) of the said Act applies:

Provided that in so determining the appropriate amount in respect of the interest in accordance with the said Schedule 11, paragraph 3 (4) of that Schedule shall apply as if there were deleted ‘in the opinion of the Appeals Commissioners’;

‘securities’ has the same meaning as in subsection (1) of section 29 of the Finance Act, 1984.”.

(2) This section shall apply and have effect as respects a disposal on or after the 28th day of March, 1996.

48 Amendment of section 36 (investment income reserved for policy holders) of Corporation Tax Act, 1976.

48.—(1) Section 36 of the Corporation Tax Act, 1976, is hereby amended in subsection (2) by the insertion of the following proviso:

“Provided that in computing that part of those profits for the purposes of paragraph (b), subsection (1A) of section 13 shall apply as if the rate per cent. of capital gains tax specified in subsection (3) of section 3 of the Capital Gains Tax Act, 1975, were the rate per cent. of corporation tax specified in paragraph (b) of subsection (1) of section 1.”.

(2) This section shall have effect as on and from the 1st day of April, 1995.

49 Amendment of section 36A (special investment policies) of Corporation Tax Act, 1976.

49.—(1) Section 36A (inserted by the Finance Act, 1993) of the Corporation Tax Act, 1976, is hereby amended in subsection (6) by the insertion of the following proviso:

“Provided that in computing profits for the purposes of this subsection, subsection (1A) of section 13 shall apply as if the rate per cent. of capital gains tax specified in subsection (3) of section 3 of the Capital Gains Tax Act, 1975, were the rate per cent. of corporation tax specified in paragraph (b) of subsection (1) of section 1.”.

(2) This section shall have effect as on and from the 1st day of April, 1995.

50 Amendment of section 46B (gains or losses arising by virtue of section 46A) of Corporation Tax Act, 1976.

50.—(1) Section 46B (inserted by the Finance Act, 1992) of the Corporation Tax Act, 1976, is hereby amended by the addition, after subsection (3), of the following subsection:

“(4) Where in an accounting period a company incurs a loss on the disposal (hereafter in this subsection referred to as the ‘first-mentioned disposal’) of an asset the gain or loss in respect of a deemed disposal of which was included in a net amount to which subsection (1)(b) applied for any preceding accounting period, then so much of the allowable loss on the first-mentioned disposal as is equal to the excess of the amount of the loss over the amount which, if section 46A had not been enacted, would have been the allowable loss on the first-mentioned disposal shall be treated for the purposes of this section as an allowable loss which would otherwise accrue on disposals deemed by virtue of section 46A to have been made in the company's accounting period.”.

(2) This section shall apply and have effect as respects a disposal on or after the 28th day of March, 1996.

51 Amendment of section 135 (company ceasing to be a member of a group) of Corporation Tax Act, 1976.

51.—As respects a company ceasing to be a member of a group of companies on or after the 28th day of March, 1996, section 135 of the Corporation Tax Act, 1976, is hereby amended—

(a) in subsection (1) by the insertion after “or in consequence of another member of the group being wound up or dissolved” of “where the winding up or dissolution of the member or the other member, as the case may be, is for bona fide commercial reasons and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax”, and

(b) by the substitution for subsection (2) of the following subsection:

“(2) Where two or more associated companies (hereafter in this subsection referred to as ‘the associated companies’) cease to be members of a group at the same time—

(a) subsection (1) shall not have effect as respects an acquisition by one from another of the associated companies, and

(b) where—

(i) a dividend has been paid or a distribution has been made by one of the associated companies to a company which is not one of the associated companies, and

(ii) the dividend so paid or the distribution so made, has been paid or made, as the case may be, wholly or partly out of profits which derive from the disposal of any asset by one to another of the associated companies,

the amount of the dividend paid or the amount or value of the distribution made, to the extent that it is paid or made, as the case may be, out of those profits, shall be deemed for the purposes of the Capital Gains Tax Act, 1975, to be consideration (in addition to any other consideration) received by the member of the group or former member of the group in respect of a disposal, which disposal gave rise to or was caused by the associated companies ceasing to be members of the group:

Provided that paragraph (b) shall not apply to a distribution other than a dividend where a company ceases to be a member of a group of companies before the 23rd day of April, 1996.”.

52 Amendment of section 162 (surcharge on undistributed income of service companies) of Corporation Tax Act, 1976.

52.—(1) Section 162 of the Corporation Tax Act, 1976, is hereby amended in subsection (4)—

(a) by the substitution of “15 per cent.” for “20 per cent.”, and

(b) by the insertion in the proviso to that subsection of the following paragraph after paragraph (ii):

“(iii) the surcharge shall apply to so much of the excess calculated under this subsection in respect of an accounting period of a company as is not greater than the excess of the aggregate of the distributable investment income and the distributable estate income of the accounting period over the distributions of the company for the accounting period as if the reference in this subsection, apart from this paragraph, to 15 per cent. were a reference to 20 per cent.”.

(2) This section shall apply and have effect as respects accounting periods ending on or after the 1st day of April, 1996:

Provided that for the purpose of this section where an accounting period begins before the 1st day of April, 1996, 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 31st day of March, 1996, and the other beginning on the 1st day of April, 1996, and ending on the day on which the accounting period ends, and both of the parts shall be treated as if they were separate accounting periods.

53 Amendment of section 39A (relief in relation to income from certain trading operations carried on in Shannon Airport) of Finance Act, 1980.

53.—Section 39A of the Finance Act, 1980, is hereby amended in subsection (6) (c) by the insertion after “selling by retail” of “otherwise than by mail order, or other distance selling, which satisfies the requirement of subsection (5) (b)”.

54 Amendment of section 28 (relief in relation to income from qualifying shipping trade) of Finance Act, 1987.

54.—(1) Section 28 of the Finance Act, 1987, is hereby amended by the substitution of the following paragraphs for paragraphs (a) and (b) of the definition of “qualifying ship”:

“(a) (i) is owned to the extent of not less than 51 per cent. by a person or persons resident in the State, or

(ii) is the subject of a letting on charter without crew by a lessor not resident in the State,

(b) in the case of a vessel to which paragraph (a) (i) applies, is registered in the State under Part II of the Mercantile Marine Act, 1955, and, in the case of a vessel to which paragraph (a) (ii) applies, is a vessel in respect of which it can be shown that all the requirements of the Merchant Shipping Acts, 1894 to 1993, have been complied with as if it had been a vessel registered under the said Part II,”.

(2) Paragraph (c) of subsection (4) of section 28 of the Finance Act, 1987, shall not have effect in the case of a letting on charter of a ship referred to therein where the lease in respect of the ship is a lease, the terms of which comply with the provisions of clauses (I) and (II) of subparagraph (i) of paragraph (b) of subsection (1) of section 30 of the Finance Act, 1994, and where the lessee produces to the Revenue Commissioners a relevant certificate within the meaning of this section.

(3) (a) In this section, a “relevant certificate” means a certificate issued, with the consent of the Minister for Finance, by the Minister for the Marine in relation to the letting on charter of a ship, certifying, on the basis of a business plan and any other information supplied by the lessee to the Minister for the Marine, that the Minister for the Marine is satisfied that the lease is in respect of a ship which—

(i) will result in an upgrading and enhancement of the lessee's fleet leading to improved efficiency and the maintenance of competitiveness,

(ii) (I) has the potential to create a reasonable level of additional sustainable employment and other socio-economic benefits in the State, or

(II) will assist in maintaining or promoting the lessee's trade in the carrying on of a qualifying shipping activity, and the maintenance of a reasonable level of sustainable employment and other socio-economic benefits in the State,

and

(iii) will result in the leasing of a ship which complies with current environmental and safety standards.

(b) Before issuing the certificate referred to in paragraph (a), the Minister for the Marine shall be satisfied that the said lease is 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 is the avoidance of tax.

(4) In this section “lessee”, in relation to a ship provided for leasing, means the person to whom the ship is or is to be leased and includes the successors in title of a lessee.

(5) This section, other than subsection (1), shall apply and have effect as respects a ship, a binding contract in writing for the acquisition or construction of which was concluded on or after the 1st day of July, 1996.

55 Amendment of section 31 (securitisation of assets) of Finance Act, 1991.

55.—(1) Section 31 of the Finance Act, 1991, is hereby amended—

(a) in subsection (1)—

(i) by the substitution for the definition of “qualifying asset” of the following:

“‘original lender’ and ‘originator’ have the meanings they have, respectively, in the definition of ‘qualifying asset’;

‘qualifying asset’ means—

(a) in the case of a qualifying company which is a qualified company (within the meaning of section 39B of the Finance Act, 1980), an asset—

(i) denominated in a foreign currency which consists of, or of an interest in or a contractual right to, any loan, lease, trade or consumer receiveable or other debt or receiveable whether secured or unsecured, and

(ii) of a person (hereafter in this section referred to as the ‘originator’), being any government, public or local authority, company or other body corporate which—

(I) is not resident in the State, and

(II) (A) is not carrying on a trade in the State through a branch or agency, or

(B) is carrying on a trade in the State through a branch or agency and the asset was not created, acquired or held by or in connection with the branch or agency,

and

(b) in any other case, a loan made by a company (hereafter in this section referred to as the ‘original lender’) on the security of a mortgage of a freehold or leasehold estate or interest in the ordinary course of a trade carried on by it which consists of or includes the lending of money on such security;”,

(ii) in the definition of “qualifying company”—

(I) by the insertion after “original lenders” of “, or the originator or originators”, and

(II) by the insertion after “any other business” of “, apart from activities which are ancillary to the said business of the management of qualifying assets”,

and

(b) in subsection (2)—

(i) by the insertion in subparagraph (b) (ii) after “the original lender” of “or the originator, as the case may be,”, and

(ii) by the insertion in the proviso to paragraph (b) after “Provided that” of “in the case of a company referred to in paragraph (b) of the definition of ‘qualifying asset’.”.

(2) This section shall apply and have effect as on and from the 28th day of March, 1996.

56 Amendment of section 56 (relief for gifts to The Enterprise Trust Ltd.) of Finance Act, 1992.

56.—Section 56 (as amended by section 51 of the Finance Act, 1994) of the Finance Act, 1992, is hereby amended—

(a) by the substitution in paragraph (a) of subsection (2) of “31st day of December, 1997,” for “31st day of December, 1996,”, and

(b) by the substitution for subsection (3) of the following subsection:

“(3) Subject to subsection (2), where a company (hereafter in this subsection referred to as the ‘donor’) makes a gift to which this section applies and claims relief from tax by reference thereto, the net amount thereof shall, for the purposes of corporation tax, be treated as—

(a) a deductible trading expense of a trade carried on by the donor, or

(b) an expense of management deductible in computing the total profits of the donor,

incurred by it in the accounting period in which the gift is made:

Provided that in determining the net amount of the gift, the amount or value of any consideration received by the said donor as a result of making the gift, whether received directly or indirectly from the company or any other person, shall be deducted from the amount of the gift.”.

57 Amendment of section 59 (deduction for certain expenditure on research and development) of Finance Act, 1995.

57.—(1) Section 59 of the Finance Act, 1995, is hereby amended in subsection (1)—

(a) in paragraph (a)—

(i) in the definition of “qualifying group expenditure on research and development” by the substitution for the meaning assigned to “D” of “D is the amount of group base expenditure on research and development”,

(ii) in the definition of “relevant period” by the addition of the following proviso:

“Provided that a period shall not be a relevant period if it commences on or after the 1st day of June, 1999;”,

and

(b) in paragraph (b), by the deletion of “and” at the end of the proviso to subparagraph (ii), the insertion of “and” after “expended in the State,” in subparagraph (iii) and the substitution for subparagraph (iv) of the following:

“(iv) expenditure on research and development shall not be regarded as having been incurred in a relevant period by a company which is a member of a group if—

(I) in the relevant period the aggregate of amounts received by companies which are members of the group, being amounts paid, directly or indirectly, to the companies by the State or by a person, other than a company which is a member of the group, to enable the company to meet the cost of such expenditure, exceeds £50,000, or

(II) it is expenditure—

(A) approved by Forbairt under any scheme administered by it, and

(B) which has been or is to be met, to any extent, directly or indirectly by the State or any person other than a company which is a member of the group.”.

(2) This section shall apply and have effect as respects any relevant period commencing on or after the 1st day of June, 1996.

58 Amendment of Chapter VII (advance corporation tax) of Part I of the Finance Act, 1983.

58.—(1) Chapter VII of Part I of the Finance Act, 1983, is hereby amended—

(a) in section 44, by the substitution in subsection (5) for “apply for the purposes of that section” of “would apply for the purposes of that section if ‘resident in the State’ in paragraph (c) of the said subsection (6) were deleted”, and

(b) in subsection (1) of section 47—

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

“(I) (A) of which the first-mentioned company is a 75 per cent. subsidiary, or

(B) which is a member of a consortium which owns the first-mentioned company,

and”,

and

(ii) by the insertion after paragraph (c) of the following paragraph:

“(d) For the purposes of paragraph (a) a company is owned by a consortium if three-quarters or more of the ordinary share capital of the company is beneficially owned between them by five or fewer companies of which none beneficially owns less than one-twentieth of that capital, and those companies are called members of the consortium.”.

(2) This section shall apply and have effect as respect dividends paid on or after the 23rd day of April, 1996.

Chapter V Capital Gains Tax

59 Amendment of paragraph 11 (disposal of certain assets) of Schedule 4 to Capital Gains Tax Act, 1975.

59.—Paragraph 11 (inserted by the Finance Act, 1982) of Schedule 4 to the Capital Gains Tax Act, 1975, is hereby amended—

(a) in subparagraph (8) by the substitution for “the consideration” of “the amount or value of the consideration, in money or money's worth,”, and

(b) in subparagraph (10A) (inserted by the Finance Act, 1995) by the insertion of the following proviso:

“Provided that this subparagraph shall not apply where there is a disposal of an asset by virtue of a capital sum being derived from the asset under a policy of insurance of the risk of any kind of damage to the asset.”.

60 Amendment of section 26 (disposal of business or farm on retirement) of Capital Gains Tax Act, 1975.

60.—(1) Section 26 of the Capital Gains Tax Act, 1975, is hereby amended in subsection (6) (a) by the insertion in the definition of “family company” of the following proviso:

“Provided that where a company which is a holding company, would not, but for this proviso, be an individual's family company, but would be such a company if the individual had not at any time on or after the 6th day of April, 1987, and before the 6th day of April, 1990, disposed of shares in the company to a child (within the meaning of section 27) of the individual, the company shall be deemed to be the individual's family company;”.

(2) This section shall apply and have effect as on and from the 23rd day of April, 1996.

61 Amendment of section 46 (debts) of Capital Gains Tax Act, 1975.

61.—(1) Section 46 of the Capital Gains Tax Act, 1975, is hereby amended by the addition of the following subsection after subsection (6):

“(7) For the purposes of this section a debenture issued by any company shall be deemed to be a security (within the meaning assigned by paragraph 3 of Schedule 2) if it is issued—

(a) on a reorganisation (as provided for in paragraph 2 (1) of Schedule 2) or in pursuance of its allotment on any such reorganisation,

(b) in exchange for shares in or debentures of another company where the requirements of paragraph 4 (2) of Schedule 2 are satisfied in relation to the exchange,

(c) under any such arrangements as are referred to in paragraph 5 (1) of Schedule 2, or

(d) in pursuance of rights attached to any debenture falling within paragraph (a), (b) or (c).”.

(2) Subsection (1) shall apply and have effect as respects the disposal of a debenture on or after the 28th day of March, 1996.

62 Amendment of section 27 (relief for individuals on certain reinvestment) of Finance Act, 1993.

62.—(1) Section 27 (as amended by section 74 of the Finance Act, 1995) of the Finance Act, 1993, is hereby amended by the insertion of the following subsection after subsection (2):

“(2A) (a) Where an individual who is not entitled to be treated in accordance with subsection (2) solely by reason of not having satisfied the requirements of either or both paragraph (a) and (d) of subsection (5) of this section, and—

(i) all the other requirements of the section have been satisfied,

(ii) the capital gains tax on the disposal of the original holding has been paid in full, and

(iii) the individual has, throughout a period of 2 years beginning within the specified period, been a full-time employee or a full-time director of the qualifying company,

then the individual shall—

(I) be entitled on making a claim in that behalf to such repayment of capital gains tax as would secure that the tax which is ultimately borne by the individual does not exceed the tax which would have been borne by the individual if the said individual had been entitled to be treated in accordance with subsection (2), and

(II) 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, and the proviso to subsection (2) shall have effect for the purposes of this subsection as it has for the purposes of that subsection.

(b) Any repayment of tax under this subsection shall not carry interest.”.

(2) This section shall apply and have effect as respects disposals made on or after the 6th day of April, 1996.

63 Amendment of section 66 (reduced rate of capital gains tax on certain disposals of shares by individuals) of Finance Act, 1994.

63.—(1) Section 66 (as amended by section 75 of the Finance Act, 1995) of the Finance Act, 1994, is hereby amended—

(a) by the substitution in subsection (6) of “3 years” for “5 years”, and

(b) by the substitution in paragraph (a) and paragraph (b) of subsection (8) of “3 years” for “5 years”.

(2) (a) Subsection (1) shall apply and have effect as respects a disposal effected by an individual of qualifying shares in a qualifying company on or after the 6th day of April, 1996.

(b) In this subsection “qualifying company” and “qualifying shares” have, respectively, the same meanings as they have in section 66 of the Finance Act, 1994.

64 Exemption of certain milk boards and associated companies from capital gains tax.

64.—(1) In this section—

“the Boards” means—

(a) the Dublin District Milk Board established under the Dublin District Milk Board Order, 1936 (S.R. & O. No. 254 of 1936), and

(b) the Cork District Milk Board established under the Cork District Milk Board Order, 1937 (S.R. & O. No. 91 of 1937);

“the companies” means—

(a) the company incorporated on the 19th day of November, 1991, as Dairysan Limited, and

(b) the company incorporated on the 14th day of February, 1994, as Glenlee (Cork) Limited;

“the Interim Board” means the Interim Board established under the Milk (Regulation of Supply) (Establishment of Interim Board) Order, 1994, (S.I. No. 408 of 1994).

(2) Section 23 of the Capital Gains Tax Act, 1975, shall apply to a gain accruing on the disposal on or after the 5th day of December, 1994, of an asset—

(a) by the Boards or the companies to the Interim Board, and

(b) by the Interim Board,

as it applies to a gain accruing to a body specified in that section.

Chapter VI Income Tax and Corporation Tax: Reliefs for Renewal and Improvement of Residential Accommodation on Certain Islands

65 Interpretation (Chapter VI).

65.—(1) In this Chapter—

“certificate of reasonable cost” means a certificate granted by the Minister for the Environment for the purposes of section 66, 67, 68 or 69, as the case may be, stating that the amount specified in the certificate in relation to the cost of construction of, conversion into, refurbishment of, or, as the case may be, construction or refurbishment of, the house to which the certificate relates appears to the Minister at the time of the granting of the certificate and on the basis of the information available to the Minister at that time to be reasonable, and section 18 of the Housing (Miscellaneous Provisions) Act, 1979, shall, with any necessary modifications, apply to a certificate of reasonable cost as if it were a certificate of reasonable value;

“certificate of reasonable value” has the meaning assigned to it by section 18 of the Housing (Miscellaneous Provisions) Act, 1979;

“designated island” means any of the following islands, that is to say—

(a) in the administrative county of Cork, the islands of Bere, Clear, Dursey, Hare, Long, Sherkin and Whiddy,

(b) in the administrative county of Donegal, the islands of Arranmore, Inishbofin, Inishfree and Tory,

(c) in the administrative county of Galway, the islands of Inisbofin, Inisheer, Inishmaan and Inishmore,

(d) in the administrative county of Limerick, the island of Foynes,

(e) in the administrative county of Mayo, the islands of Claggan, Clare, Inishbiggle, Inishcottle, Inishlyre and Inishturk, and

(f) in the administrative county of Sligo, the island of Coney;

“house” includes any building or part of a building used or suitable for use as a dwelling and any out-office, yard, garden or other land appurtenant thereto or usually enjoyed therewith;

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

“market value”, in relation to a building or house, means the price which the unencumbered fee simple of the building or house 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 house: