Finance Act 1997

PART I Income Tax, Corporation Tax and Capital Gains Tax

Chapter I Income Tax

1 Amendment of provisions relating to exemption from income tax.

1.—As respects the year of assessment 1997-98 and subsequent years of assessment, the Finance Act, 1980, is hereby amended—

(a) in section 1, by the substitution, in subsection (2) (inserted by the Finance Act, 1989), of “£8,000” and “£4,000”, respectively, for “£7,800” and “£3,900” (inserted by the Finance Act, 1996), and

(b) in section 2, by the substitution, in subsection (6) (inserted by the Finance Act, 1989)—

(i) of “£9,200” and “£10,400”, respectively, for “£9,000” and “£10,200” (inserted by the Finance Act, 1996), in paragraph (a), and

(ii) of “£4,600” and “£5,200”, respectively, for “£4,500” and “£5,100” (inserted by the Finance Act, 1996), in paragraph (b),

and the said subsection (2) of the said section 1 and the said subsection (6) of the said section 2, as so amended, are set out in the Table to this section.

TABLE

(2) In this section “the specified amount” means, subject to subsection (3)—

(a) in a case where the individual would, apart from this section, be entitled to a deduction specified in section 138 (a) of the Income Tax Act, 1967, £8,000, and

(b) in any other case, £4,000.

(6) In this section “the specified amount” means, subject to subsection (3) of section 1—

(a) in a case where the individual would, apart from this section, be entitled to a deduction specified in section 138 (a) of the Income Tax Act, 1967, £9,200:

Provided that, if at any time during the year of assessment either the individual or his spouse was of the age of seventy-five years or upwards, “the specified amount” means £10,400, and

(b) in any other case, £4,600:

Provided that, if at any time during the year of assessment the individual was of the age of seventy-five years or upwards, “the specified amount” means £5,200.

2 Alteration of rates of income tax.

2.—Section 2 of the Finance Act, 1991, is hereby amended, as respects the year of assessment 1997-98 and subsequent years of assessment, by the substitution of the following Table for the Table to that section:

TABLE

Part of taxable income	Rate of tax	Description of rate
(1)	(2)	(3)
The first £9,900	26 per cent.	the standard rate
The remainder	48 per cent.	the higher rate
Part of taxable income	Rate of tax	Description of rate
---	---	---
(1)	(2)	(3)
The first £19,800	26 per cent.	the standard rate
The remainder	48 per cent.	the higher rate

3 Personal reliefs.

3.—(1) Where a deduction falls to be made from the total income of an individual for the year of assessment 1997-98 or any subsequent year of assessment in respect of relief to which the individual is entitled under a provision mentioned in column (1) of the Table to this subsection and the amount of the deduction would, but for this section, be an amount specified in column (2) of the said Table, the amount of the deduction shall, in lieu of being the amount specified in the said column (2), be the amount specified in column (3) of the said Table opposite the mention of the amount in the said column (2).

TABLE

Statutory provision	Amount to be deducted from total income for the year 1996-97	Amount to be deducted from total income for the year 1997-98 and subsequent years
(1)	(2)	(3)
	£	£
Income Tax Act, 1967:
section 138
(married person)	5,300	5,800
(widowed person bereaved in the year of assessment)	5,300	5,800
(widowed person)	3,150	3,400
(single person)	2,650	2,900
section 138 A
(additional allowance for widowed persons and others in respect of children)
(widowed person)	2,150	2,400
(other person)	2,650	2,900
Finance Act, 1974:
section 8
(age allowance)
(single or widowed person)	200	400
(married person)	400	800

(2) Section 3 of the Finance Act, 1986, and section 3 of the Finance Act, 1996, shall have effect subject to the provisions of this section.

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

4 Amendment of provisions relating to the taxation of certain social welfare benefits.

4.—(1) Section 15 of the Finance Act, 1992, is hereby amended, in subsection (2) (inserted by the Finance Act, 1995), by the insertion of the following additional proviso:

“Provided also that the aggregate of the amounts of disability benefit, or of injury benefit, or of both disability benefit and injury benefit, payable to a person in respect of—

(a) for the year of assessment 1997-98, the first 18 days, and

(b) for the year of assessment 1998-99 and subsequent years of assessment, the first 36 days,

incapacity for work for which the person is entitled to payment of either disability benefit or injury benefit shall be disregarded for all the purposes of the Income Tax Acts.”.

(2) (a) Notwithstanding the provisions of section 15 (as amended by subsection (1) of the Finance Act, 1992, and the Finance Act, 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order, 1994 (S.I. No. 19 of 1994), the said section 15 shall not apply, as respects the year of assessment 1997-98, in relation to unemployment benefit paid or payable to a person employed in short-time employment.

(b) In this subsection, “short-time employment” has the same meaning as it has for the purposes of the Social Welfare Acts but also includes such an employment as is referred to in section 79 (2) (b) of the Social Welfare (Consolidation) Act, 1993.

5 Amendment of section 4 (separated spouses: adaptation of special provisions as to married persons) of Finance Act, 1983.

5.—As respects the year of assessment 1997-98 and subsequent years of assessment—

(a) section 4 of the Finance Act, 1983, is hereby amended by the insertion of the following subsection after subsection (2):

“(3) Notwithstanding the provisions of subsection (1), where a payment to which section 3 applies is made in a year of assessment by a spouse who is a party to marriage, that has been dissolved, for the benefit of the other spouse and—

(a) the dissolution was under either—

(i) section 5 of the Family Law (Divorce) Act, 1996, or

(ii) the law of a country or jurisdiction other than the State, being a divorce that is entitled to be recognised as valid in the State,

(b) both spouses are resident in the State for tax purposes for that year of assessment, and

(c) neither spouse has entered into another marriage,

then, the other provisions of this section shall, with any necessary modifications, have effect in relation to the spouses for that year of assessment as if their marriage had not been dissolved.”,

and

(b) section 49 of the Family Law Act, 1995, and section 32 of the Family Law (Divorce) Act, 1996, are hereby repealed.

6 Amendment of section 127 (regulations) of Income Tax Act, 1967.

6.—(1) Section 127 of the Income Tax Act, 1967, is hereby amended by the insertion of the following after subsection (5):

“(5A) (a) Notwithstanding the provisions of subsection (5), regulations made in accordance with the provisions of paragraphs (f) and (g) of subsection (1) shall not apply to an employer (being an individual) who pays emoluments to an employee engaged by that employer in a domestic employment where—

(i) the emoluments from that employment are less than £30 per week, and

(ii) the employer has only one such employee.

(b) In this subsection—

‘domestic employee’ means an employee who is employed solely on domestic duties (including the minding of children) in the employer's private dwelling house;

‘domestic employment’ means employment by reference to which an employee is a domestic employee.”.

(2) This section shall apply and have effect as on and from the 6th day of June, 1997.

7 Amendment of section 15 (relief for fees paid for part-time third level education) of Finance Act, 1996.

7.—Section 15 of the Finance Act, 1996, is hereby amended—

(a) in subsection (1)—

(i) by the substitution of the following for the definition of “approved college”:

“‘approved college’, in relation to a year of assessment, means a college or institution in the State, or a college or institution in another Member State of the European Union providing distance education in the State, which—

(a) provides courses to which a scheme approved by the Minister under the Local Authority (Higher Education) Grants Acts, 1968 to 1992, applies, or

(b) operates in accordance with a code of standards, which from time to time, may with the consent of the Minister for Finance, be laid down by the Minister,

and which the Minister approves of for the purposes of this section;”,

(ii) by the substitution of the following for the definition of “qualifying individual”:

“‘qualifying individual’ means—

(a) an individual other than an individual who has been conferred with a certificate, diploma or degree in respect of the completion by him or her of an undergraduate course of study of not less than 2 academic years duration, or

(b) an individual who has been conferred with a certificate or diploma as referred to in paragraph (a) and who is pursuing an approved course in respect of which the approved college certifies that the certificate or diploma, as the case may be, with which he or she has been conferred, has qualified him or her for exemption for one or more years of study from the normal duration of the approved course but is not otherwise an individual who is not a qualifying individual for the purposes of paragraph (a).”,

and

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

“(2A) Notwithstanding the provisions of subsection (2), where, for any year of assessment—

(a) the spouse of a qualifying individual is assessed to tax in accordance with the provisions of section 194 (inserted by the Finance Act, 1980) of the Income Tax Act, 1967, and

(b) qualifying fees are paid by the qualifying individual, or paid by that spouse on behalf of the qualifying individual, in respect of an approved course for the academic year in relation to that course commencing in that year of assessment,

then, relief under this section shall, except where the provisions of section 197 (as so inserted) of the Income Tax Act, 1967, apply, be granted to the spouse of the qualifying individual in respect of the qualifying fees so paid as if he or she were a qualifying individual and the qualifying fees had been paid by him or her on his or her own behalf.”.

8 Relief for fees paid for training courses.

8.—(1) In this section—

“An Foras” means An Foras Áiseanna Saothair;

“approved course provider” means a person providing approved courses who—

(a) operates in accordance with a code of standards which from time to time may, with the consent of the Minister for Finance, be agreed between An Foras and the Minister, and

(b) is approved of by An Foras for the purposes of this section;

“approved course” means a course of study or training, other than a post graduate course, provided by an approved course provider which—

(a) is confined to—

(i) such aspects of information technology, or

(ii) such foreign languages,

as are approved of by the Minister, with the consent of the Minister for Finance, for the purposes of this section,

(b) is of less than two years duration,

(c) results in the awarding of a certificate of competence, and

(d) having regard to a code of standards which, from time to time, may, with the consent of the Minister for Finance, be agreed between An Foras and the Minister in relation to—

(i) the quality and standard of training to be provided on the approved course, and

(ii) the methods and facilities to be used by the course provider in delivering the course and in assessing competence,

is approved of by An Foras for the purposes of this section;

“certificate of competence”, in relation to an approved course, means a certificate awarded in accordance with the standards set out in the code of standards referred to in paragraph (d) of the definition of “approved course” and certifying that a minimum level of competence has been achieved by the individual to whom the certificate is awarded;

“foreign language” means a language other than an official language of the State;

“the Minister” means the Minister for Enterprise and Employment;

“qualifying fees”, in relation to an approved course, means the amount of fees chargeable in respect of tuition to be provided in relation to such course where the net amount of such fees are not less than £250 and to the extent that they do not exceed £1,000.

(2) (a) Subject to the provisions of this section, where an individual makes a claim in that behalf and proves that—

(i) he or she has on his or her own behalf made a payment in respect of qualifying fees in respect of an approved course, and

(ii) has been awarded a certificate of competence in respect of that course,

the income tax to be charged on the individual, other than in accordance with section 5(3) of the Finance Act, 1974, for the year of assessment in which that certificate of competence is awarded, shall be reduced by an amount which is the lesser of—

(I) the amount equal to the appropriate percentage of the aggregate of all such payments proved to be so made, and

(II) the amount which reduces that income tax to nil.

(b) In this subsection “appropriate percentage”, in relation to a year of assessment, means a percentage equal to the standard rate of tax for that year.

(3) Where, for a year of assessment in which an individual is awarded a certificate of competence—

(a) the spouse of the individual is assessed to tax in accordance with the provisions of section 194 (inserted by the Finance Act, 1980) of the Income Tax Act, 1967, and

(b) qualifying fees are paid by the individual, or paid by that spouse on behalf of the individual, in respect of the approved course,

then, relief under this section shall, except where the provisions of section 197 (as so inserted) of the Income Tax Act, 1967, apply, be granted to the spouse of the individual in respect of the qualifying fees so paid as if the qualifying fees had been paid by him or her on his or her own behalf.

(4) Relief under this section shall not be given in respect of an individual for a year of assessment in respect of more than one approved course.

(5) For the purposes of this section a payment in respect of qualifying fees shall be regarded as not having been made in so far as any sum, in respect of or by reference to such fees, has been or is to be received either directly or indirectly by an individual from any source whatsoever by way of grant, scholarship or otherwise.

(6) An Foras, where it is satisfied that an approved course provider, or an approved course provided by an approved course provider, no longer meets the appropriate code of standards laid down, may by notice in writing given to the approved course provider withdraw the approval of that course provider or approved course, as the case may be, from such date as it considers appropriate and this section shall cease to apply to that course provider or that course, as the case may be, with effect from that date.

(7) (a) As soon as may be practicable after it has—

(i) approved a course provider or a course for the purposes of this section, or

(ii) withdrawn such approval,

An Foras shall notify the Revenue Commissioners in writing of such approval or withdrawal of approval.

(b) If any question arises as to whether—

(i) a course provider is an approved course provider, or

(ii) a training course is an approved course,

for the purposes of this section, the Revenue Commissioners may consult with An Foras.

(8) Part II of the Table to section 137 (inserted by the Finance Act, 1996) of the Income Tax Act, 1967, is hereby amended by the addition of “Section 8 of the Finance Act, 1997”.

(9) Section 198 (inserted by the Finance Act, 1980) of the Income Tax Act, 1967, is hereby amended, in subsection (1)(a), by the insertion of the following additional subparagraph:

“(xix) so far as it flows from relief under section 8 of the Finance Act,1997, in the proportions in which they incurred the expenditure giving rise to the relief,”.

(10) Any relief under this section shall be in substitution for and not in addition to any relief to which the individual might be entitled to in respect of the same payment under any other provision of the Income Tax Acts.

(11) This section shall come into operation on such date as may be fixed by order of the Minister for Finance.

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

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

(a) in subsection (1) of section 11, by the substitution, as on and from the 6th day of April, 1997, of the following definition for the definition of “unquoted company”:

“‘unquoted company’ means a company none of whose shares, stocks or debentures—

(i) are listed in the official list of a stock exchange, or

(ii) are quoted on an unlisted securities market of a stock exchange other than on the market known as the Developing Companies Market of the Irish Stock Exchange.”,

(b) in section 14A (inserted by the Finance Act, 1995), by the substitution, as respects a subscription for eligible shares made on or after the 2nd day of June, 1995, of the following subsection for subsection (3):

“(3) The individual shall, throughout the relevant period, possess at least 15 per cent. of the issued ordinary share capital of the company in which that individual makes a relevant investment.”,

(c) in section 16, by the substitution, as respects a relevant investment made on or after the passing of this Act, of the following subparagraph for subparagraph (iic) of paragraph (a) of subsection (2):

“(iic) the rendering of such services as are referred to in subparagraph (ii) in respect of which an industrial development agency or a County Enterprise Board (being a board referred to in the Schedule to the Industrial Development Act, 1995) has provided financial support of not less than £2,000 towards the undertaking of a feasibility study by a person approved of by the agency or the County Enterprise Board into the potential commercial viability of the services to be rendered,”,

and

(d) in section 16A (inserted by the Finance Act, 1995), as respects a relevant investment made on or after the passing of this Act, by the addition of the following after subsection (6):

“(7) (a) For the purposes of this Chapter, a certificate under subsection (2) may, instead of being given by an authority, be given by a County Enterprise Board (being a board referred to in the Schedule to the Industrial Development Act, 1995) to a company carrying on or intending to carry on one or more such qualifying trading operations as are mentioned in—

(i) subparagraph (i) (as amended by the Finance Act, 1993),

(ii) subparagraph (ii) (inserted by the Finance Act, 1990), and

(iii) subparagraph (iic) (inserted by the Finance Act, 1997),

of paragraph (a) of subsection (2) of section 16 and the provisions of subsections (2) and (6) of this section shall, subject to the modification specified in paragraph (b) and any other necessary modification, apply accordingly.

(b) The modification referred to in paragraph (a) is that, for the purposes of this subsection, the guidelines of the kind mentioned in subsection (2)(b) shall be agreed between the Minister for Finance and the Minister for Arts, Culture and the Gaeltacht or the Minister for Enterprise and Employment, as may be appropriate in the circumstances.”.

10 Amendment of section 14 (relief to individuals on loans applied in acquiring interest in companies) of Finance Act, 1992.

10.—As on and from the 6th day of April, 1997, section 14 of the Finance Act, 1992, is hereby amended by the substitution of the following definition for the definition of “quoted 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 quoted on an unlisted securities market of any stock exchange;”.

11 Income from scholarships.

11.—(1) Section 353 of the Income Tax Act, 1967, is hereby amended by the substitution of the following for subsections (2) and (3):

“(2) Nothing in subsection (1) shall be construed as conferring on any person other than the person holding the scholarship in question any exemption from a charge to tax.

(3) Notwithstanding the provisions of subsection (2), a payment of income arising from a relevant scholarship which is—

(a) provided from a trust fund or under a scheme, and

(b) held by a person receiving full-time instruction at a university, college, school or other educational establishment,

shall be exempt from tax if, in the year of assessment in which the payment is made, not more than 25 per cent. of the total amount of the payments made from that fund, or under that scheme, in respect of scholarships held as mentioned in paragraph (b) is attributable to relevant scholarships.

(4) (a) In this section—

‘relevant body’ means a body corporate, unincorporated body, partnership, individual or other body;

‘relevant scholarship’ means a scholarship provision for which is made, either directly or indirectly, by a relevant body or a person connected with that relevant body and where payments are made, either directly or indirectly, in respect of such a scholarship to—

(i) an employee or, where the relevant body is a body corporate, a director of the relevant body, or

(ii) the spouse, family, dependants or servants of such employee or director;

‘scholarship’ includes an exhibition, bursary or other similar educational endowment.

(b) A person shall be regarded as connected with a relevant body for the purposes of this subsection, if that person is—

(i) a trustee of a settlement, within the meaning of section 131 of the Finance Act, 1996, made by the relevant body, or

(ii) a relevant body,

and that person would be regarded as connected with the relevant body for the purposes of the said section 131.

(5) If any question arises whether any income is income arising from a scholarship held by a person receiving full-time instruction at a university, college, school or other educational establishment, the Revenue Commissioners may consult the Minister for Education.”.

(2) This section shall apply and have effect in relation to a payment made on or after the 26th day of March, 1997, other than a payment made before the 6th day of April, 1998, in respect of a scholarship awarded before the said 26th day of March, 1997.

(3) For the purpose of ascertaining, in accordance with the provisions of subsection (3) (as inserted by this section) of section 353 of the Income Tax Act, 1967, the percentage of the total amount of the payments made in the year of assessment 1996-97 in respect of scholarships from any fund or under any scheme which, apart from the said subsection (3), would be chargeable to tax, this section shall be deemed to have applied and had effect in relation to all such payments made in that year.

(4) Section 178 of the Income Tax Act, 1967, is hereby amended, in subsection (1), by the insertion of the following after paragraph (aaa) (inserted by the Finance Act, 1982):

“(aaaa) particulars of any relevant scholarships (within the meaning of section 353 (as amended by the Finance Act, 1997) of the Income Tax Act, 1967) in relation to those persons;”.

12 Amendment of section 115 (exemptions and reliefs in respect of tax under section 114) of Income Tax Act, 1967.

12.—Section 115 of the Income Tax Act, 1967, is hereby amended in subsection (1A) (inserted by the Finance Act, 1993)—

(a) by the insertion in paragraph (a) of the following after subparagraph (iii):

“(iv) a benefit paid in pursuance of any statutory scheme (within the meaning of Chapter II of Part I of the Finance Act, 1972), other than a payment representing normal retirement benefits, which is made in consideration or in consequence of, or otherwise in connection with, the termination of the holding of an office or employment in circumstances—

(I) of redundancy or abolition of office, or

(II) for the purposes of facilitating improvements in the organisation of the employing company, organisation, Department or other body by which greater efficiency or economy can be effected,

and for the purposes of this subparagraph, ‘normal retirement benefits’ means recognised superannuation benefits customarily payable to an individual on retirement at normal retirement date under the relevant statutory scheme, notwithstanding that, in relation to the termination of an office or employment in the circumstances described in this subparagraph, such benefits may be paid earlier than the designated retirement date or may be calculated by reference to a period greater than the individual's actual period of service in the office or employment, and includes benefits described as short service gratuities which are calculated on a basis approved by the Minister for Finance.”,

and

(b) by the insertion, in paragraph (b), of the following after subparagraph (ii):

“(iii) Subparagraph (iv) of paragraph (a) shall apply and have effect in relation to any statutory scheme established or amended after the passing of the Finance Act, 1997.”.

13 Tax deductions from payments made to subcontractors.

13.—(1) Section 17 of the Finance Act, 1970, is hereby amended—

(a) by the substitution in subsection (1), with effect from the 6th day of October, 1997, of the following for paragraph (a) of the definition of “forestry operations” (inserted by the Finance Act, 1992):

“(a) the planting, thinning, lopping or felling of trees in woods, forests or other plantations;

(aa) the maintenance of woods, forests and plantations and the preparation of land, including woods or forests which have been harvested, for planting;”,

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

“(C) in respect of—

(I) employment contributions and self-employment contributions under the Social Welfare Acts,

(II) health contributions under the Health Contributions Act, 1979, and

(III) Employment and Training Levy under the Youth Employment Agency Act, 1981, as amended by the Labour Services Act, 1987.”,

and

(c) by the insertion, as respects offences committed or penalties incurred on or after the passing of this Act, of the following after subsection (10):

“(10A) Notwithstanding the provisions of any other enactment, summary proceedings in respect of offences under this section may be instituted within 10 years of the commission of the offence.

(10B) The provisions of sections 128(4), 500(4), 501(3), 502(3), 506 and 507 of the Income Tax Act, 1967, shall, with any necessary modifications, apply for the purposes of this section and any regulations made thereunder as they apply for the purposes of those provisions.”.

(2) Schedule 15 to the Income Tax Act, 1967, is hereby amended, as respects acts or omissions occurring on or after the passing of this Act, by—

(a) the deletion in column 2 of “Regulations under section 17 of the Finance Act, 1970”,

(b) the insertion in columns 1 and 3 of “Finance Act, 1970, section 17 and Regulations made thereunder”, and

(c) the insertion in column 3 of “Finance Act, 1970, section 17A”.

14 Tax relief for agreed pay restructuring.

14.—(1) (a) In this section—

“basic pay”, in relation to a participating employee of a qualifying company, means the employee's emoluments (other than non-pecuniary emoluments) from the company in respect of an employment held with the company;

“collective agreement” means an agreement entered into by a company with, or on behalf of, one or more than one body representative of employees of the company where each such body is either the holder of a negotiation licence under the Trade Union Act, 1941 or is an excepted body within the meaning of section 6 of that Act as amended by the Trade Union Act, 1942;

“control”, in relation to a qualifying company, means the power of a person to secure, by means of the holding of shares or the possession of voting power in or in relation to that qualifying company or any other qualifying company, or by virtue of any power conferred by the articles of association or any other document regulating that or any other qualifying company, that the affairs of the first-mentioned qualifying company are conducted in accordance with the wishes of that person and, in relation to a partnership, means the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership;

“emoluments” has the meaning assigned to it by section 138B (inserted by the Finance Act, 1980) of the Income Tax Act, 1967;

“employment” means an office or employment of profit such that any emoluments thereof fall to be charged to tax under Schedule E;

“the Minister” means the Minister for Enterprise and Employment;

“participating employee”, in relation to a qualifying company, means a qualifying employee who is a participant in a relevant agreement with the company;

“qualifying company” means a company to which the Minister has issued a certificate under subsection (2) which certificate has not been withdrawn under that subsection;

“qualifying employee”, in relation to a qualifying company, means an employee of the company in receipt of emoluments from the company;

“reduced basic pay”, in relation to a participating employee, means the basic pay of the employee as reduced by the substantial reduction provided for in the relevant agreement concerned;

“relevant agreement”, in relation to a qualifying company, means a collective agreement covering all, or substantially all, of the qualifying employees of the company—

(a) which provides, amongst other things, for—

(i) a substantial reduction in the basic pay of the participating employees,

(ii) the payment of the reduced basic pay to the participating employees for the duration of the relevant period, and

(iii) the payment to the participating employees of a lump sum to compensate for that reduction,

and

(b) which is registered with the Labour Relations Commission;

“relevant date”, in relation to a relevant agreement, means the date the relevant agreement was registered with the Labour Relations Commission;

“relevant period”, in relation to a relevant agreement, means the period of 5 years commencing with the relevant date in relation to that agreement;

“specified amount”, in relation to a participating employee, means £6,000 together with £200 for each complete year of service (subject to a maximum of 20 years), up to the relevant date, of the employee in the service of the qualifying company.

(b) For the purposes of this section—

(i) a reduction in the basic pay of a participating employee shall not be regarded as substantial unless it amounts to at least 10 per cent. of the average for one year of the employee's basic pay ascertained by reference to such pay for the two year period ending with the relevant date, and

(ii) employments in respect of which payments to which this section applies are made shall be treated as held with associated qualifying companies if, on the date of any of those payments, one of those companies is under the control of the other or of a third person who controls or is under the control of the other on that or any other such date.

(2) (a) The Minister, on the making of an application in that behalf by a company, may, in accordance with guidelines laid down for the purpose by the Minister with the agreement of the Minister for Finance, give a certificate to a company stating that, for the purposes of this section, it may be treated as a qualifying company.

(b) The Minister may not grant a certificate to a company under this subsection unless the Minister is satisfied, on advice from the Labour Relations Commission, that—

(i) the company is faced with an actual or imminent substantial adverse change to its competitive environment which will determine its survival, and

(ii) to meet that change and achieve its survival, it is necessary for it to enter into a relevant agreement with its qualifying employees, and

(iii) the relevant agreement into which it is proposed to enter is designed for the sole purpose of addressing, and can be reasonably expected to address, that change.

(c) An application under paragraph (a) shall be in such form as the Minister may direct and shall contain such information in relation to the company, its trade or business and the terms of the relevant agreement into which it proposes to enter with its qualifying employees as may be specified in the guidelines referred to in that paragraph.

(d) A certificate issued by the Minister under paragraph (a) shall contain such conditions as the Minister considers appropriate and specifies therein.

(e) Any cost incurred by the Labour Relations Commission in providing advice to the Minister in accordance with paragraph (b) shall be reimbursed by the company concerned to the Commission.

(f) Where, during the relevant period, a qualifying company fails to comply with any of the conditions to which a certificate given to it under paragraph (a) is subject, the Minister may, by notice in writing to the company, revoke the certificate.

(g) The Minister may not give a certificate under paragraph (a) at any time on or after the 6th day of April, 2000.

(3) (a) An agreement shall not be a relevant agreement for the purposes of this section unless and until it has been registered with the Labour Relations Commission.

(b) A qualifying company shall, within the period of one month from the date of each of the first 5 anniversaries of the relevant date or such longer period as the Labour Relations Commission may in writing allow, confirm to the Commission, in such form as the Commission shall direct, that all the terms of the relevant agreement, to the extent that they are still relevant, continue to be in force.

(4) Nothing in this section shall be construed as preventing a participating employee from receiving, during the relevant period, an increase in basic pay—

(a) which is—

(i) provided for under the terms of the agreement known as Partnership 2000 for Inclusion, Employment and Competitiveness entered into by the Government and the Social Partners in December, 1996, or any similar increase under an agreement, whether negotiated on a national basis or otherwise, which succeeds that agreement or which succeeds an agreement which succeeds the first-mentioned agreement, or

(ii) part of an incremental scale under the terms of the employee's contract of employment and which was in place 12 months prior to the relevant date,

and

(b) which is determined by reference to the employee's reduced basic pay or that pay as subsequently increased as aforesaid.

(5) (a) This section applies to a payment made to a participating employee by a qualifying company under a relevant agreement.

(b) A payment to which this section applies shall, to the extent that the payment does not exceed the specified amount, be exempt from any charge to tax.

(c) Where two or more payments to which this section applies are made to or in respect of the same person in respect of the same employment or in respect of different employments held with the same qualifying company or an associated qualifying company, this subsection shall apply as if those payments were a single payment of an amount equal to the aggregate of those payments; and the amount of any payment chargeable to tax shall be ascertained as follows, that is to say—

(i) where the payments are treated as income of different years of assessment, the specified amount shall be deducted from a payment treated as income of an earlier year before any payment treated as income of a later year, and

(ii) subject to subparagraph (i), the specified amount shall be deducted from a payment made earlier in a year of assessment before any payment made later in that year.

(6) If, during the relevant period—

(a) the Minister revokes, in accordance with the provisions of paragraph (f) of subsection (2), a certificate given to a company under paragraph (a) of that subsection, or

(b) a qualifying company fails to meet the requirements of paragraph (b) of subsection (3), or

(c) a participating employee receives an increase in reduced basic pay, other than as provided for in subsection (4),

then, any relief granted under this section, where paragraph (a) or (b) applies, to all the participating employees of the company or, where paragraph (c) applies, to the participating employee concerned, shall be withdrawn by the making of an assessment to tax under Case IV of Schedule D for the year of assessment for which the relief was granted.

(7) Where, during the relevant period, a participating employee receives a payment from a qualifying company, other than a payment to which this section applies, which is chargeable to tax by virtue of section 114 of the Income Tax Act, 1967, any relief from tax in respect of that payment under the provisions of section 115(3) of, or Schedule 3 to, that Act, shall be reduced by the amount of any relief given under this section in respect of a payment, made in that period, to which this section applies.

(8) The provisions of section 115 of, and Schedule 3 to, the Income Tax Act, 1967, and section 3 of the Finance Act, 1968, shall not apply or have effect in relation to a payment to which this section applies.

15 Amendment of section 4 (charge of tax on sums applied outside the State in repaying certain loans) of Finance Act, 1971.

15.—Section 4 of the Finance Act, 1971, is hereby amended by the addition after subsection (5) of the following subsection:

“(6) In relation to income applied in or towards satisfaction of a debt for money lent on or after the 20th day of February, 1997, or a debt incurred for satisfying in whole or in part any such debt, this section shall apply and have effect as if the references to ordinarily resident in the State in subsection (1) and subsection (2) were references to resident or ordinarily resident in the State.”.

Chapter II Income Tax, Corporation Tax and Capital Gains Tax

16 Relief for gifts made to third level institutions.

16.—(1) In this section—

“approved institution” means an institution in the State in receipt of public funding which provides courses to which a scheme approved by the Minister under the Local Authorities (Higher Education Grants) Acts, 1968 to 1992, applies or any body established in the State for the sole purpose of raising funds for such an institution;

“approved project” means a project in respect of which the Minister has given a certificate under subsection (2) which certificate has not been revoked under that subsection;

“project” means one or more of the following—

(a) the undertaking of research;

(b) the acquisition of equipment;

(c) infrastructural development in institutions specified in the guidelines referred to in subsection (2) (a) (i);

(d) the provision of facilities designed to increase student numbers in areas of skills needs;

“Minister” means the Minister for Education;

“relevant gift” means a gift of money which—

(a) on or after the 6th day of April, 1997, is made to an approved institution for the sole purpose of funding an approved project,

(b) is or will be applied by the approved institution for the said purpose, and

(c) is not, apart from this section, deductible in computing for the purposes of tax the profits or gains of a trade or profession, or is not income to which the provisions of section 439 of the Income Tax Act, 1967, apply, or is not a gift of money to which the provisions of section 32 of the Finance Act, 1984, apply;

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

(2) (a) (i) The Minister, on the making of an application by an approved institution, may, in accordance with guidelines laid down by the Minister with the consent of the Minister for Finance, give a certificate to that institution stating that a project may be treated as an approved project for the purposes of this section.

(ii) An application under this subsection shall be in such form as the Minister may direct and shall contain such information as may be specified in the guidelines referred to in subparagraph (i).

(iii) The Minister shall consult the Higher Education Authority in relation to an application under this subsection.

(b) (i) A certificate given by the Minister under paragraph (a) shall be subject to such conditions as the Minister may consider proper and specifies therein (including a condition as to the amount, or the percentage amount, of the total cost of the approved project which shall be met by relevant gifts).

(ii) The Minister may amend or revoke any condition specified in a certificate under paragraph (a), or add to such conditions, by giving notice in writing to the approved institution of the amendment, revocation or addition and the provisions of this section shall apply as if—

(I) a condition so amended or added by the notice was specified in the certificate, and

(II) a condition as so revoked was not specified in the notice.

(c) Where an approved institution fails to comply with any of the conditions to which a certificate given to it under paragraph (a) is subject by virtue of paragraph (b), the Minister may, by notice in writing given to the institution, revoke the certificate and the project shall cease to be an approved project as respects any gifts made to the institution after the date of the Minister's notice.

(3) Where it is proved to the satisfaction of the Revenue Commissioners that a person has made a relevant gift and the person claims relief from tax by reference thereto, the provisions of subsection (6) or, as the case may be, subsection (7) shall apply.

(4) Where a relevant gift is made by a chargeable person within the meaning of Chapter II of Part I of the Finance Act, 1988, a claim under this section shall be made with the return required to be delivered by that person under section 10 of that Act, for the chargeable period in which the gift is made.

(5) In determining the net amount of the gift for the purposes of subsection (6) or (7), the amount or value of any consideration received by the person concerned as a result of making the gift, whether received directly or indirectly from the approved institution to which the gift was made or otherwise, shall be deducted from the amount of the gift.

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

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

(8) Relief under this section shall not be given to a person for a year of assessment or an accounting period, as the case may be, if the net amount of the gift (or the aggregate of the net amounts of gifts) made by such person in that year or that accounting period, as the case may be, is less than £1,000.

(9) Every approved institution, when required to do so by notice from the Minister, shall, within the time limited by the notice, prepare and deliver to the Minister a return containing particulars of the aggregate amount of relevant gifts received by the institution in respect of each approved project.

(10) If any question arises as to whether—

(a) an institution is an approved institution, or

(b) a project is an approved project, or

(c) a gift is a relevant gift,

for the purposes of this section, the Revenue Commissioners may consult with the Minister.

(11) For the purposes of a claim to relief under this section, an approved institution shall, on acceptance of a relevant gift, give to the person making the relevant gift a receipt which shall—

(a) contain a statement that—

(i) it is a receipt for purposes of this section,

(ii) the institution is an approved institution for purposes of this section,

(iii) the gift in respect of which the receipt is given is a relevant gift for purposes of this section, and

(iv) the project in respect of which the relevant gift has been made is an approved project,

and

(b) show—

(i) the name and address of the person making the relevant gift,

(ii) the amount of the relevant gift in both figures and words,

(iii) the date of the relevant gift,

(iv) the full name of the approved institution,

(v) the date on which the receipt was issued, and

(vi) particulars of the approved project in respect of which the relevant gift has been made,

and

(c) be signed by a duly authorised official of the approved institution.

17 Amendment of provisions relating to relief for expenditure on significant buildings, etc.

17.—(1) Section 19 (as amended by the Finance Act, 1995) of the Finance Act, 1982, is hereby amended—

(a) in subsection (1)—

(i) by the insertion of the following definition after the definition of “approved building”:

“‘approved object’, in relation to an approved building, has the meaning assigned to it by subsection (4A);”,

(ii) by the substitution of the following definition for the definition of “authorised person”:

“‘authorised person’ means—

(a) an inspector or other officer of the Revenue Commissioners authorised by them in writing for the purposes of this section, or

(b) a person authorised by the Minister in writing for the purposes of this section;”,

(iii) by the insertion of the following definition after the definition of “chargeable period”:

“‘the Minister’ means the Minister for Arts, Culture and the Gaeltacht;”,

(iv) by the insertion of the following definition after the definition of “the Minister” (inserted by subparagraph (iii)):

“‘public place’, in relation to an approved building in use as a tourist accommodation facility, means a part of the building to which all patrons of the facility have access;”,

(v) by the substitution of the following definition for the definition of “qualifying expenditure”:

“‘qualifying expenditure’, in relation to an approved building, means expenditure incurred, by the person who owns or occupies the approved building, on one or more of the following—

(a) the repair, maintenance or restoration of the approved building or the maintenance or restoration of any land occupied or enjoyed with the approved building as part of its garden or grounds of an ornamental nature, and

(b) to the extent that the aggregate expenditure in a chargeable period does not exceed £5,000—

(i) the repair, maintenance or restoration of an approved object in the approved building,

(ii) the installation, maintenance or replacement of a security alarm system in the approved building, and

(iii) public liability insurance for the approved building;”,

(vi) by the insertion of the following definition after the definition of “qualifying expenditure”:

“‘security alarm system’ means an electrical apparatus installed as a fixture in the approved building which, when activated, is designed to give notice to the effect that there is an intruder present or attempting to enter the approved building in which it is installed;”,

and

(vii) by the insertion of the following paragraph after paragraph (b):

“(c) For the purposes of this section, references to an approved building, unless the contrary intention is expressed, shall be construed as including a reference to any land occupied or enjoyed with an approved building as part of its garden or grounds of an ornamental nature.”,

(b) in subsection (2), by the substitution, in paragraph (a), of the following subparagraph for subparagraph (i):

“(i) that he has incurred in a chargeable period qualifying expenditure in relation to an approved building,”,

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

“(2A) (a) Where—

(i) by virtue of subsection (2), qualifying expenditure in a chargeable period is treated as if it were a loss sustained in the chargeable period in a trade carried on by the person separate from any trade actually carried on by that person, and

(ii) owing to an insufficiency of income, relief under the Tax Acts cannot be given for any part of the qualifying expenditure so treated (in this subsection referred to as ‘the unrelieved amount’),

then, all the provisions of the Tax Acts shall apply as if the unrelieved amount were a loss sustained in the next following chargeable period in a trade carried on by the person separate from any trade actually carried on by that person.

(b) Where owing to an insufficiency of income, relief under the Tax Acts cannot be given by virtue of paragraph (a) for any part of the unrelieved amount, then all the provisions of the Tax Acts shall apply as if that part of the unrelieved amount were a loss sustained in the chargeable period next following the period referred to in paragraph (a) in a trade carried on by the person separate from any trade actually carried on by that person.

(c) Where, in any chargeable period, relief under the Tax Acts is due by virtue of two or more of the following provisions, that is to say, subsection (2) and paragraphs (a) and (b) of this subsection, then the following provisions shall apply—

(i) any relief due under those Acts by virtue of paragraph (b) shall be given in priority to any relief due under those Acts by virtue of subsection (2) or paragraph (a), and

(ii) where relief has been given in accordance with subparagraph (i) or where no such relief is due, any relief due under those Acts by virtue of paragraph (a) shall be given in priority to relief due under those Acts by virtue of subsection (2).”,

(d) in subsection (4)—

(i) by the substitution in paragraph (a) of the following subparagraph for subparagraph (i):

“(i) by the Minister, to be a building which is intrinsically of significant scientific, historical, architectural or aesthetic interest, and”,

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

“(c) Where under paragraph (a) the Minister makes a determination in relation to a building and, by reason of any alteration made to the building, or any deterioration of the building, subsequent to the determination being made, the Minister considers that the building is no longer a building which is intrinsically of significant scientific, historical, architectural or aesthetic interest, the Minister may, by notice in writing given to the owner or occupier of the building, revoke the determination with effect from the date on which the Minister considers that the building ceased to be a building which is intrinsically of significant scientific, historical, architectural or aesthetic interest, and this subsection shall cease to apply to the building from that date.”,

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

“(4A) (a) In this subsection, ‘approved object’, in relation to an approved building, means an object (including a picture, sculpture, print, book, manuscript, piece of jewellery, furniture, or other similar object) or a scientific collection which is owned by the owner or occupier of the approved building and which, on application to them in that behalf by that person, is determined—

(i) by the Minister, after consideration of any evidence in relation to the matter which such owner or occupier submits to the Minister and after such consultation (if any) as may seem to the Minister to be necessary with such person or body of persons as in the opinion of the Minister may be of assistance to the Minister, to be an object which is intrinsically of significant national, scientific, historical or aesthetic interest, and

(ii) by the Revenue Commissioners, to be an object reasonable access to which is afforded, and in respect of which reasonable facilities for viewing are provided, in the building to the public.

(b) Without prejudice to the generality of the requirement that reasonable access be afforded, and that reasonable facilities for viewing be provided, to the public, access to and facilities for the viewing of an object shall not be regarded as being reasonable access afforded, or the provision of reasonable facilities for viewing, to the public unless, subject to such temporary removal as is necessary for the purposes of the repair, maintenance or restoration of the object as is reasonable—

(i) in a case where the approved building is a tourist accommodation facility, the object is displayed in a public place in the building, or

(ii) in the case of any other approved building—

(I) access to the object is afforded and such facilities for viewing the object are provided to the public on the same days and at the same times as access is afforded to the public to the approved building in which the object is kept, and

(II) the price, if any, paid by the public in return for such access is, in the opinion of the Revenue Commissioners, reasonable in amount and does not operate to preclude the public from seeking access to the object.

(c) Where under paragraph (a) the Minister makes a determination in relation to an object and, by reason of any alteration made to the object, or any deterioration of the object, subsequent to the determination being made, the Minister considers that the object is no longer an object which is intrinsically of significant national, scientific, historical or aesthetic interest, the Minister may, by notice in writing given to the owner or occupier of the building, revoke the determination with effect from the date on which the Minister considers that the object ceased to be an object which is intrinsically of significant national, scientific, historical or aesthetic interest, and this subsection shall cease to apply to the object from that date.

(d) Where under paragraph (a) the Revenue Commissioners make a determination in relation to an object and—

(i) reasonable access to the object ceases to be afforded, or reasonable facilities for the viewing of the object cease to be provided, to the public, or

(ii) the object ceases to be owned by the person to whom relief in respect of that qualifying expenditure has been granted under this section,

the Revenue Commissioners may, by notice in writing given to the owner or occupier of the approved building in which the object is or was kept, revoke that determination with effect from the date on which they consider that such access, such facilities for viewing or such ownership, as the case may be, so ceased, and—

(i) this subsection shall cease to apply to the object from that date, and

(ii) if relief has been given under this section in respect of qualifying expenditure incurred in relation to that object in the period of two years ending on the date from which the revocation has effect, that relief shall be withdrawn and there shall be made all such assessments or additional assessments as are necessary to give effect to the provisions of this subsection.”,

and

(f) by the substitution in subsection (5) of the following paragraph for paragraph (a):

“(a) Where a person makes a claim under subsection (2), an authorised person may, at any reasonable time, enter the building in relation to which the qualifying expenditure has been incurred for the purpose of inspecting, as the case may be, the building or an object or of examining any work in respect of which the expenditure to which the claim relates was incurred.”.

(2) Section 29 of the Finance Act, 1993, is hereby amended in subsection (1)—

(a) by the substitution of the following paragraph for paragraph (a) of the definition of “approved garden”:

“(a) by the Minister for Arts, Culture and the Gaeltacht, to be a garden which is intrinsically of significant horticultural, scientific, historical, architectural or aesthetic interest, and”,

(b) by the substitution of the following definition for the definition of “qualifying expenditure”:

“‘qualifying expenditure’, in relation to an approved garden, means expenditure incurred, by the person who owns or occupies the approved garden, on one or more of the following—

(a) the maintenance or restoration of the approved garden, and

(b) to the extent that the aggregate expenditure in a chargeable period does not exceed £5,000—

(i) the repair, maintenance or restoration of an approved object in the approved garden,

(ii) the installation, maintenance or replacement of a security alarm system in the approved garden, and

(iii) public liability insurance for the approved garden;”,

and

(c) by the insertion of the following definition after the definition of “qualifying expenditure”:

“‘security alarm system’ means an electrical apparatus installed as a fixture in the approved garden which, when activated, is designed to give notice to the effect that there is an intruder present or attempting to enter the approved garden in which it is installed.”.

(3) (a) Subparagraphs (ii) and (iii) of paragraph (a), and paragraph (d), of subsection (1) and paragraph (a) of subsection (2) shall be deemed to have come into operation and had effect as on and from the 12th day of March, 1996.

(b) Paragraph (c) of subsection (1) shall apply and have effect as respects qualifying expenditure incurred in a chargeable period being—

(i) where the chargeable period is a year of assessment, the year 1995-96 and any subsequent year of assessment, or

(ii) where the chargeable period is an accounting period of a company, an accounting period beginning on or after the 6th day of April, 1995.

(c) Subsection (1), other than subparagraphs (ii) and (iii) of paragraph (a) and paragraphs (c) and (d) thereof, and paragraphs (b) and (c) of subsection (2) shall apply and have effect as respects qualifying expenditure incurred in a chargeable period being—

(i) where the chargeable period is a year of assessment, the year 1997-98 and any subsequent year of assessment, or

(ii) where the chargeable period is an accounting period of a company, an accounting period beginning on or after the 6th day of April, 1997.

18 Amendment of section 134 (deduction for increase in stock values) of Finance Act, 1996.

18.—Section 134 of the Finance Act, 1996, is hereby amended in subsection (3)—

(a) by the substitution in paragraph (a) of “1999” for “1997”,

and

(b) by the substitution in paragraph (b) of “1998-99” for “1996-97”,

and the said paragraphs (a) and (b), as so amended, are set out in the Table to this section.

TABLE

(a) 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, 1999.

(b) Any deduction allowed by virtue of this section in computing the profits or gains of the trade of farming for an accounting period of a person other than a company shall not have effect for any purpose of the Income Tax Acts for any year of assessment later than the year 1998-99.

19 Amendment of section 135 (special provision for qualifying farmers) of Finance Act, 1996.

19.—Section 135 of the Finance Act, 1996, is hereby amended in paragraph (b) of subsection (1)—

(a) by the substitution in subparagraph (ii) of “three immediately succeeding years of assessment, or” for “three immediately succeeding years of assessment.”, and

(b) by the insertion of the following subparagraph after subparagraph (ii):

“(iii) on or after the 6th day of April, 1997, and before the 6th day of April, 1999, for the year of assessment in which the person becomes a qualifying farmer and for the immediately succeeding year of assessment.”.

20 Farming: allowances for capital expenditure on the construction of farm buildings etc. for control of pollution.

20.—(1) This section applies to any person—

(a) carrying on farming, the profits or gains of which are chargeable to tax in accordance with the provisions of section 15 of the Finance Act, 1974, and

(b) for whom, in respect of capital expenditure to which paragraph (c) refers and in respect of farm land occupied by him or her, a farm nutrient management plan has been drawn up by an agency or planner approved to draw up such plans by the Department of Agriculture, Food and Forestry, and drawn up in accordance with—

(i) the guidelines in relation to such plans entitled “Farm Nutrient Management Plan” which were issued by the Department of Agriculture, Food and Forestry on the 21st day of March, 1997, or

(ii) a plan drawn up under the scheme known as the Rural Environment Protection Scheme (REPS) or the scheme known as the Erne Catchment Nutrient Management Scheme, both being schemes administered by the Department of Agriculture, Food and Forestry,

and

(c) who incurs capital expenditure on or after the 6th day of April, 1997, and before the 6th day of April, 2000, on the construction of those farm buildings (excluding a building or part of a building used as a dwelling) or structures specified in the Fourth Schedule in the course of a trade of farming land occupied by such person where such building or structures are constructed in accordance with the said farm nutrient management plan and are certified as being necessary by the said agency or planner for the purpose of securing a reduction in or the elimination of any pollution arising from the trade of farming.

(2) Subject to the provisions of Article 6 of Council Regulation (EEC) No. 2328/91 of 15 July, 1991[^] on improving the efficiency of agricultural structures, as amended and subject to subsection (3), where a person to whom this section applies has delivered to the Department of Agriculture, Food and Forestry a farm nutrient management plan to which subsection (1) relates, incurs capital expenditure to which subsection (1)* applies, there shall be made to such person during a writing-down period of 8 years beginning with the chargeable period related to that expenditure, writing-down allowances (in this section referred to as “farm pollution control allowances”) in respect of that expenditure and such allowances shall be made in taxing the trade.

(3) The farm pollution control allowances to be made in accordance with subsection (2) in respect of capital expenditure incurred in a chargeable period shall be—

(a) as respects the first year of the said writing-down period referred to in subsection (2)—

(i) where the capital expenditure incurred has not exceeded £20,000, an amount equal to 50 per cent. of the said expenditure, or

(ii) where the capital expenditure incurred has exceeded £20,000, an amount equal to £10,000,

(b) as respects the next 6 years of the said writing-down period, an amount equal to 15 per cent. of the balance of the said expenditure after deducting the amount of any allowance made by virtue of paragraph (a), and

(c) as respects the last year of the said writing-down period, an amount equal to 10 per cent. of the balance of the said expenditure after deducting the amount of any allowance made by virtue of paragraph (a).

(4) Paragraph 1 of the First Schedule to the Corporation Tax Act, 1976, shall have effect for the interpretation of this section and “basis period” has the meaning assigned to it by section 297 of the Income Tax Act, 1967.

(5) Any claim by a person for a farm pollution control allowance falling to be made to such person shall be included in the annual statement required to be delivered under the Income Tax Acts of the profits or gains from farming, and section 241 (3) of the Income Tax Act, 1967, shall apply in relation to the allowance as it applies in relation to allowances in respect of wear and tear of machinery or plant.

(6) Any claim for a farm pollution control allowance shall be made to and determined by the inspector, but any person aggrieved by any decision of the inspector on any such claim may, on giving notice in writing to the inspector within 21 days after the notification to the person of the decision, appeal to the Appeal Commissioners.

(7) The Appeal Commissioners shall hear and determine an appeal to them made under subsection (6) as if it were an appeal against an assessment to tax and the provisions of the Income Tax Acts 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.

(8) Subject to subsection (9), where a person who is entitled to farm pollution control allowances in respect of farm land occupied by the person transfers his or her interest in that farm land or any part of that farm land to another person, that other person shall, to the exclusion of the first-mentioned person be entitled to the allowances under this section for the chargeable periods following the chargeable period in which the transfer of interest took place.

(9) Where the transfer of interest to which subsection (8) refers took place in relation to part of the farm land, subsection (8) shall apply to so much of the farm pollution control allowance as is properly referable to that part of the land as if it were a separate allowance.

(10) Where expenditure is incurred partly for a purpose for which a farm pollution control allowance falls to be made and partly for another purpose, subsection (2 shall apply to so much only of that expenditure as on a just apportionment ought fairly to be treated as incurred for the first-mentioned purpose.

(11) No farm pollution control allowance shall be made in respect of any expenditure if for the same or any other chargeable period an allowance is or has been made in respect of it under Chapter II of Part XV or Chapter I of Part XVI of the Income Tax Act, 1967 or section 22 of the Finance Act, 1974.

(12) 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.

(13) For the purposes only of determining, in relation to a claim for a farm pollution control allowance, whether and to what extent capital expenditure incurred on the construction of a building or structure to which this section applies is incurred or not incurred in the period specified in paragraph (c) of subsection (1), only such an amount of that capital expenditure as is properly attributable to work on the construction of the building or structure which was actually carried out during the said period shall (notwithstanding any other provision of the Tax Acts as to the time when any capital expenditure is, or is to be treated as, incurred) be treated as having been incurred in that period.

(14) Section 29 of the Finance Act, 1975, shall have effect as if subsection (1) of that section included a reference to this section.

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

21.—(1) (a) Subject to paragraph (b), sections 25 to 29 of the Finance Act, 1973, shall have effect, in relation to expenditure incurred on the provision or hiring of a vehicle to which those sections apply, as if for “£2,500” (construed as a reference to £14,000 by virtue of section 23 of the Finance Act, 1995), in each place where it occurs in those sections, there were substituted “£15,000”.

(b) Paragraph (a) shall apply only to expenditure incurred on or after the 23rd day of January, 1997, on the provision or hiring of a vehicle which, on or after that date is not a used or secondhand vehicle and is first registered in the State under section 131 of the Finance Act, 1992, without having been previously registered in any other State which duly provides for the registration of a mechanically propelled vehicle.

(2) Section 32 of the Finance Act, 1976, shall have effect, in relation to qualifying expenditure (within the meaning of that section) incurred on or after the 23rd day of January, 1997, as if for “£3,500” (construed as a reference to £14,000 by virtue of section 23 of the Finance Act, 1995), in each place where it occurs, there were substituted “£15,000”.

22 Amendment of section 241 (wear and tear of machinery, plant, etc.) of Income Tax Act, 1967.

22.—Section 241 of the Income Tax Act, 1967, is hereby amended by the substitution of the following subsections for subsection (10):

“(10) The preceding provisions of this section shall, with any necessary modifications, apply in relation to professions, employments, offices and, subject to subsection (11), the letting of any premises the profits or gains from which are chargeable under Chapter VI of Part IV as they apply in relation to trades.

(11) (a) Where, by virtue of subsection (10), the provisions of this section apply to the letting of any premises, they shall apply and have effect as respects the year of assessment 1997-98 and subsequent years of assessment in respect of capital expenditure incurred on the provision of machinery or plant within the meaning of subsection (1) (b) (i) where—

(i) such expenditure is incurred wholly and exclusively in respect of a house which is used solely as a dwelling which is or is to be let as a furnished house, and

(ii) the said furnished house is provided for renting or letting on bona fide commercial terms in the open market.

(b) Where a person incurs capital expenditure of the type to which paragraph (a) applies and an allowance falls to be made in respect of that expenditure under this section—

(i) subsection (2) of section 16 of the Corporation Tax Act, 1976, shall not apply or have effect as respects the whole or part (as the case may be) of any loss which would not have arisen but for the making of the said allowance, and

(ii) subsection (6) of section 14 of the Corporation Tax Act, 1976, shall not apply or have effect as respects the said allowance.”.

23 Amendment of Chapter I (Industrial Buildings and Structures: Annual Allowances and Balancing Allowances and Charges) of Part XVI of Income Tax Act, 1967.

23.—(1) Chapter I of Part XVI of the Income Tax Act, 1967, is hereby amended—

(a) in section 265 by the insertion in paragraph (d) of subsection (1) after “other than rent or an amount treated” of “or partly treated”, and

(b) in subsection 266 by the addition after subsection (6) of the following subsection:

“(7) If, on receipt of consideration of the type referred to in subsection (1) (d) of section 265, a balancing allowance is made in respect of the expenditure, there shall be written off at the time of the event giving rise to the balancing allowance or, if later, on the 26th day of March, 1997, the amount by which the residue of the expenditure before the said event exceeds the said consideration.”.

(2) Paragraph (a) of subsection (1) shall apply and have effect in relation to consideration of the type referred to in subsection (1) (d) of section 265 which is received on or after the 26th day of March, 1997.

24 Capital allowances: room ownership schemes.

24.—(1) In this section—

“hotel investment” means capital expenditure incurred either on the construction of, or the acquisition of a relevant interest in, a building or structure which falls to be regarded as an industrial building or structure within the meaning of section 255 (1) (d) of the Income Tax Act, 1967, other than a building or structure to which the first proviso to that provision relates;

“hotel partnership” includes any syndicate, group or pool of persons, whether or not a partnership, through or by means of which, a hotel investment is made;

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

“member” in relation to a hotel partnership includes every person who participates in that partnership or who has contributed capital, directly or indirectly, to that partnership;

“preferential terms” in relation to the acquisition of an interest referred to in subsection (4) (a) (i), means terms under which such interest is acquired for a consideration which, at the time of the acquisition, is or may be other than its market value.

(2) This section is for the purpose of counteracting any room ownership scheme entered into in connection with a hotel investment by a hotel partnership.

(3) Subject to subsection (5), no allowance shall be made under Chapter II of Part XV or Chapter I of Part XVI of the Income Tax Act, 1967, in respect of a hotel investment by a hotel partnership where, in connection with any such investment, there exists a room ownership scheme.

(4) For the purposes of this section—

(a) a scheme shall be a room ownership scheme in connection with a hotel investment if, at the time a hotel investment is made by a hotel partnership, there exists any agreement, arrangement, understanding, promise or undertaking (whether express or implied and whether or not enforceable or intended to be enforceable by legal proceedings), under or by virtue of which any member of that hotel partnership, or a person connected with such member, may—

(i) acquire on preferential terms an interest in, or

(ii) retain for use other than for the purposes of the trade of hotel-keeping,

any room or rooms in, or any particular part of, the building or structure which is the subject of the hotel investment,

(b) where a hotel investment is made by one or more than one member of a hotel partnership, it shall be deemed to be made by the hotel partnership, and

(c) any question whether a person is connected with another shall be determined in accordance with the provisions of section 131 of the Finance Act, 1996.

(5) (a) Except as provided for in paragraph (b), this section shall apply to a hotel investment the capital expenditure in respect of which is incurred on or after the 26th day of March, 1997.

(b) This section shall not apply to a hotel investment if, before the 26th day of March, 1997, in respect of a building or structure which is the subject of such investment—

(i) a binding contract in writing was entered into for the construction of, or the acquisition of a relevant interest in, the building or structure, or

(ii) an application for planning permission for the construction of the building or structure was received by a planning authority.

25 Capital allowances for buildings used for third level educational purposes.

25.—(1) In this section—

“approved institution” means an institution in the State in receipt of public funding which provides courses to which a scheme approved by the Minister for Education under the Local Authorities (Higher Education Grants) Acts, 1968 to 1992, applies;

“qualifying expenditure” means capital expenditure incurred on—

(a) the construction of a qualifying premises, or

(b) the provision of machinery or plant,

which, following receipt of the advice of An tÚdarás, is approved for that purpose by the Minister for Education with the consent of the Minister for Finance;

“qualifying premises” means a building or structure which—

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

(b) (i) is in use for the purposes of third level education provided by an approved institution,

(ii) is let to an approved institution on bona fide commercial terms for such consideration as might be expected to be paid in a letting of the building or structure which was negotiated on an arm's length basis,

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

“An tÚdarás” means the Body established by section 2 of the Higher Education Authority Act, 1971.

(2) Subject to subsections (3) to (7), all the provisions of the Tax Acts (other than section 303(3) of the Income Tax Act, 1967) relating to the making of allowances or charges in respect of capital expenditure which is incurred on the construction of an industrial building or structure shall, notwithstanding anything to the contrary therein, apply in relation to qualifying expenditure on a qualifying premises—

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

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

(3) In relation to qualifying expenditure on a qualifying premises section 264 of the Income Tax Act, 1967, shall apply as if—

(a) in subsection (1), the reference to one-fiftieth were a reference to fifteen-hundredths, and

(b) in subsection (3), the reference to fifty years were a reference to seven years.

(4) No allowance shall be made under subsection (2) unless, prior to the commencement of construction of a qualifying premises, the Minister for Finance certifies that—

(a) an approved institution has procured or otherwise secured a sum of money, none of which has been met directly or indirectly by the State, which sum is not less than one-half of the qualifying expenditure to be incurred on the qualifying premises, and

(b) such sum is to be used solely by the approved institution for the following purposes:

(i) paying interest on money borrowed for the purpose of funding the construction of the qualifying premises, and

(ii) paying any rent on the qualifying premises during such times as the qualifying premises is the subject of a letting on such terms as are referred to in paragraph (b) (ii) of the definition of qualifying premises in subsection (1), and

(iii) purchasing the qualifying premises following the termination of the letting referred to in subparagraph (ii).

(5) 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) which occurs more than 7 years after the qualifying premises were first used.

(6) This section shall come into operation on the 1st day of July, 1997.

(7) The Minister for Finance may not give a certificate under subsection (4) at any time later than the 1st day of July, 2000.

26 Amendment of Chapter IV (Urban Renewal Reliefs: Introduction of New Scheme in Certain Areas) of Part I of Finance Act, 1994.

26.—Chapter IV of Part I of the Finance Act, 1994, is hereby amended—

(a) in section 38—

(i) by the substitution of the following definition for the definition of “enterprise area” in subsection (1):

“‘enterprise area’ means—

(a) an area or areas specified as an enterprise area by order under section 39, or

(b) an area or areas described in the Tenth Schedule to the Finance Act, 1997;”,

(ii) by the substitution of the following definition for the definition of “qualifying period” in subsection (1):

“‘qualifying period’ means—

(a) subject to subsection (3) and section 39 and other than for the purposes of section 41B, the period commencing on the 1st day of August, 1994, and ending on the 31st day of July, 1997, or

(b) in respect of an area or areas described in the Tenth Schedule to the Finance Act, 1997, the period commencing on the 1st day of July, 1997, and ending on the 30th day of June, 2000;”,

(iii) by the insertion of the following definition after the definition of “qualifying period” in subsection (1):

“‘the relevant local authority’, in relation to the construction of, conversion into, refurbishment of, or, as the case may be, construction or refurbishment of a building or structure to which paragraph (a) of subsection (3) applies, 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 qualifying premises is situated;”,

and

(iv) by the addition of the following subsections after subsection (2):

“(3) (a) Where in relation to the construction of, conversion into, refurbishment of, or, as the case may be, construction or refurbishment of a building or structure which is—

(i) to be an industrial building or structure to which section 40 applies,

(ii) a qualifying premises within the respective meanings assigned in sections 41, 42 (other than a building or structure to which paragraph (a) (iv) of that meaning in that section applies), 43, 44, 45 and 46, or

(iii) a qualifying building within the meaning assigned in section 41A,

the relevant local authority gives a certificate in writing, on or before the 30th day of September, 1997, to the person constructing, converting or refurbishing, as the case may be, such a building or structure stating that it is satisfied that not less than 15 per cent. of the total cost of the building or structure had been incurred prior to the 31st day of July, 1997, then, the reference in paragraph (a) of the definition of ‘qualifying period’ in subsection (1) to the period ending on the 31st day of July, 1997, shall, as respects such a building or structure, be construed as a reference to a period ending on the 31st day of July, 1998, and the references in paragraph (a) of subsection (2) and paragraph (a) (i) of subsection (3) of section 40 and in paragraphs (a) (i) and (b) (i) (I) of subsection (8) of section 41A to ‘before the 1st day of August, 1997’ and the reference in paragraph (a) (i) of subsection (4) of section 41 to ‘the 1st day of August, 1997’ shall be construed as references to ‘before the 1st day of August, 1998’ and ‘the 1st day of August, 1998’, respectively.

(b) In considering whether to give such a certificate as is referred to in paragraph (a), the relevant local authority shall have regard only to the guidelines in relation to the giving of such certificates entitled ‘Extension from 31 July, 1997, to 31 July, 1998, of the time limit for qualifying expenditure on developments’ which were issued by the Department of the Environment on the 28th day of January, 1997.

(4) The Tenth Schedule to the Finance Act, 1997, shall apply for the purposes of supplementing this Chapter.”,

(b) in section 39—

(i) by the addition after subsection (1) of the following subsection:

“(1A) The Minister for Finance may, after consultation with the Minister for Transport, Energy and Communications and following receipt of a proposal from or on behalf of a company intending to carry on qualifying trading operations (within the meaning of section 41A) in an area or areas immediately adjacent to any of the airports commonly known as—

(a) Cork Airport,

(b) Donegal Airport,

(c) Galway Airport,

(d) Kerry Airport,

(e) Knock International Airport,

(f) Sligo Airport, or

(g) Waterford Airport,

being a company which, if those trading operations were to be carried on in an area which apart from this subsection would be an enterprise area, would be a qualifying company (within the meaning of section 41A), by order direct that—

(i) the said area or areas described in the order shall be an enterprise area for the purposes of this Chapter, and

(ii) as respects any such area so described in the order, the reference in paragraph (a) of the definition of ‘qualifying period’ in section 38(1) to the period commencing on the 1st day of August, 1994, and ending on the 31st day of July, 1997, shall be construed as a reference to such period as shall be specified in the order in relation to that area, but no such period specified in the order shall commence before the 1st day of August, 1994, or end after the 30th day of June, 2000.”,

and

(ii) by the substitution in subsection (2) of “subsection (1) or (1A)” for “subsection (1)”.

(c) in section 42 by the substitution of the following definition for the definition of “qualifying lease” in subsection (1):

“‘qualifying lease’ means a lease in respect of a qualifying premises granted on bona fide commercial terms—

(a) in the qualifying period in the case of a qualifying premises which is a building or structure to which subsection (3) (a) of section 38 refers, or

(b) in the qualifying period, or within the period of one year from the day next after the end of the qualifying period in the case of any other qualifying premises,

by a lessor to a lessee who is not connected with the lessor, or with any other person who is entitled to a rent in respect of the qualifying premises, whether under that lease or any other lease;”.

27 Amendment of provisions relating to double rent allowance.

27.—Section 45 of the Finance Act, 1986, section 42 of the Finance Act, 1994, and section 49 of the Finance Act, 1995, are hereby amended—

(a) in subsection (2) of the said section 45,

(b) in subsection (3) of the said section 42, and

(c) in subsection (3) of the said section 49,

by the substitution in each case for “equal to the amount of the first-mentioned deduction” of the following:

“(in this subsection referred to as ‘the second-mentioned deduction’) equal to the amount of the first-mentioned deduction but, as respects a qualifying lease granted on or after the 21st day of April, 1997, where the first-mentioned deduction is on account of rent which is payable by such person to a connected person, such person shall not be entitled in that computation to the second-mentioned deduction”.

28 Amendment of section 39B (relief in relation to income from certain trading operations carried on in Custom House Docks Area) of Finance Act, 1980.

28.—Section 39B (as amended by the Finance Act, 1995) of the Finance Act, 1980, is hereby amended by the addition, after subsection (9), of the following subsection:

“(10) (a) For the purposes of this section, the Minister for Finance, after consultation with the Minister for the Environment, may, by order direct that the definition of ‘the Custom House Docks Area’ contained in section 41 of the Finance Act, 1986, shall include such area or areas described in the order which, but for the order, would not be included in that definition, and where the Minister for Finance so orders, the said definition of ‘the Custom House Docks Area’ shall, for the purposes of this section, be deemed to include the said area or areas.

(b) The Minister for Finance may, for the purposes of making an order under this section and an order under section 27 of the Finance Act, 1987, exercise the powers to make those orders by making one order for the purposes of both of those sections.

(c) The Minister for Finance may make orders for the purpose of this section and any order made under this section shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the order is passed by Dáil Éireann within the next twenty-one days on which Dáil Éireann has sat after the order is laid before it, the order shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.”.

29 Relief for pre-trading expenditure.

29.—(1) Subject to subsection (4), where a person incurs expenditure for the purposes of a trade or profession before the time that the trade or profession has been set up and commenced by that person, and such expenditure—

(a) is incurred not more than three years before that time, and

(b) is not allowable, apart from this section, as a deduction for the purpose of computing the profits or gains of the trade or profession for the purposes of Case I or Case II of Schedule D, but would have been so allowable if it had been incurred after that time,

then the expenditure shall be treated for that purpose as having been incurred at that time.

(2) Where—

(a) a company pays any charges on income (within the meaning of section 10 of the Corporation Tax Act, 1976) before the time it sets up and commences a trade, and

(b) the payment is made wholly and exclusively for the purposes of that trade,

that payment, to the extent that it is not otherwise deducted from total profits of the company, shall be treated for the purposes of corporation tax as paid at that time.

(3) Where an individual who has set up and commenced a trade or profession has been assessed to tax for any year of assessment under section 434 of the Income Tax Act, 1967, in respect of a payment—

(a) made before the time the trade or profession has been set up and commenced, and

(b) wholly and exclusively for the purposes of the trade or profession,

then section 316 of the Income Tax Act, 1967, shall apply in relation to the payment as it would apply if the payment were made at that time.

(4) The amount of any expenditure which is to be treated under subsection (1) as incurred at the time that a trade or profession has been set up and commenced shall not be so treated for the purposes of section 307 of the Income Tax Act, 1967, or section 16 (2), 16A (3), 116 or 116A of the Corporation Tax Act, 1976.