Finance Act 1997

(5) An allowance or deduction shall not be made under any provision of the Tax Acts, other than this section, in respect of any expenditure or payment which is treated under this section as incurred on the day on which a trade or profession is set up and commenced.

(6) This section shall apply to expenditure incurred for the purposes of a trade or profession which is set up and commenced on or after the 22nd day of January, 1997.

30 Amendment of section 35 (relief for investment in films) of Finance Act, 1987.

30.—(1) Section 35 (inserted by section 31 (1) of the Finance Act, 1996) of the Finance Act, 1987, is hereby amended—

(a) in subsection (1)—

(i) in the definition of “film” by the substitution of “means a film of a kind which is included within the categories of films eligible for certification as set out in guidelines referred to in subsection (2) which is produced” for “means a film which is produced”, and

(ii) in the definition of “qualifying company”, to insert after paragraph (a) the following new paragraph:

“(aa) does not contain in its name registered under either or both the Companies Acts, 1963 to 1990, or the Registration of Business Names Act, 1963, the words, ‘Ireland’, ‘Irish’, ‘Éireann’, ‘Éire’ or ‘National’, and”,

(b) in subsection (2)—

(i) in paragraph (a)(i) by the insertion of the following proviso:

“Provided that nothing in this section shall be construed as obliging the Minister to give a certificate under this paragraph, and in any case where in relation to a film, the principal photography has commenced, the first animation drawings have commenced or the first model movement has commenced, as the case may be, before application is made by a qualifying company, the Minister shall not issue a certificate under this paragraph.”, and

(ii) in paragraph (b) by the substitution for paragraph (II) of the proviso to subparagraph (ii) of the following paragraph:

“(II) (A) (a) in relation to a film (other than an animation film) in respect of which the principal photography commences at any time during the months of October, November, December and January, and the production of the film continues to completion without unreasonable delay from that time, or

(b) in relation to a film in respect of which post production work is to be carried out wholly or mainly in the State,

the references in paragraph (I) of this proviso to—

(i) 60 per cent., shall be construed as a reference to 66 per cent.,

(ii) 50 per cent., shall be construed as a reference to 55 per cent., and

(iii) £7,500,000 shall be construed as a reference to £8,250,000,

and

(B) in relation to a film in respect of which not less than one-half of the amount of the total cost of production met by relevant investments has been met by relevant investments paid by allowable investor companies, the references in this proviso, apart from this subparagraph, to—

(a) £7,500,000 shall be treated as a reference to £15,000,000, and

(b) £8,250,000 shall be treated as a reference to £16,500,000,”,

and

(c) in subsection (4)—

(i) by the substitution of “£8,000,000” for “£6,000,000”,

(ii) in paragraph (a) of the proviso by the substitution of “£3,000,000” for “£2,000,000”, and

(iii) in paragraph (b) of the proviso by the substitution of “£3,000,000” for “£2,000,000”.

(2) Subsection (1) shall apply and have effect—

(a) as respects paragraph (a) and subparagraph (i) of paragraph (b), in relation to a film in respect of which the Minister did not receive, before the 29th day of April, 1997, the application to enable the Minister to consider whether a certificate should be given under section 35(2) of the Finance Act, 1987,

(b) as respects subparagraph (ii) of paragraph (b), in relation to a film in respect of which the Minster has received the application on or after the 26th day of March, 1997, to enable the Minister to consider whether a certificate should be given under section 35(2) of the Finance Act, 1987,

(c) as respects subparagraph (i) of paragraph (c), in relation to any period of twelve months ending on an anniversary of the 22nd day of January, 1997,

(d) as respects subparagraph (ii) of paragraph (c), in relation to a relevant investment made on or after the 26th day of March, 1997, and

(e) as respects subparagraph (iii) of paragraph (c), in relation to any twelve month period commencing on or after the 23rd day of January, 1997.

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

31.—(1) Section 14 (as amended by section 37 of the Finance Act, 1996) of the Finance Act, 1993 is hereby amended—

(a) in the definition of “qualifying shares” in paragraph (a) of subsection (1) by the substitution for subparagraph (ii) of the following subparagraph:

“(ii) quoted on the market known as the Developing Companies Market, or the market known as the Exploration Securities Market, of the Irish Stock Exchange,”,

and

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

“(b) the amount of a specified deposit or, if there is more than one, the aggregate of such amounts in respect of assets held at the same time as part of a special portfolio investment account shall not exceed—

(i) in the case of a special portfolio investment account in respect of which—

(I) the first specified deposit was made on or before the 5th day of April, 2000, and

(II) an amount (hereafter in this paragraph referred to as the ‘particular amount’) equal to the whole or a part of the specified deposit or specified deposits, has been used to acquire shares in a company quoted on the market known as the Developing Companies Market of the Irish Stock Exchange and those shares are, at that time, held as assets of the special portfolio investment account,

£50,000 increased by the lesser of—

(A) the particular amount, and

(B) £10,000,

and

(ii) in the case of any other special portfolio investment account, £50,000;”.

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

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

32.—Section 18 (as amended by the Finance Act, 1996) of the Finance Act, 1989, is hereby amended in subsection (1) by the insertion of the following proviso to the definition of “specified collective investment undertaking”:

“Provided that, for the purposes of this definition, reference to a qualifying management company shall be construed as if—

(i) in subsection (2) of section 39A (inserted by the Finance Act, 1981) of the Finance Act, 1980, there were deleted ‘and any certificate so given shall, unless it is revoked under subsection (4), (4A) or (4B), remain in force until the 31st day of December, 2005’, and

(ii) in subsection (2) of section 39B (inserted by the Finance Act, 1987) of the Finance Act, 1980, there were deleted ‘and any certificate so given shall, unless it is revoked under subsection (4), (5) or (5A), remain in force until the 31st day of December, 2005’.”.

33 Taxation of strips of securities.

33.—(1) In this section—

“chargeable period” has the meaning assigned to it in paragraph 1 (2) of the First Schedule to the Corporation Tax Act, 1976;

“market value” has the meaning assigned to it in section 49 of the Capital Gains Tax Act, 1975;

“nominal value”, in relation to a unit of a security, means—

(a) where the interest on the unit of the security is expressed to be payable by reference to a given value, that value, and

(b) in any other case, the amount which was paid for the unit of the security on its issue;

“opening value”, in relation to a unit of a security from which at any time strips of the unit have been created by a person means—

(a) in the case of a person who is carrying on a trade, which consists wholly or partly of dealing in securities of which the unit of the security is an asset in respect of which any profits or gains are chargeable to tax under Case I of Schedule D, an amount equal to the market value of the unit of the security at the time the strips were created, and

(b) in the case of any other person, an amount equal to—

(i) the market value of the unit of the security at the time the strips were created, or

(ii) the nominal value of the unit of the security,

whichever is the lesser;

“relevant day”, in relation to a person who holds a strip, means—

(a) where the person is not a company within the charge to corporation tax, the 5th day of April in a year of assessment, and

(b) where the person is a company within the charge to corporation tax, the day on which an accounting period of the company ends;

“securities” has the same meaning as it has in subsection (1) of section 29 of the Finance Act, 1984, and a unit of a security shall be construed accordingly;

“strip”, in relation to a unit of a security, means an obligation of the person who issued the security to make a payment, whether of interest or of principal, which has been separated from other obligations of that person to make payments in respect of the unit of the security.

(2) Where at any time a person who owns a unit of a security creates strips of that unit—

(a) the unit of the security shall be deemed to have been sold at that time by that person for an amount equal to its market value at that time,

(b) that person shall be deemed to have acquired at that time each strip for the amount which bears the same proportion to the opening value of the unit of the security as the market value of the strip at that time bears to the aggregate of the market value at that time of each of the strips of the unit of the security, and

(c) each strip shall be deemed to be a non-interest-bearing security any profits or gains arising on a disposal or redemption of which shall, subject to subsection (5), be chargeable to tax under Case III of Schedule D unless charged to tax under Case I of that Schedule.

(3) Where a person, other than a person carrying on a trade which consists wholly or partly of dealing in securities in respect of which any profits or gains are chargeable to tax under Case I of Schedule D, acquires a strip of a unit of a security in relation to which section 19 of the Capital Gains Tax Act, 1975, applies, otherwise than in accordance with subsection (2), the person shall be deemed to have acquired the strip for an amount equal to—

(a) the amount which bears the same proportion to the nominal value of the unit of the security as the market value of the strip at the time of issue of the security would have borne to the aggregate of the market value at that time of each of the strips of the unit of the security if the strip had been created at the time of issue of the security, or

(b) the amount paid by the person for the acquisition of the strip,

whichever is the lesser.

(4) Where at any time strips of a unit of a security are reconstituted into a unit of the security by any person—

(a) each of the strips shall be deemed to have been sold at that time by that person for an amount equal to its market value at that time, and

(b) that person shall be deemed to have acquired at that time the unit of the security for an amount equal to the aggregate of the market value at that time of each of the strips.

(5) Where a person holds a strip on a relevant day, that person shall on that day be deemed to have disposed of and immediately reacquired the strip at the market value of the strip on that day.

(6) Where under subsection (5), a person is deemed to have disposed of a strip on a relevant day, the amount to be included in the profits or gains chargeable to tax under Case III of Schedule D for the chargeable period in which the relevant day falls shall be the aggregate of the amounts of any profits or gains arising on such deemed disposals in the chargeable period after deducting the aggregate of the amounts of any losses arising on such deemed disposals in that chargeable period, and, so far as they have not been allowed as a deduction from profits or gains in any previous chargeable period, any losses arising on such deemed disposals in any previous chargeable period.

34 Amendment of section 138 (tax treatment of securities issued at a discount) of Finance Act, 1990.

34.—Section 138 of the Finance Act, 1990, is hereby amended in the definition of “securities” in subsection (1) by the deletion of “and” at the end of paragraph (a), the substitution of “Agriculture, and” for “Agriculture;” in paragraph (b) and the insertion of the following paragraph after paragraph (b):

“(c)strips within the meaning of section 54 (10) of the Finance Act, 1970 (inserted by section 161 of the Finance Act, 1997);”.

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

35.—Section 17 of the Finance Act, 1993, is hereby amended by the substitution for paragraph (a) of subsection (4) of the following paragraph:

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

(ii) Subparagraph (i) shall not apply to—

(I) assets to which subsection (5)(a)(ii) relates other than where such assets are held in connection with a contract or other arrangement which secures the future exchange of the assets for other assets to which the said subsection does not relate, and

(II) assets which are strips within the meaning of section 33 of the Finance Act, 1997”.

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

36.—Section 31 (as amended by the Finance Act, 1996) of the Finance Act, 1974, is hereby amended—

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

“(1) In this section—

‘company’ means any body corporate;

‘relevant security’ means a security issued by a company on or before the 31st day of December, 2005, on terms which oblige the company to redeem the security within a period of 15 years after the date on which the security was issued.”,

and

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

“(4) In relation to interest paid in respect of a relevant security paragraph (cc) of subsection (3) shall apply—

(a) as if there were deleted from subsection (2) of section 39A (inserted by the Finance Act, 1981) of the Finance Act, 1980, ‘, and any certificate so given shall, unless it is revoked under subsection (4), (4A) or (4B), remain in force until the 31st day of December, 2005’, and

(b) as if there were deleted from subsection (2) of section 39B (inserted by the Finance Act, 1987) of the Finance Act, 1980, ‘, and any certificate so given shall, unless it is revoked under subsection (4), (5) or (5A), remain in force until the 31st day of December, 2005’.”.

37 Tax credits in respect of distributions.

37.—(1) The provisions of the Corporation Tax Act, 1976, specified in paragraph 1 of the Second Schedule shall have effect in relation to distributions made on or after the 6th day of April, 1997, as if the standard rate for the year of assessment 1997-98 and subsequent years of assessment were 21 per cent.

(2) The Second Schedule shall have effect for the purpose of supplementing subsection (1).

38 Amendment of section 37 (application of section 25 (attribution of distributions to accounting periods) of Finance Act, 1989, to interim dividends) of Finance Act, 1992.

38.—Section 37 of the Finance Act, 1992, is hereby amended by the substitution in subsection (1) of “6th day of April, 2002” for “6th day of April, 1997”.

39 Amendment of Chapter VIII (taxation of acquisition by a company of its own shares) of Part I of Finance Act, 1991.

39.—(1) Chapter VIII of Part I of the Finance Act, 1991, is hereby amended—

(a) in section 59—

(i) in subsection (1)—

(I) by the insertion, after the meaning assigned to “control” of the following definition:

“‘group’ means a company which has one or more 51 per cent. subsidiaries together with those subsidiaries;”,

and

(II) in the definition of “trading group” by the deletion of the words after “trades”,

and

(ii) in subsection (3), by the substitution for “section 61” of “section 60A or 61”,

and

(b) by the insertion, after section 60, of the following section:

“Purchase of own shares by a quoted company.

60A.—(1) Notwithstanding any provision of Part IX of the Act of 1976, references in the Tax Acts to distributions of a company shall be construed so as not to include references to a payment made by a quoted company on the redemption, repayment or purchase of its own shares.

(2) References in subsection (1) to a quoted company shall include references to a company which is a member of a group of which a quoted company is a member.”.

(2) This section shall have effect as respects payments made on or after the 26th day of March, 1997.

40 Amendment of section 40 (treatment under Tax Acts of certain employment grants and recruitment subsidies) of Finance Act, 1996.

40.—(1) Section 40 of the Finance Act, 1996, is hereby amended in subsection (2) by the insertion of the following paragraphs after paragraph (c):

“(cc) the Employment Support Scheme, being a scheme established on the 1st day of January, 1993, and administered by the National Rehabilitation Board,

(ccc) the Pilot Programme for the Employment of People with Disabilities, being a programme administered by a company incorporated on the 7th day of March, 1995, as The Rehab Group,”.

(2) This section shall have effect as respects grants or subsidies paid on or after the 6th day of April, 1997.

41 Employers' pension contributions.

41.—(1) Chapter II of Part I of the Finance Act, 1972, is hereby amended—

(a) in section 16, by the substitution of the following for subsection (4):

“(4) (a) Any sum paid by an employer by way of contribution under the scheme shall, for the purposes of Case I or II of Schedule D and of sections 15 and 33(2) of the Corporation Tax Act, 1976, be allowed to be deducted as an expense, or expense of management, incurred in the chargeable period in which the sum is paid but no other sum shall for those purposes be allowed to be deducted as an expense, or expense of management, in respect of the making, or any provision for the making, of any contributions under the scheme.

(b) For the purposes of this section and of section 16A—

(i) a reference to a ‘chargeable period’ shall be construed as a reference to a ‘chargeable period or its basis period’ (within the meaning of paragraph 1 of the First Schedule to the Corporation Tax Act, 1976), and

(ii) in relation to an employer whose chargeable period is a year of assessment, ‘basis period’ means the period on the profits or gains of which income tax for that year of assessment falls to be finally computed for the purposes of Case I or II of Schedule D in respect of the trade, profession or vocation of the employer.

(4A) The amount of an employer's contributions which may be deducted under subsection (4) shall not exceed the amount contributed by that employer under the scheme in respect of employees in a trade or undertaking in respect of the profits of which the employer is assessable to income tax or corporation tax, as the case may be.

(4B) A sum not paid by way of an ordinary annual contribution shall for the purposes of subsection (4) be treated, as the Commissioners may direct, either as an expense incurred in the chargeable period in which the sum is paid, or as an expense to be spread over such period of years as the Commissioners think proper.”,

and

(b) by the insertion of the following section after section 16:

“Provisions supplemental to section 16(4).

16A.—(1) Where—

(a) there is, after the 21st day of April, 1997, an actual payment by an employer of a contribution under an exempt approved scheme,

(b) that payment would, apart from this section, be allowed to be deducted as an expense, or expense of management, of the employer in relation to any chargeable period, and

(c) the total of previously allowed deductions exceeds the relevant maximum,

the amount allowed to be so deducted in respect of the payment mentioned in paragraph (a) and of any other actual payments of contributions under the scheme which, having been made after the 21st day of April, 1997, fall within paragraph (b) in relation to the same chargeable period shall be reduced by whichever is the smaller of the excess and the amount which reduces the deduction to nil.

(2) In relation to any such actual payment by an employer of a contribution under an exempt approved scheme as would be allowed to be deducted as mentioned in subsection (1) in relation to any chargeable period—

(a) the reference in that subsection to the total of previously allowed deductions is a reference to the aggregate of every amount in respect of the making, or any provision for the making, of that or any other contributions under the scheme, which has been allowed to be deducted as an expense, or expense of management, of that person in relation to all previous chargeable periods, and

(b) the reference to the relevant maximum is a reference to the amount which would have been that aggregate if the restriction on deductions for sums other than actual payments imposed by virtue of subsection (4) of section 16 had been applied in relation to every previous chargeable period,

and, for the purposes of this subsection, an amount the deduction of the whole or any part of which falls to be taken into account as allowed in relation to more than one chargeable period shall be treated as if the amount allowed were a different amount in the case of each of those periods.

(3) For the purposes of this section, any payment which is treated under subsection (4B) of section 16 as spread over a period of years shall be treated as actually paid at the time when it is treated as paid in accordance with that subsection.”.

(2) The Corporation Tax Act, 1976, is hereby amended, in Part 1 of the Second Schedule, by the deletion of paragraph 31.

(3) This section shall have effect in the case of any employer for a chargeable period (within the meaning of section 16 (as amended by this Act) of the Finance Act, 1972) being—

(a) where the chargeable period is an accounting period of a company, an accounting period ending with a day after the 21st day of April, 1997, and

(b) where the chargeable period is a year of assessment, any year of assessment the employer's basis period for which ends with a day after that date.

42 Deemed disposal of assets on company ceasing to be resident in the State.

42.—(1) (a) In this section and in section 43—

“designated area”, “exploration or exploitation activities” and “exploration or exploitation rights” have, respectively, the same meanings as they have in section 33 of the Finance Act, 1973;

“exploration or exploitation assets” means assets used or intended for use in connection with exploration or exploitation activities, carried on in the State or in a designated area;

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

“the new assets” and “the old assets” have, respectively, the meanings assigned to them in section 28 of the Capital Gains Tax Act, 1975.

(b) For the purposes of this section and section 43 a company shall not be regarded as ceasing to be resident in the State by reason only that it ceases to exist.

(2) (a) Subject to paragraph (b), this section and section 43 shall apply to a company (hereafter in this section referred to as a “relevant company”) if, at any time (hereafter in this section and in section 43 referred to as “the relevant time”) on or after the 21st day of April, 1997, the company ceases to be resident in the State.

(b) This section and section 43 shall not apply to a company which is an excluded company.

(c) In this subsection—

“control” shall be construed in accordance with subsections (2) to (6) of section 102 of the Corporation Tax Act, 1976, as if in subsection (6) for “five or fewer participators” there were substituted “persons resident in a relevant territory”;

“excluded company” means a company of which not less than 90 per cent. of its issued share capital is held by a foreign company or foreign companies, or by a person or persons who are directly or indirectly controlled by a foreign company or foreign companies;

“foreign company” means a company which—

(i) is not resident in the State,

(ii) is under the control of a person or persons resident in a relevant territory, and

(iii) is not under the control of a person or persons resident in the State;

“relevant territory” means—

(i) the United States of America, or

(ii) a territory with the government of which arrangements having the force of law by virtue of section 361 of the Income Tax Act, 1967, have been made.

(3) A relevant company shall be deemed for all purposes of the Capital Gains Tax Acts—

(a) to have disposed of all its assets, other than assets excepted from this subsection by subsection (5), immediately before the relevant time, and

(b) immediately to have reacquired them,

at the market value of the assets at that time.

(4) Section 28 of the Capital Gains Tax Act, 1975, shall not apply where a relevant company—

(a) has disposed of the old assets, or of its interest in those assets, before the relevant time, and

(b) acquires the new assets, or its interest in those assets, after the relevant time,

unless the new assets are excepted from this subsection by subsection (5).

(5) If at any time after the relevant time a relevant company carries on a trade in the State through a branch or agency—

(a) any assets which, immediately after the relevant time, are situated in the State and are used in or for the purposes of the trade, or are used or held for the purposes of the branch or agency, shall be excepted from subsection (3), and

(b) any new assets which, after that time, are so situated and are so used or so held shall be excepted from subsection(4),

and references in this subsection to assets situated in the State include references to exploration or exploitation assets and to exploration or exploitation rights.

43 Postponement of charge on deemed disposal under section 42.

43.—(1) (a) In this section—

“deemed disposal” means a disposal which, by virtue of section 42(3), is deemed to have been made;

“foreign assets” of a company means any assets of the company which, immediately after the relevant time, are situated outside the State and are used in or for the purposes of a trade carried on by the company outside the State.

(b) For the purposes of this section a company is a 75 per cent. subsidiary of another company if and so long as not less than 75 per cent. of its ordinary share capital (within the meaning of section 155 of the Corporation Tax Act, 1976) is owned directly by that other company.

(2) If—

(a) immediately after the relevant time, a company (hereafter in this section referred to as “the company”) to which this section applies by virtue of section 42 is a 75 per cent. subsidiary of another company (hereafter in this section referred to as the “principal company”) which is resident in the State, and

(b) the principal company and the company jointly so elect, by notice in writing given to the inspector within 2 years after the relevant time,

the Capital Gains Tax Acts shall apply subject to the following provisions of this section.

(3) Any allowable losses accruing to the company on a deemed disposal of foreign assets shall be set off against the chargeable gains so accruing and—

(a) that deemed disposal shall be treated as giving rise to a single chargeable gain equal to the aggregate of those gains after deducting the aggregate of those losses, and

(b) the whole of that single chargeable gain shall be treated as not accruing to the company on that disposal but an equivalent amount (hereafter in this section referred to as the “postponed gain”) shall be brought into account in accordance with subsections (4) and (5).

(4) (a) If at any time within 10 years after the relevant time the company disposes of any assets (hereafter in this subsection referred to as “relevant assets”) the chargeable gains on which were taken into account in arriving at the postponed gain, there shall be deemed to accrue to the principal company as a chargeable gain at that time the whole or the appropriate proportion of the postponed gain so far as not already taken into account under this subsection or subsection (5).

(b) In this subsection “the appropriate proportion” means the proportion which the chargeable gain taken into account in arriving at the postponed gain in respect of the part of the relevant assets disposed of bears to the aggregate of the chargeable gains so taken into account in respect of the relevant assets held immediately before the time of the disposal.

(5) If at any time within 10 years after the relevant time—

(a) the company ceases to be a 75 per cent. subsidiary of the principal company, or

(b) the principal company ceases to be resident in the State,

there shall be deemed to accrue to the principal company as a chargeable gain—

(i) where paragraph (a) applies, at that time, and

(ii) where paragraph (b) applies, immediately before that time,

the whole of the postponed gain so far as not already taken into account under this subsection or subsection (4).

(6) If at any time—

(a) the company has allowable losses which have not been allowed as a deduction from chargeable gains, and

(b) a chargeable gain accrues to the principal company under subsection (4) or (5),

then, if and to the extent that the principal company and the company jointly so elect by notice in writing given to the inspector within 2 years after that time, those losses shall be allowed as a deduction from that gain.

44 Tax on non-resident company recoverable from another member of group or from controlling director.

44.—(1) In this section—

“chargeable period” means a year of assessment or an accounting period, as the case may be;

“controlling director”, in relation to a company, means a director of the company who has control of it (construing control in accordance with section 102 of the Corporation Tax Act, 1976);

“director”, in relation to a company, has the meaning given by section 119(1) of the Income Tax Act, 1967, and includes any person falling within section 103(5) of the Corporation Tax Act, 1976;

“group” has the meaning which would be given by section 129 of the Corporation Tax Act, 1976, if in that section references to residence in the State were omitted and for references to “75 per cent. subsidiaries” there were substituted references to “51 per cent. subsidiaries”, and references to a company being a member of a group shall be construed accordingly;

“specified period”, in relation to a chargeable period, means the period beginning with the specified return date for the chargeable period (within the meaning of section 9 of the Finance Act, 1988) and ending 3 years after the time when a return under section 10 of the Finance Act, 1988, for the chargeable period is delivered to the appropriate inspector (within the meaning of the said section 9);

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

(2) This section applies at any time on or after the 21st day of April, 1997, where tax payable (being tax which, but for section 42 or 43, would not be payable) by a company (hereafter in this section referred to as the “taxpayer company”) for a chargeable period (hereafter in this section referred to as the “chargeable period concerned”) is not paid within 6 months after the date on or before which the tax is due and payable.

(3) The Revenue Commissioners may, at any time before the end of the specified period in relation to the chargeable period concerned, serve on any person to whom subsection (4) applies a notice—

(a) stating the amount which remains unpaid of the tax payable by the taxpayer company for the chargeable period concerned and the date on or before which the tax became due and payable, and

(b) requiring that person to pay that amount within 30 days of the service of the notice.

(4) (a) This subsection applies to any person being—

(i) a company which is, or during the period of 12 months ending with the time when the gain accrued, was a member of the same group as the taxpayer company, and

(ii) a person who is, or during that period was, a controlling director of the taxpayer company or of a company which has, or within that period had, control over the taxpayer company.

(b) This subsection shall have effect in any case where the gain accrued before the 21st day of April, 1998, with the substitution in paragraph (a) (i) of “beginning with the 21st day of April, 1997, and” for “of 12 months”.

(5) Any amount which a person is required to pay by a notice under this section may be recovered from the person as if it were tax due by the said person, and such person may recover any such amount paid on foot of a notice under this section from the taxpayer company.

(6) A payment in pursuance of a notice under this section shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes.

45 Amendment of section 464 (issue of securities with exemption from tax) of Income Tax Act, 1967.

45.—(1) Section 464 (as amended by the Finance Act, 1992) of the Income Tax Act, 1967, is hereby amended in the proviso by the substitution for “Case I” of “Case I or Case IV”.

(2) This section shall apply and have effect in respect of interest and other profits or gains, accruing on or after the 21st day of April, 1997, from a security.

46 Amendment of section 470 (securities of Irish local authorities issued abroad) of Income Tax Act, 1967.

46.—(1) Section 470 (as amended by the Finance Act, 1992) of the Income Tax Act, 1967, is hereby amended in paragraph (b) of subsection (1) by the substitution for “Case I” of “Case I or Case IV”.

(2) This section shall apply and have effect in respect of interest and other profits or gains accruing on or after the 21st day of April, 1997, from a security.

47 Amendment of section 474 (exemption of certain securities from tax) of Income Tax Act, 1967.

47.—(1) Section 474 (as amended by the Finance Act, 1992) of the Income Tax Act, 1967, is hereby amended in subsection (2) by the substitution in the proviso for “Case I” of “Case I or Case IV”.

(2) This section shall apply and have effect in respect of interest and other profits or gains, accruing on or after the 21st day of April, 1997, from a security.

48 Replacement of harbour authorities by port companies.

48.—(1) In this section and in the Fifth Schedule, “relevant port company” has the meaning assigned to it in paragraph 1 of that Schedule.

(2) The provisions of the Fifth Schedule shall apply where assets are vested in, or transferred to, a relevant port company pursuant to the Harbours Act, 1996.

(3) This section and the Fifth Schedule shall have effect from the 1st day of March, 1997.

49 Treatment of certain profits and gains for tax purposes.

49.—(1) In this section “the authority” means the Dublin Docklands Development Authority.

(2) Notwithstanding any provision of the Corporation Tax Acts, profits arising to the authority in any accounting period ending after the 30th day of April, 1997, shall be exempt from corporation tax.

(3) As regards disposals made after the 30th day of April, 1997, section 23 of the Capital Gains Tax Act, 1975, shall apply to a gain accruing to the authority as it does to a body specified in that section.

(4) Section 42 of the Finance Act, 1988, is repealed with effect from the 1st day of May, 1997.

50 Amendment of Chapter IX (profit sharing schemes) of Part 1 of, and Third Schedule (profit sharing schemes) to, Finance Act, 1982.

50.—The Finance Act, 1982, is hereby amended—

(a) in section 52, as on and from the passing of this Act, by the substitution of the following for subsections (7) and (8):

“(7) In this Chapter ‘the release date’, in relation to any of a participant's shares, means the third anniversary of the date on which the shares were appropriated to the participant.

(8) Subject to section 56(4), for the purposes of provisions of this Chapter charging an individual to income tax under Schedule E by reason of the occurrence of an event relating to any of the individual's shares, any reference to ‘the appropriate percentage’ in relation to those shares shall be determined according to the time of that event, as follows—

(a) if the event occurs before the third anniversary of the date on which the shares were appropriated to the participant and paragraph (b) does not apply, the appropriate percentage is 100 per cent., and

(b) if, in a case where at the time of the event the participant—

(i) has ceased to be an employee or director of a relevant company as mentioned in subsection (5)(a), or

(ii) has reached pensionable age, as defined in section 2 of the Social Welfare (Consolidation) Act, 1993,

the event occurs before the third anniversary of the date on which the shares were appropriated to him, the appropriate percentage is 50 per cent.”,

(b) as respects sums expended on or after the passing of this Act, by the insertion of the following section after section 58:

“Costs of establishing profit sharing schemes.

58A.—(1) This section applies to a sum expended by a company in establishing a profit sharing scheme which the Revenue Commissioners approve of in accordance with Part I of the Third Schedule and under which the trustees acquire no shares before such approval is given.

(2) A sum to which this section applies shall be included—

(a) in the sums to be deducted in computing for the purposes of Schedule D the profits or gains of a trade carried on by the company, or

(b) if the company is an investment company within the meaning of section 15 of the Corporation Tax Act, 1976, or a company in the case of which that section applies by virtue of section 33 of that Act, in the sums to be deducted under section 15(1) of that Act as expenses of management in computing the profits of the company for the purposes of corporation tax.

(3) In a case where—

(a) subsection (2) applies, and

(b) the approval is given after the end of the period of nine months beginning with the day following the end of the accounting period in which the sum is expended,

then, for the purpose of subsection (2), the sum shall be treated as expended in the accounting period in which the approval is given and not the accounting period mentioned in paragraph (b).”,

and

(c) in the Third Schedule, as respects profit sharing schemes approved on or after the passing of this Act—

(i) by the substitution, in subparagraph (1) of paragraph 2, of the following for clause (a):

“(a) is then an employee or full-time director of the company concerned or, in the case of a group scheme, a participating company, and”,

and

(ii) by the substitution of the following paragraph for paragraph 7:

“7.—(1) The shares must be—

(a) fully paid up;

(b) not redeemable; and

(c) not subject to any restrictions other than restrictions which attach to all shares of the same class or a restriction authorised by subparagraph (2).

(2) Subject to subparagraphs (3) and (4), the shares may be subject to a restriction imposed by the company's articles of association—

(a) requiring all shares held by directors or employees of the company or of any other company of which it has control to be disposed of on ceasing to be so held; and

(b) requiring all shares acquired, in pursuance of rights or interests obtained by such directors or employees, by persons who are not, or have ceased to be, such directors or employees to be disposed of when they are acquired.

(3) A restriction is not authorised by subparagraph (2) unless—

(a) any disposal required by the restriction will be by way of sale for a consideration in money on terms specified in the articles of association; and

(b) the articles also contain general provisions by virtue of which any person disposing of shares of the same class (whether or not held or acquired as mentioned in subparagraph (2)) may be required to sell them on terms which are the same as those mentioned in paragraph (a).

(4) Nothing in subparagraph (2) authorises a restriction which would require a person, before the release date, to dispose of his beneficial interest in shares the ownership of which has not been transferred to him.”.

51 Employee share ownership trusts.

51.—(1) (a) This section applies to an employee share ownership trust which the Revenue Commissioners have approved of as a qualifying employee share ownership trust in accordance with the provisions of the Third Schedule and which approval has not been withdrawn.

(b) This section shall be construed together with the Third Schedule.

(2) Where, in an accounting period of a company, the company expends a sum—

(a) in establishing a trust to which this section applies, or

(b) (i) in making a payment by way of contribution to the trustees of a trust which at the time the sum is expended is a trust to which this section applies, and

(ii) at that time, the company or a company which it then controls has employees who are eligible to benefit under the terms of the trust deed, and

(iii) before the expiry of the expenditure period the sum is expended by the trustees for one or more of the qualifying purposes,

then, the sum shall be included—

(I) in the sums to be deducted in computing for the purposes of Schedule D the profits or gains for that accounting period of a trade carried on by that company, or

(II) if the company is an investment company within the meaning of section 15 of the Corporation Tax Act, 1976, or a company in the case of which that section applies by virtue of section 33 of that Act, in the sums to be deducted under section 15(1) of that Act as expenses of management in computing the profits of the company for that accounting period for the purposes of corporation tax.

(3) In a case where—

(a) paragraph (a) of subsection (2) applies, and

(b) the trust is established after the end of the period of 9 months beginning with the day following the end of the accounting period in which the sum is expended by the company,

then, for the purposes of subsection (2), the sum shall be treated as expended in the accounting period in which the trust is established and not the accounting period mentioned in paragraph (b).

(4) For the purposes of paragraph (b) (ii) of subsection (2), the question whether one company is controlled by another shall be construed in accordance with section 102 of the Corporation Tax Act, 1976.

(5) For the purposes of paragraph (b) (iii) of subsection (2)—

(a) each of the following is a qualifying purpose—

(i) the acquisition of shares in the company which established the trust;

(ii) the repayment of sums borrowed;

(iii) the payment of interest on sums borrowed;

(iv) the payment of any sum to a person who is a beneficiary under the terms of the trust deed; and

(v) the meeting of expenses;

and

(b) the expenditure period is the period of 9 months beginning with the day following the end of the accounting period in which the sum is expended by the company, or such longer period as the Revenue Commissioners may allow by notice given to the company.

(6) For the purposes of this section the trustees of an employee share ownership trust shall be taken to expend sums paid to them in the order in which the sums are received by them, irrespective of the number of companies making payments.

(7) Section 13 of the Finance Act, 1976, shall not apply to income consisting of dividends in respect of securities held by a trust to which this section applies.

(8) Where the trustees of a trust to which this section applies transfer securities to the trustees of a profit sharing scheme approved under Part I of the Third Schedule to the Finance Act, 1982, any gain accruing to those first-mentioned trustees on that transfer shall not be a chargeable gain.

(9) Notwithstanding anything in the foregoing provisions of this section, where the Revenue Commissioners in accordance with the provisions of the Third Schedule withdraw approval of an employee share ownership trust as a qualifying employee share ownership trust, this section shall not apply or have effect, on or after the date from which that withdrawal has effect, in relation to—

(a) any sum expended by a company in making a payment to that trust,

(b) income consisting of dividends in respect of securities held by that trust, or

(c) the transfer of securities to a profit sharing scheme approved under Part I of the Third Schedule to the Finance Act, 1982.

Chapter III Urban Renewal Reliefs: Introduction of New Scheme in the Dublin Docklands Area

52 Interpretation (Chapter III).

52.—In this Chapter—

“qualifying area” means an area or areas in the Dublin Docklands Area (within the meaning of section 4 of the Dublin Docklands Development Authority Act, 1997) specified as a qualifying area by order under section 53;

“lease”, “lessee”, “lessor”, “premium” and “rent” have the same meanings respectively as in Chapter VI of Part IV of the Income Tax Act, 1967;

“market value”, in relation to a building, structure or house, means the price which the unencumbered fee simple of the building, structure 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, structure or house, less the part of that price which would be attributable to the acquisition of, or of rights in or over, the land on which the building, structure or house is constructed;

“qualifying period” means, subject to section 53, the period commencing on the 1st day of July, 1997, and ending on the 30th day of June, 2000;

“refurbishment”, in relation to a building or structure and other than for the purposes of section 57, means any work of construction, reconstruction, repair or renewal, including the provision or improvement of water, sewerage or heating facilities, carried out in the course of the repair or restoration, or maintenance in the nature of repair or restoration, of the building or structure.

53 Qualifying area.

53.—(1) Subject to subsection (2), the Minister for Finance may, after consultation with the Minister for the Environment, following a recommendation from the Executive Board (within the meaning of section 17 of the Dublin Docklands Development Authority Act, 1997) of the Dublin Docklands Development Authority (within the meaning of section 14 of the said Act), by order direct that—

(a) the area or areas described in the order shall be a qualifying area—

(i) for the purposes of one or more sections of this Chapter, and

(ii) in relation to section 55, for the purposes of that section, including or excluding the provisions of subsection (6) of that section as may be specified in the order, and

(b) as respects any such area so described in the order, the definition of “qualifying period” in section 52(1) 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 prior to the 1st day of July, 1997, or end after the 30th day of June, 2000.

(2) In considering the making of an order under subsection (1) in respect of an area and, in particular, for the purposes of determining whether that area should be a qualifying area for the purposes of one or more sections of this Chapter and, where the area is to be a qualifying area for the purposes of section 55, whether the relief to be provided by virtue of section 55 is or is not to be subject to subsection (6) of that section, the Minister shall have regard to the following criteria—

(a) the consistency in relation to the area, of the types of development for which relief is provided in one or more sections of this Chapter with the relevant provisions of the master plan for the Dublin Docklands Area prepared and adopted under section 24 of the Dublin Docklands Development Authority Act, 1997, which consistency shall be certified by the Executive Board of the Dublin Docklands Development Authority,

(b) the market conditions in the area in terms of the existing and projected supply of, and the existing and projected demand for, the type of development for which relief is provided in one or more sections of this Chapter,

(c) the significance of the area for the overall regeneration of the Dublin Docklands Area, and

(d) the nature and extent of any barriers to the regeneration of the area.

(3) Every order made by the Minister for Finance under subsection (1) 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 21 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.

54 Accelerated capital allowances in relation to construction or refurbishment of certain industrial buildings or structures.

54.—(1) This section shall apply to a building or structure the site of which is wholly within a qualifying area and which is to be an industrial building or structure by reason of its use for a purpose specified in section 255 (1)(a) of the Income Tax Act, 1967.

(2) Subject to subsection (4), section 254 of the Income Tax Act, 1967, shall apply in relation to capital expenditure incurred in the qualifying period on the construction or refurbishment of a building or structure to which this section applies as if—

(a) in paragraph (a) of subsection (2A) of the said section 254, the reference to “before the 1st day of April, 1991” (as provided for in section 50 of the Finance Act, 1988) were a reference to “before the 1st day of July, 2000”,

(b) paragraph (aa) (inserted by section 74 of the Finance Act, 1990) and paragraph (b) of subsection (2A) of the said section 254 were deleted, and

(c) subsection (2B) (inserted by the said section 74) of the said section 254 were deleted.

(3) Subject to subsection (4), section 25 of the Finance Act, 1978, shall apply in relation to capital expenditure incurred in the qualifying period on the construction or refurbishment of a building or structure to which this section applies as if—

(a) paragraph (b) (as amended by section 76 of the Finance Act, 1990) of subsection (2) (inserted by section 48 of the Finance Act, 1988) of the said section 25 were deleted, and

(b) subsection (2A) (including the proviso to that subsection) of that section were deleted.

(4) In the case where capital expenditure is incurred in the qualifying period on the refurbishment of a building or structure to which this section applies, subsections (2) and (3) shall apply only if the total amount of the capital expenditure so incurred is not less than an amount which is equal to 10 per cent. of the market value of the building or structure immediately before that expenditure is incurred.

(5) For the purposes only of determining, in relation to a claim for an allowance under section 254 of the Income Tax Act, 1967, or section 25 of the Finance Act, 1978, as applied by this section, whether and to what extent capital expenditure incurred on the construction or refurbishment of an industrial building or structure is incurred or not incurred in the qualifying period, only such an amount of that capital expenditure as is properly attributable to work on the construction or refurbishment of the building or structure actually carried out during the qualifying period shall, notwithstanding any other provision of the Tax Acts as to the time when any capital expenditure is or is to be treated as incurred, be treated as having been incurred in that period.

55 Capital allowances in relation to construction or refurbishment of certain commercial premises.

55.—(1) (a) In this section—

“qualifying multi-storey car park” means a building or structure consisting of 2 or more storeys wholly or mainly in use for the purpose of providing, for members of the public generally without preference for any particular class of person, on payment of an appropriate charge, parking space for mechanically propelled vehicles;

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

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

(ii) (I) is in use for the purposes of a trade or profession, or

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

but does not include a car park (other than a qualifying multi-storey car park) or any part of a building or structure in use as or as part of a dwelling-house.

(b) Where part of a building or structure is a qualifying premises and part of it (in this paragraph referred to as “the second-mentioned part”) is not a qualifying premises and the capital expenditure which has been incurred in the qualifying period on the construction or refurbishment of the second-mentioned part is not more than one-tenth of the total capital expenditure which has been incurred in that period on the construction or refurbishment of the building or structure, then, the building or structure and every part thereof shall be treated as a qualifying premises.

(2) (a) Subject to paragraph (b) and subsections (3) to (6), the provisions of the Tax Acts (other than section 54) relating to the making of allowances or charges in respect of capital expenditure incurred on the construction or refurbishment of an industrial building or structure shall, notwithstanding anything to the contrary in those provisions apply—

(i) as if a qualifying premises were, at all times at which it is a qualifying premises, a building or structure in respect of which an allowance is 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

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

(b) An allowance shall be given by reason of this subsection in respect of any capital expenditure incurred on the construction or refurbishment of a qualifying premises only in so far as that expenditure is incurred in the qualifying period.

(3) In the case where capital expenditure is incurred in the qualifying period on the refurbishment of a qualifying premises, subsection (2) shall apply only if the total amount of the capital expenditure so incurred is not less than an amount which is equal to 10 per cent. of the market value of the qualifying premises immediately before that expenditure is incurred.

(4) For the purposes of the application, by subsection (2), of section 254 of the Income Tax Act, 1967, and section 25 of the Finance Act, 1978, in relation to capital expenditure incurred in the qualifying period on the construction or refurbishment of a qualifying premises—

(a) the said section 254 shall, notwithstanding section 22 of the Finance Act, 1991, apply as if—

(i) in paragraph (a) of subsection (2A) of the said section 254, the reference to “before the 1st day of April, 1991” (as provided for in section 50 of the Finance Act, 1988) were a reference to “before the 1st day of July, 2000”,

(ii) paragraph (aa) (inserted by section 74 of the Finance Act, 1990) and paragraph (b) of subsection (2A) of the said section 254 were deleted, and

(iii) subsection (2B) (inserted by the said section 74) of the said section 254 were deleted,

and

(b) the said section 25 shall apply—

(i) as if paragraph (b) (as amended by section 76 of the Finance Act, 1990) of subsection (2) (inserted by section 48 of the Finance Act, 1988) were deleted, and

(ii) as if subsection (2A) (including the proviso to that subsection) of that section were deleted.

(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—

(a) more than 13 years after the qualifying premises were first used, or

(b) in a case where section 26 of the Finance Act, 1991, applies more than 13 years after the capital expenditure on refurbishment of the qualifying premises was incurred.

(6) (a) Notwithstanding subsections (2) to (5), any allowance or charge which, apart from this subsection, would be made by reason of subsection (2) in respect of capital expenditure which is incurred on the construction or refurbishment of a qualifying premises may be reduced to one-half of the amount which, apart from this subsection, would be the amount of that allowance or charge.

(b) Paragraph (a) shall apply, where, in respect of an area, the Minister for Finance, having had regard to the criteria set out in section 53(2), has specified in an order under that section that the area is a qualifying area for the purposes of this section and that the relief to apply is subject to this subsection.

(c) For the purposes of paragraph (a) the amount of an allowance or charge to be reduced to one-half thereof shall be computed as if—

(i) this subsection had not been enacted, and

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

(d) Nothing in this subsection shall affect the operation of section 265(5) of the Income Tax Act, 1967.

(7) For the purposes only of determining, in relation to a claim for an allowance by virtue of subsection (2), whether and to what extent capital expenditure incurred on the construction or refurbishment of a qualifying premises is incurred or not incurred in the qualifying period, only such an amount of that capital expenditure as is properly attributable to work on the construction or refurbishment of the premises actually carried out during the qualifying period shall (notwithstanding any other provision of the Tax Acts as to the time when any capital expenditure is or is to be treated as incurred) be treated as having been incurred in that period.

(8) Where, by virtue of subsection (2), an allowance is given under Chapter II of Part XV of, or Chapter I of Part XVI of, the Income Tax Act, 1967, in respect of any capital expenditure incurred on the construction or refurbishment of a qualifying premises, relief shall not be given in respect of that expenditure under the said Chapter II or the said Chapter I by virtue of any provision of the Tax Acts other than subsection (2).

56 Double rent allowance in respect of rent paid for certain business premises.

56.—(1) (a) In this section—

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

“qualifying premises” means, subject to paragraph (b) and subsection (5) (a), a building or structure the site of which is wholly within a qualifying area and—

(i) (I) which is a building or structure in use for a purpose specified in section 255 (1)(a) of the Income Tax Act, 1967, and in respect of which capital expenditure is incurred in the qualifying period for which an allowance is to be made, or will by virtue of section 19 (as amended by section 23 of the Finance Act, 1991) of the Finance Act, 1970, be made, for the purposes of income tax or corporation tax, as the case may be, under section 254 of the Income Tax Act, 1967, or section 25 of the Finance Act, 1978, as applied by section 54,

(II) in respect of which an allowance is to be made, or will by virtue of section 19 (as amended by section 23 of the Finance Act, 1991) of the Finance Act, 1970, be made, for the purposes of income tax or corporation tax, as the case may be, under Chapter II of Part XV of, or Chapter I of Part XVI of, the Income Tax Act, 1967, by reason of section 55, or

(III) which is a building or structure in use for the purposes specified in section 255 (1)(d) of the Income Tax Act, 1967, and in respect of the construction or refurbishment of which capital expenditure is incurred in the qualifying period for which an allowance would, but for subsection (6), be made for the purposes of income tax or corporation tax, as the case may be, under Chapter II of Part XV of, or Chapter I of Part XVI of, the Income Tax Act, 1967,

and

(ii) which is let on such terms as are referred to in paragraph (ii) (II) of the definition of “qualifying premises” in section 55.

(b) Where capital expenditure is incurred in the qualifying period on the refurbishment of a building or structure in respect of which an allowance is to be made, or will by virtue of section 19 of the Finance Act, 1970, be made, or in respect of which an allowance would but for subsection (6) be made, for the purposes of income tax or corporation tax, as the case may be, under any of the provisions referred to in paragraph (a), the building or structure shall not be regarded as a qualifying premises unless the total amount of the expenditure so incurred is not less than an amount equal to 10 per cent. of the market value of the building or structure immediately before that expenditure is incurred.

(2) For the purposes of this section, so much of a period, being a period when rent is payable by a person in relation to a qualifying premises under a qualifying lease, shall be a relevant rental period as does not exceed—

(a) 10 years, or

(b) the period by which 10 years exceeds—

(i) any preceding period, or

(ii) if there is more than one preceding period, the aggregate of those periods,

for which rent was payable by that person or any other person in relation to that premises under a qualifying lease.

(3) Subject to subsection (4), where, in the computation of the amount of the profits or gains of a trade or profession, a person is apart from this section entitled to any deduction (in this subsection referred to as “the first-mentioned deduction”) on account of rent in respect of a qualifying premises occupied by such person for the purposes of that trade or profession which is payable by such person for a relevant rental period in relation to that qualifying premises under a qualifying lease, such person shall be entitled in that computation to a further deduction (in this subsection referred to as “the second-mentioned deduction”) equal to the amount of the first-mentioned deduction but, 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.

(4) Where a person holds an interest in a qualifying premises out of which interest a qualifying lease is created, directly or indirectly, in respect of the qualifying premises and in respect of rent payable under the qualifying lease a claim for a further deduction under this section is made, and either such person or another person connected with such person—

(a) takes under a qualifying lease a qualifying premises (in this subsection referred to as “the second-mentioned premises”) occupied by such person or such other person, as the case may be, for the purposes of a trade or profession, and

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

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

(5) (a) A building or structure in use for the purposes specified in section 255 (1)(d) of the Income Tax Act, 1967, shall not be a qualifying premises for the purposes of this section unless the person to whom an allowance under Chapter II of Part XV, or Chapter I of Part XVI, of that Act would but for subsection (6) be made for the purposes of income tax or corporation tax, as the case may be, in respect of the capital expenditure incurred in the qualifying period on the construction or refurbishment of the building or structure, elects by notice in writing to the appropriate inspector (within the meaning of section 9 of the Finance Act, 1988) to disclaim all allowances under the said Chapter II and the said Chapter I in respect of the said capital expenditure.

(b) An election under paragraph (a) shall be included in the return required to be made by the person concerned under section 10 of the Finance Act, 1988, for the first year of assessment or the first accounting period, as the case may be, for which an allowance would, but for subsection (6), have been made to that person under the said Chapter II or the said Chapter I in respect of the said capital expenditure.

(c) An election under paragraph (a) shall be irrevocable.

(d) A person who has made an election under paragraph (a) shall furnish a copy of that election to any person (in this paragraph referred to as “the second-mentioned person”) to whom the person grants a qualifying lease in respect of the qualifying premises and the second-mentioned person shall include the said copy in the return required to be made by the second-mentioned person under section 10 of the Finance Act, 1988, for the year of assessment or accounting period, as the case may be, in which rent is first payable by the second-mentioned person under the qualifying lease in respect of the qualifying premises.

(6) Where a person who has incurred capital expenditure in the qualifying period on the construction or refurbishment of a building or structure in use for the purposes specified in section 255 (1)(d) of the Income Tax Act, 1967, makes an election under paragraph (a) of subsection (5), then, notwithstanding any other provision of the Tax Acts—

(a) no allowance under Chapter II of Part XV, or Chapter I of Part XVI, of the Income Tax Act, 1967, shall be made to the person in respect of that capital expenditure,

(b) on the occurrence, in relation to the building or structure, of any of the events referred to in section 265(1) of the Income Tax Act, 1967, the residue of expenditure (within the meaning of section 266 of that Act) in relation to that capital expenditure shall be deemed to be nil, and

(c) section 19 (as amended by section 23 of the Finance Act, 1991) of the Finance Act, 1970, shall not apply in the case of any person who buys the relevant interest (within the meaning of section 268 of the Income Tax Act, 1967) in the building or structure.

(7) For the purposes of determining, in relation to paragraph (i) (III) of the definition of “qualifying premises” in subsection (1) (a) and subsections (5) and (6), whether and to what extent capital expenditure incurred on the construction or refurbishment of a building or structure is incurred or not incurred in the qualifying period, only such an amount of that capital expenditure as is properly attributable to work on the construction or refurbishment of the building or structure actually carried out in the qualifying period shall (notwithstanding any other provision of the Tax Acts as to the time when any capital expenditure is or is to be treated as incurred) be treated as having been incurred in that period.

(8) Section 33 (as amended by section 49(5) of the Finance Act, 1995) of the Finance Act, 1990, is hereby amended—

(a) in subsection (1), by the substitution of “section 49 of the Finance Act, 1995, or section 56 of the Finance Act, 1997” for “or section 49 of the Finance Act, 1995”, and

(b) in subsection (2)(a), by the substitution of the following definition for the definition of “qualifying premises”:

“‘qualifying premises’ means a qualifying premises within the meaning of section 45 of the Finance Act, 1986, section 42 of the Finance Act, 1994, section 49 of the Finance Act, 1995 or section 56 of the Finance Act, 1997;”.

57 Residential accommodation: allowance to owner-occupiers in respect of expenditure on construction or refurbishment.

57.—(1) In this section—

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

“qualifying owner-occupied dwelling”, in relation to an individual, means a qualifying premises which is first used, after the qualifying expenditure has been incurred, by such an individual as that individual's only or main residence;

“qualifying premises”, in relation to the incurring of qualifying expenditure, means, subject to subsections (2) and (3) of section 58, a house—

(a) the site of which is wholly within a qualifying area,

(b) which is used solely as a dwelling,

(c) in respect of which, if it is not a new house (for the purposes of section 4 of the Housing (Miscellaneous Provisions) Act, 1979) provided for sale, there is in force a certificate of reasonable cost the amount specified in which in respect of the cost of construction or, as the case may be, refurbishment of the house to which the certificate relates is not less than the expenditure actually incurred on such construction or refurbishment, as the case may be, and

(d) the total floor area of which is not less than 38 square metres and not more than 125 square metres;

“refurbishment”, in relation to a building, means either or both of the following, that is to say:

(a) the carrying out of any works of construction, reconstruction, repair or renewal, and

(b) the provision or improvement of water, sewerage or heating facilities,

where the carrying out of such works, or the provision of such facilities, is certified by the Minister for the Environment, in any certificate of reasonable cost granted by that Minister in relation to any house contained in the building, to have been necessary for the purposes of ensuring the suitability as a dwelling of any house in the building and whether or not the number of houses in the building, or the shape or size of any such house, is altered in the course of such refurbishment.

(2) Subject to subsection (3), where an individual, having made a claim in that behalf, proves to have incurred qualifying expenditure in a year of assessment, the individual shall be entitled, for that year of assessment and for any of the 9 subsequent years of assessment in which the qualifying premises in respect of which the individual incurred the qualifying expenditure is the only or main residence of the individual, to have a deduction made from the individual's total income of an amount equal to—

(a) in the case where the qualifying expenditure has been incurred on the construction of the qualifying premises, 5 per cent. of the amount of that expenditure, or

(b) in the case where the qualifying expenditure has been incurred on the refurbishment of the qualifying premises, 10 per cent. of the amount of that expenditure.

(3) Where qualifying expenditure in relation to a qualifying premises is incurred by two or more persons, each of those persons shall be treated as having incurred the expenditure in the proportions in which they actually bore the expenditure and the expenditure shall be apportioned accordingly.

(4) Section 137 of the Income Tax Act, 1967, is hereby amended in Part I of the Table to that section by the addition of “section 57 of the Finance Act, 1997”.

(5) Section 58 shall apply for the purposes of supplementing this section.

58 Provisions supplementary to section 57.

58.—(1) In section 57—

“certificate of reasonable cost” means a certificate granted by the Minister for the Environment for the purposes of section 57, stating that the amount specified in the certificate in relation to the cost of 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 within the meaning of that section;

“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;

“total floor area” means the total floor area of a house measured in the manner referred to in section 4(2)(b) of the Housing (Miscellaneous Provisions) Act, 1979.

(2) (a) A house shall not be a qualifying premises for the purposes of section 57, in so far as it applies to expenditure other than expenditure on refurbishment, unless it complies with such conditions, if any, as may be determined by the Minister for the Environment from time to time for the purposes of section 4 of the Housing (Miscellaneous Provisions) Act, 1979, in relation to standards of construction of houses and the provision of water, sewerage and other services in houses.

(b) A house shall not be a qualifying premises for the purposes of section 57, in so far as it applies to expenditure on refurbishment, unless it complies with such conditions, if any, as may be determined by the Minister for the Environment from time to time for the purposes of section 5 of the Housing (Miscellaneous Provisions) Act, 1979, in relation to standards for improvements of houses and the provision of water, sewerage and other services in houses.

(c) A house shall not be a qualifying premises for the purposes of section 57 unless the house or, in a case where the house is one of a number of houses in a single development, the development of which it is a part complies with such guidelines as may, from time to time, be issued by the Minister for the Environment, with the consent of the Minister for Finance, for the purposes of furthering the objectives of the Urban Renewal Act, 1986, and, without prejudice to the generality of the foregoing, such guidelines may include provisions in relation to all or any one or more of the following:

(i) the design and the construction of, conversion into, refurbishment of, or, as the case may be, construction or refurbishment of, houses,

(ii) the total floor area and dimensions of rooms within houses, measured in such manner as may be determined by the Minister for the Environment,

(iii) the provision of ancillary facilities and amenities in relation to houses, and

(iv) the balance to be achieved between houses of different types and sizes within a single development of two or more houses or within such a development and its general vicinity having regard to the housing existing or proposed in that vicinity.

(3) A house shall not be a qualifying premises for the purposes of section 57 unless persons authorised in writing by the Minister for the Environment for the purposes of that section are permitted to inspect the house at all reasonable times upon production, if so requested by a person affected, of their authorisations.

(4) For the purposes of section 57, references in that section to the construction or refurbishment of any premises shall be construed as including references to the development of the land on which the premises is situated or which is used in the provision of gardens, grounds, access or amenities in relation to the premises and, without prejudice to the generality of the foregoing, as including, in particular—

(a) demolition or dismantling of any building on the land,

(b) site clearance, earth moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works,

(c) walls, power-supply, drainage, sanitation and water supply, and

(d) the construction of any outhouses or other buildings or structures for use by the occupants of the premises or for use in the provision of amenities for the occupants.

(5) (a) For the purposes of determining, in relation to any claim under section 57(2), whether and to what extent expenditure incurred on the construction or refurbishment of a qualifying premises is incurred or not incurred during the qualifying period, only such an amount of that expenditure as is properly attributable to work on the construction or refurbishment of the premises which was actually carried out during the qualifying period shall, notwithstanding any other provision of the Tax Acts as to the time when any capital expenditure is or is to be treated as incurred, be treated as having been incurred during that period.

(b) Where, by virtue of subsection (4), expenditure on the construction or refurbishment of a qualifying premises includes expenditure on the development of any land, paragraph (a) shall have effect, with any necessary modifications, as if the references therein to the construction or refurbishment of the qualifying premises were references to the development of such land.

(6) For the purposes of section 57 other than for the purposes mentioned in subsection (5) (a), expenditure incurred on the construction or refurbishment of a qualifying premises shall be deemed to have been incurred on the earliest date after the expenditure was actually incurred that the premises is in use as a dwelling.

(7) An appeal to the Appeal Commissioners shall lie on any question arising under this section or under section 57 other than a question on which an appeal lies under section 18 of the Housing (Miscellaneous Provisions) Act, 1979, in like manner as an appeal would lie against an assessment to income tax or corporation tax and the provisions of the Tax Acts relating to appeals shall apply accordingly.

Chapter IV Corporation Tax

59 Rate of corporation tax.

59.—(1) As respects any accounting period ending on or after the 1st day of April, 1997, section 1 (as amended by section 54 of the Finance Act, 1995) of the Corporation Tax Act, 1976, is hereby amended by the substitution of the following subsection for subsection (1):

“(1) For the financial year 1974 and each subsequent financial year there shall be charged on the profits of companies a tax, to be called corporation tax, at the rate of—

(a) 38 per cent. for—

(i) each financial year until and including the year 1996, and

(ii) that part of the financial year 1997 beginning on the first day of January, 1997, and ending on the 31st day of March, 1997;

and

(b) 36 per cent. for—

(i) that part of the financial year beginning on the 1st day of April, 1997, and ending on the 31st day of December, 1997, and

(ii) each subsequent financial year.”.

(2) The Sixth Schedule shall have effect for the purpose of supplementing this section.

60 Amendment of section 28A (reduced rate of corporation tax for certain income) of Corporation Tax Act, 1976.

60.—(1) Section 28A (as inserted by the Finance Act, 1996) of the Corportion Tax Act, 1976, is hereby amended—

(a) as respects accounting periods ending on or after the 1st day of April, 1997, by the substitution in subsection (1) of “28 per cent.” for “30 per cent.”, and

(b) in subsection (10)—

(i) in paragraph (a), by the substitution for the definition of “S” of the following:

“S is an amount equal to so much of the profits of the company for the accounting period as are charged to tax in accordance with subsection (1),

and”,

(ii) in paragraph (b), by the substitution for subparagraph (ii) of the following:

“(ii) by an amount equal to so much of the profits of the company for the accounting period as are charged to tax in accordance with subsection (1).”.

(2) For the purposes of paragraph (a) of subsection (1), where an accounting period of a company begins before the 1st day of April, 1997, 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, 1997, and the other beginning on the 1st day of April, 1997, 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.

(3) Paragraph (b) of subsection (1) shall have effect as respects accounting periods ending on or after the 16th day of June, 1996.

61 Repeal of section 80 (exemption of income from carrying out of voluntary health insurance schemes) of Corporation Tax Act, 1976.

61.—(1) In this section—

“the Board” means the Voluntary Health Insurance Board;

“market value” has the meaning assigned to it in section 49 of the Capital Gains Tax Act, 1975.

(2) Section 80 of the Corporation Tax Act, 1976, shall be deemed to have been repealed with effect from the 1st day of March, 1997.

(3) The provisions of section 16 of the Corporation Tax Act, 1976, shall not apply to a loss incurred by the Board in an accounting period ending before the 1st day of March, 1997.

(4) Notwithstanding any other provision of the Tax Acts, bonds and shares held by the Board on the 28th day of February, 1997, in the course of the business of carrying out schemes of voluntary health insurance shall be deemed to have been disposed of and immediately reacquired by the Board on that date at the assets' market value on that date.

62 Exemption of harbour authorities and port companies.

62.—(1) (a) In this section—

“relevant body” means—

(i) a harbour authority within the meaning of the Harbours Act, 1946,

(ii) a company established pursuant to section 7 of the Harbours Act, 1996, and

(iii) any other company which controls a harbour and which carries on a trade which consists wholly or partly of the provision in that harbour of such facilities and accommodation for vessels, goods and passengers as are ordinarily provided by harbour authorities specified in paragraph (i), and companies specified in paragraph (ii) which control harbours, situate within the State, in those harbours;

“relevant profits or gains” means so much of the profits or gains of a relevant body controlling a harbour situate within the State as arise from the provision in that harbour of such facilities and accommodation for vessels, goods and passengers as are ordinarily provided by—

(i) harbour authorities specified in paragraph (i), and

(ii) companies specified in paragraph (ii),

of the definition of “relevant body”, which control harbours, situate within the State, in those harbours.

(b) For the purposes of this section, where an accounting period falls partly in a period, the part of the accounting period falling into the period shall be regarded as a separate accounting period.

(2) Section 343 of the Income Tax Act, 1967, shall be deemed to have been repealed with effect from the 1st day of January, 1997.

(3) Exemption shall be granted from tax under Schedule D in respect of relevant profits or gains in the period beginning on the 1st day of January, 1997, and ending on the 31st day of December, 1998.

(4) Subsection (3) shall apply to a relevant body which is a harbour authority referred to in paragraph (i) of the definition of “relevant body” as if “in the period beginning on the 1st day of January, 1997, and ending on the 31st day of December, 1998” were deleted.

(5) Where a relevant body is chargeable to tax under Schedule D in respect of relevant profits or gains, the relevant profits or gains shall be reduced by an amount equal to—

(a) as respects accounting periods falling wholly or partly in the year 1999, two-thirds of the said relevant profits or gains, and

(b) as respects accounting periods falling wholly or partly in the year 2000, one-third of the said relevant profits or gains.

63 Exemption of income of body designated under Irish Takeover Panel Act, 1997.

63.—Notwithstanding any provision of the Corporation Tax Acts, income arising in any accounting period ending after the 30th day of April, 1997, to the body designated by the Minster for Enterprise and Employment under section 3 of the Irish Takeover Panel Act, 1997, shall be exempt from corporation tax.

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

64.—Section 56 (as amended by section 56 of the Finance Act, 1996) of the Finance Act, 1992, is hereby amended—

(a) by the substitution in paragraph (a) of subsection (2) of “on or before the 31st day of December, 1999” for “before the 31st day of December, 1997”,

(b) by the substitution in subsection (3) of “(hereafter in this section referred to as the ‘donor’)” for “(hereafter in this subsection referred to as the ‘donor’)”,

(c) by the substitution of the following proviso for the proviso to subsection (3):

“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 and relief under this section shall not be given to a donor for an accounting period—

(i) if the net amount of the gift (or the aggregate of the net amounts of gifts) made by it in that accounting period, being a gift or gifts, as the case may be, to which this section applies, does not exceed £500,

(ii) to the extent to which the net amount of the gift (or the aggregate of the net amounts of gifts) made by it in that accounting period, being a gift or gifts, as the case may be, to which this section applies, exceeds £100,000,

(iii) in respect of a gift made at any time in the year ending on the 31st day of December in the year 1998 or 1999, if, at that time, the aggregate of the net amounts of all gifts to which this section applies made to the company within that year exceeds £1,500,000.”,

and

(d) by the addition, after subsection (4), of the following subsections:

“(5) Where a donor makes a gift in respect of which relief is not to be given by virtue of subparagraph (iii) of the proviso to subsection (3), the company shall, by notice in writing given to the donor within 30 days of the making of the gift, advise the donor accordingly.

(6) Where a gift to which this section applies is made by a donor in an accounting period of the donor which is less than 12 months, the amounts specified in subparagraphs (i) and (ii) of the proviso to subsection (3) shall be proportionately reduced.”.

65 Amendment of section 51 (relief for gifts made to First Step) of Finance Act, 1993.

65.—Section 51 (as amended by section 67 of the Finance Act, 1995) of the Finance Act, 1993, is hereby amended—

(a) by the substitution in paragraph (a) of subsection (2) of “1st day of January, 2000” for “1st day of June, 1997”, and

(b) in the proviso to subsection (3) by the substitution of the following subparagraphs for subparagraph (iii) of paragraph (b):

“(iii) in respect of a gift made at any time in the year ending on the 31st day of May in the year 1994, 1995, 1996, 1997, 1998 or 1999, if, at that time, the aggregate of the net amount of all gifts to which this section applies made to First Step within that year exceeds £1,500,000, or

(iv) in respect of a gift made at any time in the period commencing on the 1st day of June, 1999, and ending on the 31st day of December, 1999, if, at that time, the aggregate of the net amount of all gifts to which this section applies made to First Step within that period exceeds £875,000.”.

66 Amendment of section 36 (amendment of section 39B (relief in relation to income from certain trading operations carried on in Custom House Docks Area) of Finance Act, 1980) of Finance Act, 1988.

66.—(1) Section 36 of the Finance Act, 1988, is hereby amended in paragraph (a) of subsection (4) by the substitution for the definition of “foreign life assurance business” of the following definition: