TAXES CONSOLIDATION ACT, 1997

• (b) For the purposes of this subsection, any amount which by virtue of section 643 is treated as the income of a person shall, notwithstanding any other provision of the Tax Acts, be treated as the highest part of the person's income.

• (2) Where it appears to the Revenue Commissioners that any person entitled to any consideration or other amount chargeable to tax under section 643 is not resident in the State, they may direct that section 238 shall apply to any payment forming part of that amount as if the payment were an annual payment charged with tax under Schedule D, but without prejudice to the final determination of the liability of that person, including any liability under subsection (1)(a)(ii).

• (3) Section 643 shall apply subject to any provision of the Tax Acts deeming income to be income of a particular person.

• (4) Where by virtue of section 643(3)(c) any person is charged to tax on the realisation of a gain, and by virtue of section 643(10) the computation of the gain proceeded on the basis that the land or some other property was appropriated at any time as trading stock, that land or other property shall also be treated on that basis for the purposes of section 596.

• (5) Where by virtue of section 643(11) the person charged to tax is a person other than the person for whom the capital amount was obtained or the person by whom the gain was realised and the tax has been paid, then, for the purposes of sections 551 and 554, the person for whom the capital amount was obtained or the person by whom the gain was realised, as may be appropriate, shall be regarded as having been charged to the tax so paid.

645 Power to obtain information. [F(MP)A68 s22; FA81 s29(3)]

645.—(1) The inspector may by notice in writing require any person to furnish him or her within such time as may be specified in the notice (not being less than 30 days) with such particulars as the inspector thinks necessary for the purposes of sections 643 and 644.

• (2) The particulars which a person is obliged to furnish under this section, if required by notice to do so, shall include particulars as to—

• (a) transactions or arrangements with respect to which the person is or was acting on behalf of others,

• (b) transactions or arrangements which in the opinion of the inspector should properly be examined for the purposes of sections 643 and 644, notwithstanding that in the opinion of the person to whom the notice is given no liability to tax arises under those sections, and

• (c) whether the person to whom the notice is given has taken or is taking any transactions or arrangements of a description specified in the notice and, if so, what transactions or arrangements, and what part the person has taken or is taking in those transactions or arrangements.

• (3) Notwithstanding anything in subsection (2), a solicitor shall not be deemed for the purposes of subsection (2)(c) to have taken part in any transaction or arrangements by reason only that he or she has given professional advice to a client in connection with the transaction or arrangements, and shall not, in relation to anything done by him or her on behalf of a client, be compellable under this section, except with the consent of the client, to do more than state that he or she is or was acting on behalf of a client, and give the name and address of the client.

646 Postponement of payment of income tax to be permitted in certain cases. [F(MP)A68 s23(1) to (3) and (5)]

646.—(1) In this section, “basis period”, in relation to any year of assessment, means the period on the profits or gains of which income tax for that year is finally computed under Case I of Schedule D in respect of the trade or, where by virtue of the Income Tax Acts the profits or gains of any other period are taken to be the profits or gains of that period, that other period.

• (2) Where—

• (a) a person (in this section referred to as “the vendor”) carrying on a trade of dealing in or developing land (in this section referred to as “the trade”) disposes in the course of the trade of the full interest acquired by the person in any land,

• (b) the person to whom the disposition is made (in this section referred to as “the purchaser”) is not connected with the vendor,

• (c) the terms subject to which the disposition is made provide for the grant of a lease of the land by the purchaser to the vendor,

• (d) a sum representing the value of the vendor's right to be granted a lease is to be taken into account as a consideration for the disposal in computing the profits or gains of the trade, and

• (e) within 6 months after the time of the disposition, a lease of the land in accordance with those terms is granted by the purchaser to the vendor,

subsections (3) and (4) shall apply in relation to income tax for a year of assessment in the basis period for which the disposition is made.

• (3) Where, at the time when any amount of income tax charged by an assessment in respect of the profits or gains of the trade would but for this subsection become due and payable, the vendor—

• (a) retains the leasehold interest acquired by the vendor from the purchaser, and

• (b) has not disposed, as regards the whole or any part of the land, of an interest derived from that leasehold interest,

then, a part of that amount of income tax equal to 90 per cent of so much of such tax as would not have been chargeable if no sum had to be taken into account as mentioned in subsection (2)(d) shall be payable in 9 equal instalments at yearly intervals the first of which is payable on the 1st day of January in the year following that in which but for this subsection that amount of income tax would have been payable.

• (4) Where, in a case in which the postponement of payment of any amount of income tax has been authorised by subsection (3), the vendor—

• (a) ceases to retain the leasehold interest acquired by the vendor from the purchaser,

• (b) disposes, as regards the whole or any part of the land, of an interest derived from that leasehold interest,

• (c) being an individual, dies, or

• (d) being a company, commences to be wound up,

then, that amount of income tax or, as the case may be, so much of that amount of income tax as has not already become due and payable shall become due and payable forthwith.

647 Postponement of payment of corporation tax to be permitted in certain cases. [CTA76 s150]

647.—(1) Where—

• (a) for any accounting period the profits of a company consist of or include income from a trade of dealing in or developing land in the course of which the company disposes of the full interest acquired by it in any land,

• (b) in relation to that disposal, the conditions specified in paragraphs (b) to (e) of section 646(2) are satisfied, and

• (c) at the time when any amount of corporation tax charged by an assessment for that accounting period would but for this section become due and payable the company—

• (i) retains the leasehold interest acquired by it from the person to whom the disposition is made, and

• (ii) has not disposed, as regards the whole or any part of the land, of an interest derived from that leasehold interest,

then, a part of that amount of corporation tax equal to 90 per cent of so much of that amount as would not have been chargeable if no sum had to be taken into account as mentioned in section 646(2)(d) shall be payable in 9 equal instalments at yearly intervals the first of which shall be payable on the expiration of 12 months from the date on which but for this section that amount of corporation tax would have been payable.

• (2) Where, in a case in which the postponement of payment of any amount of corporation tax has been authorised by subsection (1), the company—

• (a) ceases to retain the leasehold interest acquired by it,

• (b) disposes, as regards the whole or any part of the land, of an interest derived from that leasehold interest, or

• (c) commences to be wound up,

then, that amount of corporation tax or, as the case may be, so much of that amount of corporation tax as has not already become due and payable shall become due and payable forthwith.

CHAPTER 2 Capital gains tax: disposals of development land

648 Interpretation (Chapter 2). [FA82 s36(1)]

648.—In this Chapter—

“the Act of 1963” means the Local Government (Planning and Development) Act, 1963;

“compulsory disposal” means a disposal to an authority possessing compulsory purchase powers, which is made pursuant to the exercise of those powers or the giving of formal notice of intention to exercise those powers, other than a disposal to which section 29 of the Act of 1963 applies;

“current use value”—

• (a) in relation to land at any particular time, means the amount which would be the market value of the land at that time if the market value were calculated on the assumption that it was at that time and would remain unlawful to carry out any development (within the meaning of section 3 of the Act of 1963) in relation to the land other than development of a minor nature, and

• (b) in relation to shares in a company (being shares deriving their value or the greater part of their value directly or indirectly from land, other than shares quoted on a stock exchange) at any particular time, means the amount which would be the market value of the shares at that time if the market value were calculated on the same assumption, in relation to the land from which the shares so derive value, as is mentioned in paragraph (a);

“development land” means land in the State the consideration for the disposal of which, or the market value of which at the time at which the disposal is made, exceeds the current use value of that land at the time at which the disposal is made, and includes shares deriving their value or the greater part of their value directly or indirectly from such land, other than shares quoted on a Stock Exchange;

“development of a minor nature” means development (not being development by a local authority or a statutory undertaker within the meaning of section 2 of the Act of 1963) which, under or by virtue of section 4 of the Act of 1963, is exempted development for the purposes of the Local Government (Planning and Development) Acts, 1963 to 1993;

“relevant disposal” means a disposal of development land made on or after the 28th day of January, 1982.

649 Companies chargeable to capital gains tax in respect of chargeable gains accruing on relevant disposals. [FA82 s36(4) to (6); FA92 s68(a)]

649.—(1) Notwithstanding any provision to the contrary in the Corporation Tax Acts, a company shall not be chargeable to corporation tax in respect of chargeable gains accruing to it on relevant disposals, and accordingly—

• (a) such gains shall not be regarded as profits of the company for the purposes of corporation tax, and

• (b) the company shall be chargeable to capital gains tax under the Capital Gains Tax Acts in respect of those gains.

• (2) Sections 617 and 621 to 626 shall apply with any necessary modifications in relation to capital gains tax to which a company is chargeable on chargeable gains accruing to the company on a relevant disposal as they apply in relation to corporation tax on chargeable gains, and references in those sections to corporation tax shall be construed as including references to capital gains tax.

• (3)
• (a) Where a company which is or has been a member of a group of companies (within the meaning of section 616) makes a relevant disposal of an asset which, as a result of a disposal which was not a relevant disposal, the company had acquired from another member of that group at a time when both were members of the group, the amount of the chargeable gain accruing on the relevant disposal and the capital gains tax on that gain shall be computed as if all members of the group for the time being were the same person and as if the acquisition or provision of the asset by the group, so taken as a single person, had been the acquisition or provision of the asset by the member disposing of the asset.

• (b) Notwithstanding paragraph (a), where under section 618(2) or 623 a member of the group (in this paragraph referred to as “the first-mentioned member”) had been treated as having acquired or reacquired the asset at a time later than the original acquisition or provision of the asset by the first-mentioned member or by another member of the group, as the case may be, paragraph (a) shall apply as if the reference in that paragraph to the acquisition or provision of the asset by the group were a reference to its acquisition or reacquisition so treated as having been made by the first-mentioned member.

650 Exclusion of certain disposals. [FA82 s37]

650.—Sections 651 to 654 shall not apply to a relevant disposal made by an individual in any year of assessment if the total consideration in respect of all relevant disposals made by that individual in that year does not exceed £15,000.

651 Restriction of indexation relief in relation to relevant disposals. [FA82 s38]

651.—For the purposes of computing the chargeable gain accruing to a person on a relevant disposal, the adjustment of sums allowable as deductions from the consideration for the disposal which under section 556(2) would otherwise be made shall be made only to—

• (a) such part of the amount or value of the consideration in money or money's worth given by the person or on the person's behalf wholly and exclusively for the acquisition of the asset, together with the incidental costs to the person of the acquisition, as is equal to the current use value of the asset at the date of the acquisition together with such proportion of the incidental costs to the person of the acquisition as would be referable to such value, or

• (b) in the case of an asset to which section 556(3) applies, such part of the market value of the asset on the 6th day of April, 1974, as is equal to the current use value of the asset on that date.

652 Non-application of reliefs on replacement of assets in case of relevant disposals. [FA82 s39; FA95 s73(1); FA97 s77(1)]

652.—(1) Consideration obtained for a relevant disposal shall not be regarded for the purposes of relief under section 597 as having been obtained for the disposal of old assets within the meaning of that section.

• (2)
• (a) In this subsection, “the relevant local authority”, in relation to a relevant disposal, 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 land being disposed of is situated.

• (b) Subsection (1) shall not apply to a relevant disposal where the relevant local authority gives a certificate in writing to the person making the disposal stating that the land being disposed of is subject to a use which, on the basis of guidelines issued by the Minister for the Environment and Local Government, is inconsistent with the protection and improvement of the amenities of the general area within which that land is situated or is otherwise damaging to the local environment.

• (3)
• (a) In this subsection—

“assets of an authorised racecourse” means assets of a racecourse which is an authorised racecourse where the assets are used for the provision of appropriate facilities or services to carry on horseracing at race meetings or to accommodate persons associated with horseracing, including members of the public;

“authorised racecourse” has the same meaning as in section 2 of the Irish Horseracing Industry Act, 1994.

• (b) Subject to paragraph (c), subsection (1) shall not apply to consideration obtained for a relevant disposal where—

• (i) throughout a period of 5 years ending with the time of disposal the old assets, and

• (ii) the new assets within the meaning of section 597,

are assets of an authorised racecourse.

• (c) Section 597 shall apply in relation to assets of an authorised racecourse as if—

• (i) references in subsection (4) and (5) of that section to new assets ceasing to be used for the purposes of a trade included a reference to new assets ceasing to be assets of an authorised racecourse, and

• (ii) subsection (11)(b) had not been enacted.

• (4) Section 605 shall not apply to a relevant disposal.

• (5)
• (a) In this subsection, “farming” has the same meaning as in section 654.

• (b) Subsection (4) shall not apply to a relevant disposal made to an authority possessing compulsory purchase powers where—

• (i) at the time of the disposal the original assets (within the meaning of section 605) consist of land occupied and used only for the purposes of farming, and

• (ii) the disposal is made—

• (I) for the purposes of enabling the authority to construct, widen or extend a road or part of a road, or

• (II) for a purpose connected with or ancillary to the construction, widening or extension of a road or part of a road by the authority.

• (6) Subsections (1) and (4) shall not apply to a relevant disposal made by a body of persons established for the sole purpose of promoting athletic or amateur games or sports, being a disposal which is made in relation to such of the activities of that body as are directed to that purpose.

653 Restriction of relief for losses, etc. in relation to relevant disposals. [FA82 s40(1) and (2)]

653.—(1) Notwithstanding any provision to the contrary in the Capital Gains Tax Acts, any losses accruing on disposals which are not relevant disposals shall not, in the computation of a person's liability to capital gains tax in respect of chargeable gains accruing on relevant disposals, be deducted from the amount of those chargeable gains.

• (2) In the computation of the amount on which under section 31 capital gains tax is to be charged on chargeable gains accruing on relevant disposals, any allowable losses accruing on relevant disposals may be deducted in accordance with that section but, in so far as they are so deducted, they shall not be treated as relevant allowable losses within the meaning of section 78(4) for the purposes of the calculation required to be made under section 78(2), and for the purposes of this subsection any necessary assessments or additional assessments, as may be appropriate, may be made.

OTHER SPECIAL PROVISIONS PART 23 Farming and Market Gardening

Chapter 1 Interpretation and general

654 Interpretation (Part 23). [ITA67 s54(1); FA74 s13(1); FA75 s12; FA78 s12(1); FA83 s120 and Sch4]

654.—In this Part other than in section 664—

“farming” means farming farm land, that is, land in the State wholly or mainly occupied for the purposes of husbandry, other than market garden land;

“market garden land” means land in the State occupied as a nursery or garden for the sale of the produce (other than land used for the growth of hops), and “market gardening” shall be construed accordingly;

“occupation”, in relation to any land other than market garden land, means having the use of that land or having the right by virtue of any easement (within the meaning of section 96) to graze livestock on that land.

655 Farming and market gardening profits to be charged to tax under Schedule D. [ITA67 s54(2)(a); FA69 s65(1) and Sch5 PtI; FA74 s15; FA83 s11]

655.—(1) For the purposes of the Tax Acts, farming shall be treated as the carrying on of a trade or, as the case may be, of part of a trade, and the profits or gains of farming shall be charged to tax under Case I of Schedule D.

• (2) Notwithstanding anything to the contrary in Part 43, farming carried on by any person, whether solely or in partnership, shall be treated as the carrying on of a single trade; but this subsection shall not prejudice or restrict the operation of Chapter 3 of Part 4 where a partnership trade of farming is set up and commenced or is permanently discontinued.

• (3) Market gardening shall, for the purposes of the Tax Acts in relation to the person by whom it is carried on, be treated as a trade, and the profits or gains of market gardening shall be charged to tax under Case I of Schedule D.

656 Farming: trading stock of discontinued trade. [ITA67 s 62(1) proviso; FA96 s11]

656.—(1) In this section, “specified return date for the chargeable period” has the same meaning as in section 950.

• (2) Where trading stock of a trade of farming is transferred by a farmer (in this subsection referred to as “the transferor”) to another farmer (in this subsection referred to as “the transferee”), the transferor and the transferee may jointly elect that—

• (a) section 89(2)(b) shall not apply, and

• (b) in computing their respective profits or gains from farming, the transferor and the transferee shall include such stock at the value at which the stock is included in the accounts of the transferor at the date of discontinuance,

and such election shall be made in writing on or before the specified return date for the chargeable period in which the stock is transferred.

657 Averaging of farm profits. [FA74 s16(1) to (2) and (4) to (5) and s20B (apart from proviso to subsection (2)(b)); FA75 s14(1)(a) and (b); FA77 s10; FA81 s10; FA83 s120 and Sch4; FA90 s20(2); FA97 s146(2) and Sch9 PtII]

657.—(1) In this section—

“an individual to whom subsection (1) applies” means an individual carrying on farming in a year of assessment and—

• (a) who at any time in the year of assessment is also carrying on either solely or in partnership another trade or profession,

• (b) whose spouse, in a case where the individual is a married person, is at any time in the year of assessment also carrying on either solely or in partnership another trade or profession, other than a trade consisting solely of the provision of accommodation in buildings on the farm land occupied by the individual, the provision of such accommodation being ancillary to the farming of that farm land,

• (c) who at any time in the year of assessment is a director of a company carrying on a trade or profession and is either the beneficial owner of, or able, either directly or through the medium of other companies or by any other means, to control, more than 25 per cent of the ordinary share capital of the company, or

• (d) whose spouse, in a case where the individual is a married person, is at any time in the year of assessment a director of a company carrying on a trade or profession and is either the beneficial owner of, or able, either directly or through the medium of other companies or by any other means, to control, more than 25 per cent of the ordinary share capital of the company,

but paragraphs (b) and (d) shall not apply in a case where the wife of an individual is treated for tax purposes as not living with her husband;

“company” means a company within the meaning of the Companies Act, 1963;

“director” includes a person holding any office or employment under a company.

• (2) The definition of “an individual to whom subsection (1) applies” shall apply in the case of a married person whose wife is carrying on farming, and shall apply in such a case as if the references to the individual were references to the individual's wife.

• (3) For the purposes of paragraphs (c) and (d) of the definition of “an individual to whom subsection (1) applies”, ordinary share capital which is owned or controlled in the manner referred to in those paragraphs by a person, being the spouse or a minor child of a director, or by the trustee of a trust for the benefit of a person or persons, being or including any such person or such director, shall be deemed to be owned or controlled by such director and not by any other person.

• (4)
• (a) Subject to paragraph (b), where an assessment in respect of profits or gains from farming is made for any year of assessment on an individual, other than an individual to whom subsection (1) applies, the individual may on giving notice in writing to that effect to the inspector within 30 days after the date of the notice of assessment elect to be charged to income tax for that year in respect of those profits or gains in accordance with subsection (5), and—

• (i) the Income Tax Acts shall apply in relation to the assessment as if the notice given to the inspector were a notice of appeal against the assessment under section 933, and

• (ii) the assessment shall be amended as necessary so as to give effect to the election so made by the individual.

• (b) This subsection shall not apply as respects any year of assessment where for either of the 2 immediately preceding years of assessment the individual was not charged to tax in respect of profits or gains from farming in accordance with section 65(1).

• (5)
• (a) An individual who is to be charged to income tax for a year of assessment in respect of profits or gains from farming in accordance with this subsection shall be so charged under Case I of Schedule D on the full amount of those profits or gains determined on a fair and just average of the profits or gains from farming of the individual in each of the 3 years ending on the date in the year of assessment to which it has been customary to make up accounts or, where it has not been customary to make up accounts, on the 5th day of April in the year of assessment.

• (b) Any profits or gains arising to, and any loss sustained by, the individual in the 3 years referred to in paragraph (a) in the carrying on of farming shall be aggregated for the purposes of this subsection.

• (6)
• (a) Subject to paragraph (b) and subsection (7), where as respects a year of assessment an individual duly elects in accordance with subsection (4), the individual shall be charged to income tax for that year and for each subsequent year of assessment in respect of profits or gains from farming in accordance with subsection (5).

• (b) This subsection shall not apply for any year of assessment in which the individual—

• (i) is an individual to whom subsection (1) applies, or

• (ii) is not chargeable to tax on profits or gains from farming.

• (7) Where for a year of assessment an individual is by virtue of subsection (6) chargeable to income tax in respect of profits or gains from farming in accordance with subsection (5) and the individual was so chargeable for each of the 3 years of assessment immediately preceding the year of assessment, he or she may, by notice in writing given to the inspector with the return required under section 951 for the year of assessment, elect to be charged to tax for that year of assessment in accordance with Chapter 3 of Part 4; but, where in the case of an individual subsection (6) does not apply for any year of assessment by reason of paragraph (b)(i) of that subsection, the individual shall be deemed to be entitled to elect and to have duly elected, as respects that year of assessment, in accordance with this subsection.

• (8) Where as respects a year of assessment an individual duly elects or is deemed to have elected in accordance with subsection (7)—

• (a) the individual shall be charged to income tax for that year and for each subsequent year of assessment in accordance with Chapter 3 of Part 4, and

• (b) there shall be made such assessment or assessments, if any, as may be necessary to secure that the amount of profits or gains from farming on which the individual is charged for each of the 2 years of assessment immediately preceding the year preceding the year of assessment, as respects which the individual elects or is deemed to have elected in accordance with subsection (7), shall be not less than the amount on which the individual is charged by virtue of subsection (6) in accordance with subsection (5) for the year preceding the year of assessment.

• (9) In determining for any year of assessment what capital allowances, balancing allowances or balancing charges are to be made to or on an individual in taxing a trade of farming in accordance with subsection (5), the individual shall be deemed to be chargeable for that year of assessment in respect of the profits or gains of the trade in accordance with section 65(1).

• (10) Nothing in this section shall prejudice or restrict the operation of section 67 in any case where a trade of farming is permanently discontinued.

• (11) Where for any year of assessment a loss is aggregated with profits or gains in accordance with subsection (5)(b) and the amount of the loss is in excess of the profits or gains, one-third of the amount of such excess shall be deemed for the purposes of Chapter 1 of Part 12 to be a loss sustained in the trade of farming in the final year of the 3 years on the average of the profits or gains of which the individual is to be charged to tax for that year of assessment, and any loss so aggregated shall not be eligible for relief under any provision of the Income Tax Acts apart from this subsection.

• (12) The profits or gains from farming on which an individual is to be charged to tax for any year of assessment by virtue of subsection (6) in accordance with subsection (5) shall be deemed to be the profits or gains from farming of that individual in determining his or her total income for that year for the purposes of the Income Tax Acts apart from this section, and any provision of those Acts relating to the delivery of any return, account (including balance sheet), statement, declaration, book, list or other document or the furnishing of any particulars shall apply as if this section had not been enacted.

658 Farming: allowances for capital expenditure on construction of buildings and other works. [FA74 s22(1) to (3) and (5) to (11); CTA76 s21(1) and Sch1 par70; FA83 s15; FA93 s34(2); FA94 s23]

658.—(1) This section shall apply to any person carrying on farming, the profits or gains of which are chargeable to tax in accordance with section 655.

• (2)
• (a) Where a person to whom this section applies incurs, for the purpose of a trade of farming land occupied by such person, any capital expenditure on the construction of farm buildings (excluding a building or part of a building used as a dwelling), fences, roadways, holding yards, drains or land reclamation or other works, there shall be made to such person during a writing-down period of 7 years beginning with the chargeable period related to that expenditure, writing-down allowances (in this section referred to as “farm buildings allowances”) in respect of that expenditure and such allowances shall be made in taxing the trade.

• (b) As respects each of the first 6 years of the writing-down period, the farm buildings allowance to be made under this subsection shall be 15 per cent of the capital expenditure referred to in paragraph (a) and, as respects the last year of the writing-down period, the farm buildings allowance to be made under this subsection shall be 10 per cent of that expenditure.

• (c) Where the capital expenditure referred to in paragraph (a) was incurred before the 27th day of January, 1994, this section shall apply subject to paragraph 23 of Schedule 32.

• (3) For the purposes of the application to this section of section 321, “basis period” has the meaning assigned to it by section 306.

• (4) Where for any year of assessment an individual is not chargeable to income tax in respect of profits or gains from farming in accordance with Chapter 3 of Part 4, and that year is a year of assessment in respect of which, if the individual had been so chargeable, he or she could have claimed a farm buildings allowance under this section, that allowance shall for the purposes of this section be deemed to have been made for that year of assessment and shall not be carried forward and set off against profits or gains chargeable for any subsequent year of assessment.

• (5) Any capital expenditure incurred by a person about to carry on farming but before commencing farming shall for the purposes of this section be treated as if it had been incurred on the first day on which the person commences farming.

• (6) Any claim for a farm buildings allowance to be made to a person under this section shall be included in the annual statement required to be delivered by the person under the Income Tax Acts of the profits or gains from farming, and section 304(4) shall apply in relation to the allowance as it applies in relation to allowances to be made under Part 9.

• (7) Any claim for a farm buildings allowance under this section 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 that person of the decision, appeal to the Appeal Commissioners.

• (8) The Appeal Commissioners shall hear and determine an appeal to them made under subsection (7) 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 to the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

• (9) Subject to subsection (10), where a person who is entitled to a farm buildings allowance under this section in respect of capital expenditure incurred for the purpose of farming farm land transfers such person's 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.

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

• (11) Where expenditure is incurred partly for the purposes of farming and partly for other purposes, 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 purposes of farming.

• (12) No farm buildings allowance shall be made by virtue of this section in respect of any expenditure if for the same or any other chargeable period an allowance is or has been made in respect of that expenditure under Chapter 1 of Part 9.

• (13) Expenditure shall not be regarded for 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.

659 Farming: allowances for capital expenditure on the construction of farm buildings, etc. for control of pollution. [FA97 s20(1) to (13)]

659.—(1) This section shall apply to any person—

• (a) carrying on farming, the profits or gains of which are chargeable to tax in accordance with section 655,

• (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 and Food, and drawn up in accordance with—

• (i) the guidelines in relation to such plans entitled “Farm Nutrient Management Plan” 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 and Food,

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 Table to this section in the course of a trade of farming land occupied by such person where such building or structures are constructed in accordance with that farm nutrient management plan and are certified as being necessary by that 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 1991¹ on improving the efficiency of agricultural structures, as amended, and subject to subsection (3), where a person to whom this section applies—

• (a) has delivered to the Department of Agriculture and Food, a farm nutrient management plan referred to in subsection (1)(b), and

• (b) 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 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 that 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 that writing-down period, an amount equal to 15 per cent of the balance of that expenditure after deducting the amount of any allowance made by virtue of paragraph (a), and

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

• (4) For the purposes of the application to this section of section 321, “basis period” has the meaning assigned to it by section 306.

• (5) Any claim by a person for a farm pollution control allowance 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 304(4) shall apply in relation to the allowance as it applies in relation to allowances to be made under Part 9.

• (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 to 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 is 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 that expenditure under Chapter 1 of Part 9 or section 658.

• (12) Expenditure shall not be regarded for 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 subsection (1)(c), only such an amount of that capital expenditure as is properly attributable to work on the construction of the building or structure actually carried out during that 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.

TABLE

Farm Buildings and Structures to Which Allowances for the Control of Pollution Apply

660 Farming: wear and tear allowances deemed to have been made in certain cases. [FA74 s25; CTA76 s21(1) and Sch1 par71; FA78 s14(c)]

660.—(1) In this section—

“balancing allowance” and “balancing charge” have the same meanings respectively as in Chapter 2 of Part 9;

“wear and tear allowance” means an allowance made under section 284.

• (2) In determining whether any, and if so what, wear and tear allowance, balancing allowance or balancing charge in respect of machinery or plant is to be made to or on any person for any chargeable period in taxing a trade of farming, there shall be deemed to have been made to that person, for every previous chargeable period in which the machinery or plant belonged to that person and which is a chargeable period to be taken into account for the purpose of this section, such wear and tear allowance or greater wear and tear allowance, if any, in respect of the machinery or plant as would have been made to that person if, in relation to every such previous chargeable period—

• (a) the profits or gains from farming had been chargeable to tax under Case I of Schedule D,

• (b) those profits or gains had been charged to tax in accordance with section 58 of the Income Tax Act, 1967, and not in an amount determined under section 21 of the Finance Act, 1974,

• (c) farming had been carried on by that person since the date on which that person acquired the machinery or plant,

• (d) the machinery or plant had been used by that person solely for the purposes of farming since that date, and

• (e) a proper claim had been duly made by that person for wear and tear allowance in respect of the machinery or plant for every relevant chargeable period.

• (3) There shall be taken into account for the purposes of this section every previous chargeable period in which the machinery or plant concerned belonged to the person and—

• (a) during which the machinery or plant was not used by the person for the purposes of farming,

• (b) in respect of which the person was charged to tax on an amount determined in accordance with section 21 of the Finance Act, 1974,

• (c) during which farming was not carried on by the person, or

• (d) during which farming was carried on by the person in such circumstances that the full amount of the profits or gains of farming was not liable to be charged to tax under Case I of Schedule D.

• (4) In the case of a company (within the meaning of section 4(1)), subsection (2)(c) shall not alter the periods which are to be taken as chargeable periods but, if during any period after the 5th day of April, 1976, and after the company acquired the machinery or plant, the company has not been within the charge to corporation tax, any year of assessment or part of a year of assessment falling within that period shall be taken as a chargeable period as if it had been an accounting period of the company.

• (5) Nothing in this section shall affect section 288(4).

661 Farming: restriction of relief in respect of certain losses. [FA78 s15(1) and (2); FA83 s120 and Sch4]

661.—(1) This section shall apply to a loss sustained by a person in the carrying on of farming in any year of assessment, being a year for which such person was not chargeable to tax in respect of profits or gains from farming.

• (2) No relief shall be given under section 382 in respect of a loss to which this section applies by deducting such loss from or setting it off against the amount of the profits or gains from farming assessed for any year of assessment.

662 Income tax: restriction of relief, for losses in farming or market gardening. [FA74 s27(1) to (6); FA75 s33(2) and Sch1 ptII; FA96 s132(2) and Sch5 PtII]

662.—(1) In this section—

“prior 3 years”, in relation to a loss incurred in a year of assessment, means the last 3 years of assessment before that year;

“prior period of loss” means the prior 3 years or, if losses were incurred in successive years of assessment amounting in the aggregate to a period longer than 3 years (and ending when the prior 3 years end), that longer period.

• (2)
• (a) Any loss (including any amount in respect of allowances which by virtue of section 392 is to be treated as a loss) incurred in a trade of farming or market gardening shall not be available for relief under section 381 unless it is shown that, for the year of assessment in which the loss is claimed to have been incurred, the trade was being carried on on a commercial basis and with a view to the realisation of profits in the trade.

• (b) Without prejudice to paragraph (a), any loss (including any amount in respect of allowances which by virtue of section 392 is to be treated as a loss) incurred in any year of assessment in a trade of farming or market gardening shall not be available for relief under section 381 if in each of the prior 3 years a loss was incurred in carrying on that trade.

• (c) For the purposes of this section, the fact that a trade of farming or market gardening was being carried on at any time so as to afford a reasonable expectation of profit shall be conclusive evidence that it was then being carried on with a view to the realisation of profits.

• (d) This subsection shall not restrict relief for any loss or any capital allowance where it is shown by the claimant—

• (i) that the whole of the claimant's farming or market gardening activities in the year following the prior 3 years are of such a nature, and carried on in such a way, as would have justified a reasonable expectation of the realisation of profits in the future if those activities had been undertaken by a competent farmer or market gardener, and

• (ii) that if such farmer or market gardener had undertaken those activities at the beginning of the prior period of loss, such farmer or market gardener could not reasonably have expected those activities to become profitable until after the end of the year following the prior period of loss.

• (e) This subsection shall not restrict relief where the carrying on of the trade forms part of and is ancillary to a larger trading undertaking.

• (3) In ascertaining for the purposes of this section whether a loss was incurred in any year, the rules applicable to Case I of Schedule D shall be applied.

• (4) Where a trade of farming or market gardening is or is to be treated as being carried on for a part only of a year of assessment by reason of its being set up and commenced, or discontinued, or both, in that year, subsection (2) shall apply in relation to that trade as regards that part of that year.

• (5) subsection (2) shall not restrict relief for any loss or capital allowance if the trade was set up and commenced within the prior 3 years, and for the purposes of this subsection a trade shall be treated as discontinued and a new trade set up in any event which under the Income Tax Acts is to be treated as equivalent to the permanent discontinuance or setting up of a trade.

• (6) Notwithstanding subsection (5), where at any time there has been a change in the persons engaged in carrying on a trade of farming or market gardening, this section shall apply to any person who was engaged in carrying on the trade immediately before and immediately after the change as if the trade were the same before and after the change without any discontinuance and as if a person and another person with whom such person is connected were the same person.

663 Corporation tax: restriction of relief for losses in farming or market gardening. [CTA76 s17]

663.—(1) In this section—

“prior 3 years”, in relation to a loss incurred in an accounting period, means the last 3 years before the beginning of the accounting period.

“prior period of loss” means the prior 3 years or, if losses were incurred in successive accounting periods amounting in all to a period longer than 3 years (and ending when the prior 3 years end), that longer period.

• (2)
• (a) Any loss incurred in a trade of farming or market gardening shall not be available for relief under section 396(2) unless it is shown that, for the accounting period in which the loss is claimed to have been incurred, the trade was being carried on on a commercial basis and with a view to the realisation of profits in the trade.

• (b) (i) In this paragraph, “loss computed without regard to capital allowances” means a loss ascertained in accordance with the rules of Case I of Schedule D but so that, notwithstanding sections 307 and 308, no account shall be taken of any allowance or charge which otherwise would be taken into account under those sections.

• (ii) Without prejudice to paragraph (a), any loss incurred in any accounting period in a trade of farming or market gardening shall not be available for relief under section 396(2) if a loss computed without regard to capital allowances was incurred in carrying on that trade in that accounting period and in each of the accounting periods wholly or partly comprised in the prior 3 years.

• (c) For the purposes of this section, the fact that a trade of farming or market gardening was being carried on at any time so as to afford a reasonable expectation of profit shall be conclusive evidence that it was then being carried on with a view to the realisation of profits.

• (d) This subsection shall not restrict relief for any loss where it is shown by the claimant company—

• (i) that the whole of its farming or market gardening activities in the year following the prior 3 years are of such a nature, and carried on in such a way, as would have justified a reasonable expectation of the realisation of profits in the future if those activities had been undertaken by a competent farmer or market gardener, and

• (ii) that if such farmer or market gardener had undertaken those activities at the beginning of the prior period of loss, such farmer or market gardener could not reasonably have expected those activities to become profitable until after the end of the year following the prior period of loss.

• (e) This subsection shall not restrict relief where the carrying on of the trade forms part of and is ancillary to a larger trading undertaking.

• (3) subsection (2) shall not restrict relief for any loss if the trade was set up and commenced within the prior 3 years, and for the purposes of this subsection a trade shall be treated as discontinued and a new trade set up in any event which under the Tax Acts is to be treated as equivalent to the permanent discontinuance or setting up of a trade; but a trade shall not be treated as discontinued if under section 400(6) it is not to be treated as discontinued for the purpose of capital allowances and charges.

• (4) Where a trade of farming or market gardening is or is to be treated as being carried on for a part only of an accounting period by reason of its being set up and commenced, or discontinued, or both, in that accounting period, subsection (2) shall apply in relation to that trade as regards that part of that accounting period.

• (5) Notwithstanding subsection (3), where at any time there has been a change in the persons engaged in carrying on a trade of farming or market gardening, this section shall apply to any person, who was engaged in carrying on the trade immediately before and immediately after the change as if the trade were the same before and after the change without any discontinuance and as if a person and another person with whom such person is connected were the same person, and accordingly relief from corporation tax may be restricted under this section by reference to losses some of which are incurred in years of assessment and some, computed without regard to capital allowances, are incurred in a company's accounting periods.

664 Relief for certain income from leasing of farm land. [ITA67 s195B(3) and (6); FA85 s10, FA87 s2, FA91 s10; FA93 s10(1); FA96 s10, s132(1) and Sch5 ptI par14]

664.—(1) (a) In this section—

“farm land” means land in the State wholly or mainly occupied for the purposes of husbandry and includes a building (other than a building or part of a building used as a dwelling) situated on the land and used for the purposes of farming that land;

“lease”, “lessee”, “lessor” and “rent” have the same meanings respectively as in Chapter 8 of Part 4;

“qualifying lease” means a lease of farm land which is—

• (i) in writing or evidenced in writing,

• (ii) for a definite term of 5 years or more, and

• (iii) made on an arm's length basis between a qualifying lessor or qualifying lessors and a lessee or lessees who is, or each of whom is, a qualifying lessee in relation to the qualifying lessor or the qualifying lessors;

“qualifying lessee”, in relation to a qualifying lessor or qualifying lessors, means an individual—

• (i) who is not connected with the qualifying lessor or with any of the qualifying lessors, and

• (ii) who uses any farm land leased by him or her from the qualifying lessor or the qualifying lessors for the purposes of a trade of farming carried on by him or her solely or in partnership;

“qualifying lessor” means an individual who—

• (i) is aged 55 years or over or is permanently incapacitated by reason of mental or physical infirmity from carrying on a trade of farming, and

• (ii) has not after the 30th day of January, 1985, leased the farm land which is the subject of the qualifying lease from a person or persons, who is or are, or one of whom is, connected with him or her, on terms which are not such as might have been expected to be included in a lease if the negotiations for the lease had been at arm's length;

“the specified amount”, in relation to any surplus or surpluses (within the meaning of section 97(1)) arising in respect of the rent or the rents from any farm land let under a qualifying lease or qualifying leases, means, subject to paragraph (b), the lesser of—

• (i) the amount of that surplus or the aggregate amount of those surpluses,

• (ii) as respects a qualifying lease or qualifying leases made—

• (I) in the period beginning on the 6th day of April, 1985, and ending on the 19th day of January, 1987, £2,000,

• (II) in the period beginning on the 20th day of January, 1987, and ending on the 31st day of December, 1987, £2,800,

• (III) in the period beginning on the 1st day of January, 1988, and ending on the 29th day of January, 1991, £2,000,

• (IV) in the period beginning on the 30th day of January, 1991, and ending on the 22nd day of January, 1996—

• (A) £4,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

• (B) £3,000, in any other case, or

• (V) on or after the 23rd day of January, 1996—

• (A) £6,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

• (B) £4,000, in any other case,

and

• (iii) where the rent or rents was or were not receivable in respect of a full year's letting or lettings, such amount as bears to the amount determined in accordance with clause (I), (II), (III), (IV) or (V), as may be appropriate, of subparagraph (ii) the same proportion as the amount of the rent or the aggregate amount of the rents bears to the amount of the rent or the aggregate amount of the rents which would be receivable for a full year's letting or lettings.

• (b) Where the income of a qualifying lessor consists of or includes rent or rents—

• (i) from a qualifying lease or qualifying leases made in the period beginning on the 20th day of January, 1987, and ending on the 31st day of December, 1987, and from a qualifying lease made—

• (I) in the period beginning on the 6th day of April, 1985, and ending on the 19th day of January, 1987, or

• (II) in the period beginning on the 1st day of January, 1988, and ending on the 29th day of January, 1991,

the specified amount shall not exceed £2,800;

• (ii) from a qualifying lease or qualifying leases made in the period beginning on the 30th day of January, 1991, and ending on the 22nd day of January, 1996, and from a qualifying lease made before the 30th day of January, 1991, the specified amount shall not exceed—

• (I) £4,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

• (II) £3,000, in any other case;

• (iii) from a qualifying lease or qualifying leases made on or after the 23rd day of January, 1996, and from a qualifying lease made at any other time, the specified amount shall not exceed—

• (I) £6,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

• (II) £4,000, in any other case.

• (2) Where for any year of assessment—

• (a) the total income of a qualifying lessor consists of or includes any profits or gains chargeable to tax under Case V of Schedule D, and

• (b) any surplus or surpluses (within the meaning of section (97)(1)) arising in respect of the rent or rents from any farm land let under a qualifying lease or qualifying leases has been or have been taken into account in computing the amount of those profits or gains,

the qualifying lessor shall in determining that total income be entitled to a deduction of the lesser of—

• (i) the specified amount in relation to the surplus or surpluses, and

• (ii) the amount of the profits or gains.

• (3) The amount of any deduction due under subsection (2) shall—

• (a) where by virtue of section 1017 a woman's income is deemed to be her husband's income, be determined separately as regards the part of his income which is his by virtue of that section and the part which is his apart from that section, or

• (b) where by virtue of section 1017 a man's income is deemed to be his wife's income, be determined separately as regards the part of her income which is hers by virtue of that section and the part which is hers apart from that section,

and where section 1023 applies any deduction allowed by virtue of subsection (2) shall be allocated to the person and to his or her spouse as if they were not married.

• (4)
• (a) For the purposes of subsection (2), where a single qualifying lease relates to both farm land and other property, goods or services, only such amount, if any, of the surplus arising in respect of the rent payable under the lease as is determined by the inspector and after such apportionments of rent, expenses and other deductions as are necessary, according to the best of the inspector's knowledge and judgment, to be properly attributable to the lease of the farm land shall be treated as a surplus arising in respect of a rent from farm land let under a qualifying lease.

• (b) Any amount which by virtue of paragraph (a) is determined by the inspector may be amended by the Appeal Commissioners or by the Circuit Court on the hearing or the rehearing of an appeal against that determination.

• (5) For the purposes of determining the amount of any relief to be granted under this section, the inspector may by notice in writing require the lessor to furnish such information as the inspector considers necessary.

• (6)
• (a) Subsections (1) and (2) of section 459 and section 460 shall apply to a deduction under this section as they apply to any allowance, deduction, relief or reduction under the provisions specified in the Table to section 458.