TAXES CONSOLIDATION ACT, 1997

• (2) In Chapter 4 of Part 9, as applied by virtue of subsection (1) to patent rights—

• (a) the reference in section 312(5) (a) (i) to the sum mentioned in paragraph (b) shall in the case of patent rights be construed as a reference to the amount of the capital expenditure on the acquisition of the patent rights remaining unallowed, computed in accordance with section 756, and

• (b) the reference in section 316 (1) to any expenditure or sum in the case of which a deduction of tax is to be or may be made under section 237 or 238 shall not include a sum in the case of which such a deduction is to be or may be so made by virtue of section 757.

CHAPTER 2 Scientific and certain other research

763 Interpretation (sections 764 and 765). [ITA67 s244(1), (8) and (9); CTA76 s21(1) and Sch1 par9; FA92 s39]

763.—(1) In this section—

“designated area” means an area designated by order under section 2 of the Continental Shelf Act, 1968;

“exploring for specified minerals” means searching in the State for deposits of specified minerals or testing such deposits or winning access to such deposits, and includes the systematic searching for areas containing specified minerals and searching by drilling or other means for specified minerals within those areas, but does not include operations in the course of developing or working a mine;

“licence” means—

• (a) an exploration licence,

• (b) a petroleum prospecting licence,

• (c) a petroleum lease, or

• (d) a reserved area licence, duly granted before the 11th day of June, 1968, in respect of an area in the State, or on or after the 11th day of June, 1968, in respect of either or both a designated area and an area in the State, and which was or may be so granted subject to such licensing terms as were presented to each House of the Oireachtas, and includes any such licence the terms of which have been duly amended or varied from time to time;

“licensed area” means an area in respect of which a licence is in force;

“mine” means an underground excavation for the purpose of getting specified minerals;

“petroleum” includes—

• (a) any mineral oil or relative hydrocarbon and natural gas and other liquid or gaseous hydrocarbons and their derivatives or constituent substances existing in its natural condition in strata (including, without limitation, distillate, condensate, casinghead gasoline and such other substances as are ordinarily produced from oil and gas wells), and

• (b) any other mineral substance contained in oil or natural gas brought to the surface with them in the normal process of extraction, but does not include coal and bituminous shales and other stratified deposits from which oil can be extracted by distillation,

won or capable of being won under the authority of a licence;

“petroleum exploration activities” means activities of a person carried on by the person or on behalf of the person in searching for deposits in a licensed area, in testing or appraising such deposits or in winning access to such deposits for the purposes of such searching, testing and appraising, where such activities are carried on under a licence (other than a petroleum lease) authorising the activities and held by the person or, if the person is a company, held by the company or a company associated with it;

“petroleum extraction activities” means activities of a person carried on by the person or on behalf of the person under a petroleum lease authorising the activities and held by the person or, if the person is a company, held by the company or a company associated with it in—

• (a) winning petroleum from a relevant field, including searching in that field for, and winning access to, such petroleum,

• (b) transporting as far as dry land petroleum so won from a place not on dry land, or

• (c) effecting the initial treatment and storage of petroleum so won from the relevant field;

“relevant field” means an area in respect of which a licence, being a petroleum lease, is in force;

“specified minerals” means the following minerals occurring in non-bedded deposits of such minerals, that is, barytes, felspar, serpentinous marble, quartz rock, soapstone, ores of copper, ores of gold, ores of iron, ores of lead, ores of manganese, ores of molybdenum, ores of silver, ores of sulphur and ores of zinc.

• (2) In sections 764 and 765—

“asset” includes part of an asset;

“expenditure on scientific research” does not include any expenditure incurred in the acquisition of rights in or arising out of scientific research;

“scientific research” means, subject to subsections (3) and (4), any activities in the fields of natural or applied science for the extension of knowledge.

• (3) For the purposes of the definition of “scientific research”, that definition shall, subject to subsection (4), be construed as including and be deemed always to have included a provision excluding from that definition the following activities—

• (a) exploring for specified minerals,

• (b) petroleum exploration activities, and

• (c) petroleum extraction activities.

• (4) As respects activities carried on before the 29th day of January, 1992, subsection (3) shall not apply for the purpose of computing any charge to income tax or corporation tax on a person who has before the 3rd day of December, 1991, made a claim in respect of expenditure incurred in exploring for specified minerals or in respect of petroleum exploration activities or in respect of petroleum extraction activities.

• (5) For the purposes of sections 764 and 765, expenditure shall not be regarded as incurred by a person in so far as it is or is to be met directly or indirectly out of moneys provided by the Oireachtas or by any person other than the first-mentioned person.

• (6) The same expenditure shall not be taken into account for any of the purposes of section 764 or 765 in relation to more than one trade.

764 Deduction for revenue expenditure on scientific research. [ITA67 s244(2) and (2A); CTA76 s21(1) and Sch1 par9]

764.—(1) Where a person carrying on a trade either—

• (a) incurs non-capital expenditure on scientific research relating to the trade, or

• (b) pays any sum to—

• (i) a body carrying on scientific research and approved for the purposes of this section by the Minister for Finance, or

• (ii) an Irish university,

in order that such body or university may undertake scientific research,

then, the expenditure so incurred or the sum so paid shall be deducted as an expense in computing the profits or gains of the trade.

• (2) Where a person carrying on a trade—

• (a) incurs non-capital expenditure on scientific research or pays any sum to a body or university referred to in subsection (1)(b) in order that the body or university may undertake scientific research, and

• (b) the expenditure so incurred or the sum so paid is not deductible as an expense under subsection (1) because the scientific research is not related to any trade being carried on by the person,

then, the expenditure so incurred or the sum so paid shall be deducted as an expense in computing the profits or gains of the person's trade.

765 Allowances for capital expenditure on scientific research. [ITA67 s244(3), (4), (5), (6) and (7); CTA76 s21(1) and Sch1 par9; FA80 s17(3); FA96 s132(2) and Sch5 PtII]

765.—(1) Where a person—

• (a) incurs capital expenditure on scientific research,

• (b) (i) is then carrying on a trade to which such expenditure relates, or

• (ii) subsequently sets up and commences a trade which is related to such research,

• (c) applies to the inspector for an allowance under this subsection in respect of such expenditure, and

• (d) so applies—

• (i) in the case where the expenditure was incurred while carrying on the trade, within 24 months after the end of the chargeable period in which it was incurred, or

• (ii) in the case where the expenditure was incurred before the setting up and commencement of the trade, within 24 months after the end of the chargeable period in which the trade was set up and commenced,

then, subject to this section, there shall be made in taxing the trade for the chargeable period mentioned in whichever of subparagraphs (i) and (ii) of paragraph (d) is applicable an allowance equal to the amount of the expenditure.

• (2) Where a person carrying on a trade incurs capital expenditure on scientific research in respect of which an allowance may not be made under subsection (1) because the scientific research is not related to any trade being carried on by that person, there shall be made in taxing that person's trade for the chargeable period in which the expenditure was incurred an allowance equal to the amount of the expenditure.

• (3) Where an asset representing capital expenditure on scientific research ceases at any time from any cause whatever to be used for such research, relating to the trade carried on by the person who incurred the expenditure, then—

• (a) an amount equal to the allowance made under this section in respect of that expenditure, or, if the value of the asset immediately before the cessation is less than that allowance, equal to that value, shall be treated as a trading receipt of the trade accruing immediately before the cessation, and

• (b) in the application of section 284 to an allowance made in respect of the asset for any chargeable period after that in which the cessation takes place, the actual cost of the asset shall be treated as being reduced by the amount of the allowance effectively made.

• (4) Where an allowance under this section is made to a person for any chargeable period in respect of expenditure represented wholly or partly by assets, no allowance in respect of those assets shall be made to that person under section 85 or 284 for that chargeable period.

• (5) Section 304(4) shall apply in relation to an allowance under subsection (1) or (2) as it applies in relation to allowances to be made under Part 9.

766 Deduction for certain expenditure on research and development. [FA95 s59(1) to (4); FA96 s57(1)]

766.—(1) (a) In this section—

“appropriate inspector” has the same meaning as in section 950;

“base period” means the period of 12 months ending immediately before the commencement of the first relevant period;

“expenditure on research and development” means non-capital expenditure incurred by a company, being—

• (i) an amount equal to 115 per cent of the aggregate of the amounts of—

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

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

but where expenditure referred to in clauses (I) and (II) is incurred by a company (in this definition referred to as “the first-mentioned company”) which is a member of a group on behalf of another company which is a member of the group, the other company shall be treated for the purposes of the Corporation Tax Acts as having incurred the expenditure and the first-mentioned company shall be treated for those purposes as not having incurred the expenditure, and

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

“group base expenditure on research and development” means the aggregate of the amounts of expenditure on research and development incurred in the base period by qualified companies which throughout that period are members of the group;

“group expenditure on research and development”, in relation to a relevant period, means the aggregate of the amounts of expenditure on research and development—

• (i) incurred, or treated as incurred, in the relevant period by qualified companies which throughout the relevant period are members of the group, and

• (ii) certified as having been incurred by those companies in certificates given to the companies by persons who are auditors of the companies appointed under section 160 of the Companies Act, 1963, or under the law of any territory where any such company is duly incorporated and which corresponds to that section;

“qualified company”, in relation to a relevant period, means a company which—

• (i) throughout the relevant period carries on a trade which consists wholly or mainly of the manufacture of goods in the State, but trading operations of a company shall not be treated for the purposes of this section as the manufacture of goods in the State by virtue of any section of the Tax Acts other than section 443,

• (ii) holds a certificate given to it by Forbairt which certifies that in the opinion of Forbairt the research and development activities which are proposed to be carried on by or on behalf of the company have the potential to achieve the purposes set out in paragraph (iii) of the definition of “research and development activities”,

• (iii) notifies the appropriate inspector before the commencement of the research and development activities of its intention to carry out such activities or to have such activities carried out on its behalf,

• (iv) maintains a record of expenditure incurred in the carrying on by it or on its behalf of research and development activities in accordance with a system approved by Forbairt of recording such expenditure, and

• (v) does not, at any time during the period commencing on the 10th day of May, 1995, and ending 3 years after the commencement of the first relevant period, raise any amount through the issue of eligible shares within the meaning of section 488;

“qualifying expenditure on research and development attributable to a qualified company”, in relation to a relevant period, means so much of the amount of qualifying group expenditure on research and development in the relevant period as bears to that amount the same proportion as the amount of expenditure on research and development incurred by the company in the relevant period bears to the group expenditure on research and development in the relevant period;

“qualifying group expenditure on research and development”, in relation to a relevant period, means an amount determined by the formula—

E − (D + £25,000)

where—

E is the amount of group expenditure on research and development in the relevant period, and

D is—

• (i) where the relevant period commences before the 1st day of June, 1996, the greater of—

• (I) the amount of group base expenditure on research and development, and

• (II) the amount of group expenditure on research and development in any relevant period preceding that relevant period,

and

• (ii) where the relevant period commences on or after the 1st day of June, 1996, the amount of group base expenditure on research and development,

but—

• (A) the qualifying group expenditure on research and development in relation to a relevant period shall not in any case exceed £150,000, and

• (B) the aggregate of the amounts of qualifying group expenditure on research and development in all relevant periods shall not exceed the aggregate of the amounts specified in certificates given by Forbairt to companies which are members of the group;

“relevant period” means—

• (i) in the case of a company which is a member of a group the end of the accounting periods of the members of which coincide, the period of 12 months throughout which one or more members of the group carried on a trade and ending at the end of the first accounting period of the company which commences on or after the 1st day of June, 1995,

• (ii) in the case of a company which is a member of a group the end of the accounting periods of which do not coincide, the period specified in a notice in writing made jointly by companies which are members of the group and given to the appropriate inspector within a period of 9 months after the end of the period so specified, being a period of 12 months throughout which one or more members of the group carries on a trade and ending at the end of the first accounting period of a company which is a member of the group which accounting period commences on or after the 1st day of June, 1995, and

• (iii) in any other case, the period of 12 months commencing on the 1st day of June, 1995,

and each subsequent period of 12 months, commencing immediately after the end of the preceding relevant period, which falls wholly in the period of 3 years commencing at the beginning of the first relevant period, but a period shall not be a relevant period if it commences on or after the 1st day of June, 1999;

“research and development activities” means systematic, investigative or experimental activities which—

• (i) are carried on wholly or mainly in the State,

• (ii) involve innovation or technical risk, and

• (iii) are carried on for the purpose of—

• (I) acquiring new knowledge with a view to that knowledge having a specific commercial application, or

• (II) creating new or improved materials, products, devices, processes or services,

and other activities carried on wholly or mainly in the State for a purpose directly related to the carrying on of activities of the kind referred to in paragraph (iii), but activities that are carried on by means of—

• (A) market research, market testing, market development, sales promotion or consumer surveys,

• (B) quality control,

• (C) the making of cosmetic modifications or stylistic changes to products, processes or production methods,

• (D) management studies or efficiency surveys, or

• (E) research in social sciences, arts or humanities,

shall not be research and development activities.

• (b) For the purposes of this section—

• (i) 2 companies shall be deemed to be members of a group if one company is an associated company (within the meaning of section 432) of the other company;

• (ii) a company and all its associated companies shall form a group; but a company which is not a member of a group shall be treated as if it were a member of a group which consists of that company, and accordingly references to group expenditure on research and development, group base expenditure and qualifying group expenditure on research and development shall be construed as if they were respectively references to expenditure on research and development, base expenditure and qualifying expenditure on research and development;

• (iii) systematic, investigative or experimental activities, or other activities, shall be regarded as carried on wholly or mainly in the State only if not less than 75 per cent of the total amount expended in the course of such activities is expended in the State;

• (iv) as respects any relevant period commencing before the 1st day of June, 1996, expenditure on research and development shall not be regarded as having been incurred by a company which is a member of a group if any expenditure on research and development incurred in a relevant period or in the base period by a company which is a member of the group has been or is to be met directly or indirectly by the State or any person other than a company which is a member of the group;

• (v) as respects any relevant period commencing on or after the 1st day of June, 1996, expenditure on research and development shall not be regarded as having been incurred in a relevant period by a company which is a member of a group if—

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

• (II) it is expenditure—

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

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

• (2)
• (a) In this subsection—

“income from the sale of goods” has the same meaning as in section 454;

“a loss from the sale of goods” has the same meaning as in section 455.

• (b) On making a claim in that behalf, a qualified company shall be entitled, in computing the trading income for an accounting period of a trade carried on by it, to deduct an amount equal to treble the qualifying expenditure on research and development attributable to the qualified company as is referable to the accounting period and, subject to paragraph (c), the company shall be entitled to such a deduction in addition to any deduction to which the qualified company may otherwise be entitled in respect of expenditure incurred on research and development.

• (c) Where the amount referred to in paragraph (b) exceeds an amount which apart from this subsection would be the income from the sale of goods of the trade so referred to for the accounting period, then, the excess—

• (i) shall not be deductible by virtue of paragraph (b), and

• (ii) shall be treated as a loss incurred in that trade, which is a loss from the sale of goods, for the purposes of relief under—

• (I) section 455 or 456, or

• (II) to the extent that such relief does not exceed the income from the sale of goods in the course of that trade in the accounting period for which that relief is given, section 396(1).

• (3) For the purposes of subsection (2)—

• (a) where a relevant period coincides with an accounting period of a qualified company, the amount of qualifying expenditure on research and development attributable to the qualified company which relates to the accounting period of the company shall be the amount of that qualifying expenditure attributable to the qualified company, and

• (b) where the relevant period does not coincide with an accounting period of the company—

• (i) the qualifying expenditure on research and development attributable to the qualified company shall be apportioned to the accounting periods which fall wholly or partly in the relevant period, and

• (ii) the amount so apportioned to an accounting period shall be treated as the amount of qualifying expenditure on research and development attributable to the qualified company which relates to that accounting period of the company.

• (4) Where a company makes a claim under this section, the company shall be treated for the purpose of Part 16 as not being a qualifying company in respect of any amount raised, at any time during the period commencing on the 10th day of May, 1995, and ending 3 years after the commencement of the first relevant period, by the issue of eligible shares within the meaning of section 488.

767 Payment to universities and other approved bodies for research in, or teaching of, approved subjects. [FA73 s21; FA85 s15]

767.—(1) In this section—

“approved body” means—

• (a) the College of Industrial Relations, Ranelagh, Dublin, or

• (b) any of the following colleges established under the Vocational Education Act, 1930—

• (i) colleges forming part of the Dublin Institute of Technology,

• (ii) the Limerick College of Art, Commerce and Technology, or

• (iii) regional technical colleges;

“approved subject” means—

• (a) industrial relations,

• (b) marketing, or

• (c) any other subject which is approved for the purposes of this section by the Minister for Finance.

• (2) Where a person carrying on a trade or profession—

• (a) pays any sum to—

• (i) an Irish university, or

• (ii) an approved body,

for the purpose of enabling the university or the approved body to undertake research in, or engage in the teaching of, an approved subject, and

• (b) the sum so paid is not income to which section 792 applies,

the sum so paid shall, if not otherwise so deductible, be deducted as an expense in computing the profits or gains of the person's trade or profession.

CHAPTER 3 Know-how and certain training

768 Allowance for know-how. [FA68 s2]

768.—(1) In this section—

“control” has the same meaning as in section 312;

“know-how” means industrial information and techniques likely to assist in the manufacture or processing of goods or materials, or in the carrying out of any agricultural, forestry, fishing, mining or other extractive operations;

references to a body of persons include references to a partnership.

• (2)
• (a) For the purposes of this subsection, a person incurring expenditure on know-how before the setting up and commencement of the trade in which it is used shall be treated as incurring it on that setting up and commencement.

• (b) Where a person incurs expenditure on know-how for use in a trade carried on by the person or, having incurred expenditure on know-how, sets up and commences a trade in which it is used, there shall, subject to this section, be allowed to be deducted as expenses, in computing for the purposes of Case I of Schedule D the profits or gains of the trade, such part of the expenditure as would but for this section not be allowed to be so deducted.

• (3) Where a person acquires a trade or part of a trade and, together with the trade or the part of the trade, know-how used in the trade or part of the trade, no amount shall be allowed to be deducted under this section in respect of expenditure incurred on the acquisition of the know-how.

• (4) Subsection (2) shall not apply on any sale of know-how where the buyer is a body of persons over whom the seller has control, or the seller is a body of persons over whom the buyer has control, or both the seller and the buyer are bodies of persons and some other person has control over both of them.

769 Relief for training of local staff before commencement of trading. [ITA67 s305; CTA76 s21(1) and Sch1 par51; FA93 s34(1) (c)]

769.—(1) Where, before the day of the setting up or commencement of a trade consisting of the production for sale of manufactured goods, a person who is about to carry on the trade incurs or has incurred expenditure on the recruitment and training, with a view to their employment in the trade, of persons all or a majority of whom are Irish citizens, there shall be made to such person allowances in respect of that expenditure during a writing-down period of 3 years beginning on that day, and such allowances shall be made in taxing the trade.

• (2) For the purposes of this section—

• (a) expenditure shall not include any expenditure incurred by a person in respect of which no deduction would have been allowable to the person, in computing the profits or gains of the trade under the provisions of the Tax Acts applicable to Case I of Schedule D, if it had been incurred on or after the day of the setting up or commencement of the trade;

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

• (c) the date on which any expenditure is incurred shall be taken to be the date on which the sum in question becomes payable.

• (3) Section 304(4) shall apply in relation to an allowance under subsection (1) as it applies in relation to an allowance to be made under Part 9.

• (4) For the purposes of the Income Tax Acts, any claim by a person for an allowance under this section shall be included in the annual statement required to be delivered under those Acts of the profits or gains of the person's trade and shall be accompanied by a certificate signed by the claimant (which shall be deemed to form part of the claim) stating that the expenditure was incurred on the recruitment and training, with a view to their employment in the trade, of persons all or a majority of whom are Irish citizens and giving such particulars as show that the allowance is to be made.

PART 30 Occupational Pension Schemes, Retirement Annuities, Purchased Life Annuities and Certain Pensions

CHAPTER 1 Occupational pension schemes

770 Interpretation and supplemental (Chapter 1). [FA72 s13(1), (2) and (4); FA74 s86 and Sch2 PtII]

770.—(1) In this Chapter, except where the context otherwise requires—

“administrator”, in relation to a retirement benefits scheme, means the person or persons having the management of the scheme, and references to the administrator of a scheme shall be deemed to include the person mentioned in section 772(2) (c);

“approved scheme” means a retirement benefits scheme for the time being approved by the Revenue Commissioners for the purposes of this Chapter;

“company” includes any body corporate or unincorporated body of persons other than a partnership;

“director”, in relation to a company, includes—

• (a) in the case of a company the affairs of which are managed by a board of directors or similar body, a member of that board or body,

• (b) in the case of a company the affairs of which are managed by a single director or similar person, that director or person,

• (c) in the case of a company the affairs of which are managed by the members themselves, a member of that company,

and includes a person who is to be or has been a director;

“employee”—

• (a) in relation to a company, includes an officer of the company, any director of the company and any other person taking part in the management of the affairs of the company, and

• (b) in relation to any employer, includes a person who is to be or has been an employee,

and “employer” and other cognate expressions shall be construed accordingly;

“exempt approved scheme” has the meaning assigned to it by section 774;

“final remuneration” means the average annual remuneration of the last 3 years' service;

“pension” includes annuity;

“relevant benefits” means any pension, lump sum, gratuity or other like benefit—

• (a) given or to be given on retirement or on death or in anticipation of retirement or, in connection with past service, after retirement or death, or

• (b) to be given on or in anticipation of or in connection with any change in the nature of the service of the employee in question,

but does not include any benefit which is to be afforded solely by reason of the death or disability of a person resulting from an accident arising out of or in the course of his or her office or employment and for no other reason;

“service” means service as an employee of the employer in question and other expressions, including “retirement”, shall be construed accordingly;

“statutory scheme” means a retirement benefits scheme established by or under any enactment.

• (2) Any reference in this Chapter to the provision of relevant benefits, or of a pension, for employees of an employer includes a reference to the provision of those benefits or that pension by means of a contract between the administrator or the employer and a third person.

• (3) Schedule 23 shall apply for the purposes of supplementing this Chapter and shall be construed as one with this Chapter.

771 Meaning of “retirement benefits scheme”. [FA72 s14]

771.—(1) In this Chapter, “retirement benefits scheme” means, subject to this section, a scheme for the provision of benefits consisting of or including relevant benefits, but does not include any scheme under the Social Welfare (Consolidation) Act, 1993, providing such benefits.

• (2) References in this Chapter to a scheme include references to a deed, agreement, series of agreements or other arrangements providing for relevant benefits, notwithstanding that it relates or they relate only to—

• (a) a small number of employees or to a single employee, or

• (b) the payment of a pension starting immediately on the making of the arrangements.

• (3) The Revenue Commissioners may if they think fit treat a retirement benefits scheme relating to employees of 2 or more different classes or descriptions as being for the purposes of this Chapter 2 or more separate retirement benefits schemes relating respectively to such one or more of those classes or descriptions of those employees as the Revenue Commissioners think fit.

• (4) For the purposes of this Chapter—

• (a) employees may be regarded as belonging to different classes or descriptions if they are employed by different employers, and

• (b) a particular class or description of employee may consist of a single employee or any number of employees.

772 Conditions for approval of schemes and discretionary approval. [FA72 s15(1) to (7); FA74 s64(1); FA92 s6(a); FA96 s131(2) and Sch5 PtII; FA97 s146(1) and Sch9 PtI par5(1)]

772.—(1) Subject to this section, the Revenue Commissioners shall approve any retirement benefits scheme for the purposes of this Chapter if it satisfies all of the prescribed conditions, namely—

• (a) the conditions set out in subsection (2), and

• (b) the conditions as respects benefits set out in subsection (3).

• (2) The conditions referred to in subsection (1) (a) are—

• (a) that the scheme is bona fide established for the sole purpose of providing relevant benefits in respect of service as an employee, being benefits payable to, or to the widow or widower, children or dependants or personal representatives of, the employee;

• (b) that the scheme is recognised by the employer and employees to whom it relates, and that every employee who is or has a right to be a member of the scheme has been given written particulars of all essential features of the scheme which concern the employee;

• (c) that there is a person resident in the State who will be responsible for the discharge of all duties imposed on the administrator of the scheme under this Chapter;

• (d) that the employer is a contributor to the scheme;

• (e) that the scheme is established in connection with some trade or undertaking carried on in the State by a person resident in the State;

• (f) that no amount can be paid, whether during the subsistence of the scheme or later, by means of repayment of an employee's contributions under the scheme.

• (3) The conditions as respects benefits referred to in subsection (1) (b) are—

• (a) that any benefit for an employee is a pension on retirement at a specified age not earlier than 60 years and not later than 70 years, or on earlier retirement through incapacity, which does not exceed one-sixtieth of the employee's final remuneration for each year of service up to a maximum of 40 years;

• (b) that any pension for any widow or widower of an employee who dies before retirement shall be a pension payable on the employee's death of an amount that does not exceed two-thirds of any pension or pensions which, consonant with the condition in paragraph (a), could have been provided for the employee on retirement on attaining the specified age, if the employee had continued to serve until the employee attained that age at an annual rate of remuneration equal to the employee's final remuneration;

• (c) that any lump sums provided for any widow or widower, children, dependants or personal representatives of an employee who dies before retirement shall not exceed in the aggregate 4 times the employee's final remuneration;

• (d) that any benefit for any widow or widower of an employee payable on the employee's death after retirement is a pension such that the amount payable to the widow or widower does not exceed two-thirds of any pension or pensions payable to the employee;

• (e) that any pensions for the children or dependants of an employee who dies before retirement or on the employee's death after retirement shall not exceed in the aggregate one-half of the pension specified in paragraph (b) or (d), as the case may be;

• (f) that no pension is capable in whole or in part of surrender, commutation or assignment, except in so far as the scheme allows an employee on retirement to obtain by commutation of the employee's pension a lump sum or sums not exceeding in all three-eightieths of the employee's final remuneration for each year of service up to a maximum of 40 years;

• (g) that no other benefits are payable under the scheme.

• (4)
• (a) The Revenue Commissioners may if they think fit having regard to the facts of a particular case and subject to such conditions, if any, as they think proper to attach to the approval, approve a retirement benefits scheme for the purposes of this Chapter, notwithstanding that it does not satisfy one or more of the prescribed conditions.

• (b) The Revenue Commissioners may in particular approve by virtue of this subsection a scheme which—

• (i) exceeds the limits imposed by the prescribed conditions as respects benefits for less than 40 years' service,

• (ii) allows benefits to be payable on retirement within 10 years of the specified age or on earlier incapacity,

• (iii) provides for the return in certain contingencies of employees' contributions and payment of interest (if any) on the contributions, or

• (iv) relates to a trade or undertaking carried on only partly in the State and by a person not resident in the State.

• (5) Where in the opinion of the Revenue Commissioners the facts concerning any scheme or its administration cease to warrant the continuance of their approval of the scheme, they may at any time, by notice in writing to the administrator, withdraw their approval on such grounds, and from such date, as may be specified in the notice.

• (6) Where an alteration has been made in a retirement benefits scheme, no approval given as regards the scheme before the alteration shall apply after the date of the alteration unless the alteration has been approved by the Revenue Commissioners.

• (7) For the purpose of determining whether a retirement benefits scheme, in so far as it relates to a particular class or description of employees, satisfies or continues to satisfy the prescribed conditions, that scheme shall be considered in conjunction with any other retirement benefits scheme or schemes relating to employees of that class or description, and, if those conditions are satisfied in the case of both or all of those schemes taken together, they shall be taken to be satisfied in the case of each of them but otherwise those conditions shall be taken to be satisfied in the case of none of them.

773 General Medical Services: scheme of superannuation. [FA91 s12]

773.—(1) The Revenue Commissioners may, if they think fit and subject to any undertakings and conditions that they think proper to attach to the approval, approve for the purposes of this Chapter a scheme of superannuation provided for under an agreement for the provision of services under section 58 of the Health Act, 1970 (in this section referred to as a “relevant scheme”) as if it were a retirement benefits scheme within the meaning of this Chapter and notwithstanding that it does not satisfy one or more of the conditions set out in subsections (2) and (3) of section 772.

• (2) As respects a relevant scheme approved under this section, this Chapter and Schedule 23 shall apply subject to any necessary modifications and in particular as if in this Chapter and in that Schedule—

• (a) “employee” included a registered medical practitioner providing services under an agreement for the provision of services under section 58 of the Health Act, 1970 (in this section referred to as an “agreement”),

• (b) “service” included services by a registered medical practitioner under an agreement and an “office or employment” included the provision of such services, and

• (c) a reference to Schedule E were a reference to Case II of Schedule D except in section 779.

• (3) Chapter 2 of this Part shall apply as if a member of a relevant scheme were the holder of a pensionable office or employment and such member's income assessable to tax under Case II of Schedule D arising from an agreement were remuneration from such an office or employment.

774 Certain approved schemes: exemptions and reliefs. [FA72 s16(1) to (5) and (7); CTA76 s164 and Sch3 PtI; FA88 s30(1) and (2) (a); FA91 s38; FA97 s41(1) (a) and (3)]

774.—(1) This section shall apply as respects—

• (a) any approved scheme shown to the satisfaction of the Revenue Commissioners to be established under irrevocable trusts, or

• (b) any other approved scheme as respects which the Revenue Commissioners, having regard to any special circumstances, direct that this section shall apply,

and any scheme which is for the time being within paragraph (a) or (b) is in this Chapter referred to as an “exempt approved scheme”.

• (2) This section shall apply only as respects income arising or contributions paid at a time when a scheme is an exempt approved scheme.

• (3) Exemption from income tax shall, on a claim being made in that behalf, be allowed in respect of income derived from investments or deposits of a scheme if, or to such extent as the Revenue Commissioners are satisfied that, it is income from investments or deposits held for the purposes of the scheme.

• (4)
• (a) In this subsection, “financial futures” and “traded options” mean respectively financial futures and traded options for the time being dealt in or quoted on any futures exchange or any stock exchange, whether or not that exchange is situated in the State.

• (b) For the purposes of subsection (3), a contract entered into in the course of dealing in financial futures or traded options shall be regarded as an investment.

• (5) Exemption from income tax shall, on a claim being made in that behalf, be allowed in respect of underwriting commissions if, or to such extent as the Revenue Commissioners are satisfied that, the underwriting commissions are applied for the purposes of the scheme, and in respect of which the trustees of the scheme would but for this subsection be chargeable to tax under Case IV of Schedule D.

• (6)
• (a) For the purposes of this section and section 775—

• (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 section 321), 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 is 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.

• (b) Any sum paid by an employer by means of contribution under the scheme shall for the purposes of Case I or II of Schedule D and of sections 83 and 707(4) 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.

• (c) The amount of an employer's contributions which may be deducted under paragraph (b) 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.

• (d) A sum not paid by means of an ordinary annual contribution shall for the purposes of paragraph (b) be treated, as the Revenue 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 Revenue Commissioners think proper.

• (e) In the case of any employer for a chargeable period, being—

• (i) where the chargeable period is an accounting period of a company, an accounting period ending on or before the 21st day of April, 1997, and

• (ii) where the chargeable period is a year of assessment, any year of assessment the employer's basis period for which ends on or before that date,

this subsection shall apply subject to paragraph 26 of Schedule 32.

• (7)
• (a) Any ordinary annual contribution paid under the scheme by an employee shall, in assessing income tax under Schedule E, be allowed to be deducted as an expense incurred in the year in which the contribution is paid.

• (b) Any contribution, which is not an ordinary annual contribution, paid or borne by an employee under the scheme may, as the Revenue Commissioners think proper—

• (i) be treated, as respects the year in which it is paid, as an ordinary annual contribution paid in that year, or

• (ii) be apportioned among such years as the Revenue Commissioners direct, and the amount of the contribution attributed thereby to any year shall be treated as an ordinary annual contribution paid in that year.

• (c) The aggregate amount of any contributions (whether ordinary annual contributions or contributions treated as ordinary annual contributions) allowed to be deducted in any year shall not exceed 15 per cent of the remuneration for that year of the office or employment in respect of which the contributions are paid.

775 Certain approved schemes: provisions supplementary to section 774(6). [FA72 s16A; FA97 s41(1) (b)]

775.—(1) Where—

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

• (b) apart from this section that payment would 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,

then, 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, are within paragraph (b) in relation to the same chargeable period shall be reduced by whichever is the lesser 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 contribution 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 section 774(6) 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 is 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 paragraph (d) of section 774(6) 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 paragraph.

776 Certain statutory schemes: exemptions and reliefs. [FA72 s17(1) and (2)]

776.—(1) This section shall apply to any statutory scheme established under a public statute.

• (2)
• (a) Any ordinary annual contribution paid under a scheme to which this section applies by any officer or employee shall, in assessing income tax under Schedule E, be allowed to be deducted as an expense incurred in the year in which the contribution is paid.

• (b) Any contribution, which is not an ordinary annual contribution, paid or borne by an officer or employee under a scheme to which this section applies may, as the Revenue Commissioners think proper—

• (i) be treated, as respects the year in which it is paid, as an ordinary annual contribution paid in that year, or

• (ii) be apportioned among such years as the Revenue Commissioners direct, and the amount of the contribution attributed thereby to any year shall be treated as an ordinary annual contribution paid in that year.

• (c) The aggregate amount of any contributions (whether ordinary annual contributions or contributions treated as ordinary annual contributions) allowed to be deducted in any year shall not exceed 15 per cent of the remuneration for that year of the office or employment in respect of which the contributions are paid.

777 Charge to income tax in respect of certain relevant benefits provided for employees. [FA72 s18(1)(a), (2), (3), (4) and (5); FA97 s146(1) and Sch9 PtI par5(2)]

777.—(1) Subject to this Chapter, where pursuant to a retirement benefits scheme the employer in any year of assessment pays a sum with a view to the provision of any relevant benefits for any employee of that employer, then (whether or not the accrual of the benefits is dependent on any contingency), the sum paid, if not otherwise chargeable to income tax as income of the employee, shall be deemed for the purposes of the Income Tax Acts to be income of that employee for that year of assessment and assessable to income tax under Schedule E.

• (2) Subject to this Chapter, where—

• (a) the circumstances in which any relevant benefits under a retirement benefits scheme are to accrue are not such as will render the benefits assessable to income tax as emoluments of the employee in respect of whom the benefits are paid, and

• (b) the provision of those benefits is not, or is not fully, secured by the payment of sums by the employer with a view to the provision of those benefits,

then (whether or not the accrual of the benefits is dependent on any contingency), an amount equal to the cost, estimated in accordance with subsection (3), of securing the provision by a third person of the benefits or, as the case may be, of the benefits in so far as not already secured by the payment of sums mentioned in subsection (1) shall be deemed for the purposes of the Income Tax Acts to be income of the employee for the year or years of assessment specified in subsection (3) and assessable to income tax under Schedule E.

• (3) The cost referred to in subsection (2) shall be estimated either—

• (a) as an annual sum payable in each year of assessment in which the scheme in question is in force or the employee is serving, up to and including the year of assessment in which the benefits accrue or there ceases to be any possibility of the accrual of the benefits, or

• (b) as a single sum payable in the year of assessment in which falls the date when the employee acquired the right to the relevant benefits or the date when the employee acquired the right to any increase in the relevant benefits,

as may be more appropriate in the circumstances of the case.

• (4) Where the employer pays any sum mentioned in subsection (1) in relation to more than one employee, the sum so paid shall for the purpose of that subsection be apportioned among those employees by reference to the separate sums which would have had to be paid to secure the separate benefits to be provided for them respectively, and the part of the sum apportioned to each of them shall be deemed for that purpose to have been paid separately in relation to that one of them.

• (5) Any reference in this section to the provision for an employee of relevant benefits shall include a reference to the provision of benefits payable to the employee's spouse, widow or widower, children, dependants or personal representatives.

778 Exceptions to charge to tax under section 777. [FA72 s19]

778.—(1) Neither subsection (1) nor subsection (2) of section 777 shall apply where the retirement benefits scheme in question is—

• (a) an approved scheme,

• (b) a statutory scheme, or

• (c) a scheme set up by a Government outside the State for the benefit, or primarily for the benefit, of its employees.

• (2) Neither subsection (1) nor subsection (2) of section 777 shall apply for any year of assessment where apart from those subsections the employee is under the Income Tax Acts either not assessable to income tax in respect of the emoluments of his or her employment or is so assessable in respect of those emoluments on the basis of the amount received in the State.

• (3) Where, in respect of the provision for an employee of any relevant benefits, a sum has been deemed to be income of the employee by virtue of subsection (1) or (2) of section 777, and subsequently the employee proves to the satisfaction of the Revenue Commissioners—

• (a) that no payment in respect of or in substitution for the benefits has been made, and

• (b) that some event has occurred by reason of which no such payment will be made,

and the employee makes application for relief under this subsection within 6 years from the time when that event occurred, the Revenue Commissioners shall give relief in respect of tax on that sum by repayment or otherwise as may be appropriate, and, if the employee satisfies the Revenue Commissioners in relation to some particular part of the benefits but not the whole of the benefits, the Revenue Commissioners may give such relief as may seem to them just and reasonable.

779 Charge to income tax of pensions under Schedule E. [FA72 s20]

779.—(1) Subject to subsection (2), pensions paid under any scheme which is approved or is being considered for approval under this Chapter shall be charged to income tax under Schedule E, and Chapter 4 of Part 42 shall apply accordingly.

• (2) In respect of any scheme which is approved or is being considered for approval under this Chapter, the Revenue Commissioners may direct that until such date as they may specify pensions under the scheme shall be charged to tax as annual payments under Case III of Schedule D, and tax shall be deductible under section 237 or 238 accordingly.

780 Charge to income tax on repayment of employees' contributions. [FA72 s21(1) to (5)(a) and (6) and (7); FA73 s18; FA92 s6(b)]

780.—(1) In this section and in section 781, “employee”, in relation to a statutory scheme, includes an officer.

• (2) Subject to this section, tax shall be charged under this section on any repayment to an employee during his or her lifetime of any contribution (including interest on contributions, if any) if the payment is made under—

• (a) a scheme which is or has at any time been an exempt approved scheme, or

• (b) a statutory scheme established under a public statute.

• (3) This section shall not apply where the employee's employment was carried on outside the State.

• (4) Subsection (2)(a) shall not apply in relation to a contribution made after the scheme ceases to be an exempt approved scheme unless it again becomes an exempt approved scheme.

• (5) Where any payment is chargeable to tax under this section, the administrator of the scheme shall be charged to income tax under Case IV of Schedule D and, subject to subsection (7), the rate of the tax shall be 25 per cent; but, in the case of any repayment under a statutory scheme established under a public statute, the administrator of the scheme shall be entitled to deduct the tax chargeable in respect of that repayment from the amount of that repayment.

• (6) The tax shall be charged on the amount paid or, if the administrator is entitled under the rules of the relevant scheme or otherwise to deduct the tax before payment, on the amount before deduction of tax, and the amount so charged to tax shall not be treated as income for any other purpose of the Income Tax Acts.

• (7)
• (a) The Minister for Finance may by order from time to time increase or decrease the rate of tax under subsection (5).

• (b) Every order under paragraph (a) 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.

781 Charge to income tax: commutation of entire pension. [FA72 s22(1) to (4); FA92 s6(c)]

781.—(1) Where—

• (a) a scheme which is or has at any time been an approved scheme, or

• (b) a statutory scheme established under a public statute,

contains a rule allowing in special circumstances a payment in commutation of an employee's entire pension, and any pension is commuted, whether wholly or not, under the rule, tax shall be charged on the amount by which the sum receivable exceeds—

• (i) the largest sum which would have been receivable in commutation of any part of the pension if the scheme had contained a rule providing that the aggregate value of the relevant benefits payable to an employee on or after retirement, excluding any pension which was not commutable, should not exceed three-eightieths of the employee's final remuneration for each year of service up to a maximum of 40 years, or

• (ii) the largest sum which would have been receivable in commutation of any part of the pension under any rule of the scheme authorising the commutation of part (but not the whole) of the pension, or which would have been so receivable but for those circumstances,

whichever gives the lesser amount chargeable to tax.

• (2) This section shall not apply where the employee's employment was carried on outside the State.

• (3) Where any amount is chargeable to tax under this section, the administrator of the scheme shall be charged to income tax under Case IV of Schedule D on that amount and, subject to subsection (6) of section 780 which shall apply as it applies to tax chargeable under that section, the rate of tax shall be 10 per cent.

• (4) In applying paragraph (i) or (ii) of subsection (1)—

• (a) the same considerations shall be taken into account, including the provisions of any other relevant scheme, as would have been taken into account by the Revenue Commissioners in applying section 772, and

• (b) where the scheme has ceased to be an approved scheme, account shall only be taken of the rules of the scheme at the date of the cesser.

782 Charge to tax: repayments to employer. [FA72 s23]

782.—(1) Where any payment is made or becomes due to an employer out of funds which are or have been held for the purposes of a scheme which is or has at any time been an exempt approved scheme, then—

• (a) if the scheme relates to a trade or profession carried on by the employer, the payment shall be treated for the purposes of the Tax Acts as a receipt of that trade or profession receivable when the payment is due or on the last day on which the trade or profession is carried on by the employer, whichever is the earlier;

• (b) if the scheme does not relate to such a trade or profession, the employer shall be charged to tax on the amount of the payment under Case IV of Schedule D, but only in proportion to the extent that the payment represents contributions by the employer under the scheme which were allowable as deductions for tax purposes.

• (2) This section shall not apply to a payment which was due before the scheme became an exempt approved scheme.

• (3) References in this section to any payment include references to any transfer of assets or other transfer of money's worth.

CHAPTER 2 Retirement annuities

783 Interpretation and general (Chapter 2). [ITA67 s195B(3) and (6), s235(6) to (9) and s238(3) and (4); FA69 s65(1) and Sch5 PtI; FA72 Sch1 PtIII par4; FA93 s10(1); FA96 s132(2) and Sch5 PtII; FA97 s146(1) and Sch9 PtI par 5(3)]

783.—(1) (a) In this section—

“director” means—

• (i) in relation to a body corporate the affairs of which are managed by a board of directors or similar body, a member of that board or body,

• (ii) in relation to a body corporate the affairs of which are managed by a single director or similar person, that director or person,

• (iii) in relation to a body corporate the affairs of which are managed by the members themselves, a member of the body corporate,

and includes any person who is or has been a director;

“employee”, in relation to a body corporate, includes any person taking part in the management of the affairs of the body corporate who is not a director, and includes a person who is or has been an employee;

“investment company” means a company the income of which consists mainly of investment income;

“investment income”, in relation to a company, means income which, if the company were an individual, would not be earned income;

“proprietary director” means a director of a company who is either the beneficial owner of, or able, either directly or through the medium of other companies or by any other indirect means, to control, more than 15 per cent of the ordinary share capital of the company;

“proprietary employee”, in relation to a company, means an employee who is the beneficial owner of, or able, either directly or through the medium of other companies or by any other indirect means, to control, more than 15 per cent of the ordinary share capital of the company;

“sponsored superannuation scheme” means a scheme or arrangement relating to service in particular offices or employments and having for its object or one of its objects the making of provision in respect of persons serving in those offices or employments against—

• (i) future retirement or partial retirement,

• (ii) future termination of service through death or disability, or

• (iii) similar matters,

being a scheme or arrangement under which any part of the cost of the provision so made is or has been borne otherwise than by those persons by reason of their service (whether it is the cost or part of the cost of the benefits provided, or of paying premiums or other sums in order to provide those benefits, or of administering or instituting the scheme or arrangement).

• (b) For the purposes of the definitions of “proprietary director” and “proprietary employee”, ordinary share capital which is owned or controlled as is specified in those definitions by a person, being a spouse or an infant child of a director or employee, or by the trustee of a trust for the benefit of a person or persons, being or including any such person or such director or employee, shall be deemed to be owned or controlled by such director or employee and not by any other person.

• (c) For the purposes of the definition of “sponsored superannuation scheme”, a person shall be treated as bearing by reason of his or her service the cost of any payment made or agreed to be made in respect of his or her service if that payment or the agreement to make it is treated under the Income Tax Acts as increasing the person's income or would be so treated if he or she were chargeable to tax under Schedule E in respect of his or her emoluments from that service.

• (2)
• (a) For the purposes of this Chapter, an office or employment shall be a pensionable office or employment only if service in it is service to which a sponsored superannuation scheme relates (not being a scheme under which the benefits provided in respect of that service are limited to a lump sum payable on the termination of the service through death before the age of 70 years or some lower age or disability before the age of 70 years or some lower age); but references to a pensionable office or employment apply whether or not the duties are performed wholly or partly in the State or the holder is chargeable to tax in respect of the office or employment.