Taxes Consolidation Act 1997

Type Act

Publication 1997-11-30

State In force

Source Irish Statute Book

articles 1104

(ii) an annuity granted in the ordinary course of a business of granting annuities, or

(iii) a payment made to an individual under a liability incurred in consideration of the individual surrendering, assigning or releasing an interest in settled property to or in favour of a person having a subsequent interest,

and

(b) made under a liability incurred for consideration in money or money's worth, where all or any part of such consideration is not required to be taken into account in computing for the purposes of income tax or corporation tax the income of the person making the payment.

(2) Any payment to which this section applies—

(a) shall be made without deduction of income tax,

(b) shall not be allowed as a deduction in computing the income or total income of the person by whom it is made, and

CHAPTER 2 Charges on income for corporation tax purposes

243 Allowance of charges on income. [CTA76 s10; FA82 s23(3); FA83 s25(2); FA90 s43; FA97 s29(2), (5) and (6)]

243.—(1) Subject to this section and to any other express exceptions, “charges on income” means, for the purposes of corporation tax, payments of any description mentioned in subsection (4), not being dividends or other distributions of the company; but no payment deductible in computing profits or any description of profits for the purposes of corporation tax shall be treated as a charge on income.

(2) In computing the corporation tax chargeable for any accounting period of a company, any charges on income paid by the company in the accounting period, in so far as paid out of the company's profits brought into charge to corporation tax, shall be allowed as deductions against the total profits for the period reduced by any other relief from corporation tax other than group relief.

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

(b) Where—

(i) a company pays any charges on income before the time it sets up and commences a trade, and

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

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

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

(4) Subject to subsections (5) to (8), the payments referred to in subsection (1) are—

(a) any yearly interest, annuity or other annual payment and any other payments mentioned in section 104 or 237(2), and

(b) any other interest payable in the State on an advance from—

(i) a bank carrying on a bona fide banking business in the State, or

(ii) a person who in the opinion of the Revenue Commissioners is bona fide carrying on business as a member of a stock exchange in the State or bona fide carrying on the business of a discount house in the State,

and for the purposes of this section any interest payable by a company as is mentioned in paragraph (b) shall be treated as paid on such interest being debited to the company's account in the books of the person to whom it is payable.

(5) No payment mentioned in subsection (4)(a) made by a company to a person not resident in the State shall be treated as a charge on income unless it is a payment—

(a) from which, in accordance with—

(i) section 238, or

(ii) that section as applied by section 246,

except where the company has been authorised by the Revenue Commissioners to do otherwise, the company deducts income tax which it accounts for under sections 238 and 239, or under sections 238 and 241, as the case may be, or

(b) which is payable out of income brought into charge to tax under Case III of Schedule D and which arises from securities and possessions outside the State.

(6) No such payment made by a company as is mentioned in subsection (4) shall be treated as a charge on income if—

(a) the payment is charged to capital or the payment is not ultimately borne by the company, or

(b) the payment is not made under a liability incurred for a valuable and sufficient consideration and, in the case of a company not resident in the State, incurred wholly and exclusively for the purposes of a trade carried on by the company in the State through a branch or agency, and for the purposes of this paragraph a payment within subparagraph (ii) or (iii) of section 792(1)(b) shall be treated as incurred for valuable and sufficient consideration.

(7) Subject to subsection (8), interest shall not be treated as a charge on income.

(8) Subject to subsection (9), subsection (7) shall not apply to any payment of interest on a loan to a company to defray money applied for a purpose mentioned in subsection (2) of section 247, if the conditions specified in subsections (3) and (4) of that section are fulfilled.

(9) Section 249 shall apply for corporation tax as for income tax, and accordingly references in that section to section 247, to the investing company and to the borrower, to interest eligible for relief, and to affording relief for interest shall apply as if they were or included respectively references to subsection (8), to such a company as is mentioned in that subsection, to interest to be treated as a charge on income, and to treating part only of a payment of interest as a charge on income.

CHAPTER 3 Principal provisions relating to the payment of interest

244 Relief for interest paid on certain home loans. [FA97 s145]

244.—(1) (a) In this section—

“dependent relative”, in relation to an individual, means any of the persons mentioned in paragraph (a) or (b) of section 466(2) in respect of whom the individual is entitled to a deduction under that section;

“loan” means any loan or advance or any other arrangement whatever by virtue of which interest is paid or payable;

“qualifying interest”, in relation to an individual and a year of assessment, means the amount of interest paid by the individual in the year of assessment in respect of a qualifying loan;

“qualifying loan”, in relation to an individual, means a loan or loans which, without having been used for any other purpose, is or are used by the individual solely for the purpose of defraying money employed in the purchase, repair, development or improvement of a qualifying residence or in paying off another loan or loans used for such purpose;

“qualifying residence”, in relation to an individual, means a residential premises situated in the State, Northern Ireland or Great Britain, which is used as the sole or main residence of—

(i) the individual,

(ii) a former or separated spouse of the individual, or

(iii) a person who in relation to the individual is a dependent relative, and which is, where the residential premises is provided by the individual, provided rent-free and without any other consideration;

“relievable interest”, in relation to an individual and a year of assessment, means an amount equal to that part of the qualifying interest paid by the individual in the year of assessment which is determined by the formula—

(I 80) M

where—

I is—

(i) in the case of an individual assessed to tax for the year of assessment in accordance with section 1017, the amount of qualifying interest paid by that individual in the year of assessment or, if less, £5,000,

(ii) in the case of a widowed individual, the amount of qualifying interest paid by that individual in the year of assessment or, if less, £3,600,

(iii) in the case of any other individual, the amount of qualifying interest paid by that individual in the year of assessment or, if less, £2,500, and

M is—

(i) in the case of an individual assessed to tax for the year of assessment in accordance with section 1017, £200 or, if less, the amount of qualifying interest paid by that individual in the year of assessment,

(ii) in the case of any other individual, £100 or, if less, the amount of qualifying interest paid by that individual in the year of assessment,

but, notwithstanding the preceding provisions of this definition and subject to paragraph (c), as respects the first 5 years of assessment for which there is an entitlement to relief under this section in respect of a qualifying loan, “relievable interest”, in relation to an individual and a year of assessment, shall mean an amount equal to that part of the qualifying interest paid by the individual in the year of assessment which is determined by the formula—

(I 100)

where I has the same meaning as in the preceding provisions of this definition;

“residential premises” means—

(i) a building or part of a building used, or suitable for use, as a dwelling, and

(ii) land which the occupier of a building or part of a building used as a dwelling has for the occupier's own occupation and enjoyment with that building or that part of a building as its garden or grounds of an ornamental nature;

“separated” means separated under an order of a court of competent jurisdiction or by deed of separation or in such circumstances that the separation is likely to be permanent.

(b) For the purposes of this section, in the case of an individual assessed to tax for a year of assessment in accordance with section 1017, any payment of qualifying interest made by the individual's spouse, in respect of which the individual's spouse would have been entitled to relief under this section if that spouse were assessed to tax for the year of assessment in accordance with section 1016 (apart from subsection (2) of that section) shall be deemed to have been made by the individual.

(c) For the purposes of the second-mentioned formula in the definition of “relievable interest”, the number of years of assessment in which the amount of relievable interest is to be determined in accordance with that formula shall be reduced by one year of assessment for each year of assessment in which an individual was entitled to relief for a year of assessment before the year 1997-98 under section 76(1) or 496 of, or paragraph 1(2) of Part III of Schedule 6 to, the Income Tax Act, 1967.

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

(b) Where an individual for a year of assessment proves that in the year of assessment such individual paid an amount of qualifying interest, then, the income tax to be charged, other than in accordance with section 16(2), on such individual for that year of assessment shall be reduced by an amount which is the lesser of—

(i) the amount equal to the appropriate percentage of the relievable interest, and

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

(c) Except for the purposes of sections 187 and 188, no account shall be taken of relievable interest in calculating the total income of the individual by whom the relievable interest is paid.

(3) (a) Where the amount of relievable interest is determined in accordance with the second-mentioned formula in the definition of “relievable interest”, then, notwithstanding any other provision of the Tax Acts, in the case of an individual who has elected or could be deemed to have duly elected to be assessed to tax for the year of assessment in accordance with section 1017, where either—

(i) the individual, or

(ii) the individual's spouse,

was previously entitled to relief under this section or under section 76(1) or 496 of, or paragraph 1 (2) of Part III of Schedule 6 to, the Income Tax Act, 1967, and the other person was not so entitled—

(I) the relief to be given under this section, other than that part of the relief (in this subsection referred to as “the additional relief”) which is represented by the difference between the relievable interest and the amount which would have been the amount of the relievable interest had the first-mentioned formula in that definition applied, shall be treated as given in equal proportions to the individual and that individual's spouse for that year of assessment, and

(II) the additional relief shall be reduced by 50 per cent and the additional relief, as so reduced, shall be given only to the person who was not previously entitled to relief under this section or under section 76(1) or 496 of, or paragraph 1(2) of Part III of Schedule 6 to, the Income Tax Act, 1967.

(b) Paragraph (a) shall apply notwithstanding that—

(i) section 1023 may have applied for the year of assessment, and

(ii) the payments in respect of which relief is given may not have been made in equal proportions.

(4) (a) Notwithstanding anything in this section, a loan shall not be a qualifying loan, in relation to an individual, if it is used for the purpose of defraying money applied in—

(i) the purchase of a residential premises or any interest in such premises from an individual who is the spouse of the purchaser,

(ii) the purchase of a residential premises or any interest in such premises if, at any time after the 25th day of March, 1982, that premises or interest was disposed of by the purchaser or by his or her spouse or if any interest which is reversionary to the interest purchased was so disposed of after that date, or

(iii) the purchase, repair, development or improvement of a residential premises, and the person who, directly or indirectly, received the money is connected with the individual and it appears that the purchase price of the premises substantially exceeds the value of what is acquired or, as the case may be, the cost of the repair, development or improvement substantially exceeds the value of the work done.

(b) Subparagraphs (i) and (ii) of paragraph (a) shall not apply in the case of a husband and wife who are separated.

(5) Where an individual acquires a new sole or main residence but does not dispose of the previous sole or main residence owned by the individual and it is shown to the satisfaction of the inspector that it was the individual's intention, at the time of the acquisition of the new sole or main residence, to dispose of the previous sole or main residence and that the individual has taken and continues to take all reasonable steps necessary to dispose of it, the previous sole or main residence shall be treated as a qualifying residence, in relation to the individual, for the period of 12 months commencing on the date of the acquisition of the new sole or main residence.

(6) (a) In this subsection, “personal representative” has the same meaning as in section 799.

(b) Where any interest paid on a loan used for a purpose mentioned in the definition of “qualifying loan” by persons as the personal representatives of a deceased person or as trustees of a settlement made by the will of a deceased person would, on the assumptions stated in paragraph (c), be eligible for relief under this section and, in a case where the condition stated in that paragraph applies, that condition is satisfied, that interest shall be so eligible notwithstanding the preceding provisions of this section.

(c) For the purposes of paragraph (b), it shall be assumed that the deceased person would have survived and been the borrower and if, at the time of the person's death, the residential premises was used as that person's sole or main residence, it shall be further assumed that the person would have continued so to use it and the following condition shall then apply, namely, that the residential premises was, at the time the interest was paid, used as the sole or main residence of the deceased's widow or widower or of any dependent relative of the deceased.

245 Relief for certain bridging loans. [FA74 s32; FA97 s146(1) and Sch9 PtI par8(1)]

245.—(1) Where a person—

(a) disposes of such person's only or main residence and acquires another residence for use as such person's only or main residence,

(b) obtains a loan, the proceeds of which are used to defray in whole or in part the cost of the acquisition or the disposal or both, and

(c) pays interest on the loan (and on any subsequent loan the proceeds of which are used to repay in whole or in part the first-mentioned loan or any such subsequent loan or to pay interest on any such loan) in respect of the period of 12 months from the date of the making of the first-mentioned loan,

such person shall be entitled on proof of those facts to a reduction in tax under section 244 on the amount of that interest as if no other interest had been paid by such person in respect of the period of 12 months from the date of the making of the first-mentioned loan.

(2) Subsection (1) shall not apply to a loan the proceeds of which are applied for some other purpose before being applied for the purpose specified in that subsection.

246 Interest payments by companies and to non-residents. [FA74 s31; CTA76 s140(1) and Sch2 PtI par42; FA88 s38; FA96 s33(1) and s132(2) and Sch5 PtII; FA97 s36]

246.—(1) In this section—

“company” means any body corporate;

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

(2) Where any yearly interest charged with tax under Schedule D is paid—

(a) by a company, otherwise than when paid in a fiduciary or representative capacity, to a person whose usual place of abode is in the State, or

(b) by any person to another person whose usual place of abode is outside the State,

the person by or through whom the payment is made shall on making the payment deduct out of the payment a sum representing the amount of the tax on the payment at the standard rate in force at the time of the payment, and subsections (1) and (3) to (5) of section 238 shall apply to such payments as they apply to payments specified in subsection (2) of that section.

(3) Subsection (2) shall not apply to—

(a) interest paid in the State on an advance from a bank carrying on a bona fide banking business in the State,

(b) interest paid by such a bank in the ordinary course of such business,

(i) a company in the course of carrying on relevant trading operations within the meaning of section 445 or 446, or

(ii) a specified collective investment undertaking within the meaning of section 734,

(d) interest paid by a company authorised by the Revenue Commissioners to pay interest without deduction of income tax,

(e) interest on any securities in respect of which the Minister for Finance has given a direction under section 36,

(f) interest paid without deduction of tax by virtue of section 700, or

(g) interest which under section 437 is a distribution.

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

(a) as if there were deleted from subsection (2) of section 445 “, and any certificate so given shall, unless it is revoked under subsection (4), (5) or (6), remain in force until the 31st day of December, 2005”, and

(b) as if there were deleted from subsection (2) of section 446 “, and any certificate so given shall, unless it is revoked under subsection (4), (5) or (6), remain in force until the 31st day of December, 2005”.

247 Relief to companies on loans applied in acquiring interest in other companies. [FA74 s33 and s 35(4) and (5); CTA76 s140(1) and Sch2 PtI par43; FA96 s131(9)(a)]

247.—(1) (a) In this section and in sections 248 and 249—

“control” shall be construed in accordance with section 432;

“material interest”, in relation to a company, means the beneficial ownership of, or the ability to control, directly or through the medium of a connected company or connected companies or by any other indirect means, more than 5 per cent of the ordinary share capital of the company.

(b) For the purposes of this section and sections 248 and 249, a company shall be regarded as connected with another company if it would be so regarded for the purposes of the Tax Acts by virtue of section 10 and if it is a company referred to in subsection (2)(a).

(2) This section shall apply to a loan to a company (in this section and in section 249(1) referred to as “the investing company”) to defray money applied—

(a) in acquiring any part of the ordinary share capital of—

(i) a company which exists wholly or mainly for the purpose of carrying on a trade or trades or a company whose income consists wholly or mainly of profits or gains chargeable under Case V of Schedule D, or

(ii) a company whose business consists wholly or mainly of the holding of stocks, shares or securities of a company referred to in subparagraph (i),

(b) in lending to a company referred to in paragraph (a) money which is used wholly and exclusively for the purposes of the trade or business of the company or of a connected company, or

(c) in paying off another loan where relief could have been obtained under this section for interest on that other loan if it had not been paid off (on the assumption, if the loan was free of interest, that it carried interest).

(3) Relief shall be given in respect of any payment of the interest by the investing company on the loan if—

(a) when the interest is paid the investing company has a material interest in the company or in a connected company,

(b) during the period taken as a whole from the application of the proceeds of the loan until the interest was paid at least one director of the investing company was also a director of the company or of a connected company, and

(c) the investing company shows that in the period referred to in paragraph (b) it has not recovered any capital from the company or from a connected company apart from any amount taken into account under section 249.

(4) Subsection (2) shall not apply to a loan unless it is made in connection with the application of the money and either on the occasion of its application or within what is in the circumstances a reasonable time from the application of the money, and that subsection shall not apply to a loan the proceeds of which are applied for some other purpose before being applied as described in that subsection.

(5) Interest eligible for relief under this section shall be deducted from or set off against the income of the borrower for the accounting period in which the interest is paid and tax shall be discharged or repaid accordingly, and such interest shall not be eligible for relief under any provision of the Tax Acts apart from this section.

248 Relief to individuals on loans applied in acquiring interest in companies. [FA74 s34 and s35(4) and (5); FA92 s14(4)]

248.—(1) This section shall apply to a loan to an individual to defray money applied—

(a) in acquiring any part of the ordinary share capital of—

(ii) a company whose business consists wholly or mainly of the holding of stocks, shares or securities of a company referred to in subparagraph (i),

(b) in lending to a company referred to in paragraph (a) money which is used wholly and exclusively for the purpose of the trade or business of the company or of a connected company, or

(2) Relief shall be given in respect of any payment of interest by the individual on the loan if—

(a) when the interest is paid the individual has a material interest in the company or in a connected company,

(b) during the period taken as a whole from the application of the proceeds of the loan until the interest was paid, the individual has worked for the greater part of his or her time in the actual management or conduct of the business of the company or of a connected company, and

(c) the individual shows that in the period referred to in paragraph (b) he or she has not recovered any capital from the company or from a connected company, apart from any amount taken into account under section 249.

(3) Relief shall not be given in respect of any payment of interest by an individual on a loan applied on or after the 24th day of April, 1992, for any of the purposes specified in subsection (1) unless the loan is applied for bona fide commercial purposes and not as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.

(4) Subsection (1) shall not apply to a loan unless it is made in connection with the application of the money and either on the occasion of its application or within what is in the circumstances a reasonable time from the application of the money, and that subsection shall not apply to a loan the proceeds of which are applied for some other purpose before being applied as described in that subsection.

(5) Interest eligible for relief under this section shall be deducted from or set off against the income of the borrower for the year of assessment in which the interest is paid and tax shall be discharged or repaid accordingly, and such interest shall not be eligible for relief under any provision of the Income Tax Acts apart from this section.

249 Rules relating to recovery of capital and replacement loans. [FA74 s35(1) to (3)]

249.—(1) (a) Where, at any time after the application of the proceeds of a loan to which section 247 or 248 applies, the investing company or the individual (in this section referred to as “the borrower”) has recovered any amount of capital from the company concerned or from a connected company without using that amount in repayment of the loan, the borrower shall be treated for the purposes of this section as if the borrower had at that time repaid that amount out of the loan and so that out of the interest otherwise eligible for relief and payable for any period after that time there shall be deducted an amount equal to interest on the amount of capital so recovered.

(b) Where part only of a loan referred to in paragraph (a) fulfils the conditions in section 247 or 248 so as to afford relief for interest on that part, the deduction to be made under this subsection shall be made wholly out of interest on that part.

(2) (a) The borrower shall be treated as having recovered an amount of capital from the company or from a connected company if—

(i) the borrower receives consideration of that amount or value for the sale of any part of the ordinary share capital of the company or of a connected company or any consideration of that amount or value by means of repayment of any part of that ordinary share capital,

(ii) the company or a connected company repays that amount of a loan or advance from the borrower, or

(iii) the borrower receives consideration of that amount or value for assigning any debt due to the borrower from the company or from a connected company.

(b) In the case of a sale or assignment otherwise than by means of a bargain made at arm's length, the sale or assignment shall be deemed to be for consideration of an amount equal to the market value of what is disposed of.

(3) Sections 247(3) and 248(2) and subsections (1) and (2) shall apply to a loan referred to in section 247(2)(c) or 248(1)(c) as if such loan and any loan it replaces were one loan, and as if—

(a) references in sections 247(3) and 248(2) and in subsection (1) to the application of the proceeds of the loan were references to the application of the proceeds of the original loan, and

(b) any restriction under subsection (1) which applied to any loan which has been replaced applied also to the loan which replaces that loan.

250 Extension of relief under section 248 to certain individuals in relation to loans applied in acquiring interest in certain companies. [FA78 s8; FA79 s9; FA96 s131(9)(a)]

250.—(1) In this section—

“90 per cent subsidiary” has the meaning assigned to it by section 9;

“full-time employee” and “full-time director”, in relation to a company, mean an employee or director, as the case may be, who is required to devote substantially the whole of his or her time to the service of the company;

“holding company” has the same meaning as in section 411;

“part-time employee” and “part-time director”, in relation to a company, mean an employee or director, as the case may be, who is not required to devote substantially the whole of his or her time to the service of the company;

“private company” has the meaning assigned to it by section 33 of the Companies Act, 1963.

(2) Notwithstanding that an individual does not satisfy one or both of the conditions set out in paragraphs (a) and (b) of section 248(2), the individual shall be entitled to relief under section 248 for any interest paid on any loan to him or her applied for a purpose specified in section 248(1) if—

(a) the company part of whose ordinary share capital is acquired or, as the case may be, to which the money is loaned is—

(i) both a company referred to in paragraph (a)(i) of section 248(1) and a company in relation to which the individual was a full-time employee, part-time employee, full-time director or part-time director during the period taken as a whole from the application of the proceeds of the loan until the interest was paid, or

(ii) both a company referred to in paragraph (a)(ii) of section 248(1) and a private company in relation to which, or in relation to any company which would be regarded as connected with it for the purposes of section 248, the individual was during that period a full-time director or a full-time employee,

and

(b) the company or any person connected with the company has not, during the period specified in paragraph (a)(i), made any loans or advanced any money to the individual or a person connected with the individual other than a loan made or money advanced in the ordinary course of a business which included the lending of money, being business carried on by the company or, as the case may be, by the person connected with the company.

(3) In relation to any payment or payments of interest on any loan or loans applied—

(a) in acquiring any part of the ordinary share capital of a company other than a private company,

(b) in lending money to such a company, or

no relief shall be given for any year of assessment by virtue of this section other than to a full-time employee or full-time director of the company and no such relief shall be given to such employee or director on the excess of that payment, or the aggregate amount of those payments, for that year of assessment over £2,400.

(4) Where relief is given by virtue of this section to an individual and any loan made or money advanced to the individual or to a person connected with the individual is, in accordance with paragraph (c) of subsection (5) and by virtue of subparagraph (ii), (iii), (iv) or (v) of that paragraph, subsequently regarded as not having been made or advanced in the ordinary course of a business, any relief so given, which would not have been given if, at the time the relief was given, the loan or money advanced had been so regarded, shall be withdrawn and there shall be made all such assessments or additional assessments as are necessary to give effect to this subsection.

(5) For the purposes of this section—

(a) any question whether a person is connected with another person shall be determined in accordance with section 10 (as it applies for the purposes of the Tax Acts) and paragraph (b),

(b) a person shall be connected with any other person to whom such person has, otherwise than in the ordinary course of a business carried on by such person which includes the lending of money, made any loans or advanced any money, and with any person to whom that other person has so made any loan or advanced any money and so on,

(c) a loan shall not be regarded as having been made, or money shall not be regarded as having been advanced, in the ordinary course of a business if—

(i) the loan is made or the money is advanced on terms which are not reasonably comparable with the terms which would have been applied in respect of that loan or the advance of that money on the basis that the negotiations for the loan or the advance of the money had been at arm's length,

(ii) at the time the loan was made or the money was advanced the terms were such that subparagraph (i) did not apply, those terms are subsequently altered and the terms as so altered are such that if they had applied at the time the loan was made or the money was advanced subparagraph (i) would have applied,

(iii) any interest payable on the loan or on the money advanced is waived,

(iv) any interest payable on the loan or on the money advanced is not paid within 12 months from the date on which it became payable, or

(v) the loan or the money advanced or any part of the loan or money advanced is not repaid within 12 months of the date on which it becomes repayable,

(d) the cases in which any person is to be regarded as making a loan to any other person include a case where—

(i) that other person incurs a debt to that person, or

(ii) a debt due from that other person to a third party is assigned to that person;

but subparagraph (i) shall not apply to a debt incurred for the supply by that person of goods or services in the ordinary course of that person's trade or business unless the period for which credit is given exceeds 6 months or is longer than normally given by that person,

(e) a company other than a private company shall be deemed to be a company referred to in section 248(1)(a)(i) if it is a holding company and is resident in the State, and

(f) an individual shall be deemed to be a full-time employee or full-time director of a company referred to in paragraph (e) if the individual is a full-time employee or full-time director of any company which is a 90 per cent subsidiary of that company.

251 Restriction of relief to individuals on loans applied in acquiring shares in companies where a claim for “BES relief” or “film relief” is made in respect of amount subscribed for shares. [FA90 s11; FA93 s6]

251.—Notwithstanding sections 248 and 250, relief shall not be given under either section in respect of any payment of interest on any loan applied in acquiring shares (being shares forming part of the ordinary share capital of a company) issued—

(a) on or after the 20th day of April, 1990, if a claim for relief under Part 16 is made in respect of the amount subscribed for those shares, or

(b) on or after the 6th day of May, 1993, if a claim for relief under section 481 is made in respect of the amount subscribed for those shares.

252 Restriction of relief to individuals on loans applied in acquiring interest in companies which become quoted companies. [FA92 s14(1), (2) and (3); FA97 s10]

252.—(1) In this section—

“loan” means a loan applied for any of the purposes specified in the principal section;

“the principal section” means section 248 as extended by section 250;

“quoted company” means a company whose shares or any class of whose shares—

(a) are listed in the official list of the Irish Stock Exchange or any other stock exchange, or

(b) are quoted on an unlisted securities market of any stock exchange;

“the specified date”, in relation to a loan, means—

(a) (i) in a case where the loan was applied on or before the 5th day of April, 1989, the 6th day of April, 1992,

(ii) in a case where the loan was applied on or after the 6th day of April, 1989, but on or before the 5th day of April, 1990, the 6th day of April, 1993, and

(iii) in a case where the loan was applied on or after the 6th day of April, 1990, the 6th day of April, 1994,

(b) if later, the 6th day of April in the second year of assessment next after the year of assessment in which the company, part of whose ordinary share capital was acquired or, as the case may be, to which the money was loaned, becomes a quoted company.

(2) Subject to subsection (3), if the company, part of whose ordinary share capital was acquired or, as the case may be, to which the money was loaned, is, at the specified date in relation to the loan, a quoted company, entitlement to relief under the principal section in respect of interest paid on a loan shall be determined subject to the following provisions:

(a) as respects the year of assessment commencing with the specified date, relief shall not be given in respect of the excess of the amount, or of the aggregate amount, of the interest over 70 per cent of the amount, or of the aggregate amount, of the interest in respect of which apart from this paragraph relief would otherwise have been given under the principal section;

(b) as respects the next year of assessment, relief shall not be given in respect of the excess of the amount, or of the aggregate amount, of the interest over 40 per cent of the amount, or of the aggregate amount, of the interest in respect of which apart from this paragraph relief would otherwise have been given under the principal section;

(3) Notwithstanding anything in subsection (2) or the principal section, the principal section shall not apply in relation to any payment of interest on a loan applied on or after the 29th day of January, 1992, if, at the time the loan is applied, the company, part of whose ordinary share capital was or is acquired or, as the case may be, to which the money was or is loaned, is a quoted company.

253 Relief to individuals on loans applied in acquiring interest in partnerships. [FA74 s36]

253.—(1) This section shall apply to a loan to an individual to defray money applied—

(a) in purchasing a share in a partnership,

(b) in contributing money to a partnership by means of capital or a premium, or in advancing money to the partnership, where the money contributed or advanced is used wholly and exclusively for the purposes of the trade or profession carried on by the partnership, or

(2) Relief shall be given in respect of any payment of interest by the individual on the loan if—

(a) throughout the period from the application of the proceeds of the loan until the interest was paid the individual has personally acted in the conduct of the trade or profession carried on by the partnership as a partner therein, and

(b) the individual shows that in that period he or she has not recovered any capital from the partnership, apart from any amount taken into account under subsection (3).

(3) (a) Where at any time after the application of the proceeds of the loan the individual has recovered any amount of capital from the partnership without using that amount in repayment of the loan, the individual shall be treated for the purposes of this section as if he or she had at that time repaid that amount out of the loan, and accordingly there shall be deducted out of the interest otherwise eligible for relief and payable for any period after that time an amount equal to interest on the amount of capital so recovered.

(b) Where part only of a loan fulfils the conditions in this section so as to afford relief for interest on that part, the deduction to be made under this subsection shall be made wholly out of interest on that part.

(4) (a) The individual shall be treated as having recovered an amount of capital from the partnership if—

(i) the individual receives a consideration of that amount or value for the sale of any part of his or her interest in the partnership,

(ii) the partnership returns any amount of capital to the individual or repays any amount advanced by the individual, or

(iii) the individual receives a consideration of that amount or value for assigning any debt due to the individual from the partnership.

(5) Subsections (2) to (4) shall apply to a loan referred to in subsection (1)(c) as if such loan and any loan it replaces were one loan, and as if—

(a) references in subsections (2) to (4) to the application of the proceeds of the loan were references to the application of the proceeds of the original loan, and

(b) any restriction under subsection (3) which applied to any loan which has been replaced applied also as respects the loan which replaces that loan.

(6) Subsection (1) shall not apply to a loan unless it is made in connection with the application of the money and either on the occasion of its application or within what is in the circumstances a reasonable time from the application of the money, and that subsection shall not apply to a loan the proceeds of which are applied for some other purpose before being applied as described in that subsection.

(7) Interest eligible for relief under this section shall be deducted from or set off against the income of the individual for the year of assessment in which the interest is paid and tax shall be discharged or repaid accordingly, and such interest shall not be eligible for relief under any provision of the Income Tax Acts apart from this section.

254 Interest on borrowings to replace capital withdrawn in certain circumstances from a business. [FA74 s37]

254.—Where a person borrows money to replace in whole or in part capital in any form formerly employed in any trade, profession or other business carried on by the person in respect of the profits or gains of which tax is charged under Schedule D, being capital which within the 5 years preceding the date of replacement was withdrawn from such use for use otherwise than in connection with a trade, profession or other business carried on by the person, interest on such borrowed money shall not be regarded as interest wholly and exclusively laid out or expended for the purposes of a trade, profession or other business.

255 Arrangements for payment of interest less tax or of fixed net amount. [FA74 s39]

255.—(1) Any agreement made, whether orally or in writing, for the payment of interest “less tax”, or using words to that effect, shall be construed, in relation to interest payable without deduction of tax, as if the words “less tax” or the equivalent words were not included.

(2) In relation to interest on which the recipient is chargeable to tax under Schedule D and which is payable without deduction of tax, any agreement, whether orally or in writing and however worded, for the payment of interest at such a rate (in this subsection referred to as “the gross rate”) as shall, after deduction of tax at the standard rate of tax for the time being in force, be equal to a stated rate, shall be construed as if it were an agreement requiring the payment of interest at the gross rate.

CHAPTER 4 Interest payments by certain deposit takers

256 Interpretation (Chapter 4). [FA 86 s31; FA91 s11; FA92 s22(1)(a); F(No.2)A92 s3(a); FA93 s15(1)(a); FA95 s11(1) and s167]

256.—(1) In this Chapter—

“amount on account of appropriate tax” shall be construed in accordance with section 258(4);

“appropriate tax”, in relation to a payment of relevant interest, means a sum representing income tax on the amount of that payment—

(a) in the case of a relevant deposit or relevant deposits held in a special savings account, at the rate of 15 per cent, and

(b) in the case of any other relevant deposit, at the standard rate in force at the time of payment;

“building society” means a building society within the meaning of the Building Societies Act, 1989, or a society established in accordance with the law of any other Member State of the European Communities which corresponds to that Act;

“deposit” means a sum of money paid to a relevant deposit taker on terms under which it will be repaid with or without interest and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person to whom it is made;

“foreign currency” means a currency other than the currency of the State;

“interest” means any interest of money whether yearly or otherwise, including any amount, whether or not described as interest, paid in consideration of the making of a deposit, and, as respects a building society, includes any dividend or other distribution in respect of shares in the society; but any amount consisting of an excess of the amount received on the redemption of any holding of A.C.C. Bonus Bonds — First Series, issued by ACC Bank plc, over the amount paid for the holding shall not be treated as interest for the purposes of this Chapter;

“pension scheme” means an exempt approved scheme within the meaning of section 774 or a retirement annuity contract or a trust scheme to which section 784 or 785 applies;

“relevant deposit” means a deposit held by a relevant deposit taker, other than a deposit—

(a) which is made by, and the interest on which is beneficially owned by—

(i) a relevant deposit taker,

(ii) the National Treasury Management Agency,

(iii) the State acting through the National Treasury Management Agency,

(iv) the Central Bank of Ireland, or

(v) Icarom plc,

(b) which is a debt on a security issued by the relevant deposit taker and listed on a stock exchange,

(c) which, in the case of a relevant deposit taker resident in the State for the purposes of corporation tax, is held at a branch of the relevant deposit taker situated outside the State,

(d) which, in the case of a relevant deposit taker not resident in the State for the purposes of corporation tax, is held otherwise than at a branch of the relevant deposit taker situated in the State,

(e) which is a deposit denominated in a foreign currency made—

(i) by a person other than an individual before the 1st day of January, 1993, or

(ii) by an individual before the 1st day of June, 1991,

but, where on or after the 1st day of June, 1991, and before the 1st day of January, 1993, a deposit denominated in a foreign currency is made by an individual to a relevant deposit taker with whom the individual had a deposit denominated in the same foreign currency immediately before the 1st day of June, 1991, such a deposit shall not be regarded as a relevant deposit,

(f) (i) which is made on or after the 1st day of January, 1993, by, and the interest on which is beneficially owned by—

(I) a company which is or will be within the charge to corporation tax in respect of the interest, or

(II) a pension scheme,

and

(ii) in respect of which a declaration of the kind mentioned in section 265 has been made to the relevant deposit taker,

(g) in respect of which—

(i) no person resident in the State is beneficially entitled to any interest, and

(ii) a declaration of the kind mentioned in section 263 has been made to the relevant deposit taker, or

(h) (i) the interest on which is exempt—

(I) from income tax under Schedule D by virtue of section 207(1)(b), or

(II) from corporation tax by virtue of section 207(1)(b) as it applies for the purposes of corporation tax under section 76(6),

and

(ii) in respect of which a declaration of the kind mentioned in section 266 has been made to the relevant deposit taker;

“relevant deposit taker” means any of the following persons—

(a) a person who is a holder of a licence granted under section 9 of the Central Bank Act, 1971, or a person who holds a licence or other similar authorisation under the law of any other Member State of the European Communities which corresponds to a licence granted under that section,

(b) a building society,

(d) ACC Bank plc,

(e) ICC Bank plc,

(f) ICC Investment Bank Limited,

(g) the Post Office Savings Bank;

“relevant interest” means interest paid in respect of a relevant deposit;

“return” means a return under section 258(2);

“special savings account” means an account opened on or after the 1st day of January, 1993, in which a relevant deposit or relevant deposits made by an individual is or are held and in respect of which—

(a) the conditions in section 264(1) are satisfied, and

(b) a declaration of the kind mentioned in section 264(2) has been made to the relevant deposit taker.

(2) For the purposes of this Chapter—

(a) any amount credited as interest in respect of a relevant deposit shall be treated as a payment of interest, and references in this Chapter to relevant interest being paid shall be construed accordingly,

(b) any reference in this Chapter to the amount of a payment of relevant interest shall be construed as a reference to the amount which would be the amount of that payment if no appropriate tax were to be deducted from that payment, and

(c) a deposit shall be treated as held at a branch of a relevant deposit taker if it is recorded in its books as a liability of that branch.

257 Deduction of tax from relevant interest. [FA 86 s32]

257.—(1) Where a relevant deposit taker makes a payment of relevant interest—

(a) the relevant deposit taker shall deduct out of the amount of the payment the appropriate tax in relation to the payment,

(b) the person to whom such payment is made shall allow such deduction on the receipt of the residue of the payment, and

(c) the relevant deposit taker shall be acquitted and discharged of so much money as is represented by the deduction as if that amount of money had actually been paid to the person.

(2) A relevant deposit taker shall treat every deposit made with it as a relevant deposit unless satisfied that such a deposit is not a relevant deposit; but, where a relevant deposit taker has satisfied itself that a deposit is not a relevant deposit, it shall be entitled to continue to so treat the deposit until such time as it is in possession of information which can reasonably be taken to indicate that the deposit is or may be a relevant deposit.

(3) Any payment of relevant interest which is within subsection (1) shall be treated as not being within section 246.

258 Returns and collection of appropriate tax. [FA 86 s33(1) to (9)(d) and (10); FA97 s146(2) and Sch9 PtII]

258.—(1) Notwithstanding any other provision of the Tax Acts, this section shall apply for the purpose of regulating the time and manner in which appropriate tax in relation to a payment of relevant interest shall be accounted for and paid.

(2) Subject to subsection (5), a relevant deposit taker shall make for each year of assessment, within 15 days from the end of the year of assessment, a return to the Collector-General of the relevant interest paid by it in that year and of the appropriate tax in relation to the payment of that interest.

(3) The appropriate tax in relation to a payment of relevant interest which is required to be included in a return shall be due at the time by which the return is to be made and shall be paid by the relevant deposit taker to the Collector-General, and the appropriate tax so due shall be payable by the relevant deposit taker without the making of an assessment; but appropriate tax which has become so due may be assessed on the relevant deposit taker (whether or not it has been paid when the assessment is made) if that tax or any part of it is not paid on or before the due date.

(4) (a) Notwithstanding subsection (3), a relevant deposit taker shall for each year of assessment pay to the Collector-General, within 15 days of the 5th day of October in that year of assessment, an amount on account of appropriate tax.

(b) An amount on account of appropriate tax payable under this subsection shall be not less than the amount of appropriate tax which would be due and payable by the relevant deposit taker for the year of assessment concerned under subsection (3) if the total amount of the relevant interest which had accrued in the period commencing on the 6th day of April and ending on the 5th day of October in that year of assessment on all relevant deposits held by the relevant deposit taker in that period (and no more) had been paid by it in that year of assessment.

(c) Any amount on account of appropriate tax so paid by the relevant deposit taker for any year of assessment shall be treated as far as may be as a payment on account of any appropriate tax due and payable by it for that year of assessment under subsection (3).

(d) For the purposes of paragraph (b), interest shall be treated as accruing from day to day if not otherwise so treated.

(e) Where the amount on account of appropriate tax paid by a relevant deposit taker for any year of assessment under this subsection exceeds the amount of appropriate tax due and payable by it for that year of assessment under subsection (3), the excess shall be carried forward and shall be set off against any amount due and payable under this subsection or subsection (3) by the relevant deposit taker for any subsequent year of assessment (any such set-off being effected as far as may be against an amount so due and payable at an earlier date rather than at a later date).

(5) (a) Any amount on account of appropriate tax payable by a relevant deposit taker under subsection (4) shall be so payable without the making of an assessment.

(b) The provisions of this Chapter relating to the collection and recovery of appropriate tax shall, with any necessary modifications, apply to the collection and recovery of any amount on account of appropriate tax.

(c) A return required to be made by a relevant deposit taker for any year of assessment shall contain a statement of the amount of interest in respect of which an amount on account of appropriate tax is due and payable by the relevant deposit taker for that year of assessment and of the amount on account of appropriate tax so due and payable, and a return shall be so required to be made by a relevant deposit taker for a year of assessment notwithstanding that no relevant interest was paid by it in the year of assessment.

(6) Where it appears to the inspector that there is any amount of appropriate tax in relation to a payment of relevant interest which ought to have been but has not been included in a return, or where the inspector is dissatisfied with any return, the inspector may make an assessment on the relevant deposit taker to the best of his or her judgment, and any amount of appropriate tax in relation to a payment of relevant interest due under an assessment made by virtue of this subsection shall be treated for the purposes of interest on unpaid tax as having been payable at the time when it would have been payable if a correct return had been made.

(7) Where any item has been incorrectly included in a return as a payment of relevant interest, the inspector may make such assessments, adjustments or set-offs as may in his or her judgment be required for securing that the resulting liabilities to tax, including interest on unpaid tax, whether of the relevant deposit taker or any other person, are in so far as possible the same as they would have been if the item had not been so included.

(8) (a) Any appropriate tax assessed on a relevant deposit taker under this Chapter shall be due within one month after the issue of the notice of assessment (unless that tax or any amount treated as an amount on account of that tax is due earlier under subsection (3) or (4)) subject to any appeal against the assessment, but no such appeal shall affect the date when any amount is due under subsection (3) or (4).

(b) On the determination of an appeal against an assessment under this Chapter, any appropriate tax overpaid shall be repaid.

(9) (a) The provisions of the Income Tax Acts relating to—

(i) assessments to income tax,

(ii) appeals against such assessments (including the rehearing of appeals and the statement of a case for the opinion of the High Court), and

(iii) the collection and recovery of income tax,

shall, in so far as they are applicable, apply to the assessment, collection and recovery of appropriate tax.

(b) Any amount of appropriate tax or amount on account of appropriate tax payable in accordance with this Chapter without the making of an assessment shall carry interest at the rate of 1.25 per cent for each month or part of a month from the date when the amount becomes due and payable until payment.

(c) Subsections (2) and (4) of section 1080 shall apply in relation to interest payable under paragraph (b) as they apply in relation to interest payable under section 1080.

(d) In its application to any appropriate tax charged by any assessment made in accordance with this Chapter, section 1080 shall apply as if subsection (1)(b) of that section were deleted.

(10) Every return shall be in a form prescribed by the Revenue Commissioners and shall include a declaration to the effect that the return is correct and complete.

259 Alternative amount on account of appropriate tax. [FA87 s7(1)(a) and (b), (2), (3) and (4)]

259.—(1) For the purposes of this section—

(a) interest shall be treated, if not otherwise so treated, as accruing from day to day, and

(b) references to “general crediting date”, as respects a relevant deposit taker, shall be construed as references to a date on which the relevant deposit taker credits to all, or to the majority, of relevant deposits held by it on that date interest accrued due on those deposits (whether or not the interest is added to the balances on the relevant deposits on that date for the purpose of calculating interest due at some future date).

(2) Where for any year of assessment the amount of appropriate tax due and payable by a relevant deposit taker for that year under section 258 is less than the amount of appropriate tax which would have been so due and payable by the relevant deposit taker for that year if the total amount of the interest which had accrued, in the period of 12 months ending on—

(a) the general crediting date as respects that relevant deposit taker falling in that year of assessment,

(b) if there is more than one general crediting date as respects that relevant deposit taker falling in that year of assessment, the last such date, or

(c) if there is no general crediting date as respects that relevant deposit taker falling in that year of assessment, the 5th day of April in that year,

on all relevant deposits held by the relevant deposit taker in that period (and no more) had been paid by it in that period, this section shall apply to that relevant deposit taker for the year of assessment succeeding that year of assessment and for each subsequent year of assessment.

(3) Notwithstanding anything in section 258, where this section applies to a relevant deposit taker for any year of assessment, section 258(4) shall not apply to the relevant deposit taker for that year of assessment but subsection (4) shall apply to that relevant deposit taker for that year and, as respects that relevant deposit taker for that year, any reference in the Tax Acts (apart from this section) to section 258(4) shall be construed as a reference to subsection (4).

(4) (a) Notwithstanding section 258(3), a relevant deposit taker shall for each year of assessment pay to the Collector-General, within 15 days of the 5th day of October in that year of assessment, an amount on account of appropriate tax which shall be not less than the amount determined by the formula set out in the Table to this paragraph, and any amount on account of appropriate tax so paid by the relevant deposit taker for a year of assessment shall be treated as far as may be as a payment on account of any appropriate tax due and payable by it for that year of assessment under section 258(3).

TABLE

A (B C)

where—

A is the amount of appropriate tax which would be due and payable by the relevant deposit taker for the year of assessment (in this Table referred to as “the relevant year”) in accordance with section 258(3) if the total amount of the relevant interest which had accrued in the period of 12 months ending on the 5th day of October in the relevant year on all relevant deposits held by the relevant deposit taker in that period (and no more) had been paid by it in the relevant year,

B is the amount of appropriate tax which was due and payable by the relevant deposit taker for the year of assessment preceding the relevant year in accordance with section 258(3), and

C is an amount equal to the lesser of the amount at B and the amount treated, in accordance with this subsection or section 258(4), as paid by the relevant deposit taker on account of the appropriate tax due and payable by it for the year of assessment preceding the relevant year.

(b) Where the amount on account of appropriate tax paid by a relevant deposit taker for any year of assessment under this subsection exceeds the amount of appropriate tax due and payable by it for that year of assessment under section 258(3), the excess shall be carried forward and shall be set off against any amount due and payable under this subsection or section 258(3) by the relevant deposit taker for any subsequent year of assessment (any such set-off being effected as far as may be against an amount so due and payable at an earlier date rather than at a later date).

260 Provisions supplemental to sections 258 and 259. [FA86 s33A; FA96 s42; FA97 s146(1) and Sch9 PtI par14]

260.—(1) In this section—

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

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

(b) in respect of which—

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

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

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

“specified interest” means interest in respect of a specified deposit, other than so much of the amount of that interest as—

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

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

(2) (a) Subject to this section, specified interest shall for the purposes of section 258 be deemed—

(i) to accrue from day to day, and

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

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

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

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

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

(3) (a) Where apart from subsection (2) a relevant deposit taker makes a payment of relevant interest which is or includes specified interest, the relevant deposit taker shall—

(i) deduct out of the whole of the amount of that payment the appropriate tax in relation to that payment in accordance with section 257, and

(ii) account for that appropriate tax under section 258,

and that appropriate tax shall be due and payable by the relevant deposit taker in accordance with section 258.

(b) So much of the amount of appropriate tax paid by the relevant deposit taker by virtue of subsection (2) as is referable to specified interest included in a payment of relevant interest referred to in paragraph (a) shall be set off against any amount of appropriate tax due and payable by the relevant deposit taker for the year of assessment in which that payment of interest is made or against any amount, or amount on account of, appropriate tax due and payable by it for a year of assessment subsequent to that year (any such set-off being effected as far as may be against an amount so due and payable at an earlier date rather than at a later date).

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

(a) in accordance with section 258(4) or 259(4), as may be appropriate, a relevant deposit taker makes a payment on account of appropriate tax in respect of specified interest as if, in relation to each specified deposit held by it, the references—

(i) in section 258(4), to the period beginning on the 6th day of April, and ending on the 5th day of October in the year of assessment, and

(ii) in section 259(4), where it occurs in the meaning assigned to “A”, to the period of 12 months ending on the 5th day of October in the relevant year,

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

(b) the full amount payable on account of appropriate tax by the relevant deposit taker in that year of assessment in accordance with section 258(4) or 259(4), including any amount payable in accordance with those sections as modified by paragraph (a), before the set-off of any amount on account of appropriate tax paid in an earlier year of assessment, does not exceed the appropriate tax payable by the relevant deposit taker for that year of assessment.

261 Taxation of relevant interest, etc. [FA 86 s35(1)(a) to (cc); FA93 s15(1)(b); FA94 s12(1)(a)]

261.—Notwithstanding anything in the Tax Acts—

(a) no part of any interest paid by a building society in respect of any shares in the society shall be treated for the purposes of the Corporation Tax Acts as a distribution of the society or as franked investment income of any company resident in the State;

(b) except where otherwise provided for in section 267, no repayment of appropriate tax in respect of any relevant interest shall be made to any person receiving or entitled to the payment of the relevant interest who is not a company within the charge to corporation tax in respect of the payment;

(c) (i) the amount of any payment of relevant interest shall be regarded as income chargeable to tax under Case IV of Schedule D and under no other Case or Schedule and shall be taken into account in computing the total income of the person entitled to that amount, but, in relation to such a person (being an individual)—

(I) except for the purposes of a claim to repayment under section 267(3), the specified amount within the meaning of section 187 or 188, and

(II) the part of taxable income on which he or she is charged to income tax at the standard rate,

shall, as respects the year of assessment for which he or she is to be charged to income tax in respect of the relevant interest, be increased by the amount of that payment, and

(ii) where the specified amount is so increased, references in sections 187 and 188 to—

(I) income tax payable shall be construed as references to the income tax payable after credit is given by virtue of section 59 for appropriate tax deducted from the payment of relevant interest, and

(II) a sum equal to twice the specified amount shall be construed as references to a sum equal to the aggregate of—

(A) twice the specified amount (before it is so increased), and

(B) the amount of the payment of relevant interest;

(d) section 59 shall apply as if a reference to appropriate tax deductible by virtue of this Chapter were contained in paragraph (a) of that section.

262 Statement furnished by relevant deposit taker. [FA86 s36]

262.—A relevant deposit taker shall, when requested to do so by any person entitled to any relevant interest on a relevant deposit held by the relevant deposit taker, furnish to that person, as respects any payment of such relevant interest, a statement showing—

(a) the amount of that payment,

(b) the amount of appropriate tax deducted from that payment,

(d) the date of that payment.

263 Declarations relating to deposits of non-residents. [FA86 s37(1) (apart from paragraph (i) of the proviso) and (2); FA95 s167]

263.—(1) The declaration referred to in paragraph (g)(ii) of the definition of “relevant deposit” in section 256(1) shall be a declaration in writing to a relevant deposit taker which—

(a) is made by a person (in this section referred to as “the declarer”) to whom any interest on the deposit in respect of which the declaration is made is payable by the relevant deposit taker and is signed by the declarer,

(b) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(c) declares that at the time when the declaration is made the person beneficially entitled to the interest in relation to the deposit is not, or, as the case may be, all of the persons so entitled are not, resident in the State,

(d) contains as respects the person or, as the case may be, each of the persons mentioned in paragraph (c)—

(i) the name of the person,

(ii) the address of the person's principal place of residence, and

(iii) the name of the country in which the person is resident at the time the declaration is made,

(e) contains an undertaking by the declarer that if the person or, as the case may be, any of the persons mentioned in paragraph (c) becomes resident in the State, the declarer will notify the relevant deposit taker accordingly, and

(f) contains such other information as the Revenue Commissioners may reasonably require for the purposes of this Chapter;

and a declaration made before the 27th day of May, 1986, in a form authorised by the Revenue Commissioners under paragraph (22) of Financial Resolution No. 12 passed by Dáil Éireann on the 30th day of January, 1986, shall be deemed for the purposes of this Chapter to be a declaration of the kind mentioned in this subsection.

(2) (a) A relevant deposit taker shall—

(i) keep and retain for the longer of the following periods—

(I) a period of 6 years, and

(II) a period which, in relation to the deposit in respect of which the declaration is made, ends not earlier than 3 years after the date on which the deposit is repaid or, as the case may be, becomes a relevant deposit, and

(ii) on being so required by notice given to it in writing by an inspector, make available to the inspector, within the time specified in the notice,

all declarations of the kind mentioned in subsection (1) which have been made in respect of deposits held by the relevant deposit taker.

(b) The inspector may examine or take extracts from or copies of any declarations made available to him or her under paragraph (a).

264 Conditions and declarations relating to special savings accounts. [FA86 s37A; FA92 s22(1)(c); F(No.2)A92 s3(b); FA93 s15(1)(c); FA94 s12(1)(b)]

264.—(1) The following are the conditions referred to in paragraph (a) of the definition of “special savings account” in section 256(1):

(a) the account shall be designated by the relevant deposit taker as a special savings account;

(b) the account shall not be denominated in a foreign currency;

(c) the account shall not be connected with any other account held by the account holder or any other person; and for this purpose an account shall be connected with another account if—

(i) (I) either account was opened with reference to the other account, or with a view to enabling the other account to be opened on particular terms, or with a view to facilitating the opening of the other account on particular terms, and

(II) the terms on which either account was opened would have been significantly less favourable to the account holder if the other account had not been opened,

(ii) the terms on which either account is operated are altered or affected in any way whatever because of the existence of the other account;

(d) no withdrawal of money shall be made from the account within the period of 3 months commencing on the date on which it is opened;

(e) the terms under which the account is opened shall require the individual to give a minimum notice of 30 days to the relevant deposit taker in relation to the withdrawal of any money from the account;

(f) all moneys held in the account shall be subject to the same terms;

(g) there shall not be any agreement, arrangement or understanding in existence, whether express or implied, which influences or determines, or could influence or determine, the rate (other than an unspecified and variable rate) of interest which is paid or payable, in respect of the relevant deposit or relevant deposits held in the account, in or in respect of any period which is more than 24 months;

(h) interest paid or payable in respect of the relevant deposit or relevant deposits held in the account shall not directly or indirectly be linked to or determined by any change in the price or value of any shares, stocks, debentures or securities listed on a stock exchange or dealt in on an unlisted securities market;

(i) the relevant deposit or the aggregate of the relevant deposits held in the account, including any relevant interest added to that deposit or those deposits, shall not at any time exceed £50,000;

(j) the account shall not be opened by or held in the name of an individual who is not of full age;

(k) the account shall be opened by and held in the name of the individual beneficially entitled to the relevant interest payable in respect of the relevant deposit or relevant deposits held in the account;

(l) except in the case of an account opened and held jointly only by a couple married to each other, the account shall not be a joint account;

(m) except in the case of an account opened and held jointly only by a couple married to each other, either the same or any other relevant deposit taker shall not simultaneously hold another special savings account opened and held by an individual;

(n) in the case of an account opened and held jointly only by a couple married to each other, they shall not simultaneously hold (either with the same or any other relevant deposit taker) any other special savings account either individually or jointly other than one other such account opened and held jointly by them.

(2) The declaration referred to in paragraph (b) of the definition of “special savings account” in section 256(1) shall be a declaration in writing to a relevant deposit taker which—

(a) is made by the individual (in this section referred to as “the declarer”) to whom any interest payable in respect of the relevant deposit or relevant deposits held in the account in respect of which the declaration is made is payable by the relevant deposit taker, and is signed by the declarer,

(b) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(c) declares that at the time when the declaration is made the conditions referred to in paragraphs (j) to (n) of subsection (1) are satisfied in relation to the account in respect of which the declaration is made,

(d) contains the full name and address of the individual beneficially entitled to the interest payable in respect of the relevant deposit or relevant deposits held in the account in respect of which the declaration is made,

(e) contains an undertaking by the declarer that, if the conditions referred to in paragraphs (j) to (n) of subsection (1) cease to be satisfied in respect of the account in respect of which the declaration is made, the declarer will notify the relevant deposit taker accordingly, and

(f) contains such other information as the Revenue Commissioners may reasonably require for the purposes of this Chapter.

(3) Subsection (2) of section 263 shall apply as respects declarations of the kind mentioned in this section as it applies as respects declarations of the kind mentioned in that section.

(4) Section 261 shall apply in relation to any relevant interest paid in respect of any relevant deposit held in a special savings account as if the following paragraph were substituted for paragraph (c) of that section:

“(c) the amount of any payment of relevant interest (being relevant interest paid in respect of any relevant deposit held in a special savings account) shall not, except for the purposes of a claim to repayment under section 267(3) in respect of the appropriate tax deducted from such relevant interest, be reckoned in computing total income for the purposes of the Income Tax Acts,”.

(5) An account shall cease to be a special savings account if any of the conditions mentioned in subsection (1) cease to be satisfied, and subsection (4) shall not apply to any relevant interest in respect of any relevant deposit held in the account which is paid on or after the date on which the account ceases to be a special savings account.

265 Declarations by companies and pension schemes. [FA86 s37B; FA92 s22(1)(c); F(No.2)A92 s3(c)]

265.—(1) In this section—

“appropriate person” means—

(a) in relation to a company, the person or persons appointed as auditor of the company under section 160 of the Companies Act, 1963, or under the law of the state in which the company is incorporated and which corresponds to that section, and

(b) in relation to a pension scheme—

(i) in the case of an exempt approved scheme (within the meaning of section 774), the administrator (within the meaning of section 770) of the scheme,

(ii) in the case of a retirement annuity contract to which section 784 or 785 applies, the person lawfully carrying on in the State the business of granting annuities on human life with whom the contract is made, and

(iii) in the case of a trust scheme to which section 784 or 785 applies, the trustees of the trust scheme;

“tax reference number”, in relation to a person, has the meaning assigned to it by section 885 in relation to a specified person within the meaning of that section.

(2) The declaration referred to in paragraph (f) of the definition of “relevant deposit” in section 256(1) shall be a declaration in writing to the relevant deposit taker which—

(b) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(c) declares that at the time the declaration is made the interest on the deposit in respect of which the declaration is made—

(i) (I) is beneficially owned by a company within the charge to corporation tax, and

(II) will be included in the profits of the company on which it is to be charged to corporation tax,

(ii) is beneficially owned by a pension scheme,

(d) contains as respects the person beneficially entitled to the interest—

(i) that person's name and address, and

(ii) that person's tax reference number,

(e) contains a certificate by the appropriate person that, to the best of that person's knowledge and belief, the declaration made in accordance with paragraph (c) and the information furnished in accordance with paragraph (d) are true and correct, and

(f) contains such information as the Revenue Commissioners may reasonably require for the purposes of this Chapter.

(3) Subsection (2) of section 263 shall apply as respects declarations of the kind mentioned in this section as it applies as respects declarations of the kind mentioned in that section.

(4) Where a return is required to be made by a relevant deposit taker under section 891 in respect of interest on a deposit in respect of which a declaration has been made in accordance with this section, that return shall include the tax reference number contained in that declaration of the person beneficially entitled to the interest.

266 Declarations relating to deposits of charities. [FA86 s38]

266.—(1) The declaration referred to in paragraph (h)(ii) of the definition of “relevant deposit” in section 256(1) shall be a declaration in writing to a relevant deposit taker which—

(b) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(c) declares that at the time when the declaration is made the interest on the deposit in respect of which the declaration is made—

(i) (I) forms part of the income of a body of persons or trust treated by the Revenue Commissioners as a body or trust established for charitable purposes only, or

(II) is, according to the rules or regulations established by statute, charter, decree, deed of trust or will, applicable to charitable purposes only and is so treated by the Revenue Commissioners, and

(ii) will be applied to charitable purposes only,

(d) contains the name and address of the person, or, as the case may be, of each of the persons entitled, in respect of the interest in relation to the deposit, to exemption—

(i) from income tax under Schedule D by virtue of section 207(1)(b), or

(ii) from corporation tax by virtue of section 207(1)(b) as it applies for the purposes of corporation tax by virtue of section 76(6),

(e) contains an undertaking by the declarer that if the person or, as the case may be, any of the persons referred to in paragraph (d) ceases to be so exempt in respect of that interest, the declarer will notify the relevant deposit taker accordingly, and

(f) contains such information as the Revenue Commissioners may reasonably require for the purposes of this Chapter.

(2) Subsection (2) of section 263 shall apply as respects declarations of the kind mentioned in this section as it applies as respects declarations of the kind mentioned in that section.

267 Repayment of appropriate tax in certain cases. [FA 86 s39]

267.—(1) In this section, “relevant person” means an individual who proves to the satisfaction of the inspector or, on appeal, to the Appeal Commissioners that—

(a) at some time during the relevant year the individual or his or her spouse was of the age of 65 years or over, or

(b) throughout the relevant year the individual or his or her spouse was, or as on and from some time during the relevant year the individual or his or her spouse became, permanently incapacitated by reason of mental or physical infirmity from maintaining himself or herself.

(2) Notwithstanding section 261 (b), repayment of appropriate tax in respect of any relevant interest shall be made to a person entitled to exemption in respect of that interest—

(a) from income tax under Schedule D by virtue of section 207(1)(b), or

(b) from corporation tax by virtue of section 207(1)(b) as it applies for the purposes of corporation tax by virtue of section 76(6)

(3) Where in any year of assessment (in this subsection referred to as “the relevant year”) the total income of a relevant person includes any relevant interest and apart from section 261 (b) the relevant person would be entitled to repayment of the whole or any part of the appropriate tax deducted from that relevant interest, then, notwithstanding section 261(b), the repayment to which the relevant person would be so entitled may be made to the relevant person on the making by the relevant person to the inspector, not earlier than the end of the relevant year, of a claim in that behalf.

PART 9 Principal Provisions Relating to Relief for Capital Expenditure

CHAPTER 1 Industrial buildings or structures: industrial building allowances, writing-down allowances, balancing allowances and balancing charges

268 Meaning of “industrial building or structure”. [ITA67 s255(1) to (5), s257 and s263(4); FA69 s64(1), (2) and (5), FA75 s34(1) and (3); FA84 s36; FA92 s27; FA96 s29]

268.—(1) In this Part, “industrial building or structure” means a building or structure in use—

(a) for the purposes of a trade carried on in—

(i) a mill, factory or other similar premises, or

(ii) a laboratory the sole or main function of which is the analysis of minerals (including oil and natural gas) in connection with the exploration for, or the extraction of, such minerals,

(b) for the purposes of a dock undertaking,

(c) for the purposes of growing fruit, vegetables or other produce in the course of a trade of market gardening within the meaning of section 654,

(d) for the purposes of the trade of hotel-keeping,

(e) for the purposes of the intensive production of cattle, sheep, pigs, poultry or eggs in the course of a trade other than the trade of farming within the meaning of section 654, or

(f) for the purposes of a trade which consists of the operation or management of an airport and which is an airport runway or an airport apron used solely or mainly by aircraft carrying passengers or cargo for hire or reward,

and in particular, in relation to capital expenditure incurred on or after the 6th day of April, 1969, includes any building or structure provided by the person carrying on such a trade or undertaking for the recreation or welfare of workers employed in that trade or undertaking and in use for that purpose.

(2) In this section, “dock” includes any harbour, wharf, pier or jetty or other works in or at which vessels can ship or unship merchandise or passengers, not being a pier or jetty primarily used for recreation, and “dock undertaking” shall be construed accordingly.

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