Taxes Consolidation Act 1997

Type Act

Publication 1997-11-30

State In force

Source Irish Statute Book

articles 1104

(3) For the purpose of this Part, a building or structure in use as a holiday camp or, in relation to capital expenditure incurred on or after the 1st day of July, 1968, a building or structure in use as a holiday cottage and comprised in premises registered in any register of holiday cottages established by Bord Fáilte Éireann under any Act of the Oireachtas passed on or after the 29th day of July, 1969, shall be deemed to be a building or structure in use for the purposes of the trade of hotel-keeping.

(4) Where capital expenditure is incurred on preparing, cutting, tunnelling or levelling land for the purposes of preparing the land as a site for the installation of machinery or plant, the machinery or plant shall, as regards that expenditure, be treated for the purposes of this Chapter as a building or structure.

(5) For the purposes of this Part, expenditure incurred by a person on or after the 23rd day of April, 1996, either on the construction of, or on the acquisition of the relevant interest in, a building or structure not situated in the State shall not be treated as expenditure on a building or structure within the meaning of this section unless, being a building or structure not situated in the State—

(a) it is a building or structure which is to be constructed or which is in the course of construction and in respect of which it can be shown that—

(i) the person has either entered into a binding contract in writing for the acquisition of the site for the building or structure or has entered into an agreement in writing in relation to an option to acquire that site on or before the 23rd day of April, 1996,

(ii) the person has entered into a binding contract in writing for the construction of the building or structure on or before the 1st day of July, 1996, and

(iii) the construction of the building or structure had commenced on or before the 1st day of July, 1996, and had been completed before the 31st day of December, 1997,

and

(b) it is a building or structure to be constructed or which is being constructed which will be used for the purposes of a trade the profits or gains from which are taxable in the State.

(6) Subsection (1) shall apply in relation to a part of a trade as it applies in relation to a trade but, where part only of a trade complies with the conditions set out in that subsection, a building or structure shall not by virtue of this subsection be an industrial building or structure unless it is in use for the purposes of that part of that trade.

(7) (a) In this subsection, “retail shop” includes any premises of a similar character where retail trade or business (including repair work) is carried on.

(b) Notwithstanding anything in subsections (1) to (6) but subject to subsection (8), in this Part, “industrial building or structure” does not include any building or structure in use as, or as part of, a dwelling house (other than a holiday cottage referred to in subsection (3)), retail shop, showroom or office or for any purpose ancillary to the purposes of a dwelling house (other than a holiday cottage referred to in subsection (3)), retail shop, showroom or office.

(8) Where part of the whole of a building or structure is, and part of the whole of the building or structure is not, an industrial building or structure, and the capital expenditure incurred on the construction of the second-mentioned part is not more than 10 per cent of the total capital expenditure incurred on the construction of the whole building or structure, the whole building or structure and every part of the whole of the building or structure shall be treated as an industrial building or structure.

(9) Subsection (1) shall apply—

(a) by reference to paragraph (a)(ii), as respects capital expenditure incurred on or after the 25th day of January, 1984,

(b) by reference to paragraph (e), as respects capital expenditure incurred on or after the 6th day of April, 1971, and

269 Meaning of “the relevant interest”. [ITA67 s268]

269.—(1) Subject to this section, in this Chapter, “the relevant interest”, in relation to any expenditure incurred on the construction of a building or structure, means the interest in that building or structure to which the person who incurred the expenditure was entitled when the person incurred the expenditure.

(2) Where, when a person incurs expenditure on the construction of a building or structure, the person is entitled to 2 or more interests in the building or structure and one of those interests is an interest which is reversionary on all the others, that interest shall be the relevant interest for the purposes of this Chapter.

(3) An interest shall not cease to be the relevant interest for the purposes of this Chapter by reason of the creation of any lease or other interest to which that interest is subject, and where the relevant interest is a leasehold interest and is extinguished by reason of the surrender of the leasehold interest, or on the person entitled to the leasehold interest acquiring the interest which is reversionary on the leasehold interest, the interest into which that leasehold interest merges shall thereupon become the relevant interest.

270 Meaning of “expenditure on construction of building or structure”. [ITA67 s256, s263(4); CTA76 s21(1) and Sch1 par18; FA94 s22(1)(b); FA97 s146(1) and Sch9 PtI par1(18)]

270.—(1) In this section, “refurbishment”, in relation to a building or structure, means any work of construction, reconstruction, repair or renewal, including the provision of water, sewerage or heating facilities carried out in the course of the repair or restoration, or maintenance in the nature of repair or restoration, of the building or structure.

(2) A reference in this Chapter to expenditure incurred on the construction of a building or structure includes expenditure on the refurbishment of the building or structure, but does not include—

(a) any expenditure incurred on the acquisition of, or of rights in or over, any land,

(b) any expenditure on the provision of machinery or plant or on any asset treated for any chargeable period as machinery or plant, or

(c) any expenditure in respect of which an allowance is or may be made for the same or for any other chargeable period under section 670 or 765(1).

(3) Where a building or structure which is to be an industrial building or structure forms part of a building or is one of a number of buildings in a single development, or forms a part of a building which is itself one of a number of buildings in a single development, there shall be made such apportionment as is necessary of the expenditure incurred on the construction of the whole building or number of buildings, as the case may be, for the purpose of determining the expenditure incurred on the construction of the building or structure which is to be an industrial building or structure.

271 Industrial building allowances. [ITA67 s254(1)(a), (b) and (c), (2A), (2B), (3) and (7); FA75 s34(2)(a)(i); CTA76 s 21(1) and Sch1 par17and par72; FA81 s27; FA88 s51(1)(a) and (cc), (4)(a) and (6); FA89 s14; FA90 s74, s80 and s81(1)(a) and (4); FA91 s22(1); FA93 s33(1); FA95 s26 and s27; FA96 s27 and s43]

271.—(1) In this section—

“industrial development agency” means the Industrial Development Authority, the Shannon Free Airport Development Company Limited or Údarás na Gaeltachta;

“appropriate chargeable period”, in relation to any person who has incurred expenditure on the construction of a building or structure, means the chargeable period related to the expenditure or, if it is later, the chargeable period related to the event (which shall be regarded as an event within the meaning of section 321(2)(b)), where such event is—

(a) the commencement of the tenancy in a case in which the first use to which the building or structure is put is a use by a person occupying it by virtue of a tenancy to which the relevant interest is reversionary, or

(b) in a case to which subsection (2)(b)(ii) refers, the commencement of the tenancy to which the relevant interest is reversionary;

“relevant lease” means a lease to which the relevant interest is reversionary.

(2) (a) Subject to the Tax Acts, where a person incurs capital expenditure on the construction of a building or structure—

(i) which is to be an industrial building or structure to which subsection (3) applies, and

(ii) which is to be occupied for the purposes of a trade carried on either by the person or by a lessee mentioned in paragraph (b),

there shall be made to the person who incurred the expenditure, for the appropriate chargeable period, an allowance (in this Chapter referred to as an “industrial building allowance”).

(b) The lessee referred to in paragraph (a) is a lessee occupying the building or structure on the construction of which the expenditure was incurred and who so occupies it—

(i) under a relevant lease, or

(ii) under a lease to which a relevant lease granted to an industrial development agency is reversionary.

(3) This subsection shall apply to—

(a) an industrial building or structure provided—

(i) before the 23rd day of April, 1996, for use for the purposes of trading operations, or

(ii) on or after the 23rd day of April, 1996, by a company for use for the purposes of trading operations carried on by the company,

which are relevant trading operations within the meaning of section 445 or 446 but, in relation to capital expenditure incurred on the provision of an industrial building or structure on or after the 6th day of May, 1993, excluding an industrial building or structure provided by a lessor to a lessee other than in the course of the carrying on by the lessor of those relevant trading operations,

(b) an industrial building or structure provided for the purposes of a project approved by an industrial development agency on or before the 31st day of December, 1988, and in respect of the provision of which expenditure was incurred before the 31st day of December, 1995; but, as respects an industrial building or structure provided for the purposes of a project approved by an industrial development agency in the period from the 1st day of January, 1986, to the 31st day of December, 1988, this paragraph shall apply as if the reference to the 31st day of December, 1995, were a reference to the 31st day of December, 1996,

and

(c) an industrial building or structure provided for the purposes of a project approved for grant assistance by an industrial development agency in the period from the 1st day of January, 1989, to the 31st day of December, 1990, and in respect of the provision of which expenditure is incurred before the 31st day of December, 1997; but, as respects an industrial building or structure provided for the purposes of any such project specified in the list referred to in section 133(8)(c)(iv), this paragraph shall apply as if the reference to the 31st day of December, 1997, were a reference to the 31st day of December, 2002.

(4) An industrial building allowance shall be of an amount equal to—

(a) where the building or structure is to be used for a purpose specified in paragraph (a) or (b) of section 268(1), 50 per cent of the capital expenditure mentioned in subsection (2); but, in the case of a building or structure to which subsection (3)(a) applies, this paragraph shall apply only if that expenditure is incurred before the 25th day of January, 1999,

(b) where the building or structure is to be used for a purpose specified in paragraph (c) or (e) of section 268(1), 20 per cent of the capital expenditure mentioned in subsection (2), and

(5) Where an industrial building allowance in respect of capital expenditure incurred on the construction of a building or structure to which subsection (3)(c) applies is made under this section for any chargeable period—

(a) no allowance in relation to that capital expenditure shall be made under section 272 for that chargeable period, and

(b) an allowance in relation to that capital expenditure which is to be made under section 272 for any chargeable period subsequent to that chargeable period shall not be increased under section 273.

(6) Notwithstanding any other provision of this section, no industrial building allowance shall be made in respect of any expenditure on a building or structure if the building or structure, when it comes to be used, is not an industrial building or structure, and where an industrial building allowance has been granted in respect of any expenditure on any such building or structure, any necessary additional assessments may be made to give effect to this subsection.

272 Writing-down allowances. [ITA67 s264; FA75 s34(2)(a)(ii) and (iii) and (3); CTA76 s21(1) and Sch1 pars23 and 72; FA86 s52(2); FA94 s22(1)(c) and (2); FA96 s28(1)]

272.—(1) A building or structure shall be one to which this section applies only if the capital expenditure incurred on the construction of it has been incurred on or after the 30th day of September, 1956.

(2) Subject to this Part, where—

(a) any person is, at the end of a chargeable period or its basis period, entitled to an interest in a building or structure to which this section applies,

(b) at the end of the chargeable period or its basis period, the building or structure is an industrial building or structure, and

(c) that interest is the relevant interest in relation to the capital expenditure incurred on the construction of that building or structure,

an allowance (in this Chapter referred to as a “writing-down allowance”) shall be made to such person for that chargeable period.

(3) A writing-down allowance shall be of an amount equal to—

(a) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (a) or (b) of section 268(1)—

(i) 2 per cent of the expenditure referred to in subsection (2)(c), if that expenditure was incurred before the 16th day of January, 1975, or

(ii) 4 per cent of the expenditure referred to in subsection (2)(c), if that expenditure is incurred on or after the 16th day of January, 1975,

(b) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (c) or (e) of section 268(1), 10 per cent of the expenditure referred to in subsection (2)(c),

(c) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(d), other than a building or structure to which paragraph (d) relates—

(i) 10 per cent of the expenditure referred to in subsection (2)(c), if that expenditure was incurred before the 27th day of January, 1994, or

(ii) 15 per cent of the expenditure referred to in subsection (2)(c), if that expenditure is incurred on or after the 27th day of January, 1994,

(d) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(d) by reason of its use as a holiday cottage, 10 per cent of the expenditure referred to in subsection (2)(c), and

(e) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(f), 4 per cent of the expenditure referred to in subsection (2)(c).

(4) Where the interest in a building or structure which is the relevant interest in relation to any expenditure is sold while the building or structure is an industrial building or structure, then, subject to any further adjustment under this subsection on a later sale, the writing-down allowance for any chargeable period, if that chargeable period or its basis period ends after the time of the sale, shall be the residue (within the meaning of section 277) of that expenditure immediately after the sale, reduced in the proportion (if it is less than one) which the length of the chargeable period bears to the part unexpired at the date of the sale of the period of—

(a) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (a) or (b) of section 268(1)—

(i) 50 years beginning with the time when the building or structure was first used, in the case where the capital expenditure on the construction of the building or structure was incurred before the 16th day of January, 1975, or

(ii) 25 years beginning with the time when the building or structure was first used, in the case where the capital expenditure on the construction of the building or structure is incurred on or after the 16th day of January, 1975,

(b) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (c) or (e) of section 268(1), 10 years beginning with the time when the building or structure was first used,

(i) 10 years beginning with the time when the building or structure was first used, in the case where the capital expenditure on the construction of the building or structure was incurred before the 27th day of January, 1994, or

(ii) 7 years beginning with the time when the building or structure was first used, in the case where the capital expenditure on the construction of the building or structure is incurred on or after the 27th day of January, 1994,

(d) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(d) by reason of its use as a holiday cottage, 10 years beginning with the time when the building or structure was first used, and

(e) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(f), 25 years beginning with the time when the building or structure was first used.

(5) In ascertaining a writing-down allowance to be made to a person under subsection (4), the residue of expenditure mentioned in that subsection shall, where it exceeds the amount of expenditure incurred by that person in respect of the sale, be taken to be the amount of the expenditure so incurred.

(6) Notwithstanding any other provision of this section, in no case shall the amount of a writing-down allowance made to a person for any chargeable period in respect of any expenditure exceed what, apart from the writing off to be made by reason of the making of that allowance, would be the residue of that expenditure at the end of that chargeable period or its basis period.

273 Acceleration of writing-down allowances in respect of certain expenditure on certain industrial buildings or structures. [FA78 s25; FA79 s25; FA88 s48 and s51(1)(a), (c) and (cc), (4)(b) and (6); FA89 s16; FA90 s76, s80 and s81(1)(a) and (b), proviso to (1), and (5); FA93 s33; FA95 s26 and s27; FA96 s43 and s132(1) and Sch 5 PtI par11]

273.—(1) In this section—

“industrial development agency” means the Industrial Development Authority, Shannon Free Airport Development Company Limited or Údarás na Gaeltachta;

“qualifying expenditure” means capital expenditure incurred on or after the 2nd day of February, 1978, by the person to whom the allowance under section 272 is to be made on the construction of a building or structure which is to be an industrial building or structure occupied by that person for a purpose specified in paragraph (a), (b) or (d) of section 268(1), but excluding such expenditure incurred for the purposes of the trade of hotel-keeping unless it is incurred on the construction of premises which are registered in a register kept by Bord Fáilte Éireann under the Tourist Traffic Acts, 1939 to 1995.

(2) (a) Subject to this section, where for any chargeable period an allowance is to be made under section 272 in respect of qualifying expenditure, the allowance shall, subject to subsection (6) of that section, be increased by such amount as is specified by the person to whom the allowance is to be made and, in relation to a case in which this subsection has applied, any reference in the Tax Acts to an allowance made under section 272 shall be construed as a reference to that allowance as increased under this section.

(b) As respects any qualifying expenditure incurred on or after the 1st day of April, 1988, any allowance made under section 272 and increased under paragraph (a) in respect of that expenditure, whether claimed for one chargeable period or more than one such period, shall not in the aggregate exceed—

(i) if the qualifying expenditure was incurred before the 1st day of April, 1989, 75 per cent,

(ii) if the qualifying expenditure was incurred on or after the 1st day of April, 1989, and before the 1st day of April, 1991, 50 per cent, or

(iii) if the qualifying expenditure was incurred on or after the 1st day of April, 1991, and before the 1st day of April, 1992, 25 per cent,

of the amount of that qualifying expenditure.

(3) Notwithstanding subsection (2), but subject to subsections (4) and (6)—

(a) no allowance made under section 272 in respect of qualifying expenditure incurred on or after the 1st day of April, 1992, shall be increased under this section, and

(b) as respects chargeable periods ending on or after the 6th day of April, 1999, no allowance made under section 272 in respect of qualifying expenditure incurred before the 1st day of April, 1992, shall be increased under this section.

(4) This section shall apply in relation to capital expenditure incurred on the construction of an industrial building or structure to which subsection (5) applies as if subsections (2)(b) and (3) were deleted.

(5) This subsection shall apply to—

(a) an industrial building or structure provided—

(i) before the 23rd day of April, 1996, for use for the purposes of trading operations, or

(ii) on or after the 23rd day of April, 1996, by a company for use for the purposes of trading operations carried on by the company,

(b) an industrial building or structure the expenditure on the provision of which was incurred before the 31st day of December, 1995, under a binding contract entered into on or before the 27th day of January, 1988, and

(c) an industrial building or structure provided for the purposes of a project approved by an industrial development agency on or before the 31st day of December, 1988, and in respect of the provision of which expenditure was incurred before the 31st day of December, 1995; but, as respects an industrial building or structure provided for the purposes of a project approved by an industrial development agency in the period from the 1st day of January, 1986, to the 31st day of December, 1988, this paragraph shall apply as if the reference to the 31st day of December, 1995, were a reference to the 31st day of December, 1996.

(6) This section shall apply in relation to capital expenditure incurred on the construction of a building or structure which is to be an industrial building or structure to which subsection (7)(a) applies—

(a) as if in subsection (2)(b)—

(i) the following subparagraph were substituted for subparagraph (ii):

“(ii) if the qualifying expenditure is incurred on or after the 1st day of April, 1989, 50 per cent,”,

and

(ii) subparagraph (iii) were deleted,

and

(b) as if subsection (3) were deleted.

(7) (a) This subsection shall apply to—

(i) an industrial building or structure provided for the purposes of a project approved for grant assistance by an industrial development agency in the period from the 1st day of January, 1989, to the 31st day of December, 1990, and in respect of the provision of which expenditure is incurred before the 31st day of December, 1997; but, as respects an industrial building or structure provided for the purposes of any such project specified in the list referred to in section 133(8)(c)(iv), this paragraph shall apply as if the reference to the 31st day of December, 1997, were a reference to the 31st day of December, 2002, and

(ii) a building or structure which is to be an industrial building or structure within the meaning of section 268(1)(d) and in respect of the provision of which expenditure was incurred before the 31st day of December, 1995, where a binding contract for the provision of the building or structure was entered into before the 31st day of December, 1990.

(b) Paragraph (a)(ii) shall not apply if the building or structure referred to in that paragraph is not registered within 6 months after the date of the completion of that building or structure in a register kept by Bord Fáilte Éireann under the Tourist Traffic Acts, 1939 to 1995, and where by virtue of this section any allowance or increased allowance has been granted, any necessary additional assessments may be made to give effect to this paragraph.

(8) Where for any chargeable period an allowance under section 272 in respect of qualifying expenditure is increased under this section, no allowance under section 271 shall be made in respect of that qualifying expenditure for that or any subsequent chargeable period.

274 Balancing allowances and balancing charges. [ITA67 s265; FA69 s64(3) and (4); FA75 s34(2)(a)(iii); CTA76 s21(1) and Sch1 pars24 and 72; FA80 s58; FA88 s45 and s51(1)(d) and (5); FA90 s78; FA94 s22(1)(d) and (2); FA95 s24; FA96 s28(2); FA97 s23(1)(a) and (2)]

274.—(1) (a) Where any capital expenditure has been incurred on the construction of a building or structure in respect of which an allowance has been made under this Chapter, and any of the following events occurs—

(i) the relevant interest in the building or structure is sold,

(ii) that interest, being a leasehold interest, comes to an end otherwise than on the person entitled to the leasehold interest acquiring the interest which is reversionary on the leasehold interest,

(iii) the building or structure is demolished or destroyed or, without being demolished or destroyed, ceases altogether to be used, or

(iv) subject to subsection (2), where consideration (other than rent or an amount treated or, as respects consideration received on or after the 26th day of March, 1997, partly treated as rent under section 98) is received by the person entitled to the relevant interest in respect of an interest which is subject to that relevant interest,

an allowance or charge (in this Chapter referred to as a “balancing allowance” or a “balancing charge”) shall, in the circumstances mentioned in this section, be made to or on, as the case may be, the person entitled to the relevant interest immediately before that event occurs, for the chargeable period related to that event.

(b) Notwithstanding paragraph (a), no balancing allowance or balancing charge shall be made by reason of any event referred to in that paragraph occurring more than—

(i) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (a) or (b) of section 268(1)—

(I) 50 years after the building or structure was first used, in the case where the capital expenditure on the construction of the building or structure was incurred before the 16th day of January, 1975, or

(II) 25 years after the building or structure was first used, in the case where the capital expenditure on the construction of the building or structure is incurred on or after the 16th day of January, 1975,

(ii) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (c) or (e) of section 268(1), 10 years after the building or structure was first used,

(iii) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(d), other than a building or structure to which subparagraph (iv) relates—

(I) 10 years after the building or structure was first used, in the case where the capital expenditure on the construction of the building or structure was incurred before the 27th day of January, 1994, or

(II) 7 years after the building or structure was first used, in the case where the capital expenditure on the construction of the building or structure is incurred on or after the 27th day of January, 1994,

(iv) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(d) by reason of its use as a holiday cottage, 10 years after the building or structure was first used, and

(v) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(f), 25 years after the building or structure was first used.

(2) Subsection (1)(a)(iv) shall not apply as respects the relevant interest in a building or structure in use for the purposes of a trade or part of a trade of hotel-keeping where a binding contract for the provision of the building or structure was entered into after the 27th day of January, 1988, and before the 1st day of June, 1988.

(3) Where there are no sale, insurance, salvage or compensation moneys, or consideration of the type referred to in subsection (1)(a)(iv), or where the residue of the expenditure immediately before the event exceeds those moneys or that consideration, a balancing allowance shall be made, and the amount of that allowance shall be the amount of that residue or, as the case may be, of the excess of that residue over those moneys or that consideration.

(4) Where the sale, insurance, salvage or compensation moneys, or consideration of the type referred to in subsection (1)(a)(iv), exceed the residue, if any, of the expenditure immediately before the event, a balancing charge shall be made, and the amount on which it is made shall be an amount equal to the excess or, where the residue is nil, to those moneys or that consideration.

(5) (a) In this subsection, “the relevant period” means the period beginning when the building or structure was first used for any purpose and ending—

(i) if the event giving rise to the balancing allowance or balancing charge occurs on the last day of a chargeable period or its basis period, on that day, or

(ii) in any other case, on the latest date before that event which is the last day of a chargeable period or its basis period;

but where before that event the building or structure has been sold while an industrial building or structure, the relevant period shall begin on the day following that sale or, if there has been more than one such sale, the last such sale.

(b) Where a balancing allowance or a balancing charge is to be made to or on a person, and any part of the relevant period is not comprised in a chargeable period for which a writing-down allowance has been made to such person or is not comprised in the basis period for such chargeable period, the amount of the balancing allowance or, as the case may be, the amount on which the balancing charge is to be made shall be reduced in the proportion which the part or parts so comprised bears to the whole of the relevant period.

(c) Notwithstanding paragraph (b), where but for section 272(6) or 321(5) a writing-down allowance would have been made to a person for any chargeable period, the part of the relevant period comprised in that chargeable period or its basis period shall be deemed for the purposes of this subsection to be comprised in a chargeable period for which a writing-down allowance was made to the person.

(6) Where a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(d) by reason of its use as a holiday cottage ceases to be comprised in premises registered in a register referred to in section 268 in such circumstances that apart from this subsection this section would not apply in relation to the building or structure, the relevant interest in the building or structure shall for the purposes of this Chapter (other than section 272(4)) be deemed on such cesser to have been sold while the building or structure was an industrial building or structure and the net proceeds of the sale shall be deemed for those purposes to be an amount equal to the capital expenditure incurred on the construction of the building or structure.

(7) Where a balancing charge is made under this section by virtue of subsection (6) and the relevant interest in the building or structure is not subsequently sold by the person on whom the charge is made while the building or structure is not an industrial building or structure, such person shall, if the building or structure again becomes comprised in a premises registered in a register referred to in section 268, be treated for the purposes of this Chapter as if, at the time of the cesser referred to in subsection (6), such person were the buyer of the relevant interest deemed under that subsection to have been sold.

(8) Notwithstanding any other provision of this section, in no case shall the amount on which a balancing charge is made on a person in respect of any expenditure on the construction of a building or structure exceed the amount of the industrial building allowance, if any, made to such person in respect of that expenditure together with the amount of any writing-down allowances made to such person in respect of that expenditure for chargeable periods which end on or before the date of the event giving rise to the charge or, as the case may be, for chargeable periods for which the basis periods end on or before that date.

275 Restriction of balancing allowances on sale of industrial building or structure. [FA73 s40(1) to (5)]

275.—(1) In this section—

“inferior interest” means any interest in or right over the building or structure in question, whether granted by the relevant person or by someone else;

“premium” includes any capital consideration except so much of any sum as corresponds to any amount of rent or profits which is to be computed by reference to that sum under section 98;

“capital consideration” means consideration which consists of a capital sum or would be a capital sum if it had taken the form of a money payment;

“rent” includes any consideration which is not capital consideration;

“commercial rent” means such rent as might reasonably be expected to have been required in respect of the inferior interest in question, having regard to any premium payable for the grant of the interest, if the transaction had been at arm's length.

(2) This section shall apply where—

(a) the relevant interest in a building is sold subject to an inferior interest,

(b) by virtue of the sale a balancing allowance under section 274 would apart from this section be made to or for the benefit of the person (in this section referred to as “the relevant person”) who was entitled to the relevant interest immediately before the sale, and

(i) the relevant person, the person to whom the relevant interest is sold and the grantee of the inferior interest, or any 2 of them, are connected with each other, or

(ii) it appears with respect to the sale or the grant of the inferior interest, or with respect to transactions including the sale or grant, that the sole or main benefit which but for this section might have been expected to accrue to the parties or any of them was the obtaining of an allowance or deduction under this Chapter.

(3) For the purposes of section 274, the net proceeds to the relevant person of the sale—

(a) shall be taken to be increased by an amount equal to any premium receivable by the relevant person for the grant of the inferior interest, and

(b) where no rent or no commercial rent is payable in respect of the inferior interest, shall be taken to be the sum of—

(i) what those proceeds would have been if a commercial rent had been payable and the relevant interest had been sold in the open market, and

(ii) any amount to be added under paragraph (a);

but the net proceeds of the sale shall not by virtue of this subsection be taken to be greater than such amount as will secure that no balancing allowance is to be made.

(4) Where subsection (3) operates in relation to a sale to deny or reduce a balancing allowance in respect of any expenditure, the residue of that expenditure immediately after the sale shall be calculated for the purposes of this Chapter as if that balancing allowance had been made or, as the case may be, had not been reduced.

(5) Where the terms on which the inferior interest is granted are varied before the sale of the relevant interest, any capital consideration for the variation shall be treated for the purposes of this section as a premium for the grant of the interest, and the question whether any and, if so, what rent is payable in respect of the interest shall be determined by reference to the terms as in force immediately before the sale.

276 Application of sections 272 and 274 in relation to capital expenditure on refurbishment. [FA91 s26]

276.—(1) In this section, “refurbishment” means any work of construction, reconstruction, repair or renewal, including the provision or improvement of water, sewerage or heating facilities, carried out in the course of repair or restoration, or maintenance in the nature of repair or restoration, of a building or structure.

(2) Notwithstanding any other provision of the Tax Acts, where on or after the 6th day of April, 1991, any capital expenditure has been incurred on the refurbishment of a building or structure in respect of which an allowance is to be made for the purposes of income tax or corporation tax, as the case may be, under this Chapter, sections 272 and 274 shall apply as if “the capital expenditure on refurbishment of the building or structure was incurred” were substituted for “the building or structure was first used” in each place where it occurs in sections 272(4) and 274(1)(b).

(3) For the purposes of giving effect to this section in so far as the computation of a balancing allowance or balancing charge is concerned, all such apportionments shall be made as are in the circumstances just and reasonable.

277 Writing off of expenditure and meaning of “residue of expenditure”. [ITA67 s266; CTA76 s21(1) and Sch1 par25; FA97 s23(b)]

277.—(1) For the purposes of this Chapter, any expenditure incurred on the construction of any building or structure shall be treated as written off to the extent and at the times specified in this section, and references in this Chapter to the residue of any such expenditure shall be construed accordingly.

(2) Where an industrial building allowance is made in respect of the expenditure, the amount of that allowance shall be written off at the time when the building or structure is first used.

(3) Where, by reason of the building or structure being at any time an industrial building or structure, a writing-down allowance is made for any chargeable period in respect of the expenditure, the amount of that allowance shall be written off at that time; but, where at that time an event occurs which gives rise or may give rise to a balancing allowance or balancing charge, the amount directed to be written off by this subsection at that time shall be taken into account in computing the residue of that expenditure immediately before that event for the purpose of determining whether any, and if so what, balancing allowance or balancing charge is to be made.

(4) (a) Where, for any period or periods between the time when the building or structure was first used for any purpose and the time at which the residue of the expenditure is to be ascertained, the building or structure has not been in use as an industrial building or structure, there shall in ascertaining that residue be treated as having been previously written off in respect of that period or those periods amounts equal to writing-down allowances made for chargeable periods of a total length equal to the length of that period, or the aggregate length of those periods, as the case may be, at such rate or rates as would have been appropriate having regard to any sale on which section 272(4) operated.

(b) Where the building or structure was in use as an industrial building or structure at the end of the basis period for any year of assessment before the year 1960-71, an amount equal to 2 per cent of the expenditure shall be treated as written off at the end of the previous year of assessment.

(5) Where on the occasion of a sale a balancing allowance is made in respect of the expenditure, there shall be written off at the time of the sale the amount by which the residue of the expenditure before the sale exceeds the net proceeds of the sale.

(6) Where on the occasion of a sale a balancing charge is made in respect of the expenditure, the residue of the expenditure shall be deemed for the purposes of this Chapter to be increased at the time of the sale by the amount on which the charge is made.

(7) Where, on receipt of consideration of the type referred to in section 274(1)(a)(iv), a balancing allowance is made in respect of the expenditure, there shall be written off at the time of the event giving rise to the balancing allowance or, if later, on the 26th day of March, 1997, the amount by which the residue of the expenditure before that event exceeds that consideration.

278 Manner of making allowances and charges. [ITA67 s254(1)(d) and (e) and s267; CTA76 s21(1) and Sch1 par17 and par26]

278.—(1) Except in the cases mentioned in this section, any allowance or charge made to or on a person under the preceding provisions of this Part shall be made to or on such person in taxing such person's trade or, as the case may require, in charging such person's income under Case V of Schedule D.

(2) An industrial building allowance shall be made to a person by discharge or repayment of tax if such person's interest in the building or structure is subject to any lease when the expenditure is incurred or becomes subject to any lease before the building or structure is first used for any purpose and, where it is so made, section 304(4) shall not apply; but this subsection shall not apply as respects income chargeable under Case V of Schedule D.

(3) A writing-down allowance shall be made to a person for a chargeable period by means of discharge or repayment of tax if such person's interest is subject to any lease at the end of that chargeable period or its basis period; but this subsection shall not apply as respects income chargeable under Case V of Schedule D.

(4) A balancing allowance shall be made to a person by means of discharge or repayment of tax if such person's interest is subject to any lease immediately before the event giving rise to the allowance; but this subsection shall not apply as respects income chargeable under Case V of Schedule D.

(5) A balancing charge shall be made on a person under Case IV of Schedule D if such person's interest is subject to any lease immediately before the event giving rise to the charge and the corresponding income is chargeable under that Case.

(6) Any allowance which under subsections (1) to (4) is to be made otherwise than in taxing a trade shall be available primarily against the following income—

(a) where the income (whether arising by means of rent or receipts in respect of premises or easements or otherwise) from the industrial building or structure in respect of the capital expenditure on which the allowance is given is chargeable under Case V of Schedule D, against income chargeable under that Case,

(b) where the income (whether arising by means of rent or receipts in respect of premises or easements or otherwise) from the industrial building or structure in respect of the capital expenditure on which the allowance is given is chargeable under Case IV of Schedule D, against income chargeable under that Case, or

279 Purchases of certain buildings or structures. FA70 s19(1), (2) and (2A); FA90 s75; FA91 s23; FA97 s146(1) and Sch9 PtI par4(2)]

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

“expenditure incurred on the construction of a building or structure” excludes any expenditure within the meaning of section 270(2);

“the net price paid” means the amount represented by A in the equation—

A B	C _____ C D

where—

B is the amount paid by a person on the purchase of the relevant interest in a building or structure,

C is the amount of the expenditure actually incurred on the construction of the building or structure, and

D is the amount of any expenditure actually incurred which is expenditure for the purposes of paragraph (a), (b) or (c) of section 270(2).

(2) Where expenditure is incurred on the construction of a building or structure and, before the building or structure is used or within a period of one year after it commences to be used, the relevant interest in the building or structure is sold, then, if an allowance has not been claimed by any other person in respect of that building or structure under this Chapter—

(a) the expenditure actually incurred on the construction of the building or structure shall be disregarded for the purposes of sections 271, 272, 274 and 277, but

(b) the person who buys that interest shall be deemed for those purposes to have incurred, on the date when the purchase price becomes payable, expenditure on the construction of the building or structure equal to that expenditure or to the net price paid by such person for that interest, whichever is the less;

but, where the relevant interest in the building or structure is sold more than once before the building or structure is used or within the period of one year after it commences to be used, paragraph (b) shall apply only in relation to the last of those sales.

(3) Where the expenditure incurred on the construction of a building or structure was incurred by a person carrying on a trade which consists, as to the whole or any part of the trade, of the construction of buildings or structures with a view to their sale and, before the building or structure is used or within a period of one year after it commences to be used, such person sells the relevant interest in the building or structure in the course of that trade or, as the case may be, of that part of that trade, subsection (2) shall apply subject to the following modifications—

(a) if that sale is the only sale of the relevant interest before the building or structure is used or within the period of one year after it commences to be used, subsection (2) shall apply as if in paragraph (b) of that subsection “that expenditure or to” and “, whichever is the less” were deleted, and

(b) if there is more than one sale of the relevant interest before the building or structure is used or within the period of one year after it commences to be used, subsection (2) shall apply as if the reference to the expenditure actually incurred on the construction of the building or structure were a reference to the price paid on that sale.

280 Temporary disuse of building or structure. [ITA67 s270; CTA76 s21(1) and Sch1 par27]

280.—(1) For the purposes of this Chapter, a building or structure shall not be deemed to cease altogether to be used by reason that it is temporarily out of use and where, immediately before any period of temporary disuse, a building or structure is an industrial building or structure, it shall be deemed to continue to be an industrial building or structure during the period of temporary disuse.

(2) (a) Notwithstanding any other provision of this Part as to the manner of making allowances and charges but subject to paragraph (b), where by virtue of subsection (1) a building or structure is deemed to continue to be an industrial building or structure while temporarily out of use, then, if—

(i) on the last occasion on which the building or structure was in use as an industrial building or structure, it was in use for the purposes of a trade which has since been permanently discontinued, or

(ii) on the last occasion on which the building or structure was in use as an industrial building or structure, the relevant interest in the building or structure was subject to a lease which has since come to an end,

any writing-down allowance or balancing allowance to be made to any person in respect of the building or structure during any period for which the temporary disuse continues after the discontinuance of the trade or the coming to an end of the lease shall be made by means of discharge or repayment of tax, and any balancing charge to be made on any person in respect of the building or structure during that period shall be made under Case IV of Schedule D.

(b) Where for a chargeable period the person has income chargeable to tax under Case V of Schedule D and at the end of the chargeable period or its basis period the building or structure is one to which paragraph (a) applies, any writing-down allowance or balancing allowance or balancing charge to be made to or on the person in respect of the building or structure shall be made in charging that person's income under Case V of Schedule D.

(3) The reference in this section to the permanent discontinuance of a trade does not include a reference to the happening of any event which by virtue of the Income Tax Acts is to be treated as equivalent to the discontinuance of the trade.

281 Special provisions in regard to leases. [ITA67 s269]

281.—(1) Where with the consent of the lessor a lessee of any building or structure remains in possession of that building or structure after the termination of the lease without a new lease being granted to the lessee, that lease shall be deemed for the purposes of this Chapter to continue so long as the lessee remains so in possession.

(2) Where on the termination of a lease a new lease is granted to the lessee consequent on the lessee being entitled by statute to a new lease or in pursuance of an option available to the lessee under the terms of the first lease, this Chapter shall apply as if the second lease were a continuation of the first lease.

(3) Where on the termination of a lease the lessor pays any sum to the lessee in respect of a building or structure comprised in the lease, this Chapter shall apply as if the lease had come to an end by reason of the surrender of the lease in consideration of the payment.

282 Supplementary provisions (Chapter 1). [ITA67 s263(2) and (3)]

282.—(1) A person who has incurred expenditure on the construction of a building or structure shall be deemed, for the purposes of any provision of this Chapter referring to such person's interest in the building or structure at the time when the expenditure was incurred, to have had the same interest in the building or structure as such person would have had if the construction of the building or structure had been completed at that time.

(2) Without prejudice to any other provision of this Part relating to the apportionment of sale, insurance, salvage or compensation moneys, the sum paid on the sale of the relevant interest in a building or structure, or any other sale, insurance, salvage or compensation moneys payable in respect of any building or structure, shall for the purposes of this Chapter be deemed to be reduced by an amount equal to so much of that sum or those moneys, as the case may be, as on a just apportionment is attributable to assets representing expenditure other than expenditure in respect of which an allowance may be made under this Chapter.

CHAPTER 2 Machinery or plant: initial allowances, wear and tear allowances, balancing allowances and balancing charges

283 Initial allowances. ITA67 s251(1), (4)(bb)(ii) and (d), (6) and (7); FA73 s9(2) (apart from the proviso); CTA76 s 21(1) and Sch1 par15 and par61; FA88 s43(b), s51(1)(a) and (cc) (proviso thereto), (2)(a), (c) and (d) and (6); FA89 s13; FA90 s73(a) and (b), s80, s81(1)(a) and (2)(a) and (b); FA93 s33; FA95 s27; FA96 s43]

283.—(1) In this section—

“industrial development agency” means the Industrial Development Authority, Shannon Free Airport Development Company Limited or Údarás na Gaeltachta;

“new” means unused and not secondhand, but a ship shall be deemed to be new even if it has been used or is secondhand.

(2) Subject to the Tax Acts, where—

(a) a person carrying on a trade, the profits or gains of which are chargeable under Case I of Schedule D, incurs capital expenditure on the provision for the purposes of the trade of new machinery or new plant, other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles,

(b) that machinery or plant is machinery or plant to which subsection (4) or (5) applies, and

there shall be made to such person for the chargeable period related to the expenditure an allowance (in this Chapter referred to as an “initial allowance”).

(3) An initial allowance shall be of an amount equal to—

(a) in the case of machinery or plant to which subsection (4) applies, 100 per cent of the capital expenditure mentioned in subsection (2), or

(b) in the case of machinery or plant to which subsection (5) applies, 50 per cent of the capital expenditure mentioned in subsection (2).

(4) This subsection shall apply to—

(a) machinery or plant provided—

(i) before the 23rd day of April, 1996, for use for the purposes of trading operations, or

(ii) on or after the 23rd day of April, 1996, by a company for use for the purposes of trading operations carried on by the company,

which are relevant trading operations within the meaning of section 445 or 446 but, in relation to capital expenditure incurred on the provision of machinery or plant on or after the 6th day of May, 1993, excluding machinery or plant provided by a lessor to a lessee other than in the course of the carrying on by the lessor of those relevant trading operations, and

(b) machinery or plant provided for the purposes of a project approved by an industrial development agency in the period from the 1st day of January, 1986, to the 31st day of December, 1988, and in respect of the provision of which expenditure was incurred before the 31st day of December, 1996.

(5) This subsection shall apply to machinery or plant provided for the purposes of a project approved for grant assistance by an industrial development agency in the period from the 1st day of January, 1989, to the 31st day of December, 1990, and in respect of the provision of which expenditure is incurred before the 31st day of December, 1997; but, as respects machinery or plant provided for the purposes of any such project specified in the list referred to in section 133(8)(c)(iv), this subsection shall apply as if the reference to the 31st day of December, 1997, were a reference to the 31st day of December, 2002.

(6) Where an initial allowance in respect of capital expenditure incurred on or after the 1st day of April, 1989, on the provision of machinery or plant, other than machinery or plant to which subsection (4) applies, is made under this section for any chargeable period—

(a) no allowance for wear and tear of that machinery or plant shall be made under section 284 for that chargeable period, and

(b) an allowance for wear and tear of that machinery or plant which is to be made under section 284 for any chargeable period subsequent to that chargeable period shall not be increased under section 285.

(7) Any initial allowance under this section made to a person for any chargeable period in respect of machinery or plant shall not exceed such sum as will, when added to—

(a) the amount of any allowance in respect of the machinery or plant made to the person under section 284 for that chargeable period, and

(b) the aggregate amount of any allowances made to the person in respect of the machinery or plant under this section and section 284 for earlier chargeable periods,

equal the amount of the expenditure incurred by such person on the provision of the machinery or plant.

284 Wear and tear allowances. [ITA67 s241(1)(a) and (b) and proviso to (1), (6), (6A), (10) and (11); CTA76 s21(1) and Sch1 par6; FA92 s26(4); FA96 s132(1) and Sch5 PtI par1(12)(a); FA97 s22 and s146(1) and Sch9 PtI par1(16)]

284.—(1) Subject to the Tax Acts, where a person carrying on a trade in any chargeable period has incurred capital expenditure on the provision of machinery or plant for the purposes of the trade, an allowance (in this Chapter referred to as a “wear and tear allowance”) shall be made to such person for that chargeable period on account of the wear and tear of any of the machinery or plant which belongs to such person and is in use for the purposes of the trade at the end of that chargeable period or its basis period and which, while used for the purposes of the trade, is wholly and exclusively so used.

(2) (a) Subject to subsection (4), the amount of the wear and tear allowance to be made shall be an amount equal to—

(i) in the case of machinery or plant, other than machinery or plant of the type referred to in subparagraph (ii), 15 per cent of the actual cost of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by means of renewal, improvement or reinstatement, or

(ii) in the case of machinery or plant which consists of a vehicle suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles, 20 per cent of the value of that machinery or plant at the commencement of the chargeable period.

(b) Where a chargeable period or its basis period consists of a period less than one year in length, the wear and tear allowance shall not exceed such portion of the amount specified in subparagraph (i) or (ii) of paragraph (a), as the case may be, as bears to that amount the same proportion as the length of the chargeable period or its basis period bears to a period of one year.

(3) For the purposes of subsection (2)(a)(ii), the value at the commencement of the chargeable period of the machinery or plant shall be taken to be the actual cost to the person of such machinery or plant reduced by the total of any wear and tear allowances made to that person in relation to the machinery or plant for previous chargeable periods.

(4) No wear and tear allowance or repayment on account of any such allowance shall be made for any chargeable period if such allowance, when added to—

(a) the allowances on that account, and

(b) any initial allowances in relation to the machinery or plant under section 283,

made for any previous chargeable periods to the person by whom the trade is carried on, will make the aggregate amount of the allowances exceed the actual cost to that person of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by means of renewal, improvement or reinstatement.

(5) No wear and tear allowance shall be made under this section in respect of capital expenditure incurred on the construction of a building or structure which is or is deemed to be an industrial building or structure within the meaning of section 268.

(6) Subject to subsection (7), this section shall, with any necessary modifications, apply in relation to the letting of any premises the profits or gains from which are chargeable under Chapter 8 of Part 4 as it applies in relation to trades.

(7) Where by virtue of subsection (6) this section applies to the letting of any premises, it shall apply as respects the year of assessment 1997-98 and subsequent years of assessment in respect of capital expenditure incurred on the provision of machinery or plant within the meaning of subsection (2)(a)(i) where—

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

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

285 Acceleration of wear and tear allowances. [FA67 s11(1), (2), (2A) and (4); FA71 s26(1), (2), (2A) and (4); CTA76 s21(1) and Sch1 par53 and par60; FA78 s22; FA88 s46, s47 and s51(1)(a), (c), (cc) and the proviso thereto and (d), (3) and (6); FA90 s71, s72, s80 and s81(1)(a) and (c) and proviso to (1), and (3); FA95 s26 and s27; FA96 s43 and s132(1) and Sch5 PtI pars2 and 5]

285.—(1) In this section—

“designated area” means a designated area for the purposes of the Industrial Development Act, 1969;

“industrial development agency” means the Industrial Development Authority, Shannon Free Airport Development Company Limited or Údarás na Gaeltachta;

“qualifying building or structure” means a building or structure which is to be an industrial building or structure within the meaning of section 268(1)(d), and in respect of the provision of which expenditure was incurred before the 31st day of December, 1995, where a binding contract for the provision of the building or structure was entered into before the 31st day of December, 1990;

“qualifying machinery or plant” means machinery or plant, other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles, provided—

(a) on or after the 1st day of April, 1967, for use in any designated area, or

(b) on or after the 1st day of April, 1971, for use in any area other than a designated area,

for the purposes of a trade and which at the time it is so provided is unused and not secondhand.

(2) (a) Subject to this section and section 299(2), where for any chargeable period a wear and tear allowance is to be made under section 284 in relation to any qualifying machinery or plant, the allowance shall, subject to section 284(4), be increased by such amount as is specified by the person to whom the allowance is to be made and, in relation to a case in which this subsection has applied, any reference in the Tax Acts to an allowance made under section 284 shall be construed as a reference to that allowance as increased under this subsection.

(b) Subject to subsections (4) and (6), as respects any machinery or plant provided for use on or after the 1st day of April, 1988, any wear and tear allowance made under section 284 and increased under paragraph (a) in respect of that machinery or plant, whether claimed for one chargeable period or more than one such period, shall not in the aggregate exceed—

(i) if the machinery or plant was provided for use before the 1st day of April, 1989, 75 per cent,

(ii) if the machinery or plant was provided for use on or after the 1st day of April, 1989, and before the 1st day of April, 1991, 50 per cent, or

(iii) if the machinery or plant was provided for use on or after the 1st day of April, 1991, and before the 1st day of April, 1992, 25 per cent,

of the capital expenditure incurred on the provision of that machinery or plant.

(3) Notwithstanding subsection (2) but subject to subsections (4) and (6)—

(a) no allowance made under section 284 for wear and tear of any qualifying machinery or plant provided for use on or after the 1st day of April, 1992, shall be increased under this section, and

(b) as respects chargeable periods ending on or after the 6th day of April, 1999, no allowance made under section 284 for wear and tear of any qualifying machinery or plant provided for use before the 1st day of April, 1992, shall be increased under this section.

(4) This section shall apply in relation to machinery or plant to which subsection (5) applies as if subsections (2)(b) and (3) were deleted.

(5) This subsection shall apply to—

(a) machinery or plant provided—

(i) before the 23rd day of April, 1996, for use for the purposes of trading operations, or

(ii) on or after the 23rd day of April, 1996, by a company for use for the purposes of trading operations carried on by the company,

(b) machinery or plant the expenditure on the provision of which was incurred before the 31st day of December, 1995, under a binding contract entered into on or before the 27th day of January, 1988,

(c) machinery or plant provided for the purposes of a project approved by an industrial development agency on or before the 31st day of December, 1988, and in respect of the provision of which expenditure was incurred before the 31st day of December, 1995; but, as respects machinery or plant provided for the purposes of a project approved by an industrial development agency in the period from the 1st day of January, 1986, to the 31st day of December, 1988, this paragraph shall apply as if the reference to the 31st day of December, 1995, were a reference to the 31st day of December, 1996,

and

(d) machinery or plant provided before the 1st day of April, 1991, for the purposes of a trade or part of a trade of hotel-keeping carried on in a building or structure or part of a building or structure, including machinery or plant provided by a lessor to a lessee for use in such a trade or part of a trade, where a binding contract for the provision of that building or structure was entered into after the 27th day of January, 1988, and before the 1st day of June, 1988.

(6) This section shall apply in relation to machinery or plant to which subsection (7)(a) applies—

(a) as if in subsection (2)(b)—

(i) the following subparagraph were substituted for subparagraph (ii):

“(ii) if the machinery or plant is provided for use on or after the 1st day of April, 1989, 50 per cent,”,

and

(ii) subparagraph (iii) were deleted,

and

(b) as if subsection (3) were deleted.

(7) (a) This subsection shall apply to—

(i) machinery or plant provided for the purposes of a project approved for grant assistance by an industrial development agency in the period from the 1st day of January, 1989, to the 31st day of December, 1990, and in respect of the provision of which expenditure is incurred before the 31st day of December, 1997; but, as respects machinery or plant provided for the purposes of any such project specified in the list referred to in section 133(8)(c)(iv), this subparagraph shall apply as if the reference to the 31st day of December, 1997, were a reference to the 31st day of December, 2002,

and

(ii) machinery or plant provided for the purposes of a trade or part of a trade of hotel-keeping carried on in a qualifying building or structure and in respect of the provision of which expenditure was incurred before the 31st day of December, 1995.

(b) Paragraph (a)(ii) shall not apply if the qualifying building or structure is not registered within 6 months after the date of the completion of that building or structure in a register kept by Bord Fáilte Éireann under the Tourist Traffic Acts, 1939 to 1995, and where by virtue of this section any allowance or increased allowance has been granted any necessary additional assessments may be made to give effect to this paragraph.

(8) Where for any chargeable period a wear and tear allowance under section 284 in relation to any machinery or plant is increased under this section, no allowance under section 283 shall be made in relation to the machinery or plant for that or any subsequent chargeable period.

286 Increased wear and tear allowances for taxis and cars for short-term hire. [FA87 s24; FA96 s131, s132(1) and Sch5 PtI par16]

286.—(1) (a) In this section—

“car” means any mechanically propelled road vehicle, being a vehicle which has been constructed or adapted to be primarily suited to the carriage of passengers and not to the conveyance of goods or burden of any description or to the haulage by road of other vehicles, and which is a vehicle of a type commonly used as a private vehicle and suitable to be so used, and includes a vehicle in use for the purpose referred to in paragraph (ii) of the definition of “qualifying purposes”;

“qualifying purposes” means, subject to paragraphs (c) and (d), the use in the ordinary course of trade of a car for the purposes of—

(i) short-term hire to members of the public, or

(ii) the carriage of members of the public while the car is a licensed public hire vehicle fitted with a taximeter in accordance with the Road Traffic (Public Service Vehicles) Regulations, 1963 (S.I. No. 191 of 1963);

“short-term hire”, in relation to a car and subject to paragraph (b), means the hire of the car to a person under a hire-drive agreement (within the meaning of section 3 of the Road Traffic Act, 1961) for a continuous period which does not exceed 8 weeks.

(b) Where a period of hire of a car to a person by another person is followed within 7 days of the end of that period by a further period of hire of a car (whether the same car or not) to that person by that other person, the 2 periods shall be deemed for the purposes of this section, including any subsequent application of this paragraph, to constitute together a single continuous period of hire so that, where that continuous period of hire exceeds 8 weeks, the period of hire of any car included in that continuous period of hire shall not be treated as a period of short-term hire, and for the purposes of this paragraph any reference to a person shall be treated as including a reference to any other person who is connected with that person.

(c) For the purposes of this section, a car shall be regarded as used by a person for qualifying purposes as respects a chargeable period only if not less than 75 per cent of its use (determined by reference to the periods of time in which the car is used, or available for use, for any purpose) by that person in the chargeable period or its basis period is for qualifying purposes.

(d) Notwithstanding paragraph (c), where as respects a chargeable period the use of a car for qualifying purposes does not satisfy the requirements of that paragraph but would have satisfied those requirements if the reference in that paragraph to 75 per cent were a reference to 50 per cent, the car shall be deemed to be used for qualifying purposes as respects that chargeable period if the use of the car by that person for qualifying purposes satisfied the requirements of that paragraph as respects the immediately preceding chargeable period, or the car shall be deemed to be so used if that use of the car has satisfied those requirements as respects the immediately succeeding chargeable period, and the inspector shall accordingly adjust the amount of capital allowances to be made in taxing the person's trade and any amount of tax overpaid shall be repaid.

(2) In determining what capital allowances are to be made to a person for any chargeable period in taxing a trade which consists of or includes the carrying on of qualifying purposes, section 284 shall apply to a car which as respects that period has been used by the person for qualifying purposes as if the reference in subsection (2)(a)(ii) of that section to 20 per cent were a reference to 40 per cent.

287 Wear and tear allowances deemed to have been made in certain cases. [FA 1970 s 14(1),(2) and (3); CTA76 s21(1) and Sch1 par56; FA97 s146(1) and Sch9 PtI par4 (1)]

287.—(1) In this section—

“wear and tear allowance” means an allowance made under section 284 otherwise than by virtue of section 285;

“normal wear and tear allowance” means such wear and tear allowance or greater wear and tear allowance, if any, as would have been made to a person in respect of any machinery or plant used by such person during any chargeable period if all the conditions specified in subsection (3) had been fulfilled in relation to that chargeable period.

(2) Where for any chargeable period during which any machinery or plant has been used by a person no wear and tear allowance or a wear and tear allowance less than the normal wear and tear allowance is made to such person in respect of the machinery or plant, the normal wear and tear allowance shall be deemed for the purposes of subsections (3) and (4) of section 284 to have been made to such person in respect of the machinery or plant for that chargeable period.

(3) The conditions referred to in subsection (1) are—

(a) that the trade had been carried on by the person in question since the date on which such person acquired the machinery or plant and had been so carried on by such person in such circumstances that the full amount of the profits or gains of the trade was liable to be charged to tax,

(b) that the trade had at no time consisted wholly or partly of exempted trading operations within the meaning of Chapter I of Part XXV of the Income Tax Act, 1967, or Part V of the Corporation Tax Act, 1976,

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

(e) that no question arose in connection with any chargeable period as to there being payable to such person directly or indirectly any sums in respect of, or taking account of, the wear and tear of the machinery or plant.

(4) In the case of a company, subsection (3)(a) shall not alter the periods which are to be taken as chargeable periods but if, during any time after the year 1975-76 and after the company acquired the machinery or plant, the company has not been within the charge to corporation tax, any year of assessment or part of a year of assessment falling within that time shall be taken as a chargeable period as if it had been an accounting period of the company.

288 Balancing allowances and balancing charges. [ITA67 s272(1) to (4), (5)(a) and (b) and (6) and definition of “scientific research allowance” in ITA67 s271; CTA76 s21(1) and Sch1 par28 and par29; FA94 s24(b); FA95 s25(1)]

288.—(1) Subject to this section, where any of the following events occurs in the case of any machinery or plant in respect of which an initial allowance or a wear and tear allowance has been made for any chargeable period to a person carrying on a trade—

(a) any event occurring after the setting up and before the permanent discontinuance of the trade whereby the machinery or plant ceases to belong to the person carrying on the trade (whether on a sale of the machinery or plant or in any other circumstances of any description),

(b) any event occurring after the setting up and before the permanent discontinuance of the trade whereby the machinery or plant (while continuing to belong to the person carrying on the trade) permanently ceases to be used for the purposes of a trade carried on by the person,

(c) the permanent discontinuance of the trade, the machinery or plant not having previously ceased to belong to the person carrying on the trade,

(d) in the case of machinery or plant consisting of computer software or the right to use or otherwise deal with computer software, any event whereby the person grants to another person a right to use or otherwise deal with the whole or part of the computer software concerned in circumstances where the consideration in money for the grant constitutes (or, if there were consideration in money for the grant, would constitute) a capital sum,

an allowance or charge (in this Chapter referred to as a “balancing allowance” or a “balancing charge”) shall, in the circumstances mentioned in this section, be made to or, as the case may be, on that person for the chargeable period related to that event.

(2) Where there are no sale, insurance, salvage or compensation moneys or where the amount of the capital expenditure of the person in question on the provision of the machinery or plant still unallowed as at the time of the event exceeds those moneys, a balancing allowance shall be made, and the amount of the allowance shall be the amount of the expenditure still unallowed as at that time or, as the case may be, of the excess of that expenditure still unallowed as at that time over those moneys.

(3) Where the sale, insurance, salvage or compensation moneys exceed the amount, if any, of that expenditure still unallowed as at the time of the event, a balancing charge shall be made, and the amount on which it is made shall be an amount equal to—

(a) the excess, or

(b) where the amount still unallowed is nil, those moneys.

(4) (a) In this subsection, “scientific research allowance” means—

(i) in relation to any expenditure incurred before the 6th day of April, 1965, the total amount of any allowances made in respect of that expenditure under section 244(3) of the Income Tax Act, 1967, increased by the amount of any allowance made under section 244(4)(b) of that Act or, as the case may be, reduced by any amount treated as a trading receipt in accordance with section 244(4)(c) of that Act, and

(ii) in relation to any expenditure incurred on or after the 6th day of April, 1965, the amount of any allowance made in respect of that expenditure under subsection (1) or (2) of section 765, reduced by any amount treated as a trading receipt in accordance with section 765(3)(a).

(b) Notwithstanding anything in subsection (3), in no case shall the amount on which a balancing charge is made on a person exceed the aggregate of the following amounts—

(i) the amount of the initial allowance, if any, made to the person in respect of the expenditure in question,

(ii) the amount of any wear and tear allowance made to the person in respect of the machinery or plant in question,

(iii) the amount of any scientific research allowance made to the person in respect of the expenditure, and

(iv) the amount of any balancing allowance previously made to the person in respect of the expenditure.

(5) (a) Where the aggregate amount of initial allowances and wear and tear allowances made to any person in respect of any machinery or plant exceeds the actual amount of the expenditure incurred by that person on the provision of that machinery or plant, the amount of such excess (in this paragraph referred to as “the excess amount”) shall, on the occurrence of an event within paragraph (a), (b), (c) or (d) of subsection (1), be deemed to be a payment of an equal amount received by that person on account of sale, insurance, salvage or compensation moneys and shall be added to any other such moneys received in respect of that machinery or plant, and a balancing charge shall be made and the amount on which it is made shall be an amount equal to—

(i) where there are no sale, insurance, salvage or compensation moneys, the excess amount, or

(ii) where there are sale, insurance, salvage or compensation moneys, the aggregate of such moneys and the excess amount.

(b) Where as respects any machinery or plant an event within paragraph (a), (b), (c) or (d) of subsection (1) is followed by another event within any of those paragraphs, any balancing allowance or balancing charge made to or on the person by virtue of the happening of the later event shall take account of any balancing allowance or balancing charge previously made to or on that person in respect of the expenditure incurred by the person on the provision of that machinery or plant.

(6) (a) Where—

(i) the sale, insurance, salvage or compensation moneys consist of a payment or payments to a person under the scheme for compensation in respect of the decommissioning of fishing vessels implemented by the Minister for the Marine and Natural Resources in accordance with Council Regulation (EC) No. 3699/93 of 21 December 1993, [^1] and

(ii) on account of the receipt by the person of such payment or payments, a balancing charge is to be made on the person for any chargeable period other than by virtue of paragraph (b),

then, the amount on which the balancing charge is to be made for that chargeable period shall be an amount equal to one-third of the amount (in this subsection referred to as “the original amount”) on which the balancing charge would but for this subsection have been made.

(b) Notwithstanding paragraph (a), there shall be made on the person for each of the 2 immediately succeeding chargeable periods a balancing charge, and the amount on which that charge is made for each of those periods shall be an amount equal to one-third of the original amount.

289 Calculation of balancing allowances and balancing charges in certain cases. [ITA67 s277]

289.—(1) In this section, “open-market price”, in relation to any machinery or plant, means the price which the machinery or plant would have fetched if sold in the open market at the time of the event in question.

(2) Where—

(a) an event occurs which gives rise or might give rise to a balancing allowance or balancing charge in respect of machinery or plant,

(b) the event is the permanent discontinuance of a trade, and

(c) at or about the time of the discontinuance there occurs in relation to the machinery or plant any event mentioned in paragraphs (a) to (c) of section 318, not being a sale at less than open-market price other than a sale to which section 312 applies,

then, for the purpose of determining—

(i) whether the discontinuance gives rise to a balancing allowance or balancing charge, and, if so,

(ii) the amount of the allowance or, as the case may be, the amount on which the charge is to be made,

the amount of the net proceeds, compensation, receipts or insurance moneys mentioned in paragraphs (a) to (c) of section 318 which arise on the last-mentioned event shall be deemed to be an amount of sale, insurance, salvage or compensation moneys arising on the permanent discontinuance of the trade.

(3) (a) Subject to subsections (4) and (6), paragraph (b) shall apply where an event occurs which gives rise or might give rise to a balancing allowance or balancing charge in respect of machinery or plant, and—

(i) the event is the permanent discontinuance of the trade and immediately after the time of the discontinuance the machinery or plant continues to belong to the person by whom the trade was carried on immediately before that time and the case is not one within subsection (2),

(ii) the event is the permanent discontinuance of the trade and at the time of the discontinuance the machinery or plant is either sold at less than the open-market price, the sale not being one to which section 312 applies, or the machinery or plant is given away,

(iii) the event is the sale of the machinery or plant at less than the open-market price, not being a sale to which section 312 applies, or is the gift of the machinery or plant, or

(iv) the event is that, after the setting up and before the permanent discontinuance of the trade, the machinery or plant permanently ceases to be used for the purposes of a trade carried on by the person by whom the first-mentioned trade is being carried on, and so ceases either by reason of that person's transferring the machinery or plant to other use or, on a transfer of the trade which is not treated as involving a discontinuance of the trade, by reason of the retention of the machinery or plant by the transferor.

(b) For the purpose of determining whether a balancing allowance or balancing charge is to be made and, if so, the amount of the allowance or, as the case may be, the amount on which the charge is to be made, the event shall be treated as if it had given rise to sale, insurance, salvage or compensation moneys of an amount equal to the open-market price of the machinery or plant.

(4) References in subsection (3) to the sale of machinery or plant at less than the open-market price do not include references to the sale of machinery or plant in such circumstances that there is a charge to income tax under Schedule E by virtue of Chapter 3 of Part 5, and subsection (3)(b) shall not apply by reason of the gift of machinery or plant if the machinery or plant is given away in any such circumstances.

(5) Subject to subsection (6), where subsection (3)(b) applies by reason of the gift or sale of machinery or plant to any person, and that person receives or purchases the machinery or plant with a view to using it for the purposes of a trade carried on by that person, then, in determining whether any, and if so what, wear and tear allowances, balancing allowances or balancing charges are to be made in connection with that trade, the like consequences shall ensue as if the recipient or purchaser had purchased the machinery or plant at the open-market price.

(6) Where in a case within subsection (5) the recipient or purchaser and the donor or seller, by notice in writing to the inspector, jointly so elect, the following provisions shall apply:

(a) subsections (3)(b) and (5) shall apply as if for the references in those subsections to the open-market price there were substituted references to that price or the amount of the expenditure on the provision of the machinery or plant still unallowed immediately before the gift or sale, whichever is the lower;

(b) notwithstanding anything in this Chapter, such balancing charge, if any, shall be made on the recipient or purchaser on any event occurring after the date of the gift or sale as would have been made on the donor or seller if the donor or seller had continued to own the machinery or plant and had done all such things and been allowed all such allowances in connection with the machinery or plant as were done by or allowed to the recipient or purchaser.

290 Option in case of replacement. [ITA67 s273(1)]

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