Finance Act 1998

PART 1 Income Tax, Corporation Tax and Capital Gains Tax

Chapter 1 Interpretation

1 Interpretation.

1.—In this Part, “the Principal Act” means the Taxes Consolidation Act, 1997.

Chapter 2 Income Tax

2 Amendment of provisions relating to exemption from income tax.

2.—As respects the year of assessment 1998-99 and subsequent years of assessment, the Principal Act is hereby amended—

(a) in section 187, by the substitution, in subsection (1), of “£8,200” and “£4,100”, respectively, for “£8,000” and “£4,000”, and

(b) in section 188, by the substitution, in subsection (2)—

(i) of “£10,000” and “£11,000”, respectively, for “£9,200” and “£10,400”, in paragraph (a), and

(ii) of “£5,000” and “£5,500”, respectively, for “£4,600” and “£5,200”, in paragraph (b),

and those subsections, as so amended, are set out in the Table to this section.

TABLE

(1) In this section, “the specified amount” means, subject to subsection (2)—

(a) in a case where the individual would apart from this section be entitled to a deduction specified in section 461(a), £8,200, and

(b) in any other case, £4,100.

(2) In this section, “the specified amount” means, subject to section 187(2)—

(a) in a case where the individual would apart from this section be entitled to a deduction specified in section 461(a), £10,000; but, if at any time during the year of assessment either the individual or the spouse of the individual was of the age of 75 years or over, “the specified amount” means £11,000, and

(b) in any other case, £5,000; but, if at any time during the year of assessment the individual was of the age of 75 years or over, “the specified amount” means £5,500.

3 Alteration of rates of income tax.

3.—Section 15 of the Principal Act is hereby amended, as respects the year of assessment 1998-99 and subsequent years of assessment, by the substitution of the following Table for the Table to that section:

“TABLE

PART 1

Part of taxable income	Rate of tax	Description of rate
(1)	(2)	(3)
The first £10,000	24 per cent	the standard rate
The remainder	46 per cent	the higher rate

PART 2

Part of taxable income	Rate of tax	Description of rate
(1)	(2)	(3)
The first £20,000	24 per cent	the standard rate
The remainder	46 per cent	the higher rate

”

4 Personal reliefs.

4.—(1) Where a deduction falls to be made from the total income of an individual for the year of assessment 1998-99 or any subsequent year of assessment in respect of relief to which the individual is entitled under a provision mentioned in column (1) of the Table to this subsection and the amount of the deduction would, but for this section, be an amount specified in column (2) of the said Table, the amount of the deduction shall, in lieu of being the amount specified in the said column (2), be the amount specified in column (3) of the said Table opposite the mention of the amount in the said column (2).

Statutory provision	Amount to be deducted from total income for the year 1997-98	Amount to be deducted from total income for the year 1998-99 and subsequent years
(1)	(2)	(3)
	£	£
Principal Act:
section 461
(married person)	5,800	6,300
(widowed person bereaved in the year of assessment)	5,800	6,300
(widowed person)	3,400	3,650
(single person)	2,900	3,150
section 462
(additional allowance for widowed persons and others in respect of children)
(widowed person)	2,400	2,650
(other person)	2,900	3,150
section 465
(incapacitated child)	700	800
section 467
(person employed to take care of an incapacitated person)	7,500	8,500
section 468
(blind person)	700	1,000
(both spouses blind)	1,600	2,000

(2) Schedule 1 shall apply for the purpose of supplementing subsection (1).

5 Amendment of section 463 (special allowance for widowed parent following death of spouse) of Principal Act.

5.—As respects the year of assessment 1998-99 and subsequent years of assessment, section 463 of the Principal Act is hereby amended by the substitution of the following subsection for subsection (2):

“(2) Where a claimant proves, in relation to any of the 5 years of assessment immediately following the year of assessment in which the claimant's spouse dies, that—

(a) he or she has not remarried before the commencement of the year, and

(b) a qualifying child is resident with him or her for the whole or part of the year,

the claimant shall, in respect of each of the years in relation to which the claimant so proves, be entitled, in computing the amount of his or her taxable income, to have a deduction made from his or her total income as follows—

(i) for the first of those 5 years, £5,000,

(ii) for the second of those 5 years, £4,000,

(iii) for the third of those 5 years, £3,000,

(iv) for the fourth of those 5 years, £2,000, and

(v) for the fifth of those 5 years, £1,000;

but this section shall not apply for any year of assessment in the case of a man and woman living together as man and wife.”.

6 Amendment of section 126 (tax treatment of certain benefits payable under Social Welfare Acts) of Principal Act.

6.—Section 126 of the Principal Act is hereby amended by the substitution, in subsection (8), of the following for paragraph (b):

“(b) Notwithstanding subsection (3) and the Finance Act, 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order, 1994 (S.I. No. 19 of 1994), subsection (3)(b) shall not apply as respects the years of assessment 1997-98 and 1998-99 in relation to unemployment benefit paid or payable to a person employed in short-time employment.”.

7 Income under dispositions for short periods.

7.—Schedule 32 to the Principal Act is hereby amended, in subparagraph (1) of paragraph 27, by the substitution of “6th day of April, 2000” for “6th day of April, 1998” and that subparagraph, as so amended, is set out in the Table to this section.

TABLE

(1) Where—

(a) the conditions set out in subparagraph (3) are satisfied, and

(b) the Revenue Commissioners are satisfied that the application of the amendments to section 439 of the Income Tax Act, 1967, effected by subsections (1) and (2) of section 13 of the Finance Act, 1995, which subsections are re-enacted in subsections (1) and (2) of section 792, would give rise to hardship,

then, those amendments shall not, to the extent that the Revenue Commissioners consider just, apply before the 6th day of April, 2000, in respect of a disposition, to which clause (a) of subparagraph (2) applies, by a person (in this paragraph referred to as “the disponer”), in so far as, by virtue or in consequence of such disposition, income is payable in a year of assessment to or for the benefit of an individual to whom clause (b) of subparagraph (2) applies, and accordingly, notwithstanding that section 439 of the Income Tax Act, 1967, as it stood before its amendment by subsections (1) and (2) of section 13 of the Finance Act, 1995, is not re-enacted by this Act, this Act shall apply with any modifications necessary to give effect to this paragraph.

8 Amendment of section 66 (special basis at commencement of trade or profession) of Principal Act.

8.—As respects the year 1998-99 and subsequent years of assessment, section 66 of the Principal Act is hereby amended by the substitution of the following for subsection (2):

“(2) Any person chargeable with income tax in respect of the profits or gains of any trade or profession which has been set up and commenced within one year preceding the year of assessment shall be charged—

(a) if only one account was made up to a date within the year of assessment and that account was for a period of one year, on the full amount of the profits or gains of the year ending on that date,

(b) if—

(i) an account, other than an account to which paragraph (a) applies, was made up to a date in the year of assessment or more accounts than one were made up to dates in the year of assessment, and

(ii) the trade or profession was set up and commenced not less than 12 months before the first-mentioned date in subparagraph (i) or, as the case may be, the last of the second-mentioned dates in that subparagraph,

on the full amount of the profits or gains of the year ending on that first-mentioned date or, as the case may be, the last of those second-mentioned dates, or

(c) in any other case, on the full amount of the profits or gains of the year of assessment.”.

9 Amendment of section 191 (taxation treatment of Hepatitis C compensation payments) of Principal Act.

9.—(1) Section 191 of the Principal Act is hereby amended by the substitution of the following for subsections (1) and (2):

“(1) In this section—

‘the Act’ means the Hepatitis C Compensation Tribunal Act, 1997;

‘the Tribunal’ means the Tribunal known as the Hepatitis C Compensation Tribunal established under section 3 of the Act.

(2) This section shall apply to any payment in respect of compensation—

(a) by the Tribunal in accordance with the Act, or

(b) following the institution by or on behalf of a person of a civil action for damages in respect of personal injury,

to a person referred to—

(i) in subsection (1) of section 4 of the Act, in respect of matters referred to in that section, or

(ii) in any regulations made under section 9 of the Act, in respect of matters referred to in those regulations.”.

(2) This section shall apply as on and from the 1st day of November, 1997.

10 Amendment of section 202 (relief for agreed pay restructuring) of Principal Act.

10.—Section 202 of the Principal Act is hereby amended

(a) in subsection (1)—

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

“‘relevant agreement’, in relation to a qualifying company, means a collective agreement—

(a) that applies to—

(i) more than 50 per cent of the total number of qualifying employees of the company, or

(ii) more than 75 per cent of a bona fide class or classes of qualifying employees of the company if the number of participating employees in the class or classes, as the case may be, comprises at least 25 per cent of the total number of qualifying employees of the company,

(b) that provides amongst other things for—

(i) a substantial reduction in the basic pay of the participating employees to which it relates,

(ii) the payment of the reduced basic pay to the participating employees to which it relates for the duration of the relevant period, and

(iii) the payment to them of a lump sum to compensate for that reduction,

and

(c) that is registered with the Labour Relations Commission;”,

and

(ii) by the addition of the following paragraph after paragraph (b):

“(c) In determining for the purposes of the definition of ‘relevant agreement’ whether qualifying employees of a qualifying company are comprised in a bona fide class or classes, as the case may be, regard shall be had to matters such as common work practices, skills, established collective bargaining arrangements and the organisational structure and arrangements within the company.”,

and

(b) in subsection (2), by the substitution in paragraph (b) of the following subparagraphs for subparagraphs (i) and (ii):

“(i) the company is confronted with a substantial adverse change to its competitive environment which will determine its current or continued viability,

(ii) to accommodate that change and maintain its viability, it is necessary for it to enter into a relevant agreement with its qualifying employees, and”.

11 Amendment of section 479 (relief for new shares purchased on issue by employees) of Principal Act.

11.—(1) Section 479 of the Principal Act is hereby amended—

(a) in subsection (1)(a), by the substitution, in paragraph (ii) of the definition of “eligible shares”, of “the period of 3 years” for “the period of 5 years”,

(b) in subsection (3)—

(i) by the substitution of “the period of 3 years” for “the period of 5 years”, and

(ii) by the deletion of the words from “; but” to the end of the subsection,

and

(c) by the substitution of the following subsection for subsection (5)—

“(5) In relation to shares in respect of which relief has been given under subsection (2) and not withdrawn, any question—

(a) as to which (if any) such shares issued to an eligible employee at different times a disposal relates, or

(b) as to whether a disposal relates to such shares or to other shares,

shall for the purposes of this section be determined as it would be determined for the purposes of section 498 but without regard to the reference in subsection (4) (as amended by the Finance Act, 1998) of that section to subsection (3) of this section.”,

and the said paragraph (ii) and the said subsection (3), as so amended, are set out in the Table to this section.

(2) This section shall come into operation on the 12th day of February, 1998.

TABLE

(ii) throughout the period of 3 years beginning with the date on which they are issued, carry no present or future preferential right to dividends or to the company's assets on its winding up and no present or future preferential right to be redeemed,

(3) Subsection (2) shall not apply as respects any amount subscribed for eligible shares if within the period of 3 years from the date of their acquisition—

(a) those shares are disposed of, or

(b) the eligible employee who made the subscription receives in respect of those shares any money or money's worth which does not constitute income in his or her hands for the purpose of income tax,

and there shall be made all such assessments, additional assessments or adjustments of assessments as are necessary to withdraw any relief from income tax already given under subsection (2) in respect of the amount subscribed.

12 Amendment of Chapter 1 (transfer of assets abroad) of Part 33 of Principal Act.

12.—(1) Chapter 1 of Part 33 of the Principal Act is hereby amended—

(a) in section 806—

(i) in subsection (3), by the substitution of “individuals resident or ordinarily resident in the State” for “individuals ordinarily resident in the State”, and

(ii) by the insertion of the following after subsection (5):

“(5A) Nothing in subsection (3) shall be taken to imply that the provisions of subsections (4) and (5) apply only if—

(a) the individual in question was resident or ordinarily resident in the State at the time when the transfer was made, or

(b) the avoidance of liability to income tax is the purpose, or one of the purposes, for which the transfer was effected.”,

and

(b) in section 808, in paragraph (a) of subsection (4), by the substitution of “an individual resident or ordinarily resident in the State” for “an individual ordinarily resident in the State”.

(2) This section shall apply irrespective of when the transfer or associated operations took place but shall apply only to income arising on or after the 12th day of February, 1998.

13 Reduction in income tax for certain income earned outside the State.

13.—The Principal Act is hereby amended by the insertion in Part 34 of the following section after section 825:

“Reduction in income tax for certain income earned outside the State.

825A.—(1) In this section—

‘authorised officer’ has the same meaning as in section 818;

‘proprietary director’ has the same meaning as in section 472;

‘qualifying employment’, in relation to a year of assessment, means an office (including an office of director of a company which would be within the charge to corporation tax if it were resident in the State, and which carries on a trade or profession) or employment which is held—

(a) outside the State in a territory with the Government of which arrangements are for the time being in force by virtue of section 826, and

(b) for a continuous period of not less than 13 weeks, but excluding any such office or employment—

(i) the emoluments of which are paid out of the revenue of the State,

(ii) with any board, authority or other similar body established in the State by or under statute;

‘the specified amount’ in relation to an individual means, as respects the year of assessment concerned, the amount of tax for that year determined by the formula—

A B ______ C

where—

A is the amount of tax which, apart from this section, would be chargeable on the individual for that year of assessment, other than tax charged in accordance with section 16(2), and after taking account of any such reductions in tax as are specified in the provisions referred to in Part 2 of the Table to section 458 but before credit for any foreign tax paid on any income, profits or gains assessed for that year,

B is the total income of the individual for that year but excluding any income, profits or gains from a qualifying employment for that year,

C is the total income of the individual for that year.

(2) This section shall not apply in any case where the income, profits or gains from a qualifying employment are—

(a) chargeable to tax in accordance with section 71(3),

(b) income, profits or gains to which section 822 applies, or