Finance Act 1998

Type Act

Publication 1998-03-27

State In force

Source Irish Statute Book

articles 138

(b) (i) an application for planning permission for the work represented by that expenditure on the specified building had (in so far as such permission is required) been received by a planning authority before the 3rd day of December, 1997, or

(ii) the individual can prove, to the satisfaction of the Revenue Commissioners, that a detailed plan had been prepared for the work represented by that expenditure and that detailed discussions had taken place with a planning authority in relation to the specified building before the 3rd day of December, 1997, and that this can be supported by means of an affidavit or statutory declaration duly made on behalf of the planning authority concerned,

and that expenditure is incurred under an obligation entered into by the individual in relation to the specified building before—

(i) the 3rd day of December, 1997, or

(ii) the 1st day of May, 1998, pursuant to negotiations which were in progress before the 3rd day of December, 1997.

(5) For the purposes of subsection (4)—

(a) an obligation shall be treated as having been entered into before a particular date only if, before that date, there was in existence a binding contract in writing under which that obligation arose, and

(b) negotiations pursuant to which an obligation was entered into shall not be regarded as having been in progress before a particular date unless preliminary commitments or agreements in writing in relation to that obligation had been entered into before that date.

(6) Where an individual has entered into an obligation to which subsection (4) relates to incur capital expenditure on a specified building on or after the 3rd day of December, 1997, and that individual dies before any part of that expenditure has been incurred, another individual who—

(a) undertakes in writing to honour the obligation entered into by the deceased individual, and

(b) incurs that part of the capital expenditure on the specified building which would otherwise have been incurred by the deceased individual,

shall be deemed to have complied with the requirements of subsection (4) in relation to that expenditure.

(7) This section shall, with any necessary modifications, apply in relation to a profession as it applies in relation to a trade.”.

31 Amendment of section 403 (restriction on use of capital allowances for certain leased assets) of Principal Act.

31.—Section 403 of the Principal Act is hereby amended in subsection (9) by the substitution of the following paragraph for paragraph (b):

“(b) The reference in the definition of ‘the specified capital allowancess’ to machinery or plant to which this subsection applies is a reference to machinery or plant (not being a film of the kind mentioned in subsection (7)(a)) provided on or after the 13th day of May, 1986, for leasing by a lessor to a lessee (who is not a person connected with the lessor) under a lease the terms of which include an undertaking given by the lessee that, during a period (in this section referred to as ‘the relevant period’) which is not less than 3 years and which commences on the day on which the machinery or plant is first brought into use by the lessee, the machinery or plant so provided will—

(i) where it is so provided before the 4th day of March, 1998, be used by the lessee for the purposes only of a specified trade carried on in the State by the lessee, and

(ii) where it is so provided on or after that day, be used by the lessee for the purposes only of a specified trade carried on in the State by the lessee and that it will not be used for the purposes of any other trade, or business or activity other than the lessor's trade.”.

32 Amendment of section 481 (relief for investment in films) of Principal Act.

32.—(1) Section 481 of the Principal Act is hereby amended in subsection (1) in the definition of “film”—

(a) in paragraph (a), by the substitution of “subsection (2), and” for “subsection (2), or”,

(b) in paragraph (b), by the substitution of “as respects every film” for “as respects any other film”.

(2) This section shall apply as on and from the 6th day of April, 1997.

33 Amendment of section 482 (relief for expenditure on significant buildings and gardens) of Principal Act.

33.—As respects qualifying expenditure incurred on or after the 12th day of February, 1998, section 482 of the Principal Act is hereby amended by the addition to subsection (2) of the following paragraph after paragraph (c)—

“(d) For the purpose only of determining, in relation to a claim referred to in paragraph (a), whether and to what extent qualifying expenditure incurred in relation to an approved building is incurred or not incurred in a chargeable period, only such an amount of that qualifying expenditure as is properly attributable to work which was actually carried out during the chargeable period shall (notwithstanding any other provision of the Tax Acts as to the time when any expenditure is or is to be treated as incurred) be treated as having been incurred in that period.”.

34 Restriction of relief as respects eligible shares issued on or after 3rd December, 1997.

34.—The Principal Act is hereby amended in Part 16—

(a) subject to section 35, as respects eligible shares issued on or after the 3rd day of December, 1997—

(i) in section 491—

(I) by the substitution of the following for subsections (2) and (3):

“(2) (a) Subject to this section, where a company raises any amount through the issue of eligible shares on or after the 3rd day of December, 1997, (in this section referred to as ‘the relevant issue’), relief shall not be given in respect of the excess of the amount so raised over the amount determined by the formula—

A B

where—

A is—

(i) in the case of a company which, or whose qualifying subsidiary, raises the amount by virtue of section 496(2)(a)(iv)(II), £100,000,

(ii) in the case of a relevant investment, £500,000,

(iii) in the case where the money raised was used, is being used or is intended to be used solely for qualifying trading operations referred to in section 496(2)(a)(ix) carried on or to be carried on by the company or its qualifying subsidiary, £1,000,000, or

(iv) in any other case, £250,000, and

B is the lesser of—

(i) the appropriate amount represented by A in the formula, and

(ii) an amount equal to the aggregate of all amounts raised by the company through the issue of eligible shares at any time before the relevant issue other than—

(I) where A in the formula is £100,000, the first £400,000, and

(II) where A in the formula is £250,000, the first £250,000,

of any amounts raised by way of relevant investments.

(b) (i) Where a company raises any amount through a relevant issue which amount consists of a relevant investment and any other amount, the relevant issue shall be deemed for the purposes of this subsection (but for no other purpose of this Part) to consist of 2 separate issues of eligible shares one of which shall be in respect of the relevant investment (in this paragraph referred to as ‘the first issue’) and the other in respect of the other amount raised (in this paragraph referred to as ‘the second issue’).

(ii) Where subparagraph (i) applies, the first issue shall be deemed for the purposes of this subsection (but for no other purpose of this Part) to have been made on the day before the date of the relevant issue and the second issue shall be deemed for the purposes of this subsection (but for no other purpose of this Part) to have been made on the date of the relevant issue and paragraph (a) shall apply accordingly.

(3) (a) Where a company raises any amount through a relevant issue and that company is associated (within the meaning of this section) with one or more other companies, then, as respects that company, relief shall not be given in respect of the excess of the amount so raised over the amount determined by the formula—

A B

where—

A is—

(i) in the case of a company which, or whose qualifying subsidiary, raises the amount by virtue of section 496(2)(a)(iv)(II), £100,000,

(ii) in the case of a relevant investment, £500,000,

(iv) in any other case, £250,000, and

B is the lesser of—

(i) the appropriate amount represented by A in the formula, and

(ii) the aggregate of all amounts raised through the issue of eligible shares at any time before or on the date of the relevant issue by all of the companies (including that company) which are associated within the meaning of this section other than—

(I) the amount raised through the relevant issue, and

(II) (A) where A in the formula is £100,000, the first £400,000, and

(B) where A in the formula is £250,000, the first £250,000, of any amounts raised by way of relevant investments.

and

(II) by the substitution of the following subsection for subsection (5):

“(5) In determining for the purposes of the formula in subsection (2)(a) or, as the case may be, the formula in subsection (3)(a) the amount to which paragraph (ii) of the definition of ‘B’ in those formulas relates, account shall not be taken of any amount—

(a) which is subscribed by a person other than an individual who qualifies for relief, or

(b) in respect of which relief is precluded by virtue of section 490.”,

and

(ii) by the deletion of section 492,

(b) in section 498, as on and from the 12th day of February, 1998, by the substitution of the following subsection for subsection (4)—

“(4) Where an individual holds ordinary shares of any class in a company and the relief has been given in respect of some shares of that class but not others, any disposal by the individual of ordinary shares of that class in the company, not being a disposal to which section 479(3) or 512(2) applies, shall be treated for the purposes of this section as relating to those in respect of which relief has been given under this Part rather than to others.”,

and

35 Transitional arrangements in relation to section 34.

35.—(1) In this section—

“auditor” means—

(a) in relation to a company or its qualifying subsidiary, the person or persons appointed as auditor of the company or its qualifying subsidiary, as appropriate, for all the purposes of the Companies Acts, 1963 to 1990, and

(b) in relation to a specified designated fund, the person or persons appointed as auditor of that fund;

“authority” has the meaning assigned to it by section 492 of the Principal Act;

“certifying agency” has the meaning assigned to it by section 488 of the Principal Act;

“certifying Minister” has the meaning assigned to it by section 488 of the Principal Act;

“combined certificate” has the meaning assigned to it by section 492 of the Principal Act;

“County Enterprise Board” means a board referred to in the Schedule to the Industrial Development Act, 1995;

“eligible shares” has the meaning assigned to it by section 488 of the Principal Act;

“industrial development agency” has the meaning assigned to it by section 488 of the Principal Act;

“the principal provisions” mean Chapter III of Part I of the Finance Act, 1984, or Part 16 of the Principal Act;

“prospectus”, in relation to a company, means any prospectus, notice, circular or advertisement, offering to the public for subscription or purchase any eligible shares of the company, and in this definition “the public” includes any section of the public, whether selected as members of the company or as clients of the person issuing the prospectus or in any other manner;

“qualifying subsidiary”, in relation to a company, has the same meaning as it has for the purposes of section 495 of the Principal Act;

“qualifying trading operations” has the meaning assigned to it by section 496 of the Principal Act;

“relevant certificate” has the meaning assigned to it by section 492 of the Principal Act;

“specified designated fund” means an investment fund designated under section 27 of the Finance Act, 1984, which closed on or before the 5th day of April, 1997;

“the specified period” means the period beginning on the 1st day of December, 1996, and ending on the 2nd day of December, 1997.

(2) Paragraph (a) of section 34 shall not apply as respects eligible shares issued on or after the 3rd day of December, 1997, by a company to which this section applies and in respect of which the conditions in either subsection (5), (6) or (7) are met.

(3) The provisions of Part 16 of the Principal Act which were in force immediately before the 3rd day of December, 1997, shall, as those provisions stand amended by paragraphs (b) and (c) of section 34, apply as respects eligible shares issued on or after that day by a company to which this section applies and in respect of which the conditions in either subsection (5), (6) or (7) are met.

(4) This section applies to a company which, or whose qualifying subsidiary, either carries on or intends to carry on one or more of the qualifying trading operations.

(5) The conditions of this subsection referred to in subsection (2) are—

(a) the eligible shares are issued by the company on or before the 5th day of April, 1998, and

(b) the eligible shares are issued following a subscription on behalf of an individual by a person or persons having the management of a specified designated fund, and

(c) the company proves to the satisfaction of the Revenue Commissioners that before the 3rd day of December, 1997, it had the intention of raising money, on or before the 5th day of April, 1998, under the principal provisions through the specified designated fund referred to in paragraph (b) of this subsection,

and in determining whether they are satisfied that the company has complied with the requirements specified in paragraph (c) of this subsection the Revenue Commissioners shall have regard to the following—

(i) (I) signed heads of agreement between the company and the fund, or

(II) exchange of correspondence between the company and the fund showing a clear intention that the fund intended, on or before the 5th day of April, 1998, to subscribe for eligible shares in the company,

(ii) a certificate by the auditor of the fund confirming that it is a specified designated fund, and

(iii) any other information the Revenue Commisisoners deem necessary for the purpose.

(6) The conditions of this subsection referred to in subsection (2) are—

(a) the eligible shares are issued by the company on or before the 30th day of September, 1998, and

(b) a relevant certificate or a combined certificate has been issued to the company by an authority before the 3rd day of December, 1997.

(7) The conditions of this subsection referred to in subsection (2) are—

(a) the eligible shares are issued by the company on or before the 30th day of September, 1998, and

(b) the company proves to the satisfaction of the Revenue Commissioners that before the 3rd day of December, 1997, it had an intention to raise money under the principal provisions, and in determining whether they are so satisfied the Revenue Commissioners shall have regard to one or more of the following—

(i) an application in writing made by the company to the Revenue Commissioners in the specified period for the opinion of the Revenue Commissioners as to whether the company would be a qualifying company for the purposes of the principal provisions,

(ii) an application in writing made by the company to an authority in the specified period for a relevant certificate or a combined certificate,

(iii) an application in writing made by the company to an industrial development agency in the specified period for a certificate referred to in section 489(2)(e) of the Principal Act,

(iv) an application in writing made to a certifying agency, certifying Minister or County Enterprise Board in the specified period for a certificate under section 497 of the Principal Act, and

(v) the publication in the specified period of a prospectus by, or on behalf of, the company,

and

(c) (i) in the case of a company which, or whose qualifying subsidiary, either carries on or intends to carry on a qualifying trading operation as is mentioned in subparagraph (i), (ii), (iii), (v), (viii), (ix), (xi) or (xiii) of paragraph (a) of section 496(2) of the Principal Act, that in the specified period the company or its qualifying subsidiary, as the case may be, had entered into a binding contract in writing—

(I) to purchase or lease land or a building,

(II) to purchase or lease plant or machinery, or

(III) for the construction or refurbishment of a building,

to be used in the carrying on of its qualifying trading operation,

(ii) in the case of a company which, or whose qualifying subsidiary, either carries on or intends to carry on a qualifying trading operation as is mentioned in subparagraph (vii) of paragraph (a) of section 496(2) of the Principal Act, that in the specified period the company or its qualifying subsidiary, as the case may be, had entered into a binding contract in writing—

(I) to purchase or lease greenhouses,

(II) to purchase or lease plant or machinery, or

(III) for the construction or refurbishment of greenhouses,

to be used in the carrying on of its qualifying trading operation,

(iii) in the case of a company which, or whose qualifying subsidiary, either carries on or intends to carry on a qualifying trading operation as is mentioned in subparagraph (xii) of paragraph (a) of section 496(2) of the Principal Act, that in the specified period the company or its qualifying subsidiary, as the case may be, had entered into a binding contract in writing for the production, publication, marketing or promotion of the qualifying recording or qualifying recordings which the company or its qualifying subsidiary, as the case may be, intends to produce,

and the company proves to the satisfaction of the Revenue Commisisoners that the contract which it or its qualifying subsidiary, as the case may be, had entered into was integral to, or consistent with, the purpose for which it had intended to raise money under the principal provisions and that the consideration of the contract is equal to 25 per cent or more of the money which it is intended to so raise.

(8) For the purposes of subsection (7)—

(a) the date on which a contract was entered into by a company or, as the case may be, its qualifying subsidiary, and

(b) the date on which a prospectus was published by, or on behalf of, a company,

shall be confirmed in a certificate by the auditor of the company, or its qualifying subsidiary, as appropriate.

36.—(1) The Principal Act is hereby amended—

(a) in Chapter 1 of Part 17, by the insertion of the following section after section 511:

“Shares acquired from an employee share ownership trust.

511A.—(1) Where, on or after the date of the passing of the Finance Act, 1998, the trustees of an approved scheme make an appropriation of shares to which section 510(3) applies to a participant and the conditions mentioned in subsection (2) are satisfied, then, for the purposes of this Chapter as it applies to those shares—

(a) the period of retention shall end on, and

(b) the release date shall be,

the day following the day on which the shares were appropriated to the participant.

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

(a) the shares concerned were transferred to the trustees of the approved scheme concerned by the trustees of an employee share ownership trust to which section 519 applies,

(b) immediately prior to the transfer referred to in paragraph (a), the shares had been held in that employee share ownership trust for a period of not less than 3 years, and

(c) the participant concerned was a beneficiary (within the meaning of paragraph 11 of Schedule 12) under that employee share ownership trust at all times during the period of 3 years ending on the date on which the shares were appropriated to him or her.”,

(b) in Chapter 2 of Part 17, by the substitution in section 519 of the following subsection for subsection (7):

“(7) The trustees of a trust to which this section applies shall not be chargeable to income tax in respect of income consisting of dividends in respect of securities held by the trust if, and to the extent that, the income is expended within the expenditure period (within the meaning of paragraph 13 of Schedule 12) by the trustees for one or more of the qualifying purposes referred to in that paragraph, but the trustees shall not be entitled to the setoff or payment of a tax credit under section 136 in respect of those dividends.”,

“(1A) (a) As respects a profit sharing scheme approved on or after the date of the passing of the Finance Act, 1998, the Revenue Commissioners must be satisfied—

(i) that there are no features of the scheme (other than any which are included to satisfy the requirements of Chapter 1 of Part 17 and this Schedule) which have or would have the effect of discouraging any description of employees or former employees who fulfil the conditions in subparagraph (1) from participating in the scheme, and

(ii) where the company concerned is a member of a group of companies, that the scheme does not and would not have the effect of conferring benefits wholly or mainly on directors of companies in the group or on those employees of companies in the group who are in receipt of higher or the highest levels of remuneration.

(b) In this subparagraph ‘a group of companies’ means a company and any other companies of which it has control.”,

and

(d) in Schedule 12—

(i) in paragraph 1—

(I) by the substitution of the following subparagraph for subparagraph (3):

“(3) For the purposes of this Schedule, a company falls within the founding company's group at a particular time if—

(a) it is the founding company, or

(b) at that time, it is controlled by the founding company and the trust concerned referred to in paragraph 2(1) is expressed to extend to it.”,

and

(II) in subparagraph (4)(a), by the substitution of the following definition for the definition of “associate”:

“‘associate’ has the meaning assigned to it by subsection (3) of section 433, subject to the reference to the employees in both places where it occurs in subparagraph (ii) of paragraph (c) of that subsection being construed as including a reference to former employees;”,

(ii) by the substitution of the following paragraph for paragraph 2:

“2. (1) On the application of a body corporate (in this Schedule referred to as ‘the founding company’) which has established an employee share ownership trust, the Revenue Commissioners shall approve of the trust as a qualifying employee share ownership trust if they are satisfied that the conditions in paragraphs 6 to 18 are complied with in relation to the trust.

(2) (a) Where the founding company is a member of a group of companies, the Revenue Commissioners shall not approve of a trust under subparagraph (1) unless they are satisfied that the trust does not and would not have the effect of conferring benefits wholly or mainly on directors of companies in the group or on those employees of companies in the group who are in receipt of higher or the highest levels of remuneration.

(b) In this subparagraph ‘a group of companies’ means a company and any other companies of which it has control.”,

(iii) in paragraph 11—

(I) by the substitution of the following subparagraphs for subparagraph (2):

“(2) The trust deed shall provide that a person is a beneficiary at a particular time (in this subparagraph referred to as ‘the relevant time’) if—

(a) the person is at the relevant time an employee or director of a company within the founding company's group,

(b) at each given time in a qualifying period the person was such an employee or director of a company falling within the founding company's group at that given time,

(c) in the case of a director, at that given time the person worked as a director of the company concerned at the rate of at least 20 hours a week (disregarding such matters as holidays and sickness), and

(d) the person is chargeable to income tax in respect of his or her office or employment under Schedule E.

(2A) The trust deed may provide that a person is a beneficiary at a particular time if, but for subparagraph (2)(d), he or she would be a beneficiary within the rule which is included in the deed and conforms with subparagraph (2).”,

(II) in subparagraph (4)(a), by the substitution for “subparagraph (3)” of “subparagraphs (2A) and (3)”,

(III) in subparagraph (5), by the substitution for “subparagraph (2)” of “subparagraphs (2) and (2A)”,

(IV) in subparagraph (7), by the substitution for “subparagraph (3) or (4)” of “subparagraph (2A), (3) or (4)”, and

(V) in subparagraph (8), by the substitution for “subparagraph (2), (3) or (4)” of “subparagraph (2), (2A), (3) or (4)”.

(2) (a) Paragraph (b) of subsection (1) shall apply as on and from the date of the passing of this Act.

(b) Paragraph (d) of subsection (1) shall apply as respects employee share ownership trusts approved of under paragraph 2 of Schedule 12 of the Principal Act on or after the date of the passing of this Act.

37 Payments to subcontractors in certain industries.

37.—(1) Part 18 of the Principal Act is hereby amended in Chapter 2—

(a) in subsection (1) of section 530, by the substitution of the following definition for the definition of “meat processing operations”:

“‘meat processing operations’ means operations of any of the following descriptions—

(a) the slaughter of cattle, sheep, pigs, domestic fowl, turkeys, guinea-fowl, ducks or geese,

(b) the catching of domestic fowl, turkeys, guinea-fowl, ducks or geese,

(c) the division (including cutting or boning), sorting, packaging (including vacuum packaging), rewrapping or branding of, or the application of any other similar process to, the carcasses or any part of the carcasses (including meat) of slaughtered cattle, sheep, pigs, domestic fowl, turkeys, guinea-fowl, ducks or geese,

(d) the application of methods of preservation (including cold storage) to the carcasses or any part of the carcasses (including meat) of slaughtered cattle, sheep, pigs, domestic fowl, turkeys, guinea-fowl, ducks or geese,

(e) the loading or unloading of the carcasses or part of the carcasses (including meat) of slaughtered cattle, sheep, pigs, domestic fowl, turkeys, guinea-fowl, ducks or geese at any establishment where any of the operations referred to in paragraphs (a), (c) and (d) are carried on,

(f) the haulage of the carcasses or any part of the carcasses (including meat) of slaughtered cattle, sheep, pigs, domestic fowl, turkeys, guinea-fowl, ducks or geese from any establishment where any of the operations referred to in paragraphs (a), (c) and (d) are carried on,

(g) the cleaning down of any establishment where any of the operations referred to in paragraphs (a), (c) and (d) are carried on,

(h) the grading, sexing and transport of day-old chicks of domestic fowl, turkeys, guinea-fowl, ducks or geese,

(i) the haulage for hire of cattle, sheep, pigs, domestic fowl, turkeys, guinea-fowl, ducks or geese or of any of the materials, machinery or plant for use, whether used or not, in any of the operations referred to in paragraphs (a) to (h).”,

and

(b) in paragraph (b) of section 531(1), by the substitution of the following for subparagraph (ii):

“(ii) carrying on a business of meat processing operations in an establishment approved and inspected in accordance with the European Communities (Fresh Meat) Regulations, 1997 (S.I. No. 434 of 1997) or, as the case may be, the European Communities (Fresh Poultry-meat) Regulations, 1996 (S.I. No. 3 of 1996), or”.

(2) This section shall apply as on and from the 6th day of October, 1998.

38 Amendment of section 659 (farming: allowances for capital expenditure on the construction of farm buildings, etc. for control of pollution) of Principal Act.

38.—Section 659 of the Principal Act is hereby amended in subsection (3) by the substitution of the following paragraph for paragraph (a):

“(a) as respects the first year of the writing-down period referred to in subsection (2), where the capital expenditure was incurred—

(i) before the 6th day of April, 1998, an amount equal to 50 per cent of that expenditure or £10,000, whichever is the lesser, or

(ii) on or after the 6th day of April, 1998, an amount equal to 50 per cent of that expenditure or £15,000, whichever is the lesser,”.

39 Amendment of section 667 (special provisions for qualifying farmers) of Principal Act.

39.—Section 667 of the Principal Act is hereby amended in paragraph (b) of subsection (2)—

(a) in subparagraph (i), by the substitution of “years of assessment, or” for “years of assessment,”, and

(b) by the substitution of the following for subparagraphs (ii) and (iii):

“(ii) on or after the 6th day of April, 1995, and before the 6th day of April, 1999, for the year of assessment in which the individual becomes a qualifying farmer and for each of the 3 immediately succeeding years of assessment.”.

40 Amendment of section 680 (annual allowance for mineral depletion) of Principal Act.

40.—Section 680(2) of the Principal Act is hereby amended—

(a) by the insertion after “qualifying mine” of “at any time”, and

(b) by the substitution for “date” of “time”.

41 Amendment of section 681 (allowance for mine rehabilitation expenditure) of Principal Act.

41.—Subsection (1)(a) of section 681 of the Principal Act is hereby amended by the insertion in the definition of “qualifying mine” after “limestone,” of “fireclay, coal,”.

42 Amendment of section 734 (taxation of collective investment undertakings) of Principal Act.

42.—Section 734 of the Principal Act, is hereby amended in paragraph (a) of subsection (1) by the substitution for paragraph (ii) of the definition of “specified company” of the following paragraph:

“(ii) (I) not more than 25 per cent of the share capital of which is owned directly or indirectly by persons resident in the State, or

(II) all of the share capital of which is owned directly by another company resident in the State and not more than 25 per cent of the share capital of that other company is owned directly or indirectly by persons resident in the State,”.

43 Taxation of shares issued in place of cash dividends.

43.—(1) The Principal Act is hereby amended—

(a) in section 816 by the substitution for subsections (1) to (3) of the following subsections—

“(1) In this section—

‘company’ means any body corporate;

‘quoted company’ means a company whose shares, or any class of whose shares—

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

(b) are quoted on the market known as the Developing Companies Market, or the market known as the Exploration Securities Market, of the Irish Stock Exchange or on any similar or corresponding market of any other stock exchange;

‘share’ means share in the share capital of a company and includes stock and any other interest in the company.

(2) Where any person as a consequence of the exercise (whether before, on or after the declaration of a distribution of profits by a company) of an option to receive in respect of shares in the company either a sum in cash or additional share capital of the company, receives such additional share capital, then, an amount equal to the amount which that person would have received if that person had received the distribution in cash instead of such share capital shall for the purposes of the Tax Acts—

(a) where the company is resident outside the State, be deemed to be income received by the person from the company, and such income shall be treated as income from securities and possessions outside the State and be assessed and charged to tax under Case III of Schedule D,

(b) where the company is resident in the State and is a quoted company—

(i) be treated as a distribution made by the company, and

(ii) be deemed to be a distribution received by the person,

and

(c) where the company is resident in the State and is not a quoted company, be deemed to be profits or gains of the person, being profits or gains not within any other Case of Schedule D and not charged by virtue of any other Schedule, and be assessed and charged to tax under Case IV of Schedule D.

(3) Where a company is treated under subsection (2)(b)(i) as making a distribution to a person, section 152 shall apply with any necessary modifications as if the distribution were a dividend to which subsection (1) of that section applies.”,

(b) in section 4 (as amended by section 51) in the definition of “distribution” in subsection (1) by the substitution for “sections 436 and 437” of “sections 436 and 437, and subsection (2)(b) of section 816”,

(c) in section 20(1), paragraph 1 of Schedule F by the substitution for “sections 436 and 437” of “sections 436 and 437, and subsection (2)(b) of section 816”, and

(d) in section 130(1) by the substitution for “sections 436 and 437” of “sections 436 and 437, and subsection (2)(b) of section 816”.

(2) This section shall apply as respects shares issued by a company on or after the 3rd day of December, 1997.

44 Amendment of section 843 (capital allowances for buildings used for third level educational purposes) of Principal Act.

44.—Section 843 of the Principal Act is hereby amended in subsection (1)—

(a) by the substitution of the following definition for the definition of “approved institution”:

“‘approved institution’ means—

(a) an institution of higher education within the meaning of section 1 of the Higher Education Authority Act, 1971, or

(b) an institution in the State in receipt of public funding which provides courses to which a scheme approved by the Minister for Education and Science under the Local Authorities (Higher Education Grants) Acts, 1968 to 1992, applies;”,

and

(b) by the substitution, in the definition of “qualifying premises”, of the following subparagraph for subparagraph (ii) of paragraph (b):

“(ii) is let to an approved institution,”.

45 Amendment of Part 41 (self assessment) of Principal Act.

45.—(1) Part 41 of the Principal Act is hereby amended—

(a) in section 950(1), by the substitution, in the definition of “specified return date for the chargeable period”, of the following paragraph for paragraph (a):

“(a) where the chargeable period is a year of assessment, the 31st day of January in the year of assessment following that year; but as respects—

(i) such year of assessment (not being earlier than the year 199899) as the Minister for Finance shall by order appoint, and

(ii) each year of assessment following the year to which subparagraph (i) relates,

the 30th day of November following the year of assessment,”,

and

(b) in section 958—

(i) in subsection (2)—

(I) by the substitution of the following paragraphs for paragraphs (a) and (b):

“(a) where the chargeable period is a year of assessment for income tax and subject to subsection (10), on or before the 1st day of November in the year of assessment; but as respects—

(i) such year of assessment (not being earlier than the year 1999-2000) as the Minister for Finance shall by order appoint, and

(ii) each year of assessment following the year to which subparagraph (i) relates,

the 30th day of November in the year of assessment,

(b) where the chargeable period is a year of assessment for capital gains tax, on or before the 1st day of November following the year of assessment; but as respects—

(i) such year of assessment (not being earlier than the year 1998-1999) as the Minister for Finance shall by order appoint, and

(ii) each year of assessment following the year to which subparagraph (i) relates,

the 30th day of November following the year of assessment, or”,

and

(II) by the substitution of “the 1st day of November in the year of assessment, the 30th day of November in the year of assessment, the 1st day of November following the year of assessment, the 30th day of November following the year of assessment” for “the 1st day of November in the year of assessment, the 1st day of November following the year of assessment”,

(ii) in subsection (3) (b), the substitution of the following subparagraph for subparagraph (ii):

“(ii) if the chargeable period is a year of assessment for capital gains tax, on or before the specified return date for the chargeable period or, if later, not later than one month from the date on which the assessment is made; but as respects—

(I) such year of assessment (not being earlier than the year 19981999) as the Minister for Finance shall by order appoint, and

(II) each year of assessment following the year to which clause (I) relates,

on or before the specified return date for the chargeable period, and”,

(iii) in subsection (4)(b), by the substitution of the following subparagraph for subparagraph (i):

“(i) (I) 90 per cent of the tax payable by the chargeable person for the chargeable period, or

(II) in the case of an assessment to capital gains tax made on a chargeable person for the chargeable period, being the year 1998-99 or any subsequent year of assessment, the tax payable by the chargeable person for the chargeable period,”,

and

(iv) in subsection (10)—

(I) in paragraph (a), by the substitution of the following for the words from “on or before the 9th day of December” to the end of the paragraph:

“on or before—

(i) in the case of the years 1997-98 and 1998-99, the 9th day of December, and

(ii) in the case of the year 1999-2000 and any subsequent year of assessment, the 9th day of March,

in the year of assessment to which the preliminary tax relates by virtue of subsection (2)(a).”,

(II) in paragraph (b), by the substitution of the following for the words from “throughout the calendar year” to the end of the paragraph:

“throughout—

(i) in the case of the years 1997-98 and 1998-99, the calendar year or a part of that year in which the due date for the payment of that preliminary tax in accordance with subsection (2)(a) falls, and

(ii) in the case of the year 1999-2000 or any subsequent year of assessment, that year,

and the Collector-General shall debit the bank account of that person with such instalments on the 9th day of each month in that calendar year or a part of that calendar year or, as the case may be, in that year.”,

and

(III) by the substitution of the following paragraph for paragraph (c):

“(c) (i) In the case of the years 1997-98 and 1998-99, the Collector-General may at any time, notwithstanding paragraph (b), agree to alter the amount of preliminary tax to be debited to the bank account of the chargeable person in accordance with this subsection.

(ii) In the case of the year 1999-2000 or any subsequent year of assessment, the Collector-General may, in any particular case, in order to facilitate the payment of preliminary tax in accordance with this subsection, agree to vary the number of equal monthly instalments to be collected in a year or, after one or more monthly instalments have been paid in that year, agree to an increase or decrease in the amount to be collected in subsequent instalments in that year; but, a chargeable person shall not be treated as having paid an amount of preliminary tax in accordance with this subsection unless—

(I) the number of monthly instalments paid by that person in the year of assessment is not less than 10, and

(II) not less than 70 per cent of the amount of the preliminary tax payable by that person for that year is paid by instalments on or before the 31st day of December, in that year.”.

(2) Every order made by the Minister for Finance under this section shall be laid before Dáil Éireann as soon as may be after it is made.

46 Amendment of section 787 (nature and amount of relief for qualifying premiums) of Principal Act.

46.—Section 787 of the Principal Act is hereby amended, in subsection (7), by the substitution of “on or before the specified return date for the chargeable period (within the meaning of Part 41)” for “on or before the 31st day of January in the year following the year of assessment”.

47 Amendments of Principal Act in consequence of a change in the currency of certain states.

47.—(1) The provisions of the Principal Act referred to in Schedule 2 shall apply subject to the amendments specified in that Schedule (being amendments the purposes of which are, amongst other things, to make provision in consequence of a change in the currency of certain states).

(2) This section shall come into operation on such day or days as the Minister for Finance may appoint by order or orders either generally or with reference to any particular provision of Schedule 2 and different days may be so appointed for different such provisions.

48 Amendment of Principal Act in consequence of convention with United States of America relating to double taxation, etc.

48.—(1) Subject to subsection (2), the provisions of the Principal Act referred to in Schedule 3 shall apply subject to the amendments specified in that Schedule.

(2) (a) Subject to paragraph (b), this section shall apply as on and from the times at which the Convention set out in the Schedule to the Double Taxation Relief (Taxes on Income and Capital Gains) (United States of America) Order, 1997 (S.I. No. 477 of 1997), has effect in accordance with paragraph 2 of Article 29 of that Convention.

(b) Where, in relation to a person, paragraph 3 of Article 29 of the said Convention applies in respect of the period specified in that paragraph, the Principal Act shall apply in relation to the person in respect of that period as if subsection (1) had not been enacted.

49 Amendment of Part 26 (life assurance companies) of Principal Act.

49.—(1) Part 26 of the Principal Act is hereby amended by the substitution in both section 723(6) and section 738 (2)(c) of “the rate per cent of corporation tax specified in section 21(1)” for “the rate per cent of corporation tax specified in section 21(1)(b)”.

(2) This section shall apply as on and from the 6th day of April, 1997.

50 Amendment of section 1013 (limited partnerships) of Principal Act.

50.—(1) Section 1013 of the Principal Act is hereby amended—

(a) in subsection (1)—

(i) by the insertion before the definition of “the aggregate amount” of the following definition—

“‘active partner’, in relation to a partnership trade, means a partner who works for the greater part of his or her time on the day-to-day management or conduct of the partnership trade;”,

and

(ii) in the definition of “limited partner”—

(I) in paragraph (b), by the substitution of “reimbursed by some other person,” for “reimbursed by some other person, or”,

(II) in paragraph (c), by the substitution of “incurred for the purposes of the trade, or” for “incurred for the purposes of the trade;”,

and

(III) by the insertion after paragraph (c) of the following paragraph:

“(d) a person who carries on the trade as a general partner in a partnership otherwise than as an active partner where the activities of the trade include the activity of—

(i) producing, distributing, or the holding of or of an interest in, films or video tapes, or

(ii) exploring for, or exploiting, oil or gas resources;”,

(b) in subsection (2)(a)—

(i) in subparagraph (I), by the substitution of “gains arising from the trade,” for “gains arising from the trade, or”,

(ii) in subparagraph (II), by the substitution of “profits or gains arising from the trade, or” for “profits or gains arising from the trade”, and

(iii) by the insertion after subparagraph (II) of the following subparagraph:

“(III) where the individual is a limited partner in relation to a trade by virtue of paragraph (d) of the definition of ‘limited partner’ and the relevant year of assessment is the year of assessment 1997-98 or any subsequent year of assessment, subject to subsection (2A), only against income consisting of profits or gains arising from the trade,”,

and

“(2A) Subparagraph (III) of subsection (2) (a) shall not apply to—

(a) interest paid on or before the 27th day of February, 1998,

(b) an allowance to be made in respect of expenditure incurred on or before the 27th day of February, 1998, or

(i) that year of assessment had ended on the 27th day of February, 1998, and

(ii) the loss were determined only by reference to accounts made up in relation to the trade for the period commencing on the 6th day of April, 1997, or if later, the date the trade was set up and commenced, and ending on the 27th day of February, 1998, and not by reference to accounts made up for any other period.”.

(2) This section shall apply as on and from the 28th day of February, 1998.

51 Reduction in tax credits in respect of distributions.

51.—(1) Section 4 of the Principal Act is hereby amended, with effect as on and from the 3rd day of December, 1997, in subsection (1) by the substitution for the definition of “standard credit rate” of the following definition:

“‘standard credit rate’ for a year of assessment means—

(a) for the year of assessment 1997-98—

(i) 21 per cent where it has application in relation to a distribution made or treated as having been made by a company before the 3rd day of December, 1997, and

(ii) 11 per cent where it has application in relation to a distribution made or treated as having been made by a company on or after the 3rd day of December, 1997,

and

(b) for the year of assessment 1998-99, 11 per cent,

and, accordingly, ‘standard credit rate per cent’ for the year of assessment 1997-98 means 21 or 11, as the case may be, and for the year of assessment 1998-99 means 11;”.

(2) Schedule 4 shall have effect for the purpose of supplementing subsection (1).

52 Abolition of tax credits.

52.—The provisions of the Principal Act referred to in Schedule 5 shall apply subject to the amendments specified in that Schedule (being amendments the purposes of which are to provide for the abolition of tax credits as respects distributions made on or after the 6th day of April, 1999).

53 Amendment of definition of specified qualifying shares.

53.—The Principal Act is hereby amended, in sections 723(1), 737(1) and 838(1), by the substitution, in the definition of “specified qualifying shares”, of “£200,000,000” for “£100,000,000”.

54 Amendment of section 198 (certain interest not to be chargeable) of Principal Act.

54.—Chapter 1 of Part 7 of the Principal Act is hereby amended in section 198—

(a) by renumbering the existing provision as subsection (1) of that section, and

(b) by the addition of the following:

“(2) In relation to interest paid in respect of a relevant security (within the meaning of section 246), subsection (1) shall apply—

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

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

Chapter 4 Corporation Tax

55 Rate of corporation tax.

55.—(1) Section 21 of the Principal Act is hereby amended in subsection (1):

(a) in paragraph (a) by the substitution for “March, 1997, and” of “March, 1997,”, and

(b) by the substitution for paragraph (b) of the following paragraphs:

“(b) 36 per cent for that part of the financial year 1997 beginning on the 1st day of April, 1997, and ending on the 31st day of December, 1997, and

(2) Schedule 6 shall have effect for the purpose of supplementing this section.

56 Amendment of section 22 (reduced rate of corporation tax for certain income) of Principal Act.

56.—Section 22 of the Principal Act is hereby amended in subsection (1)—

(a) in paragraph (a), by the substitution for subparagraphs (I) and (II) of the following subparagraphs:

“(I) as respects accounting periods ending before the 1st day of April, 1997, 30 per cent,

(II) as respects accounting periods ending on or after the 1st day of April, 1997, and before the 1st day of January, 1998, 28 per cent, and

(III) as respects accounting periods ending on or after the 1st day of January, 1998, 25 per cent.”,

and

(b) by the substitution for paragraph (b) of the following paragraph:

“(b) For the purposes of paragraph (a)—

(i) where an accounting period of a company begins before the 1st day of April, 1997, and ends on or after that day, it shall be divided into 2 parts, one beginning on the day on which the accounting period begins and ending on the 31st day of March, 1997, and the other beginning on the 1st day of April, 1997, and ending on the day on which the accounting period ends, and both parts shall be treated for the purposes of this section as if they were separate accounting periods of the company, and

(ii) where an accounting period of a company, including a period treated under subparagraph (i) as an accounting period, begins before the 1st day of January, 1998, and ends on or after that day, it shall be divided into 2 parts, one beginning on the day on which the accounting period begins and ending on the 31st day of December, 1997, and the other beginning on the 1st day of January, 1998, and ending on the day on which the accounting period ends, and both parts shall be treated for the purposes of this section as if they were separate accounting periods of the company.”.

57 Amendment of section 713 (investment income reserved for policyholders) of Principal Act.

57.—(1) Section 713(3) of the Principal Act is hereby amended—

(a) by the substitution of “specified in section 21(1)” for “specified in section 21(1)(b)”, and

(b) by the substitution of “in respect of the part specified in subsection (6) of the unrelieved profits” for “in respect of the part specified in subsection (5) of the unrelieved profits”.

(2) This section shall apply as on and from the 6th day of April, 1997.

58 Credit unions.

58.—(1) The Principal Act is hereby amended by the insertion, after section 219, of the following section:

“Income of credit unions.

219A.—(1) In this section ‘the Act’ means the Credit Union Act, 1997.

(2) Income arising to a credit union which is—

(a) registered as such under the Act, or

(b) deemed to be so registered by virtue of section 5(3) of the Act,

shall, with effect from the date of the registration or the deemed registration, as the case may be, of the credit union under the Act, be exempt from corporation tax.”.

(2) Section 212 of the Principal Act is hereby repealed.

59 Amendment of section 449 (credit for foreign tax not otherwise credited) of Principal Act.

59.—Section 449 of the Principal Act is hereby amended, in subsection (1), in the definition of “relevant foreign tax”—

(a) in paragraph (c), by the deletion of “and”,

(b) in paragraph (d), by the substitution for “Schedule 24;” of “Schedule 24, and”, and

“(e) which is not treated under Schedule 24 as reducing the amount of any income;”.

60 Relief for double taxation.

60.—The Principal Act is hereby amended as respects accounting periods ending on or after the 1st day of April, 1998, in Schedule 24—

(a) by the substitution for—

Interpretation

(1) In this Schedule, except where the context otherwise requires—”

Part 1

Interpretation

(1) In this Schedule, except where the context otherwise requires—”,

(b) in paragraph 1(1), by the substitution for the definition of “foreign tax” of the following definition:

“‘foreign tax’ means—

(a) in the case of any territory in relation to which arrangements have the force of law, any tax chargeable under the laws of that territory for which credit may be allowed under the arrangements, and

(b) in any other case, any tax chargeable in respect of which credit may be allowed by virtue of subparagraph (3) of paragraph 9A.”,

“Part 2

Unilateral Relief

9A. (1) To the extent appearing from the following provisions of this paragraph, relief (in this paragraph referred to as ‘unilateral relief’) from corporation tax in respect of profits represented by dividends shall be given in respect of tax payable under the law of any territory other than the State by allowing that tax as a credit against corporation tax, notwithstanding that there are not for the time being in force any arrangements providing for such relief.

(2) Unilateral relief shall be such relief as would fall to be given under this Schedule if arrangements with the government of the territory in question containing the provisions in subparagraphs (3) to (5) were in force, and a reference in this Schedule to credit under arrangements shall be construed as a reference to unilateral relief.

(3) Subject to Part 1 and to subparagraph (5), credit for tax paid under the law of a territory other than the State in relation to a relevant dividend paid by a company resident in the territory to a company resident in the State shall be allowed against corporation tax attributable to the profits represented by the dividend.

(4) For the purposes of subparagraph (3)—

(a) ‘tax paid under the law of a territory other than the State in relation to a relevant dividend paid by a company’ means—

(i) tax which is directly charged on the dividend, whether by charge to tax, deduction of tax at source or otherwise, and the whole of which tax neither the company nor the recipient would have borne if the dividend had not been paid, and

(ii) tax paid in respect of its profits under the law of the territory by the company paying the dividend in so far as that tax is properly attributable to the proportion of the profits represented by the dividend,

(b) ‘relevant dividend’ means a dividend paid by a company resident in a territory other than the State to a company resident in the State which either directly or indirectly owns, or is a subsidiary of a company which directly or indirectly owns, not less than 25 per cent of the ordinary share capital of the company paying the dividend; for the purposes of this subparagraph one company is a subsidiary of another company if the other company owns, directly or indirectly, not less than 50 per cent of the ordinary share capital of the first company.

(5) Credit shall not be allowed by virtue of subparagraph (3)—

(a) for tax paid under the law of a territory where there are arrangements with the government of the territory,

(b) for any tax which is relevant foreign tax within the meaning of section 449, or

(6) Where—

(a) unilateral relief may be given in respect of a dividend, and

(b) it appears that the assessment to corporation tax made in respect of the dividends is not made in respect of the full amount thereof, or is incorrect having regard to the credit, if any, which falls to be given by way of unilateral relief,

any such assessment may be made or amended as is necessary to ensure that the total amount of the dividend is assessed, and the proper credit, if any, is given in respect thereof.

(7) In this Schedule in its application to unilateral relief, references to tax payable or paid under the law of a territory outside the State include only references to taxes which are charged on income or capital gains and which correspond to corporation tax and capital gains tax.

Dividends Paid Between Related Companies: Relief for Irish and Third Country Taxes

9B. (1) Where a foreign company pays a dividend to an Irish company and the foreign company is related to the Irish company, then for the purpose of allowing credit under any arrangements against corporation tax in respect of the dividend, there shall, subject to Part 1, be taken into account as if it were tax payable under the law of the territory in which the foreign company is resident—

(a) any income tax or corporation tax payable in the State by the foreign company in respect of its profits, and

(b) any tax which, under the law of any other territory, is payable by the foreign company in respect of its profits.

(2) Where the foreign company has received a dividend from a third company and the third company is related to the foreign company and is connected with the Irish company, then, subject to subparagraph (4), there shall be treated for the purposes of subparagraph (1) as tax paid by the foreign company in respect of its profits any underlying tax payable by the third company, to the extent that it would be taken into account under this Schedule if the dividend had been paid by a foreign company to an Irish company and arrangements had provided for underlying tax to be taken into account.

(3) Where the third company has received a dividend from a fourth company and the fourth company is related to the third company and is connected with the Irish company, then, subject to subparagraph (4), tax payable by the fourth company shall similarly be treated for the purposes of subparagraph (2) as tax paid by the third company, and so on for successive companies each of which is related to the one before and is connected with the Irish company.

(4) Subparagraphs (2) and (3) are subject to the following limitations—

(a) no tax shall be taken into account in respect of a dividend paid by an Irish company except corporation tax payable in the State and any tax for which that company is entitled to credit under this Schedule, and

(b) no tax shall be taken into account in respect of a dividend paid by a foreign company to another such company unless it could have been taken into account under this Schedule had the other company been an Irish company.

(5) (a) In this paragraph—

‘foreign company’ means a company resident outside the State;

‘Irish company’ means a company resident in the State;

‘underlying tax’, in relation to a dividend, means tax borne by the company paying the dividend on the relevant profits (within the meaning of paragraph (8)) in so far as it is properly attributable to the proportion of the relevant profits represented by the dividend.

(b) For the purposes of this paragraph—

(i) a company is related to another company if that other company—

(I) owns directly or indirectly, or

(II) is a subsidiary of a company which owns directly or indirectly,

not less than 25 per cent of the ordinary share capital of the first-mentioned company,

(ii) one company is a subsidiary of another company if the other company owns, directly or indirectly, not less than 50 per cent of the ordinary share capital of the first-mentioned company,

and

(iii) a company is connected with another company if that other company—

(I) owns directly or indirectly, or

(II) is a subsidiary of a company which owns directly or indirectly,

not less than 10 per cent of the ordinary share capital of the first-mentioned company.”,

and

(d) in paragraph 10, by the substitution for—

“Miscellaneous

10.

Credit shall not be allowed”

“Part 3

Miscellaneous

10.

Credit shall not be allowed”.

61 Corporate donations to eligible charities.

61.—Chapter 3 of Part 15 of the Principal Act is hereby amended by the insertion after section 486 of the following section:

“Corporate donations to eligible charities.

486A.—(1) In this section—

‘authorisation’ shall be construed in accordance with subsection (2);

‘eligible charity’ means any body in the State that is the holder of an authorisation that is in force;

‘qualifying donation’ shall be construed in accordance with subsection (8).

(2) Subject to subsection (3), the Revenue Commissioners may, on application to them in such form as they may determine, or in a form to the like effect, by a body in the State, and on the furnishing by the body to the Revenue Commissioners of such information as they may reasonably require for the purpose of their functions under this section, issue to the body a document (‘an authorisation’) stating that the body is an eligible charity for the purposes of this section.

(3) An authorisation shall not be issued to a body unless it shows to the satisfaction of the Revenue Commissioners that—

(a) it is a body of persons or a trust established for charitable purposes only,

(b) the income of the body is applied for charitable purposes only,

(c) before the date of the making of the application concerned under subsection (2), it has been granted exemption from tax for the purposes of section 207 for a period of not less than 3 years,

(d) it provides such other information to the Revenue Commissioners as they may require for the purposes of their functions under this section, and

(e) it complies with such conditions, if any, as the Minister for Justice, Equality and Law Reform may, from time to time, specify for the purposes of this section.

(4) An eligible charity shall publish such information in such manner as the Minister for Finance may reasonably require, including audited accounts of the charity comprising—

(a) an income and expenditure account or a profit and loss account, as appropriate, for its most recent accounting period, and

(b) a balance sheet as at the last day of that period.

(5) Notwithstanding any obligations as to secrecy or other restriction upon disclosure of information imposed by or under any statute or otherwise, the Revenue Commissioners may make available to any person the name and address of an eligible charity.

(6) Subject to subsection (7), an authorisation shall have effect for such period, not exceeding 5 years, as the Revenue Commissioners may determine and specify therein.

(7) Where the Revenue Commissioners are satisfied that an eligible charity has ceased to comply with subsection (3) or (4), they shall, by notice in writing served by registered post on the charity, withdraw the authorisation of the charity and the withdrawal shall apply and have effect from such date, subsequent to the date of the notice, as is specified therein.

(8) For the purposes of this section, a donation to an eligible charity is a qualifying donation if—

(a) it is made by a company,

(b) it is made on or after the 6th day of April, 1998, and

(9) A donation made by a company in an accounting period of the company satisfies the requirements of this subsection if—

(a) it takes the form of the payment of one or more sums of money,

(b) it is not subject to a condition as to repayment,

(d) it is not conditional on or associated with, or part of an arrangement involving, the acquisition of property by the eligible charity, otherwise than by way of gift, from the donor company or a person connected with it,

(e) but for subsection (10)—

(i) it would not be deductible in computing for the purposes of corporation tax the profits or gains of a trade or profession, and

(ii) it would not be an expense of management deductible in computing the total profits of a company,

and

(f) it is not income to which section 792 applies.

(10) Where a company makes a qualifying donation in any accounting period and claims relief from tax by reference thereto, the amount thereof shall, for the purposes of corporation tax, be treated as—

(a) a deductible trading expense of a trade carried on by the company, or

(b) an expense of management deductible in computing the total profits of the company,

for that accounting period.

(11) A claim under this section shall be made with the return required to be delivered under section 951 for the accounting period in which the qualifying donation is made.

(12) Relief under this section shall not be given—

(a) in respect of a qualifying donation made by a company in any accounting period to an eligible charity—

(i) if the amount of the qualifying donation, or the aggregate of the amount of qualifying donations made by the company in the period, does not exceed £250, or

(ii) to the extent to which the amount of the qualifying donation, or the aggregate of the amount of qualifying donations, aforesaid, exceeds £10,000,

(b) to the extent to which the aggregate of the amount of all qualifying donations made by a company in any accounting period to more than one eligible charity, exceeds the lesser of—

(i) £50,000, or

(ii) 10 per cent of the profits, before account is taken of the relief under this section, of the company for the accounting period.

(13) Where a qualifying donation is made by a company in an accounting period of the company which is less than 12 months, the amounts of £10,000 and £50,000 specified in subsection (12) shall be proportionately reduced.”.

62 Relief for investment in renewable energy generation.

62.—(1) Chapter 3 of Part 15 of the Principal Act is hereby amended by the insertion after section 486A (inserted by section 61) of the following section:

“Relief for investment in renewable energy generation.

486B.—(1) In this section—

‘authorised officer’ means an officer of the Revenue Commissioners authorised by them in writing for the purposes of this section;

‘commencement date’ means the day on which section 62 of the Finance Act, 1998, comes into operation;

‘the Minister’ means the Minister for Public Enterprise;

‘new ordinary shares’ means new ordinary shares forming part of the ordinary share capital of a qualifying company which, throughout the period of five years commencing on the date such shares are issued, carry no present or future preferential right to dividends, or to a company's assets on its winding up, and no present or future preferential right to be redeemed;

‘qualifying company’ means a company which—

(a) is incorporated in the State,

(b) is resident in the State and not resident elsewhere, and

‘qualifying energy project’ means a renewable energy project in respect of which the Minister has given a certificate under subsection (2) which has not been revoked under that subsection;

‘qualifying period’ means the period commencing on the commencement date and ending on the day before the third anniversary of that date;

‘relevant cost’ in relation to a qualifying energy project means the amount of the capital expenditure incurred or to be incurred by the qualifying company for the purposes of undertaking the qualifying energy project reduced by an amount equal to such part of that expenditure as—

(a) is attributable to the acquisition of, or of rights in or over, land, and

(b) has been or is to be met directly or indirectly by the State or by any person other than the qualifying company;

‘relevant deduction’ means, subject to subsections (4) and (5), a deduction of an amount equal to a relevant investment;

‘relevant investment’ means a sum of money which is—

(a) paid in the qualifying period by a company on its own behalf to a qualifying company in respect of new ordinary shares in the qualifying company and is paid by the company directly to the qualifying company,

(b) paid by the company for the purposes of enabling the qualifying company to undertake a qualifying energy project, and

but does not include a sum of money paid to the qualifying company on terms which provide that it will be repaid, and a reference to the making of a relevant investment shall be construed as a reference to the payment of such a sum to a qualifying company;

‘renewable energy project’ means a renewable energy project (including a project successful in the Third Alternative Energy Requirement Competition (AER III— 1997) initiated by the Minister) in one or more of the following categories of technology—

(a) solar power,

(b) windpower,

(d) biomass.

(2) (a) (i) The Minister, on the making of an application by a qualifying company, may give a certificate to the qualifying company stating, in relation to a renewable energy project to be undertaken by the company, that the renewable energy project is a qualifying energy project for the purposes of this section.

(ii) An application under this section shall be in such form, and shall contain such information, as the Minister may direct.

(b) A certificate given by the Minister under paragraph (a) shall be subject to such conditions as the Minister may consider proper and specifies in the certificate.

(c) The Minister may amend or revoke any condition (including a condition amended by virtue of this paragraph) specified in such a certificate; the Minister shall give notice in writing to the qualifying company concerned of the amendment or revocation and, on such notice being given, this section shall apply as if—

(i) a condition so amended and the amendment of which is specified in the notice was specified in the certificate, and

(ii) a condition so revoked and the revocation of which is specified in the notice was not specified in the certificate.

(d) A reference in paragraph (c) to the amendment of a condition specified in a certificate includes a reference to the addition of any matter, by way of a further condition, to the terms of the certificate.

(e) Where a company fails to comply with any of the conditions specified in a certificate issued to it under paragraph (a)—

(i) that failure shall constitute the failure of an event to happen by reason of which relief is to be withdrawn under subsection (6), and

(ii) the Minister may, by notice in writing served by registered post on the company, revoke the certificate.

(3) Subject to this section, where in an accounting period a company makes a relevant investment, it shall, on making a claim in that behalf, be given a relevant deduction from its total profits for the accounting period; but, where the amount of the relevant deduction to which the company is entitled under this section in an accounting period exceeds its profits for that accounting period, an amount equal to that excess shall be carried forward to the succeeding accounting period and the amount so carried forward shall be treated for the purposes of this section as if it were a relevant investment made in that succeeding accounting period.

(4) Where in any period of 12 months ending on the day before an anniversary of the commencement date, the amount or the aggregate amount of the relevant investments made, or treated as made, by a company, or by the company and all companies which at any time in that period would be regarded as connected with the company, exceeds £10,000,000—

(a) no relief shall be given under this section in respect of the amount of the excess, and

(b) where there is more than one relevant investment, the inspector or, on appeal, the Appeal Commissioners shall make such apportionment of the relief available as shall be just and reasonable to allocate to each relevant investment a due proportion of the relief available and, where necessary, to grant to each company concerned an amount of relief proportionate to the amount of the relevant investment or the aggregate amount of the relevant investments made by it in the period.

(5) Relief under this section shall not be given in respect of a relevant investment which is made at any time in a qualifying company if, at that time, the aggregate of the amounts of that relevant investment and all other relevant investments made in the qualifying company at or before that time exceeds an amount equal to—

(a) 50 per cent of the relevant cost of the project, or

(b) £7,500,000,

whichever is the lesser.

(6) (a) A claim to relief under this section may be allowed at any time after the time specified in paragraph (c) in respect of the payment of a sum to a qualifying company if—

(i) that payment, if it is used, within 2 years of its being paid, by the qualifying company for the purposes of a qualifying energy project, will be a relevant investment, and

(ii) all the conditions specified in this section for the giving of the relief are or will be satisfied,

but the relief shall be withdrawn if, by reason of the happening of any subsequent event including the revocation by the Minister of a certificate under subsection (2) or the failure of an event to happen which at the time the relief was given was expected to happen, the company making the claim was not entitled to the relief allowed.

(b) Where a company has made a relevant investment by means of a subscription for new ordinary shares of a qualifying company and any of those shares are disposed of at any time within 5 years after the time specified in paragraph (c), a claim to relief under this section shall not be allowed in respect of the amount subscribed for those shares, and if any such relief has been given, it shall be withdrawn.

(c) The time referred to in paragraph (a) and paragraph (b) is the time when the payment in respect of which relief is claimed has been made.

(7) A claim for relief in respect of a relevant investment in a company shall not be allowed unless it is accompanied by a certificate issued by the company in such form as the Revenue Commissioners may direct and certifying that the conditions for the relief, in so far as they apply to the company and the qualifying energy project, are or will be satisfied in relation to that relevant investment.

(8) Before issuing a certificate for the purposes of subsection (7), a qualifying company shall furnish the authorised officer with—

(a) a statement to the effect that it satisfies or will satisfy the conditions for the relief in so far as they apply in relation to the company and the qualifying energy project,

(b) a copy of the certificate, including a copy of any notice given by the Minister specifying the amendment or revocation of a condition specified in that certificate, under subsection (2) in respect of the qualifying energy project, and

(9) A certificate to which subsection (7) relates shall not be issued—

(a) without the authority of the authorised officer, or

(b) in relation to a relevant investment in respect of which relief may not be given by virtue of subsection (5).

(10) Any statement under subsection (8) shall—

(a) contain such information as the Revenue Commissioners may reasonably require,

(b) be in such form as the Revenue Commissioners may direct, and

(11) Where a qualifying company has issued a certificate for the purposes of subsection (7) or furnished a statement under subsection (8) and either—

(a) the certificate or statement is false or misleading in a material respect and is so false or misleading due to fraud or neglect, or

(b) the certificate was issued in contravention of subsection (9),

then—

(i) the company shall be liable to a penalty not exceeding £500 or, in the case of fraud, not exceeding £1,000, and such penalty may, without prejudice to any other method of recovery, be proceeded for and recovered summarily in the like manner as in summary proceedings for the recovery of any fine or penalty under any Act relating to the excise, and

(ii) no relief shall be given under this section in respect of the matter to which the certificate or statement relates and, if any such relief has been given, it shall be withdrawn.

(12) A company shall not be entitled to relief in respect of a relevant investment unless the relevant investment—

(a) has been made for bona fide commercial reasons and not as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax,

(b) has been or will be used for the purposes of undertaking a qualifying energy project, and

(c) is made at the risk of the company and neither the company nor any person who would be regarded as connected with the company is entitled to receive any payment in money or money's worth or other benefit directly or indirectly borne by or attributable to the qualifying company, other than a payment made on an arm's length basis for goods or services supplied or a payment out of the proceeds of exploiting the qualifying energy project to which the company is entitled under the terms subject to which the relevant investment is made.

(13) Where any relief has been given under this section which is subsequently found not to have been due or is to be withdrawn by virtue of subsection (6) or (11), that relief shall be withdrawn by making an assessment to corporation tax, under Case IV of Schedule D, for the accounting period or accounting periods in which relief was given and, notwithstanding anything in the Tax Acts, such an assessment may be made at any time.

(14) (a) Subject to paragraph (b), where a company is entitled to relief under this section in respect of any sum or any part of a sum, or would be so entitled on duly making a claim in that behalf, as a relevant deduction from its total profits for any accounting period, it shall not be entitled to any relief for that sum or that part of a sum, in computing its income or profits, or as a deduction from its income or profits, for any accounting period under any other provision of the Tax Acts or the Capital Gains Tax Acts.

(b) Where a company has made a relevant investment by means of a subscription for new ordinary shares of a qualifying company and none of those shares is disposed of by the company within five years of their acquisition by that company, then, the sums allowable as deductions from the consideration (‘the consideration concerned’) in the computation for the purpose of capital gains tax of the gain or loss accruing to the company on the disposal of those shares shall be determined without regard to any relief under this section which the company has obtained, or would be entitled, on duly making a claim in that behalf, to obtain, except that, where those sums exceed the consideration concerned, they shall be reduced by an amount equal to the lesser of—

(i) the amount of the relevant deduction allowed to the company under this section in respect of the subscription for those shares, and

(ii) the amount of the excess.”.

(2) This section shall come into operation on such day as the Minister for Finance appoints by order.

63 Amendment of section 88 (deduction for gifts to Enterprise Trust Ltd.) of Principal Act.

63.—Section 88 of the Principal Act is hereby amended in subsection (3)(b)—

(a) by the deletion of subparagraph (ii), and

(b) by the substitution of “£3,000,000” for “£1,500,000” in subparagraph (iii).

64 Amendment of section 715 (annuity business: separate charge on profits) of Principal Act.

64.—(1) Section 715 of the Principal Act is hereby amended in subsection (2) by the substitution for paragraph (a) of the following paragraph:

“(a) (i) subject to subparagraphs (ii), (iii) and (iv), subsection (1) of section 710 shall apply with the necessary modifications and in particular shall apply as if there were deleted from that subsection all references to policyholders other than holders of policies referable to pension business,

(ii) where apart from this subparagraph any profits would be excluded in making the computation solely by virtue of that part being reserved for holders of policies referable to pension business, that part shall not be so excluded,

(iii) in relation to investments of any fund representing the amount of the liabilities of the company to policyholders in respect of its pension business or general annuity business, as the case may be,

(I) any increase in value of those investments (whether realised or unrealised) shall be taken into account as a receipt, and

(II) any decrease in value of those investments (whether realised or unrealised) shall be taken into account as an expense,

to the extent that the increase or decrease, as the case may be, is included in the value of those liabilities as valued by the actuary to the company, and

(iv) where the profits of an assurance company for an accounting period (in this subparagraph referred to as ‘the first accounting period’) are computed in accordance with subparagraph (iii) and the profits of the most recent preceding accounting period are not so computed, the increase or decrease in the value of investments referred to in subparagraph (iii) shall as respects the first accounting period be computed by reference to the cost of the investments at the time they were acquired by the company and such increase or decrease shall be treated as a receipt or as an expense, as the case may be.”.

(2) This section shall apply as respects an accounting period of a company ending on or after the 4th day of March, 1998.

Chapter 5 Capital Gains Tax

65 Capital gains: rates of charge.

65.—(1) The Principal Act is hereby amended—

(a) in section 28, by the substitution in subsection (3) of “20 per cent” for “40 per cent”,

(b) in section 594, by the insertion after paragraph (e) of subsection (2) of the following paragraph:

“(f) Notwithstanding subsection (3) of section 28, the rate of capital gains tax in respect of a relevant gain accruing to a person shall be 40 per cent”,

and

“Relevant disposals: rate of charge.

649A.—Notwithstanding subsection (3) of section 28, the rate of capital gains tax in respect of chargeable gains accruing to a person on relevant disposals, other than a relevant disposal to which section 650 refers, shall be 40 per cent.”.

(2) Subsection (1) shall apply—

(a) as respects paragraphs (a) and (c), in relation to disposals made on or after the 3rd day of December, 1997, and

(b) as respects paragraph (b), in relation to disposals made on or after the 12th day of February, 1998.

66 Amendment of Part 27 (unit trusts and offshore funds) of Principal Act.

66.—The Principal Act is hereby amended in Part 27 by the insertion after Chapter 2 of the following Chapter:

“CHAPTER 3

Offshore funds: supplementary provisions

Capital gains tax: rate of charge.

747A.—(1) In this section ‘material interest’, ‘non-qualifying fund’ and ‘offshore fund’ shall have the same meaning as is assigned to them in Chapter 2 of this Part.

(2) This section shall apply to a disposal, on or after the 12th day of February, 1998, by a person of an asset, if at the time of the disposal—

(a) the asset constitutes a material interest in an offshore fund which is not nor was at any material time a non-qualifying offshore fund, or

(b) the asset constitutes an interest in a company resident in the State or in a unit trust scheme, the trustees of which are at that time resident in the State and at a material time on or after the 1st day of January, 1991, the company or unit trust scheme was an offshore fund other than a non-qualifying offshore fund and the asset constituted a material interest in that fund.

(3) Subsections (2) to (7) of section 741 shall apply for the purposes of this section as if references in those subsections to a non-qualifying offshore fund were references to an offshore fund.

(4) Notwithstanding subsection (3) of section 28, the rate of capital gains tax in respect of chargeable gains accruing to a person on the disposal of an asset to which this section applies shall be 40 per cent.”.

67 Amendment of section 538 (disposals where assets lost or destroyed or become of negligible value) of Principal Act.

67.—(1) Section 538 of the Principal Act is hereby amended by the insertion after subsection (2) of the following subsection:

“(2A) (a) Where as a result of the dissolution of a body corporate, property of the body corporate becomes property of the State by virtue of Part III of the State Property Act, 1954, and the Minister for Finance, in accordance with that Part of that Act, waives the right of the State to that property in favour of a person who holds or has held shares in the body corporate, then, notwithstanding section 31 and subject to paragraph (c), any allowable loss (in this subsection referred to as a ‘claimed loss’) accruing to the person by virtue of a claim made under subsection (2) in respect of those shares shall not be allowable as a deduction from chargeable gains in any year of assessment earlier than the year of assessment in which the property is disposed of by the person and any necessary adjustments may be made by way of assessment or additional assessment to give effect to this paragraph.

(b) Paragraph (a) shall apply in relation to a body corporate which has no share capital as if references to shares included references to any interest in the body corporate possessed by members of the body corporate.

(i) where in a year of assessment there is a part disposal (within the meaning of section 534) of property, only so much of the claimed loss shall be allowable as a deduction from chargeable gains in that year of assessment as bears to the amount of the claimed loss the same proportion as the market value, when acquired, of the part of the property which is disposed of bears to the market value of the whole of that property when acquired,

(ii) the year of assessment in which property is disposed of by a person, where the disposal, being a disposal to the husband or wife of the person, is a disposal to which section 1028(5) applies, shall mean the year of assessment in which the property is subsequently disposed of by the person's wife or husband, as the case may be, where the subsequent disposal is a disposal to which section 1028(5) does not apply.”.

(2) This section shall apply as respects a waiver of the right of the State to property on or after the 12th day of February, 1998.

68 Amendment of section 547 (disposals and acquisitions treated as made at market value) of Principal Act.

68.—(1) Section 547 of the Principal Act is hereby amended by the insertion of the following subsection after subsection (1):

“(1A) (a) Notwithstanding subsection (1), where, by virtue of section 31 of the State Property Act, 1954, the Minister for Finance waives, in favour of a person, the right of the State to property, the person's acquisition of the property shall for the purposes of the Capital Gains Tax Acts be deemed to be for a consideration equal to the amount (including a nil amount) of the payment of money made by the person as one of the terms of that waiver.”.

(2) This section shall apply as respects the acquisition of an asset on or after the 12th day of February, 1998.

69 Amendment of Chapter 3 (assets held in fiduciary or representative capacity, inheritances and settlements) of Part 19 of Principal Act.

69.—(1) Chapter 3 of Part 19 of the Principal Act is hereby amended, by the insertion of the following section after section 577—

“Relinquishing of a life interest by the person entitled.

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Finance Act 1998

31 Amendment of section 403 (restriction on use of capital allowances for certain leased assets) of Principal Act.

32 Amendment of section 481 (relief for investment in films) of Principal Act.

33 Amendment of section 482 (relief for expenditure on significant buildings and gardens) of Principal Act.

34 Restriction of relief as respects eligible shares issued on or after 3rd December, 1997.

35 Transitional arrangements in relation to section 34.

36 Employee share schemes.

37 Payments to subcontractors in certain industries.

38 Amendment of section 659 (farming: allowances for capital expenditure on the construction of farm buildings, etc. for control of pollution) of Principal Act.

39 Amendment of section 667 (special provisions for qualifying farmers) of Principal Act.

40 Amendment of section 680 (annual allowance for mineral depletion) of Principal Act.

41 Amendment of section 681 (allowance for mine rehabilitation expenditure) of Principal Act.

42 Amendment of section 734 (taxation of collective investment undertakings) of Principal Act.

43 Taxation of shares issued in place of cash dividends.

44 Amendment of section 843 (capital allowances for buildings used for third level educational purposes) of Principal Act.

45 Amendment of Part 41 (self assessment) of Principal Act.

46 Amendment of section 787 (nature and amount of relief for qualifying premiums) of Principal Act.

47 Amendments of Principal Act in consequence of a change in the currency of certain states.

48 Amendment of Principal Act in consequence of convention with United States of America relating to double taxation, etc.

49 Amendment of Part 26 (life assurance companies) of Principal Act.

50 Amendment of section 1013 (limited partnerships) of Principal Act.

51 Reduction in tax credits in respect of distributions.

52 Abolition of tax credits.

53 Amendment of definition of specified qualifying shares.

54 Amendment of section 198 (certain interest not to be chargeable) of Principal Act.

Chapter 4 Corporation Tax

55 Rate of corporation tax.

56 Amendment of section 22 (reduced rate of corporation tax for certain income) of Principal Act.

57 Amendment of section 713 (investment income reserved for policyholders) of Principal Act.

58 Credit unions.

59 Amendment of section 449 (credit for foreign tax not otherwise credited) of Principal Act.

60 Relief for double taxation.

61 Corporate donations to eligible charities.

62 Relief for investment in renewable energy generation.

63 Amendment of section 88 (deduction for gifts to Enterprise Trust Ltd.) of Principal Act.

64 Amendment of section 715 (annuity business: separate charge on profits) of Principal Act.

Chapter 5 Capital Gains Tax

65 Capital gains: rates of charge.

66 Amendment of Part 27 (unit trusts and offshore funds) of Principal Act.

67 Amendment of section 538 (disposals where assets lost or destroyed or become of negligible value) of Principal Act.

68 Amendment of section 547 (disposals and acquisitions treated as made at market value) of Principal Act.

69 Amendment of Chapter 3 (assets held in fiduciary or representative capacity, inheritances and settlements) of Part 19 of Principal Act.