Legalize / Ireland / Act

FINANCE ACT, 1998

Type Act

Publication 1998-03-27

Last updated 2014-12-23

State Partially repealed superseded text

Text As published

Source Irish Statute Book

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articles 138

This is the act as published. Later amendments are not folded into the text below: each one is a separate act in this repository and an entry in this law's history.

11 amending acts · 2014-12-23, Finance Act 2014

Act to charge and impose certain duties of customs and inland revenue (including excise), to amend the law relating to customs and inland revenue (including excise) and to make further provisions in connection with finance

Reform history JSON API

(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

(c) a loss sustained in the year of assessment 1997-98 which would have been the loss sustained in that year if—

(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

(c) 32 per cent for the financial year 1998 and each subsequent financial year.”.

(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—

“Relief from Income Tax and Corporation Tax by Means of Credit in Respect of Foreign Tax

Interpretation

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

“Relief from Income Tax and Corporation Tax by Means of Credit in Respect of Foreign Tax

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

(c) for any tax in respect of which credit may be allowed under section 831.

(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

Credit shall not be allowed”

“Part 3

Miscellaneous

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

(c) it satisfies the requirements of subsection (9).

(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,

(c) neither the company nor any person connected with it receives a benefit in consequence of making the donation,

(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,

or

(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

(c) exists solely for the purposes of undertaking a qualifying energy project;

‘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

(c) used by the qualifying company within 2 years of the receipt of that sum for those purposes,

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,

(c) hydropower, and

(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

(c) such other information as the Revenue Commissioners may reasonably require.

(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

(c) contain a declaration that it is correct to the best of the company's knowledge and belief.
(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.

(c) For the purposes of paragraph (a)—

(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.

577A.—Where by virtue of section 576(1) the assets forming part of any settled property are deemed to be disposed of and immediately reacquired by the trustee on the occasion when a person becomes absolutely entitled to the assets as against the trustee, then, in case that occasion is the relinquishing of a life interest (within the meaning of section 577) by the person entitled to that interest, the trustee shall be given such relief as would be given under sections 598 and 599 to the person who relinquished the life interest—

(a) if the person had become absolutely entitled to the assets as against the trustee at the commencement of the life interest and had continued to be so entitled throughout the period (in this section referred to as the ‘life interest period’) that the life interest subsisted, and

(b) as if any expenditure of the kind referred to in paragraph (b) of section 552(1) that was incurred on the assets during the life interest period by the trustee had been incurred by the person.”.

(2) This section shall apply as respects a disposal deemed to be made on or after the 12th day of February, 1998.

70 Repeal of section 592 (reduced rate of capital gains tax on certain disposals of shares by individuals) of Principal Act.

70.—(1) Section 592 of the Principal Act is hereby repealed.

(2) This section shall apply as respects disposals made on or after the 3rd day of December, 1997.

71 Amendment of section 597 (replacement of business and other assets) of Principal Act.

71.—(1) Section 597 of the Principal Act is hereby amended, in subsection (3), by the substitution for paragraph (c) of the following paragraphs:

“(c) goodwill,

(d) any financial assets owned by a body of persons referred to in paragraph (f) of subsection (2); for the purposes of this paragraph ‘financial assets’ means shares of any company and stocks, bonds and obligations of any government, municipal corporation, company or other body corporate.”.

(2) This section shall apply as respects disposals made on or after the passing of this Act.

72 Amendment of section 598 (disposals of business or farm on “retirement”) of Principal Act.

72.—(1) Section 598 of the Principal Act is hereby amended in subsection (1)—

(a) in the definition of “qualifying assets”—

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

“(i) the chargeable business assets of the individual which apart from tangible moveable property he or she has owned for a period of not less than 10 years ending with the disposal and which have been his or her chargeable business assets throughout the period of 10 years ending with that disposal,”,

(ii) by the substitution, in paragraph (ii), of “for a period of not less than 5 years, and” for “for a period of not less than 5 years;”,

and

(iii) by the insertion after paragraph (ii) of the following:

“(iii) land used for the purposes of farming carried on by the individual which he or she owned and used for that purpose for a period of not less than 10 years ending with the transfer of an interest in that land for the purposes of complying with the terms of the Scheme;”,

and

(b) by the insertion after the definition of “qualifying assets” of the following:

“‘the Scheme’ means the scheme known as the Scheme of Early Retirement From Farming introduced by the Minister for Agriculture and Food for the purpose of implementing Council Regulation (EEC) No. 2079/92 of 30 June 1992^*;”.

(2) This section shall apply as respects a disposal of an asset on or after the 6th day of April, 1998.

73 Amendment of section 652 (non-application of reliefs on replacement of assets in case of relevant disposals) of Principal Act.

73.—(1) Section 652 of the Principal Act is hereby amended by the insertion of the following subsections after subsection (3)—

“(3A)

(a) In this subsection—

‘greyhound race’, ‘greyhound race track’ and ‘greyhound race track licence’ have the same meanings respectively as in section 2 of the Greyhound Industry Act, 1958;

‘assets of an authorised greyhound race track’ means assets of a greyhound race track which is an authorised greyhound race track where the assets are used for the provision of appropriate facilities or services to hold greyhound races or to accommodate persons associated with greyhound racing, including members of the public;

‘authorised greyhound race track’ means a greyhound race track in respect of which a greyhound race track licence has been granted, and that licence has not been revoked.

(b) Subject to paragraph (c), subsection (1) shall not apply to consideration obtained for a relevant disposal where—

(i) throughout a period of 5 years ending with the time of disposal the old assets, and

(ii) the new assets within the meaning of section 597,

are assets of an authorised greyhound race track.

(c) Section 597 shall apply in relation to assets of an authorised greyhound race track as if—

(i) references in subsections (4) and (5) of that section to new assets ceasing to be used for the purposes of a trade included a reference to new assets ceasing to be assets of an authorised greyhound race track, and

(ii) subsection (11)(b) had not been enacted.

(3B) Subsection (1) shall not apply to consideration obtained for a relevant disposal effected by an order made under section 28(1) of the Dublin Docklands Development Authority Act, 1997.”.

(2) This section shall apply in respect of relevant disposals made on or after the 6th day of April, 1998.

74 Amendment of section 980 (deduction from consideration on disposal of certain assets) of Principal Act.

74.—Section 980 of the Principal Act is hereby amended, as respects disposals made on or after the passing of this Act, in subsection (3), by the substitution of “£150,000” for “£100,000”.

75 Amendment of section 1028 (married persons) of Principal Act.

75.—Section 1028 of the Principal Act is hereby amended, as respects the year of assessment 1998-99 and subsequent years of assessment, by the deletion of subsection (4).

Chapter 6 Income Tax and Corporation Tax: Reliefs for Renewal and Improvement of Certain Urban and Rural Areas

76 Amendment of Part 10 (income tax and corporation tax: reliefs for renewal and improvement of certain urban areas, certain resort areas and certain islands) of Principal Act.

76.—Part 10 of the Principal Act is hereby amended by the insertion after Chapter 6 of the following:

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