Finance Act 2001

PART 1 Income Tax, Corporation Tax and Capital Gains Tax

Chapter 1 Interpretation

1 Interpretation (Part 1).

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

Chapter 2 Income Tax

2 Tax credits.

2.—(1) Where an individual is entitled under a provision of the Principal Act mentioned in column (1) of the Table to this subsection to have the income tax to be charged on the individual, other than in accordance with the provisions of section 16(2) of the Principal Act, reduced for the year of assessment 2001 or any subsequent year of assessment and the amount of the reduction would, but for this section, be an amount which is the lesser of—

(a) an appropriate percentage of an amount (in this section referred to as the “standard-rated allowance”) specified in column (2) of that Table, and

(b) the amount which reduces that liability to nil,

the amount of the reduction in accordance with paragraph (a) shall, in lieu of being the standard-rated allowance, be the amount of the tax credit specified in column (3) or column (4), as may be appropriate, of the Table opposite the mention of the amount in column (2).

TABLE

Statutory Provision				Standard rated allowance for the year	Tax credit for the year 2001	Tax credit for the year 2002 and subsequent years
(1)				(2)	(3)	(4)
Section 461
(married person)		...	...	£9,400	£1,628	€2,794
(widowed person bereaved in the year of assessment)			...	£9,400	£1,628	€2,794
(single person)		...	...	£4,700	£814	€1,397
Section 461A
(additional relief for certain widowed persons)				£1,000	£148	€254
Section 462
(additional relief for single parents)	...	...	...	£4,700	£814	€1,397
Section 463
(additional relief for widowed parent following death of spouse)
(1st year)	...	...	...	£10,000	£2,000	€2,540
(2nd year)	...	...	...	£8,000	£1,600	€2,032
(3rd year)	...	...	...	£6,000	£1,200	€1,524
(4th year)	...	...	...	£4,000	£800	€1,016
(5th year)	...	...	...	£2,000	£400	€508
Section 464
(aged person)
(married person)		...	...	£1,600	£238	€408
(single person)		...	...	£800	£119	€204
Section 465
(incapacitated child)		...	...	£1,600	£238	€408
Section 466
(dependent relative)		...	...	£220	£33	€56
Section 466A
(home carer)	...	...	...	£3,000	£444	€762
Section 468
(blind person)		...	...	£3,000	£444	€762
(both spouses blind)		...	...	£6,000	£888	€1,524
Section 472
(employee)	...	...	...	£1,000	£296	€508

(2) Section 7 of the Finance Act, 1999, and sections 4, 5, 6, 7, 8, 9, 10, 11 and 12 of the Finance Act, 2000, shall apply subject to the provisions of this section.

(3) Schedule 1 shall have effect for the purposes of supplementing subsection (1).

3 Alteration of rates of income tax.

3.—Section 15 of the Principal Act is amended—

(a) as respects the year of assessment 2001 and subsequent years of assessment, by the substitution of the following for subsection (4):

“(4) For the purposes of subsection (3), ‘specified income’ means total income after deducting from such income any deduction attributable to a specific source of income and any relevant interest within the meaning of Chapter 4 of Part 8.”,

(b) as respects the year of assessment 2001—

(i) by the substitution in subsection (3) of “£8,140” for “£6,000”, and

(ii) by the substitution of the following Table for the Table to that section:

“TABLE

PART 1

	Part of taxable income	Rate of tax	Description of rate
	(1)	(2)	(3)
	The first £14,800	20 per cent	the standard rate
	The remainder	42 per cent	the higher rate

PART 2

	Part of taxable income	Rate of tax	Description of rate
	(1)	(2)	(3)
	The first £17,131	20 per cent	the standard rate
	The remainder	42 per cent	the higher rate

PART 3

	Part of taxable income	Rate of tax	Description of rate
	(1)	(2)	(3)
	The first £21,460	20 per cent	the standard rate
	The remainder	42 per cent	the higher rate

and

(c) as respects the year of assessment 2002 and subsequent years of assessment—

(i) by the substitution in subsection (3) of “€13,967” for “£6,000”, and

(ii) by the substitution of the following Table for the Table to that section:

“TABLE

PART 1

	Part of taxable income	Rate of tax	Description of rate
	(1)	(2)	(3)
	The first €25,395	20 per cent	the standard rate
	The remainder	42 per cent	the higher rate

PART 2

	Part of taxable income	Rate of tax	Description of rate
	(1)	(2)	(3)
	The first €29,395	20 per cent	the standard rate
	The remainder	42 per cent	the higher rate

PART 3

	Part of taxable income	Rate of tax	Description of rate
	(1)	(2)	(3)
	The first €36,823	20 per cent	the standard rate
	The remainder	42 per cent	the higher rate

4 Age exemption.

4.—Section 188 of the Principal Act is amended—

(a) as respects the year of assessment 2001 and subsequent years of assessment—

(i) by the substitution of the following for subsections (1) and (2):

“(1) In this section and in section 187—

‘income tax payable’ has the same meaning (inserted by the Finance Act, 2001) as in section 3, but without regard to any reduction of tax under section 244;

‘total income’ has the same meaning as in section 3, but includes income arising outside the State which is not chargeable to tax.

(2) In this section, ‘the specified amount’ means, subject to section 187(2)—

(a) in a case where the individual would apart from this section be entitled to a tax credit specified in section 461(a) (inserted by the Finance Act, 2001), £12,580, and

(b) in any other case, £6,290.”,

and

(ii) in subsection (3), by the substitution for “relief under section 461(2) as an individual referred to in paragraph (a)(i) of the definition of ‘specified amount’ in subsection (1) of that section” of “a tax credit specified in section 461(a)”,

and

(b) as respects the year of assessment 2002 and subsequent years of assessment, by the substitution, in subsection (2) (inserted by paragraph (a)), of “€21,586” for “£12,580” and of “€10,793” for “£6,290”.

5 Amendment of section 122 (preferential loan arrangements) of Principal Act.

5.—Section 122 of the Principal Act is amended, as respects the year of assessment 2001 and subsequent years of assessment, by the substitution in the definition of “the specified rate” in paragraph (a) of subsection (1) of—

(a) “6 per cent” for “4 per cent” in both places where it occurs, and

(b) “12 per cent” for “10 per cent”,

and the said definition, as so amended, is set out in the Table to this section.

TABLE

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

(i) in a case where—

(I) the interest paid on the preferential loan qualifies for relief under section 244, or

(II) if no interest is paid on the preferential loan, the interest which would have been paid on that loan (if interest had been payable) would have so qualified,

the rate of 6 per cent per annum or such other rate (if any) prescribed by the Minister for Finance by regulations,

(ii) in a case where—

(I) the preferential loan is made to an employee by an employer,

(II) the making of loans for the purposes of purchasing a dwelling house for occupation by the borrower as a residence, for a stated term of years at a rate of interest which does not vary for the duration of the loan, forms part of the trade of the employer, and

(III) the rate of interest at which, in the course of the employer's trade at the time the preferential loan is or was made, the employer makes or made loans at arm's length to persons, other than employees, for the purposes of purchasing a dwelling house for occupation by the borrower as a residence is less than 6 per cent per annum or such other rate (if any) prescribed by the Minister for Finance by regulations,

the first-mentioned rate in subparagraph (III), or

(iii) in any other case, the rate of 12 per cent per annum or such other rate (if any) prescribed by the Minister for Finance by regulations.

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

6.—Section 126 of the Principal Act is amended by the substitution, in subsection (8), of the following for paragraph (b) (inserted by the Finance Act, 2000):

“(b) Notwithstanding subsection (3) and the Finance Act, 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order, 1994 (S.I. No. 19 of 1994), subsection (3)(b) shall not apply in relation to unemployment benefit paid or payable, in the period commencing on 6 April 1997 and ending on 31 December 2001, to a person employed in short-time employment.”.

7 Amendment of section 467 (employed person taking care of incapacitated individual) of Principal Act.

7.—Section 467 of the Principal Act is amended by the substitution of—

(a) as respects the year of assessment 2001, “£7,400” for “£8,500” in both places where it occurs, and

(b) as respects the year of assessment 2002 and subsequent years of assessment, “€12,700” for “£8,500” in both places where it occurs.

8 Amendment of section 469 (relief for health expenses) of Principal Act.

8.—As respects the year of assessment 2001 and subsequent years of assessment, subsection (1) of section 469 of the Principal Act is amended—

(a) in the definition of “dependent”—

(i) by the substitution in paragraph (b) of “under section 465,” for “under section 465 or 466, and”,

(ii) by the substitution in subparagraph (ii) of paragraph (c) of “year of assessment, and” for “year of assessment;”, and

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

“(d) any other person being—

(i) a relative of the individual, or of the individual's spouse, who is incapacitated by old age or infirmity from maintaining himself or herself,

(ii) the widowed father or widowed mother of the individual or of the individual's spouse, whether incapacitated or not, or

(iii) a son or daughter of the individual who resides with the individual and on whose services the individual, by reason of old age or infirmity, is compelled to depend;”,

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

“‘educational psychologist’ means a person who is entered on a register maintained by the Minister for Education and Science for the purposes of this section in accordance with guidelines set down by that Minister with the consent of the Minister for Finance;”,

(c) in the definition of “health care”, by the deletion of “other than routine maternity care”,

(d) in the definition of “health expenses”, by the insertion of the following after paragraph (h):

“(i) as respects a dependant of the individual referred to in paragraphs (b) and (c) of the definition of ‘dependant’ either or both—

(I) educational psychological assessment carried out by an educational psychologist, and

(II) speech and language therapy carried out by a speech and language therapist;”,

(e) by the deletion of the definition of “routine maternity care”, and

(f) by the insertion of the following after the definition of “routine ophthalmic treatment”:

“‘speech and language therapist’ means a person approved of for the purposes of this section by the Minister for Health and Children in accordance with guidelines set down by that Minister with the consent of the Minister for Finance.”.

9 Amendment of section 473 (allowance for rent paid by certain tenants) of Principal Act.

9.—Section 473 of the Principal Act is amended—

(a) as respects the year of assessment 2001, by the substitution in subsection (1) of the following definition for the definition of “the specified limit”:

“‘specified limit’, in relation to an individual for a year of assessment, means—

(a) in the case of—

(i) a married person assessed to tax in accordance with section 1017, or

(ii) a widowed person,

£1,480; but, if at any time during the year of assessment the individual was of the age of 55 years or over, ‘specified limit’ means £2,960, and

(b) in any other case, £740; but, if at any time during the year of assessment the individual was of the age of 55 years or over, ‘specified limit’ means £1,480;”,

and

(b) as respects the year of assessment 2002 and subsequent years of assessment, by the substitution in subsection (1) of the following definition for the definition of “the specified limit”:

“‘specified limit’, in relation to an individual for a year of assessment, means—

(a) in the case of—

(i) a married person assessed to tax in accordance with section 1017, or

(ii) a widowed person,

€2,540; but, if at any time during the year of assessment the individual was of the age of 55 years of over, ‘specified limit’ means €5,080, and

(b) in any other case, €1,270; but, if at any time during the year of assessment the individual was of the age of 55 years or over, ‘specified limit’ means €2,540;”.

10 Amendment of section 477 (relief for service charges) of Principal Act.

10.—Section 477 of the Principal Act is amended—

(a) as respects the year of assessment 2001 and subsequent years of assessment, by the substitution in paragraph (a) of subsection (6) of “subject to paragraph (d),” for “subject to paragraph (c),”,

(b) as respects the year of assessment 2001, by the substitution in paragraph (a) of subsection (7) of “£150” for “£50”, and

(c) as respects the year of assessment 2002 and subsequent years of assessment, by the substitution in paragraph (a) of subsection (7) of “€195” for “£50”.

11 Relief for trade union subscriptions.

11.—(1) The Principal Act is amended as respects the year of assessment 2001 and subsequent years of assessment—

(a) by the insertion in Part 2 of the Table to section 458 of the following after “section 472”:

“section 472C”,

(b) by the insertion after section 472B of the following section: