Finance Act 2001

(iii) subsequent to the acquisition by the chargeable person of the premises, the number of residential units is not, subject to subparagraph (iv), reduced to less than 50 per cent of the total number of residential units contained in the premises at date of acquisition,

(iv) the premises consists throughout the year of a minimum of 3 residential units,

(v) at all times during the year (except for reasonable periods of temporary disuse between the ending of one lease and the commencement of another lease) not less than 50 per cent of the residential units in the premises are let under a lease where the lesses in the case of each such letting is either—

(I) a local authority, or a person nominated by a local authority under an agreement in writing between the lessor and that local authority, or

(II) a person who, at the commencement of the tenancy, is entitled to a payment under section 179 of the Social Welfare (Consolidation) Act, 1993, in respect of rent,

and

(vi) all the requirements of the following Regulations—

(I) the Housing (Standards for Rented Houses) Regulations, 1993 (S.I. No. 147 of 1993),

(II) the Housing (Rent Books) Regulations, 1993 (S.I. No. 146 of 1993), and

(III) the Housing (Registration of Rented Houses) Regulations, 1996 (S.I. No. 30 of 1996), as amended by the Housing (Registration of Rented Houses) (Amendment) Regulations, 2000 (S.I. No. 12 of 2000),

are complied with in relation to the premises throughout the year,

and

(b) in this subsection—

‘local authority’, in relation to a premises, means the council of a country or the corporation of a country or other borough or, where appropriate, the council of an urban district in whose functional area the premises is located; ‘residential unit’ means a separately contained part of a residential premises used or suitable for use as a dwelling.”.

35 Amendment of section 177 (conditions as to residence and period of ownership) of Principal Act.

35.—As respects a redemption, repayment or purchase of its own shares by a company to which section 176 applies on or after 15 February 2001, section 177 of the Principal Act is amended by the substitution of the following for subsection (6):

“(6) The shares shall have been owned by the vendor throughout the period of—

(a) where the shares were appropriated to the vendor under an approved scheme (within the meaning of Chapter 1 of Part 17), and to which the provisions of subsections (4) to (7) of section 515 do not apply, 3 years, and

(b) in any other case, 5 years,

ending on the date of redemption, repayment or purchase, as the case may be.”.

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

36.—(1) Section 198 of the Principal Act is amended in subsection (1)—

(a) by the substitution in the definition of “tax” in paragraph (a) for “corporation tax” of “income tax or corporation tax, as is appropriate,”,

(b) by the substitution in paragraph (b) for “company” of “person” in each place in which it occurs,

(c) by the deletion of “and” at the end of subparagraph (i) of paragraph (c),

(d) by the substitution in subparagraph (ii)(II) of paragraph (c) for “relevant territory,” of “relevant territory,” and by the insertion of “and” at the end of that subparagraph,

(e) by the insertion after subparagraph (ii) of paragraph (c) of the following:

“(iii) a person shall not be chargeable to income tax in respect of interest paid by a company if—

(I) the person is not resident in the State, and

(II) the person is regarded for the purposes of this subsection as being a resident of a relevant territory,

and the interest is interest to which section 64(2) applies.”.

(2) This section shall apply as respects interest paid on or after the date of the passing of this Act.

37 Treatment of certain interest payments.

37.—(1) Part 8 of the Principal Act is amended—

(a) in section 243—

(i) by the insertion after subsection (1) of the following:

“(1A) For the purposes of this section, ‘bank’ includes building society within the meaning of section 256(1).”,

and

(ii) in subsection (5)(a)—

(I) in subparagraph (I) by the deletion of “or”, and

(II) by the substitution for subparagraph (II) of the following:

“(II) the interest is interest referred to in paragraph (a), (b) or (h) of section 246(3), or

(III) the interest is interest to which section 64(2) applies,”,

and

(b) in section 246(1)—

(i) by the substitution for the definitions of “a collective investment undertaking” and “collective investor” of the following:

“‘bank’ includes building society within the meaning of section 256(1);”

and

(ii) by the substitution for the definition of “relevant person” of the following:

“‘investment undertaking’ means—

(a) a unit trust mentioned in section 731(5)(a),

(b) a special investment scheme within the meaning given to it in section 737, or

(c) an investment undertaking within the meaning given to it in section 739B;

‘relevant person’ means—

(a) a company, or

(b) an investment undertaking;”.

(2) This section shall apply to interest paid on or after the date of passing of this Act.

38 Amendment of Part 20 (companies' chargeable gains) of Principal Act.

38.—(1) Part 20 of the Principal Act is amended—

(a) in section 615 as respects a disposal on or after 15 February 2001 by the substitution for subsection (2) of the following:

“(2) (a) Subject to this section, where—

(i) any scheme of reconstruction or amalgamation involves the transfer of the whole or part of a company's business to another company,

(ii) (I) the company acquiring the assets is resident in the State at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately after that time, and

(II) the company from which the assets are acquired is resident in the State at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately before that time,

and

(iii) the first-mentioned company receives no part of the consideration for the transfer (otherwise than by the other company taking over the whole or part of the liabilities of the business),

then, in so far as relates to corporation tax on chargeable gains, both companies shall be treated as if any assets included in the transfer were acquired by the one company from the other company for a consideration of such amount as would secure that on the disposal by means of the transfer neither a gain nor a loss would accrue to the company making the disposal, and for the purposes of section 556 the acquiring company shall be treated as if the respective acquisitions of the assets by the other company had been the acquiring company's acquisition of the assets.

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

(i) an asset is a ‘chargeable asset’ in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain, and

(ii) a reference to a company shall apply only to a company which, by virtue of the law of a Member State of the European Communities, is resident for the purposes of tax in such a Member State, and for this purpose ‘tax’, in relation to a Member State of the European Communities other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State.”,

(b) in section 616—

(i) in subsection (1)—

(I) by the substitution for paragraph (a) of the following:

“(a) subject to section 621(1), a reference to a company or companies shall apply only to a company or companies, as limited by subsection (2), being a company or, as the case may be, companies which, by virtue of the law of a Member State of the European Communities, is or are resident for the purposes of tax in such a Member State, and for this purpose ‘tax’, in relation to a Member State of the European Communities other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State, and references to a member or members of a group of companies shall be construed accordingly;”,

(II) in paragraph (e) by the substitution of “State;” for “State.”, and

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

“(f) an asset is a ‘chargeable asset’ in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain.”,

and

(ii) in subsection (2)(b), by the deletion of “(although resident in the State)”,

(c) in section 617 as respects a disposal on or after 15 February 2001 by the substitution for subsection (1) of the following:

“(1) Notwithstanding any provision in the Capital Gains Tax Acts fixing the amount of the consideration deemed to be received on a disposal or given on an acquisition, where—

(a) a member of a group of companies disposes of an asset to another member of the group,

(b) the company making the disposal is resident in the State at the time of the disposal or the asset is a chargeable asset in relation to that company immediately before that time, and

(c) the other company is resident in the State at the time of the disposal or the asset is a chargeable asset in relation to that company immediately after that time,

both members shall, except where provided by subsections (2) and (3), be treated, in so far as relates to corporation tax on chargeable gains, as if the asset acquired by the member to whom the disposal is made were acquired for a consideration of such amount as would secure that on the other member's disposal neither a gain nor a loss would accure to that other member; but, where it is assumed for any purpose that a member of a group of companies has sold or acquired an asset, it shall be assumed also that it was not a sale to or acquisition from another member of the group.”,

(d) in section 618 as respects an acquisition or disposal on or after 15 February 2001—

(i) by the substitution for subsection (1) of the following:

“(1) Where—

(a) a company which is a member of a group of companies acquires an asset as trading stock of a trade to which this section applies,

(b) the acquisition is from another company which is a member of the group, and

(c) the asset did not form part of the trading stock of any such trade carried on by the other company,

the company acquiring the asset shall be treated for the purposes of section 596 as having acquired the asset otherwise than as trading stock and immediately appropriated it for the purposes of the trade as trading stock.”,

(ii) by the insertion in subsection (2) after “formed part of the trading stock of a trade” of “to which this section applies”, and

(iii) by the insertion after subsection (2) of the following:

“(3) This section applies to—

(a) a trade carried on by a company which is resident in the State, and

(b) a trade carried on in the State through a branch or agency by a company which is not so resident.”,

(e) in section 619 as respects an acquisition on or after 15 February 2001 in subsections (1) and (2) by the substitution of “in the course of a disposal to which section 617 applies” for “at a time when both were members of the group”,

(f) by the substitution for section 620 of the following:

“Replacement of business assets by members of group.

620.—(1) For the purposes of this section ‘old assets’ and ‘new assets’ have the same meanings as in section 597. (2) Subject to subsection (4), for the purposes of section 597 all the trades to which this section applies carried on by members of a group of companies shall be treated as a single trade (except in a case of one member of the group acquiring, or acquiring the interest in, the new assets from another member or disposing of, or disposing of the interest in, the old assets to another member). (3) This section applies to— (a) any trade carried on by a company which is resident in the State, and (b) any trade carried on in the State through a branch or agency of a company which is not so resident. (4) This section shall not apply unless— (a) the company disposing of the old assets is resident in the State at the time of the disposal, or the assets are chargeable assets in relation to that company immediately before that time, and (b) the company acquiring the new assets is resident in the State at the time of acquisition, or the assets are chargeable assets in relation to that company immediately after that time.”,

(g) by the insertion after section 620 of the following:

“Deemed disposal in certain circumstances.

620A.—(1) This section applies in relation to a company where— (a) at any time on or after 15 February 2001 an asset ceases to be a chargeable asset in relation to the company— (i) where at the time of the acquisition of the asset by the company the asset consisted of shares deriving their value or the greater part of their value from assets specified in paragraph (a) or (b) of section 29(3), by virtue of the assets ceasing to so derive their value or the greater part of their value, or (ii) by virtue of the asset becoming situated outside the State, and (b) (i) the company acquired the asset in the course of— (I) a transfer to which section 615 applies, or (II) a disposal to which section 617 applies, or (ii) by virtue of section 620 the asset constitutes new assets for the purposes of section 597. (2) Where this section applies in relation to a company, the company shall be deemed for the purposes of the Capital Gains Tax Acts and the Corporation Tax Acts— (a) to have disposed of the asset immediately before the time when it ceased to be a chargeable asset in relation to the company, and (b) immediately to have reacquired it, at its market value at that time.”,

(h) in section 621 as respects a case in which the depreciatory transaction (within the meaning of section 621) is on or after 15 February 2001 by the substitution for the definition of a group of companies of the following:

“a group of companies' may consist of companies some or all of which are not resident for the purposes of tax in a Member State of the European Communities.”,

(i) in section 623 as respects an asset acquired on or after 15 February 2001 by the substitution for subsection (2) of the following:

“(2) This section applies where—

(a) a company (in this section referred to as the ‘chargeable company’) which is a member of a group of companies acquires an asset from another company which at the time of acquisition was a member of the group.

(b) the chargeable company ceases to be a member of the group within the period of 10 years after the time of the acquisition,

(c) the chargeable company is resident in the State at the time of acquisition of the asset, or the asset is a chargeable asset in relation to that company immediately after that time, and

(d) the other company is resident in the State at the time of that acquisition, or the asset is a chargeable asset in relation to that company immediately before that time.”,

(j) in section 624(5) by the substitution of “a company which is not resident in a Member State of the European Communities” for “a company resident outside the State”, and

(k) in section 629(1) in the definition of “group” by the substitution of “a Member State of the European Communities” for “the State”.

(2) (a) Except where the context otherwise requires and subject to paragraph (b), this section applies from 15 February 2001.

(b)(i) Subsection (1) (f) applies in relation to cases in which—

(I) either the disposal or acquisition is on or after 15 February 2001, or

(II) both the disposal and acquisition are on or after that date.

(ii) In a case to which subparagraph (i)(I) relates, any question of whether a company was, at the time of the acquisition or disposal corresponding to the disposal or acquisition referred to in that subparagraph, a member of a group shall be determined in accordance with section 616 as amended by subsection (1)(b).

39 Amendment of section 590 (attribution to participants of chargeable gains accruing to non-resident company) of Principal Act.

39.—(1) Section 590 of the Principal Act is amended in subsection (16)—

(a) in paragraph (b)(i) by the substitution of “section 617 (other than paragraphs (b) and (c) of subsection (1)), section 618 (with the omission of the words ‘to which this section applies’ in subsections (1)(a) and (2), of ‘such’ in subsection (1)(c) and of subsection (3)), section 619(2) (with the substitution for ‘in the course of a disposal to which section 617 applies’ of ‘at a time when both were members of the group’) and section 620(2) (with the omission of the words ‘to which this section applies’)” for “sections 617 to 620”,

(b) in paragraph (b)(ii) by the insertion after “section 623” of “(apart from paragraphs (c) and (d) of subsection (2))”.

(2) This section applies in cases in which section 617, 618, 619(2) or 620(2), as the case may be, have effect as amended by this Act.

40 Amendment of Schedule 18A (restriction on set-off of pre-entry losses) to Principal Act.

40.—(1) Schedule 18A to the Principal Act is amended in paragraph 1—

(a) in subparagraph (3) by the substitution of “at the time immediately before the relevant event occurred in relation to it by a company which is or was” for “by a company at the time immediately before the company became”,

(b) by the insertion after subparagraph (3) of the following:

“(3A) (a) In this paragraph references to the relevant event occurring in relation to a company—

(i) in a case in which—

(I) the company was resident in the State at the time when it became a member of the relevant group, or

(II) the asset was a chargeable asset in relation to the company at that time,

are references to the company becoming a member of that group;

(ii) in any other case, are references to whichever is the first of—

(I) the company becoming resident in the State, or

(II) the asset becoming a chargeable asset in relation to the company.

(b) For the purposes of paragraph (a), an asset is a ‘chargeable asset’ in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain.”,

(c) in subparagraph (4)(a) by the substitution of “the relevant event occurred in relation to it” for “the company became a member of the relevant group”, and

(d) in subparagraph (5)—

(i) in the opening words by the substitution of “the relevant event occurred in relation to the company by reference to which that asset is a pre-entry asset” for “the company by reference to which the asset is a pre-entry asset became a member of the relevant group”,

(ii) in clause (a) by the substitution of “a relevant event has occurred in relation to a company” for “a company has become a member of the relevant group”, and

(iii) in clause (b) by the substitution of “a relevant event occurred in relation to a company” for “a company became a member of the relevant group”.

(2) (a) This section applies in relation to—

(i) where chargeable gains are to be included in a company's total profits, the amount to be included in respect of chargeable gains in the company's total profits for any accounting period ending on or after 15 February 2001, and

(ii) in any other case, the amount on which a company is chargeable in accordance with section 31 for the year of assessment 2000-2001 and any subsequent year of assessment.

(b) For the purposes of this section, any question whether a company was, in relation to any time before 15 February 2001, a member of a group shall be determined by reference to the Principal Act before its amendment by this Act.

41 Amendment of Schedule 24 (relief from income tax and corporation tax by means of credit in respect of foreign tax) to Principal Act.

41.—(1) Schedule 24 of the Principal Act is amended—

(a) in paragraph 3 by the substitution for “Credit shall not be allowed” of “Subject to paragraphs 9A, 9B and 9C, credit shall not be allowed”,

(b) in paragraph 4(4)(e) by the insertion after “644B” of “by any fraction”,

(c) in paragraph 9A—

(i) in subparagraph (3) by the substitution for “company resident in the State” of “company falling within subparagraph (3A)”,

(ii) by the insertion after subparagraph (3) of the following subparagraph:

“(3A) (a) A company falls within this subparagraph if—

(i) it is resident in the State, or

(ii) it is, by virtue of the law of a Member State of the European Communities other than the State, resident for the purposes of tax in such a Member State and the dividend referred to in subparagraph (3) forms part of the profits of a branch or agency of the company in the State.

(b) For the purposes of subparagraph (a)(ii), ‘tax’, in relation to a Member State of the European Communities other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State.”,

and

(iii) in subparagraph (4)(b) by the substitution for “company resident in the State” of “company falling within subparagraph (3A)”,

(d) in paragraph 9B—

(i) in subparagraph (1) by the substitution for “an Irish company” of “a company falling within subparagraph (1A) (in this paragraph referred to as the ‘relevant company’)”, and by the substitution for “the Irish company” of “the relevant company”,

(ii) by the insertion after subparagraph (1) of the following subparagraph:

“(1A) (a) A company falls within this subparagraph if—

(i) it is resident in the State, or

(ii) it is, by virtue of the law of a Member State of the European Communities other than the State, resident for the purposes of tax in such a Member State and the dividend referred to in subparagraph (1) forms part of the profits of a branch or agency of the company in the State.

(b) For the purposes of subparagraph (a)(ii), ‘tax’, in relation to a Member State of the European Communities other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State.”,

(iii) in subparagraphs (2) and (3) by the substitution for “the Irish company” of “the relevant company”,

(iv) in subparagraph (4) by the substitution for “an Irish company” of “a relevant company”, and

(v) in subparagraph (5) by the deletion of the definition of “Irish company”,

and

(e) by the insertion after paragraph 9B, but in Part 2, of the following:

“9C.—(1) In this paragraph—

‘relevant company’ means a company which—

(a) is not resident in the State,

(b) is, by virtue of the law of a Member State of the European Communities other than the State, resident for the purposes of tax in such a Member State, and

(c) carries on a trade in the State through a branch or agency,

and for the purposes of subparagraph (b) of this definition ‘tax’, in relation to a Member State of the European Communities other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State;

‘relevant tax’ means foreign tax paid in respect of the income or chargeable gains of a branch or agency in the State of a relevant company, other than such tax paid in a territory in which the company is liable to tax by reason of domicile, residence, place of management or other similar criterion.

(2) A relevant company shall, as respects an accounting period, be entitled to such relief under this Schedule in respect of relevant tax as would, if the branch or agency in the State had been a company resident in the State, have been given under any arrangements to that company resident in the State.”.

(2) This section applies as respects accounting periods ending on or after 15 February 2001.

42 Amendment of section 89 (valuation of trading stock at discontinuance of trade) of Principal Act.

42.—(1) Section 89 of the Principal Act is amended—

(a) by the substitution in subsection (1) for paragraph (b) of the following:

“(b) For the purposes of this section—

(i) ‘trading stock’, in relation to a trade, includes any services, article or material which, if the trade were a profession, would be treated as work in progress of the profession for the purposes of section 90, and references to the sale or transfer of trading stock shall be construed accordingly;

(ii) two persons are connected with each other if—

(I) they are connected with each other within the meaning of section 10;

(II) one of them is a partnership and the other has a right to a share in the partnership;

(III) one of them is a body corporate and the other has control over that body;

(IV) both of them are partnerships and some other person has a right to a share in each of them; or

(V) both of them are bodies corporate or one of them is a partnership and the other is a body corporate and, in either case, some other person has control over both of them;

and in this subparagraph the references to a right to a share in a partnership are references to a share of the assets or income of the partnership and control has the meaning given by section 11.”,

(b) by the substitution in subsection (2)(a) for “the price paid for such trading stock on such sale or the value of the consideration given for such trading stock on such transfer, as the case may be” of “the amount determined in accordance with subsections (3) and (4)”, and

(c) by the insertion of the following after subsection (2):

“(3) Subject to subsection (4), paragraph 2(2) of Schedule 16 and paragraph 4(2) of Schedule 17, the value of any trading stock falling to be valued under subsection (2)(a) shall be taken—

(a) except where the person to whom it is sold or transferred is connected with the person who makes the sale or transfer, to be the amount (in this subsection and subsection (4) referred to as ‘the price actually received for it’) realised on the sale or, as the case may be, which is in fact the value of the consideration given for the transfer, and

(b) if those persons are connected with each other, to be what would have been the price actually received for it had the sale or transfer been a transaction between independent persons dealing at arm's length.

(4) If—

(a) trading stock is sold or transferred to a person in circumstances where subsection (3)(b) would, apart from this subsection, apply for determining the value of stock so sold or transferred,

(b) the amount which would be taken in accordance with subsection (3)(b) to be the value of the stock sold or transferred to that person is more than the acquisition value of that stock and also more than the price actually received for it, and

(c) the person by whom the stock is sold or transferred includes in a return required to be delivered under section 951 for the chargeable period in which the trade is discontinued an election signed by both parties to the sale or transfer that this subsection shall apply,

then the stock so sold or transferred shall be taken to have a value equal to whichever is the greater (taking all the stock so sold or transferred together) of its acquisition value and the price actually received for it or, in a case where they are the same, to either of them.

(5) In subsection (4) ‘acquisition value’, in relation to any trading stock, means the amount which, in computing for any tax purposes the profits or gains of the discontinued trade, would have been deductible as representing the purchase price of that stock if—

(a) the stock had, immediately before the discontinuance, been sold in the course of the trade for a price equal to whatever would be its value in accordance with subsection (3)(b), and

(b) the period for which those profits or gains were to be computed began immediately before the sale.

(6) Where any trading stock falls to be valued under subsection (2)(a), the amount determined in accordance with subsections (3) and (4) to be the amount to be brought into account as the value of that stock in computing profits or gains of the discontinued trade shall also be taken, for the purpose of making any deduction in computing the profits or gains of any trade carried on by the purchaser, to be the cost of that stock to the purchaser.”.

(2) This section applies from 6 December 2000.

43 Dividend withholding tax.

43.—(1) Chapter 8A (inserted by the Finance Act, 1999) of Part 6 of the Principal Act is amended—

(a) in section 172A(1)(a)—

(i) by the insertion of the following definitions after the definition of “approved body of persons” (inserted by the Finance Act, 2000):

“‘approved minimum retirement fund’ has the same meaning as in section 784C;

‘approved retirement fund’ has the same meaning as in section 784A;”,

(ii) by the insertion of the following definition after the definition of “qualifying employee share ownership trust”:

“‘qualifying fund manager’ has the same meaning as in section 784A;”,

(iii) by the insertion of the following definition after the definition of “qualifying non-resident person”:

“‘qualifying savings manager’ has the same meaning as in section 848B (inserted by the Finance Act, 2001);”,

and

(iv) by the insertion of the following definition after the definition of “special portfolio investment account”:

“‘special savings incentive account’ has the same meaning as in section 848M (inserted by the Finance Act, 2001);”,

(b) in section 172B, by the insertion of the following after subsection (7) (inserted by the Finance Act, 2000):

“(8) This section shall not apply where a relevant distribution is made by a company resident in the State to another company so resident and the company making the relevant distribution is a 51 per cent subsidiary of that other company.”,

(c) in section 172C—

(i) in subsection (2)—

(I) in paragraph (a), by the insertion after “Schedule 2A” of “, but this paragraph is without prejudice to the operation of section 172B(8)”,

(II) by the insertion of the following after paragraph (b):

“(ba) a qualifying fund manager or a qualifying savings manager who—

(i) is receiving the relevant distribution as income arising in respect of assets held—

(I) in the case of a qualifying fund manager, in an approved retirement fund or an approved minimum retirement fund, and

(II) in the case of a qualifying savings manager, in a special savings incentive account,

and

(ii) has made a declaration to the relevant person in relation to the relevant distribution in accordance with paragraph 4A of Schedule 2A,”,

and

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

“(da) a person who—

(i) is entitled to exemption from income tax under Schedule F in respect of the relevant distribution by virtue of section 189(2), subsection (2) or (3)(b) of section 189A or section 192(2), and

(ii) has made a declaration to the relevant person in relation to the relevant distribution in accordance with paragraph 6A of Schedule 2A,”,

and

(ii) in subsection (3)—

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

(II) by the insertion of the following after paragraph (b):

“(c) a qualifying fund manager or a qualifying savings manager who receives a relevant distribution as income arising in respect of assets held—

(i) in the case of a qualifying fund manager, in an approved retirement fund or an approved minimum retirement fund, and

(ii) in the case of a qualifying savings manager, in a special savings incentive account,

and

(d) the trustees of a qualifying trust (within the meaning of section 189A) who receive a relevant distribution as income arising in respect of the trust funds (within the meaning of that section),”,

(d) in section 172D, by the deletion of subsection (1), and

(e) in section 172F(3)(a)(ii)(II), by the substitution of “paragraph 9(f)” for “subparagraphs (f) and (g) of paragraph 9”.

(2) Schedule 2A (inserted by the Finance Act, 1999) to the Principal Act is amended—

(a) by the insertion of the following after paragraph 4:

“Declaration to be made by qualifying fund manager or qualifying savings manager

4A. The declaration referred to in section 172C(2)(ba)(ii) shall be a declaration in writing to the relevant person which—

(a) is made by the person (in this paragraph referred to as the ‘declarer’) beneficially entitled to the relevant distribution in respect of which the declaration is made,

(b) is signed by the declarer,

(c) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(d) declares that, at the time the declaration is made, the person beneficially entitled to the relevant distribution is a person referred to in section 172C(2)(ba)(i),

(e) contains the name and tax reference number of the person,

(f) contains a statement that, at the time when the declaration is made, the relevant distribution in respect of which the declaration is made will be applied as income of an approved retirement fund, an approved minimum retirement fund or, as the case may be, a special savings incentive account,

(g) contains an undertaking that, if the person mentioned in paragraph (d) ceases to be an excluded person, the declarer will, by notice in writing, advise the relevant person in relation to the relevant distribution accordingly, and

(h) contains such other information as the Revenue Commissioners may reasonably require for the purposes of Chapter 8A of Part 6.”,

and

(b) by the insertion of the following after paragraph 6:

“Declaration to be made by persons entitled to exemption from income tax under Schedule F

6A. The declaration referred to in section 172C(2)(da)(ii) shall be a declaration in writing to the relevant person which—

(a) is made by the person (in this paragraph referred to as ‘the declarer’) beneficially entitled to the relevant distributions in respect of which the declaration is made,

(b) is signed by the declarer,

(c) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(d) declares that, at the time when the declaration is made, the person beneficially entitled to the relevant distribution is a person referred to in section 172C(2)(da)(i),

(e) contains the name and tax reference number of the person,

(f) contains an undertaking by the declarer that, if the person mentioned in subparagraph (d) ceases to be an excluded person, the declarer will, by notice in writing, advise the relevant person in relation to the relevant distributions accordingly, and

(g) contains such other information as the Revenue Commissioners may reasonably require for the purposes of Chapter 8A of Part 6.”.

44 Amendment of provisions relating to exploration and exploitation activities.

44.—The Principal Act is amended—

(a) in section 13 by the substitution for subsection (4) of the following:

“(4) Where exploration or exploitation activities are carried on by a person on behalf of the holder of a licence or lease granted under the Petroleum and Other Minerals Development Act, 1960, such holder shall, for the purpose of an assessment to income tax, be deemed to be the agent of that person.”,

(b) in section 567 by the substitution for subsection (3) of the following:

“(3) Where exploration or exploitation activities are carried on by a person on behalf of the holder of a licence or lease granted under the Petroleum and Other Minerals Development Act, 1960, such holder shall for the purpose of an assessment to capital gains tax be deemed to be the agent of that person.”,

and

(c) in Schedule 1 by the insertion after paragraph 6 of the following:

“Interpretation

45 Donations to approved bodies, etc.

45.—(1) Part 36 of the Principal Act is amended by the insertion of the following after section 848—

“Donations to approved bodies.

848A.—(1) (a) In this section— ‘appropriate certificate’, in relation to a relevant donation by a donor who is an individual, other than an individual referred to in subsection (7), to an approved body, means a certificate which is in such form as the Revenue Commissioners may prescribe and which contains— (i) statements to the effect that— (I) the donation satisfies the requirements of subsection (3), and (II) the donor has paid or will pay to the Revenue Commissioners income tax of an amount equal to income tax at the standard rate or the higher rate or partly at the standard rate and partly at the higher rate, as the case may be, for the relevant year of assessment on the grossed up amount of the donation, but not being— (A) income tax which the donor is entitled to charge against any other person or to deduct, retain or satisfy out of any payment which the donor is liable to make to any other person, or (B) appropriate tax within the meaning of Chapter 4 of Part 8, (ii) a statement specifying how much of the grossed up amount referred to in subparagraph (i)(II) has been or will be liable to income tax at the standard rate and the higher rate for the relevant year of assessment, and (iii) the identifying number, known as the Personal Public Service Number (PPSN), of the donor; ‘approved body’ means a body specified in Part 1 of Schedule 26A; ‘relevant accounting period’ in relation to a relevant donation means the accounting period in which the relevant donation is made; ‘relevant donation’ means a donation which satisfies the requirements of subsection (3) and takes the form of the payment by a person (in this section referred to as the ‘donor’) of a sum or sums of money amounting to at least £200 to an approved body which is made— (i) where the donor is a company, in an accounting period, and (ii) where the donor is an individual, in a year of assessment; ‘relevant year of assessment’, in relation to a relevant donation, means the year of assessment in which the relevant donation is made. (b) For the purposes of this section and in relation to a donation by a donor who is an individual (other than an individual referred to in subsection (7)), references to the grossed up amount are to the amount which after deducting income tax at the standard rate or the higher rate or partly at the standard rate and partly at the higher rate, as the case may be, for the relevant year of assessment leaves the amount of the donation. (c) This section shall be construed together with Schedule 26A. (2) Where it is proved to the satisfaction of the Revenue Commissioners that a person has made a relevant donation the provisions of subsection (4), subsection (7) or subsection (9), as the case may be, shall apply. (3) A donation will satisfy the requirements of this section if— (a) it is not subject to a condition as to repayment, (b) neither the donor nor any person connected with the donor receives a benefit in consequence of making the donation, either directly or indirectly, (c) it is not conditional on or associated with, or part of an arrangement involving, the acquisition of property by the approved body, otherwise than by way of gift, from the donor or a person connected with the donor, (d) subject to subsection (4)— (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, (e) in respect of a donation made by an individual, the individual— (i) is resident in the State for the relevant year of assessment, (ii) has, except in the case of an individual referred to in subsection (7), given an appropriate certificate in relation to the donation to the approved body, and (iii) has, except in the case of an individual referred to in subsection (7), paid the tax referred to in such appropriate certificate and is not entitled to claim a repayment of that tax or any part of that tax. (4) Where a company makes a relevant 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 in, or (b) an expense of management deductible in computing the total profits of the company for, that accounting period. (5) A claim by a company under this section shall be made with the return required to be delivered under section 951 for the accounting period in which the relevant donation is made. (6) Where a relevant donation is made by a donor in an accounting period of a company or in a year of assessment which is less than 12 months, the amounts specified in the definition of ‘relevant donation’ shall be proportionately reduced. (7) Where a relevant donation is made to an approved body in a year of assessment by an individual who is a chargeable person (within the meaning of Part 41) for the year of assessment, the amount of the donation shall be deducted from or set off against any income of the individual chargeable to income tax for that year of assessment and tax shall where necessary be discharged or repaid accordingly, and the total income of the individual or, where the individual's spouse is assessed to income tax in accordance with section 1017, the total income of the spouse shall be calculated accordingly; but any such deduction or set-off shall not be taken into account in determining the net relevant earnings (within the meaning of section 787) of the individual or, as the case may be, the individual's spouse for the year of assessment. (8) Where a relevant donation is made to an approved body by an individual who is a chargeable person (within the meaning of Part 41) a claim under this section shall be made with the return required to be made by that individual under section 951 for the year of assessment in which the donation is made. (9) Where a donation is a relevant donation made by a donor who is an individual (other than an individual referred to in subsection (7) to an approved body, the Tax Acts shall apply in relation to the approved body as if— (a) the grossed up amount of the donation were an annual payment which was the income of the approved body received by it under deduction of tax, in the amounts and at the rates specified in the statement referred to in paragraph (ii) of the definition of ‘appropriate certificate’ for the relevant year of assessment, and (b) the provisions of those Acts which apply in relation to a claim to repayment of tax applied in relation to any claim to repayment of such tax by an approved body; but, if the total amount of the tax referred to in paragraph (ii) of the definition of ‘appropriate certificate’ is not paid, the amount of any repayment which would otherwise be made to an approved body in accordance with this section shall not exceed the amount of tax actually paid by the donor. (10) The details contained in an appropriate certificate shall be given by the approved body to the Revenue Commissioners in an electronic format approved by the Revenue Commissioners in connection with the making of a claim to repayment of tax to which subsection (9)(b) refers and where it is so given it shall be accompanied by a declaration made by the approved body, on a form prescribed or authorised for that purpose by the Revenue Commissioners, to the effect that the details are correct and complete. (11) Where the Revenue Commissioners are satisfied that an approved body does not have the facilities to give the details contained in an appropriate certificate in the electronic format referred to in subsection (10), such details shall be given in writing in a form prescribed or authorised by the Revenue Commissioners and shall be accompanied by a declaration made by the approved body to the effect that the claim is correct and complete. (12) Section 764 shall apply as if subsection (1)(b) were deleted and subsection (2) shall be construed accordingly. (13) Section 88, 484, 485, 485A, 485B, 486, 486A and 767, subparagraphs (ii) and (iii) of subsection (1)(b), and subsection (3), of section 792 and section 848 are repealed. (14) Where any body to which Part 2 or Part 3 of Schedule 26A relates has been approved or is the holder of an authorisation, as the case may be, under any enactment and, that approval or authorisation has not been withdrawn on the day prior to the coming into operation of this section, such body shall be deemed to be an approved body for the purposes of this section.”.

(2) Chapter 1 of Part 15 of the Principal Act is amended by the substitution in Part 2 of the Table to section 458 of “section 848A(7)” for “section 485A(4)”.

(3) In respect of a donation made on or after 1 January 2002, m“relevant donation” in subsection (1)(a) of section 848A of the Principal Act (inserted by subsection (1)) is amended by the substitution of “€250” for “£200”.

(4) The Principal Act is amended by the insertion of the following after Schedule 26:

“Section 848A.	SCHEDULE 26A PART 1
List of approved bodies for the purposes of section 848A 1. A body approved for education in the arts in accordance with Part 2. 2. A body approved as an eligible charity in accordance with Part 3. 3. An institution of higher education within the meaning of section 1 of the Higher Education Authority Act, 1971, or any body established in the State for the sole purpose of raising funds for such an institution. 4. 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 or any body established in the State for the sole purpose of raising funds for such an institution. 5. An institution of higher education in the State which provides courses which are validated by the Higher Education Training and Awards Council under the provisions of the Qualifications (Education and Training) Act, 1999. 6. An institution or other body in the State which provides primary education up to the end of sixth standard, based on a programme prescribed or approved by the Minister for Education and Science. 7. An institution or other body in the State which provides post-primary education up to the level of either or both the Junior Certificate and the Leaving Certificate based on a programme prescribed or approved by the Minister for Education and Science. 8. STEIF which is the Scientific and Technological Education (Investment) Fund established under the Scientific and Technological Education (Investment) Fund Act, 1997 (as amended by the Scientific and Technological Education (Investment) Fund (Amendment) Act, 1998). 9. The company incorporated under the Companies Acts, 1963 to 1990, on 20 September 1990 as First Step Limited. 10. The Malting Research Committee of the Irish Malters Association. 11. The European Research Institute of Ireland. 12. The Equine Foundation. 13. The Dun Research Foundation. 14. The Institute of Ophthalmology. 15. The Mater College for Research and Postgraduate Education. 16. St. Luke's Institute of Cancer Research. 17. A body to which section 209 applies which is a body for the promotion of the observance of the Universal Declaration of Human Rights or the implementation of the European Convention for the Protection of Human Rights and Fundamental Freedoms or both the promotion of the observance of that Declaration and the implementation of that Convention. 18. The Foundation for Investing in Communities Limited or any of its 90 per cent subsidiaries as may be approved for the purposes of this Schedule by the Minister for Finance.
	PART 2
	Approval of a body for education in the arts
1. In this Part— ‘approved body’ means any body or institution in the State which may be approved of by the Minister for Finance and which— (a) provides in the State any course one of the conditions of entry to which is related to the results of the Leaving Certificate Examination, a matriculation examination of a recognised university in the State or an equivalent examination held outside the State, or (b)(i) is established on a permanent basis solely for the advancement wholly or mainly in the State of one or more approved subjects, (ii) contributes to the advancement of that subject or those subjects on a national or regional basis, and (iii) is prohibited by its constitution from distributing to its members any of its assets or profits; ‘approved subject’ means— (a) the practice of architecture, (b) the practice of art and design, (c) the practice of music and musical composition, (d) the practice of theatre arts, (e) the practice of film arts, or (f) any other subject approved of for the purpose of this Part by the Minister for Finance. 2. (a) The Minister for Finance may, by notice in writing given to the body or institution, as the case may be, withdraw the approval of any body or institution for the purposes of this Part, and on the giving of the notice the body or institution shall cease to be an approved body from the day after the date of the notice referred to in subparagraph (b). (b) Where the Minister for Finance withdraws the approval of any body or institution for the purposes of this Part, notice of its withdrawal shall be published as soon as may be in Iris Oifigiúil.
	PART 3
	Approval of body as eligible charity
1. In this Part— ‘authorisation’ shall be construed in accordance with paragraph 3; ‘eligible charity’ means any body in the State that is the holder of an authorisation that is in force. 2. Subject to paragraph 3, the Revenue Commissioners may, on application to them by a body in the State, and on the furnishing of the body to the Revenue Commissioners of such information as they may reasonably require for the purpose of their functions under this Part, issue to the body a document (in this Part referred to as ‘an authorisation’) stating that the body is an eligible charity for the purposes of this Part. 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 paragraph 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 Part, and (e) it complies with such conditions, if any, as the Minister for Social, Community and Family Affairs may, from time to time, specify for the purposes of this Part. 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 paragraph 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 paragraph 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.”.

46 Amendment of section 665 (interpretation (Chapter 2)) of Principal Act.

46.—Section 665 of the Principal Act is amended by the deletion of the definition of “person”.

47 Amendment of section 666 (deduction for increase in stock values) of Principal Act.

47.—(1) Section 666 of the Principal Act is amended by the substitution of the following for subsection (4):

“(4) (a) A deduction shall not be allowed under this section in computing a company's trading income for any accounting period which ends on or after the 31 December 2002.

(b) Any deduction allowed by virtue of this section in computing the profits or gains of the trade of farming for an accounting period of a person other than a company shall not apply for any purpose of the Income Tax Acts for any year of assessment later than the year 2002.”.

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

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

48.—(1) Section 667 of the Principal Act is amended in paragraph (b) of subsection (2) by the substitution of the following for subparagraph (ii):

“(ii) on or after 6 April 1995 and before 31 December 2002, for the year of assessment in which the individual becomes a qualifying farmer and for each of the 3 immediately succeeding years of assessment.”.

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

49 Amendment of section 668 (compulsory disposal of livestock) of Principal Act.

49.—Section 668 of the Principal Act is amended by the substitution of the following for the definition of “stock to which this section applies”:

“‘stock to which this section applies’ means—

(a) all cattle forming part of the trading stock of the trade of farming, where such cattle are compulsorily disposed of on or after 6 April 1993, under any statute relating to the eradication or control of diseases in livestock, and for the purposes of this section all cattle shall be regarded as compulsorily disposed of where, in the case of any disease eradication scheme relating to the eradication or control of brucellosis in livestock, all eligible cattle for the purposes of any such scheme, together with such other cattle as are required to be disposed of, are disposed of, or

(b) animals and poultry of a kind specified in Parts I and II, respectively, of the First Schedule to the Diseases of Animals Act, 1966, forming part of the trading stock of the trade for farming, where all animals or poultry of the particular kind forming part of that trade of farming are disposed of on or after 6 December 2000, in such circumstances that compensation is paid by the Minister for Agriculture, Food and Rural Development in respect of that disposal.”.

50 Amendment of section 310 (allowances in respect of certain contributions to capital expenditure of local authorities) of Principal Act.

50.—(1) Section 310 of the Principal Act is amended—

(a) by the insertion of the following after the definition of “approved scheme”:

“‘local authority’, means the council of a county or the corporation of a county or other borought or the council of an urban district;”,

(b) by the substitution of the following for subsection (2)—

“(2) Where a person, for the purposes of a trade carried on or to be carried on by the person, contributes a capital sum to capital expenditure incurred by a local authority on or after 15 February 2001 on the provision of an asset to be used for the purposes of—

(a) an approved scheme, in so far as the scheme relates to the treatment of trade effluents, or

(b) the supply of water under an agreement in writing between the person and the local authority.

then, such allowances, if any, shall be made to the person under section 272 or 284 as would have been made to the person if the capital sum contributed in the chargeable period or its basis period had been expenditure on the provision for the purposes of that trade of a similar asset and that asset had continued at all material times to be in use for the purposes of the trade.”,

and

(c) by the insertion of the following after subsection (2):

“2(A) Where, by virtue of subsection (2), a person is entitled to an allowance under section 284, then, for the purposes of determining the amount of wear and tear allowances to be made for any chargeable period or its basis period for the purposes of this section, section 284 shall apply as if the reference in paragraph (aa) (inserted by the Finance Act, 2001) of subsection (2) of that section to ‘20 per cent of the actual cost of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by means of renewal, improvement or reinstatement’ were a reference to ‘20 per cent of the capital sum contributed in the chargeable period or its basis period’.”.

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

51 Wear and tear allowances for licences for public hire vehicles.

51.—The Principal Act is amended by the insertion of the following after section 286:

“286A.—(1) In this section—

‘licence’ means a taxi licence or a wheelchair accessible taxi licence granted in respect of a small public service vehicle by a licensing authority in accordance with the Road Traffic (Public Service Vehicles) Regulations, 1963 to 2000, made under section 82 of the Road Traffic Act, 1961, as amended by section 57 of the Road Traffic Act, 1968;

‘qualifying expenditure’ means—

(a) capital expenditure incurred on the acquisition of a licence on or before 21 November 2000 and for the purposes of this section, where capital expenditure is so incurred it shall be deemed to have been incurred on 21 November 1997 or, if later, on the day on which the trade commenced, or

(b) where a licence formed part of an inheritance taken by an individual on or before 21 November 2000 and inheritance tax or probate tax was paid in relation to that licence, an amount equal to the open market value of the licence used for the purpose of inheritance tax or probate tax if that amount is greater than the amount of the capital expenditure incurred on the acquisition of the licence and, where this paragraph applies, the first-mentioned amount shall be deemed to have been capital expenditure incurred on the acquisition of a licence on 21 November 1997 or, if later, on the date on which the trade commenced;

‘qualifying trade’, means a trade carried on by an individual which consists of the carriage of members of the public for reward in a vehicle in respect of which a licence has been granted but excluding any trade or part of a trade which consists of the letting of such a vehicle.

(2) (a) Where an individual carrying on a qualifying trade proves to have incurred qualifying expenditure, then, for the purposes of this Chapter, other than sections 298 and 299, and for the purposes of Chapter 4 of this Part—

(i) the licence shall, subject to paragraph (c), be treated as machinery or plant,

(ii) such machinery or plant shall be treated as having been provided for the purposes of the trade, and

(iii) for so long as the individual is entitled to the licence, that machinery or plant shall be treated as belonging to that individual.

(b) Where an individual who has incurred qualifying expenditure carries on a qualifying trade and uses a vehicle, being the vehicle to which the machinery or plant referred to in paragraph (a) relates, partly for letting to another person and partly for the purposes of the qualifying trade, the machinery or plant shall be deemed for the purposes of section 284(1) to be used only for the purposes of the qualifying trade.

(c) Notwithstanding paragraph (a), where an individual who has incurred qualifying expenditure in relation to more than one licence carries on a qualifying trade and lets more than one of the vehicles, which are used for the purposes of the trade, being the vehicles to which the machinery or plant referred to in paragraph (a) relates, to another person or persons for use also by that other person or persons, paragraph (a) shall apply in respect of so much of that machinery or plant as relates to one licence only (in this section referred to as ‘the relevant licence’).

(3) Where an individual who is not, apart from this subsection, entitled to allowances under this Chapter by virtue of this section, becomes the beneficial owner of a licence on the death of his or her spouse, and that spouse—

(a) had incurred qualifying expenditure in respect of the licence, and

(b) had carried on a qualifying trade,

then, for the purposes of this section, if the individual lets the vehicle to which the licence relates, or lets the licence, for use for the purposes of a qualifying trade carried on by another person—

(i) the individual shall be deemed to have incurred the qualifying expenditure in respect of the licence,

(ii) that licence shall be treated as machinery or plant, and

(iii) the letting of that vehicle or of that licence by the individual shall be deemed to be a qualifying trade carried on by the individual which commenced on the date of the first letting of that vehicle,

but this subsection shall apply in relation to an individual as respects one licence only.

(4) In determining what capital allowances are to be made in taxing the trade of an individual to which subsection (2) refers for any year of assessment, section 284(2)(aa) (inserted by the Finance Act, 2001) shall apply—

(a) as if the machinery or plant to which subsection (2) refers were machinery or plant to which section 284(2)(aa) applies, and

(b) as if the reference to ‘on or after 1 January 2001’ in section 284(2)(aa) were a reference to ‘on 21 November 1997’.

(5)(a) This subsection shall apply to an individual to whom paragraph (b) or (c) of subsection (2) relates who lets a vehicle to which subsection (2)(b) relates or a vehicle relating to a relevant licence.

(b) Notwithstanding section 381, where relief is claimed under that section in respect of a loss sustained in a qualifying trade, the amount of that loss, in so far as by virtue of section 392 it is referable to an allowance under this section, shall be treated for the purposes of subsections (1) and (3)(b) of section 381 as reducing income only from a letting to which paragraph (a) refers and shall not be treated as reducing any other income.

(6) Subsection (7) of section 953 shall apply to an excess, referred to in that subsection, arising by virtue of an allowance made under this section as if the reference in paragraph (a)(ii) of that subsection to ‘section 438(4)’ were a reference to this section.

(7) This section shall be deemed to have come into operation as on and from 6 April 1997.”.

52 Wear and tear allowances for certain sea fishing boats.

52.—(1) Section 284(3A) of the Principal Act is amended—

(a) by the substitution in paragraph (a) of “6 years” for “3 years”,

(b) by the substitution in paragraph (b) of “paragraph (ba) and subsection (4)” for “subsection (4)”,

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

“(ba) Notwithstanding subsection (2), but subject to subsection (4), wear and tear allowances to be made to any person in respect of machinery or plant to which this subsection applies, and in respect of which capital expenditure is incurred on or after the date of the coming into operation of section 52 of the Finance Act, 2001, shall be made during a writing-down period of 6 years beginning with the first chargeable period or its basis period at the end of which the machinery or plant belongs to that person and is in use for the purposes of that person's trade, and shall be of an amount equal to—

(i) as respects the first year of the writing-down period, 50 per cent of the actual cost of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on that machinery or plant by means of renewal, improvement or reinstatement, and

(ii) as respects the next 5 years of the writing-down period, 20 per cent of the balance of that actual cost after the deduction of any allowance made by virtue of subparagraph (i).”,

and

(d) by the insertion in paragraph (c) of “or in subparagraph (i) or (ii), as may be appropriate, of paragraph (ba),” after “paragraph (b),”.

(2) Section 403(5A) of the Principal Act is amended by the substitution in paragraph (b)(ii) of “6 years” for “3 years”.

(3) This section shall come into operation on such day as the Minister for Finance may by order appoint.

53 Wear and tear allowances.

53.—Section 284(2) of the Principal Act is amended as respects capital expenditure incurred on or after 1 January 2001—

(a) in paragraph (a), by the insertion before “subsection (4)” of “paragraph (aa) and”,

(b) by the insertion of the following paragraph after paragraph (a):

“(aa) Notwithstanding paragraph (a), where capital expenditure is incurred on or after 1 January 2001 on the provision of—

(i) machinery or plant, other than machinery or plant to which paragraph (a)(ii) and subsection (3A) relates, or

(ii) machinery or plant to which paragraph (a)(ii) relates, other than a car within the meaning of section 286 used for qualifying purposes within the meaning of that section,

the amount of the wear and tear allowance to be made shall be an amount equal to 20 per cent of the actual cost of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by means of renewal, improvement or reinstatement.”,

and

(c) in paragraph (b), by the insertion after “subparagraph (i) or (ii) of paragraph (a)” of “or the amount specified in paragraph (aa)”.

54 Amendment of section 274 (balancing allowances and balancing charges) of Principal Act.

54.—Section 274(3) of the Principal Act is amended by the substitution for “or that consideration.” of the following:

“or that consideration; but this subsection shall not apply in the case of consideration of the type referred to in subsection (1)(a)(iv) which is received on or after 5 March 2001.”.

55 Amendment of Chapter 4 (interest payment by certain deposit takers) of Part 8 of Principal Act.

55.—Chapter 4 of Part 8 of the Principal Act is amended—

(a) in section 256(1)—

(i) by the substitution for the definition of “appropriate tax”—

(I) as on and from 6 April 2000, of the following:

“‘appropriate tax’, in relation to a payment of relevant interest, means a sum representing income tax on the amount of the payment—

(a) in the case of a relevant deposit or relevant deposits held in a special savings account, at the rate of 20 per cent,

(b) subject to paragraph (c), in the case of any other relevant deposit, at the standard rate in force at the time of payment, and

(c) in the case of a relevant deposit, being a deposit made on or after 23 March 2000, other than a relevant deposit—

(i) referred to in paragraph (a), or

(ii) the interest in respect of which is payable annually or at more frequent intervals, or

(iii) which is a specified deposit within the meaning of section 260,

at a rate determined by the formula—

(S + 3) per cent

where S is the standard rate per cent (within the meaning of section 4(1)) in force at the time of payment;”,

and

(II) as on and from 6 April 2001, of the following:

“‘appropriate tax’, in relation to a payment of relevant interest, means a sum representing income tax on the amount of the payment—

(a) in the case of interest paid in respect of a relevant deposit or relevant deposits held in a special savings account, at the rate of 20 per cent,

(b) subject to paragraph (c), in the case of interest paid in respect of any other relevant deposit, at the standard rate in force at the time of payment, and

(c) in the case of interest paid in respect of a relevant deposit, being a deposit made on or after 23 March 2000, other than interest which is—

(i) referred to in paragraph (a), or

(ii) payable annually or at more frequent intervals, or

(iii) specified interest within the meaning of section 260,

at a rate determined by the formula—

(S + 3) per cent

where S is the standard rate per cent (within the meaning of section 4(1)) in force at the time of payment;”,

(ii) by the substitution for the definition of “deposit”, as respects a deposit made on or after 6 April 2001, of the following:

“‘deposit’ means a sum of money paid to a relevant deposit taker on terms under which it, or any part of it, may be repaid with or without interest and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person to whom it is made, notwithstanding that the amount to be repaid may be to any extent linked to or determined by changes in a stock exchange index or any other financial index;”,

(iii) by the substitution for the definition of “interest”, as respects a deposit made on or after 6 April 2001, of the following:

“‘interest’ means any interest of money whether yearly or otherwise, including any amount, whether or not described as interest, paid in consideration of the making of a deposit, and, as respects—

(a) a deposit, where the amount to be repaid may be to any extent linked to or determined by changes in a stock exchange index or any other financial index, includes any amount which is or is to be repaid over and above the amount of the deposit,

(b) a building society, includes any dividend or other distribution in respect of shares in the society,

but any amount consisting of an excess of the amount received on the redemption of any holding of A.C.C. Bonus Bonds — First Series, issued by ACC Bank plc, over the amount paid for the holding shall not be treated as interest for the purposes of this Chapter,”,

and

(iv) in the definition of “special savings account” by the substitution for “on or after the 1st day of January, 1993” of “on or after 1 January 1993 and before 6 April 2001”,

(b) in section 258(9)(c), as on and from 6 April 1997, by the substitution for “Subsections 2 and 4” of “Subsections 2 to 4”,

(c) in section 261(c)(i)(II) by the substitution for “paragraph (b) or the definition” of “paragraph (b) of the definition”, and

(d) in section 265(2)(e) by the substitution for “true and correct” of “true and correct; but in the case of a company no such certificate shall be required where the declarer includes a written statement, as part of the declaration to the relevant deposit taker, confirming that the company has availed of the exemption under Part III of the Companies (Amendment) (No. 2) Act, 1999”.

56 Amendment of section 838 (special portfolio investment accounts) of Principal Act.

56.—Section 838 of the Principal Act is amended—

(a) in subsection (1)—

(i) in the definition of “special portfolio investment account” by the substitution for “on or after the 1st day of February, 1993” of “on or after 1 February 1993 and before 6 April 2001”, and

(ii) by the deletion of the definition of “relevant period”,

and

(b) in subsection (2)—

(i) by the deletion of paragraph (c), and

(ii) in paragraph (g) by the substitution for “on or after the 1st day of February, 1996” of “on or after 1 February 1996 and before 31 December 2000”.

57 Taxation of certain savings in credit unions and other financial institutions.

57.—(1) The Principal Act is amended—

(a) in Part 8—

(i) in section 256(1)—

(I) by the substitution for paragraph (a) of the definition of “appropriate tax” of the following:

“(a) in the case of interest paid in respect of a relevant deposit or relevant deposits held in—

(i) a special savings account, or

(ii) a special term account,

at the rate of 20 per cent,”,

(II) by the insertion after the definition of “building society” of the following:

“‘credit union’ means a society registered under the Credit Union Act, 1997, including a society deemed to be so registered under section 5(3) of that Act;”,

(III) by the insertion after the definition of “interest” of the following:

“‘long term account’ means an account opened by an individual with a relevant deposit taker on terms under which the individual has agreed that each relevant deposit held in the account is to be held in the account for a period of not less than 5 years;

‘medium term account’ means an account opened by an individual with a relevant deposit taker on terms under which the individual has agreed that each relevant deposit held in the account is to be held in the account for a period of not less than 3 years;”,

(IV) by the insertion in the definition of “relevant deposit taker” after paragraph (c) of the following:

“(ca) a credit union,”,

(V) by the substitution for the definition of “relevant interest” of the following:

“‘relevant interest’ means, subject to section 261A, interest paid in respect of a relevant deposit;”,

(VI) by the substitution in paragraph (b) of the definition of “special savings account” of “deposit taker;” for “deposit taker.”, and

(VII) by the insertion after the definition of “special savings account” of the following:

“‘special term account’ means—

(a) a medium term account, or

(b) a long term account,

being an account in which a relevant deposit or relevant deposits made by an individual is or are held and in respect of which—

(i) the conditions specified in section 264A(1) are satisfied, and

(ii) a declaration of the kind mentioned in section 264A(2) has been made to the relevant deposit taker.”,

(ii) by the insertion after section 261 of the following:

“Taxation of interest on special term accounts.

261A.—(1) Where interest is paid by a relevant deposit taker in respect of a relevant deposit held in a special term account, such interest shall be relevant interest for the purposes of this Chapter only to the extent provided for in this section. (2) Interest paid in a year of assessment in respect of a relevant deposit held in a medium term account shall be relevant interest only to the extent that such interest exceeds £278. (3) Interest paid in a year of assessment in respect of a relevant deposit held in a long term account shall be relevant interest only to the extent that such interest exceeds £370. (4) Where an individual opens a medium term account, the individual may subsequently make an election in writing to the relevant deposit taker to have the account converted to a long term account. (5) Where an election is made in accordance with subsection (4), interest paid in a year of assessment which commences on or after the date the election is made shall be relevant interest only to the extent that such interest exceeds £370. (6) Subject to subsection (8), section 261 shall apply in relation to any relevant interest paid in respect of a relevant deposit held in a special term account, as if the following paragraph were substituted for paragraph (c) of that section: ‘(c) the amount of any payment of relevant interest paid in respect of any relevant deposit held in a special term account shall not, except for the purposes of a claim to repayment under section 267(3) in respect of the appropriate tax deducted from such relevant interest, be reckoned in computing total income for the purposes of the Income Tax Acts;’. (7) An account shall cease to be a special term account if any of the conditions specified in section 264A(1) cease to be satisfied, and where that occurs— (a) all interest paid on or after the occurrence in respect of relevant deposits held in the account shall be relevant interest, (b) all interest (in this paragraph referred to as ‘past interest’) paid prior to the occurrence, in respect of relevant deposits held in the account, shall be treated by the relevant deposit taker as relevant interest to the extent that such interest has not already been treated as relevant interest, and— (i) the provisions of section 257(1) shall apply as if the payment of past interest was being made on the date of the occurrence, and (ii) where on that date the past interest has already been withdrawn from the account— (I) the relevant deposit taker shall deduct from the relevant deposits held in the account on that date, an amount equal to the amount of the appropriate tax which would have been deducted from the past interest under subparagraph (i), but for the withdrawal, and such amount shall be treated as appropriate tax, and (II) the provisions of paragraphs (b) and (c) of section 257(1) shall apply to such deduction as they apply to a deduction from relevant interest. (8) Subsection (6) shall not apply to any interest in respect of any relevant deposit held in the account which is paid, or by virtue of subsection (7) treated as paid, on or after the date on which the account ceases to be a special term account.”,

(iii) in section 261A (as inserted by subparagraph (ii)), as respects the year of assessment 2002 and subsequent years of assessment, by the substitution—

(I) in subsection (2) of “€480” for “£278”, and

(II) in subsections (3) and (5) of “€635” for “£370”,

(iv) by the insertion after section 264 of the following:

“Conditions and declarations relating to special term accounts.	264A.—(1) The following are the conditions referred to in subparagraph (i) of the definition of ‘special term account’ in section 256(1): (a) the account shall be opened and designated by the relevant deposit taker as a medium term account or, as the case may be, a long term account; (b) the account shall not be denominated in a foreign currency; (c) the account shall not be connected with any other account held by the account holder or any other person; and for this purpose an account shall be connected with another account if— (i) (I) either account was opened with reference to the other account, or with a view to enabling the other account to be opened on particular terms, or with a view to facilitating the opening of the other account on particular terms, and (II) the terms on which either account was opened would have been significantly less favourable to the account holder if the other account had not been opened, or (ii) the terms on which either account is operated are altered or affected in any way whatever because of the existence of the other account; (d) all relevant deposits held in the account shall be subject to the same terms; (e) there shall not be any agreement, arrangement or understanding in existence, whether express or implied, which influences or determines, or could influence or determine, the rate (other than an unspecified and variable rate) of interest which is paid or payable, in respect of the relevant deposit or relevant deposits held in the account, in or in respect of any period which is more than 12 months; (f) interest paid or payable in respect of the relevant deposit or relevant deposits held in the account shall not directly or indirectly be linked to or determined by any change in the price or value of any shares, stocks, debentures or securities listed on a stock exchange or dealt in on an unlisted securities market; (g) the account shall not be opened by or held in the name of an individual who is under 16 years of age; (h) the account shall be opened by and held in the name of the individual beneficially entitled to the relevant interest payable in respect of the relevant deposit or relevant deposits held in the account; (i) the account may be held jointly by not more than 2 individuals; (j) subject to paragraph (k), an individual shall not simultaneously hold, whether solely or jointly, another special term account; (k) where the account is held jointly by individuals who are married to each other they may simultaneously hold one other such account jointly; (l) subject to paragraphs (m) and (n), the amount of a deposit or the aggregate amount of deposits which may be made to an account in any one month shall not exceed £500; (m) at the time an individual opens an account with a relevant deposit taker, a deposit consisting of all or part of the relevant deposits of the individual which are at that time held by the same relevant deposit taker, may be transferred to the account; (n) otherwise than by way of a transfer under paragraph (m), a deposit of not more than £6,000 may be made by an individual once and only once to an account during the period in which the account is a special term account; (o) any interest credited to the account by the relevant deposit taker shall not be treated as a deposit for the purposes of paragraph (l) or (p), but such interest may not be withdrawn from the account, otherwise than in accordance with paragraph (q), unless the withdrawal is made within the period of 12 months from the date it was so credited; (p) subject to paragraph (q), a deposit may not be withdrawn from an account held by an individual within— (i) 3 years from the date the deposit was made, in the case of a medium term account, and (ii) 5 years from the date the deposit was made, in the case of a long term account, otherwise than on the death of the individual or, where the account is an account held jointly by 2 individuals, on the death of one of them; (q) one and only one withdrawal may be made from an account by an individual who is 60 years of age or over on the date of the withdrawal, provided that the account was opened when the individual was under that age. (2) The declaration referred to in subparagraph (ii) of the definition of ‘special term account’ in section 256(1) shall be a declaration in writing to a relevant deposit taker which— (a) is made by the individual (in this subsection referred to as ‘the declarer’) who holds the account in respect of which the declaration is made is payable, (b) is signed by the declarer, (c) is made in such form as may be prescribed or authorised by the Revenue Commissioners, (d) declares that at the time when the declaration is made the conditions referred to in paragraphs (g), (h), (j) and (k) of subsection (1) are satisfied in relation to the account in respect of which the declaration is made, (e) contains the full name and address of the declarer, (f) contains an undertaking by the declarer that, if the conditions referred to in paragraphs (g), (h), (j) and (k) of subsection (1) cease to be satisfied in respect of the account in respect of which the declaration is made, the declarer will notify the relevant deposit taker accordingly, and (g) contains such other information as the Revenue Commissioners may reasonably require for the purposes of this Chapter. (3) Section 263(2) shall apply as respects declarations of the kind mentioned in this section as it applies as respects declarations of the kind mentioned in that section.
Returns of special term accounts by relevant deposit takers.	264B.—(1) In this section ‘appropriate inspector’ means— (a) the inspector who has last given notice in writing to the relevant deposit taker that he or she is the inspector to whom the relevant deposit taker is required to deliver the return referred to in subsection (2), or (b) where there is no such inspector as is referred to in paragraph (a), the inspector of returns specified in section 950. (2) On or before 31 March in each year of assessment, every relevant deposit taker shall prepare and deliver to the appropriate inspector a return, in such form as may be prescribed or authorised by the Revenue Commissioners specifying— (a) the name and address of the holder or holders, as the case may be, of each special term account which was opened during the previous year of assessment, (b) whether such account is a medium term account or a long term account, and (c) the date of opening of such account. (3) Sections 1052 and 1054 shall apply to a failure by a relevant deposit taker to deliver a return required by subsection (2) and to each and every such failure, as they apply to a failure to deliver a return referred to in section 1052.”,
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(v) in section 264A(1) (inserted by subparagraph (iv)), as respects the year of assessment 2002 and subsequent years of assessment, by the substitution—

(I) in paragraph (l) of “€635” for “£500”, and

(II) in paragraph (n) of “€7,620” for “£6,000”,

(vi) by the insertion after Chapter 4 of the following:

Dividend Payments by Credit Unions