Finance Act 2008

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. Amendment of section 15 (rate of charge) of Principal Act.

2.— As respects the year of assessment 2008 and subsequent years of assessment, section 15 of the Principal Act is amended—

(a) by substituting “€26,400” for “€25,000” (inserted by the Finance Act 2007) in subsection (3), and

(b) by substituting the following Table for the Table (as so inserted) to that section:

“TABLE

PART 1

Part of taxable income	Rate of tax	Description of rate
(1)	(2)	(3)
The first €35,400	20 per cent	the standard rate
The remainder	41 per cent	the higher rate

PART 2

Part of taxable income	Rate of tax	Description of rate
(1)	(2)	(3)
The first €39,400	20 per cent	the standard rate
The remainder	41 per cent	the higher rate

PART 3

Part of taxable income	Rate of tax	Description of rate
(1)	(2)	(3)
The first €44,400	20 per cent	the standard rate
The remainder	41 per cent	the higher rate

”.

3. Personal tax credits.

3.— (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 2008 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) the amount 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 be the amount of the tax credit specified in column (3) of the Table.

TABLE

Statutory Provision	Existing tax credit	Tax credit for the year 2008 and subsequent years
(1)	(2)	(3)
Section 461 (basic personal tax credit) (married person) (widowed person bereaved in year of assessment) (single person)	€3,520 €3,520 €1,760	€3,660 €3,660 €1,830
Section 461A (additional tax credit for certain widowed persons)	€550	€600
Section 462 (one-parent family tax credit)	€1,760	€1,830
Section 463 (widowed parent tax credit) (1st year) (2nd year) (3rd year) (4th year) (5th year)	€3,750 €3,250 €2,750 €2,250 €1,750	€4,000 €3,500 €3,000 €2,500 €2,000
Section 464 (age tax credit) (married person) (single person)	€550 €275	€650 €325
Section 465 (incapacitated child tax credit)	€3,000	€3,660
Section 466A (home carer tax credit)	€770	€900
Section 468 (blind person’s tax credit) (blind person) (both spouses blind)	€1,760 €3,520	€1,830 €3,660
Section 472 (employee tax credit)	€1,760	€1,830

(2) Section 3 (as amended by the Finance Act 2007) of the Finance Act 2002 shall have effect subject to the provisions of this section.

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

4. Age exemption.

4.— As respects the year of assessment 2008 and subsequent years of assessment, section 188 of the Principal Act is amended, in subsection (2), by substituting “€40,000” for “€38,000” (inserted by the Finance Act 2007) and “€20,000” for “€19,000” (as so inserted).

5. Cesser of exemption limits.

5.— The Principal Act is amended—

(a) in section 187 by inserting the following after subsection (4):

“(5) This section ceases to have effect on or after 1 January 2008.”,

(b) in section 188—

(i) in subsection (1) by deleting “and in section 187”,

(ii) in subsection (2) by substituting “subject to subsection (2A)” for “subject to section 187(2)”, and

(iii) by inserting the following after subsection (2)—

“(2A) (a) For the purposes of this section, where a claimant proves that he or she has living at any time during the year of assessment any qualifying child then, subject to subsection (2B), the specified amount (within the meaning of this section) shall be increased for that year of assessment by—

(i) €575 in respect of the first such child,

(ii) €575 in respect of the second such child, and

(iii) €830 in respect of each such child in excess of 2.

(b) Any question as to whether a child is a qualifying child for the purposes of this section shall be determined on the same basis as it would be for the purposes of section 462, but without regard to subsections (1)(b), (2) and (3) of that section.

(2B) Where for any year of assessment 2 or more individuals are, or but for this subsection would be, entitled under subsection (2A) to an increase in the specified amount, (within the meaning of this section) in respect of the same child, the following provisions shall apply:

(a) only one such increase under subsection (2A) shall be allowed in respect of each child;

(b) where such child is maintained by one individual only, that individual only shall be entitled to claim the increase;

(c) where such child is maintained by more than one individual, each individual shall be entitled to claim such part of the increase as is proportionate to the amount expended on the child by that individual in relation to the total amount paid by all individuals towards the maintenance of the child;

(d) in ascertaining for the purposes of this subsection whether an individual maintains a child and, if so, to what extent, any payment made by the individual for or towards the maintenance of the child which that individual is entitled to deduct in computing his or her total income for the purposes of the Income Tax Acts shall be deemed not to be a payment for or towards the maintenance of the child.”,

and

(iv) in subsection (6) by deleting “or under section 187” in both places where it occurs,

(c) in section 244(2)(c) by substituting “Except for the purpose of section 188” for “Except for the purposes of sections 187 and 188”,

(d) in section 261—

(i) in subsection (c)(i)(I) by substituting “section 188” for “section 187 or 188”, and

(ii) in subsection (c)(ii) by substituting “section 188” for “sections 187 or 188”,

(e) in section 459(6) by substituting “section 188” for “section 187 or 188”,

(f) in section 644A(3)(b) by substituting “section 188” for “sections 187 or 188”, and

(g) in section 787R(1)(b) by substituting “section 188” for “sections 187 or 188”.

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

6.— Section 473 of the Principal Act is amended, as respects the year of assessment 2008 and subsequent years of assessment, by substituting in subsection (1) the following definition for the definition of “specified limit” (inserted by the Finance Act 2007):

“ ‘ 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,

€4,000; but, if at any time during the year of assessment the individual was of the age of 55 years or over, ‘specified limit’ means €8,000, and

(b) in any other case, €2,000; but, if at any time during the year of assessment the individual was of the age of 55 years or over, ‘specified limit’ means €4,000;”.

7. Amendment of section 244 (relief for interest paid on certain home loans) of Principal Act.

7.— As respects the year of assessment 2008 and subsequent years of assessment, section 244 of the Principal Act is amended in the definition of “relievable interest” in subsection (1)(a)—

(a) by substituting “€20,000” for “€16,000” (inserted by the Finance Act 2007), and

(b) by substituting “€10,000” for “€8,000” (inserted by the Finance Act 2007).

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

8.— As respects the year of assessment 2008 and subsequent years of assessment, section 122 of the Principal Act is amended in the definition of “the specified rate” in subsection (1)(a)—

(a) by substituting “5.5 per cent” for “4.5 per cent” (inserted by the Finance Act 2007) in both places where it occurs, and

(b) by substituting “13 per cent” for “12 per cent” (inserted by the Finance Act 2007).

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

9.— Section 467 of the Principal Act is amended by inserting the following after subsection (2):

“(2A) Notwithstanding subsection (2)(a) but subject to all other provisions of this section, relief may be granted under this section in the first year in which the individual proves that either he or she or a relative of the individual was totally incapacitated by physical or mental infirmity.”.

10. Amendment of section 472C (relief for trade union subscriptions) of Principal Act.

10.— As respects the year of assessment 2008 and subsequent years of assessment, section 472C of the Principal Act is amended, in subsection (1), by substituting “€350” for “€300” (inserted by the Finance Act 2006) in the definition of “specified amount”.

11. Amendment of section 216A (rent-a-room relief) of Principal Act.

11.— As respects the year of assessment 2008 and subsequent years of assessment, section 216A of the Principal Act is amended, in subsection (5), by substituting “€10,000” for “€7,620”.

12. Amendment of Schedule 13 (accountable persons for purposes of Chapter 1 of Part 18) to Principal Act.

12.— (1) Schedule 13 to the Principal Act is amended—

(a) by substituting the following for paragraph 111:

“111. Director of the Equality Tribunal.”,

(b) by substituting the following for paragraph 114:

“114. Competition Authority.”,

(c) by substituting the following for paragraph 120:

“120. Citizens Information Board.”,

(d) by substituting the following for paragraph 143:

“143. Children Acts Advisory Board.”,

(e) by deleting paragraphs 34, 81, 86, 107, 112 and 157, and

(f) by inserting the following after paragraph 164 (inserted by the Finance Act 2007):

“165. Limerick Northside Regeneration Agency.

(2) (a) Subsection (1)(a) is deemed to have taken effect as and from 19 July 2004.

(b) Subsection (1)(b) is deemed to have taken effect as and from 1 October 1991.

(c) Subsection (1)(c) is deemed to have taken effect as and from 30 March 2007.

(d) Subsection (1)(d) is deemed to have taken effect as and from 17 July 2007.

(e) Subsection (1)(e) is deemed to have taken effect as and from 1 January 2008.

(f) Subsection (1)(f) takes effect as and from 1 May 2008.

13. Amendment of Schedule 12A (approved savings-related share option schemes) to Principal Act.

13.— (1) Schedule 12A to the Principal Act is amended in paragraph 25—

(a) in subparagraph (2)(a) by substituting “€500” for “€320”, and

(b) by deleting subparagraph (3).

(2) (a) Paragraph (a) of subsection (1) applies as respects contributions made under certified contractual savings schemes entered into on or after 1 February 2008.

(b) Paragraph (b) of subsection (1) applies as on and from 1 February 2008.

14. Amendment of section 515 (excess or unauthorised shares) of Principal Act.

14.— (1) Section 515(2A) of the Principal Act is amended in paragraph (c) by substituting “a period of at least 10 years, or such lesser period (not being less than the period referred to in paragraph (b)) as the Revenue Commissioners may allow,” for “a period of at least 10 years”.

(2) This section applies as on and from 31 January 2008.

15. Amendment of section 657 (averaging of farm profits) of Principal Act.

15.— Section 657 of the Principal Act is amended by inserting the following after subsection (10):

“(10A) Where the commencement of a partnership to which European Communities (Milk Quota) (Amendment) Regulations 2002 (S.I. No. 97 of 2002) apply, would otherwise result in the permanent discontinuation of another trade of farming then, notwithstanding subsection (10) and solely for the purposes of the application of this section, the partnership trade shall be treated as a continuation of that other trade.”.

16. Tax treatment of directors and employees who acquire convertible securities.

16.— (1) The Principal Act is amended by inserting the following after section 128B:

“128C.— (1) In this section—

‘ chargeable amount ’ has the same meaning as it has in subsection (6), computed in accordance with subsection (8);

‘ chargeable event ’ has the meaning given in subsection (7);

‘ collective investment scheme ’ means any scheme or arrangement made for the purpose, or having the effect, of providing facilities for the participation by persons, as beneficiaries, in profits or income arising from the acquisition, holding, management or disposals of assets;

‘ convertible securities ’ shall be construed in accordance with subsection (4);

‘director’ and ‘employee’ have the meanings respectively assigned to them by section 770(1);

‘ interest ’, in relation to securities, includes an interest in securities which is less than full beneficial ownership and an interest in the proceeds of the sale of them, but does not include a right to acquire securities;

‘ market value ’ shall be construed in accordance with section 548;

‘ securities ’ includes—

(a) shares,

(b) securities within the meaning of section 135,

(c) debentures, debenture stock, loan stock, bonds, certificates of deposit, and other instruments (including certificates and warrants) creating or acknowledging indebtedness, including certificates and other instruments providing for a share in the profits of a company,

(d) options (other than options to acquire securities, except where such options are acquired under arrangements of which the main purpose or one of the main purposes is the avoidance of income tax, corporation tax or capital gains tax) and financial and commodity futures (within the meaning of the Investment Intermediaries Act 1995),

(e) warrants and other instruments entitling their holders to subscribe for securities,

(f) certificates and other instruments conferring rights in respect of securities held by persons other than persons on whom the rights are conferred and the transfer of which may be effected without the consent of those persons, and

(g) units in a collective investment scheme,

but does not include cheques or other bills of exchange, bankers’ drafts or letters of credit, statements showing balances in current, deposit or savings accounts, or leases and other dispositions of property;

‘ shares ’ includes securities (within the meaning of section 135) and stock.

(2) References in this section to an employee or director acquiring securities in a company as a director or employee of that company or of another company, includes references to securities acquired by any other person by reason of the director’s or employee’s office or employment, and for this purpose ‘employment’ includes a former or prospective employment.

(3) This section applies where—

(a) an employee or director acquires securities in a company as a director or employee of that company or of another company (in this section referred to as ‘employment-related securities’), and

(b) at the time of acquisition, the securities are convertible securities or an interest in convertible securities.

(4) For the purposes of this section securities are convertible securities if—

(a) they confer on the holder an entitlement (whether immediate or deferred and whether conditional or unconditional) to convert them—

(i) into securities of a different description, or

(ii) into money or money’s worth,

or

(b) a contract, agreement, arrangement or condition—

(i) authorises or requires the grant of such an entitlement as is referred to in paragraph (a) to the holder if certain circumstances arise or do not arise, or

(ii) provides for the conversion of the securities, otherwise than by the holder, into securities of a different description or into money or money’s worth.

(5) (a) For the purposes of—