Finance Act 2009

PART 1 Income Levy, 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 Levy

2. Income levy.

2.— (1) The Principal Act is amended—

(a) in section 531A(1) by substituting the following for the definition of “ aggregate income”:

“ ‘aggregate income for the year of assessment’, in relation to an individual and a year of assessment, means the aggregate of the individual’s relevant emoluments in the year of assessment, including relevant emoluments that are paid in whole or in part for a year of assessment other than the year of assessment during which the payment is made, and relevant income for the year of assessment;”,

(b) in section 531B in paragraph (b) of the Table to subsection (1) by substituting the following for all of the words from “The income described in this paragraph” to “in accordance with the Income Tax Acts and—”:

“The income described in this paragraph, to be known as ‘relevant income’, is income, without regard to any amount deductible from or deductible in computing total income, from all sources as estimated in accordance with the Tax Acts, other than relevant emoluments, social welfare payments and similar type payments and excluded emoluments, and—”,

(c) in section 531B in paragraph (b)(iii) of the Table to subsection (1) by deleting “and”,

(d) in section 531B in paragraph (b)(iv) of the Table to subsection (1) by substituting “such payment,” for “such payment.”,

(e) in section 531B in paragraph (b) of the Table to subsection (1) by inserting the following after subparagraph (iv):

“(v) disregarding expenses, in respect of which an employee may be entitled to relief from income tax, which fall within Regulation 10(3) of the PAYE Regulations,

(vi) having regard to any relief arising under subsection (5)(a) of section 201, and paragraphs 6 and 8 of Schedule 3 in respect of payments chargeable to tax under section 123, and

(vii) excluding relevant emoluments of an individual who is resident in a territory with which arrangements have been made under section 826(1)(a)(i) in relation to affording relief from double taxation, where those emoluments are the subject of a notification issued under section 984(1).”,

(f) in section 531B(2) by substituting the following for paragraph (a):

“(a) subject to subsection (3), proves to the satisfaction of the Revenue Commissioners that his or her aggregate income for the year of assessment does not exceed €15,028,”,

(g) in section 531B by inserting the following after subsection (2):

“(3) For the purposes of determining an individual’s aggregate income for the year of assessment 2009 for the purposes of subsection (2)(a), any payment of relevant emoluments from which income levy was not deducted by an employer, made in the period from 1 January 2009 to 30 April 2009, to which the appropriate portion of €18,304 was applied in that period, shall be disregarded.

(4) (a) This subsection applies to emoluments paid to an individual in the period 1 January 2009 to 30 April 2009 in the form of any taxable ex-gratia payment made on the occasion of the redundancy of that individual, which is chargeable to income tax under the provisions of section 123.

(b) Notwithstanding any other provision of this Part and subject to paragraph (c), to the extent that emoluments are emoluments to which this subsection applies, those emoluments—

(i) shall be charged to income levy for the year of assessment 2009 at the rate of—

(I) 1 per cent on the first €100,100 of such emoluments,

(II) 2 per cent on the next €150,020 of such emoluments, and

(III) 3 per cent on the remainder of such emoluments,

and

(ii) shall not be reckoned in computing relevant emoluments for that year for any other purpose of this Part.

(c) This subsection shall not apply to emoluments paid to an individual if that individual so elects by notice in writing to an inspector after the end of the year of assessment 2009.”,

(h) by substituting the following for section 531C:

“Rate of charge.

531C.— (1) For the year of assessment 2009, an individual shall be charged to income levy on the individual’s aggregate income for the year of assessment at the rates specified in the Table to this subsection.

TABLE

	Part of aggregate income	Rate of income levy
	The first €75,036	1.67%
	The next €25,064	3%
	The next €74,880	3.33%
	The next €75,140	4.67%
	The remainder	5%

(2) For the year of assessment 2010, and subsequent years of assessment, an individual shall be charged to income levy on the individual’s aggregate income for the year of assessment at the rates specified in the Table to this subsection.

TABLE

	Part of aggregate income	Rate of income levy
	The first €75,036	2%
	The next €99,944	4%
	The remainder	6%

.”,

(i) in section 531D by substituting the following for subsection (2):

“(2) (a) As respects any payment of relevant emoluments made to or on behalf of an employee in the period beginning on 1 January 2009 and ending on 30 April 2009, income levy shall be deducted from such emoluments by the employer at any or all of the following rates—

(i) 1 per cent where the amount of the relevant emoluments does not exceed €1,925, in the case where the period in respect of which the payment is being made is a week, or a corresponding amount, where the period is greater or less than a week,

(ii) 2 per cent on the amount of the excess where the amount of relevant emoluments exceeds €1,925, but does not exceed €4,810, in the case where the period in respect of which the payment is being made is a week, or a corresponding amount, where the period is greater or less than a week,

(iii) 3 per cent on the amount of the excess where the amount of relevant emoluments exceeds €4,810, in the case where the period in respect of which the payment is being made is a week, or a corresponding amount, where the period is greater or less than a week.

(b) As respects any payment of relevant emoluments made to or on behalf of an employee on or after 1 May 2009, income levy shall be deducted from such emoluments by the employer at any or all of the following rates—

(i) 2 per cent where the amount of the relevant emoluments does not exceed €1,443, in the case where the period in respect of which the payment is being made is a week, or a corresponding amount, where the period is greater or less than a week,

(ii) 4 per cent on the amount of the excess where the amount of relevant emoluments exceeds €1,443, but does not exceed €3,365, in the case where the period in respect of which the payment is being made is a week, or a corresponding amount, where the period is greater or less than a week,

(iii) 6 per cent on the amount of the excess where the amount of relevant emoluments exceeds €3,365, in the case where the period in respect of which the payment is being made is a week, or a corresponding amount, where the period is greater or less than a week.”,

and

(j) by substituting the following for section 531H:

“Assessment, collection, payment and recovery of income levy on aggregate income for the year of assessment.

531H.— (1) Income levy payable for a year of assessment in respect of aggregate income for the year of assessment shall be assessed, charged and paid in all respects as if it was an amount of income tax assessed and charged under the Tax Acts, but without regard to section 1017, and may be stated in one sum (in this section referred to as the ‘aggregate sum’) with the amount of income tax contained in any computation of, or assessment or assessments to, income tax made by or on the individual by whom the income levy is payable for the year of assessment.

(2) Where, but for this subsection, no assessment to income levy would be made on an individual for a year of assessment, then an officer of the Revenue Commissioners shall make an assessment to income levy on the individual to the best of the officer’s judgement of the amounts chargeable to income levy, and the provisions of the Tax Acts, including in particular those provisions relating to the assessment, collection and recovery of tax and the payment of interest on unpaid tax, shall apply as respects any assessment to income levy made on the individual by virtue of this subsection, other than any such provisions in so far as they relate to the granting of any allowance, deduction or relief.

(3) Where income levy is payable for the year of assessment 2009 in respect of aggregate income for the year of assessment, section 958 shall apply and have effect as if, in accordance with this Part, income levy had been payable for the year of assessment 2008.

(4) The Revenue Commissioners may make regulations for the purposes of the proper administration and implementation of this Part, and those regulations may, in particular and without prejudice to the generality of the foregoing, include provision for assessment, collection, recovery and repayment of income levy for any year of assessment to which this Part applies.”.

(2) This section applies for the year of assessment 2009 and subsequent years of assessment.

Chapter 3 Income Tax

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

3.— As respects the year of assessment 2009 and subsequent years of assessment, section 244 of the Principal Act is amended by inserting the following after subsection (1)—

“(1A) (a) This section shall not apply as respects interest paid on or after 1 May 2009.

(b) Notwithstanding paragraph (a), this section shall continue to apply—

(i) as respects the first 7 years of assessment for which an individual has an entitlement to relief under this section in respect of qualifying interest determined by reference to paragraph (iii) or (iv) of the definition of ‘relievable interest ’, and

(ii) as respects a period not exceeding 7 years of assessment for which an individual has an entitlement to relief under this section in respect of qualifying interest in relation to a qualifying loan.

(c) (i) Paragraph (b) shall not apply in respect of qualifying interest attributable to that part of a qualifying loan used to repay another qualifying loan (in this paragraph referred to as an ‘existing qualifying loan’) unless the qualifying interest on that existing qualifying loan would, had the existing qualifying loan not been repaid, have been interest referred to in paragraph (b)(i) or (ii).

(ii) Where subparagraph (i) applies, the number of years of assessment for which there is an entitlement to relief under this section in respect of qualifying interest attributable to that part of a qualifying loan used to repay the existing qualifying loan shall not exceed the number of years of assessment for which relief would have applied had the existing qualifying loan not been repaid.

(d) As respects the year of assessment 2009 only, the definition of ‘relievable interest’ is amended—

(i) in paragraph (i) by substituting ‘the amount of qualifying interest paid by the individual in the period 1 January 2009 to 30 April 2009 or, if less, €2,000 and the amount of qualifying interest paid by the individual in the period 1 May 2009 to 31 December 2009 or, if less, €4,000’ for ‘the amount of qualifying interest paid by the individual in the year of assessment or, if less, €6,000’, and

(ii) in paragraph (ii) by substituting ‘the amount of qualifying interest paid by the individual in the period 1 January 2009 to 30 April 2009 or, if less, €1,000 and the amount of qualifying interest paid by the individual in the period 1 May 2009 to 31 December 2009 or, if less, €2,000’ for ‘the amount of qualifying interest paid by the individual in the year of assessment or, if less, €3,000’.”.

4. Amendment of section 244A (application of section 244) of Principal Act.

4.— As respects the year of assessment 2009 and subsequent years of assessment, section 244A of the Principal Act is amended by inserting the following after subsection (6)—

“(7) (a) Notwithstanding any other enactment, an officer of the Revenue Commissioners may request a qualifying lender to provide, in such form as the Revenue Commissioners may require, such information in relation to qualifying mortgage loans granted by the qualifying lender—

(i) as will or may assist an officer of the Revenue Commissioners to determine if relief is due under section 244 for a particular year of assessment, and

(ii) as is necessary for the proper administration of this section.

(b) The qualifying lender shall comply with a request under paragraph (a) no later than—

(i) 30 days after receipt of such request, or

(ii) any extension of the period referred to in subparagraph (i) as may be agreed with an officer of the Revenue Commissioners.

(c) Information provided to the Revenue Commissioners under this subsection shall be used by them only for the purposes of section 244 and this section and, notwithstanding section 872, shall be used for no other purpose.”.

5. Amendment of section 97 (computational rules and allowable deductions) of Principal Act.

5.— Section 97 of the Principal Act is amended by inserting the following after subsection (2I):

“(2J) (a) Notwithstanding subsection (2) but subject to the other provisions of this section (including paragraph (b) of this subsection), the deduction authorised by subsection (2)(e) shall not exceed 75 per cent of the deduction that would, but for this subsection, be authorised by subsection (2)(e) in respect of interest accrued on or after 7 April 2009 on borrowed money employed in the purchase, improvement or repair of a premises which, at the time the interest accrues, is a residential premises and, for the purposes of this subsection, interest on such borrowed money shall be treated as accruing from day to day.

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

(i) borrowed money employed on the construction of a residential premises on land in which the person chargeable has an estate or interest shall, together with any borrowed money which that person employed in the acquisition of such land, be deemed to be borrowed money employed in the purchase of a residential premises, and

(ii) where a premises consists in part of residential premises and in part of premises which are not residential premises, paragraph (a) shall apply to the interest accrued on the part of the borrowed money employed in the purchase, improvement or repair of the premises that is attributable, on a just and reasonable basis, to residential premises.”.

6. Income tax: treatment of profits or gains and losses from dealing in residential development land.

6.— Part 22 of the Principal Act is amended—

(a) in section 644A by inserting the following after subsection (5):

“(6) This section shall not apply to profits or gains arising to a person in the year of assessment 2009 or in any subsequent year of assessment.”,

and

(b) by inserting the following after section 644A:

“Treatment of losses from dealing in residential development land.

644AA.— (1) In this section—

‘ adjusted income ’ for a tax year means a person’s income from all sources for the tax year after taking into account any allowance, charge, deduction or loss attributable to a specific source to which the person is entitled in taxing the income from the source or which is required to be made in taxing the person’s income from the source, but without taking into account any allowance, charge, deduction or loss to which the person is entitled, or which is required to be made, in taxing the person’s income from all sources;

‘ adjusted profits or gains ’ in relation to a trade for a tax year means the amount, if any, of the profits or gains from the trade after taking into account any allowance, charge, deduction or loss to which a person is entitled in taxing the trade or which is required to be made in taxing the trade, and references to the adjusted profits or gains from the combined trade or from the non-specified trade shall be construed accordingly;

‘ combined trade ’ means a trade comprising partly of a specified trade and partly of a non-specified trade;

‘ non-specified trade ’, in relation to a combined trade, means the activities and operations of the combined trade that are the part of the trade that is not a specified trade;

‘ relevant loss ’, in relation to a tax year, means—

(a) in the case of a specified trade, the full amount of a loss sustained in the specified trade in the tax year, and

(b) in the case of a combined trade, so much of the amount of a loss sustained in the combined trade in the tax year as is attributable to a specified trade;

‘specified trade’ means, as the case may be, a trade, or the part of a combined trade, the profits or gains, if any, of which, for a tax year before the tax year 2009, were chargeable to tax in accordance with section 644A(3) (other than by virtue of subsection (5) of that section);

‘ tax ’ means income tax;

‘ tax year ’ means a year of assessment.

(2) For the purposes of subsections (3) to (8), where a trade is a combined trade, the part of the trade which is a specified trade and the part of the trade which is a non-specified trade shall each be treated as a separate trade and where, in order to give effect to the provisions of subsections (3) to (8), an apportionment of the total amount receivable from sales made and services rendered in the course of a combined trade and of expenses incurred in that trade is required to be made, such apportionment shall be made in a manner that is just and reasonable.

(3) Where, in respect of a tax year before the tax year 2009, a claim is made by a person (in this subsection and subsections (4) to (7) referred to as the ‘ claimant ’) in accordance with subsection (6) of section 381, which claim is in respect of, or includes, a relevant loss, then, notwithstanding subsection (1) of that section, unless the claim is made to and received by the Revenue Commissioners before 7 April 2009, that subsection shall not apply to so much of the loss as is a relevant loss and the claimant shall instead be entitled as regards the relevant loss to such repayment of tax as is provided for by subsection (4).