Finance Act , 1995

“qualifying lease”, in relation to a house, means, subject to section 53 (3), a lease of the house the consideration for the grant of which consists solely of—

(a) a single payment which is, or falls to be treated as, an amount by way of rent for the purposes of Chapter VI of Part IV of the Income Tax Act, 1967, or

(b) periodic payments all of which are, or fall to be treated as, amounts by way of rent for the purposes of the said Chapter VI;

“qualifying premises” means, subject to subsections (4), (5) (b), (6) and (7) of section 53, a house—

(a) which is used solely as a dwelling,

(b) the total floor area of which—

(i) is not less than 30 square metres and not more than 125 square metres in the case where the house is a separate self-contained flat or maisonette in a building of two or more storeys, or

(ii) is not less than 35 square metres and not more than 125 square metres in any other case,

(c) in respect of which there is in force a certificate of reasonable cost the amount specified in which in respect of the cost of conversion in relation to the house to which the certificate relates is not less than the expenditure actually incurred on such conversion, and

(d) which, without having been used subsequent to the incurring of the expenditure on the conversion, is first let in its entirety under a qualifying lease and thereafter throughout the remainder of the relevant period (save for reasonable periods of temporary disuse between the ending of one qualifying lease and the commencement of another such lease) continues to be let under such a lease;

“relevant period”, in relation to a qualifying premises, means the period of 10 years beginning with the date of the first letting of the premises under a qualifying lease.

(2) For the purposes of this section, expenditure incurred on conversion of a building shall be deemed to include expenditure incurred, in the course of the conversion, on either or both the following, that is to say:

(a) the carrying out of works of construction, reconstruction, repair or renewal, and

(b) the provision or improvement of water, sewerage or heating facilities,

in relation to the building or any out-office appurtenant thereto or usually enjoyed therewith, but shall not be deemed to include—

(i) any expenditure in respect of which any person is entitled to a deduction, relief or allowance under any other provision of the Tax Acts, or

(ii) any expenditure attributable to any part (hereafter in this section referred to as a “non-residential unit”) of the building which, upon completion of the conversion, is not a house.

(3) For the purposes of paragraph (ii) of subsection (2), where expenditure is attributable to a building in general and not directly to any particular house or non-residential unit comprised in the building upon completion of the conversion, then such an amount of that expenditure shall be deemed to be attributable to a non-residential unit as bears to the whole of that expenditure the same proportion as the total floor area of the non-residential unit bears to the total floor area of the building.

(4) Where a person, having made a claim in that behalf, proves to have incurred conversion expenditure in relation to a house which is a qualifying premises, such person shall be entitled, in computing, for the purposes of subsection (4) of section 81 of the Income Tax Act, 1967, the amount of a surplus or deficiency in respect of the rent from the said premises, to a deduction of so much (if any) of the expenditure as falls to be treated, under section 53 (9) or any of the provisions of this section, as having been incurred by such person in the qualifying period and all the provisions of Chapter VI of Part IV of the said Act shall apply as if the said deduction were a deduction authorised by the provisions of subsection (5) of the said section 81.

(5) Where a qualifying premises forms part of a building or is one of a number of buildings in a single development, or forms part of a building which is itself one of a number of buildings in a single development, there shall be made such apportionment as is necessary of the expenditure incurred on the conversion of the said building or buildings for the purposes of determining the conversion expenditure incurred in relation to the qualifying premises.

(6) Where a house is a qualifying premises and at any time during the relevant period in relation to the premises either of the following events occurs:

(a) the house ceases to be a qualifying premises, or

(b) the ownership of the lessor's interest in the house passes to any other person but the house does not cease to be a qualifying premises,

then the person who, before the occurrence of the event, received or was entitled to receive a deduction under subsection (4) in respect of conversion expenditure incurred in relation to the qualifying premises shall be deemed to have received on the day before the day of the occurrence an amount by way of rent from the qualifying premises equal to the amount of the deduction.

(7) Where the event mentioned in subsection (6) (b) occurs in the relevant period in relation to a house which is a qualifying premises, the person to whom the ownership of the lessor's interest in the said house passes shall be treated, for the purposes of this section, as having incurred in the qualifying period an amount of conversion expenditure in relation to the said house equal to the amount of the conversion expenditure which, under section 53 (9) or any of the provisions of this section, the said lessor was treated as having incurred in the qualifying period in relation to the said house:

Provided that, in the case of a person who purchases such a house, the amount so treated as having been incurred by such person shall not exceed—

(a) the net price paid by such person on the sale, or

(b) in case only a part of the conversion expenditure incurred in relation to the house falls to be treated, under section 53 (9), as having been incurred in the qualifying period, the amount which bears to the said net price the same proportion as that part bears to the whole of the conversion expenditure incurred in relation to the house.

(8) Where conversion expenditure is incurred in relation to a house and before the house is used subsequent to the incurring of that expenditure it is sold, the person who buys the house shall be treated, for the purposes of this section, as having incurred in the qualifying period conversion expenditure in relation to the house equal to—

(a) the amount of such expenditure which falls to be treated under section 53 (9) as having been incurred in the qualifying period, or

(b) (i) the net price paid by such person on the sale, or

(ii) in case only a part of the conversion expenditure incurred in relation to the house falls to be treated, under section 53 (9), as having been incurred in the qualifying period, the amount which bears to the said net price the same proportion as that part bears to the whole of the conversion expenditure incurred in relation to the house,

whichever is the lower:

Provided that, where the house is sold more than once before it is used subsequent to the incurring of the conversion expenditure in relation to the house, the provisions of this subsection shall have effect only in relation to the last of those sales.

(9) This section shall not apply in the case of a conversion unless planning permission in respect of the conversion has been granted under the Local Government (Planning and Development) Acts, 1963 to 1993.

(10) The provisions of section 53 shall have effect for the purposes of supplementing this section.

52 Rented residential accommodation: deduction for expenditure on refurbishment.

52.—(1) In this section—

“qualifying lease”, in relation to a house, means, subject to section 53 (3), a lease of the house the consideration for the grant of which consists solely of—

(a) a single payment which is, or falls to be treated as, an amount by way of rent for the purposes of Chapter VI of Part IV of the Income Tax Act, 1967, or

(b) periodic payments all of which are, or fall to be treated as, amounts by way of rent for the purposes of the said Chapter VI;

“qualifying premises” means, subject to subsections (4), (5) (b), (6) and (7) of section 53, a house—

(a) which is used solely as a dwelling,

(b) the total floor area of which—

(i) is not less than 30 square metres and not more than 125 square metres in the case where the house is a separate self-contained flat or maisonette in a building of two or more storeys, or

(ii) is not less than 35 square metres and not more than 125 square metres in any other case,

(c) in respect of which there is in force a certificate of reasonable cost the amount specified in which in respect of the cost of refurbishment in relation to the house to which the certificate relates is not less than the relevant expenditure actually incurred on such refurbishment, and

(d) which, on the date of completion of the refurbishment to which the relevant expenditure relates, is let (or, if it is not let on that date, is, without having been used after that date, first let) in its entirety under a qualifying lease and thereafter throughout the remainder of the relevant period (save for reasonable periods of temporary disuse between the ending of one qualifying lease and the commencement of another such lease) continues to be let under such a lease;

“refurbishment”, in relation to a building, means either or both of the following, that is to say:

(a) the carrying out of any works of construction, reconstruction, repair or renewal, and

(b) the provision or improvement of water, sewerage or heating facilities,

where the carrying out of such works, or the provision of such facilities, is certified by the Minister for the Environment, in any certificate of reasonable cost granted by that Minister in relation to any house contained in the building, to have been necessary for the purposes of ensuring the suitability as a dwelling of any house in the building and whether or not the number of houses in the building, or the shape or size of any such house, is altered in the course of such refurbishment;

“relevant expenditure” means expenditure incurred on the refurbishment of a specified building, other than expenditure attributable to any part (hereafter in this section referred to as a “non-residential unit”) of the building which, upon completion of the refurbishment, is not a house; and, for the purposes of this definition, where expenditure is attributable to the specified building in general (and not directly to any particular house or non-residential unit comprised in the building upon completion of the refurbishment) such an amount of that expenditure shall be deemed to be attributable to a non-residential unit as bears to the whole of that expenditure the same proportion as the total floor area of the non-residential unit bears to the total floor area of the building;

“relevant period”, in relation to a qualifying premises, means the period of 10 years beginning with the date of the completion of the refurbishment to which the relevant expenditure relates or, if the premises was not let under a qualifying lease on that date, the period of 10 years beginning with the date of the first such letting after the date of such completion;

“specified building” means a building—

(a) the site of which is wholly within a qualifying resort area,

(b) in which, prior to the refurbishment to which the relevant expenditure relates, there is one or more houses, and

(c) which, upon completion of that refurbishment, contains (whether in addition to any non-residential unit or not) one or more houses.

(2) Where a person, having made a claim in that behalf, proves to have incurred relevant expenditure in relation to a house which is a qualifying premises, such person shall be entitled, in computing, for the purposes of subsection (4) of section 81 of the Income Tax Act, 1967, the amount of a surplus or deficiency in respect of the rent from the said premises, to a deduction of so much (if any) of the expenditure as falls to be treated, under section 53 (9) or any of the provisions of this section, as having been incurred by such person in the qualifying period and all the provisions of Chapter VI of Part IV of the said Act shall apply as if the said deduction were a deduction authorised by the provisions of subsection (5) of the said section 81.

(3) Where a qualifying premises forms part of a building or is one of a number of buildings in a single development, or forms part of a building which is itself one of a number of buildings in a single development, there shall be made such apportionment as is necessary of the relevant expenditure incurred on the said building or buildings for the purposes of determining the relevant expenditure incurred in relation to the qualifying premises.

(4) Where a house is a qualifying premises and at any time during the relevant period in relation to the premises either of the following events occurs:

(a) the house ceases to be a qualifying premises, or

(b) the ownership of the lessor's interest in the house passes to any other person but the house does not cease to be a qualifying premises,

then the person who, before the occurrence of the event, received or was entitled to receive a deduction under subsection (2) in respect of relevant expenditure incurred in relation to the qualifying premises shall be deemed to have received on the day before the day of the occurrence an amount by way of rent from the qualifying premises equal to the amount of the deduction.

(5) Where the event mentioned in subsection (4) (b) occurs in the relevant period in relation to a house which is a qualifying premises, the person to whom the ownership of the lessor's interest in the said house passes shall be treated, for the purposes of this section, as having incurred in the qualifying period an amount of relevant expenditure in relation to the said house equal to the amount of the relevant expenditure which, under section 53 (9) or any of the provisions of this section, the said lessor was treated as having incurred in the qualifying period in relation to the said house:

Provided that, in the case of a person who purchases such a house, the amount so treated as having been incurred by such person shall not exceed—

(a) the net price paid by such person on the sale, or

(b) in case only a part of the relevant expenditure incurred in relation to the house falls to be treated, under section 53 (9), as having been incurred in the qualifying period, the amount which bears to the said net price the same proportion as that part bears to the whole of the relevant expenditure incurred in relation to the house.

(6) Where relevant expenditure is incurred in relation to a house and before the house is used subsequent to the incurring of that expenditure it is sold, the person who buys the house shall be treated, for the purposes of this section, as having incurred in the qualifying period relevant expenditure in relation to the house equal to—

(a) the amount of such expenditure which falls to be treated under section 53 (9) as having been incurred in the qualifying period, or

(b) (i) the net price paid by such person on the sale, or

(ii) in case only a part of the relevant expenditure incurred in relation to the house falls to be treated, under section 53 (9), as having been incurred in the qualifying period, the amount which bears to the said net price the same proportion as that part bears to the whole of the relevant expenditure incurred in relation to the house,

whichever is the lower:

Provided that, where the house is sold more than once before it is used subsequent to the incurring of the relevant expenditure in relation to the house, the provisions of this subsection shall have effect only in relation to the last of those sales.

(7) This section shall not apply in the case of any refurbishment unless planning permission, in so far as it is required, in respect of the work carried out in the course of the refurbishment has been granted under the Local Government (Planning and Development) Acts, 1963 to 1993.

(8) Expenditure in respect of which a person is entitled to relief under this section shall not include any expenditure in respect of which any person is entitled to a deduction, relief or allowance under any other provision of the Tax Acts.

(9) The provisions of section 53 shall have effect for the purposes of supplementing this section.

53 Provisions supplementary to sections 50 to 52.

53.—(1) In this section “certificate of reasonable value” has the meaning assigned to it by section 18 of the Housing (Miscellaneous Provisions) Act, 1979.

(2) In sections 50 to 52—

“certificate of reasonable cost” means a certificate granted by the Minister for the Environment for the purposes of section 50, 51 or 52, as the case may be, stating that the amount specified in the certificate in relation to the cost of construction of, conversion into, or, as the case may be, refurbishment of, the house to which the certificate relates appears to that Minister at the time of the granting of the certificate and on the basis of the information available to that Minister at that time to be reasonable, and section 18 of the Housing (Miscellaneous Provisions) Act, 1979, shall, with any necessary modifications, apply to a certificate of reasonable cost as if it were a certificate of reasonable value;

“house” includes any building or part of a building used or suitable for use as a dwelling and any out-office, yard, garden or other land appurtenant thereto or usually enjoyed therewith;

“total floor area” means the total floor area of a house measured in the manner referred to in section 4 (2) (b) of the Housing (Miscellaneous Provisions) Act, 1979.

(3) A lease shall not be a qualifying lease for the purposes of section 50, 51 or 52, if the terms of the lease contain any provisions enabling the lessee or any other person, directly or indirectly, at any time to acquire any interest in the house to which the lease relates for a consideration which is less than that which might be expected to be given at that time for the acquisition of the interest if the negotiations for that acquisition were conducted in the open market at arm's length.

(4) A house shall not be a qualifying premises for the purposes of section 50, 51 or 52 if it is occupied as a dwelling by any person who is connected with the person who is entitled, in relation to the expenditure incurred on the construction of, conversion into, or, as the case may be, refurbishment of, the house, to a deduction under section 50 (2),51 (4) or 52 (2), as the case may be, and the terms of the qualifying lease in relation to the house are not such as might have been expected to be included in the lease if the negotiations for the lease had been at arm's length.

(5) (a) A house shall not be a qualifying premises for the purposes of section 50 unless it complies with such conditions, if any, as may be determined by the Minister for the Environment from time to time for the purposes of section 4 of the Housing (Miscellaneous Provisions) Act, 1979, in relation to standards of construction of houses and the provision of water, sewerage and other services therein.

(b) A house shall not be a qualifying premises for the purposes of section 51 or 52 unless it complies with such conditions, if any, as may be determined by the Minister for the Environment from time to time for the purposes of section 5 of the Housing (Miscellaneous Provisions) Act, 1979, in relation to standards for improvements of houses and the provision of water, sewerage and other services therein.

(6) A house shall not be a qualifying premises for the purposes of section 50, 51 or 52 unless persons authorised in writing by the Minister for the Environment for the purposes of those sections are permitted to inspect it at all reasonable times upon production, if so requested by a person affected, of their authorisations.

(7) (a) A house shall not be a qualifying premises for the purposes of section 50, 51 or 52 unless, throughout the relevant period (within the meaning of section 50, 51 or 52, as the case may be)—

(i) it is used primarily for letting to and occupation by tourists, with or without prior arrangement, and

(ii) it is used and occupied for no other purpose during the months April to October in each year.

(b) A house shall not be a qualifying premises for the purposes of section 50, 51 or 52 if, during the relevant period (within the meaning of section 50, 51 or 52, as the case may be), the house is let or leased to or occupied by any person for more than two consecutive months at any one time or for more than six months in any year.

(c) A house shall not be a qualifying premises for the purposes of section 50, 51 or 52 unless a register of lessees of the house is maintained which shall contain the following particulars, that is to say—

(i) the name, permanent address and nationality of each lessee of the house during the relevant period (within the meaning of section 50, 51 or 52, as the case may be), and

(ii) the date of arrival and the date of departure of each such lessee.

(8) For the purposes of sections 50, 51 and 52 references therein to the construction of, conversion into, or, as the case may be, refurbishment of, any premises shall be construed as including references to the development of the land on which the premises is situated or which is used in the provision of gardens, grounds, access or amenities in relation to the premises and, without prejudice to the generality of the foregoing, as including, in particular—

(a) demolition or dismantling of any building on the land,

(b) site clearance, earth moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works,

(c) walls, power-supply, drainage, sanitation and water supply, and

(d) the construction of any outhouses or other buildings or structures for use by the occupants of the premises or for use in the provision of amenities for the occupants.

(9) (a) For the purposes of determining, in relation to any claim under section 50 (2), 51 (4) or 52 (2), as the case may be, whether and to what extent expenditure incurred on the construction of, conversion into, or, as the case may be, refurbishment of, a qualifying premises is incurred or not incurred during the qualifying period, only such an amount of that expenditure as is properly attributable to work on the construction of, conversion into, or, as the case may be, refurbishment of, the premises which was actually carried out during the qualifying period shall be treated as having been incurred during that period.

(b) Where, by virtue of subsection (8), expenditure on the construction of, conversion into, or, as the case may be, refurbishment of, a qualifying premises includes expenditure on the development of any land, paragraph (a) shall have effect, with any necessary modifications, as if the references therein to the construction of, conversion into, or, as the case may be, refurbishment of, the qualifying premises were references to the development of such land.

(10) (a) For the purposes of sections 50 and 51, other than for the purposes mentioned in subsection (9) (a), expenditure incurred on the construction of, or, as the case may be, conversion into, a qualifying premises shall be deemed to have been incurred on the date of the first letting of the premises under a qualifying lease.

(b) For the purposes of section 52, other than for the purposes mentioned in subsection (9) (a), relevant expenditure incurred in relation to the refurbishment of a qualifying premises shall be deemed to have been incurred on the date of the commencement of the relevant period, in relation to the premises, determined as respects the refurbishment to which the relevant expenditure relates.

(11) For the purposes of sections 50, 51 and 52, expenditure shall not be regarded as incurred by a person in so far as it has been or is to be met directly or indirectly by the State, by any board established by statute or by any public or local authority.

(12) Paragraph 5 of Schedule 1 to the Capital Gains Tax Act, 1975, shall have effect as if a deduction under section 50 (2), 51 (4) or 52 (2), as the case may be, were a capital allowance and as if any amount by way of rent deemed to have been received by a person under section 50 (4), 51 (6) or 52 (4), as the case may be, were a balancing charge.

(13) An appeal to the Appeal Commissioners shall lie on any question arising under this section or under section 50, 51 or 52, other than a question on which an appeal lies under section 18 of the Housing (Miscellaneous Provisions) Act, 1979, in like manner as an appeal would lie against an assessment to income tax or corporation tax and the provisions of the Tax Acts relating to appeals shall apply and have effect accordingly.

Chapter IV Corporation Tax

54 Rate of corporation tax.

54.—(1) As respects any accounting period ending on or after the 1st day of April, 1995, section 1 (as amended by the Finance Act, 1990) of the Corporation Tax Act, 1976, is hereby amended by the substitution of the following subsection for subsection (1):

“(1) For the financial year 1974 and each subsequent financial year there shall be charged on profits of companies a tax, to be called corporation tax, at the rate of—

(a) 40 per cent. for—

(i) each financial year until and including the year 1994, and

(ii) that part of the financial year 1995 beginning on the 1st day of January, 1995, and ending on the 31st day of March, 1995;

and

(b) 38 per cent. for—

(i) that part of the financial year beginning on the 1st day of April, 1995, and ending on the 31st day of December, 1995, and

(ii) each subsequent financial year.”.

(2) The Fourth Schedule shall have effect for the purpose of supplementing this section.

55 Amendment of section 162 (surcharge on undistributed income of service companies) of Corporation Tax Act, 1976.

55.—(1) Section 162 (as amended by section 48 of the Finance Act, 1990) of the Corporation Tax Act, 1976, is hereby amended in subsection (4)—

(a) by the substitution in paragraph (a) of “one-half” for “four-fifths”, and

(b) by the substitution in paragraph (b) of “one-half” for “one-fifth”.

(2) This section shall have effect as respects accounting periods ending on or after the 1st day of April, 1995:

Provided that for the purposes of this section where an accounting period begins before the 1st day of April, 1995, and ends on or after that day, it shall be divided into two parts, one beginning on the day on which the accounting period begins and ending on the 31st day of March, 1995, and the other beginning on the 1st day of April, 1995, and ending on the day on which the accounting period ends, and both of the parts shall be treated as if they were separate accounting periods.

56 Amendment of section 45 (credit for bank levy) of Finance Act, 1992.

56.—Section 45 of the Finance Act, 1992, is hereby amended in subsection (1) (a)—

(a) by the insertion after “section 200,” in subparagraph (II) of paragraph (iii) of the definition of “accounting profit” of “section 142 of the Finance Act, 1995,”, and

(b) by the insertion after “section 200” in the definition of “levy payment” of “or section 142 of the Finance Act, 1995,”.

57 Relief for certain payments to National Cooperative Farm Relief Services Ltd. and certain payments made to its members.

57.—(1) In this section—

“the agreement” means the agreement in writing dated the 16th day of May, 1995, between the Minister for Agriculture, Food and Forestry and the National Co-operative for the provision of financial support for the development of agricultural services together with every amendment of the agreement in accordance with Article 9.1 thereof;

“the commencement date” means the 12th day of December, 1994, being the date specified in the agreement as the commencement date;

“a member co-operative”, “the Minister”, “the National Co-operative” and “society” have the meanings respectively assigned to them in section 52 (1) of the Finance Act, 1994.

(2) Notwithstanding any provision of the Corporation Tax Acts—

(a) a payment made under Article 3.1 (a) of the agreement by the Minister on or after the commencement date to the National Co-operative, and

(b) a transmission of monies under Article 3.4 in respect of payments under Article 3.1 (a) of the agreement by the National Co-operative on or after the commencement date to a member co-operative,

shall be disregarded for all of the purposes of those Acts.

58 Amendment of section 141 (particulars to be supplied by new companies) of Corporation Tax Act, 1976.

58.—Section 141 of the Corporation Tax Act, 1976, is hereby amended—

(a) in the proviso to subsection (1), by the substitution for “trade or profession” of “trade, profession or business”,

(b) by the insertion, after subsection (1), of the following subsections:

“(1A) Subject to subsection (1B), every company which is incorporated in the State and is neither resident in the State nor carrying on a trade, profession or business therein shall, in every case within thirty days of—

(a) the date on which it commences to carry on a trade, profession or business, wherever carried on, and

(b) any time at which there is a material change in information previously delivered by the company under this subsection, and

(c) the giving of a notice to the company by an inspector requiring a statement under this subsection,

deliver to the Revenue Commissioners a statement in writing containing particulars of—

(i) the name of the company;

(ii) the address of its registered office in the State and the address of its principal place of business;

(iii) the nature of the trade, profession or business;

(iv) the name and address of the secretary of the company;

(v) (I) where the company is controlled by a company the shares in which are listed in the official list of a recognised stock exchange and have been the subject of dealings on the said exchange in the period of 12 months ending at the time at which the statement is delivered, the name of that company and the address of its registered office, and

(II) in any other case, the name and address of any individual or individuals who have control of the company;

(vi) the territory in which the central management and control of the company is normally carried out; and

(vii) such other information as the Revenue Commissioners consider necessary for the purposes of determining the territory in which the company is resident for the purposes of tax.

(1B) Subsection (1A) shall not apply to a company (hereafter in this subsection referred to as the ‘first-mentioned company’) if at the time at which a statement under that subsection would, apart from this subsection, fall to be delivered, there is a company, which is a 90 per cent, subsidiary of the first-mentioned company, carrying on a trade or profession in the State.”,

and

(c) by the addition, after subsection (2), of the following subsection:

“(3) For the purposes of this section—

(a) sections 108 to 114 of the Corporation Tax Act, 1976, shall apply for the purposes of this paragraph as they would apply for the purposes of Part XI of that Act if subsection (7) of section 107 of the said Act were deleted, and

(b) control shall be construed in accordance with section 102 of the Corporation Tax Act, 1976.”.

59 Deduction for certain expenditure on research and development.

59.—(1) (a) In this section—

“appropriate inspector” has the meaning assigned to it in section 9 of the Finance Act, 1988;

“base period” means the period of 12 months ending immediately before the commencement of the first relevant period;

“expenditure on research and development” means non-capital expenditure incurred by a company being—

(i) an amount equal to 115 per cent, of the aggregate of the amounts of—

(I) such part of the emoluments paid by the company to employees of the company engaged in the carrying out of research and development activities related to the company's trade as is laid out for the purposes of the said activities, and

(II) expenditure incurred by the company on materials or goods used solely by the company in the carrying out of research and development activities related to the company's trade:

Provided that expenditure referred to in clauses (I) and (II) incurred by a company (hereafter in this definition referred to as “the first-mentioned company”) which is a member of a group on behalf of another company which is a member of the group, the other company shall be treated for the purposes of the Corporation Tax Acts as having incurred the expenditure and the first-mentioned company shall be treated for those purposes as not having incurred the said expenditure,

and

(ii) a sum paid to another person, not being a person connected with the company, in order that such person may carry out research and development activities related to the company's trade;

“group base expenditure on research and development” means the aggregate of the amounts of expenditure on research and development incurred in the base period by qualified companies which throughout that period are members of the group;

“group expenditure on research and development”, in relation to a relevant period, means the aggregate of the amounts of expenditure on research and development—

(i) incurred, or treated as incurred, in the relevant period by qualified companies which throughout the relevant period are members of the group, and

(ii) which is certified as having been incurred by the said companies in certificates given to the companies by persons who are auditors of the companies appointed under section 160 of the Companies Act, 1963, or under the law of any territory where any such company is duly incorporated and which corresponds to that section;

“qualified company”, in relation to a relevant period, means a company which—

(i) throughout the relevant period carries on a trade which consists wholly or mainly of the manufacture of goods in the State:

Provided that trading operations of a company shall not be treated for the purposes of this section as the manufacture of goods in the State by virtue of any section of the Tax Acts other than section 39 of the Finance Act, 1980,

(ii) holds a certificate, given to it by Forbairt, which certifies that, in the opinion of Forbairt, the research and development activities which are proposed to be carried on by or on behalf of the company have the potential to achieve the purposes set out in paragraph (iii) of the definition of research and development activities,

(iii) notifies the appropriate inspector, before the commencement of the research and development activities, of its intention to carry out such activities or to have such activities carried out on its behalf,

(iv) maintains a record of expenditure incurred in the carrying on by it or on its behalf of research and development activities in accordance with a system, approved by Forbairt, of recording such expenditure, and

(v) does not, at any time during the period commencing on the 10th day of May, 1995, and ending 3 years after the commencement of the first relevant period, raise any amount through the issue of eligible shares (within the meaning of section 12 of the Finance Act, 1984);

“qualifying expenditure on research and development attributable to a qualified company”, in relation to a relevant period, means so much of the amount of qualifying group expenditure on research and development in the relevant period as bears to that amount the same proportion as the amount of expenditure on research and development incurred by the company in the relevant period bears to the group expenditure on research and development in the relevant period;

“qualifying group expenditure on research and development”, in relation to a relevant period (hereafter in this definition referred to as the “said relevant period”), means an amount determined by the formula

E — (D £25,000)

where—

E is the amount of group expenditure on research and development in the relevant period, and

D is the greater of—

(i) the amount of group base expenditure on research and development, and

(ii) the amount of group expenditure on research and development in any relevant period preceding the said relevant period:

Provided that—

(I) the qualifying group expenditure on research and development in relation to a relevant period shall not in any case exceed £150,000, and

(II) the aggregate of the amounts of qualifying group expenditure on research and development in all relevant periods shall not exceed the aggregate of the amounts specified in certificates given by Forbairt to companies which are members of the group;

“relevant period” means—

(i) in the case of a company which is a member of a group the end of the accounting periods of the members of which coincide, the period of 12 months throughout which one or more members of the group carried on a trade and ending at the end of the first accounting period of the company which commences on or after the 1st day of June, 1995,

(ii) in the case of a company which is a member of a group the end of the accounting periods of which do not coincide, the period specified in a notice in writing made jointly by companies which are members of the group and given to the appropriate inspector within a period of 9 months after the end of the period so specified, being a period of 12 months throughout which one or more members of the group carries on a trade and ending at the end of the first accounting period of a company which is a member of the group which accounting period commences on or after the 1st day of June, 1995, and

(iii) in any other case, the period of 12 months commencing on the 1st day of June, 1995,

and each subsequent period of 12 months, commencing immediately after the end of the preceding relevant period, which falls wholly into the period of 3 years commencing at the beginning of the first relevant period;

“research and development activities” means systematic, investigative or experimental activities which—

(i) are carried on wholly or mainly in the State,

(ii) involve innovation or technical risk, and

(iii) are carried on for the purpose of—

(I) acquiring new knowledge with a view to that knowledge having a specific commercial application, or

(II) creating new or improved materials, products, devices, processes or services,

and other activities carried on wholly or mainly in the State for a purpose directly related to the carrying on of activities of the kind referred to in paragraph (iii):

Provided that activities that are carried on by way of—

(A) market research, market testing, market development, sales promotion or consumer surveys,

(B) quality control,

(C) the making of cosmetic modifications or stylistic changes to products, processes or production methods,

(D) management studies or efficiency surveys, or

(E) research in social sciences, arts or humanities,

shall not be research and development activities.

(b) For the purposes of this section—

(i) two companies shall be deemed to be members of a group if one is an associated company (within the meaning of section 102 of the Corporation Tax Act, 1976) of the other,

(ii) a company and all its associated companies form a group:

Provided that a company which is not a member of a group shall be treated as if it were a member of a group which consists of that company and, accordingly, references to group expenditure on research and development, group base expenditure, and qualifying group expenditure on research and development shall be construed as if they were, respectively, references to expenditure on research and development, base expenditure and qualifying expenditure on research and development, and

(iii) systematic, investigative or experimental activities, or other activities, shall be regarded as carried on wholly or mainly in the State if, and only if, not less than 75 per cent, of the total amount expended in the course of such activities is expended in the State,

(iv) expenditure on research and development shall not be regarded as having been incurred by a company which is a member of a group if any expenditure on research and development incurred in a relevant period or in the base period by a company which is a member of the group has been or is to be met directly or indirectly by the State or any person other than a company which is a member of the group.

(2) (a) On making a claim in that behalf, a qualified company shall be entitled, in computing the trading income for an accounting period of a trade carried on by it, to deduct an amount equal to treble the qualifying expenditure on research and development attributable to the qualified company as is referable to the accounting period and the company shall be entitled to such a deduction in addition to any deduction to which the qualified company may be otherwise entitled in respect of expenditure incurred on research and development:

Provided that where the amount referred to in paragraph (a) exceeds an amount which would, apart from this subsection, be the income from the sale of goods of the trade so referred to, for the said accounting period, then the excess—

(i) shall not be deductible by virtue of the foregoing provisions of this subsection, and

(ii) shall be treated as a loss incurred in that trade, which is a loss from the sale of goods, for the purposes of relief under—

(I) section 16A or section 116A of the Corporation Tax Act, 1976, or

(II) to the extent that such relief does not exceed the income from the sale of goods in the course of that trade in the accounting period for which that relief is given, section 16 (1) of the Corporation Tax Act, 1976.

(b) In this subsection “income from the sale of goods” and “a loss from the sale of goods” have the same meaning respectively as they have in section 116A of the Corporation Tax Act, 1976.

(3) For the purposes of subsection (2)—

(a) where a relevant period coincides with an accounting period of a qualified company, the amount of qualifying expenditure on research and development attributable to the qualified company which relates to the accounting period of the company shall be the amount of the said qualifying expenditure attributable to the qualified company, and

(b) where the relevant period does not coincide with an accounting period of the company—

(i) the qualifying expenditure on research and development attributable to the qualified company shall be apportioned to the accounting periods which fall wholly or partly into the relevant period, and

(ii) the amount so apportioned to an accounting period shall be treated as the amount of qualifying expenditure on research and development attributable to the qualified company which relates to that accounting period of the company.

(4) Where a company makes a claim under this section the company shall be treated for the purpose of Chapter III of Part I of the Finance Act, 1984, as not being a qualifying company in respect of any amount raised, at any time during the period commencing on the 10th day of May, 1995, and ending 3 years after the commencement of the first relevant period, by the issue of eligible shares (within the meaning of section 12 of the said Act of 1984).

(5) Section 157 of the Corporation Tax Act, 1976, shall apply for the purposes of this section.

60 Amendment of section 23 (double taxation relief: supplementary) of Corporation Tax Act, 1976.

60.—Section 23 of the Corporation Tax Act, 1976, is hereby amended, as respects accounting periods ending on or after the 1st day of January, 1995—

(a) in subsection (2) by the substitution for “the corporation tax attributable to any income or gain (‘the relevant income or gain’) shall be determined in accordance with subsections (3) and (4).” of the following:

“the corporation tax attributable to any income or gain (hereafter in this subsection referred to as ‘the said income’ or ‘the said gain’, as the case may be) of a company shall, subject to subsections (3) and (4), be the corporation tax attributable to so much (hereafter in this section referred to as ‘the relevant income’ or ‘the relevant gain’, as the case may be) of the income or chargeable gains of the company computed in accordance with the Tax Acts and the Capital Gains Tax Acts, as is attributable to the said income or the said gain, as the case may be:

Provided that, for the purposes of this subsection, the relevant income of a company attributable to an amount receivable from the sale of goods, within the meaning of section 39C (inserted by the Finance Act, 1994) of the Finance Act, 1980, shall be the sum which would, for the purposes of that section, be taken to be the amount of the income of the company referable to the amount so receivable.”,

(b) in subsection (3) by the addition of the following proviso:

“Provided that, where the corporation tax payable by the company for the relevant accounting period on the relevant income or gain is reduced by virtue of—

(a) section 41 (as amended by the Finance Act, 1994) of the Finance Act, 1980, by any fraction, the rate of corporation tax payable by the company on its income and chargeable gains for the relevant accounting period shall be treated as reduced by that fraction,

(b) section 36 (2) (as amended by the Finance Act, 1993) of the Corporation Tax Act, 1976, or section 17 (2) of the Finance Act, 1993, the rate of corporation tax payable by the company on its income and chargeable gains for the relevant accounting period shall be treated as the standard rate of income tax by reference to which the corporation tax so payable is reduced, and

(c) section 36A (6) (inserted by the Finance Act, 1993) of the Corporation Tax Act, 1976, the rate of corporation tax payable by the company on its income and chargeable gains for the relevant accounting period shall be treated as 10 per cent.,

for the purposes of computing the corporation tax attributable to that relevant income or gain, as the case may be.”,

and

(c) in subsection (4) by the substitution for paragraphs (a) and (b) of the following paragraphs:

“(a) the company shall, for the purposes of this section and sections 39C and 39D of the Finance Act, 1980, allocate every such deduction in such amounts and to such of its profits for that period as it thinks fit, and

(b) (i) the amount of the relevant income or gain shall be treated for the purposes of subsection (3),

(ii) the amount of any income of a company which is treated for the purposes of that section as referable to an amount receivable from the sale of goods, within the meaning of that section, shall be treated for the purposes of the said section 39C, and

(iii) the amount of the income of a company which is treated for the purposes of that section as attributable to relevant payments, within the meaning of that section, shall be treated for the purposes of the said section 39D,

as reduced or, as the case may be, extinguished by so much (if any) of the deduction as is allocated to it.”.

61 Amendment of section 41 (basis of relief from corporation tax) of Finance Act, 1980.

61.—Section 41 of the Finance Act, 1980, is hereby amended in paragraph (b) of subsection (1) (inserted by the Finance Act, 1992) by the insertion before “sections 25 and 26” of “section 22 and”.

62 Double taxation relief.

62.—Chapter VI of Part I of the Finance Act, 1980, is hereby amended, as respect accounting periods ending on or after the 1st day of January, 1995, by the insertion after section 39C (inserted by the Finance Act, 1994) of the following section—

“39D.—(1) (a) In this section—

‘appropriate inspector’, ‘chargeable period’ and ‘specified return date for the chargeable period’ have the meanings assigned to them, respectively, in Chapter II of Part I of the Finance Act, 1988;

‘arrangements’ and ‘foreign tax’ have the meanings assigned to them, respectively, in paragraph 1 (1) of Schedule 10 to the Income Tax Act, 1967;

‘credit institution’ means an undertaking whose business it is to receive deposits or other repayable funds from the public and to grant credit on its own account;

‘group relevant payment’ means a relevant payment made to a relevant company by a company which is related to the relevant company;

‘qualified company’ and ‘relevant trading operations’ have, subject to paragraph (d), the meanings assigned to them, respectively, in section 39B;

‘relevant company’ means a qualified company, other than a credit institution or a 25 per cent. subsidiary of a credit institution, the relevant trading operations of which—

(i) are wholly carried on by persons—

(I) who are employees of the qualified company or a company related to it and who are not employees of any employer other than the qualified company or the company related to it, as the case may be, and

(II) in respect of whom there does not exist any understanding or arrangement the purpose of which, or one of the purposes of which, is to provide for the engagement of the services of those persons, whether as employees or otherwise, should they cease to be employed by the qualified company or the company related to it, as the case may be,

and

(ii) are not managed or directed, whether directly or indirectly, by another qualified company other than a company related to the first-mentioned qualified company;

‘relevant foreign tax’ means so much of the amount of foreign tax as—

(i) has been deducted from relevant payments,

(ii) would have been so deducted if the laws of the territory under which the tax was deducted prohibited the deduction of tax from such payments at a rate in excess of 10 per cent., and

(iii) has not been repaid;

‘relevant payment’ means a payment of interest which—

(i) arises from a source within a territory in regard to which arrangements have the force of law, and

(ii) is regarded, subject to paragraph (d), by virtue of subsection (8) (b) of section 39B as receivable by a relevant company from the sale of goods for the purposes of relief under this Chapter.

(b) For the purposes of this section a company shall be treated as related to another company at any relevant time if at that time one of the two companies is a 25 per cent. subsidiary of the other, or both are 25 per cent. subsidiaries of the same company.

(c) For the purposes of this section a company shall be deemed to be a 25 per cent. subsidiary of another company if and so long as not less than 25 per cent. of its ordinary share capital would be treated as owned directly or indirectly by that other company if the provisions of section 156 of the Corporation Tax Act, 1976, other than subsection (1) of that section, were to apply for the purposes of this paragraph as they apply for the purposes of section 156:

Provided that—

(i) where a company (hereafter in this subparagraph referred to as ‘the said company’) would be treated, for the purposes of this section, as a 25 per cent. subsidiary of a credit institution, which is not a company, if the credit institution were a company, the said company shall be so treated for the said purposes, and

(ii) for the purposes of paragraph (b) a company (hereafter in this proviso referred to as ‘the subsidiary company’) shall not be deemed to be a 25 per cent. subsidiary of another company (hereafter in this proviso referred to as ‘the parent company’) at any time if the percentage—

(I) of any profits, which are available for distribution to equity holders, of the subsidiary company at such time to which the parent company is beneficially entitled at such time, or

(II) of any assets, which are available for distribution to equity holders on a winding up, of the subsidiary company at such time to which the parent company would be beneficially entitled at such time on a winding up of the subsidiary company,

is less than 25 per cent. of such profits or assets, as the case may be, of the subsidiary company at such time, and, for the purposes of this subparagraph of this proviso, sections 109, 110, 111 and 114 of the Corporation Tax Act, 1976, shall apply, but without regard to section 107 (7) of that Act in so far as it relates to those sections, with any necessary modifications, to the determination of the percentage of those profits or assets, as the case may be, which a company is beneficially entitled to, as they apply to the determination for the purposes of Part XI of the said Act of 1976 of the percentage of any such profits or assets to which a company is so entitled.

(d) For the purpose of this section, apart from this paragraph—

(i) a payment made to a company in the course of relevant trading operations (within the meaning of section 39A) being a payment which is regarded, by virtue of subsection (7) (b) of section 39A, as receivable from the sale of goods for the purposes of relief under this Chapter shall be treated as so regarded by virtue of subsection (8) (b) of section 39B, and

(ii) if the company is a qualified company carrying on relevant trading operations (within the meaning of section 39A) it shall be treated as being a qualified company carrying on relevant trading operations within the meaning of section 39B,

so long as the relevant trading operations within the meaning of section 39A could be certified by the Minister for Finance as relevant trading operations for the purposes of section 39B if they were carried out in the Area (within the meaning of section 39B) rather than in the airport (within the meaning of section 39A).

(2) Notwithstanding paragraph 4 of Schedule 10 to the Income Tax Act, 1967, and section 23 (as amended by the Finance Act, 1995) of the Corporation Tax Act, 1976, where a relevant company elects to have the amount of the credit, which is to be allowed to the company in respect of foreign tax deducted from group relevant payments made to the company in a relevant accounting period, computed as if, for the purposes of the said paragraph 4 and the said section 23, the amount of the corporation tax attributable to the income attributable to those group relevant payments were deemed to be increased by an amount which—

(a) shall be allocated by the company in such amounts and to such part of that income as the company thinks fit, and

(b) shall not exceed seven-twentieths of the amount of corporation tax which—

(i) would, apart from this section, be payable by the company, and

(ii) is attributable to all relevant payments made to the company in the course of the trade in the accounting period,

the amount of that credit shall be so computed for those purposes:

Provided that, where an election is made by a company under this subsection in respect of a relevant accounting period—

(I) any credit for foreign tax deducted from group relevant payments made to the company in the accounting period shall be computed as if the amount of foreign tax deducted from those group relevant payments were the amount of relevant foreign tax comprised in that amount, and

(II) so much of that credit as would not have been allowed to the company apart from this section shall be ignored for the purposes of subparagraph (3) (c) of paragraph 8 of the said Schedule 10.

(3) (a) For the purposes of subsection (2) the amount of corporation tax which would, apart from this section, be payable by a company and which is attributable to relevant payments made to the company shall be an amount determined by the formula—

A B

where—

A is an amount equal to 10 per cent, of the amount of the income of the company attributable to relevant payments; and

B is the credit which would, apart from this section, be allowed to the company in respect of foreign tax deducted from those payments.

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

(i) the amount of the income of a company attributable to relevant payments made to the company in the course of a trade in a relevant accounting period shall, subject to section 23 (4) (as amended by the Finance Act, 1995) of the Corporation Tax Act, 1976, be taken to be such sum as bears to the total amount of the income of the company from the sale of goods in the course of the trade in the relevant accounting period the same proportion as the said relevant payments bear to the total amount receivable by the company from the sale of goods in the course of the trade in the accounting period, and

(ii) the total amount of income of a company from the sale of goods in the course of a trade in a relevant accounting period shall be taken to be the sum referred to in subsection (3) of section 41 which, for the purposes of subsection (2) of that section, is to be taken to be the income of the trade for the relevant accounting period referred to in the expression ‘the income from the sale of those goods’ in subsection (2) of that section.

(4) Where, as respects a relevant accounting period, corporation tax payable by a company is, by virtue of subsection (9) (inserted by the Finance (No. 2) Act, 1992) of section 41, reduced by a fraction, which is referred to in the said subsection (9) as the ‘revised relief,’ then, this section shall apply to the company as if the references to 10 per cent., in subsection (1) in the definition of ‘relevant foreign tax’ and in subsection (3) (a) in the definition of ‘A’, were references to a rate per cent, determined by the formula—

C (1 D)

where—

C is the rate per cent, of corporation tax, specified in section 1 (1) of the Corporation Tax Act, 1976, for the financial year in which the relevant accounting period ends, and

D is the fraction so referred to.

(5) An election referred to in subsection (2) shall be made in writing to the appropriate inspector in relation to the company making the election on or before that company's specified return date for the chargeable period in respect of which it is making the election.”.

63 Amendment of section 39C (credit for foreign tax) of Finance Act, 1980.

63.—Section 39C (inserted by the Finance Act, 1994) of the Finance Act, 1980, is hereby amended, as respects accounting periods ending on or after the 1st day of January, 1995—

(a) in subsection (1)—

(i) in paragraph (a), in the definition of “relevant foreign tax” by the insertion after paragraph (i) of that definition of the following:

“(ia) which corresponds to income tax or corporation tax,”,

(ii) in paragraph (b)—

(I) by the substitution for subparagraph (i) of the following subparagraph:

“(i) the amount of the corporation tax which would, apart from subsection (2), be payable by a company and which is attributable to an amount receivable from the sale of goods shall be an amount equal to 10 per cent, of the amount of the income of the company referable to the amount so receivable;”,

(II) in subparagraph (ii) by the insertion after “shall” of “, subject to section 23 (4) (as amended by the Finance Act, 1995) of the Corporation Tax Act, 1976,”, and

(III) in subparagraph (iii) by the insertion after “which” of “, for the purposes of subsection (2) of the said section,”,

(b) in subsection (2) by the substitution for “nine-tenths of so much of” of “so much of nine-tenths of”, and

(c) by the insertion of the following subsection:

“(3) Where, as respects a relevant accounting period, corporation tax payable by a company is, by virtue of subsection (9) (inserted by the Finance (No. 2) Act, 1992) of section 41, reduced by a fraction, which is referred to in the said subsection (9) as the ‘revised relief’, then, in computing the reduction, if any, under subsection (2) of corporation tax payable by the company for the relevant accounting period, being corporation tax attributable to an amount receivable from the sale of goods which is an amount receivable in the course of relevant trading operations, within the meaning of section 39B, this section shall apply as if—

(a) in subparagraph (i) (as inserted by the Finance Act, 1995) of subsection (1) (b) the reference to 10 per cent, were a reference to a rate per cent, determined by the formula—

C (1 D)

where—

C is the rate per cent, of corporation tax, specified in section 1 (1) of the Corporation Tax Act, 1976, for the financial year in which the relevant accounting period ends, and

D is the fraction so referred to,

and

(b) the reference in subsection (2) to nine-tenths were a reference to a fraction determined by the formula—

100 [C (1 D)] ___ 100

where C and D have the meanings assigned to them in paragraph (a).”.

64 Amendment of section 43 (overseas life assurance companies: investment income) of Corporation Tax Act, 1976.

64.—Section 43 of the Corporation Tax Act, 1976, is hereby amended, as respects accounting periods beginning on or after the 1st day of January, 1995, by the insertion after subsection (2) of the following subsection:

“(2A) Where an overseas life assurance company is entitled to an amount (hereafter in this subsection referred to as ‘the said amount’), being an amount which corresponds to a tax credit, by virtue of having received a distribution from a company which is not resident in the State, the distribution shall be treated, for the purposes of this section, as representing income equal to the aggregate of the amount or value of that distribution and the said amount.”.

65 Amendment of section 39B (relief in relation to income from certain trading operations carried on in Custom House Docks Area) of Finance Act, 1980.

65.—Section 39B is hereby amended in paragraph (c) of subsection (6) by the substitution for subparagraph (iiia) (inserted by the Finance Act, 1988) of the following subparagraph:

“(iiia) dealing by a company in commodity futures or commodity options on behalf of persons not ordinarily resident in the State—

(I) other than on behalf of persons who—

(A) carry on a trade in which commodities of a type which are the subject of the futures or options, as the case may be, are used in the course of the carrying on of the trade, or

(B) would be regarded for the purposes of the Corporation Tax Acts as connected with a person who carries on such a trade,

or

(II) where dealing in futures and options, some or all of which are commodity futures or commodity options, as the case may be, is the principal relevant trading operation carried on by the company;”.

66 Amendment of section 55 (late submission of returns: restriction of certain claims of relief) of Finance Act, 1992.

66.—(1) Subject to subsection (2), any restriction or reduction imposed by paragraph (a), (b), (c), (d) or (e) of subsection (1) of section 55 of the Finance Act, 1992, in respect of a chargeable period in the case of a company which fails to deliver a return of income on or before the specified return date for that chargeable period shall apply and have effect subject to—

(a) in the case of the restrictions or reductions imposed by paragraph (a), (b) or (c) of the said subsection, a maximum restriction or reduction, as the case may be, of £125,000 in each case for the chargeable period, and

(b) in the case of the restrictions imposed by paragraph (d) or (e) of the said subsection, a maximum restriction of £50,000 in each case for the chargeable period.

(2) Where in relation to a chargeable period a company, having failed to deliver a return of income on or before the specified return date for that chargeable period, delivers the said return before the expiry of two months from the specified return date, paragraphs (a) to (e) of subsection (1) of section 55 of the Finance Act, 1992, shall apply and have effect—

(a) as if the references therein to “50 per cent.” were references to “75 per cent.” in the case of paragraphs (a), (b), (d) and (e) and “25 per cent.” in the case of paragraph (c), and

(b) subject to—

(i) in the case of the restrictions or reductions imposed by paragraph (a), (b) or (c) of the said subsection, a maximum restriction or reduction, as the case may be, of £25,000 in each case for the chargeable period, and

(ii) in the case of the restrictions imposed by paragraph (d) or (e) of the said subsection, a maximum restriction of £10,000 in each case for the chargeable period.

(3) This section shall apply and have effect as respects chargeable periods ending on or after the 6th day of April, 1995.

67 Amendment of section 51 (relief for gifts to First Step) of Finance Act, 1993.

67.—Section 51 of the Finance Act, 1993, is hereby amended—

(a) by the substitution in paragraph (a) of subsection (2) of “1st day of June, 1997” for “1st day of June, 1995”, and

(b) in the proviso to subsection (3) by the substitution of the following subparagraph for subparagraphs (iii) and (iv) of paragraph (b):

“(iii) in respect of a gift made at any time in the year ended on the 31st day of May in the year 1994, 1995,1996 or 1997, if, at that time, the aggregate of the net amounts of all gifts to which this section applies made to First Step within that year exceeds £1,500,000.”.

68 Amendment of section 20A (foreign life assurance and deferred annuities: taxation and returns) of Capital Gains Tax Act, 1975.

68.—Section 20A (inserted by the Finance Act, 1993) of the Capital Gains Tax Act, 1975, is hereby amended, as respects disposals of assets on or after the 20th day of May, 1993, by the addition of the following subsection:

“(4) (a) In this subsection ‘reinsurance contract’ means any contract or other agreement for reassurance, or reinsurance, in respect of—

(i) any policy of assurance on the life of any person, or

(ii) any class of such policies.

(b) Where apart from this paragraph a reinsurance contract would not be a policy of assurance on the life of any person for the purposes of this Act it shall be deemed to be such a policy for those purposes.

(c) Subsections (2) and (3) shall not apply to, and shall be deemed never to have applied to, reinsurance contracts:

Provided that where, apart from this paragraph, a reinsurance contract would not be a relevant policy within the meaning of section 20B (inserted by the Finance Act, 1994) for the purposes of that section, it shall be deemed not to be such a policy for those purposes.

(d) (i) Subject to paragraph (e), where, apart from paragraph (c) of this subsection, subsection (2) would apply to a reinsurance contract in respect of any policy of assurance on the life of any person, being a policy issued on or after the 1st day of January, 1995, section 20 (2) shall not have effect in respect of any disposal or deemed disposal on or after the 1st day of January, 1995, of, or any interest in, rights of the insured company under the reinsurance contract to the extent that—

(I) those rights refer to the said policy, and

(II) the insured company could receive, otherwise than on the death, disablement or disease of any person, or one of a class of persons, to whom the said policy refers, payment on a disposal of those rights the aggregate amount of which would exceed the aggregate amount of payment made by it in respect of those rights:

Provided that this subparagraph shall apply—

(A) as respects any reinsurance contract made before the 20th day of May, 1993, as if that contract were made on that day, and

(B) as respects any reinsurance contract made or modified on or after the 1st day of January, 1995, as if there were deleted from this subparagraph ‘being a policy issued on or after the 1st day of January, 1995,’.

(ii) Subparagraphs (i) and (ii) of subsection (1) (b) shall apply for the purposes of this paragraph as if for ‘the 20th day of May, 1993’ there were substituted ‘the 1st day of January, 1995’.

(e) Paragraph (d) shall not apply to any disposal of, or any interest in, rights under a reinsurance contract, being a disposal resulting directly from the death, disablement or disease of a person, or one of a class of persons, to whom the reinsurance contract refers:

Provided that in computing any gain or loss in respect of a disposal or deemed disposal of, or any interest in, rights of the insured company under a reinsurance contract—

(i) there shall be excluded from the sums allowable under paragraph 3 of Schedule 1 to the Capital Gains Tax Act, 1975, so much of any payment made by the insured company under the reinsurance contract as is paid in respect of an entitlement to a payment on the death, disablement, or disease of a person, or one of a class of persons, and

(ii) there shall be added to the consideration taken into account under the said Schedule the market value of an entitlement for any period, commencing on or after the most recent acquisition or deemed acquisition by the insured company of the said rights, to a payment on the death, disablement or disease of a person, or one of a class of persons, to the extent that the insured company held the entitlement for that period in place of any return which would otherwise have accrued under the reinsurance contract and increased the said consideration.”.

69 Amendment of section 46B (gains or losses arising by virtue of section 46A) of Corporation Tax Act, 1976.

69.—Section 46B of the Corporation Tax Act, 1976, is hereby amended in subsection (1) by the insertion of the following proviso:

“Provided that as respects chargeable gains or allowable losses accruing on disposals of rights under reinsurance contracts (within the meaning of section 20A (4) (inserted by the Finance Act, 1995) of the Capital Gains Tax Act, 1975) deemed by virtue of section 46A to have been made in the accounting period or part of an accounting period falling wholly within the year ending on—

(i) the 31st day of December, 1995, this section shall not apply to five-sevenths,

(ii) the 31st day of December, 1996, this section shall not apply to four-sevenths,

(iii) the 31st day of December, 1997, this section shall not apply to three-sevenths,

(iv) the 31st day of December, 1998, this section shall not apply to two-sevenths, or

(v) the 31st day of December, 1999, this section shall not apply to one-seventh,

of those chargeable gains and allowable losses.”.

Chapter V Capital Gains Tax

70 Amendment of Schedule 4 (administration) to Capital Gains Tax Act, 1975.

70.—(1) Schedule 4 to the Capital Gains Tax Act, 1975, is hereby amended by the substitution, in subparagraph (6) of paragraph 4, of “£15,000” for “£5,000” (inserted by section 63 (1) of the Finance Act, 1994).

(2) Subsection (1) shall apply and have effect as respects transactions effected on or after the 6th day of April, 1995.

71 Amendment of section 26 (disposal of business or farm on retirement) of Capital Gains Tax Act, 1975.

71.—(1) Section 26 of the Capital Gains Tax Act, 1975, is hereby amended—

(a) in subsection (1) (a), by the substitution of “£250,000” for “£200,000” (inserted by section 42 (a) of the Finance Act, 1991) in each place where it occurs,

(b) by the substitution of the following subsections for subsection (3) (as amended by section 84 (a) of the Finance Act, 1990) and subsection (3A) (inserted by section 84 (b) of the said Act):

“(3) Where a disposal of qualifying assets includes a disposal of shares or securities of the individual's family company, the amount of the consideration to be taken into account for the purposes of subsection (1) in respect of those shares or securities shall be the proportion of the consideration for such shares or securities which is equal to—

(a) in a case where the individual's family company is not a holding company, the proportion which the part of the value of the company's chargeable assets at the time of the disposal which is attributable to the value of the company's chargeable business assets bears to the whole of that value, and

(b) in a case where the individual's family company is a holding company, the proportion which the part of the value of the chargeable assets of the trading group (excluding shares or securities of one member of the group held by another member of the group) at the time of the disposal which is attributable to the value of the chargeable business assets of the trading group bears to the whole of that value:

Provided that nothing in this section shall affect liability on any gains calculated by reference to the balance of the consideration for the disposal of the shares or securities.

(3A) For the purposes of subsection (3) every asset shall be a chargeable asset except one on the disposal of which by the company or a member of the trading group, as the case may be, at the time of the disposal of the shares or securities, no gain accruing to the company or member of the trading group, as the case may be, would be a chargeable gain.”,

and

(c) in subsection (6) (a)—

(i) by the deletion of “a company shall be deemed to be a ‘100 per cent. subsidiary’ of another company if and so long as not less than 100 per cent. of its ordinary share capital is owned directly or indirectly by that other company” (inserted by section 84 (c) (i) of the Finance Act, 1990),

(ii) by the substitution of the following definition for the definition of “chargeable business asset” (as amended by section 84 (c) (ii) of the Finance Act, 1990):

“‘chargeable business asset’ means an asset (including goodwill but not including shares or securities or other assets held as investments) which is, or is an interest in, an asset used for the purposes of farming, or a trade, profession, office or employment, carried on by—

(i) the individual, or

(ii) the individual's family company, or

(iii) a company which is a member of a trading group of which the holding company is the individual's family company,

other than an asset on the disposal of which no gain accruing would be a chargeable gain;”,

(iii) by the substitution of “75 per cent. subsidiaries” for “100 per cent. subsidiaries” in the definition of “holding company” (inserted by section 84 (c) (iii) of the Finance Act, 1990),

(iv) by the substitution of the following definitions for the definitions of “trading company” and “trading group” (inserted by section 84 (c) (v) of the Finance Act, 1990):

“‘trading company’ means a company whose business consists wholly or mainly of the carrying on of one or more trades or professions;

‘trading group’ means a group of companies consisting of the holding company and its 75 per cent. subsidiaries, the business of whose members taken together consists wholly or mainly of the carrying on of one or more trades or professions;”,

and

(v) by the insertion of the following definition after the definition of “trading group” (inserted by subparagraph (iv)):

“‘75 per cent. subsidiary’ has the meaning assigned to it in section 156 of the Corporation Tax Act, 1976.”.

(2) Subsection (1) shall apply and have effect as respects disposals made on or after the 6th day of April, 1995.

72 Amendment of section 27 (disposal within the family of business or farm) of Capital Gains Tax Act, 1975.

72.—(1) Section 27 (as amended by section 85 of the Finance Act, 1990) of the Capital Gains Tax Act, 1975, is hereby amended, in paragraph (a) of subsection (4), by the substitution of “six years” for “ten years”.

(2) Subsection (1) shall apply and have effect as respects disposals made on or after the 6th day of April, 1995.

73 Amendment of section 39 (amendment of provisions regarding replacement of assets) of Finance Act, 1982.

73.—(1) Section 39 of the Finance Act, 1982, is hereby amended by the addition of the following subsections after subsection (3):

“(4) Subsection (1) shall not apply to a relevant disposal where the relevant local authority gives a certificate in writing to the person making the disposal stating that the land being disposed of is subject to a use which, on the basis of guidelines issued by the Minister for the Environment, is inconsistent with the protection and improvement of the amenities of the general area within which that land is situated or is otherwise damaging to the local environment.

(5) Subsection (2) shall not apply to a relevant disposal made to an authority possessing compulsory purchase powers where—

(a) at the time of the disposal, the original assets (within the meaning of section 5 of the Act of 1978) consist of land occupied and used only for the purposes of farming, and

(b) the disposal is made—

(i) for the purposes of enabling the authority to construct, widen or extend a road, or part of a road, or

(ii) for a purpose connected with, or ancillary to, the construction, widening or extension of a road, or part of a road, by the authority.

(6) (a) In subsection (4) ‘the relevant local authority’, in relation to a relevant disposal, means the council of a county or the corporation of a county or other borough or, where appropriate, the urban district council, in whose functional area the land being disposed of is situated.

(b) In subsection (5) ‘farming’ has the same meaning as it has in Chapter II of Part I of the Finance Act, 1974, by virtue of section 13 of that Act.”.

(2) Subsection (1) shall apply and have effect as respects disposals made on or after the 6th day of April, 1995.

74 Amendment of section 27 (relief for individuals on certain reinvestment) of Finance Act, 1993.

74.—(1) Section 27 (as amended by section 65 of the Finance Act, 1994) of the Finance Act, 1993, is hereby amended—

(a) in subsection (1)—

(i) by the insertion of the following definition before the definitions of “eligible shares”, “ordinary shares” and “unquoted company”:

“‘director’ has the meaning assigned to it in Chapter III of Part V of the Income Tax Act, 1967;”,

(ii) by the deletion of the definitions of “full-time working officer or employee” and “personal company”,

(iii) by the insertion of the following definitions before the definition of “holding company”:

“‘full-time director’, ‘full-time employee’, ‘part-time director’ and ‘part-time employee’ have, respectively, the meanings assigned to them in section 8 of the Finance Act, 1978;”,

and

(iv) by the insertion of the following definitions before the definition of “trading company”:

“‘trade’ includes a profession and ‘trading company’, ‘trading group’, ‘qualifying trade’ (within the meaning of subsection (7)) and ‘qualifying trading operations’ (within the said meaning) shall be construed accordingly;”,

(b) in subsection (4), by the insertion of “and” at the end of paragraph (i), the deletion of paragraphs (ii) and (iii) and the substitution of the following paragraph for paragraph (iv):

“(iv) the re-investor has been a full-time employee, part-time employee, full-time director or part-time director of the company or, if that company is a member of a trading group, of one or more companies which are members of the trading group.”,

and

(c) in subsection (5)—

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

“(bb) within the specified period, the company uses the money raised through the issue of the eligible shares for the purposes of enabling it, or enlarging its capacity, to undertake qualifying trading operations (within the meaning of subsection (7)),”,

and

(ii) by the substitution, in paragraph (d), of “a full-time employee or a full-time director of the company” for “a full-time working officer or employee of the company”.

(2) Subsection (1) shall apply and have effect as respects disposals made on or after the 6th day of April, 1995.

75 Amendment of section 66 (reduced rate of capital gains tax on certain disposals of shares by individuals) of Finance Act, 1994.

75.—Section 66 of the Finance Act, 1994, is hereby amended—

(a) in paragraph (a) of subsection (7), by the substitution of “subsections (8) and (8A)” for “subsection (8)”, and

(b) by the insertion of the following subsection after subsection (8):

“(8A) In a case where paragraph (b) of subsection (7) applies and has effect, or would apply and have effect but for the fact that the new holding acquired by the individual does not constitute qualifying shares, and the following conditions are satisfied, that is to say:

(a) the date of the acquisition of the new holding by the individual was on or before the 5th day of April, 1994,

(b) the original shares had been held by the individual throughout the period of 5 years immediately preceding the date of the acquisition of the new holding,

(c) a disposal of the new holding, or a part of that holding, is made by the individual in the year of assessment 1995-96, and

(d) at the time of the disposal of the new holding, or, as the case may be, the part of that holding, the company in which the new holding subsists would not, other than by virtue of this subsection, be treated as a qualifying company in relation to that disposal,

then—

(i) if the disposal by the individual of the new holding or, as the case may be, the part of that holding is not a disposal of qualifying shares, that disposal shall, notwithstanding any other provision of this section, be treated as a disposal of qualifying shares in respect of which the individual's period of ownership is not less than 5 years,

(ii) subsection (2) shall apply—

(I) as if the reference in paragraph (a) of subsection (2) to ‘at the date of acquisition of those shares’ were a reference to ‘at the date of acquisition of the original shares’,

(II) where the company in which the new holding subsists is not the company in which the original shares subsisted, as if the reference in paragraph (a) of subsection (2) to ‘it is’ were a reference to ‘the company in which the original shares subsisted is’,

(III) as if the reference in paragraph (b) of subsection (2) to ‘throughout the specified period’ were a reference to ‘throughout the period of 5 years immediately preceding the date of the acquisition of the new holding’, and

(IV) where the company in which the new holding subsists is not the company in which the original shares subsisted, as if the reference in paragraph (b) of subsection (2) to ‘it is’ were a reference to ‘the company in which the original shares subsisted is’,

and

(iii) subsections (3) and (4) shall apply as if the references therein to ‘throughout the specified period’ were references to ‘throughout the period of 5 years immediately preceding the date of the acquisition of the new holding’.”.

76 Amendment of paragraph 11 (disposal of certain assets) of Schedule 4 to Capital Gains Tax Act, 1975.

76.—As respects any payment in money or money's worth, after the passing of this Act, in respect of the disposal of an asset, paragraph 11 (inserted by the Finance Act, 1982) of Schedule 4 to the Capital Gains Tax Act, 1975, is hereby amended—

(a) in subparagraph (1)—

(i) by the deletion from clause (d) of “and”, and

(ii) by the insertion after clause (d) of the following clause:

“(dd) shares, other than shares quoted on a stock exchange, to which paragraph 2 of Schedule 2 applies, whether by virtue of that paragraph or any other provision of Schedule 2, so that, as respects a person disposing of those shares, they are treated as the same shares as shares specified in clause (d), acquired as the shares so specified were acquired; and”;

(b) in subparagraph (6) by the deletion from clause (a) of “ordinarily”;

(c) in subparagraph (7) by the substitution for clauses (a), (b) and (c) of the following clauses:

“(a) Where—

(i) after the passing of the Finance Act, 1995, a person acquires an asset to which this paragraph applies and paragraph 18 does not apply,

(ii) the consideration for acquiring the asset is of such a kind that the deduction mentioned in subparagraph (2) cannot be made thereout, and

(iii) the person disposing of the asset does not, at or before the time at which the acquisition is made, produce to the person acquiring the asset a certificate under subparagraph (6) in relation to the disposal,

the person acquiring the asset shall, within seven days of the time at which the acquisition is made,

(I) notify the Revenue Commissioners of the acquisition in a notice in writing containing particulars of—

(A) the asset acquired,

(B) the consideration for acquiring the asset,

(C) the market value of that consideration, estimated to the best of that person's knowledge and belief, and

(D) the name and address of the person making the disposal,

and

(II) pay to the Collector-General an amount of capital gains tax, equal to 15 per cent. of the market value of the consideration so estimated.

(b) Capital gains tax which, by virtue of subclause (II) of clause (a), is payable by a person acquiring an asset shall—

(i) be payable by that person in addition to any capital gains tax which, by virtue of any other provision of the Capital Gains Tax Acts, is payable by that person,

(ii) be due within seven days of the time at which that person acquires the asset, and

(iii) be payable by that person without the making of an assessment:

Provided that tax which has become due as aforesaid may be assessed on the person acquiring the asset (whether or not it has been paid when the assessment is made) if that tax or any part of it is not paid on or before the due date.

(c) Where any person acquiring an asset, has, in pursuance of subclause (II) of clause (a), paid any amount of tax by reference to the market value of the consideration for acquiring the asset, that person shall be entitled to recover a sum of that amount from the person disposing of the asset as a simple contract debt in any court of competent jurisdiction:

Provided that, where a copy of a certificate under subparagraph (6) is issued to the person acquiring the asset, being a copy of a certificate in relation to the disposal by which the person acquired the asset, that person—

(i) shall not be entitled thereafter to so recover the said sum, and

(ii) shall be repaid the said amount of tax.”;

(d) by the insertion after subparagraph (10) of the following subparagraph:

“(10A) Where there is a disposal of assets by virtue of a capital sum being derived from those assets, the person paying the capital sum shall, notwithstanding that no asset is acquired by that person, be treated for the purposes of this paragraph as acquiring the assets disposed of for a consideration equal to the capital sum, whether that sum is paid in money or money's worth, and the provisions of this paragraph shall, subject to any necessary modifications, apply accordingly.”.

PART II Customs and Excise

Chapter I Excise Duty on Tobacco Products other than Cigarettes — Introduction of Tax Stamps

77 Interpretation (Chapter I).

77.—In this Chapter—

“the Act of 1994” means the Finance Act, 1994;

“the Principal Act” means the Finance (Excise Duty on Tobacco Products) Act, 1977.

78 Amendment of section 2A (liability for duty to be paid by tax stamps) of Principal Act.

78.—Section 2A (inserted by the Act of 1994) of the Principal Act is hereby amended—

(a) in subsection (1), by the insertion of “and such other types of tobacco products as may be specified by order made under subsection (5) of this section,” after “in respect of cigarettes”,

(b) in subsection (4), by the substitution of “tobacco products, other than cigarettes or other tobacco products to which an order under subsection (5) of the section relates” for “other tobacco products”, and

(c) by the addition of the following subsection after subsection (4):

“(5) The Minister for Finance may, by order, extend the provisions of this Act which relate to tax stamps and cigarettes to other tobacco products to which this Act relates.”.

79 Amendment of section 2B (sale of cigarettes) of Principal Act.

79.—Section 2B (inserted by the Act of 1994) of the Principal Act is hereby amended—

(a) by the substitution of “relevant tobacco products” for “cigarettes” in each place where it occurs,

(b) in subsection (1), by the deletion of “and” in paragraph (b) and the insertion of the following paragraph after paragraph (c):

“(d) tobacco products which are not relevant tobacco products,”,

and

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

“(3) In this section ‘relevant tobacco products’ means cigarettes and any other tobacco products in respect of which an order under section 2A (5) of this Act relates.”.

80 Amendment of section 3 (repayment, remission and deferment of payment) of Principal Act.

80.—Section 3 of the Principal Act is hereby amended in subsection (3) (inserted by the Act of 1994) by the substitution in paragraph (a) of “cigarettes and other tobacco products in respect of which an order under section 2A (5) of this Act relates (other than cigarettes and such other tobacco products to which the proviso to subsection (1) applies)” for “cigarettes (other than cigarettes referred to in the proviso to subsection (1) of section 2A)”.

81 Amendment of section 8 (regulations) of Principal Act.

81.—Section 8 of the Principal Act is hereby amended in subsection (2) by the substitution of the following paragraph for paragraph (i) (inserted by the Act of 1994):

“(i) prescribe the form of tax stamps to be used to collect the excise duty imposed by section 2 of this Act on cigarettes or on other tobacco products in respect of which an order under section 2A(5) of this Act relates,”.

82 Amendment of section 10A (offences in relation to tax stamps) of Principal Act.

82.—Section 10A (inserted by the Act of 1994) of the Principal Act is hereby amended—

(a) in subsection (1)—

(i) by the insertion of “, and in subsection (4),” after “subsection (1)”, and

(ii) by the substitution of “relevant tobacco products” for “cigarettes” in each place where it occurs,

and

(b) by the addition of the following subsection after subsection (4):

“(5) In this section ‘relevant tobacco products’ means cigarettes and any other tobacco products in respect of which an order under section 2A(5) of this Act relates.”.

83 Amendment of section 18 (power to refuse delivery of goods) of Finance Act, 1939.