LegalizeFinance Act 2001
(e) in section 730G(1) in paragraph (c) by the substitution for “Subsections (2) and (4)” by “Subsections (2) to (4)”, and
(f) by the insertion after section 730G of the following:
| “Repayment of appropriate tax. | 730GA.—For the purposes of a claim to relief, under section 189, 189A or 192, or a repayment of income tax in consequence thereof, the amount of a payment made to a policyholder by an assurance company shall be treated as a net amount of income from the gross amount of which has been deducted income tax, of an amount equal to the amount of appropriate tax (within the meaning of section 730F) deducted from the payment, and such amount of gross income shall be treated as chargeable to tax under Case III of Schedule D. |
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| Capital acquisitions tax: set-off. | 730GB.—Where appropriate tax is payable as a result of the death of a person, the amount of such tax, in so far as it has been paid, shall be treated as an amount of capital gains tax paid for the purposes of section 63 of the Finance Act, 1985.”. |
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(2) This section shall—
(a) as respects paragraph (b), apply as on and from 15 February 2001,
(b) as respects paragraphs (a), (c), (d), (e) and (f), apply as on and from 1 January 2001.
71 Amendment of section 731 (chargeable gains accruing to unit trusts) of Principal Act.
71.—(1) Section 731 of the Principal Act is amended in subsection (5)—
(a) by the substitution in paragraph (a) for “all the issued units in a unit trust” of “all the issued units in a unit trust which neither is, nor is deemed to be, an authorised unit trust scheme (within the meaning of the Unit Trusts Act, 1990)”, and
(b) by the insertion after paragraph (b) of the following:
“(c) Where, by virtue of paragraph (a), gains accruing to a unit trust in a year of assessment are not chargeable gains, then—
(i) the unit trust shall not be chargeable to income tax for that year of assessment, and
(ii) a deposit (within the meaning of section 256(1)), which is an asset of the unit trust, shall not be a relevant deposit (within the meaning of that section) for the purposes of Chapter 4 of Part 8, for that year of assessment.”.
(2) This section shall be deemed to have applied—
(a) as respects paragraph (a), as on and from 1 January 2001, and
(b) as respects paragraph (b), for the year of assessment 2000-2001 and subsequent years of assessment.
72 Amendment of Part 27 (unit trusts and offshore funds) of Principal Act.
72.—(1) Part 27 of the Principal Act is amended by the insertion after Chapter 3 of the following:
Certain Offshore Funds — Taxation and Returns
| Interpretation and application. | 747B.—(1) In this Chapter— ‘chargeable period’ has the same meaning as in section 321(2); ‘EEA Agreement’ means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993; ‘EEA state’ means a State, other than the State, which is a Contracting Party to the EEA Agreement; ‘material interest’ shall be construed in accordance with section 743; ‘OECD’ means the organisation known as the Organisation for Economic Co-operation and Development; ‘offshore fund’ has the meaning assigned to it by section 743; ‘offshore state’ means a State, other than the State, which is— (i) a Member State of the European Communities, (ii) a State which is an EEA state, or (iii) a State which is a member of the OECD, the government of which have entered into arrangements having the force of law by virtue of section 826; ‘relevant payment’ means any payment including a distribution made to a person in respect of a material interest in an offshore fund, where such payments are made annually or at more frequent intervals, other than a payment made in consideration of the disposal of an interest in the offshore fund; ‘return of income’ has the meaning assigned to it by section 1084; ‘specified return date for the chargeable period’ has the meaning assigned to it by section 950; ‘standard rate per cent’ has the meaning assigned to it by section 4. (2) This Chapter applies to an offshore fund which— (a) being a company, the company is resident in, (b) being a unit trust scheme, the trustees of the unit trust scheme are resident in, or (c) being any arrangements referred to in section 743(1), those arrangements take effect by virtue of the law of, an offshore state. (3) For the purposes of this Chapter— (a) (i) there shall be a disposal of an asset if there would be such a disposal for the purposes of the Capital Gains Tax Acts, and (ii) where, on the death of a person, an asset which the person was competent to dispose, is a material interest in an offshore fund to which this Chapter applies, then, notwithstanding section 573(2)(b), such material interest shall be deemed to be disposed of and reacquired by the person immediately before the death of the person for a consideration equal to its then market value, (b) an income shall be correctly included in a return made by a person, only where that income is included in a return of income made by the person on or before the specified return date for the chargeable period in which the income arises, and (c) details of a disposal shall be correctly included in a return made by a person, only where details of the disposal are included in a return of income made by the person or, where the person has died, his or her executor or administrator, on or before the specified return date for the chargeable period in which the disposal is made. |
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| Return on acquisition of material interest. | 747C.—Where in any chargeable period a person acquires a material interest in an offshore fund, the person shall, notwithstanding anything to the contrary in section 950 or 1084, be deemed for that chargeable period to be a chargeable person for the purposes of sections 951 and 1084, and the return of income to be delivered by the person for that chargeable period shall include the following particulars— (a) the name and address of the offshore fund, (b) a description, including the cost to the person, of the material interest acquired, and (c) the name and address of the person through whom the material interest was acquired. |
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| Payment in respect of offshore funds. | 747D.—Where on or after 1 January 2001 a person who has a material interest in an offshore fund, is in receipt of a payment from the offshore fund, then— (a) where the person is not a company, and (i) the income represented by the payment is correctly included in a return made by the person, then notwithstanding section 15, the rate of income tax to be charged on the income shall be— (I) where the payment is a relevant payment, the standard rate per cent, and (II) where the payment is not a relevant payment and is not made in consideration of the disposal of an interest in the offshore fund, at the rate determined by the formula— (S + 3) per cent, where S is the standard rate per cent, and (ii) where the income represented by the payment is not correctly included in a return made by the person, the income shall be charged to income tax at a rate determined by section 15, and (b) where the person is a company, the income represented by the payment shall be charged to tax under Case III of Schedule D. |
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| Disposal of an interest in offshore funds. | 747E.—(1) Where on or after 1 January 2001 a person who has a material interest in an offshore fund, disposes of an interest in the offshore fund and the disposal gives rise to a gain computed in accordance with subsection (2), then, notwithstanding sections 645 and 747, the amount of that gain shall be treated as an amount of income chargeable to tax under Case IV of Schedule D, and where the person is not a company, and the person has correctly included details of the disposal in a return made by the person, the rate of income tax to be charged on that income shall, notwithstanding section 15, be the rate determined by the formula— (S + 3) per cent, where S is the standard rate per cent. (2) The amount of the gain accruing on a disposal referred to in subsection (1) is the amount which would be the amount of a gain accruing on the disposal for the purposes of the Capital Gains Tax Acts, if it were computed without regard to— (a) any charge to tax by virtue of this section, and (b) section 556(2). (3) Notwithstanding sections 538 and 546, where apart from this subsection the effect of any computation under subsection (2) would be to produce a loss, the gain on the disposal referred to in subsection (1) shall be treated as nil and accordingly for the purposes of this Chapter no loss shall be treated as accruing on such disposal. (4) Where, as a result of a disposal by a person, an amount of income is chargeable to tax under Case IV of Schedule D, that amount shall not be reduced by a claim made by the person— (a) where the person is not a company, under section 381 or 383, or (b) where the person is a company, under section 396 or 399. (5) Where an individual is chargeable to tax in accordance with subsection (1) in respect of an amount of income— (a) the tax thereby payable, in so far as it is paid, shall be treated as an amount of capital gains tax paid, for the purposes of section 63 of the Finance Act, 1985, and (b) that amount of income shall not be included in reckonable income (within the meaning of the Health Contributions Regulations, 1979 (S.I. No. 107 of 1979)) for the purposes of those Regulations.”. |
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(2) This section shall be deemed to have applied as on and from 1 January 2001.
73 Amendment of section 737 (special investment schemes) of Principal Act.
73.—(1) Section 737 of the Principal Act is amended—
(a) by the deletion in subsection (1) of the definition of “relevant period”,
(b) by the substitution in subsection (2) for paragraph (a)(v) of the following paragraph:
“(v) the aggregate of consideration given for shares which are, at any time on or after 1 February 1996 and before 31 December 2000, assets subject to any trust created under the scheme shall not be less than—
(I) as respects qualifying shares, 55 per cent, and
(II) as respects specified qualifying shares, 10 per cent,
of the aggregate of the consideration given for the assets which are at that time subject to any such trust.”,
and
(c) by the deletion in subsection (3)(a) of subparagraph (iii).
(2) This section shall be deemed to have applied as on and from 1 January 2001.
74 Amendment of Chapter 1A (investment undertakings) of Part 27 of Principal Act.
74.—(1) Chapter 1A of Part 27 of the Principal Act is amended—
(a) in section 739B—
(i) in subsection (1)—
(I) in the definition of “chargeable event”—
(A) by the deletion in paragraph (b) of “other than a payment made on the death of a unit holder”,
(B) by the deletion in paragraph (c) of “(other than as a result of the death of the unit holder)”, and
(C) by the substitution for paragraphs (A) and (B) of the following:
“(I) any exchange by a unit holder, effected by way of a bargain made at arm's length by an investment undertaking which is an umbrella scheme, of units in a sub-fund of the investment undertaking, for units in another sub-fund of the investment undertaking,
(II) any exchange by a unit holder, effected by way of a bargain made at arm's length by an investment undertaking, of units in the investment undertaking for other units in the investment undertaking,
(III) any transaction in relation to, or in respect of, units which are held in a recognised clearing system, and
(IV) the transfer by a unit holder of entitlement to a unit where the transfer is—
(A) between a husband and wife,
(B) between the spouses or former spouses concerned (as the case may be), by virtue or in consequence of an order made under Part III of the Family Law (Divorce) Act, 1996, on or following the granting of a decree of divorce,
(C) between the spouses concerned, by virtue or in consequence of an order made under Part II of the Family Law Act, 1995, on or following the granting of a decree of judicial separation within the meaning of that Act, or
(D) between the spouses or former spouses concerned (as the case may be), by virtue of an order or other determination of like effect, which is analogous to an order referred to in subparagraph (B) or (C), of a court under the law of a territory other than the State made under or in consequence of the dissolution of a marriage or the legal separation of the spouses, being a dissolution or legal separation that is entitled to be recognised as valid in the State,
but on the happening of a chargeable event following such a transfer, the then unit holder shall be treated as having acquired the unit transferred at the same cost as the person who transferred the unit;”,
(II) by the insertion after the definition of “qualifying management company” of the following:
“‘qualifying savings manager’ has the meaning assigned to it in section 848B (inserted by the Finance Act, 2001);”,
and
(III) by the insertion after the definition of “special investment scheme” of the following:
“‘special savings incentive account’ has the meaning assigned to it by section 848B (inserted by the Finance Act, 2001);”,
and
(ii) by the substitution for subsection (3) of the following:
“(3) This Chapter applies to an investment undertaking and the unit holders in relation to that investment undertaking where the investment undertaking—
(a) is on 31 March 2000 a specified collective investment undertaking, from 1 April 2000,
(b) first issued units on or after 1 April 2000, from the day of such first issue, or
(c) was a unit trust mentioned in section 631(5)(a), from the day on which the unit trust became an investment undertaking.”,
(b) in section 739D—
(i) in subsection (1) by the substitution for paragraph (a) of the following:
“(a) references to an investment undertaking being associated with another investment undertaking are references to both investment undertakings being set up and promoted by the same person,”,
(ii) by the substitution for subsections (3), (4) and (5) of the following:
“(3) The amount referred to in subsection (2)(c) is the amount determined by the formula—
| P — | (C P) | ||
|---|---|---|---|
| V |
where—
P is the amount in money or money's worth payable to the unit holder on the cancellation, redemption or repurchase of units, without having regard to any amount of appropriate tax (within the meaning of section 739E) thereby arising,
C is the total amount invested by the unit holder in the investment undertaking to acquire the units held by the unit holder immediately before the chargeable event and—
(a) where any unit was otherwise acquired by the unit holder, or
(b) where a chargeable event was deemed to happen on 31 December 2000 in respect of the unit holder of that unit,
the amount so invested to acquire the unit is—
(i) where paragraph (a) applies, the value of the unit at the time of its acquisition by the unit holder, and
(ii) where paragraph (b) applies, the greater of the cost of first acquisition of the unit by the unit holder and the value of the unit on 31 December 2000, without having regard to any amount of appropriate tax (within the meaning of section 739E) thereby arising,
and
V is the total value of the units held by the unit holder immediately before the chargeable event.
(4) The amount referred to in subsection (2)(d) is the amount determined by the formula—
| V1 — | (C V1) | ||
|---|---|---|---|
| V2 |
where—
V1 is the value of the units transferred, at the time of transfer, without having regard to any amount of appropriate tax (within the meaning of section 639E) thereby arising,
C is the total amount invested by the unit holder in the investment undertaking to acquire the units held by the unit holder immediately before the chargeable event and—
(a) where any unit was otherwise acquired by the unit holder, or
(b) a chargeable event was deemed to happen on 31 December 2000 in respect of the unit holder of that unit,
the amount so invested to acquire the unit is—
(i) where paragraph (a) applies, the value of the unit at the time of its acquisition by the unit holder, and
(ii) where paragraph (b) applies, the greater of the cost of first acquisition of the unit by the unit holder and the value of the unit on 31 December 2000, without having regard to any amount of appropriate tax (within the meaning of section 739E) thereby arising,
and
V2 is the total value of the units held by the unit holder immediately before the chargeable event.
(5) (a) The election referred to in paragraphs (c) and (d) of subsection (2) is an irrevocable election made by an investment undertaking in respect of all its unit holders at the time of the election or at any other time, so that, for the purposes of identifying units acquired with units subsequently disposed of by a unit holder, units acquired at an earlier time are deemed to have been disposed of before units acquired at a later time.
(b) On the first occasion that an investment undertaking is required to compute a gain on the happening of a chargeable event in respect of a unit holder on the cancellation, redemption, repurchase or transfer of a unit, and—
(i) the gain is computed in accordance with paragraph (a), the investment undertaking will be deemed to have made the election specified in that paragraph, or
(ii) the gain is not computed in accordance with paragraph (a), an election under paragraph (a) shall not be made.”,
(iii) by the substitution for subsection (6)(h) of the following:
“(h) is a person who is entitled to exemption from income tax and capital gains tax by virtue of section 784A(2) (as amended by the Finance Act, 2000) or by virtue of section 848E (inserted by the Finance Act, 2001) and the units held are assets of an approved retirement fund, an approved minimum retirement fund or, as the case may be, a special savings incentive account, and the qualifying fund manager, or, as the case may be, the qualifying savings manager has made a declaration to the investment undertaking in accordance with paragraph 9 of Schedule 2B.”,
(iv) by the insertion of the following after subsection (7):
“(7A) Where an investment undertaking is in possession of—
(a) a declaration made by a unit holder who is a person referred to in subsection (6), or
(b) a declaration made by a unit holder of the kind referred to in subsection (7) and paragraph (b) of that subsection is satisfied, which unit holder is entitled to the units in respect of which the declaration was made, a gain shall not be treated as arising—
(i) to the investment undertaking on the happening of a chargeable event in respect of the unit holder in relation to any other units in the investment undertaking to which the unit holder becomes entitled, or
(ii) to another investment undertaking which is associated with the investment undertaking referred to in subparagraph (i), on the happening of a chargeable event in respect of the unit holder in relation to units in that other investment undertaking to which the unit holder becomes entitled.”,
(v) by the substitution for subsection (8) of the following:
“(8) (a) A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder where the investment undertaking was on 31 March 2000 a specified collective investment undertaking and—
(i) the unit holder was a unit holder (within the meaning of section 734(1)) in relation to that specified collective investment undertaking at that time and the investment undertaking on or before 30 June 2000 makes to the Collector-General a declaration in accordance with paragraph 12 of Schedule 2B, or
(ii) the unit holder otherwise became a unit holder on or before 30 September 2000 and the investment undertaking forwarded to the Collector-General, on or before 1 November 2000, a list containing the name and address of each such unit holder who is resident in the State,
otherwise than, subject to paragraph (b), in respect of a unit holder (in this subsection and in section 739G referred to as an ‘excepted unit holder’)—
(I) whose name is included in the schedule to the declaration referred to in paragraph 12(d) of Schedule 2B or the list referred to in subparagraph (ii), and
(II) who has not made a declaration of a kind referred to in subsection (6) to the investment undertaking.
(b) A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of an excepted unit holder where a chargeable event is deemed to happen on 31 December 2000.
(8A) Where under subsection (8)(a) a gain is not treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder who acquired units on or before 30 September 2000, a gain shall not be treated as arising—
(a) to the investment undertaking on the happening of a chargeable event in respect of the unit holder in relation to any other units in the investment undertaking to which the unit holder becomes entitled, or
(b) to another investment undertaking which is associated with the investment undertaking referred to in paragraph (a), on the happening of a chargeable event in respect of the unit holder in relation to units in that other investment undertaking to which the unit holder becomes entitled.
(8B) A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder where—
(a) the investment undertaking was a unit trust mentioned in section 731(5)(a),
(b) the unit holder held units in that unit trust at the time that it became an investment undertaking, and
(c) within 30 days of that time, the investment undertaking forwards to the Collector-General a list containing the name and address of each such unit holder and such other information as the Revenue Commissioners reasonably require.
(8C) (a) In this section a ‘scheme of amalgamation’ means an arrangement whereby a unit holder in a unit trust referred to in section 631(5)(a) exchanges units so held, for units in an investment undertaking.
(b) A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder where—
(i) the unit holder acquires units in the investment undertaking in exchange for units held in a unit trust referred to in section 731(5)(a), under a scheme of amalgamation, and
(ii) within 30 days of the scheme of amalgamation taking place, the investment undertaking forwards to the Collector-General a list containing, in respect of each unit holder who so acquired units in the investment undertaking, the name and address and such other information as the Revenue Commissioners may reasonably require.
(8D) (a) In this section ‘scheme of migration and amalgamation’ means an arrangement whereby the assets of a unit trust, whose trustees are neither resident nor ordinarily resident in the State, are transferred to an investment undertaking in exchange for the issue by the investment undertaking of units to the unit holders of the unit trust, in proportion to the number of units they so held, and as a result of which the units in the unit trust become negligible in value.
(b) A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder where—
(i) under a scheme of migration and amalgamation the unit holder acquires units in the investment undertaking in exchange for units held in a unit trust whose trustees are neither resident nor ordinarily resident in the State, and
(ii) within 30 days of the scheme of migration and amalgamation taking place, the investment undertaking forwards to the Collector-General, a declaration of a kind referred to in paragraph (c),
otherwise than in respect of a unit holder whose name is included in the schedule referred to in paragraph (c)(ii).
(c) The declaration referred to in paragraph (b) is a declaration in writing made and signed by the investment undertaking which—
(i) declares to the best of the investment undertaking's knowledge and belief that at the time of the scheme of migration and amalgamation it did not issue units to a person who was resident in the State at that time, other than such persons whose names and addresses are set out on the schedule to the declaration, and
(ii) contains a schedule which sets out the name and address of each person who was resident in the State at the time that the person was issued units by the investment undertaking under the scheme of migration and amalgamation.”,
(vi) by the substitution in subsection (9) for “A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder who is an intermediary” of “A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder”, and
(vii) by the substitution for subsection (10) of the following:
“(10) An investment undertaking shall keep and retain declarations made to it in accordance with Schedule 2B for a period of 6 years from the time the unit holder of the units in respect of which the declaration was made, ceases to be both such a unit holder and a unit holder in all investment undertakings which are associated with the investment undertaking.”,
(c) in section 739F by the substitution for subsection (5) of the following:
“(5) Where—
(a) any item has been incorrectly included in a return as appropriate tax, the inspector may make such assessments, adjustments or set-offs as may in his or her judgement be required for securing that the resulting liabilities, including interest on unpaid tax, whether of the investment undertaking making the return or of any other person, are in so far as possible the same as they would have been if the item had not been included, or
(b) any item has been correctly included in a return, but within one year of the making of the return the investment undertaking proves to the satisfaction of the Revenue Commissioners that it is just and reasonable that an amount of appropriate tax (included in the return) which has been paid, should be repaid to the investment undertaking, such amount may be repaid to the investment undertaking.”,
(d) in section 739F(7) by the substitution for paragraph (c) of the following:
“(c) Subsections (2) to (4) of section 1080 shall apply in relation to interest payable under paragraph (b) as they apply in relation to interest payable under section 1080.”,
(e) in section 739G—
(i) in subsection (2)—
(I) by the substitution for paragraph (b) of the following paragraph:
“(b) where the unit holder is not a company and the payment is a payment from which appropriate tax has not been deducted, the amount of the payment shall be treated for the purposes of the Tax Acts as income arising to the unit holder, constituting profits or gains chargeable to tax under Case IV of Schedule D; but where the payment is in respect of the cancellation, redemption, repurchase or transfer of units, such income shall be reduced by the amount of the consideration in money or money's worth given by the unit holder for the acquisition of those units,”,
(II) by the substitution for paragraphs (e) and (f) of the following:
“(e) where the unit holder is a company, the payment is not a relevant payment and appropriate tax has been deducted therefrom, such payment shall, subject to paragraph (g), not otherwise be taken into account for the purposes of the Tax Acts,
(f) where the unit holder is a company, the payment is not a relevant payment and appropriate tax has not been deducted from the payment, the amount of such payment shall, subject to paragraph (g), be treated for the purposes of the Tax Acts as income arising to the unit holder, constituting profits or gains chargeable to tax under Case IV of Schedule D; but where the payment is in respect of the cancellation, redemption, repurchase or transfer of units, such income shall be reduced by the amount of the consideration in money or money's worth given by the unit holder for the acquisition of those units,”,
(III) by the substitution in paragraph (h) of “chargeable to income tax,” for “chargeable to income tax, and”, and
(IV) by the substitution for paragraph (i) of the following:
“(i) otherwise than by virtue of section 739F(5) or paragraph (j), no repayment of appropriate tax shall be made to any person who is not a company within the charge to corporation tax, and
(j) notwithstanding paragraph (a), for the purposes of a claim to relief, under section 189, 189A or 192, or a repayment of income tax in consequence thereof, the amount of a payment made to a unit holder shall be treated as a net amount of income from the gross amount of which has been deducted income tax (of an amount equal to the amount of appropriate tax deducted in making the payment), and such gross amount of income shall be treated as chargeable to tax under Case III of Schedule D.”,
and
(ii) by the insertion after subsection (2) of the following:
“(3) References in subsection (2) to payments, from which appropriate tax has not been deducted, made to a unit holder by an investment undertaking, include references to payments made to a unit holder who holds units which are held in a recognised clearing system.
(4) Where the units of an investment undertaking are denominated in a currency other than the currency of the State (in this subsection referred to as ‘foreign currency’), then for the purposes of the Capital Gains Tax Acts the amount of foreign currency given by a unit holder to the investment undertaking for the acquisition of a unit in the investment undertaking shall be deemed to have been disposed of and reacquired by the unit holder—
(a) immediately before it was so given, and
(b) immediately after the unit holder receives payment for the cancellation, redemption or repurchase of, or as the case may be, transfer of, his or her units.
(5) Where appropriate tax is payable as a result of the death of a person, the amount of such tax, in so far as it has been paid, shall be treated as an amount of capital gains tax paid, for the purposes of section 63 of the Finance Act, 1985.”.
(2) This section shall—
(a) as respects paragraph (a)(i), apply on of after 15 February 2001, and
(b) as respects paragraphs (a)(ii) and (b) to (e), be deemed to have applied on or after 1 April 2000.
75 Amendment of Schedule 2B (Investment undertakings declarations) of Principal Act.
75.—The Principal Act is amended in Schedule 2B by the substitution for paragraph 9 of the following:
“Declaration of qualifying fund manager or qualifying savings manager
The declaration referred to in section 739D(6)(h) is a declaration in writing to the investment undertaking which—
(a) is made by a qualifying fund manager or, as the case may be, a qualifying savings manager (in this paragraph referred to as the ‘declarer’) in respect of the units which are assets in an approved retirement fund, an approved minimum retirement fund, or a special savings incentive account,
(b) is signed by the declarer,
(c) is made in such form as may be prescribed or authorised by the Revenue Commissioners,
(d) declares that, at the time the declaration is made, the units in respect of which the declaration is made—
(i) are assets of an approved retirement fund, an approved minimum retirement fund or, as the case may be, a special savings incentive account, and
(ii) are managed by the declarer for the individual who is beneficially entitled to the units,
(e) contains the name, address and tax reference number of the individual referred to in paragraph (d),
(f) contains an undertaking by the declarer that if the units cease to be assets of the approved retirement fund, the approved minimum retirement fund or held in the special savings incentive account, including a case where the units are transferred to another such fund or account, the declarer will notify the investment undertaking accordingly, and
(g) contains such other information as the Revenue Commissioners may reasonably require for the purposes of Chapter 1A of Part 27.”.
76 Amendment of section 843 (capital allowances for buildings used for third level educational purposes) of Principal Act.
76.—(1) Section 843 of the Principal Act is amended—
(a) in subsection (1)—
(i) in the definition of “approved institution”—
(I) by the substitution in paragraph (b) of “applies, or” for “applies;”, and
(II) by the insertion after paragraph (b) of the following:
“(c) any body engaged in the provision of third level health and social services education or training which is approved by the Minister for Health and Children for the purposes of this section and is in receipt of public funding in respect of the provision of such education or training;”,
(ii) in the definition of “qualifying expenditure”, by the substitution of the following for the words from “which, following” to the end of that definition:
“which—
(i) in the case of an institution referred to in paragraph (a) or (b) of the definition of ‘approved institution’, is, following the receipt of the advice of An tÚdarás, approved for that purpose by the Minister for Education and Science with the consent of the Minister for Finance, and
(ii) in the case of a body referred to in paragraph (c) of the definition of ‘approved institution’, is approved for that purpose by the Minister for Health and Children with the consent of the Minister for Finance;”,
and
(iii) in paragraph (b)(i) of the definition of “qualifying premises”, by the insertion of “or associated sporting or leisure activities” after “education”,
(b) in subsection (4), by the insertion of “or, in the case of the construction of a qualifying premises which consists of a building or structure which is to be used for the purposes of sporting or leisure activities associated with third level education provided by an approved institution where in relation to that premises an application for certification under this subsection was made, and the construction of that premises commenced, prior to 15 February 2001, before 1 July 2001,” after “before the construction of a qualifying premises,”, and
(c) in subsection (8)—
(i) in paragraph (a), by the substitution of “paragraph (i) of the definition of ‘qualifying expenditure”’ for “the definition of ‘qualifying expenditure”’,
(ii) in paragraph (b), by the insertion of “in so far as that expenditure is concerned,” before “on the Minister for Finance”,
(iii) by the substitution of “either generally in the case of institutions referred to in paragraphs (a) and (b) of the definition of “approved institution” or in respect of capital expenditure to be incurred on any particular type of qualifying premises to be used by any such institution” for “either generally or in respect of capital expenditure to be incurred on any particular type of qualifying premises”,
(iv) by the insertion after “where these Ministers of the Government so delegate that authority” of “, then, as respects the matters so delegated”, and
(v) by the substitution of the following for paragraph (I):
“(I) the definition of ‘qualifying expenditure’ in subsection (1) shall apply as if the reference in paragraph (i) of that definition to ‘is, following the receipt of the advice of An tÚdarás, approved for that purpose by the Minister for Education and Science with the consent of the Minister for Finance’ were a reference to ‘is approved for that purpose by An tÚdarás, and”’.
(2) Subsection (1)(a)(iii) shall be deemed to have come into operation as respects capital expenditure incurred on or after 1 October 1999.
77 Changeover to calendar year of assessment
77.—(1) The Principal Act is amended—
(a) in section 2(1), by the substitution of the following for the definition of “year of assessment”:
“‘year of assessment’ means—
(a) in relation to a period prior to 6 April 2001, a year beginning on 6 April in one year and ending on 5 April in the next year,
(b) the period beginning on 6 April 2001 and ending on 31 December 2001, which period is referred to as the ‘year of assessment 2001’, and
(c) thereafter, a calendar year and, accordingly, the ‘year of assessment 2002’ means the year beginning on 1 January 2002 and any corresponding expression in which a subsequent year of assessment is similarly mentioned means the year beginning on 1 January in that year;”,
(b) in section 5(1), by the substitution of the following for the definition of “year of assessment”:
“‘year of assessment’ means—
(a) in relation to a period prior to 6 April 2001, a year beginning on 6 April in one year and ending on 5 April in the next year,
(b) the period beginning on 6 April 2001 and ending on 31 December 2001, which period is referred to as the ‘year of assessment 2001’, and
(c) thereafter, a calendar year and, accordingly, the ‘year of assessment 2002’ means the year beginning on 1 January 2002 and any corresponding expression in which a subsequent year of assessment is similarly mentioned means the year beginning on 1 January in that year;”,
and
(c) in section 14, by the substitution of the following for subsection (2):
“(2) Every assessment and charge to income tax shall be made for a year of assessment.”.
(2) The Principal Act is amended in the manner and to the extent specified in Schedule 2.
78 Provisions relating to making of returns of income and chargeable gains and payment of income tax and capital gains tax.
78.—(1) Part 41 of the Principal Act is amended as respects the year of assessment 2001 and subsequent years (being years of assessment for income tax and capital gains tax) and as respects accounting periods of companies ending on or after 1 April 2001—
(a) in section 950(1)—
(i) by the substitution for paragraph (a) of the definition of “chargeable person” of the following:
“(a) whose total income for the chargeable period consists solely of emoluments to which Chapter 4 of Part 42 applies, and for this purpose a person whose total income for the chargeable period, other than emoluments to which that Chapter applies, is taken into account in determining in accordance with regulations made under section 986 the amount of his or her tax credits and standard rate cut-off point for the chargeable period shall be deemed for the chargeable period to be a person whose total income consists solely of emoluments to which that Chapter applies,”,
and
(ii) by the substitution for paragraph (a) of the definition of “specified return date for the chargeable period” of the following:
“(a) where the chargeable period is a year of assessment for income tax or capital gains tax purposes, 31 October in the year of assessment following that year,”,
(b) in section 951—
(i) in subsection (1)—
(I) by the substitution for “Every chargeable person shall as respects a chargeable period prepare and deliver to the appropriate inspector” of the following:
“Every chargeable person shall as respects a chargeable period prepare and deliver to, in the case of a chargeable person who is chargeable to income tax or capital gains tax for a chargeable period which is a year of assessment, the Collector-General and, in any other case, the appropriate inspector”,
and
(II) by the insertion after “such further particulars” of “(including particulars relating to the preceding year of assessment where the profits or gains of that preceding year are determined in accordance with section 65(3))”,
(ii) in subsection (2) by the substitution for “appropriate inspector” of “Collector-General” and for “the inspector” of “the appropriate inspector”,
(iii) in subsection (3)(a) by the substitution for “an inspector” of “the Collector-General or an inspector, as the case may be”,
(iv) in subsection (4) by the substitution for “appropriate inspector” of “the Collector-General or the appropriate inspector, as the case may be,”, and
(v) in subsection (10)—
(I) by the substitution for “an inspector” in both places in which it occurs of “an officer of the Revenue Commissioners”, and
(II) by the substitution for “that inspector” of “such officer”,
(c) in section 952—
(i) by the deletion of subsection (3),
(ii) by the insertion after subsection (5) of the following:
“(6) This section shall not apply to capital gains tax.”,
(d) in section 953 by the deletion of subsections (1) to (6) and subsections (8) to (11),
(e) in section 957(1) by the deletion of paragraph (a),
(f) in section 958—
(i) in subsection (1) by the deletion of the definition of “specified due date”,
(ii) by the substitution for subsections (2) to (4) of the following:
“(2) Preliminary tax appropriate to a chargeable period shall be due and payable—
(a) where the chargeable period is a year of assessment for income tax and subject to subsection (10), on or before 31 October in the year of assessment, or
(b) where the chargeable period is an accounting period of a company, within the period of 6 months from the end of the accounting period; but in any case not later than—
(i) day 28 of the month in which that period of 6 months ends, or
(ii) such earlier day in that month as may be specified by order made by the Minister for Finance,
and accordingly references in this Part to the due date for the payment of an amount of preliminary tax shall be construed as references to 31 October in the year of assessment, the last day of that period of 6 months, or day 28 (or such earlier day as may be specified by order made by the Minister for Finance) of the month in which that period of 6 months ends, as the case may be.
(3) (a) Subject to subsections (3A) and (4), tax payable by a chargeable person for a chargeable period shall be due and payable—
(i) where an assessment is made on the chargeable person for the chargeable period before the due date for the payment of an amount of preliminary tax for the chargeable period, on or before that date,
(ii) where an assessment is made on the chargeable person for the chargeable period before the specified return date for the chargeable period and the chargeable period is a year of assessment for income tax or capital gains tax, on or before that date,
(iii) where an assessment has not been made on the chargeable person for the chargeable period, being a year of assessment for income tax or capital gains tax, on or before the specified return date for the chargeable period, or
(iv) where the chargeable period is an accounting period of a company, not later than one month from the date on which an assessment is made on the chargeable person for the chargeable period.
(b) Where in relation to a chargeable period, being a year of assessment for income tax or capital gains tax, tax payable by a chargeable person for the year of assessment is due and payable in accordance with paragraph (a)(iii), then, tax specified in any subsequent assessment made on the chargeable person for that year shall be deemed to have been due and payable on or before the specified return date for the chargeable period.
(3A) Subject to subsection (3), where—
(a) an assessment to tax has not been made on a chargeable person on or before the specified return date for a chargeable period (being a year of assessment for income tax or capital gains tax), and
(b) the chargeable person has—
(i) delivered a return for the year of assessment by the specified return date for the chargeable period,
(ii) made in the return a full and true disclosure of all material facts necessary for the making of a correct assessment for the year of assessment, and
(iii) paid an amount of tax for the year of assessment on or before the specified return date, being an amount which is less than the tax payable by the chargeable person for the year of assessment by not more than the greater of—
(I) 5 per cent of the tax payable by that person for that year or £2,500, whichever is the lesser, and
(II) £500,
then, subject to subsection (8), any additional tax payable by the chargeable person for that year shall be due and payable on or before 31 December in the following year of assessment.
(4) Where but for this subsection tax payable by a chargeable person for a chargeable period would be due and payable in accordance with subsection (3), other than paragraph (a)(i) of that subsection, and—
(a) the chargeable person has defaulted in the payment of preliminary tax for the chargeable period,
(b) the preliminary tax paid by the chargeable person for the chargeable period is less than, or less than the least of, as the case may be—
(i) 90 per cent of the tax payable by the chargeable person for the chargeable period,
(ii) (I) where the chargeable period is a year of assessment other than the year of assessment 2001 or 2002, the income tax payable by the chargeable person for the preceding chargeable period,
(II) where the chargeable period is the year of assessment 2002, 135 per cent of the income tax payable by the chargeable person for the preceding chargeable period,
(III) where the chargeable period is the year of assessment 2001, 74 per cent of the income tax payable by the chargeable person for the preceding chargeable period,
(iii) in the case of a chargeable person to whom subsection (10) applies (other than a chargeable person in relation to whom the amount of income tax payable, or taken in accordance with subsection (5)(a) to be payable, for the pre-preceding chargeable period was nil)—
(I) where the chargeable period is a year of assessment other than the year of assessment 2001 or 2003, 105 per cent of the income tax payable by the chargeable person for the pre-preceding chargeable period,
(II) where the chargeable period is the year of assessment 2003, 142 per cent of the income tax payable by the chargeable person for the pre-preceding chargeable period,
(III) where the chargeable period is the year of assessment 2001, 78 per cent of the income tax payable by the chargeable person for the pre-preceding chargeable period,
or
(c) the preliminary tax payable by the chargeable person for the chargeable period was not paid by the date on which it was due and payable,
the tax payable by the chargeable person shall be deemed to have been due and payable on the due date for the payment of an amount of preliminary tax for the chargeable period.
(4A) Where—
(a) after the due date for the payment of an amount of preliminary tax for a chargeable period (being a year of assessment for income tax), an amount of additional income tax to which subsection (3A) applies is paid for the preceding chargeable period, and
(b) an additional amount of preliminary tax (which is not more than the additional amount of income tax so paid) is paid on or before 31 December in the year of assessment such that the total amount of preliminary tax paid by the chargeable person for the chargeable period is not less than the amount specified in subsection (4)(b)(ii),
then, the additional amount of preliminary tax so paid shall be deemed for the purposes of subsection (4)(b)(ii) to have been paid on the due date for the payment of an amount of preliminary tax for the chargeable period.”,
(iii) by the insertion after subsection (8) of the following:
“(8A) (a) Where, in relation to a chargeable period being a year of assessment for income tax, the profits or gains of a corresponding period relating to the preceding year of assessment are taken to be the profits or gains of that preceding year of assessment in accordance with section 65(3), then, notwithstanding that the assessment for that preceding year of assessment has not been amended, any tax payable for that preceding year of assessment which exceeds the tax due and payable for that year without regard to the operation of section 65(3) shall be due and payable on or before the specified return date for the chargeable period.
(b) An amount of income tax to which paragraph (a) applies shall not be taken into account for the purposes of subsection (4).
(c) Notwithstanding subsection (8), where, in relation to a chargeable period being a year of assessment for income tax, any additional tax for the preceding year of assessment is due and payable by virtue of an amendment of the assessment for that year made in accordance with section 65(3), then, such additional tax as specified in the amendment to the assessment for that year shall be deemed to have been due and payable on or before the specified return date for the chargeable period.”,
and
(iv) by the substitution for subsection (10) of the following:
“(10) (a) This subsection shall apply to a chargeable person who authorises the Collector-General to collect preliminary tax by the debiting of the bank account of that person in accordance with paragraph (b) and complies with such conditions as the Collector-General may reasonably impose to ensure that an amount of preliminary tax payable by a chargeable person for a chargeable period will be paid by the chargeable person in accordance with this subsection.
(b) Preliminary tax appropriate to a chargeable period where the chargeable period is a year of assessment for income tax shall be due and payable in the case of a chargeable person to whom this subsection applies—
(i) as respects the first year of assessment for which the Collector-General is authorised in accordance with paragraph (a) to debit that person's bank account, by way of a minimum of 3 equal monthly instalments in that year, and
(ii) as respects any subsequent year of assessment in which the Collector-General is so authorised, by way of a minimum of 8 equal monthly instalments in that year,
and the Collector-General shall debit the bank account of that person with such instalments on day 9 of each month for which the Collector-General is so authorised.
(c) The Collector-General may, in any particular case, in order to facilitate the payment of preliminary tax in accordance with this subsection, agree at the Collector-General's discretion to vary the number of equal monthly instalments to be collected in a year or agree at the Collector-General's discretion to an increase or decrease in the amount to be collected in any subsequent instalment to be made in that year.
(d) A chargeable person shall not be treated as having paid an amount of preliminary tax in accordance with this subsection unless that person pays in the year of assessment the monthly instalments due in accordance with paragraph (b) or (c), as appropriate.
(e) For the purposes of this section, a chargeable person who pays an amount of preliminary tax appropriate to a chargeable period in accordance with this subsection shall be deemed to have paid that amount of preliminary tax on the due date for the payment of an amount of preliminary tax for the chargeable period.”,
and
(g) in section 959 by the deletion from subsection (2) of “a notice of preliminary tax bearing the name of the inspector or” and “that notice of preliminary tax shall for the purposes of the Tax Acts and the Capital Gains Tax Acts be deemed to have been given by the inspector to the best of his or her opinion,”.
(2) The Principal Act is amended as respects the year of assessment 2001 and subsequent years (being years of assessment for income tax and capital gains tax) and as respects accounting periods of companies ending on or after 1 April 2001—
(a) by the substitution in section 66(3) for “on giving notice in writing to the inspector with the return required under section 951 for the year of assessment” of “on including a claim in that behalf with the return required under section 951 for the year of assessment”,
(b) by the substitution in section 579D(1) and in the definition of “specified period” in section 629(1) for “when a return under section 951 for the chargeable period is delivered to the appropriate inspector (within the meaning of section 950)” of “when a return under section 951 for the chargeable period is delivered to the Collector-General”,
(c) by the substitution in section 657(7) for “by notice in writing given to the inspector with the return required under section 951 for the year of assessment” of “on including a claim in that behalf with the return required under section 951 for the year of assessment”.
(d) by the substitution in paragraph (b) of the definition of “appropriate inspector” in section 894(1) for “a return or statement of income or profits” of “any return, statement, list or declaration”,
(e) by the substitution in paragraph (a) of the definition of “appropriate inspector” in section 895(1) for “to deliver a return or statement of income or profits” of “to deliver a return, statement, declaration or list by reason of a notice given to the person by the inspector”,
(f) by the substitution in paragraph (b) of the definition of “appropriate inspector” in section 895(1) for “such return or statement” of “such return, statement, declaration or list”,
(g) by the substitution in section 909(2) for “to deliver a tax return to an inspector of taxes or to the inspector of returns (within the meaning of section 951(11)), as the case may be, the inspector” of “to deliver a tax return, an inspector of taxes or the inspector of returns (within the meaning of section 951(11)), as the case may be,”, and
(h) by the substitution in section 1084 for subsection (5) of the following:
“(5) This section shall apply in relation to an amount of preliminary tax (within the meaning of Part 41) paid under section 952 as it applies to an amount of tax specified in an assessment.”.
(3) Section 958 of the Principal Act is amended, as respects the year of assessment 2002 and subsequent years, by the substitution in subsection (3A)(b)(iii) (inserted by subsection (1)(f)(ii)) for “£2,500” of “€3,175” and for “£500” of “€635”.
79 Amendment of provisions relating to Dublin Docklands Development Authority.
79.—The Principal Act is amended—
(a) in section 9(1)—
(i) by the substitution in paragraph (c) for “company.” of “company,”, and
(ii) by the insertion of the following after paragraph (c):
“(d) a ‘wholly-owned subsidiary’ of another company if and so long as 100 per cent of its ordinary share capital is directly owned by that other company.”,
(b) as respects accounting periods ending on or after 6 April 2001, in paragraph 3 of the Table to section 220 by the substitution for “Authority.” of “Authority and any of its wholly-owned subsidiaries.”, and
(c) as respects disposals made on or after 6 April 2001, in paragraph 31 of Schedule 15 by the substitution for “Authority.” of “Authority and any of its wholly-owned subsidiaries.”.
80 Amendment of Chapter 10 (designated areas of certain towns) of Part 10 of Principal Act.
80.—(1) Chapter 10 of Part 10 of the Principal Act is amended—
(a) in section 372AA(1), by the substitution in the definition of “qualifying period” of “31 December 2003” for “31 March 2003”,
(b) in section 372AB(1)(c), by the substitution of “31 December 2003” for “31 March 2003”,
(c) in section 372AF(1), by the substitution in paragraph (b) of the definition of “qualifying premises” of “150 square metres” for “125 square metres”,
(d) in section 372AG(1), by the substitution in paragraph (b) of the definition of “qualifying premises” of “150 square metres” for “125 square metres”,
(e) in section 372AH(1), by the substitution for paragraph (d) of the definition of “qualifying premises” of the following:
“(d) the total floor area of which is not less than 38 square metres and not more than—
(i) in the case where the qualifying expenditure has been incurred on the construction of the qualifying premises, 125 square metres, or
(ii) in the case where the qualifying expenditure has been incurred on the refurbishment of the qualifying premises, 210 square metres;”,
and
(f) in section 372AJ(1), by the insertion after paragraph (a) of the following:
“(aa) in respect of expenditure incurred on or after 6 April 2001 on the construction or refurbishment of a building or structure or a qualifying premises where any part of such expenditure has been or is to be met, directly or indirectly, by grant assistance from the State or from any other person.
(ab) in respect of expenditure incurred on or after 6 April 2001 on the construction or refurbishment of a building or structure or a qualifying premises unless the relevant interest, within the meaning of section 269, in such expenditure is held by a small or medium-sized enterprise within the meaning of Annex I to Commission Regulation (EC) No. 60/2001 of 12 January 2001[^1],
(ac) in respect of expenditure incurred on or after 6 April 2001 on the refurbishment of a building or structure or a qualifying premises unless—
(i) such expenditure does not exceed €800,000,
(ii) such expenditure is incurred on a building or structure or qualifying premises in use for the purposes of the retailing of goods or the provision of services only within the State but excluding any building or structure or qualifying premises in use—
(I) as offices, or
(II) for the provision of mail order or financial services,
or
(iii) in conjunction with such expenditure, expenditure on the construction of an extension to the building or structure or qualifying premises is incurred which amounts to not less than 25 per cent of the market value of the building or structure or qualifying premises, as the case may be, immediately before the expenditure on the construction and refurbishment of the building or structure or qualifying premises was incurred.”.
(2) Paragraphs (c), (d) and (e) of subsection (1) shall apply as respects expenditure incurred on or after 6 April 2001, being expenditure which is—
(a) conversion expenditure within the meaning of section 372AF,
(b) relevant expenditure within the meaning of section 372AG, or
(c) qualifying expenditure within the meaning of section 372AH,
as the case may be.
81 Capital allowances for hotels.
81.—Section 268 of the Principal Act is amended by the insertion of the following after subsection (10):
“(11) Notwithstanding any other provision of this section, as respects capital expenditure incurred on or after 20 March 2001, a building or structure in use for the purposes of the trade of hotel-keeping shall not be treated as an industrial building or structure where any part of that expenditure has been or is to be met, directly or indirectly, by grant assistance from the State or from any other person.
(12) Notwithstanding any other provision of this section, as respects capital expenditure incurred on the construction or refurbishment of a building or structure in respect of which construction or refurbishment first commences on or after 6 April 2001, a building or structure in use for the purposes of the trade of hotel-keeping shall not be treated as an industrial building or structure unless, on the making of an application by the person who incurs the capital expenditure on the construction or refurbishment of the building or structure, Bord Fáilte Éireann gives a certificate in writing to that person, in relation to that expenditure, stating—
(a) that sufficient information has been furnished to it as to enable a determination to be made as to whether or not that person is a small or medium-sized enterprise within the meaning of Annex 1 to Commission Regulation (EC) No. 70/2001 of 12 January 2001[^1] on the application of Articles 87 and 88 of the European Communities Treaty to State aid to small and medium-sized enterprises, and
(b) that such person has undertaken to furnish to the Minister for Finance, or to such other Government Minister, agency or body as may be nominated for that purpose by the Minister for Finance, upon request in writing by that Minister, agency or body, such further information as may be necessary to enable compliance with the reporting requirements of that Regulation or any other European Communities Regulation or Directive under the European Communities Treaty governing the granting of State aid in specific sectors.”.
Chapter 4 Corporation Tax
82 Amendment of provisions relating to a shipping trade.
82.—(1) The Principal Act is amended—
(a) in section 21 by the insertion after subsection (1) of the following:
“(1A) (a) In this subsection—
‘qualifying shipping activities’ and ‘qualifying shipping trade’ have the same meanings respectively as in section 407;
(b) Notwithstanding subsection (1), for the financial year 2001 and 2002, in relation to a company carrying on a qualifying shipping trade, profits from qualifying shipping activities carried on in the course of the qualifying shipping trade shall be charged to corporation tax at the rate of 12 per cent.”,
and
(b) in section 407(1) in the definition of “relevant period” by the substitution of “1 January 1987 to 31 December 2002” for “the 1st day of January, 1987, to the 31st day of December, 2000”.
(2) This section applies as on and from 1 January 2001.
83 Amendment of section 22A (reduction of corporation tax in respect of certain trading income) of Principal Act.
83.—(1) Section 22A of the Principal Act is amended—
(a) in subsection (2)(b) by the substitution of the following for paragraphs (i) to (iii)—
(i) as respects an accounting period falling within the financial year 2001, 30 per cent, and
(ii) as respects an accounting period falling within the financial year, 2002, 14 per cent,”,
and
(b) in subsection (3) by the substitution of—
(i) as respects the financial year 2001 “£200,000” for “£50,000” and “£250,000” for “£75,000”, and
(ii) as respects the financial year 2002 “€254,000” for “£50,000” and “€317,500” for “£75,000”,
in both places where they each occur.
(2) This section has effect as respects the financial year 2001 and subsequent financial years.
84 Foundation for Investing in Communities.
84.—(1) The Principal Act is amended by the insertion of the following after section 87:
| “Deductions for gifts to Foundation for Investing in Communities. | 87A.—(1) In this section, ‘the Company’ means the company incorporated on 11 November 1998 as The Foundation for Investing in Communities Limited or any of its 90 per cent subsidiaries as may be approved for the purposes of this section by the Minister for Finance. (2) This section shall apply to a gift of money which— (a) on or before 5 April 2001 is made to the Company and accepted by it, (b) is to be applied by the Company solely for the objects set out in its memorandum of association, (c) apart from subsection (3), would not be deductible in computing for the purposes of corporation tax the profits or gains of a trade or profession, and (d) is not income to which section 792 applies. (3) (a) Subject to paragraph (b) and subsection (2), where a company (in this section referred to as a ‘donor’) makes a gift to which this section applies and claims relief from tax by reference to the gift, the net amount of the gift shall be treated for the purposes of corporation tax as— (i) a deductible trading expense of a trade carried on by the donor, or (ii) an expense of management deductible in computing the total profits of the donor, incurred by it in the accounting period in which the gift is made. (b) In determining for the purposes of paragraph (a) the net amount of the gift, the amount or value of any consideration received by a donor as a result of making the gift, whether received directly or indirectly from the Company or any other person, shall be deducted from the amount of the gift, and relief under this section shall not be given to a donor for an accounting period— (i) if the net amount of the gift (or the aggregate of the net amounts of gifts) made by the donor in that accounting period, being a gift or gifts, as the case may be, to which this section applies, does not exceed £500, (ii) if at the time a donor makes a gift to which this section applies the aggregate of the net amounts of all gifts to which this section applies exceeds £5,000,000. (4) A claim under this section shall be made with the return required to be delivered under section 951 for the accounting period in which the payment is made. (5) Where a donor makes a gift in respect of which relief is not to be given by virtue of subsection (3)(b)(ii), the Company shall, by notice in writing given to the donor within 30 days of the making of the gift, advise the donor accordingly. (6) Where a gift to which this section applies is made by a donor in an accounting period of the donor which is less than 12 months, the amount specified in subsection (3)(b)(i) shall be proportionately reduced.”. |
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(2) Subsection (1) shall be deemed to have had effect from 1 August 2000.
(3) Section 87A (inserted by this section) of the Principal Act is repealed with effect from 6 April 2001.
85 Amendment of section 130 (matters to be treated as distributions) of Principal Act.
85.—(1) Section 130 of the Principal Act is amended by the insertion after subsection (2) of the following:
“(2A) For the purposes of subsection (2)(d)(iii)(I), the consideration given by the company for the use of the principal received shall not be treated as being to any extent dependent on the results of the company's business or any part of the company's business by reason only of the fact that the terms (however expressed) of the security provide—
(a) for the consideration to be reduced in the event of the results improving, or
(b) for the consideration to be increased in the event of the results deteriorating.”.
(2) This section applies to payments made on or after 15 February 2001.
86 Amendment of section 222 (certain dividends from a non-resident subsidiary) of Principal Act.
86.—Section 222 of the Principal Act is amended in subsection (1)(a) in paragraph (i) of the definition of “relevant dividends” by the substitution of “specified in a certificate given before 15 February 2001 by the Minister” for “specified in a certificate given by the Minister”.
87 Amendment of Chapter 2 of Part 14 of Principal Act.
87.—Chapter 2 of Part 14 of the Principal Act is amended by the substitution for section 452 of the following:
| “Application of section 130 to certain interest. | 452.—(1) (a) In this section— ‘arrangements’ means arrangements having the force of law by virtue of section 826; ‘relevant territory’ means— (i) a Member State of the European Communities other than the State, or (ii) not being such a Member State, a territory with the government of which arrangements have been made; ‘qualified company’ and ‘relevant trading operations’ have the same meanings as they have for the purposes of sections 445 and 446, but trading operations shall not be treated as relevant trading operations (within the meaning of section 445) if they are not trading operations which could be certified by the Minister for Finance as relevant trading operations for the purposes of section 446 if they were carried on in the area (within the meaning of section 446) rather than the airport (within the meaning of section 445); ‘tax’, in relation to a relevant territory, means any tax imposed in that territory which corresponds to corporation tax in the State. (b) For the purposes of this section, a company shall be regarded as being a resident of a relevant territory if— (i) in a case where the relevant territory is a territory with the government of which arrangements have been made, the company is regarded as being a resident of that territory under those arrangements, and (ii) in any other case, the company is by virtue of the law of the relevant territory resident for the purposes of tax in that territory. (2) (a) This paragraph shall apply to so much of any interest as— (i) is a distribution by virtue only of section 130(2)(d)(iv), (ii) is payable by a company in the ordinary course of a trade carried on by that company and would, but for section 130(2)(d)(iv), be deductible as a trading expense in computing the amount of the company's income from the trade, and (iii) is interest payable to a company which is a resident of a relevant territory. (b) Where a company proves that paragraph (a) applies to any interest payable by it for an accounting period and elects to have that interest treated as not being a distribution for the purposes of section 130(2)(d)(iv), then, section 130(2)(d)(iv) shall not apply to that interest. (3) (a) This paragraph shall apply to so much of any interest as— (i) is a distribution by virtue only of section 130(2)(d)(iv), (ii) is payable by a qualified company in the course of carrying on relevant trading operations and would but for section 130 (2)(d)(iv) be deductible as a trading expense in computing the amount of the company's income from the relevant trading operations, and (iii) represents no more than a reasonable commercial return for the use of the principal in respect of which the interest is paid by the qualified company. (b) Where a qualified company proves that paragraph (a) applies to any interest payable by it for an accounting period and elects to have that interest treated as not being a distribution for the purposes of section 130(2)(d)(iv), then, section 130(2)(d)(iv) shall not apply to that interest. (4) An election under subsection (2)(b) or (3)(b) in relation to interest payable by a company for an accounting period shall be made in writing to the inspector and furnished together with the company's return of its profits for the period.”. |
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88 Amendment of Part 36 of Principal Act.
88.—Part 36 of the Principal Act is amended by the insertion after section 845 of the following:
| “Non-application of section 130 in the case of certain interest paid by banks. | 845A.—(1) In this section, ‘bank’ means— (a) a person who is a holder of a licence granted under section 9 of the Central Bank Act, 1971, or (b) a person who holds a licence or other similar authorisation under the law of any other Member State of the European Communities which corresponds to a licence granted under the said section 9. (2) This subsection shall apply to so much of any interest as— (a) is a distribution by virtue only of section 130(2)(d)(iv), (b) is payable by a bank carrying on a bona fide banking business in the State and would but for section 130(2)(d)(iv) be deductible as a trading expense in computing the amount of the bank's income from its banking business, and (c) represents no more than a reasonable commercial return for the use of the principal in respect of which the interest is paid by the bank. (3) Where a bank proves that subsection (2) applies to any interest payable by it for an accounting period and elects to have that interest treated as not being a distribution for the purposes of section 130(2)(d)(iv), then, section 130(2)(d)(iv) shall not apply to that interest. (4) An election under subsection (3) in relation to interest payable by a bank for an accounting period shall be made in writing to the inspector together with the bank's return of its profits for the period.”. |
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89 Amendment of section 847 (tax relief for certain branch profits) of Principal Act.
89.—Section 847 of the Principal Act is amended in subsection (1) in the definition of “qualified company” by the substitution of “has before 15 February 2001 given a certificate” for “has given a certificate”.
90 Restriction of certain losses and charges.
90.—(1) The Principal Act is amended—
(a) in Part 8 by the insertion after section 243 of the following:
| “Restriction of relevant charges on income. | 243A.—(1) In this section— ‘relevant trading charges on income’, in relation to an accounting period of a company, means the charges on income paid by the company in the accounting period wholly and exclusively for the purposes of a trade carried on by the company, other than so much of those charges as are charges on income paid for the purposes of an excepted trade within the meaning of section 21A; ‘relevant trading income’, in relation to an accounting period of a company, means the trading income of the company for the accounting period (not being income chargeable to tax under Case III of Schedule D) other than so much of that income as is income of an excepted trade within the meaning of section 21A. (2) Notwithstanding section 243, relevant trading charges on income paid by a company in an accounting period shall not be allowed as deductions against the total profits of the company for the accounting period. (3) Subject to section 454, where a company pays relevant trading charges on income in an accounting period and, apart from subsection (2), those charges would be allowed as deductions against the total profits of the company for the accounting period, those charges shall be allowed as deductions against— (a) income specified in section 21A(4)(b), and (b) relevant trading income, of the company for the accounting period as reduced by any amount set off against that income under section 396A.”, |
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(b) in Part 12—
(i) by the insertion after section 396 of the following section:
| “Relief for relevant trading losses. | 396A.—(1) In this section— ‘relevant trading income’ has the same meaning as in section 243A; ‘relevant trading loss’, in relation to an accounting period of a company, means a loss incurred in the accounting period in a trade carried on by the company, other than so much of the loss as is a loss incurred in an excepted trade within the meaning of section 21A. (2) Notwithstanding subsection (2) of section 396, for the purposes of that subsection the amount of a loss in a trade incurred by a company in an accounting period shall be deemed to be reduced by the amount of a relevant trading loss incurred by the company in the accounting period. (3) Subject to section 455, where in an accounting period a company carrying on a trade incurs a relevant trading loss, the company may make a claim requiring that the loss be set off for the purposes of corporation tax against income of the company, being— (a) income specified in section 21A(4)(b), and (b) relevant trading income, of that accounting period and, if the company was then carrying on the trade and if the claim so requires, of preceding accounting periods ending within the time specified in subsection (4), and subject to that subsection and any relief for an earlier relevant trading loss, to the extent that the income of any of those accounting periods consists of or includes income specified in section 21A(4)(b) or relevant trading income, that income shall then be reduced by the amount of the relevant trading loss or by so much of that amount as cannot be relieved against income of a later accounting period. (4) For the purposes of subsection (3), the time referred to in paragraph (b) of that subsection shall be the time immediately preceding the accounting period first mentioned in subsection (3) equal in length to that accounting period; but the amount of the reduction which may be made under subsection (3) in the relevant trading income of an accounting period falling partly before that time shall not exceed such part of that relevant trading income as bears to the whole of the relevant trading income the same proportion as the part of the accounting period falling within that time bears to the whole of that accounting period.”, |
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and
(ii) by the insertion after section 420 of the following:
| “Group relief: relevant losses and charges | 420A.—(1) In this section— ‘relevant trading charges on income’ and ‘relevant trading income’ have the same meanings, respectively, as in section 243A; ‘relevant trading loss’ has the same meaning as in section 396A. (2) Notwithstanding subsections (1) and (6) of section 420 and section 421, where in any accounting period the surrendering company incurs a relevant trading loss or an excess of relevant trading charges on income, that loss or excess may not be set off for the purposes of corporation tax against the total profits of the claimant company for its corresponding accounting period. (3) (a) Subject to section 456, where in any accounting period the surrendering company incurs a relevant trading loss, computed as for the purposes of section 396(2), or an excess of relevant trading charges on income in carrying on a trade in respect of which the company is within the charge to corporation tax, that loss or excess may be set off for the purposes of corporation tax against— (i) income specified in section 21A(4)(b), and (ii) relevant trading income, of the claimant company for its corresponding accounting period as reduced by any amounts allowed as deductions against that income under section 243A or set off against that income under section 396A. (b) Paragraph (a) shall not apply— (i) to so much of a loss as is excluded from section 396(2) by section 396(4) or 663, or (ii) so as to reduce the profits of a claimant company which carries on life business (within the meaning of section 706) by an amount greater than the amount of such profits (before a set off under this subsection) computed in accordance with Case 1 of Schedule D and section 710(1). (4) Group relief allowed under subsection (3) shall reduce the income from a trade of the claimant company for an accounting period— (a) before relief granted under section 397 in respect of a loss incurred in a succeeding accounting period or periods, and (b) after the relief granted under section 396 in respect of a loss incurred in a preceding accounting period or periods. (5) For the purposes of this section in the case of a claim made by a company as a member of a consortium, only a fraction of a relevant trading loss or an excess of relevant trading charges on income may be set off, and that fraction shall be equal to that member's share in the consortium, subject to any further reduction under section 422(2).”, |
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and
(c) in Chapter 2 of Part 14—
(i) in section 448—
(I) by the substitution of the following for subsections (3) and (4):
“(3) For the purposes of subsection (2), the ‘income from the sale of those goods’ shall be the amount determined by—
(a) firstly, calculating such sum (in this subsection referred to as the ‘relevant sum’) as bears to the amount of the company's income for the relevant accounting period from the sale in the course of the trade mentioned in that subsection of goods and merchandise the same proportion as the amount receivable by the company in the relevant accounting period from the sale in the course of the trade of goods bears to the total amount receivable by the company in the relevant accounting period from the sale in the course of the trade of goods and merchandise, and
(b) then, deducting from the relevant sum—
(i) the amount of any relief for charges allowed under section 454,
(ii) the amount of any relief for a loss in a trade allowed under section 455, and
(iii) the amount of any group relief allowed under section 456,
against income of the trade in the relevant accounting period.
(4) For the purposes of subsection (3), the ‘company's income for the relevant accounting period from the sale in the course of the trade mentioned in that subsection of goods and merchandise’ shall be determined as an amount equal to—
(a) in any case where the income from the trade is derived solely from sales of goods and merchandise, the amount of the company's income from the trade, and
(b) in any other case, such amount of the income from the trade as appears to the inspector or on appeal to the Appeal Commissioners to be just and reasonable,
but shall be so determined as if—
(i) no relief for charges had been claimed under section 243A or 454,
(ii) no relief for a loss in a trade had been claimed under section 396A or 455, and
(iii) no group relief had been allowed under section 420A or 456,
for the relevant accounting period.”,
and
(II) by the substitution of the following for subparagraph (i) of subsection (5A)(b):
“(i) by any amounts allowed under sections 243A, 396A, 420A, 454, 455 and 456, and”,
(ii) by the substitution in section 454 for subsections (2) and (3) of the following:
“(2) Notwithstanding sections 243 and 243A, charges on income paid for the purposes of the sale of goods by a company in a relevant accounting period in the course of a trade or trades, as the case may be, shall not be allowed as deductions against the total profits, or against the relevant trading income, of the company for the relevant accounting period.
(3) Charges on income paid for the purposes of the sale of goods by a company in a relevant accounting period which charges on income would, apart from subsection (2) and section 243A(2), be allowed as deductions against the total profits of the company for the accounting period, shall be allowed as deductions against the company's income from the sale of goods, as reduced by any amount set off under section 455, for the accounting period.”,
(iii) in section 455—
(I) in subsection (2) by the substitution of “Notwithstanding sections 396(2) and 396A(2) but subject to subsections (6) and (7), for the purposes of those sections” for “Notwithstanding section 396(2) but subject to subsections (6) and (7), for the purposes of that section”, and
(II) by the deletion of subsection (5),
(iv) in section 456—
(I) by the substitution for subsections (2) and (3) of the following:
“(2) Notwithstanding subsections (1) and (6) of section 420 and sections 420A(3) and 421, where in any relevant accounting period the surrendering company incurs a loss from the sale of goods or an excess of charges on income paid for the sale of goods, that loss or excess may not be set off for the purposes of corporation tax against the total profits, or against the relevant trading income, of the claimant company for its corresponding accounting period.
(2A) (a) Where in any relevant accounting period the surrendering company incurs a loss from the sale of goods or an excess of charges on income paid for the sale of goods, that loss or excess may be set off for the purposes of corporation tax against the income from the sale of goods of the claimant company for its corresponding accounting period, as reduced by any amounts—
(i) allowed as deductions against that income under section 454, or
(ii) set off against that income under section 455.
(b) Group relief allowed under paragraph (a) shall reduce the income from a trade of the claimant company for an accounting period—
(i) before relief granted under section 397 in respect of a loss incurred in a succeeding accounting period or periods, and
(ii) after the relief granted under section 396 in respect of a loss incurred in a preceding accounting period or periods.”,
and
(II) in subsection (5) by the deletion of paragraph (b),
and
(v) by the deletion of section 457.
(2) Subsection (1) applies as respects an accounting period ending on or after 6 March 2001.
(3) Sections 454, 455 and 456 shall cease to have effect as on and from 1 January 2003.
(4) For the purposes of this section—
(a) where an accounting period of a company begins before 6 March 2001 and ends on or after that date, it shall be divided into 2 parts, one beginning on the date on which the accounting period begins and ending on 5 March 2001 and the other beginning on 6 March 2001 and ending on the date on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods of the company, and
(b) where an accounting period of a company begins before 1 January 2003 and ends on or after that date, it shall be divided into 2 parts, one beginning on the date on which the accounting period begins and ending on 31 December 2002 and the other beginning on 1 January 2003 and ending on the date on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods of the company.
91 Close company surcharges.
91.—(1) Section 434 of the Principal Act is amended—
(a) in subsection (1)—
(i) by the substitution of the following for the definition of “distributable income”:
“‘distributable income’ means the aggregate of the amounts of the distributable trading income and distributable estate and investment income;”,
(ii) by the insertion after the definition of “estate income” of the following:
“‘franked investment income’ excludes—
(a) a distribution made out of exempt profits within the meaning of section 140,
(b) a distribution made out of disregarded income within the meaning of section 141 and to which subsection (3)(a) of that section applies, and
(c) a distribution made out of exempted income within the meaning of section 142;
‘income’ of a company for an accounting period means the income as computed in accordance with subsection (4);”,
and
(iii) by the insertion of the following after the definition of “investment income”:
“‘relevant charges’, in relation to an accounting period of a company, means charges on income paid in the accounting period by the company and which are allowed as deductions under section 243, other than so much of those charges as is paid for the purposes of an excepted trade within the meaning of section 21A;”,
(b) in subsection (4)—
(i) by the substitution of “The income” for “For the purposes of subsection (1), the income”, and
(ii) by the substitution of the following for paragraphs (g) and (h):
“(g) any amount which is an allowable deduction against relevant trading income by virtue of section 243A.”,
and
(c) by the substitution of the following for subsection (5):
“(5) (a) The estate and investment income of a company for an accounting period shall be the amount by which the sum of—
(i) the amount of franked investment income for the accounting period, and
(ii) an amount determined by applying to the amount of the income of the company for
| the accounting period the fraction | A | |
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| where— | B |
A is the aggregate of the amounts of estate income and investment income taken into account in computing the income of the company for the accounting period, and
B is the total amount of income so taken into account,
exceeds the aggregate of—
(I) the amount of relevant charges, and
(II) the amount which is an allowable deduction in computing the total profits for the accounting period in respect of expenses of management by virtue of section 83(2).
(b) The trading income of a company for an accounting period shall be the income of the company for the accounting period after deducting—
(i) the estate and investment income of the company for the accounting period as computed in accordance with paragraph (a),
(ii) where the aggregate of the amounts specified in clauses (I) and (II) of paragraph (a) exceeds the sum of the amounts specified in subparagraphs (i) and (ii) of that paragraph, the amount of the excess, and
(iii) charges on income paid for the purposes of an excepted trade within the meaning of section 21A.
(5A) (a) For the purposes of sections 440 and 441, but subject to paragraph (b)—
‘distributable estate and investment income’ of a company for an accounting period means the estate and investment income of the company for the accounting period after deducting the amount of corporation tax which would be payable by the company for the accounting period if the tax were computed on the basis of that income;
‘distributable trading income’ of a company for an accounting period means the trading income of the company for the accounting period after deducting the amount of corporation tax which, apart from sections 22A(2) and 448(2), would be payable by the company for the accounting period if the tax were computed on the basis of that income.
(b) In the case of a trading company, the distributable estate and investment income for an accounting period shall be the amount determined in accordance with paragraph (a) reduced by 7.5 per cent.”.
(2) Section 440 of the Principal Act is amended—
(a) in subsection (1)(a) by the substitution of “distributable estate and investment income” for “aggregate of the distributable investment income and distributable estate income”,
(b) by the insertion after subsection (2) of the following:
“(2A) For the purposes of subsection (2)(a), the accumulated undistributed income of a company at the end of an accounting period shall be the aggregate of the undistributed income of the company for accounting periods ending on or before the end of that period computed—
(a) in the case of any such accounting period which ended before 14 March 2001, in accordance with section 434 before amendment by the Finance Act, 2001, and
(b) in the case of any such accounting periods ending on or after 14 March 2001, in accordance with section 434 as amended by the Finance Act, 2001.”.
(3) Section 441 of the Principal Act is amended—
(a) in subsection (4)—
(i) in paragraph (a) by the substitution of the following for subparagraphs (i) and (ii)—
“(i) the distributable estate and investment income, and
(ii) 50 per cent of the distributable trading income,”,
and
(ii) in paragraph (b)(iii) by the substitution of “distributable estate and investment income” for “aggregate of distributable investment income and the distributable estate income”,
and
(b) in subsection (6)(b)(ii) by the substitution of “‘distributable estate and investment income’ and ‘distributable trading income’” for “‘distributable income’, ‘distributable investment income’ and ‘distributable estate income’”.
(4) This section applies as respects an accounting period ending on or after 14 March 2001.
Chapter 5 Capital Gains Tax
92 Amendment of Chapter 6 (transfers of business assets) of Part 19 of Principal Act.
92.—(1) The Principal Act is amended in Chapter 6 of Part 19 by the insertion after section 600 of the following:
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