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6 1967

INCOME TAX ACT, 1967

PART XXIII

Purchase and Sale of Securities

Application of Part XXIII.

367. —(1) Subject as hereinafter provided, this Part relates to cases of a purchase by a person (in this Part referred to as the first buyer) after the 22nd day of April, 1959, of any securities and their subsequent sale by him, the result of the transaction being that interest becoming payable in respect of the securities (in this Part referred to as the interest) is receivable by the first buyer.

(2) This Part does not relate to cases where—

(a) the time elapsing between the purchase by the first buyer and his taking steps to dispose of the securities exceeded six months, or

(b) that time exceeded one month and, in the opinion of the Revenue Commissioners, the purchase and sale were each effected at the current market price and the sale was not effected in pursuance of an agreement or arrangement made before or at the time of the purchase.

(3) An appeal shall lie to the Special Commissioners with respect to any opinion of the Revenue Commissioners under subsection (2) (b) in like manner as an appeal would lie against an assessment to income tax, and the provisions of this Act relating to appeals shall apply and have effect accordingly.

(4) The reference in subsection (2) to the first buyer taking steps to dispose of the securities shall be construed—

(a) if he sold them in the exercise of an option he had acquired, as a reference to his acquisition of the option,

(b) in any other case, as a reference to his selling them.

(5) For the purposes of this Part a sale of securities similar to, and of the like nominal amount as, securities previously bought (hereinafter referred to as the original securities) shall be equivalent to a sale of the original securities, and subsection (4) shall apply accordingly; and where the first buyer bought parcels of similar securities at different times, a subsequent sale of any of the securities shall so far as may be be related to the last to be bought of the parcels, and then to the last but one, and so on:

Provided that a person shall be under no greater liability to tax by virtue of this subsection than he would have been under if instead of selling the similar securities he had sold the original securities.

(6) Where, at the time when a trade is, or is deemed to be, set up and commenced, any securities form part of the trading stock belonging to the trade, those securities shall be treated for the purposes of this section as having been sold at that time in the open market by the person to whom they belonged immediately before that time and as having been purchased at that time in the open market by the person thereafter engaged in carrying on the trade; and subject to the foregoing provisions of this subsection, where there is a change in the persons engaged in carrying on a trade which is not a change on which the trade is deemed to be discontinued, the provisions of this section shall apply in relation to the person so engaged after the change as if anything done to or by his predecessor had been done to or by him.

(7) For the purposes of this Part—

(a) “interest” includes a dividend;

(b) “person” includes any body of persons, and references to a person entitled to any exemption from income tax include, in a case of an exemption expressed to apply to income of a trust or fund, references to the persons entitled to make claims for the granting of that exemption;

(c) “securities” includes stocks and shares;

(d) securities shall be deemed to be similar if they entitle their holders to the same rights against the same persons as to capital and interest and the same remedies for the enforcement of those rights, notwithstanding any difference in the total nominal amounts of the respective securities or in the form in which they are held or the manner in which they can be transferred.

Dealers in securities.

368. —(1) Subject to the provisions of this section, if the first buyer is engaged in carrying on a trade which consists of or comprises dealings in securities, then, in computing for any of the purposes of this Act the profits arising from or loss sustained in the trade, the price paid by him for the securities shall be reduced by the appropriate amount in respect of the interest, as determined in accordance with Schedule 11.

(2) Where, in the opinion of the Revenue Commissioners, the first buyer is bona fide carrying on the business of a discount house in the State, or where the first buyer is a member of a stock exchange in the State who is recognised by the committee of that stock exchange as carrying on the business of a dealer, subsection (1) shall not have effect in relation to securities bought in the ordinary course of his said business.

(3) Subsection (1) shall not apply if the interest is to any extent required to be brought into account under section 371 as if it were a trading receipt which had not borne tax or would to any extent be so required to be brought into account but for the provisions of paragraph 2 of Schedule 12.

Persons entitled to exemptions.

369. —(1) If the first buyer is entitled under any enactment to an exemption from income tax which, apart from this subsection, would extend to the interest, then, subject to the provisions of this section, the exemption shall not extend to an amount equal to the appropriate amount in respect of the interest, as determined in accordance with Schedule 11:

Provided that if the first buyer is entitled as aforesaid and any annual payment is payable by him out of the interest, the annual payment shall be deemed as to the whole thereof to be paid out of profits or gains not brought into charge to tax, and section 434 shall apply accordingly.

(2) This section shall not apply where the exemption arises from the residence of the first buyer in Northern Ireland or Great Britain.

Traders other than dealers in securities.

370. —(1) If the first buyer carries on a trade not falling within section 368 then, in ascertaining whether any, and, if so, what, repayment of tax is to be made to him under section 307 by reference to any loss sustained in the trade for the year of assessment his income for which includes the interest, there shall be left out of account—

(a) the appropriate amount in respect of the interest, as determined in accordance with Schedule 11, and

(b) any tax paid on that amount.

(2) Where the first buyer is a company and carries on a trade not falling within section 368 or a business consisting mainly in the making of investments then, if any annual payment payable by the company is to any extent payable out of the interest, that annual payment shall be deemed to that extent not to be payable out of profits or gains brought into charge to tax, and section 434 shall apply accordingly.

(3) In this section “company” includes any body corporate.