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10 1985

FINANCE ACT, 1985

PART I

Income Tax, Income Levy, Corporation Tax and Capital Gains Tax

Chapter I

Income Tax

Amendment of provisions relating to exemption from income tax.

1. —As respects the year 1985-86 and subsequent years of assessment, the Finance Act, 1980 , is hereby amended—

(a) in subsection (2) of section 1, by the substitution of “£5,300” for “£5,000” (inserted by the Finance Act, 1984 ) and of “£2,650” for “£2,500” (inserted by the Finance Act, 1984 ), and

(b) in subsection (6) of section 2, by the substitution of “£6,000” for “£5,600” (inserted by the Finance Act, 1984 ), of “£7,000” for “£6,600” (inserted by the Finance Act, 1984 ), of “£3,000” for “£2,800” (inserted by the Finance Act, 1984 ) and of “£3,500” for “£3,300” (inserted by the Finance Act, 1984 ),

and the said subsections (2) and (6), as so amended, are set out in the Table to this section.

TABLE

(2) In this section “the specified amount” means—

(a) in a case where the individual would, apart from this section, be entitled to a deduction specified in section 138 (a) of the Income Tax Act, 1967 , £5,300, and

(b) in any other case, £2,650.

(6) In this section “the specified amount” means—

(a) in a case where the individual would, apart from this section, be entitled to a deduction specified in paragraph (a) of the said section 138, £6,000:

Provided that, if at any time during the year of assessment either the individual or his spouse was of the age of seventy-five years or upwards, “the specified amount” means £7,000;

(b) in any other case, £3,000:

Provided that, if at any time during the year of assessment the individual was of the age of seventy-five years or upwards, “the specified amount” means £3,500.

Alteration of rates of income tax.

2. Section 2 of the Finance Act, 1984 , is hereby amended, as respects the year 1985-86 and subsequent years of assessment, by the substitution of the following Table for the Table to the said section:

“TABLE

PART I

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first £4,500

35 per cent.

the standard rate

The next £2,800

48 per cent.

}

the higher rates

The remainder

60 per cent.

PART II

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first £9,000

35 per cent.

the standard rate

The next £5,600

48 per cent.

}

the higher rates

The remainder

60 per cent.

Personal reliefs.

3. —(1) Where a deduction falls to be made from the total income of an individual for the year 1985-86 or any subsequent year of assessment in respect of relief to which the individual is entitled under a provision mentioned in column (1) of the Table to this subsection and the amount of the deduction would, but for this section, be an amount specified in column (2) of the said Table, the amount of the deduction shall, in lieu of being the amount specified in the said column (2), be the amount specified in column (3) of the said Table opposite the mention of the amount in the said column (2).

TABLE

Statutory provision

Amount to be deducted from total income for 1984-85

Amount to be deducted from total income for 1985-86 and subsequent years

(1)

(2)

(3)

£

£

Income Tax Act, 1967 :

section 138

(married man)

3,600

3,800

(widowed person)

2,300

2,400

(widow bereaved in the year of assessment)

3,600

3,800

(single person)

1,800

1,900

section 141

(incapacitated child)

500

600

Finance Act, 1969 :

section 3

(housekeeper taking care of incapacitated person)

2,000

2,500

Finance Act, 1971 :

section 11

(blind person)

500

600

(both spouses blind)

1,200

1,400

(2) Section 2 of the Finance Act, 1982 , section 3 of the Finance Act, 1984 , and section 8 of the Finance Act, 1984 , shall have effect subject to the provisions of this section.

(3) The First Schedule shall have effect for the purpose of supplementing subsection (1).

Amendment of section 138A (additional allowance for widows and others in respect of children) of Income Tax Act, 1967.

4. —The Income Tax Act, 1967 , is hereby amended, as respects the year 1985-86 and subsequent years of assessment, by the substitution of the following section for section 138A (inserted by the Finance Act, 1980 )—

“138A.—(1) (a) This section applies to an individual who is not entitled to a deduction mentioned in paragraph (a) or paragraph (b) (ii) of section 138.

(b) In this section ‘a qualifying child’ means, in relation to any claimant and year of assessment—

(i) a child—

(I) who is born in the year of assessment, or

(II) who, at the commencement of the year of assessment, is under the age of 16 years, or

(III) who, if over the age of 16 years at the commencement of the year of assessment—

(A) is receiving full-time instruction at any university, college, school or other educational establishment, or

(B) is permanently incapacitated by reason of mental or physical infirmity from maintaining himself and had become so permanently incapacitated before he had attained the age of 21 years or had become so permanently incapacitated after attaining the age of 21 years but while he had been in receipt of full-time instruction as aforesaid,

and

(ii) a child who is a child of the claimant or, not being such a child, is in the custody of the claimant and is maintained by the claimant at his own expense for the whole or part of the year of assessment.

(2) Subject to subsection (3), if the claimant, being an individual to whom this section applies, proves in the case of a year of assessment that a qualifying child is resident with him for the whole or part of the year he shall be entitled, if he is an individual to whom paragraph (b) (i) of section 138 applies, to a deduction of £1,400 or, if he is an individual to whom paragraph (c) of section 138 applies, to a deduction of £1,900:

Provided that this section shall not apply for any year of assessment in the case of a husband or a wife where the wife is living with her husband, or in the case of a man and woman who are living together as man and wife.

(3) A claimant shall be entitled to only one deduction under subsection (2) for any year of assessment irrespective of the number of qualifying children resident with him in that year.

(4) (a) The references in subsection (1) (b) to a child receiving full-time instruction at an educational establishment shall include references to a child undergoing training by any person (hereafter in this subsection referred to as ‘the employer’) for any trade or profession in such circumstances that the child is required to devote the whole of his time to the training for a period of not less than two years.

(b) For the purpose of a claim in respect of a child undergoing training the inspector may require the employer to furnish particulars with respect to the training of the child in such form as may be prescribed by the Revenue Commissioners.

(5) No deduction shall be allowed under this section for any year of assessment in respect of any child who is entitled in his own right to an income exceeding £720 in that year, except that if the amount of the excess is less than the deduction which apart from this subsection would be allowable, a deduction reduced by that amount shall be allowed:

Provided that in calculating the income of the child for the purposes of the foregoing provision no account shall be taken of any income to which the child is entitled as the holder of a scholarship, bursary or other similar educational endowment.

(6) If any question arises as to whether any person is entitled to an allowance under this section in respect of a child who is over the age of 16 years, as being a child who is receiving such full-time instruction as aforesaid, the Revenue Commissioners may consult the Minister for Education.

(7) In subsection (1) (b) (ii) the reference to a child of the claimant includes a reference to a stepchild of his, an illegitimate child of his if he has married the other parent after the child's birth and an adopted child of his in respect of whom an adoption order under the Adoption Acts, 1952 to 1976, is in force.”.

Amendment of section 6 (special allowance in respect of P.R.S.I. for 1982-83) of Finance Act, 1982.

5. Section 6 of the Finance Act, 1982 , shall have effect for the purpose of ascertaining the amount of income on which an individual referred to therein is to be charged to income tax for the year 1985-86, as if in subsection (2)—

(a) “1985-86” were substituted for “1982-83”, and

(b) “£286” were substituted for “£312”, in each place where it occurs.

Amendment of section 125 (application of PAYE) of Income Tax Act, 1967.

6. —(1) The Income Tax Act, 1967 , is hereby amended, as respects emoluments arising in the year 1986-87 and subsequent years of assessment, by the substitution of the following section for section 125:

“125.—This Chapter applies to all emoluments except emoluments which are emoluments in respect of which the employer has been notified by the inspector that they are emoluments which arise from an office or employment and from which, in the opinion of the inspector having regard to the circumstances of the office or employment or to the amount of the emoluments, the deduction of tax by reference to the provisions of this Chapter is impracticable:

Provided that the inspector may, if a change in the circumstances of the office or employment or in the amount of the emoluments so warrants, cancel such notification by notice in writing given to the employer and this Chapter shall then apply to payments of emoluments arising from the office or employment made after the date of such notice.”.

(2) Any notice issued by or on behalf of the Revenue Commissioners under section 125 of the Income Tax Act, 1967 , prior to the 6th day of April, 1986, shall not apply or have effect in relation to emoluments arising in the year 1986-87 or any subsequent year of assessment.

Amendment of section 142A (allowance for rent paid by certain tenants) of Income Tax Act, 1967.

7. Section 142A (inserted by the Finance Act, 1982 ) of the Income Tax Act, 1967 , is hereby amended in subsection (2), as respects the year 1985-86 and subsequent years of assessment—

(a) by the substitution in paragraph (a) (i) of “fifty-five years” for “sixty years” (inserted by the Finance Act, 1984 ), and

(b) by the substitution in paragraph (b) of “£1,500” for “£1,000” and of “£750” for “£500”,

and the said paragraphs (a) (i) and (b), as so amended, are set out in the Table to this section.

TABLE

(i) at any time during the year of assessment he was of the age of fifty-five years or upwards, and

(b) In this subsection “the relevant limit” means—

(i) in the case of a claimant who is entitled to a deduction under section 138(a), £1,500, and

(ii) in any other case, £750.

Amendment of section 344 (exemption of interest on certain deposits) of Income Tax Act, 1967.

8. Section 344 of the Income Tax Act, 1967 , is hereby amended, as respects the year 1985-86 and subsequent years of assessment, by the substitution for subsections (1) and (2) (inserted by the Finance Act, 1980 ) of the following subsections:

“(1) Where the total income of an individual for the year of assessment includes, or would but for this section include, any sums (in this section referred to as ‘the said sums’) paid or credited in respect of interest on—

(a) deposits with a trustee savings bank or with the Post Office Savings Bank, or

(b) deposits with any of the commercial banks,

the said sums shall be disregarded for all the purposes of the Income Tax Acts if or in so far as the said sums do not exceed the specified amount:

Provided that the provisions of this Act as regards the making by the individual of a return of his total income shall apply as if this section had not been enacted.

(1A) (a) Subject to paragraph (b), in this section ‘specified amount’ means—

(i) in the case of sums representing interest on deposits mentioned in paragraph (a) of subsection (1), £120:

Provided that, if at any time during the year of assessment the individual was of the age of sixty-five years or upwards, ‘specified amount’, in the case of such sums, means £240;

(ii) in the case of sums representing interest on deposits mentioned in paragraph (b) of subsection (1), £50:

Provided that, if at any time during the year of assessment the individual was of the age of sixty-five years or upwards, ‘specified amount’, in the case of such sums, means £100.

(b) The total sums to be disregarded under this section in the case of an individual shall not exceed the appropriate specified amount mentioned in paragraph (a) (i).

(2) For the purposes of subsection (1) the question whether or how far the said sums exceed the appropriate specified amount shall, where by virtue of section 194 a woman's income is deemed to be her husband's, be determined separately as regards the part of his income which is his by virtue of that section and the part which is his apart from that section.”.

Amendment of provisions relating to estimation of tax due.

9. —The Finance Act, 1968 , is hereby amended, as respects estimates of tax due made on or after the passing of this Act—

(a) in section 7 (5), by the deletion of “or section 8”, and

(b) in section 8—

(i) in subsection (1)—

(I) by the substitution for “Where the Revenue Commissioners have reason to believe” of “Where the inspector, or such other officer as the Revenue Commissioners may nominate to exercise the powers conferred by this section (hereafter in this section referred to as ‘other officer’), has reason to believe”,

(II) by the substitution for “they may make an estimate” of “the inspector or other officer may make an estimate”, and

(III) by the substitution of “his” for “their”,

(ii) in paragraph (a) of subsection (2)—

(I) by the substitution for “the Revenue Commissioners” of “the inspector or other officer”, and

(II) by the substitution for “fourteen days” of “thirty days”,

and

(iii) in subsection (4), by the substitution for “the Revenue Commissioners” of “the inspector or other officer”,

and the said section 7 (5), the said subsection (1) (apart from paragraphs (a), (b) and (c) thereof), the said paragraph (a) of subsection (2) and the said subsection (4), as so amended, are set out in the Table to this section.

TABLE

(5) The Revenue Commissioners may nominate any of their officers to perform any acts and discharge any functions authorised by this section to be performed or discharged by the Revenue Commissioners.

(1) Where the inspector, or such other officer as the Revenue Commissioners may nominate to exercise the powers conferred by this section (hereafter in this section referred to as “other officer”), has reason to believe that the total amount of tax which an employer was liable under the regulations to remit in respect of the respective income tax months comprised in any year of assessment was greater than the amount of tax (if any) paid by the employer in respect of the said months then, without prejudice to any other action which may be taken, the inspector or other officer may make an estimate in one sum of the total amount of tax which in his opinion should have been paid in respect of the income tax months comprised in that year and may serve notice on the employer specifying—

(2) Where notice is served on an employer under subsection (1)—

(a) the employer may, if he claims that the total amount of tax or the balance of tax remaining unpaid is excessive, on giving notice in writing to the inspector or other officer within the period of thirty days from the service of the notice, appeal to the Appeal Commissioners,

(4) A notice given by the inspector or other officer under subsection (1) may extend to two or more years of assessment.

Exemption of certain income from leasing of farm land.

10.—(1) (a) In this section—

farm land” means land in the State wholly or mainly occupied for the purposes of husbandry and includes a building (other than a building or part of a building used as a dwelling) situated on the land and used for the purposes of farming that land;

lease”, “lessee”, “lessor” and “rent” have the meanings respectively assigned to them by Chapter VI of Part IV of the Income Tax Act, 1967 ;

qualifying lease” means a lease of farm land which—

(i) is in writing or is evidenced in writing, and

(ii) is for a definite term of five years or more, and

(iii) is made on an arm's length basis between a qualifying lessor or qualifying lessors and a lessee or lessees who is, or each of whom is, a qualifying lessee in relation to the qualifying lessor or the qualifying lessors;

qualifying lessee”, in relation to a qualifying lessor or to qualifying lessors, means an individual—

(i) who is not connected with the qualifying lessor or with any of the qualifying lessors, and

(ii) who uses any farm land leased by him from the qualifying lessor or the qualifying lessors for the purposes of a trade of farming carried on by him solely or in partnership;

qualifying lessor” means an individual who—

(i) is of the age of 55 years or upwards or who is permanently incapacitated by reason of mental or physical infirmity from carrying on a trade of farming, and

(ii) has not, after the 30th day of January, 1985, leased the farm land which is the subject of the qualifying lease from a person or persons, who is, or one of whom is, connected with him, on terms which are not such as might have been expected to be included in a lease if the negotiations for the lease had been at arm's length;

the specified amount”, in relation to any surplus or surpluses (within the meaning of section 81 (4) of the Income Tax Act, 1967 ) arising in respect of the rent or the rents from any farm land let under a qualifying lease or qualifying leases, means—

(i) the amount of that surplus or the aggregate amount of those surpluses, or

(ii) £2,000, or

(iii) where the rent or rents were not receivable in respect of a full year's letting or lettings, such amount as bears to £2,000 the same proportion as the amount of the rent or the aggregate amount of the rents bears to the amount of the rent or the aggregate amount of the rents which would be receivable for a full year's letting or lettings,

whichever is the least.

(b) A person shall be regarded for the purposes of this section as connected with another person if he would be so regarded in accordance with the provisions of section 16 of the Finance (Miscellaneous Provisions) Act, 1968 .

(2) Where for the year 1985-86 or any subsequent year of assessment the total income of a qualifying lessor consists of or includes any profits or gains chargeable to tax under Case V of Schedule D and any surplus or surpluses (within the meaning of section 81 (4) of the Income Tax Act, 1967 ) arising in respect of the rent or rents from any farm land let under a qualifying lease or qualifying leases has been or have been taken into account in computing the amount of those profits or gains, the qualifying lessor shall, in arriving at that total income, be entitled to a deduction of—

(a) the specified amount in relation to the surplus or surpluses, or

(b) the amount of the profits or gains,

whichever is the lesser.

(3) The amount of any deduction due under subsection (2) shall, where by virtue of section 194 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , a woman's income is deemed to be her husband's, be determined separately as regards the part of his income which is his by virtue of that section and the part which is his apart from that section, and where the provisions of section 197 of that Act apply any deduction allowed by virtue of the said subsection (2) shall be allocated to the husband and to the wife as if they were not married.

(4) (a) For the purposes of subsection (2), where a single qualifying lease relates to both farm land and other property, goods or services, only such amount, if any, of the surplus arising in respect of the rent payable under the lease as is determined by the inspector and after such apportionments of rent, expenses and other deductions as are necessary, according to the best of his knowledge and judgment, to be properly attributable to the lease of the farm land shall be treated as a surplus arising in respect of a rent from farm land let under a qualifying lease.

(b) Any amount which, by virtue of paragraph (a), is determined by the inspector may be amended by the Appeal Commissioners or by the Circuit Court on the hearing, or the rehearing, of an appeal against that determination.

(5) For the purposes of determining the amount of any relief to be granted under the provisions of this section, the inspector may, by notice in writing, require the lessor to furnish such information as the inspector considers necessary.

(6) All such provisions of the Income Tax Acts as apply in relation to the deductions specified in sections 138 to 143 of the Income Tax Act, 1967 , shall, with any necessary modifications, apply in relation to a deduction under this section.