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10 1990

FINANCE ACT, 1990

PART I

Income Tax, Corporation Tax and Capital Gains Tax

Chapter I

Income Tax

Amendment of provisions relating to exemption from income tax.

1. —As respects the year 1990-91 and subsequent years of assessment, the Finance Act, 1980 , is hereby amended—

(a) in section 1, by the substitution—

(i) in paragraph (b) of subsection (1), of “53 per cent.” for “60 per cent.”,

(ii) in subsection (2) (inserted by the Finance Act, 1989 ), of “£6,500” for “£6,000”, and “£3,250” for “£3,000”, and

(iii) in paragraph (a) of subsection (3) (inserted by the Finance Act, 1989 ), of “£300” for “£200”,

and

(b) in section 2, by the substitution—

(i) in subsection (3), of “53 per cent.” for “60 per cent.”, and

(ii) in subsection (6) (inserted by the Finance Act, 1989 ), of “£7,500” for “£6,800”, “£8,700” for “£8,000”, “£3,750” for “£3,400”, and “£4,350” for “£4,000”,

and the said paragraph (b), the said subsection (2), the said paragraph (a) and the said subsections (3) and (6), as so amended, are set out in the Table to this section.

TABLE

(b) an individual makes a claim for the purpose, makes a return in the prescribed form of his total income for that year and proves that it does not exceed a sum equal to twice the specified amount, he shall be entitled to have the amount of income tax payable in respect of his total income for that year, if that amount would, but for the provisions of this subsection, exceed a sum equal to 53 per cent. of the amount by which his total income exceeds the specified amount, reduced to that sum.

(2) In this section “the specified amount” means, subject to subsection (3)—

(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 , £6,500, and

(b) in any other case, £3,250.

(a) For the purposes of this section and section 2, where a claimant proves that he has living, at any time during a year of assessment, any qualifying child, then, subject to subsection (4), the specified amount (within the meaning of this section or section 2, as the case may be) shall be increased, for that year of assessment, by £300 in respect of each such child.

(3) Where an individual to whom this section applies proves that his total income for a year of assessment for which this section applies does not exceed a sum equal to twice the specified amount, he shall be entitled to have the amount of income tax payable in respect of his total income for that year, if that amount would, but for the provisions of this subsection, exceed a sum equal to 53 per cent. of the amount by which his total income exceeds the specified amount, reduced to that sum.

(6) In this section “the specified amount” means, subject to subsection (3) of section 1—

(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 , £7,500:

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 £8,700, and

(b) in any other case, £3,750:

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 £4,350.

Alteration of rates of income tax.

2. Section 2 of the Finance Act, 1984 , is hereby amended, as respects the year 1990-91 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 £6,500

30 per cent.

the standard rate

The next £3,100

48 per cent.

the higher rates

The remainder

53 per cent.

PART II

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first £13,000

30 per cent.

the standard rate

The next £6,200

48 per cent.

the higher rates

The remainder

53 per cent.”.

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

3. 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 1990-91, as if in subsection (2)—

(a) “1990-91” were substituted for “1982-83”, and

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

Amendment of section 3 (employed person taking care of incapacitated individual) of Finance Act, 1969.

4. —As respects the year 1990-91 and subsequent years of assessment, section 3 of the Finance Act, 1969, is hereby amended, in subsection (1), by the substitution of “£5,000” for “£2,500” (inserted by the Finance Act, 1985 ) in each place where it occurs, and the said subsection (1), as so amended, is set out in the Table to this section.

TABLE

(1) Subject to the provisions of this section, an individual who, in the manner prescribed by the Income Tax Acts makes a claim in that behalf, makes a return in the prescribed form of his total income and proves—

(a) (i) that, throughout the year of assessment, he was totally incapacitated by physical or mental infirmity, or

(ii) that, being a husband, who, for the relevant year of assessment, is assessed to tax in accordance with the provisions of section 194 of the Income Tax Act, 1967 , his wife was, throughout that year, totally incapacitated by physical or mental infirmity, and

(b) that for the year of assessment he has employed a person for the purpose of having the care of the person (being the individual or his wife) who is so incapacitated,

shall, in computing the amount of his taxable income, be entitled to have a deduction made from his total income of £5,000, if the amount ultimately borne by him in the year of assessment in employing the employed person is not less than £5,000, or the amount so borne, if it is less than £5,000.

Payments in respect of personal injuries.

5. —(1) This section applies to any payment which is made—

(a) to, or in respect of, an individual who is permanently and totally incapacitated by reason of mental or physical infirmity from maintaining himself, and

(b) following the institution by, or on behalf of, the individual of a civil action for damages in respect of personal injury giving rise to that mental or physical infirmity.

(2) Income which arises to a person, to or in respect of whom payments to which this section applies are made, from the investment, in whole or in part, of such payments or of income therefrom, being income consisting of dividends or other income which would, but for this section, be chargeable to tax under Schedule C or under Case III, IV (by virtue of section 4 of the Finance Act, 1974 ) or V of Schedule D or under Schedule F, shall be exempt from tax and shall not be reckoned in computing total income for the purposes of the Income Tax Acts but the provisions of those Acts in relation to the making of returns of total income shall apply as if this section had not been enacted:

Provided that this section shall not apply in a case unless the income so arising (hereinafter in this proviso referred to as “the exempt income”) is the sole or main income of the individual to or in respect of whom the exempt income arises.

(3) This section shall have effect as respects the year 1990-91 and subsequent years of assessment.

Amendment of provisions relating to relief in respect of premiums on certain insurances, etc.

6. Section 8 of the Finance Act, 1989 , shall have effect, as respects the year 1990-91 and subsequent years of assessment, as if “50 per cent.” were substituted for “80 per cent.”.

Tax treatment of certain payments made by the Haemophilia H.I.V. Trust.

7. —(1) In this section “the Trust” means the trust established by deed dated the 22nd day of November, 1989, between the Minister for Health and certain other persons and referred to in the deed as “the Haemophilia H.I.V. Trust” or “the HHT”.

(2) This section applies to income consisting of payments made by the trustees of the Trust to, or in respect of, a beneficiary under the Trust, whether that income has arisen before or arises after the passing of this Act.

(3) Notwithstanding any provision of the Income Tax Acts, income to which this section applies shall be disregarded for all the purposes of those Acts.

Amendment of section 13 (surcharge on certain income of trustees) of Finance Act, 1976 .

8. —As respects the year 1990-91 and subsequent years of assessment, section 13 of the Finance Act, 1976 , is hereby amended by the substitution, in subsection (2), of the following paragraphs for paragraph (a):

“(a) Income to which this section applies shall, in addition to being chargeable to income tax at the standard rate for the year of assessment for which it is so chargeable, be charged to an additional duty of income tax (hereinafter referred to as ‘a surcharge’) at the rate of 20 per cent.

(aa) A surcharge to be made on trustees under this section in respect of income arising in a year of assessment (hereinafter referred to as ‘the first year of assessment’) shall—

(i) be charged on the trustees for the year of assessment in which a period of eighteen months beginning immediately after the end of that first year of assessment ends, and

(ii) be treated as income tax chargeable for the year of assessment for which it is so charged.”.

Amendment of section 28 (farming: provision relating to relief in respect of increase in stock values) of Finance Act, 1980 .

9. —As respects disposals made on or after the 6th day of April, 1990, section 28 of the Finance Act, 1980 , is hereby amended in paragraph (b) of subsection (3)—

(a) by the substitution in subparagraph (ii) of “two years” for “one year”,

(b) by the substitution in subparagraph (ii) of the following clause for clause (II):

“(II) the value of the said trading stock at the beginning of the immediately succeeding accounting period or at the beginning of the accounting period next after that period, where appropriate,”,

and

(c) by the substitution of the following paragraph for paragraph (A) of the proviso:

“(A) this subsection shall not be construed as enabling the value of trading stock at the end of an accounting period or, as the case may be, at the beginning of an immediately succeeding accounting period or of the accounting period next after that period, to exceed the value of the trading stock at the beginning of the first-mentioned accounting period,”,

and the said paragraph (b) (other than subparagraph (i) and the proviso), as so amended, is set out in the Table to this section.

TABLE

(b) Where—

(ii) apart from the provisions of this subsection, the value of the trading stock of the said trade of farming at the beginning of the accounting period exceeds the value of the trading stock at the end of the accounting period, the person may elect, by notice in writing given to the inspector not later than two years after the end of the accounting period, that for the purpose of section 31 of and the Third Schedule to the Finance Act, 1975 , and section 12 of the Finance Act, 1976

(I) the value of the trading stock of the trade of farming at the end of the accounting period, and

(II) the value of the said trading stock at the beginning of the immediately succeeding accounting period or at the beginning of the accounting period next after that period, where appropriate,

shall be computed as if the said stock to which this subsection applies had not been disposed of:

Amendment of Chapter III (Income Tax: Relief for Investment in Corporater Trades) of Part I of Finance Act, 1984.

10. —Chapter III of Part I of the Finance Act, 1984 , is hereby amended—

(a) in subsection (1) of section 11—

(i) by the insertion of the following definition before the definition of “associate”:

“‘advance factory building’ means a factory building the construction of which is—

(a) promoted by a local community group the objective of which, or one of the main objectives of which, is to promote the development of, and the creation of opportunities for employment in, its locality, and

(b) undertaken without any prior commitment, either direct or indirect, in writing or otherwise, by a person that either he or any other person will enter into a lease for its use;”,

and

(ii) by the insertion of the following definitions after the definition of “director”:

“‘factory building’ has the meaning assigned to it by section 2 (1) of the Industrial Development Act, 1986 ;

industrial development agency’ means the Industrial Development Authority, the Shannon Free Airport Development Company Limited or Údarás na Gaeltachta, as may be appropriate;”,

(b) in section 12—

(i) by the substitution of the following subparagraph for subparagraph (ii) of paragraph (c) of subsection (1):

“(ii) with a view to the creation or maintenance of employment in the company or, in the case of qualifying trading operations to which section 16 (2) (a) (iiib) (inserted by the Finance Act, 1990) relates, in either or both a company contracted to construct the advance factory building concerned and a company which enters into a lease for its use:”,

(ii) by the insertion of the following additional proviso to paragraph (c) of subsection (1):

“Provided also that where the money raised was used, is being used, or is intended to be used, for the purpose of the construction and the leasing of an advance factory building, the aforementioned evidence shall include a certificate by an industrial development agency certifying that it has satisfied itself—

(i) that the building is or will be an advance factory building, and

(ii) that—

(I) the advance factory building is or will be situated in an area which, on the basis of guidelines agreed between it and the Minister for Industry and Commerce or the Minister for the Gaeltacht (as may be appropriate in the circumstances) and with the consent of the Minister for Finance, was or is in particular need of development and of the creation of opportunities for employment, and

(II) its construction contributes or will contribute significantly to meeting those needs.”,

and

(iii) by the insertion of the following proviso to subsection (4):

“Provided that, in the case of qualifying trading operations to which section 16 (2) (a) (iiib) (inserted by the Finance Act, 1990) relates, the trade shall be deemed to have commenced on the date on which the construction of the advance factory building commenced.”,

and

(c) in section 16—

(i) by the substitution, in paragraph (a) of subsection (2)—

(I) of the following proviso for the proviso to subparagraph (i):

“Provided that trading operations or activities included in the definition, or regarded as the manufacture within the State, of goods for the purposes of the said Chapter VI by any enactment enacted after the passing of this Act (other than section 41 of the Finance Act, 1990), shall not, subject to the following provisions of this paragraph, be regarded as qualifying trading operations for the purposes of this Chapter,”,

and

(II) of the following subparagraph for subparagraph (ii):

“(ii) in respect of a subscription for eligible shares issued on or after the passing of the Finance Act, 1990, the rendering of services (other than relevant trading operations within the meaning of section 39B, inserted by the Finance Act, 1987 , of the Finance Act, 1980 ) in the course of a service industry (within the meaning of the Industrial Development Act, 1986 ) in respect of which—

(I) an employment grant was made by the Industrial Development Authority under section 25 of the Industrial Development Act, 1986 , or

(II) a grant under section 3, or financial assistance under section 4 , of the Shannon Free Airport Development Company Limited (Amendment) Act, 1970 , was made available by the Shannon Free Airport Development Company Limited, or

(III) financial assistance was made available by Údarás na Gaeltachta under section 10 of the Údará s na Gaeltachta Act, 1979 ,”,

(ii) by the insertion, in paragraph (a) of subsection (2), of the following subparagraph:

“(iiib) in respect of a subscription for eligible shares made on or after the passing of the Finance Act, 1990, the construction and the leasing of an advance factory building,”,

(iii) by the substitution, in subsection (2), of the following paragraph for paragraph (II) of the second proviso (inserted by the Finance Act, 1989 ):

“(II) the leasing of land or buildings (other than the leasing of an advance factory building), or”,

and

(iv) by the substitution of the following subsection for subsection (4):

“(4) References in this Chapter to a trade shall be construed—

(a) without regard to so much of the definition of ‘trade’ in section 1 (1) of the Income Tax Act, 1967 , as relates to adventures or concerns in the nature of trade, and

(b) as including the construction and the leasing of an advance factory building:

Provided that, for all other purposes of the Tax Acts, the question of whether a trade is being carried on shall be determined without regard to this subsection.”.

Restriction of relief to individuals on loans applied in acquiring shares in companies.

11. —Notwithstanding the provisions of section 34 of the Finance Act, 1974 , and section 8 of the Finance Act, 1978 , relief shall not be given under the said section 34 or the said section 8 in respect of any payment of interest on any loan applied in acquiring shares issued on or after the 20th day of April, 1990 (being shares forming part of the ordinary share capital of a company) if a claim for relief under Chapter III of Part I of the Finance Act, 1984 , is made in respect of the amount subscribed for those shares.

Amendment of Schedule 3 (reliefs in respect of tax charged on payments on retirement, etc.) to Income Tax Act, 1967 .

12. —Schedule 3 to the Income Tax Act, 1967 , is hereby amended, as on and from the 20th day of April, 1990—

(a) by the substitution of the following subparagraph for subparagraph (c) of paragraph 4:

“(c) there shall be deducted from the product at (b) an amount equal to the relevant capital sum in relation to the office or employment.”,

and

(b) by the substitution of the following paragraph for paragraph 6:

“6. (a) In this Schedule ‘the relevant capital sum in relation to an office or employment’ means the aggregate of—

(i) the amount of any lump sum (not chargeable to tax) received, and

(ii) the amount equal to the value, at the relevant date, of any lump sum (not chargeable to tax) receivable, and

(iii) the amount equal to the value, at the relevant date, of any lump sum (not chargeable to tax) which, upon the exercise of an option or a right to commute, in whole or in part, a pension in favour of a lump sum, may be received in the future,

by the holder in respect of the office or employment in pursuance of any such scheme or fund as is referred to in section 115 (1) (d):

Provided that the relevant capital sum in relation to an office or employment shall include the amount mentioned in clause (iii) irrespective of whether or not the option or right referred to in that clause is exercised:

Provided also that, where, under the conditions or terms of any such scheme or fund as is referred to in section 115 (1) (d), the holder of the office or employment is entitled to surrender irrevocably the option or right referred to in clause (iii) and has done so at the relevant date, the relevant capital sum in relation to an office or employment shall not include the amount mentioned in that clause.

(b) In computing the charge to tax in respect of a payment chargeable to tax under section 114 in the case of a claimant, if the claimant has not previously made a claim under section 115 and the relevant capital sum (if any) in relation to the office or employment in respect of which the payment is made does not exceed £4,000, section 115 (3) and paragraph 3 shall apply to that payment as if each reference to £6,000 were a reference to £6,000 increased by the amount by which £4,000 exceeds that relevant capital sum.”.

Exemption of local authorities, etc., from certain tax provisions.

13. —(1) Notwithstanding any provision of the Income Tax Acts, other than the provisions of Chapter IV of Part I of the Finance Act, 1986 , income arising to a body to which this section applies shall be exempt from income tax.

(2) This section shall have effect as respects the year 1973-74 and subsequent years of assessment.

(3) This section shall apply to each of the following bodies, that is to say:

(a) a local authority;

(b) a health board;

(c) a vocational education committee established under the Vocational Education Acts, 1930 to 1970;

(d) a committee of agriculture established under the Agriculture Acts, 1931 to 1980.

(4) In this section “local authority” has the meaning assigned to it by section 2 (2) of the Local Government Act, 1941 , and includes a body established under the Local Government Services (Corporate Bodies) Act, 1971 .