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9 1996

FINANCE ACT, 1996

Chapter III

Income Tax, Corporation Tax and Capital Gains Tax

Stud greyhound service fees.

25. —(1) In this section—

greyhound bitches” means female greyhounds registered in the Irish Greyhound Stud Book or in any other greyhound stud book recognised for the purposes of the Irish Greyhound Stud Book;

stud greyhound” means a male greyhound registered as a sire for stud purposes in the Irish Greyhound Stud Book or in any other greyhound stud book recognised for the purposes of the Irish Greyhound Stud Book.

(2) (a) As respects income tax for the year 1996-97 and subsequent years of assessment, and

(b) as respects corporation tax for an accounting period ending on or after the 6th day of April, 1996,

the profits or gains arising—

(i) to the owner of a stud greyhound which is ordinarily kept in the State from the sale of services of greyhound bitches within the State by the stud greyhound or to the part-owner of such a stud greyhound from the sale of such services or of rights to such services, or

(ii) to the part-owner of a stud greyhound which is ordinarily kept outside the State from the sale of services of greyhound bitches by the stud greyhound or of rights to such services where the part-owner carries on in the State a trade which consists of or includes greyhound breeding, and it is shown to the satisfaction of the inspector or, on appeal, to the satisfaction of the Appeal Commissioners, that the part-ownership of the stud greyhound was acquired and is held primarily for the purposes of the service by the stud greyhound of greyhound bitches owned or partly-owned by the part-owner of the stud greyhound in the course of that trade,

shall not be taken into account for any purpose of the Tax Acts.

(3) Section 93 of the Corporation Tax Act, 1976 , is hereby amended by the substitution in subsection (1) of the following paragraphs for paragraph (b):

“(b) the said section 18 as applied by section 11 (6) (continuation of exemptions), or

(c) section 25 of the Finance Act, 1996 (stud greyhound service fees),”.

(4) This section applies to profits or gains arising on or after the 6th day of April, 1996.

Amendment of section 41B (capital allowances in relation to construction or refurbishment of certain multi-storey car-parks) of Finance Act, 1994.

26. —(1) Section 41B (inserted by section 35 of the Finance Act, 1995) of the Finance Act, 1994 , is hereby amended in subsection (1) by the substitution of the following for the definition of “the relevant local authority”:

“‘the relevant local authority’, in relation to the construction or refurbishment of a multi-storey car-park, means—

(a) the corporation of a county or other borough or, where appropriate, the urban district council, or

(b) in respect of the administrative county of Dún Laoghaire-Rathdown, the administrative county of Fingal or the administrative county of South Dublin, the council of the county,

in whose functional area the multi-storey car-park is situated.”.

(2) Subsection (1) shall be deemed to have applied and have effect as on and from the 1st day of July, 1995.

Amendment of section 22 (continuation of certain allowances, etc.) of Finance Act, 1991.

27. Section 22 of the Finance Act, 1991 , is hereby amended with effect as on and from the 1st day of April, 1996—

(a) by the substitution of the following subsection for subsection (1):

“(1) Subsection (2A) (a) of section 254 of the Income Tax Act, 1967 , shall have effect as if the reference therein to the 1st day of April, 1991 (as provided for in section 50 of the Finance Act, 1988 ) were a reference to the 25th day of January, 1999:

Provided that the said subsection (2A) (a) shall have such effect for the purposes only of section 51 of the Finance Act, 1988 , and Chapter VII of Part I of the Finance Act, 1991 .”,

and

(b) by the deletion of the Table to that section.

Continuation of certain industrial buildings annual allowances.

28. —(1) Section 264 of the Income Tax Act, 1967 , is hereby amended—

(a) in the proviso to subsection (1), by the substitution of the following paragraph for paragraph (ii):

“(ii) in relation to a building or structure—

(I) the capital expenditure on the construction of which has been incurred on or after the 16th day of January, 1975, and which falls to be regarded as an industrial building or structure within the meaning of paragraph (a) or (b) of section 255 (1), and

(II) the capital expenditure on the construction of which has been incurred on or after the 24th day of April, 1992, and which falls to be regarded as an industrial building or structure within the meaning of section 255 (1) (bb),

this Part shall have effect as if ‘one-twenty-fifth’ were substituted for ‘one-fiftieth’ in the foregoing provisions of this subsection.”,

and

(b) in the proviso to subsection (3), by the substitution of the following paragraph for paragraph (ii):

“(ii) in relation to a building or structure—

(I) the capital expenditure on the construction of which has been incurred on or after the 16th day of January, 1975, and which falls to be regarded as an industrial building or structure within the meaning of paragraph (a) or (b) of section 255 (1), and

(II) the capital expenditure on the construction of which has been incurred on or after the 24th day of April, 1992, and which falls to be regarded as an industrial building or structure within the meaning of section 255 (1) (bb),

this Part shall have effect as if ‘twenty-five years’ were substituted for ‘fifty years’ in the foregoing provisions of this subsection.”.

(2) Section 265 of the Income Tax Act, 1967 , is hereby amended, in the proviso to subsection (1), by the substitution of the following paragraph for paragraph (iii):

“(iii) in relation to a building or structure—

(I) the capital expenditure on the construction of which has been incurred on or after the 16th day of January, 1975, and which falls to be regarded as an industrial building or structure within the meaning of paragraph (a) or (b) of section 255 (1), and

(II) the capital expenditure on the construction of which has been incurred on or after the 24th day of April, 1992, and which falls to be regarded as an industrial building or structure within the meaning of section 255 (1) (bb),

this Part shall have effect as if ‘twenty-five years’ were substituted for ‘fifty years’ in the foregoing provisions of this subsection.”.

Amendment of section 255 (meaning of “industrial building or structure”) of Income Tax Act, 1967.

29. Section 255 of the Income Tax Act, 1967 , is hereby amended in subsection (1) by the insertion of the following additional proviso after the proviso to that subsection:

“Provided also that expenditure incurred by a person on or after the 23rd day of April, 1996, either on the construction of, or on the acquisition of the relevant interest in, a building or structure which is not situated in the State shall not be treated as expenditure on a building or structure within the meaning of this section unless, being a building or structure not situated in the State—

(a) it is a building or structure which is to be constructed or which is in the course of construction and in respect of which it can be shown that—

(i) the said person has either entered into a binding contract in writing for the acquisition of the site for the building or structure or has entered into an agreement in writing in relation to an option to acquire the said site on or before the 23rd day of April, 1996, and

(ii) the said person has entered into a binding contract in writing for the construction of the building or structure on or before the 1st day of July, 1996, and

(iii) the construction of the building or structure had commenced on or before the said 1st day of July and had been completed before the 31st day of December, 1997,

and

(b) it is a building or structure to be constructed or which is being constructed which will be used for the purposes of a trade the profits or gains from which are taxable in the State.”.

Amendment of Chapter III (Income Tax and Corporation Tax: Reliefs for Renewal and Improvement of Certain Resort Areas) of Part I of Finance Act, 1995.

30. —Chapter III of Part I of the Finance Act, 1995, is hereby amended by the insertion of the following section after section 49:

“Restriction of capital allowances on holiday cottages, holiday apartments, etc.

49A.—(1) This section applies to—

(a) a building or structure to which section 47 applies by virtue of the building or structure being a holiday cottage of the type referred to in the proviso to section 255 (1) of the Income Tax Act, 1967 , and

(b) a building or structure which is a qualifying premises within the meaning of section 48 by virtue of the building or structure being—

(i) a holiday apartment registered under Part III of the Tourist Traffic Act, 1939 , or

(ii) other self-catering accommodation in a list published under section 9 of the Tourist Traffic Act, 1957 .

(2) (a) Subject to subsection (5), a building or structure to which this section applies shall not be a qualifying premises for the purposes of section 49, unless the person to whom an allowance under Chapter II of Part XV, or Chapter I of Part XVI, of the Income Tax Act, 1967 , would, but for subsection (3), fall to be made for the purposes of income tax or corporation tax, as the case may be, in respect of the capital expenditure incurred in the qualifying period on the construction or refurbishment of the building or structure, elects by notice in writing to the appropriate inspector (within the meaning of section 9 of the Finance Act, 1988 ) to disclaim all allowances under the said Chapter II and the said Chapter I in respect of the said capital expenditure.

(b) An election under paragraph (a) shall be included in the return required to be made by the person concerned under section 10 of the Finance Act, 1988 , for the first year of assessment or the first accounting period, as the case may be, for which an allowance would, but for subsection (3), have fallen to be made to that person under the said Chapter II or the said Chapter I in respect of the said capital expenditure.

(c) An election under paragraph (a) shall be irrevocable.

(d) A person who has made an election under paragraph (a) shall furnish a copy of that election to any person (hereafter in this paragraph referred to as ‘the second-mentioned person’) to whom the person grants a qualifying lease (within the meaning of section 49) in respect of a building or structure to which this section applies and the second-mentioned person shall include the said copy in the return required to be made by the second-mentioned person under section 10 of the Finance Act, 1988 , for the year of assessment or accounting period, as the case may be, in which rent is first payable by the second-mentioned person under the qualifying lease in respect of such a building or structure.

(3) Subject to subsection (5), where a person who has incurred capital expenditure in the qualifying period on the construction or refurbishment of a building or structure to which this section applies, makes an election under paragraph (a) of subsection (2), then, notwithstanding any other provision of the Tax Acts—

(a) no allowance under Chapter II of Part XV, or Chapter I of Part XVI, of the Income Tax Act, 1967 , shall be made to the person in respect of the said capital expenditure,

(b) on the occurrence, in relation to the building or structure, of any of the events referred to in section 265 (1) of the Income Tax Act, 1967 , the residue of expenditure (within the meaning of section 266 of that Act) in relation to the said capital expenditure shall be deemed to be nil, and

(c) the provisions of section 19 (as amended by section 23 of the Finance Act, 1991 ) of the Finance Act, 1970 , shall not apply or have effect in the case of any person who buys the relevant interest (within the meaning of section 268 of the Income Tax Act, 1967 ) in the building or structure.

(4) Subject to subsection (5), where, in the qualifying period, a person incurs capital expenditure on the acquisition, construction or refurbishment of a building or structure which is, or is to be, a building or structure to which paragraph (b) of subsection (1) applies and an allowance falls to be made in respect of that expenditure under section 254 (as amended by section 22 of the Finance Act, 1994 ) or 264 (as amended by section 28 of the Finance Act, 1996) of the Income Tax Act, 1967 , then—

(a) neither—

(i) section 307 (as amended by section 27 of the Finance Act, 1990 ) of the Income Tax Act, 1967 , nor

(ii) subsection (2) of section 16 of the Corporation Tax Act, 1976 ,

shall apply or have effect as respects the whole or part (as the case may be) of any loss which would not have arisen but for the making of the said allowance, and

(b) neither the proviso to subsection (1) of section 296 of the Income Tax Act, 1967 , nor subsection (6) of section 14 of the Corporation Tax Act, 1976 , shall apply or have effect as respects the said allowance.

(5) This section shall not apply—

(a) to expenditure incurred within the qualifying period on the acquisition, construction or refurbishment of a building or structure (hereafter in this subsection referred to as ‘the holiday cottage or apartment’) which is, or is to be, a building or structure to which this section applies if, before the 5th day of April, 1996—

(i) a binding contract in writing for the acquisition or construction of the holiday cottage or apartment was entered into, or

(ii) an application for planning permission for the construction of the holiday cottage or apartment was received by a planning authority, or

(iii) in relation to the holiday cottage or apartment, an opinion in writing was issued by the Revenue Commissioners to the effect that an allowance to be made in respect of expenditure on the said holiday cottage or apartment would not fall to be restricted by virtue of section 24 of the Finance Act, 1991 ,

or

(b) where before the 5th day of April, 1996—

(i) expenditure was incurred on the acquisition of land on which the holiday cottage or apartment is to be constructed or refurbished, by the person who incurred the expenditure on the said construction or refurbishment, or

(ii) a binding contract in writing for the acquisition of the said land by the said person was entered into,

and the said person can prove to the satisfaction of the Revenue Commissioners that a detailed plan had been prepared and that detailed discussions had taken place with a planning authority in relation to the holiday cottage or apartment on or after the 8th day of February, 1995 but before the 5th day of April, 1996 and that this can be supported by way of an affidavit from the said planning authority.”.

Relief for investment in films.

31. —(1) Subject to subsections (2) and (3), Chapter V of Part I of the Finance Act, 1987 , is hereby amended, as respects a sum of money which is paid on or after the 23rd day of January, 1996, by the substitution for section 35 of the following section—

“35.—(1) In this section:

allowable investor company’ means, in relation to a qualifying company, a company which is not connected with the qualifying company;

authorised officer’ means an officer of the Revenue Commissioners authorised by them in writing for the purposes of this section;

film’ means a film which is produced—

(a) on a commercial basis with a view to the realisation of profit, and

(b) wholly or principally for exhibition to the public in cinemas or by way of television broadcasting,

but does not include a film made for exhibition as an advertising programme or as a commercial;

the Minister’ means the Minister for Arts, Culture and the Gaeltacht;

qualifying company’ means a company which—

(a) is incorporated in the State, and

(b) is resident in the State and is not resident elsewhere, and

(c) exists solely for the purposes of the production and distribution of one, and only one, qualifying film;

qualifying film’ means a film in respect of which the Minister has given a certificate under subsection (2) which certificate has not been revoked under that subsection;

qualifying individual’ means, in relation to a qualifying company, an individual who is not connected with the company;

qualifying period’ means—

(a) in relation to an allowable investor company, the period commencing on the 23rd day of January, 1996, and ending on the 22nd day of January, 1999, and

(b) in relation to a qualifying individual, the period commencing on the 23rd day of January, 1996, and ending on the 5th day of April, 1999;

relevant deduction’ means a deduction of an amount equal to 80 per cent. of a relevant investment;

relevant investment’ means a sum of money which is—

(a) paid in the qualifying period to a qualifying company in respect of shares in the company by an allowable investor company on its own behalf or by a qualifying individual on that individual's own behalf, and is paid by the allowable investor company or by the qualifying individual, as the case may be, directly to the qualifying company, and

(b) paid by the allowable investor company or the qualifying individual, as the case may be, for the purposes of enabling the qualifying company to produce a film in respect of which, at the time such sum of money is paid, the Minister has given notice in writing to the qualifying company that the Minister is satisfied, for the time being, that an application in writing containing such information as may be specified in guidelines referred to in subsection (2) has been made to enable the Minister to consider whether a certificate should be given to that company under that subsection, and

(c) used by the qualifying company, within two years of the receipt of that sum, for that purpose,

but does not include a sum of money paid to the qualifying company on terms which provide that it will be repaid, other than a provision for its repayment in the event of the Minister not giving a certificate under subsection (2), and a reference to the making of a relevant investment shall be construed as a reference to the payment of such a sum to a qualifying company.

(2) (a) (i) The Minister, on the making of an application by a qualifying company, may, in accordance with guidelines laid down by the Minister with the consent of the Minister for Finance, give a certificate to a qualifying company stating, in relation to a film to be produced by the company, that the film may be treated as a qualifying film for the purposes of this section.

(ii) An application under this section shall be in such form as the Minister may direct and shall contain such information as may be specified in the guidelines referred to in subparagraph (i).

(b) A certificate given by the Minister under paragraph (a) shall be subject to such conditions as the Minister may consider proper (having regard, in particular, to any contribution which the production of the film is expected to make to either or both the development of the film industry in the State and the promotion and expression of Irish culture) and specifies therein including—

(i) a condition that not less than—

(I) 75 per cent., or

(II) such lower percentage, not being less than 10 per cent., which, in accordance with guidelines laid down under paragraph (a), the Minister specifies in the certificate, of the work on the production of the film is carried out in the State,

(ii) a condition that the amount per cent. of the total cost of production of the film which may be met by relevant investments shall not exceed the amount per cent. (in the proviso to this provision referred to as ‘the specified percentage’) specified in the certificate:

Provided that—

(I) subject to paragraph (II) of this proviso, the specified percentage shall not exceed—

(A) where the total cost of production of the film does not exceed £4,000,000, 60 per cent.,

(B) where the total cost of production of the film exceeds £4,000,000 and does not exceed £5,000,000, the amount per cent. (hereafter in this paragraph referred to as ‘the allowable percentage’) where the amount of the allowable percentage is determined by the formula—

E

60 — _________

£100,000

where E is the excess of the total cost of production of the film over £4,000,000, and

(C) where the total cost of production of the film exceeds £5,000,000, 50 per cent.,

but in any case to which subparagraph (A), (B) or (C) relates, the total cost of production of the film which is met by relevant investments shall not exceed £7,500,000, and where the percentage of the work on the production of the film carried out in the State (in this proviso referred to as the ‘lower percentage’) is less than 50 per cent., paragraph (b) shall be construed as if the reference to 60 per cent., the reference to the allowable percentage and the reference to 50 per cent. were a reference to the lower percentage, and

(II) in relation to a film (otherwise than an animation film) in respect of which the principal photography commences at any time during the months of October, November, December and January, and the production of the film continues to completion without unreasonable delay from that time, the references in paragraph (I) of this proviso to—

(A) 60 per cent., shall be construed as a reference to 66 per cent.,

(B) 50 per cent., shall be construed as a reference to 55 per cent., and

(C) £7,500,000 shall be treated as a reference to £8,250,000,

and

(iii) a condition that the qualifying company shall, in respect of the qualifying film concerned, notify the Minister in writing of when the principal photography has commenced, the first animation drawings have commenced or the first model movement has commenced, as appropriate:

Provided that the Minister may amend or revoke any such condition (including a condition added by virtue of this proviso) specified in the certificate, or add to such conditions, by giving notice in writing to the qualifying company concerned of the amendment, revocation or addition, and the provisions of this section shall apply as if—

(I) a condition as so amended or added by the notice was specified in the certificate, and

(II) a condition as so revoked was not specified in the certificate.

(c) Where a company fails to comply with any of the conditions to which a certificate given to it under paragraph (a) is subject by virtue of paragraph (b)—

(i) that failure shall constitute the failure of an event to happen by reason of which relief falls to be withdrawn under subsection (11), and

(ii) the Minister may, by notice in writing served by registered post on the company, revoke the certificate.

(3) Subject to the provisions of this section, where, in an accounting period, an allowable investor company makes a relevant investment, it shall, on making a claim in that behalf, be given a relevant deduction from its total profits for the accounting period:

Provided that, where the amount of the relevant deduction to which the allowable investor company is entitled under this section in an accounting period exceeds its profits for that accounting period, an amount equal to ten-eighths of the amount of that excess shall be carried forward to the succeeding accounting period and the amount so carried forward shall be treated for the purposes of this section as if it were a relevant investment made in that succeeding accounting period.

(4) Where in any period of twelve months (in the proviso to this subsection referred to as a ‘twelve month period’) ending on an anniversary of the 22nd day of January, 1996, the amount, or the aggregate amount, of the relevant investments made, or treated as made, by an allowable investor company, or by such company and all companies (which other companies are referred to in the proviso to this subsection as ‘connected companies’) which, at any time in that period, would be regarded as connected with such company, exceeds £6,000,000, no relief shall be given under this section in respect of the amount of the excess and, where there is more than one relevant investment, the inspector or, on appeal, the Appeal Commissioners, shall make such apportionment of the relief available as shall be just and reasonable to allocate to each relevant investment a due proportion of the relief available and, where necessary, to grant to each allowable investor company concerned an amount of relief proportionate to the amount of the relevant investment or the aggregate amount of the relevant investments made by it in the period:

Provided that no relief shall be given under this section in respect of the amount or the aggregate amount of the relevant investments (in this proviso referred to as the ‘total amount’) made by an allowable investor company and its connected companies—

(a) to the extent that the amount of the relevant investment, or the total amount made in any one qualifying company, exceeds £2,000,000, and

(b) where in any twelve month period the total amount exceeds £2,000,000, to the extent that the excess comprises a relevant investment or relevant investments made in a qualifying company to enable the company to produce a film, the total cost of production of which exceeds £4,000,000.

(5) Subject to the provisions of this section, where, in any year of assessment, a qualifying individual makes a relevant investment, the individual shall, on making a claim in that behalf, be given a relevant deduction from the individual's total income for that year of assessment.

(6) A relevant deduction shall not be given under this section in respect of any relevant investment made by a qualifying individual in a qualifying company in any year of assessment unless the amount of that relevant investment, or the total amount of the relevant investments, made by the individual in the qualifying company in that year is £200 or more:

Provided that, in the case of a qualifying individual who is married and is assessed to tax for a year of assessment in accordance with the provisions of section 194 (inserted by section 18 of the Finance Act, 1980 ) of the Income Tax Act, 1967 , or of that section as applied by section 195B (inserted by section 10 of the Finance Act, 1993 ) of the Income Tax Act, 1967 , any relevant investment made by the qualifying individual's spouse in the qualifying company in that year of assessment shall be deemed to have been made by the qualifying individual.

(7) A relevant deduction shall not be given to a qualifying individual under this section for a year of assessment to the extent to which the amount of the relevant investment, or the total amount of the relevant investments (whether or not made in the same qualifying company), made, or treated as made, by the individual in that year of assessment exceeds £25,000.

(8) If, for any year of assessment, a greater relevant deduction would be given to a qualifying individual under this section but for either or both of the following reasons, that is to say—

(a) an insufficiency of total income, or

(b) the operation of subsection (7),

ten-eighths of the relevant deduction which cannot be given to the individual under this section for either or both of those reasons shall be carried forward to the next year of assessment and shall be treated for the purposes of this section as a relevant investment made by the individual in that following year:

Provided that an amount shall not be carried forward to any year of assessment after the year 1998-99.

(9) To the extent that an amount once carried forward to a year of assessment under subsection (8) (and treated as a relevant investment made by a qualifying individual in that year of assessment) gives rise to a relevant deduction which is not deducted from the qualifying individual's total income for that year of assessment, the amount shall to that extent be carried forward again to the next following year of assessment (and treated as a relevant investment made by the individual in that next following year), and so on for succeeding years of assessment:

Provided that an amount shall not be carried forward to any year of assessment after the year 1998-99.

(10) A relevant deduction under this section shall be given to a qualifying individual for any year of assessment as follows:

(a) in the first instance, in respect of an amount of relevant investment carried forward from an earlier year of assessment in accordance with the provisions of subsection (8) or (9), and, in respect of such an amount so carried forward, for an earlier year of assessment in priority to a later year of assessment, and

(b) thereafter, and only thereafter, in respect of any other amount of relevant investment in respect of which a relevant deduction is to be given in that year of assessment.

(11) (a) A claim to relief under this section may be allowed at any time after the time specified in paragraph (b) in respect of the payment of a sum to a qualifying company, which, if it is used, within two years of its being paid, by the qualifying company for the production of a qualifying film, will be a relevant investment, if all the conditions for relief are or will be satisfied, but the relief shall be withdrawn if, by reason of the happening of any subsequent event including the revocation by the Minister of a certificate under subsection (2) or the failure of an event to happen which at the time the relief was given was expected to happen, the company or the individual, as the case may be, making the claim was not entitled to the relief allowed.

(b) The time referred to in paragraph (a) is the time at which all of the following events have occurred, that is to say—

(i) the payment in respect of which relief is claimed has been made, and

(ii) in relation to the qualifying film the principal photography has commenced, the first animation drawings have commenced or the first model movement has commenced, as appropriate.

(12) A claim for relief in respect of a relevant investment in a company shall not be allowed unless it is accompanied by a certificate issued by the company in such form as the Revenue Commissioners may direct and certifying that the conditions for the relief, so far as applying to the company and the qualifying film, are or will be satisfied in relation to that investment.

(13) Before issuing a certificate for the purposes of subsection (12), a company shall furnish the authorised officer with—

(a) a statement to the effect that it satisfies or will satisfy the conditions for the relief, so far as they apply in relation to the company and a film,

(b) a copy of any notification required to be given to the Minister under subsection (2) (b) (iii),

(c) a copy of the certificate, including a copy of any notice given by the Minister amending, revoking or adding a condition to that certificate, under subsection (2) in respect of the film, and

(d) such other information as the Revenue Commissioners may reasonably require.

(14) A certificate to which subsection (12) relates shall not be issued without the authority of the authorised officer.

(15) Any statement under subsection (13) shall—

(a) contain such information as the Revenue Commissioners may reasonably require,

(b) be in such form as the Revenue Commissioners may direct, and

(c) contain a declaration that it is correct to the best of the company's knowledge and belief.

(16) Where a company has issued a certificate for the purposes of subsection (12), or furnished a statement under subsection (13), and either—

(a) the certificate or statement was made fraudulently or negligently, or

(b) the certificate was issued in contravention of subsection (14),

then—

(i) the company shall be liable to a penalty not exceeding £500 or, in the case of fraud, not exceeding £1,000, and such penalty may, without prejudice to any other method of recovery, be proceeded for and recovered summarily in the same manner as in summary proceedings for recovery of any fine or penalty under any Act relating to the excise, and

(ii) no relief shall be given under the provisions of this section and if any such relief has been given, it shall be withdrawn.

(17) For the purpose of regulations made under section 127 of the Income Tax Act, 1967 , no regard shall be had to the relief unless a claim for it has been duly made and admitted.

(18) An allowable investor company or a qualifying individual shall not be entitled to relief in respect of a relevant investment unless the relevant investment—

(a) has been made for bona fide commercial reasons and not as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax,

(b) has been, or will be, used in the production of a qualifying film, and

(c) is made at the risk of the allowable investor company or the qualifying individual, as the case may be, and—

(i) in a case where it is made by an allowable investor company, neither the company nor any person who would be regarded as connected with the company, or

(ii) in a case where it is made by a qualifying individual, neither the individual nor any person who would be regarded as connected with the individual,

is entitled to receive any payment, in money or money's worth, or other benefit directly or indirectly borne by, or attributable to, the qualifying company other than a payment made on an arm's length basis for goods or services supplied or a payment out of the proceeds of exploiting the film to which the allowable investor company or the qualifying individual, as the case may be, is entitled under the terms subject to which the relevant investment is made.

(19) Where any relief has been given under this section which is subsequently found not to have been due or is to be withdrawn by virtue of subsection (11) or (16), it shall be withdrawn by making an assessment to corporation tax or income tax, as the case may be, under Case IV of Schedule D for the accounting period or accounting periods, or the year of assessment or years of assessment, as the case may be, in which relief was given and, notwithstanding anything in the Tax Acts, such an assessment may be made at any time.

(20) (a) Subject to paragraph (c), where an allowable investor company is entitled to relief under this section in respect of any sum, or any part of a sum, or would be so entitled on making due claim, as a relevant deduction from its total profits for any accounting period, it shall not be entitled to any relief for that sum or any part of a sum, in computing its income or profits, or as a deduction from its income or profits, for any accounting period under any other provision of the Corporation Tax Acts or the Capital Gains Tax Acts.

(b) Subject to paragraph (c), where a qualifying individual is entitled to relief under this section in respect of any sum, or any part of a sum, or would be so entitled on making due claim, as a relevant deduction from the individual's total income for any year of assessment—

(i) the individual shall not be entitled to any relief for that sum or part in computing the individual's total income, or as a deduction from the individual's total income, for any year of assessment under any other provision of the Income Tax Acts, and

(ii) so much of that sum or part as is equal to the amount of the relevant deduction given in relation thereto shall be treated as a sum which, by reason of paragraph 4 of Schedule 1 to the Capital Gains Tax Act, 1975 , is to be excluded from the sums allowable as a deduction in the computation of gains and losses for the purposes of the Capital Gains Tax Acts.

(c) Where an allowable investor company or a qualifying individual has made a relevant investment by way of a subscription for new ordinary shares of a qualifying company and none of those shares are disposed of by the allowable investor company or the qualifying individual, as the case may be, within one year of their acquisition by that company or that individual, as the case may be, then the sums allowable as deductions from the consideration in the computation for the purpose of capital gains tax of the gain or loss accruing to the company or the individual, as the case may be, on the disposal of those shares shall be determined without regard to any relief under this section which the company or the individual, as the case may be, has obtained, or would be entitled on due claim to obtain, except that where those sums exceed the consideration they shall be reduced by an amount equal to—

(i) the amount of the relevant deduction allowed to the allowable investor company or the qualifying individual, as the case may be, under this section in respect of the subscription for those shares, or

(ii) the amount of the excess, whichever is the lesser amount:

Provided that, if the disposal of shares is by a qualifying individual, and the disposal falls within section 13 (5) of the Capital Gains Tax Act, 1975 , the preceding provisions of this paragraph shall not apply.

(d) For the purposes of this subsection ‘new ordinary shares’ means new ordinary shares forming part of the ordinary share capital of a qualifying company which, throughout the period of one year commencing on the date such shares are issued, carry no present or future preferential right to dividends, or to a company's assets on its winding up, and no present or future preferential right to be redeemed.

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

(22) In the case of an individual, all such provisions of the Income Tax Acts as apply in relation to the deductions specified in sections 138 to 142 of the Income Tax Act, 1967 , shall, with any necessary modifications, apply in relation to relief under this section.”.

(2) (a) Where an allowable investor company has in the period of twelve months ending on the 22nd day of January, 1997, paid a sum of money to which subsection (3) applies then the reference in subsection (4) of section 35 (inserted by subsection (1)) to £6,000,000 shall, in respect of that period, be construed as a reference to £6,000,000 less the amount or if there is more amounts than one the aggregate of such amounts, of such sums of money, and

(b) where a qualifying individual has in the year of assessment 1995-96 paid a sum of money to which subsection (3) applies, the reference in subsection (7) of section 35 (inserted by subsection (1)) to £25,000 shall, in respect of that year of assessment, be construed as a reference to £25,000 less that amount or, if there is more amounts than one the aggregate of such amounts, of such sums of money.

(3) Subsection (1) shall not apply as respects a sum of money which is paid on or after the 23rd day of January, 1996, and on or before the 31st day of March, 1996, where the sum of money is paid in respect of shares in a qualifying company, and—

(a) the Minister for Arts, Culture and the Gaeltacht had received before the 23rd day of January, 1996, an application in writing to give a certificate to the company stating, in relation to a film to be produced by the company, that the film is a qualifying film, and

(b) where a certificate is given by the Minister to the company after the 23rd day of January, 1996, it includes a statement that the Minister had received the said application before that date.

(4) As respects a sum of money—

(a) to which subsection (1) does not apply by virtue of subsection (3), or

(b) which is paid before the 23rd day of January, 1996,

the provisions of section 35 of the Finance Act, 1987 , which were in force immediately prior to the 23rd day of January, 1996, shall continue to have effect:

Provided that where the sum of money is a sum of money paid on or after the 6th day of April, 1995, or it is a sum of money to which subsection (3) applies and the sum of money is used for the purpose of enabling the qualifying company to produce a qualifying film in respect of which an application (to give a certificate under subsection (1A)) had not been received by the Minister before the 23rd day of January, 1996, the provisions shall have effect as if—

(i) subsection (2) was amended by the substitution for “a deduction of the amount of that investment” of “a deduction of an amount equal to 80 per cent. of that investment”, and

(ii) subsection (3A) was amended by the substitution for “a deduction of the amount of that investment” of “a deduction of an amount equal to 80 per cent. of that investment”.

Treatment of patent royalties and related distributions.

32. —(1) Section 34 of the Finance Act, 1973 , is hereby amended in subsection (1) in the definition of “income from a qualifying patent” by the insertion after paragraph (a) of the following proviso:

“Provided that where the royalty or other sum exceeds the royalty or other sum which would have been paid if the payer of the royalty or other sum and the beneficial recipient thereof were independent persons acting at arm's length, the excess shall not be income from a qualifying patent,”.

(2) Section 170 of the Corporation Tax Act, 1976 , is hereby amended—

(a) in subsection (1) by the substitution for the definition of “disregarded income” of the following definition:

“‘disregarded income’ means—

(a) income from a qualifying patent which by virtue of subsection (2) of section 34 of the Finance Act, 1973 (income from patent royalties) has been disregarded for the purposes of income tax, and

(b) income from a qualifying patent which by virtue of subsection (2) of section 34 of the Finance Act, 1973, and subsection (6) of section 11 has been disregarded for the purposes of corporation tax,

but does not include income from a qualifying patent (in this section referred to as ‘specified income’) which would not be income from a qualifying patent if paragraph (a) of the definition of ‘income from a qualifying patent’ in subsection (1) of the said section 34 had not been enacted;”,

and

(b) by the insertion after subsection (3A) of the following subsection:

“(3B) (a) Where for an accounting period a company makes one or more distributions out of specified income, so much of the amount of that distribution, or the aggregate of such distributions, as does not exceed the amount of aggregate expenditure on research and development incurred by the company in relation to the accounting period shall be treated as a distribution made out of disregarded income:

Provided that—

(I) subject to paragraph (II), if in an accounting period the beneficial recipient (hereafter in this proviso referred to as ‘the recipient’) of the specified income shows in writing to the satisfaction of the Revenue Commissioners that the specified income is income from a qualifying patent in respect of an invention which—

(A) involved radical innovation, and

(B) was patented for bona fide commercial reasons and not primarily for the purpose of avoiding liability to taxation,

the Revenue Commissioners shall, after consideration of any evidence in relation to the matter which the recipient submits to them and after such consultations (if any) as may seem to them to be necessary with such persons as in their opinion may be of assistance to them, determine whether all distributions made out of specified income accruing to the recipient for that accounting period and all subsequent accounting periods are to be treated as distributions made out of disregarded income and the recipient shall be notified in writing of the determination,

(II) a recipient aggrieved by the determination of the Revenue Commissioners may, by notice in writing given to the Revenue Commissioners within thirty days of the date of notification advising of the determination, appeal to the Appeal Commissioners and the Appeal Commissioners shall hear and determine the appeal made to them as if it were an appeal against an assessment to income tax and all the provisions of the Income Tax Act, 1967 , relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

(b) The Revenue Commissioners may nominate any of their officers to perform any acts and discharge any functions, authorised by this subsection to be performed or discharged by the Revenue Commissioners and references in this subsection to the Revenue Commissioners shall, with any necessary modifications, be construed as including references to an officer so nominated.

(c) In this subsection—

the amount of aggregate expenditure on research and development incurred by a company in relation to an accounting period’ means the amount of expenditure on research and development activities incurred in the State by the company in the accounting period and the previous two accounting periods:

Provided that where in an accounting period a company incurs expenditure on research and development activities and not less than 75 per cent. of the expenditure was incurred in the State, all of the expenditure shall be deemed to have been incurred in the State;

the amount of the expenditure on research and development activities’, in relation to expenditure incurred by a company in an accounting period, means non-capital expenditure incurred by the company being the aggregate of the amounts of—

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

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

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

Provided that where the company (hereafter in this proviso referred to as the ‘first company’) is a member of a group then for the purposes of this section the amount of expenditure on research and development activities incurred in an accounting period by another company which in the accounting period is a member of the group shall, on a joint election in writing being made on that behalf by the first company and the other company, be treated as being expenditure incurred on research and development activities in the accounting period by the first company and not by the other company;

research and development activities’ has the same meaning as in paragraph (a) of subsection (1) of section 59 of the Finance Act, 1995.

(d) In this subsection—

(i) two companies shall be deemed to be members of a group if both are wholly or mainly under the control of the same individual or individuals or if one is a 75 per cent. subsidiary of another or both are 75 per cent. subsidiaries of a third company:

Provided that in determining whether one company is a 75 per cent. subsidiary of another, the other company shall be treated as not being the owner—

(I) of any share capital which it owns directly in a company if a profit on sale of the shares would be treated as a trading receipt of its trade, or

(II) of any share capital which it owns indirectly, and which is owned directly by a company for which a profit on the sale of the shares would be a trading receipt,

(ii) a company shall be wholly or mainly under the control of an individual or individuals if not less than 75 per cent. of the ordinary share capital of the company is owned directly or indirectly by the individual or, as the case may be, by individuals, each of whom own directly or indirectly part of that share capital,

(iii) sections 108 to 114 of the Corporation Tax Act, 1976 , shall apply for the purposes of this paragraph as they apply for the purposes of Part XI of that Act and where two companies are deemed to be members of a group by reason that both are wholly or mainly under the control of the same individual or individuals those sections shall apply as they would apply for the purposes of the said Part if the references in those sections to a parent company included a reference to an individual or individuals who hold shares in a company.”.

(3) This section shall apply—

(a) as respects subsection (1), to a royalty or other sum paid on or after the 23rd day of April, 1996, and

(b) as respects subsection (2), to a distribution made out of specified income accruing to a company on or after the 28th day of March, 1996.

Amendment of section 31 (interest payments by companies and to non-residents) of Finance Act, 1974.

33. —(1) Section 31 of the Finance Act, 1974 , is hereby amended by the substitution for paragraph (cc) (inserted by the Finance Act, 1988 ) of subsection (3) of the following:

“(cc) interest paid to a person whose usual place of abode is outside the State by—

(i) a company in the course of carrying on relevant trading operations within the meaning of section 39A (inserted by the Finance Act, 1981 ) or section 39B (inserted by the Finance Act, 1987 ) of the Finance Act, 1980 , or

(ii) a specified collective investment undertaking within the meaning of section 18 (as amended by section 35 of the Finance Act, 1996) of the Finance Act, 1989 ,

or”.

(2) This section shall apply and have effect as on and from the 28th day of March, 1996.

Allowance for mine rehabilitation expenditure.

34. —The Finance (Taxation of Profits of Certain Mines) Act, 1974 , is hereby amended by the insertion, after section 8, of the following section:

“8A.—(1) (a) In this section—

integrated pollution control licence’ means a licence granted under section 83 of the Environmental Protection Agency Act, 1992 ;

mine rehabilitation fund’, in relation to a qualifying mine, means a fund—

(i) which consists of amounts paid by a person who is carrying on the trade of working a qualifying mine to another person (hereafter in this section referred to as the ‘fund holder’) who is not connected with the first-mentioned person,

(ii) which is obliged to be maintained under the terms—

(I) of a State mining facility, or

(II) of any other agreement in writing to which the Minister is a party and to which the State mining facility is subject,

(iii) the sole purpose of which is to have available at the time a qualifying mine ceases to be worked such amount as is specified in a certificate given by the Minister under subsection (2) as being the amount which, in the Minister's opinion, could reasonably be expected to be necessary to meet rehabilitation expenditure in relation to the qualifying mine, and

(iv) no part of which may be paid to the person, or a person connected with that person, who is working, or has worked the qualifying mine except where—

(I) the fund holder has been authorised in writing by the Minister, and by either or both the relevant local authority and the Environmental Protection Agency, to make a payment to the person, or the connected person, as the case may be, for the purposes of incurring rehabilitation expenditure in relation to the qualifying mine, or

(II) an amount may be paid to the person, or the connected person, as the case may be, after a certificate of completion of rehabilitation in relation to the qualifying mine has been submitted to, and approved by—

(A) the Minister, and

(B) either or both the relevant local authority and the Environmental Protection Agency;

the Minister’ means the Minister for Transport, Energy and Communications;

qualifying mine’ means a mine that is being worked for the purpose of obtaining scheduled minerals, dolomite and dolomitic limestone, calcite and gypsum, or any of those minerals;

rehabilitation expenditure’ means expenditure incurred, in connection with the rehabilitation of the site of a mine, or part of a mine, in order to comply with any condition—

(i) of a State mining facility,

(ii) subject to which planning permission for development consisting of the mining and working of minerals was granted, or

(iii) subject to which an integrated pollution control licence for an activity specified in the First Schedule to the Environmental Protection Agency Act, 1992 , was granted,

by a person who has ceased to work the mine;

rehabilitation’ includes landscaping and the carrying out of any activities which take place after the mine ceases to be worked and which are required by a condition subject to which planning permission for development consisting of the mining and working of minerals, or an integrated pollution control licence, was granted;

relevant local authority’, in relation to a qualifying mine, means the council of a county or the corporation of a county or other borough or, where appropriate, the urban district council, in whose functional area the mine is situated;

relevant payments’ means payments specified in accordance with paragraph (b) (iii) of subsection (2) in a certificate given under that subsection and which are paid at or about the time specified in the certificate;

State mining facility’, in relation to a mine, means a State mining lease, a State mining licence or a State mining permission granted by the Minister in relation to the mine.

(b) For the purposes of this section—

(i) any reference to the site of a mine includes a reference to land used in connection with the working of the mine, and

(ii) the net cost to any person of the rehabilitation of the site of a mine is the excess, if any, of rehabilitation expenditure over any receipts which are attributable to the rehabilitation (whether for spoil or other assets removed from the site or for tipping rights or otherwise).

(2) (a) Where in relation to a fund the Minister is of the opinion that—

(i) the matters set out in paragraphs (i), (ii) and (iv) of the definition of ‘mine rehabilitation fund’ are satisfied, and

(ii) the sole purpose of the fund is to have available at the time a qualifying mine ceases to be worked such amount as could reasonably be expected to be necessary to meet rehabilitation expenditure in relation to the qualifying mine,

the Minister may give a certificate to that effect.

(b) A certificate given under paragraph (a) shall, in addition to the information specified in that paragraph, specify—

(i) the number of years, being the Minister's opinion of the life (hereafter in this section referred to as the ‘estimated life of the mine’) of the mine remaining at the time the certificate is given,

(ii) the amount which, in the Minister's opinion, could reasonably be expected to be necessary to meet rehabilitation expenditure in relation to the qualifying mine, and

(iii) the amounts (hereafter in this section referred to as the ‘scheduled payments’) which are required to be paid to the fund holder, and the times at which such amounts are to be paid, so as to achieve the purpose specified in paragraph (a)(ii).

(c) The Minister may, by notice in writing given to a person to whom a certificate has been given under this section, amend the certificate.

(3) (a) An allowance equal to so much of any rehabilitation expenditure in relation to a qualifying mine as does not exceed the net cost of the rehabilitation of the site of the mine shall be made to a person under this section for the chargeable period related to the expenditure.

(b) Expenditure incurred by a person after the person ceases to carry on the trade of working a qualifying mine shall be treated as having been incurred on the last day on which the person carried on the trade.

(4) Where the Minister has issued a certificate under subsection (2) in respect of a mine rehabilitation fund related to a qualifying mine, an allowance shall be made to the person who—

(a) is working the qualifying mine, and

(b) is obliged to make relevant payments to the fund holder in relation to the fund,

for any chargeable period which falls wholly or partly into the period (hereafter in this subsection referred to as the ‘funding period’) commencing on the date on which the Minister gives the certificate and ending at the end of the estimated life of the mine and the amount of the allowance shall be an amount determined by the formula—

N       1

E × __ × __

12       L

where—

E is the aggregate of scheduled payments,

N is the number of months in the chargeable period, or the part of the chargeable period falling into the funding period, and

L is the number of years in the estimated life of the mine:

Provided that—

(i) the aggregate of the amounts of allowances under this subsection for a chargeable period and all preceding chargeable periods shall not exceed the aggregate of the amounts of relevant payments made in the chargeable period or its basis period and in all preceding chargeable periods or their basis periods, and

(ii) where effect cannot be given to an allowance, or part of an allowance, under this subsection for a chargeable period by virtue of paragraph (i), the allowance or the part of the allowance, as the case may be, shall be added to the amount of an allowance under this subsection for the following chargeable period and, subject to paragraph (i), shall be deemed to be part of the allowance for that period, or, if there is no such allowance for that period, shall be deemed to be the allowance for that period, and so on for succeeding periods.

(5) Where the Minister by notice in writing amends a certificate under subsection (2) (c) in a chargeable period or its basis period—

(a) if the aggregate of the amounts of allowances made under subsection (4) for the chargeable period and all preceding chargeable periods exceeds the aggregate of the amounts of allowances which would have been made under that subsection for those chargeable periods if the certificate had been amended in accordance with the notice at the time the certificate was given, an amount equal to the amount of the excess shall be treated as a trading receipt of the chargeable period in which, or in the basis period for which, the certificate was amended, and

(b) if the aggregate of the amounts of allowances which would have been made under subsection (4) for the chargeable period and all preceding chargeable periods if the certificate had been amended in accordance with the notice at the time the certificate was given exceeds the aggregate of the amounts of allowances made under that subsection for those chargeable periods, the allowance under subsection (4) for the chargeable period shall, subject to paragraph (i) of the proviso to subsection (4), be increased by an amount equal to the excess.

(6) (a) Subject to paragraph (b), an amount received by a person who is working, or has worked a qualifying mine, or by a person connected with such a person, from the fund holder of a mine rehabilitation fund in relation to the qualifying mine, or otherwise in connection with the mine rehabilitation fund, shall, in accordance with this section, be treated as trading income of the person.

(b) The amount to be treated as trading income for a chargeable period shall not exceed the excess of the aggregate of the amounts of allowances made under subsections (4) and (5) in that chargeable period and in any preceding chargeable periods over the aggregate amounts treated under this subsection or subsection (5) as trading income for all preceding chargeable periods.

(c) An amount which falls to be treated under this subsection as trading income of a person shall be treated as income of—

(i) where the amount is received at any time when the person is working the qualifying mine, the chargeable period in which, or in the basis period for which, the amount is received, and

(ii) in any other case, the chargeable period in which the mine ceases to be worked.

(d) Notwithstanding paragraph (c), where an amount falls to be treated as income of a chargeable period in accordance with subparagraph (ii) of that paragraph, the amount shall be assessed for the chargeable period in which, or in the basis period for which, the amount is received and details of the receipt of the amount shall be included in the return required to be made by the person under section 10 of the Finance Act, 1988 , for that chargeable period.

(7) Where a person (hereinafter in this subsection referred to as the ‘first-mentioned person’) ceases to work a qualifying mine and any obligations of the first-mentioned person to rehabilitate the site of the mine are transferred to any other person the other person shall be treated for the purposes of this section as if that other person had worked the qualifying mine and as if everything done to or by the first-mentioned person had been done to or by that other person.

(8) As respects any person who incurs rehabilitation expenditure in respect of which an allowance is made under subsection (3)—

(a) rehabilitation expenditure shall not be deductible in computing income of the person for any purpose of income tax or corporation tax,

(b) an allowance shall not be made under any provision of the Tax Acts, other than this section, in respect of the expenditure, and

(c) to the extent that any receipts are, under subsection (1) (b) (ii), taken into account to determine the net cost of the rehabilitation of the site of a mine, those receipts shall not constitute income of the person for any purpose of income tax or corporation tax.

(9) An allowance made to a person who is carrying on a trade of working a mine under this section shall be made in taxing that trade and section 241 (3) of the Income Tax Act, 1967 , shall apply in relation to an allowance under subsection (4) as it applies in relation to allowances for wear and tear of machinery and plant.

(10) Section 131 shall apply for the purposes of this section.”.

Amendment of section 18 (taxation of collective investment undertakings) of Finance Act, 1989.

35. —(1) Section 18 (as amended by the Finance Act, 1995) of the Finance Act, 1989 , is hereby amended in subsection (1)—

(a) by the insertion after the definition of “return” of the following definition:

“‘specified company’ means a company—

(a) which is—

(i) a qualified company carrying on relevant trading operations (within the meaning of section 39B of the Finance Act, 1980 ), or

(ii) a qualified company carrying on relevant trading operations (within the meaning of section 39A of the Finance Act, 1980 ) so long as the relevant trading operations within the meaning of the said section 39A could be certified by the Minister for Finance as relevant trading operations for the purposes of section 39B of the Finance Act, 1980 , if they were carried on in the Area (within the meaning of the said section 39B) rather than in the airport (within the meaning of section 39A),

and

(b) not more than 25 per cent. of the share capital of which is owned directly or indirectly by persons resident in the State;”,

and

(b) by the insertion in paragraph (b) of the definition of “specified collective investment undertaking” after “ Corporation Tax Act, 1976 ,” of “a specified company”.

(2) This section shall apply and have effect as on and from the 28th day of March, 1996.

Amendment of section 13 (special investment schemes) of Finance Act, 1993.

36. —(1) Section 13 of the Finance Act, 1993 , is hereby amended in subsection (8) by the insertion after paragraph (b) of the following paragraph:

“(bb) (i) Where in a year of assessment (in this paragraph referred to as ‘the first year of assessment’) any securities which are assets subject to any trust created in pursuance of a special investment scheme are disposed of and in the immediately following year of assessment interest becoming payable in respect of the securities is receivable by the special investment scheme, then, for the purposes of computing the chargeable gains for the first year of assessment the price paid by the management company or the trustee for the securities shall be treated as reduced by the appropriate amount in respect of the interest:

Provided that where for a year of assessment the provisions of this paragraph apply so as to reduce the price paid for securities, the amount by which the price paid for the securities is reduced shall be treated as a loss arising, in the immediately following year of assessment, from the disposal of the securities.

(ii) In this paragraph—

the appropriate amount in respect of the interest’ means the appropriate amount in respect of the interest which would be determined in accordance with Schedule 11 to the Income Tax Act, 1967 , if the management company or the trustee was the first buyer and the management company or the trustee carried on a trade to which section 368 (1) of the said Act applies:

Provided that in determining the appropriate amount in respect of the interest in accordance with the said Schedule 11, paragraph 3 (4) of that Schedule shall apply as if there were deleted ‘in the opinion of the Appeal Commissioners’;

securities’ has the same meaning as in subsection (1) of section 29 of the Finance Act, 1984 .”.

(2) This section shall apply and have effect as respects a disposal on or after the 28th day of March, 1996.

Amendment of section 14 (special portfolio investment accounts) of Finance Act, 1993.

37. —(1) Section 14 of the Finance Act, 1993 , is hereby amended—

(a) in subsection (1) in the definition of “designated broker” by the insertion after “the Irish Stock Exchange” of “or is a member firm (which carries on a trade in the State through a branch or agency) of a stock exchange of any other Member State of the European Union”, and

(b) in subsection (4) by the insertion after paragraph (b) of the following paragraph:

“(bb) (i) Where in a year of assessment (hereafter in this paragraph referred to as ‘the first year of assessment’) securities which are assets of a special portfolio investment account are disposed of and in the immediately following year of assessment interest becoming payable in respect of the securities is receivable by the special portfolio investment account, then, for the purposes of computing the relevant income or gains for the first year of assessment, the price paid by the designated broker for the securities shall be treated as reduced by the appropriate amount in respect of the interest:

Provided that where for a year of assessment the provisions of this paragraph apply so as to reduce the price paid for securities, the amount by which the price paid for the securities is reduced shall be treated as a loss arising, in the immediately following year of assessment, from the disposal of the securities.

(ii) In this paragraph—

the appropriate amount in respect of the interest’ means the appropriate amount in respect of the interest which would be determined in accordance with Schedule 11 to the Income Tax Act, 1967 , if the designated broker were the first buyer and the designated broker carried on a trade to which section 368 (1) of that Act applies:

Provided that in so determining the appropriate amount in respect of the interest in accordance with the said Schedule 11, paragraph 3 (4) of that Schedule shall apply as if there were deleted ‘in the opinion of the Appeal Commissioners’;

securities’ has the same meaning as in subsection (1) of section 29 of the Finance Act, 1984 .”.

(2) This section shall apply and have effect as respects a disposal on or after the 28th day of March, 1996.

Amendment of section 17 (undertakings for collective investment) of Finance Act, 1993.

38. —(1) Section 17 (as amended by section 57 of the Finance Act, 1994 ) of the Finance Act, 1993 , is hereby amended—

(a) by the insertion after the proviso to paragraph (b) of subsection (2) of the following additional proviso to that paragraph:

“Provided also that in computing profits for the purposes of the foregoing provisions of this paragraph, subsection (1A) of section 13 shall apply as if the rate per cent. of capital gains tax specified in subsection (3) of section 3 of the Capital Gains Tax Act, 1975 , were the rate per cent. of corporation tax specified in paragraph (b) of subsection (1) of section 1.”,

(b) by the insertion after paragraph (d) of subsection (4) of the following paragraph:

“(e) Where in a chargeable period an undertaking for collective investment incurs a loss on the disposal (hereafter in this paragraph referred to as the ‘first-mentioned disposal’) of an asset the gain or loss in respect of a deemed disposal of which was included in a net amount to which paragraph (b) (ii) applied for any preceding chargeable period, so much of the allowable loss on the first-mentioned disposal as is equal to the excess of the amount of the loss over the amount which, if paragraph (a) had not been enacted, would have been the allowable loss on the first-mentioned disposal shall be treated for purposes of paragraph (b) as an allowable loss which would otherwise accrue to the undertaking for collective investment on disposals deemed by virtue of paragraph (a) to have been made in the chargeable period.”,

and

(c) by the insertion after subsection (6) of the following subsection:

“(6A) (a) Where in a chargeable period an undertaking for collective investment disposes of any securities and in the immediately following chargeable period or its basis period interest becoming payable in respect of the securities is receivable by the undertaking for collective investment, then, the gain or loss accruing on the disposal shall be computed as if the price paid by the undertaking for collective investment for the securities was reduced by the appropriate amount in respect of the interest:

Provided that where for a chargeable period the provisions of this paragraph apply so as to reduce the price paid for securities, the amount by which the price paid for the securities is reduced shall be treated as a loss arising, in the immediately following chargeable period, from the disposal of the securities.

(b) In this paragraph—

the appropriate amount in respect of the interest’ means the appropriate amount in respect of the interest which would be determined in accordance with Schedule 11 to the Income Tax Act, 1967 , if the undertaking for collective investment was the first buyer and it carried on a trade to which section 368 (1) of the said Act applies:

Provided that in determining the appropriate amount in respect of the interest in accordance with the said Schedule 11, paragraph 3 (4) of that Schedule shall apply as if there were deleted ‘in the opinion of the Appeal Commissioners’;

securities’ has the same meaning as in subsection (1) of section 29 of the Finance Act, 1984 .”.

(2) This section shall apply and have effect—

(a) as respects paragraph (a) of subsection (1), for accounting periods ending on or after the 1st day of April, 1995, and

(b) as respects paragraphs (b) and (c) of subsection (1), in relation to a disposal on or after the 28th day of March, 1996.

Exemption of bodies designated under section 4 of Securitisation (Proceeds of Certain Mortgages) Act, 1995, from certain tax provisions.

39. —(1) In this section “designated body” means a body designated under section 4 (1) of the Securitisation (Proceeds of Certain Mortgages) Act, 1995.

(2) Notwithstanding any provision of the Tax Acts, income arising to a designated body shall be exempt from income tax and corporation tax.

(3) Any stock or other forms of security issued by a designated body shall be deemed to be securities issued under the authority of the Minister within the meaning of section 466 of the Income Tax Act, 1967 , and that section shall apply accordingly.

(4) Section 474 of the Income Tax Act, 1967 , is hereby amended by the insertion in subsection (1) after “ Finance Act, 1994 ” (inserted by section 161 of the Finance Act, 1994 ) of “, or section 39 of the Finance Act, 1996”.

(5) Section 19 of the Capital Gains Tax Act, 1975 , is hereby amended in subsection (1) by the insertion after paragraph (b) of the following paragraph:

“(bb) securities issued by a designated body within the meaning assigned by section 1 of the Securitisation (Proceeds of Certain Mortgages) Act, 1995;”.

(6) Section 23 of the Capital Gains Tax Act, 1975 , shall apply to a gain accruing to a designated body as it does to a gain accruing to a body specified in that section.

(7) Section 14 of the Securitisation (Proceeds of Certain Mortgages) Act, 1995, is hereby repealed and shall be deemed never to have had effect.

(8) This section shall be deemed to have come into operation on the 30th day of November, 1995.

Treatment under Tax Acts of certain employment grants and recruitment subsidies.

40. —(1) An employment grant or recruitment subsidy to which this section applies shall be disregarded for all the purposes of the Tax Acts.

(2) This section applies to an employment grant or recruitment subsidy made to an employer in respect of a person employed by him or her, under—

(a) the Back to Work Allowance Scheme, being a scheme established on the 1st day of October, 1993, and administered by the Minister for Social Welfare,

(b) any scheme which may be established by the Minister for Enterprise and Employment with the approval of the Minister for Finance for the purposes of promoting the employment of individuals who have been unemployed for three years or more and which is to be administered by An Foras Áiseanna Saothair,

(c) paragraph 13 of Annex B to an operating agreement between the Minister for Enterprise and Employment and a County Enterprise Board, being a board specified in the Schedule to the Industrial Development Act, 1995,

(d) the European Union Leader II Community Initiative 1994 to 1999, and which is administered in accordance with operating rules determined by the Minister for Agriculture, Food and Forestry,

(e) the European Union Operational Programme for Local Urban and Rural Development which is to be administered by the company incorporated under the Companies Acts, 1963 to 1990, on the 14th day of October, 1992, as Area Development Management Limited,

(f) the Special European Union Programme for Peace and Reconciliation in Northern Ireland and the Border Counties of Ireland which was approved by the European Commission on the 28th day of July, 1995,

(g) the Joint Northern Ireland/Ireland INTERREG Programme 1994 to 1999, which was approved by the European Commission on the 27th day of February, 1995, or

(h) any initiatives of the International Fund for Ireland which was designated by the International Fund for Ireland (Designation and Immunities) Order, 1986 (S.I. No. 394 of 1986) as an organisation to which Part VIII of the Diplomatic Relations and Immunities Act, 1967 , applies.

(3) This section shall apply and have effect as on and from the 6th day of April, 1996.

Amendment of section 17 (tax deduction from payments to subcontractors) of Finance Act, 1970.

41. —As respects relevant contracts (within the meaning of section 17 of the Finance Act, 1970 ) entered into on or after the passing of this Act, section 17 (inserted by the Finance Act, 1976 ) of the Finance Act, 1970 , is hereby amended—

(a) in subsection (1), by the insertion of the following proviso to the definition of “relevant contract”:

“Provided that a separate relevant contract shall be deemed to exist between the principal and each individual member of a gang or group of persons, including a partnership in respect of which the principal has not received a relevant payments card, where relevant operations are performed collectively by the gang or group, notwithstanding that any payment or part of a payment in respect of such relevant operations is made by the principal to one or more of the gang or group or to some other person;”,

(b) in subsection (2), by the insertion after “the principal makes a payment” of “or is deemed to make a payment pursuant to subsection (2A)”,

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

“(2A) Where relevant operations are performed by a gang or group of persons, including a partnership in respect of which the principal has not received a relevant payments card, and notwithstanding that any payment or part of a payment in respect of such relevant operations is made by the principal to one or more of the gang or group or to some other person, then such payment or part of a payment shall be deemed, for the purposes of this section and any regulations made thereunder, to have been made by the principal to the individual members of that gang or group in the proportions in which the payment or any amount in respect of the payment is to be divided amongst them.”,

and

(d) in paragraph (d) of subsection (5), by the insertion after “certificates of tax deducted from payments made to subcontractors” of “and the entry thereon of such particulars as may be specified in the regulations”.

Provisions supplemental to section 33 of Finance Act, 1986, relating to interest payments by certain deposit takers.

42. —The Finance Act, 1986 , is hereby amended by the insertion of the following section after section 33:

“33A.—(1) In this section—

specified deposit’ means a relevant deposit made on or after the 28th day of March, 1996, in respect of which specified interest is payable other than such a deposit—

(a) which is held in a special savings account, or

(b) in respect of which—

(i) the interest payable is, to any extent, linked to, or determined by, changes in a stock exchange index or any other financial index,

(ii) arrangements were, or were being put, in place by the relevant deposit taker prior to the 28th day of March, 1996, to accept such a deposit, and

(iii) the deposit is made on or before the 7th day of June, 1996;

specified interest’ means interest in respect of a specified deposit other than so much of the amount of that interest as—

(a) is payable annually or at more frequent intervals, or

(b) cannot be determined until the date of payment of such interest, notwithstanding that the terms under which the deposit was made are complied with fully.

(2) Subject to the following provisions of this section, specified interest shall, for the purposes of section 33, be deemed—

(a) to accrue from day to day, and

(b) to be relevant interest paid by the relevant deposit taker in each year of assessment to the extent that—

(i) it is deemed to accrue in that year of assessment, and

(ii) it is not paid in that year of assessment,

and the relevant deposit taker shall account for appropriate tax accordingly:

Provided that—

(a) specified interest deemed to so accrue in the period from the 28th day of March, 1996, to the 5th day of April, 1996, shall be deemed to accrue in the year of assessment 1996-97, and

(b) the amount of specified interest deemed, to be relevant interest paid by a relevant deposit taker in any year of assessment by virtue of this subsection shall not be less than such amount as would be deductible in respect of interest or any other amount payable on the specified deposit in computing the income of the relevant deposit taker for the year of assessment if the year of assessment were an accounting period of the relevant deposit taker.

(3) Where, apart from that subsection, a relevant deposit taker makes a payment of relevant interest which is, or includes, specified interest it shall—

(a) deduct out of the whole of the amount of that payment the appropriate tax in relation to the payment in accordance with section 32, and

(b) account for that appropriate tax under section 33,

and the said appropriate tax shall be due and payable by the relevant deposit taker in accordance with section 33:

Provided that so much of the amount of appropriate tax paid by the relevant deposit taker by virtue of subsection (2) as is referable to specified interest included in the said payment of relevant interest shall be set off against any amount of appropriate tax due and payable by it for the year of assessment in which that payment of interest is made or against any amount, or amount on account of, appropriate tax due and payable by it for a year of assessment subsequent to that year (any such set-off being effected as far as may be against an amount so due and payable at an earlier date rather than at a later date).

(4) Subsection (2) shall not apply for a year of assessment where, for that year of assessment and all preceding years of assessment—

(a) in accordance with the provisions of section 33 (4) of this Act or section 7 (4) of the Finance Act, 1987 , as may be appropriate, a relevant deposit taker makes a payment on account of appropriate tax in respect of specified interest as if, in relation to each specified deposit held by it, the references—

(i) in the said section 33 (4), to the period beginning on the 6th day of April, and ending on the 5th day of October in the year of assessment, and

(ii) in the said section 7 (4), where it occurs in the meaning assigned to ‘A’, to the period of twelve months ending on the 5th day of October in the relevant year,

were a reference to the period beginning on the date on which the specified deposit was made and ending on the 5th day of October in the year of assessment, and

(b) the full amount payable on account of appropriate tax by the relevant deposit taker in that year of assessment in accordance with the provisions of section 33 (4) of this Act or section 7 (4) of the Finance Act, 1987 , including any amount payable in accordance with the said sections as modified by paragraph (a), before set off of any amount on account of appropriate tax paid in an earlier year of assessment, does not exceed the appropriate tax payable by the relevant deposit taker for that year of assessment.”.

Amendment of section 51 (application of certain allowances in relation to certain areas and certain expenditure) of Finance Act, 1988.

43. —(1) Section 51 (as amended by the Finance Act, 1995) of the Finance Act, 1988 , is hereby amended in paragraph (a) in subsection (1) by the substitution for “provided for use for the purposes of trading operations” of “provided by a company for use for the purposes of trading operations carried on by it”.

(2) This section shall apply and have effect as respects machinery or plant or an industrial building provided on or after the 23rd day of April, 1996.