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39 1997

TAXES CONSOLIDATION ACT, 1997

CHAPTER 3

Income tax: basis of assessment under Cases I and II

Cases I and II: basis of assessment.

[ITA67 s58(1) and s60; FA90 s14(1)(a) and s15; FA97 s146(1) and Sch9 PtI par1(2)]

65. —(1) Subject to this Chapter, income tax shall be charged under Case I or II of Schedule D on the full amount of the profits or gains of the year of assessment.

(2) Where in the case of any trade or profession it has been customary to make up accounts—

(a) if only one account was made up to a date within the year of assessment and that account was for a period of one year, the profits or gains of the year ending on that date shall be taken to be the profits or gains of the year of assessment;

(b) if an account, other than an account to which paragraph (a) applies, was made up to a date in the year of assessment, or if more accounts than one were made up to dates in the year of assessment, the profits or gains of the year ending on that date or on the last of those dates, as the case may be, shall be taken to be the profits or gains of the year of assessment;

(c) in any other case, the profits or gains of the year of assessment shall be determined in accordance with subsection (1).

(3) Where the profits or gains of a year of assessment have been computed on the basis of a period in accordance with paragraph (b) or (c) of subsection (2) and the profits of the corresponding period relating to the preceding year of assessment exceed the profits or gains charged to income tax for that year, then, the profits of that corresponding period shall be taken to be the profits or gains of that preceding year of assessment and the assessment shall be amended accordingly.

(4) In the case of the death of a person who, if he or she had not died, would under this section have become chargeable to income tax for any year of assessment, the tax which would have been so chargeable shall be assessed and charged on such person's executors or administrators, and shall be a debt due from and payable out of such person's estate.

Special basis at commencement of trade or profession.

[ITA67 s58(2), (3) and (4); FA90 s14(1)(b)]

66. —(1) Where a trade or profession has been set up and commenced within the year of assessment, the computation of the profits or gains chargeable under Case I or II of Schedule D shall be made either on the full amount of the profits or gains arising in the year of assessment or according to the average of such period, not being greater than one year, as the case may require and as may be directed by the inspector.

(2) Any person chargeable with income tax in respect of the profits or gains of any trade or profession which has been set up and commenced within one year preceding the year of assessment shall be charged on the full amount of the profits or gains for one year from the time of such setting up and commencement.

(3) Any person chargeable with income tax in respect of the profits or gains of any trade or profession which has been set up and commenced within the year next before the year preceding the year of assessment shall be entitled, on giving notice in writing to the inspector with the return required under section 951 for the year of assessment, to have the assessment reduced by the amount (if any) by which the amount of the assessment for the year preceding the year of assessment exceeds the full amount of the profits or gains of that preceding year; but, where the excess is greater than the amount of the assessment, the difference between the excess and the amount of the assessment shall be treated for the purposes of section 382 as if it were a loss sustained in a trade in that year of assessment.

Special basis on discontinuance of trade or profession.

[ITA67 s58(5) and (6); FA71 s3; FA90 s14(2); FA96 s132(2) and Sch5 PtII]

67. —(1) (a) Where in any year of assessment a trade or profession is permanently discontinued, then, notwithstanding anything in the Income Tax Acts—

(i) the person charged or chargeable with income tax in respect of the trade or profession shall be charged for that year on the amount of the profits or gains of the period beginning on the 6th day of April in that year and ending on the date of the discontinuance, subject to any deduction or set-off to which such person may be entitled under section 382 and, if such person has been charged otherwise than in accordance with this paragraph, any tax overpaid shall be repaid, or an additional assessment may be made on such person, as the case may require;

(ii) if the profits or gains of the year ending on the 5th day of April in the year preceding the year of assessment in which the discontinuance occurs exceed the amount on which the person has been charged for that preceding year, or would have been charged if no such deduction or set-off to which such person may be entitled under section 382 had been allowed, an additional assessment may be made on such person, so that such person shall be charged for that preceding year on the amount of the profits or gains of the year ending on the 5th day of April in that preceding year, subject to any such deduction or set-off to which such person may be entitled.

(b) In the case of the death of a person who, if he or she had not died, would under this subsection have become chargeable to income tax for any year, the tax which would have been so chargeable shall be assessed and charged on such person's executors or administrators, and shall be a debt due from and payable out of such person's estate.

(2) The reference in subsection (1) to the discontinuance of a trade or profession shall be construed as referring to a discontinuance occurring by reason of the death while carrying on such trade or profession of the person carrying on the same, as well as to a discontinuance occurring in the lifetime of such person, and for the purposes of subsection (1) such death shall be deemed to cause a discontinuance and such discontinuance shall be deemed to take place on the day of such death.

Short-lived businesses.

[ITA67 s58A; FA95 s19]

68. —(1) This section shall apply to a trade or profession—

(a) which has been set up and commenced in a year of assessment,

(b) which is permanently discontinued within the second year of assessment following that year of assessment, and

(c) in respect of which the aggregate of the profits or gains on which any person has been charged, or would be charged to income tax, by virtue of any other provision of the Income Tax Acts, exceeds the aggregate of the profits or gains arising in the period beginning on the date of set up and commencement and ending on the date of permanent discontinuance of the trade or profession.

(2) Any person chargeable to income tax on the profits or gains of a trade or profession to which this section applies shall be entitled, on giving notice in writing to the inspector on or before the specified return date (within the meaning of section 950 ) for the year of assessment in which the trade or profession is permanently discontinued, to have the assessment for the year of assessment immediately preceding that year reduced by the amount by which the amount of the assessment for that immediately preceding year exceeds the full amount of the profits or gains arising in that same year.

(3) Subsection (2) of section 67 shall apply to this section as if references in that subsection to subsection (1) of that section included references to this section.

Changes of proprietorship.

[ITA67 s59]

69. —(1) Where at any time a trade or profession which immediately before that time was carried on by an individual (in this subsection referred to as “the predecessor”) becomes carried on by another individual or by a partnership of persons (including a partnership in which the predecessor is a partner), the income tax payable for all years of assessment by the predecessor shall be computed as if the trade or profession had been permanently discontinued at that time.

(2) Where at any time an individual (in this subsection referred to as “the successor”) succeeds to a trade or profession which immediately before that time was carried on by another individual or by a partnership of persons (including a partnership in which the successor was a partner), the income tax payable for all years of assessment by the successor shall be computed as if the successor had set up or commenced the trade or profession at that time.

(3) In the case of the death of a person who, if he or she had not died, would under this section have become chargeable to income tax for any year, the tax which would have been so chargeable shall be assessed and charged on such person's executors or administrators, and shall be a debt due from and payable out of such person's estate.