CHAPTER 5

Miscellaneous charging provisions

123. —(1) This section shall apply to any payment (not otherwise chargeable to income tax) which is made, whether in pursuance of any legal obligation or not, either directly or indirectly in consideration or in consequence of, or otherwise in connection with, the termination of the holding of an office or employment or any change in its functions or emoluments, including any payment in commutation of annual or periodical payments (whether chargeable to tax or not) which would otherwise have been so made.

(2) Subject to section 201 , income tax shall be charged under Schedule E in respect of any payment to which this section applies made to the holder or past holder of any office or employment, or to his or her executors or administrators, whether made by the person under whom he or she holds or held the office or employment or by any other person.

(3) For the purposes of this section and section 201 , any payment made to the spouse or any relative or dependant of a person who holds or has held an office or employment, or made on behalf of or to the order of that person, shall be treated as made to that person, and any valuable consideration other than money shall be treated as a payment of money equal to the value of that consideration at the date when it is given.

(4) Any payment chargeable to tax by virtue of this section shall be treated as income received on the following date—

(a) in the case of a payment in commutation of annual or other periodical payments, the date on which the commutation is effected, and

(b) in the case of any other payment, the date of the termination or change in respect of which the payment is made,

and shall be treated as emoluments of the holder or past holder of the office or employment assessable to income tax under Schedule E.

(5) In the case of the death of any person who if he or she had not died would have been chargeable to tax in respect of any such payment, the tax which would have been so chargeable shall be assessed and charged on his or her executors or administrators, and shall be a debt due from and payable out of his or her estate.

(6) Where any payment chargeable to tax under this section is made to any person in any year of assessment, it shall be the duty of the person by whom that payment is made to deliver particulars of the payment in writing to the inspector not later than 14 days after the end of that year.

124. —(1) This section shall apply to the following payments—

(a) a termination allowance (other than that part of the allowance which comprises a lump sum) payable in accordance with section 5 of the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992 , and any regulations made under that section, and

(b) a severance allowance or a special allowance payable in accordance with Part V (inserted by the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992 ) of the Ministerial and Parliamentary Offices Act, 1938 .

(2) Notwithstanding any other provision of the Income Tax Acts, payments to which this section applies shall be deemed to be—

(a) profits or gains accruing from an office or employment (and accordingly tax under Schedule E shall be charged on those payments, and tax so chargeable shall be computed under section 112 (1)), and

(b) emoluments to which Chapter 4 of Part 42 is applied by section 984 .

125. —(1) In this section—

“benefit” means a payment made to a person under a permanent health benefit scheme in the event of loss or diminution of income in consequence of ill health;

“permanent health benefit scheme” means any scheme, contract, policy or other arrangement, approved by the Revenue Commissioners for the purposes of this section, which provides for periodic payments to an individual in the event of loss or diminution of income in consequence of ill health.

(2) (a) A policy of permanent health insurance, sickness insurance or other similar insurance issued in respect of an insurance made on or after the 6th day of April, 1986, shall be a permanent health benefit scheme within the meaning of this section if it conforms with a form which, at the time the policy is issued, is either—

(i) a standard form approved by the Revenue Commissioners as a standard form of permanent health benefit scheme, or

(ii) a form varying from a standard form so approved in no other respect than by making such alterations to that standard form as are, at the time the policy is issued, approved by the Revenue Commissioners as being compatible with a permanent health benefit scheme when made to that standard form and satisfying any conditions subject to which the alterations are so approved.

(b) In approving a policy as a standard form of permanent health benefit scheme in pursuance of paragraph (a), the Revenue Commissioners may disregard any provision of the policy which appears to them insignificant.

(3) (a) Any benefit received by a person under a permanent health benefit scheme, whether as of right or not, shall be deemed to be—

(i) profits or gains arising or accruing from an employment, and

(ii) emoluments within the meaning of Chapter 4 of Part 42 .

(b) Tax under Schedule E shall be charged on every person to whom any benefit referred to in paragraph (a) is paid in respect of all such benefits paid to such person, and tax so chargeable shall be computed under section 112 (1).

(4) The Revenue Commissioners may nominate any of their officers, including an inspector, to perform any acts and discharge any functions authorised by this section to be performed or discharged by them.

126. —(1) In this section, “the Acts” means the Social Welfare (Consolidation) Act, 1993 , and any subsequent enactment together with which that Act may be cited.

(2) (a) This subsection shall apply to the following benefits payable under the Acts—

(i) widow's (contributory) pension,

(ii) orphan's (contributory) allowance,

(iii) retirement pension, and

(iv) old age (contributory) pension.

(b) Payments of benefits to which this subsection applies shall be deemed to be emoluments to which Chapter 4 of Part 42 applies.

(3) (a) This subsection shall apply to the following benefits payable under the Acts—

(i) disability benefit,

(ii) unemployment benefit,

(iii) injury benefit which is comprised in occupational injuries benefit, and

(iv) pay-related benefit.

(b) Amounts to be paid on foot of the benefits to which this subsection applies (other than amounts so payable in respect of a qualified child within the meaning of section 2 (3)(a) of the Social Welfare (Consolidation) Act, 1993 ) shall be deemed—

(i) to be profits or gains arising or accruing from an employment (and accordingly tax under Schedule E shall be charged on every person to whom any such benefit is payable in respect of amounts to be paid on foot of such benefits, and tax so chargeable shall be computed under section 112 (1)), and

(ii) to be emoluments to which Chapter 4 of Part 42 is applied by section 984 .

(4) (a) In this subsection, “income tax week” means one of the successive periods of 7 days in a year of assessment beginning on the 1st day of that year, or on any 7th day after that day, and the last day of a year of assessment (or the last 2 days of a year of assessment ending in a leap year) shall be taken as included in the last income tax week of that year of assessment.

(b) Notwithstanding subsection (3), the first £10 of the aggregate of the amounts of unemployment benefit payable to a person in respect of one or more days of unemployment comprised in any income tax week (other than an amount so payable in respect of a qualified child within the meaning of section 2 (3)(a) of the Social Welfare (Consolidation) Act, 1993 ) shall be disregarded for the purposes of the Income Tax Acts.

(5) Notwithstanding subsection (3), the aggregate of the amounts of disability benefit, injury benefit or both disability benefit and injury benefit payable to a person in respect of—

(a) for the year of assessment 1997-98, the first 18 days, and

(b) for the year of assessment 1998-99 and subsequent years of assessment, the first 36 days,

incapacity for work for which the person is entitled to payment of either disability benefit or injury benefit shall be disregarded for the purposes of the Income Tax Acts.

(6) (a) Subsection (3) shall come into operation on such day or days as may be fixed for that purpose by order or orders of the Minister for Finance, either generally or with reference to any particular benefit to which that subsection applies, or with reference to any category of person in receipt of any particular benefit to which that subsection applies, and different days may be so fixed for different benefits or categories of persons in receipt of benefits.

(b) Where an order is proposed to be made under this subsection, a draft of the order shall be laid before Dáil Éireann, and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann.

(7) (a) The Revenue Commissioners may, in order to provide for the efficient collection and recovery of any tax due in respect of benefits to which subsection (3) applies, make regulations modifying the Income Tax (Employment) Regulations, 1960 (S.I. No. 28 of 1960), in their application to those benefits, the employees in receipt of those benefits, the tax-free allowances appropriate to such employees, and employers of such employees or certificates of tax-free allowances or tax deduction cards held by employers of such employees in respect of those employees.

(b) Without prejudice to the generality of paragraph (a), regulations under that paragraph may include provision for the reallocation by the Revenue Commissioners (without the issue of amended notices of determination of tax-free allowances, amended certificates of tax-free allowances or amended tax deduction cards) of the tax-free allowances appropriate to employees between the benefits to which subsection (3) applies and other emoluments receivable by them.

(c) Every regulation made under this subsection shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

(8) (a) In this subsection, “short-time employment” has the same meaning as it has for the purposes of the Social Welfare Acts, but also includes an employment referred to in section 79 (2)(b) of the Social Welfare (Consolidation) Act, 1993 .

(b) Notwithstanding subsection (3) and the Finance Act, 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order, 1994 (S.I. No. 19 of 1994), subsection (3)(b) shall not apply as respects the year of assessment 1997-98 in relation to unemployment benefit paid or payable to a person employed in short-time employment.

127.— (1) In this section—

“accounting period” means an accounting period determined in accordance with section 27 ;

“basis period” means the period on the profits or gains of which income tax is to be finally computed under Schedule D or, where by virtue of the Income Tax Acts the profits or gains of any other period are to be taken to be the profits or gains of that period, that other period;

“office or employment” means any office or employment whatever such that the emoluments of that office or employment, if any, are or would be chargeable to income tax under Schedule E or under Case III of Schedule D for any year of assessment;

references to the giving of valuable consideration shall not include references to the mere assumption of an obligation to make over or provide valuable property, rights or advantages, but shall include references to the doing of anything in or towards the discharge of such an obligation.

(2) Where—

(a) an individual who holds, has held or is about to hold an office or employment gives, in connection with the holding of the office or employment, an undertaking (whether absolute or qualified and whether legally valid or not), the tenor or effect of which is to restrict the individual as to his or her conduct or activities,

(b) in respect of the giving of that undertaking by the individual, or of the total or partial fulfilment of that undertaking by the individual, any sum is paid either to the individual or to any other person, and

(c) apart from this section, the sum paid would not be treated as profits or gains from the office or employment,

the sum paid shall be deemed—

(i) to be profits or gains arising or accruing from the office or employment, and accordingly—

(I) in a case where the profits or gains from the office or employment are or would be chargeable to tax under the Schedule E, tax under that Schedule shall be charged on that sum, and tax so chargeable shall be computed under section 112 (1), or

(II) in a case where the profits or gains from the office or employment are or would be chargeable to tax under Case III of Schedule D, tax under that Case shall be charged on that sum,

and

(ii) in a case within paragraph (i)(I), to be emoluments to which Chapter 4 of Part 42 is applied by section 984 ,

for the year of assessment in which the sum is paid; but where the individual has died before the payment of the sum this subsection shall apply as if the sum had been paid immediately before the individual's death.

(3) Where valuable consideration otherwise than in the form of money is given in respect of the giving of, or of the total or partial fulfilment of, any undertaking, subsection (2) shall apply as if a sum had instead been paid equal to the value of that consideration.

(4) Notwithstanding section 81 (2), where any sum paid or valuable consideration given by a person carrying on a trade or profession is chargeable to tax in accordance with subsection (2), the sum paid or the value of the consideration given, as the case may be, may be deducted as an expense in computing for the purposes of Schedule D the profits or gains of that person's trade or profession, as the case may be—

(a) in the case of a person chargeable to income tax, for the basis period, or

(b) in the case of a person chargeable to corporation tax, for the accounting period,

in which the sum is paid or valuable consideration is given.

(5) Where any sum paid or valuable consideration given by an investment company (within the meaning of section 83 ), or a company to which section 83 applies by virtue of section 707 , is chargeable to tax in accordance with subsection (2), the sum paid or the value of consideration given, as the case may be, shall for the purposes of section 83 be treated as an expense of management for the accounting period in which the sum is paid or valuable consideration is given.

(6) This section shall apply in relation to any sum paid or consideration given in respect of the giving of, or the total or partial fulfilment of, any undertaking whenever given.

128. —(1) (a) In this section, except where the context otherwise requires—

“company” has the same meaning as in section 4 ;

“director” and “employee” have the meanings respectively assigned to them by section 770 (1);

“right” means a right to acquire any asset or assets including shares in any company;

“market value” shall be construed in accordance with section 548 ;

“shares” includes securities within the meaning of section 135 and stock.

(b) In this section—

(i) references to the release of a right include references to agreeing to the restriction of the exercise of the right;

(ii) a person shall be regarded as acquiring a right as a director of a company or as an employee—

(I) if by reason of the person's office or employment it is granted to the person, or to another person who assigns the right to the person, and

(II) if section 71 (3) does not apply in charging to tax the profits or gains of that office or employment,

and clauses (I) and (II) shall apply to a right granted by reason of a person's office or employment before the person has commenced to hold it or after the person has ceased to hold it as they would apply if the person had commenced to hold the office or employment or had not ceased to hold the office or employment, as the case may be.

(2) Where a person realises a gain by the exercise of, or by the assignment or release of, a right obtained by the person on or after the 6th day of April, 1986, as a director of a company or employee, the person shall be chargeable to tax under Schedule E for the year of assessment in which the gain is so realised on an amount equal to the amount of his or her gain as computed in accordance with this section.

(3) Subject to subsection (5), where tax may by virtue of this section become chargeable in respect of any gain which may be realised by the exercise of a right, tax shall not be chargeable under any other provision of the Tax Acts in respect of the receipt of the right.

(4) The gain realised by—

(a) the exercise of any right at any time shall be taken to be the difference between the market value of the asset or assets, as the case may be, at the time of acquisition and the aggregate amount or value of the consideration, if any, given for the asset or assets and for the grant of the right, and

(b) the assignment or release of any right shall be taken to be the difference between the amount or value of the consideration for the assignment or release and the amount or value of the consideration, if any, given for the grant of the right,

and for this purpose the inspector may make a just apportionment of any entire consideration given for the grant of the right or for the grant of the right and for something besides; but neither the consideration given for the grant of the right nor any such entire consideration shall be taken to include the performance of any duties in or in connection with an office or employment, and no part of the amount or value of the consideration given for the grant shall be deducted more than once under this subsection.

(5) (a) Where a right mentioned in subsection (2) is obtained as mentioned in that subsection and the right is capable of being exercised later than 7 years after it is obtained, subsection (3) shall not prevent the charging of tax under any other provision of the Tax Acts in respect of the receipt of the right; but where tax is charged under such provision it shall be deducted from any tax which under subsection (2) is chargeable by reference to the gain realised by the exercise, assignment or release of the right.

(b) For the purpose of any charge to tax enabled to be made by this subsection, the value of a right shall be taken to be not less than the market value at the time the right is obtained of the asset or assets which may be acquired by the exercise of the right or of any asset or assets for which the asset or assets so acquired may be exchanged, reduced by the amount or value (or, if variable, the least amount or value) of the consideration for which the asset or assets may be so acquired.

(6) Subject to subsection (7), a person shall, in the case of a right granted by reason of the person's office or employment, be chargeable to tax under this section in respect of a gain realised by another person—

(a) if the right was granted to that other person, or

(b) if the other person acquired the right otherwise than by or under an assignment made by means of a bargain at arm's length, or if the 2 persons are connected persons at the time when the gain is realised;

but in a case within paragraph (b) the gain realised shall be treated as reduced by the amount of any gain realised by a previous holder on an assignment of the right.

(7) A person shall not be chargeable to tax by virtue of subsection (6)(b) in respect of any gain realised by another person if the first-mentioned person was divested of the right by operation of law on the first-mentioned person's bankruptcy or otherwise, but the other person shall be chargeable to tax in respect of the gain under Case IV of Schedule D.

(8) Where a right is assigned or released in whole or in part for a consideration which consists of or comprises another right, that other right shall not be treated as consideration for the assignment or release; but this section shall apply in relation to that other right as it applies in relation to the right assigned or released and as if the consideration for its acquisition did not include the value of the consideration given for the grant of the right assigned or released in so far as that has not been offset by any valuable consideration for the assignment or release other than the consideration consisting of the other right.

(9) (a) Where as a result of 2 or more transactions a person ceases to hold a right and the person or a connected person comes to hold another right (whether or not acquired from the person to whom the other right was assigned) and any of those transactions was effected under arrangements to which 2 or more persons holding rights in respect of which tax may be chargeable under this section were parties, those transactions shall be treated for the purposes of subsection (8) as a single transaction whereby the one right is assigned for a consideration which consists of or comprises the other right.

(b) This subsection shall apply in relation to 2 or more transactions, whether they involve an assignment preceding, coinciding with, or subsequent to, an acquisition.

(10) Where a gain chargeable to tax under subsection (2) or (6) is realised by the exercise of a right, section 552 shall apply as if a sum equal to the amount of the gain so chargeable to tax formed part of the consideration given by the person acquiring the shares for their acquisition by that person.

(11) Where in any year of assessment a person grants a right in respect of which tax may be chargeable under this section, or allots any shares or transfers any asset in pursuance of such a right, or gives any consideration for the assignment or release in whole or in part of such a right, or receives written notice of the assignment of such a right, the person shall deliver particulars thereof in writing to the inspector not later than 30 days after the end of that year.