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7 1976

CORPORATION TAX ACT, 1976

SECOND SCHEDULE

PART I

Application and Adaptation of Income Tax Acts

Section 140 .

1. In section 1 of the Income Tax Act, 1967 , there shall be added the following subsection—

“(6) So much of this Act as relates to corporation tax shall be construed together with the Corporation Tax Act, 1976, and any subsequent enactments amending or extending that Act.”.

2. In section 8 of the Income Tax Act, 1967

(1) for subsection (1) there shall be substituted the following subsection—

“(1) Where in any year of assessment any payments have been made, previously to the passing of an Act increasing the rate of tax for that year, on account of any interest, dividends or other annual profits or gains from which under the provisions of the Income Tax Acts or the Corporation Tax Acts as defined in section 155 (1) of the Corporation Tax Act, 1976, income tax is required to be deducted and tax has not been charged thereon or deducted therefrom, or has not been charged thereon or deducted therefrom at the increased rate of tax for the said year, the amount not so charged or deducted shall be charged under Case IV of Schedule D in respect of those payments, as profits or gains not charged by virtue of any other Schedule, and the agents entrusted with the payment of the interest, dividends or annual profits or gains shall furnish to the Revenue Commissioners a list containing the names and addresses of the persons to whom payments have been made and the amount of those payments, upon a requisition made by the Commissioners in that behalf.”; and

(2) the following subsection shall be added—

“(3) This section shall not apply to a payment which is a distribution within the meaning of Part IX of the Corporation Tax Act, 1976.”.

3. Section 83 (6) of the Income Tax Act, 1967 , shall have effect for corporation tax as for income tax, and references to income tax shall have effect accordingly as if they were or included references to corporation tax.

4. In section 169 of the Income Tax Act, 1967 , after subsection (1), there shall be inserted the following subsection—

“(1A) Where a person's income of which particulars are required to be included in a statement under this section comprises a distribution chargeable under Schedule F there shall be separately shown in the statement the amount or value of the distribution and the amount of any tax credit under section 88 of the Corporation Tax Act, 1976, to which the person is entitled in respect of that distribution.”.

5. In section 181 (1) of the Income Tax Act, 1967 , for “and E” there shall be substituted “, E and F” and the said section 181 (1), as so amended, is set out in the Table to this paragraph.

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(1) Assessments under Schedules D, E and F, except—

(a) such assessments as the Revenue Commissioners are empowered to make under Part XXXI, and

(b) assessments to which section 157 applies, and

(c) such assessments as officers or persons appointed by the Revenue Commissioners are empowered to make under section 158,

shall be made by the inspectors or such other officers as the Revenue Commissioners shall appoint in that behalf.

6. In section 183 (1) of the Income Tax Act, 1967 , for “or E or under both” there shall be substituted “, E or F or under two or more”, and the said section 183 (1), as so amended, is set out in the Table to this paragraph.

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(1) Where two or more assessments fall to be made on a person under Schedule D, E or F or under two or more of those Schedules, the tax in the assessments may be stated in one sum, and the notice of assessment may be stated correspondingly.

7. In section 184 (2) (a) of the Income Tax Act, 1967 , for “D” there shall be substituted “D or F” and the said section 184 (2) (a), as so amended, is set out in the Table to this paragraph.

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(a) a person makes default in the delivery of a statement in respect of any tax under Schedule D or F, or

8. In section 186 (1) of the Income Tax Act, 1967 , for “or E” there shall be substituted “, E or F” and the said section 186 (1), as so amended, is set out in the Table to this paragraph.

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(1) If the inspector discovers—

(a) that any properties or profits chargeable to tax have been omitted from the first assessments, or

(b) that a person chargeable has not delivered any statement, or has not delivered a full and proper statement, or has not been assessed to tax, or has been undercharged in the first assessments, or

(c) that a person chargeable has been allowed, or has obtained from and in the first assessments, any allowance, deduction, exemption, abatement, or relief not authorised by this Act.

then, where the tax is chargeable under Schedule D, E or F, the inspector shall make an additional first assessment :

Provided that any such additional first assessment shall be subject to appeal and other proceedings as in the case of a first assessment.

9. In section 239 (6) of the Income Tax Act, 1967 , after “person” there shall be inserted “, other than a company which is within the charge to corporation tax,” and the said section 239 (6), as so amended, is set out in the Table to this paragraph.

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(6) Any person, other than a company which is within the charge to corporation tax, carrying on a business of granting annuities on human life shall be entitled to repayment of any tax borne by him by deduction or otherwise for any year of assessment up to the amount of tax which, if this section had not been passed, he would have been entitled to deduct and retain on making payments due in that year of assessment on account of life annuities and which in accordance with this section he has not deducted.

10. In section 329 of the Income Tax Act, 1967

(1) in subsection (1), there shall be deleted in paragraphs (a) and (b) in each place where they occur, the expressions “dividend or” and “stock, shares, or”; for “applicable to” in paragraph (a) there shall be substituted “deducted from”; for “interest” in paragraph (a) there shall be substituted “payment of interest”; and after paragraph (b) there shall be inserted the following paragraph—

“(c) the amount of any distribution received by such individual in respect of such stock, shares or security shall, for all the purposes of the Income Tax Acts, be deemed to be diminished by 20 per cent. and the amount of any tax credit to which he is entitled in respect of such distribution shall also be deemed to be diminished by 20 per cent. :

Provided that, notwithstanding the provisions of this section, an individual who is in receipt of a distribution in respect of any stock, shares or security to which this section applies shall be entitled to payment of an amount equal to 20 per cent. of the tax credit to which he would have been entitled in respect of that distribution if this section had not been enacted.”; and

(2) for subsection (3) there shall be substituted the following subsection—

“(3) In relation to every distribution or payment of interest made by a company in respect of any stock, share or security to which this section applies, the provisions of sections 5 (dividend warrants) and 83 (5) (Schedule F) of the Corporation Tax Act, 1976, shall apply to the company so that the statements provided for by those sections shall show, in addition to the particulars required to be given apart from this section, either (as the case may require)—

(a) that the whole of the distribution or payment of interest is made in respect of such stock, share or security, or

(b) that a part (the amount or value of which is separately stated) of the distribution or payment of interest is made in respect of such stock, share or security.”,

and the said subsection (1), as so amended, is set out in the Table to this paragraph.

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(1) Where an individual who is resident in the State and is not resident elsewhere claims and proves that he is entitled to the beneficial ownership of any stock, shares or security to which this section applies, the following provisions shall have effect, that is to say—

(a) such individual shall be entitled to repayment of 20 per cent. of the income tax deducted from any payment of interest received by him in respect of such security, save in so far as relief or repayment in respect of such tax has been or is granted under any other provision of this Act;

(b) in estimating the total income from all sources of such individual for the purposes of income tax the amount of any interest in respect of such security shall be deemed to be diminished by 20 per cent.;

(c) the amount of any distribution received by such individual in respect of such stock, shares or security shall, for all the purposes of the Income Tax Acts, be deemed to be diminished by 20 per cent. and the amount of any tax credit to which he is entitled in respect of such distribution shall also be deemed to be diminished by 20 per cent.:

Provided that, notwithstanding the provisions of this section, an individual who is in receipt of a distribution in respect of any stock, shares or security to which this section applies shall be entitled to payment of an amount equal to 20 per cent. of the tax credit to which he would have been entitled in respect of that distribution if this section had not been enacted.

11. In section 331 of the Income Tax Act, 1967 , for subsection (3) there shall be substituted the following subsection—

“(3) Where a certificate is given under section 329 (2) in respect of any stocks, shares, or securities section 329 (1) shall not apply to any distribution or payment of interest which was made in respect of the stocks, shares or securities before the date of the certificate:

Provided that the said section 329 (1) shall apply to any such distribution or payment of interest where—

(a) the distribution or payment of interest was made within the period of two years prior to the date of the said certificate, and

(b) the distribution or payment of interest was made in respect of stocks, shares or securities in relation to which the conditions specified in paragraphs (a) to (c) of section 329 (2) and in section 330 (2) were complied with either—

(i) throughout the said period of two years, or

(ii) if the stocks, shares or securities were issued during the said period, throughout the period from the date of such issue to the date of the said certificate.”.

12. In section 332 of the Income Tax Act, 1967

(1) in subsection (1), there shall be deleted in paragraphs (a) and (b) in each place where they occur, the expressions “dividend or” and “stock, shares, or”; for “applicable to” in paragraph (a) there shall be substituted “deducted from”; for “interest” in paragraph (a) there shall be substituted “payment of interest”; and after paragraph (b) there shall be inserted the following paragraph—

“(c) the amount of any distribution received by such individual in respect of such stock, shares or security shall, for all the purposes of the

Income Tax Acts, be deemed to be diminished by 20 per cent. and the amount of any tax credit to which he is entitled in respect of such distribution shall also be deemed to be diminished by 20 per cent. :

Provided that, notwithstanding the provisions of this section, an individual who is in receipt of a distribution in respect of any stock, shares or security to which this section applies shall be entitled to payment of an amount equal to 20 per cent. of the tax credit to which he would have been entitled in respect of that distribution if this section had not been enacted.”;

(2) for subsection (3) there shall be substituted the following subsection—

“(3) In relation to every distribution or payment of interest made by a company in respect of any stock, share or security to which this section applies, the provisions of sections 5 (dividend warrants) and 83 (5) (Schedule F) of the Corporation Tax Act, 1976, shall apply to the company so that the statements provided for by those sections shall show, in addition to the particulars required to be given apart from this section, either (as the case may require)—

(a) that the whole of the distribution or payment of interest is made in respect of such stock, share or security, or

(b) that a part (the amount or value of which is separately stated) of the distribution or payment of interest is made in respect of such stock, share or security.”; and

(3) for subsection (8) there shall be substituted the following subsection—

“(8) Where a certificate is given under subsection (2) in respect of any stocks, shares or securities subsection (1) shall not apply to any distribution or payment of interest which was made in respect of the stocks, shares or securities before the date of the certificate:

Provided that the said subsection (1) shall apply to any such distribution or payment of interest where—

(a) the distribution or payment of interest was made within the period of two years prior to the date of the said certificate, and

(b) the distribution or payment of interest was made in respect of stocks, shares or securities in relation to which the conditions specified in paragraphs (a) and (b) of subsection (2) were complied with either—

(i) throughout the said period of two years, or

(ii) if the stocks, shares or securities were issued during the said period, throughout the period from the date of such issue to the date of the said certificate.”,

and the said subsection (1), as so amended, is set out in the Table to this paragraph.

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(1) Where an individual who is resident in the State and is not resident elsewhere claims and proves that he is entitled to the beneficial ownership of any stock, shares or security to which this section applies, the following provisions shall have effect, that is to say—

(a) such individual shall be entitled to repayment of 20 per cent. of the income tax deducted from any payment of interest received by him in respect of such security, save in so far as relief or repayment in respect of such tax has been or is granted under any other provision of this Act;

(b) in estimating the total income from all sources of such individual for the purposes of income tax the amount of any interest in respect of such security shall be deemed to be diminished by 20 per cent.;

(c) the amount of any distribution received by such individual in respect of such stock, shares or security shall, for all the purposes of the Income Tax Acts, be deemed to be diminished by 20 per cent. and the amount of any tax credit to which he is entitled in respect of such distribution shall also be deemed to be diminished by 20 per cent.:

Provided that, notwithstanding the provisions of this section, an individual who is in receipt of a distribution in respect of any stock, shares or security to which this section applies shall be entitled to payment of an amount equal to 20 per cent. of the tax credit to which he would have been entitled in respect of that distribution if this section had not been enacted.

13. In section 333 (1) (b) of the Income Tax Act, 1967

(1) after “shares of annuities,” “and” shall be deleted; and

(2) after “other annual payment” there shall be inserted “, and from income tax chargeable under Schedule F in respect of any distribution”.

14. In section 335 (1) of the Income Tax Act, 1967 , “Schedules C and D” shall be deleted, and there shall be inserted “Schedules C, D and F”.

15. In section 336 of the Income Tax Act, 1967 , “Schedules C and D” shall be deleted, and there shall be inserted “Schedules C, D and F”.

16. In section 337 (2) of the Income Tax Act, 1967 , “Schedules C and D” shall be deleted and there shall be inserted “Schedules C, D and F”.

17. In section 367 (7) of the Income Tax Act, 1967

(1) after “of this Part” there shall be inserted “and Schedule 11”;

(2) in paragraph (a) for “dividend” there shall be substituted the following—

“distribution made on or after the 6th day of April, 1976, and any dividend which is not such a distribution, and in applying references to interest in relation to such a distribution ‘gross interest’ or ‘gross amount’ means the distribution together with the tax credit to which the recipient of the distribution is entitled in respect of it and ‘net interest’ means the distribution exclusive of any such tax credit”; and

(3) for paragraph (d) there shall be substituted the following—

“(d) securities shall be deemed to be similar if they entitle their holders to the same rights against the same persons as to capital and interest and the same remedies for the enforcement of those rights, notwithstanding any difference in the total nominal amounts of the respective securities or in the form in which they are held or the manner in which they can be transferred;

and in paragraph (a) ‘distribution’ and ‘tax credit’ have the same meanings as in Part IX of the Corporation Tax Act, 1976”,

and the said section 367 (7), as so amended, is set out in the Table to this paragraph.

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(7) For the purposes of this Part and Schedule 11—

(a) “interest” includes a distribution made on or after the 6th day of April, 1976, and any dividend which is not such a distribution, and in applying references to interest in relation to such a distribution “gross interest” or “gross amount” means the distribution together with the tax credit to which the recipient of the distribution is entitled in respect of it and “net interest” means the distribution exclusive of any such tax credit;

(b) “person” includes any body of persons, and references to a person entitled to any exemption from income tax include, in a case of an exemption expressed to apply to income of a trust or fund, references to the persons entitled to make claims for the granting of that exemption;

(c) “securities” includes stocks and shares;

(d) securities shall be deemed to be similar if they entitle their holders to the same rights against the same persons as to capital and interest and the same remedies for the enforcement of those rights, notwithstanding any difference in the total nominal amounts of the respective securities or in the form in which they are held or the manner in which they can be transferred;

and in paragraph (a) “distribution” and “tax credit” have the same meanings as in Part IX of the Corporation Tax Act, 1976.

18. Section 369 (1) of the Income Tax Act, 1967 , shall have effect for purposes of corporation tax as if after “Schedule 11” there were inserted “and if the first buyer is entitled as aforesaid and any annual payment is payable by him out of the interest, the annual payment shall be deemed as to the whole thereof not to be a payment which is a charge on income”.

19. Section 370 of the Income Tax Act, 1967 , shall apply for the purposes of corporation tax and

(1) subsection (1) shall apply accordingly as if for “whether any” to the end of the subsection there were substituted “the income or profits against which the loss may be set-off under section 16 (relief for trading losses other than terminal losses) or section 25 (set-off of losses etc. against franked investment income) of the Corporation Tax Act, 1976, there shall be left out of account the appropriate amount in respect of the interest, as determined in accordance with Schedule 11”; and

(2) subsection (2) shall apply accordingly as if for “to be payable” to the end of the subsection there were substituted “to be a payment which is a charge on income”.

20. Section 371 of the Income Tax Act, 1967

(1) shall have effect for purposes of corporation tax as if after “apply to the dividend” in subsection (2) there were inserted “, and if any annual payment is payable by that person out of the distribution, that annual payment shall be deemed as to the whole thereof not to be a payment which is a charge on income”, and

(2) shall be amended by the insertion after subsection (8) of the following subsection—

“(9) For the purposes of this Part and Schedule 12—

(a) references to a dividend shall except where the context otherwise requires, be construed as including references to a distribution and to an amount which under any enactment is to be treated as a distribution, made on or after the 6th day of April, 1976,

(b) in relation to such a distribution, including an amount to be so treated as a distribution, references to a dividend being paid or becoming payable or being received or becoming receivable on shares shall be construed as references to a distribution or an amount to be so treated as a distribution being made or received in respect of shares or securities, and

(c) in applying references to a dividend in relation to a distribution ‘gross amount’ or ‘gross dividend’ means the distribution together with the tax credit to which the recipient of the distribution is entitled in respect of it and ‘net amount’ or ‘net dividend’ means the distribution exclusive of any such tax credit,

and in this subsection ‘distribution’ and ‘tax credit’ have the same meanings as in Part IX of the Corporation Tax Act, 1976.”.

21. Section 372 of the Income Tax Act, 1967

(1) shall apply for corporation tax, and subsection (1) shall apply accordingly as if—

(a) the reference to a year of assessment where that reference first occurs were a reference to an accounting period, and

(b) for “whether any” to the end of the subsection there were substituted “the income or profits against which the loss may be set-off under section 16 (relief for trading losses other than terminal losses) or section 25 (set-off of losses etc. against franked investment income) of the Corporation Tax Act, 1976, there shall be left out of account the gross amount corresponding to so much of the said net amount as would have been required to be brought into account as aforesaid”, and

(2) shall be amended by the substitution in subsection (1) for “tax paid on” of “tax credit in respect of”, and the said subsection (1), as so amended, is set out in the Table to this paragraph.

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(1) Where a person carries on a trade other than such a trade as is mentioned in section 371 (1) and his income for any year of assessment includes a dividend the net amount of which would, if the trade were such a trade as is mentioned in section 371 (1), be required to any extent to be brought into account as a trading receipt which has not borne tax, then, in ascertaining whether any or what repayment of tax is to be made to that person under section 307 by reference to any loss sustained in the trade for the said year of assessment, there shall be left out of account—

(a) the gross amount corresponding to so much of the said net amount as would have been required to be brought into account as aforesaid, and

(b) any tax credit in respect of the amount required to be left out of account under paragraph (a).

22. (1) In section 449 (1) of the Income Tax Act, 1967 , for paragraph (c) there shall be substituted the following paragraph—

“(c) where the said securities are of such character that the interest payable in respect thereof may be paid without deduction of tax, the owner or beneficiary (as the case may be) unless he shows that the proceeds of any sale or other realisation of the right to receive the interest which is deemed to be his income by virtue of this section have been charged to tax under Schedule C or under Part XXXI, shall be chargeable to tax under Case IV of Schedule D in respect of that interest, but shall be entitled to credit for any tax which that interest is shown to have borne;”.

(2) In relation to corporation tax—

(a) paragraph (c) of the said section 449 (1) shall apply (subject to the provisions of this Act about distributions) to any interest within the meaning of the said section 449, whether or not the securities are of such character that the interest may be paid without deduction of tax, and with the omission of the words “but shall be entitled to credit for any tax which that interest is shown to have borne”, and

(b) paragraph (d) of the said section 449 (1) shall not apply.

23. In section 450 (2) (d) of the Income Tax Act, 1967 , after “construed” there shall be inserted the following “, subject to section 99 (2) of the Corporation Tax Act, 1976,” and the said section 450 (2) (d), as so amended, is set out in the Table to this paragraph.

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(d) references to the “aggregate income of the estate” of a deceased person for any year of assessment shall be construed, subject to section 99 (2) of the Corporation Tax Act, 1976, as references to the aggregate income from all sources for that year of the personal representatives of the deceased as such, treated as consisting of—

(i) any such income which is chargeable to Irish income tax by deduction or otherwise, such income being computed at the amount on which that tax falls to be borne for that year, and

(ii) any such income which would have been so chargeable if it had arisen in the State to a person resident and ordinarily resident therein, such income being computed at the full amount thereof actually arising during that year, less such deductions as would have been allowable if it had been charged to Irish income tax, but excluding any income from property devolving on the personal representatives otherwise than as assets for payment of the debts of the deceased;

24. For the purposes of any charge to corporation tax to which section 452 of the Income Tax Act, 1967 (estates of deceased persons: absolute interests in residue), is applied the residuary income of a company shall be computed in the first instance by reference to years of assessment, and the residuary income for any such year shall be apportioned between the accounting periods (if more than one) comprising that year.

25. In section 458 (1) of the Income Tax Act, 1967 , for “or dividend distributed” there shall be substituted “which is not a distribution within the meaning of the Corporation Tax Act, 1976,” and for “such interest or dividend” there shall be substituted “such interest”, and the said section 458 (1), as so amended, is set out in the Table to this paragraph.

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(1) Every warrant, cheque, or other order sent or delivered for the purpose of paying any interest which is not a distribution within the meaning of the Corporation Tax Act, 1976, by a company which is entitled to deduct income tax from such interest shall have annexed thereto or be accompanied by a statement in writing showing—

(a) the gross amount which, after deduction of the income tax appropriate thereto, corresponds to the net amount actually paid, and

(b) the rate and amount of income tax appropriate to such gross amount, and

(c) the net amount actually paid.

26. Section 475 of the Income Tax Act, 1967 , shall have effect for purposes of corporation tax.

27. Where a gift to which section 547 of the Income Tax Act, 1967 , applies is made by a company, the amount thereof shall for purposes of corporation tax be deemed to be a loss incurred by the company in a separate trade in the accounting period in which the gift is made.

28. Schedule 12 to the Income Tax Act, 1967 , shall be amended—

(1) by the substitution for paragraph 4 (2) of the following subparagraph—

“(2) The said profits shall be the income of the company for the period diminished by—

(a) the income tax actually borne by the company for any year of assessment (not being a year of assessment after the year 1975-76) in the said period (including any sur-tax borne by the company under section 530 and Schedule 16), and

(b) the corporation profits tax payable by the company for any accounting period in the said period, and

(c) the corporation tax (including corporation tax charged by virtue of sections 101 and 162 of the Corporation Tax Act, 1976) payable by the company for any accounting period in the said period, and for this purpose the tax credit comprised in any franked investment income shall be treated as corporation tax payable by the company for the accounting period in which the distribution was received, and

(d) the capital gains tax payable by the company for any year of assessment (not being a year of assessment after the year 1975-76) in the said period:

Provided that where relief has been afforded to the company under section 358, 360 or 361, references in this subparagraph to tax actually borne or to tax payable shall be construed as references to the tax which would have been borne or payable if that relief had not been given.”;

(2) by the substitution for paragraph 4 (3) of the following subparagraph—

“(3) In ascertaining for the purposes of this paragraph the amount of income tax, corporation profits tax and corporation tax by which the income of the company for the period is to be diminished, any tax on the amount to be deducted under clause (d) or (e) of paragraph 5 (3) shall be left out of account.”;

(3) by the substitution for paragraph 5 (2) of the following subparagraph—

“(2) There shall be computed the aggregate amount—

(a) of any profits or gains arising in the period from any trade carried on by the company computed in accordance with the provisions applicable to Case I of Schedule D, and

(b) of any income (including any franked investment income) arising in the period (computed in accordance with the provisions of this Act or in the case of franked investment income, in accordance with the provisions of the Corporation Tax Act, 1976), other than profits or gains arising from any such trade, and

(c) of any capital profits arising in the period (whether or not chargeable to capital gains tax or corporation tax).”;

(4) by the substitution for paragraph 5 (3) of the following subparagraph—

“(3) There shall be deducted from the said aggregate amount the sum of the following amounts that is to say—

(a) any loss sustained by the company in the period in any such trade (computed in the same manner as profits or gains under the provisions applicable to Case I of Schedule D),

(b) any allowances in respect of any such trade under sections 241, 244 (3) or 245, Chapter III of Part XIV, Part XV or XVI—

(i) for any year of assessment (not being a year of assessment after the year 1975-76) in the period,

(ii) which under section 14 of the Corporation Tax Act, 1976, fall to be made in taxing the trade for the purpose of corporation tax for any accounting period in the period,

(c) (i) any payments made by the company in the period to which section 433 or 434 applies, other than payments which are deductible in computing the profits or gains or losses of a trade carried on by it,

(ii) any amount in respect of which repayment was made under section 496 for any year of assessment in the period,

(iii) any charges on income which under section 10 (1) of the Corporation Tax Act, 1976, fall to be allowed as deductions against the total profits for any accounting period in the period,

(d) if the company is not engaged in carrying on such a trade as is mentioned in section 371 (1) and has received in the period—

(i) on or before the 5th day of April, 1976, a dividend which, if the company had been engaged in such a trade, would have been required by section 371 (1) to be brought into account to any extent as mentioned therein, such amount as would, after deduction of income tax at the rate authorised by section 456, be equal to the amount which would have been so required to be brought into account,

(ii) after the 5th day of April, 1976, a distribution within the meaning of Part IX of the Corporation Tax Act, 1976, which if the company had been engaged in such a trade would have been so required to be so brought into account to any extent, an amount equal to so much of the distribution as would be so required to be brought into account increased by so much of the tax credit in respect of that distribution as bears to the amount of such tax credit the same proportion as the part of the distribution which would be so required to be brought into account bears to the distribution, and

(e) if the company is not engaged as aforesaid, but were it so engaged any reduction under section 368 would, or would but for section 368 (3), fall to be made as respects the price paid by the company for securities (within the meaning of that section) bought by it in the period—

(i) on or before the 5th day of April, 1976, such amount as would, after deduction of income tax at the rate applicable to the payment, be equal to the amount of the reduction,

(ii) after the 5th day of April, 1976, such amount as would be equal to an amount of gross interest corresponding to an amount of net interest equal to the amount of the reduction,

so however that where the securities are of the description specified in paragraph 4 of Schedule 11, the amount shall be the amount of the reduction,

and the balance shall be the income of the company for the period.”; and

(5) by the substitution for paragraph 6 of the following paragraph—

“6. Any reference in paragraph 4 or 5 to an amount for a year of assessment in the period in question shall be taken as a reference to the full amount for any year of assessment falling wholly within the period and a proportionate part of the amount (on a time basis) for any year of assessment falling partly within that period, and the reference therein to corporation profits tax or corporation tax payable for any accounting period in the said period shall be construed in a corresponding manner.”.

29. In Part IV of the Finance (Miscellaneous Provisions) Act, 1968 , as it applies for the purposes of corporation tax—

(1) any question whether a person is connected with another, and

(2) the meaning of “control

shall, notwithstanding the provisions of section 16 of that Act, be determined in accordance with the provisions of section 157.

30. Section 37 of the Finance Act, 1968 , shall have effect for corporation tax as for income tax, and references to income tax shall have effect accordingly as if they were or included references to corporation tax; and in subsection (4) of the said section 37 for “ section 214 of the Income Tax Act, 1967 ,” there shall be substituted “section 15 or 33 (2) of the Corporation Tax Act, 1976,”, and the said subsection (4), as so amended, is set out in the Table to this paragraph.

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(4) Where a lump sum is paid by an employer in respect of employment wholly in a business carried on by the employer, and expenses of management of the business are eligible for relief under section 15 or 33 (2) of the Corporation Tax Act, 1976, the amount by which the lump sum exceeds the amount of the rebate recoverable shall (if not otherwise so allowable) be allowable as expenses of management eligible for relief under that section; and, if the lump sum was paid after the discontinuance of the business, the net amount so allowable shall be treated as if it were expenses of management incurred on the last day on which the business was carried on.

31. Section 16 of the Finance Act, 1972 , shall have effect for corporation tax as if for subsection (4) there were substituted the following subsection—

“(4) Any sum paid by an employer by way of contribution under the scheme shall, for the purposes of Case I or II of Schedule D and of the provisions of section 15 or 33 (2) of the Corporation Tax Act, 1976, relating to expenses of management, be allowed to be deducted as an expense or expense of management incurred in the accounting period in which the sum is paid:

Provided that—

(a) the amount of an employer's contributions which may be so deducted shall not exceed the amount contributed by him under the scheme in respect of employees in a trade or undertaking in respect of the profits of which the employer is assessable to corporation tax,

(b) a sum not paid by way of an ordinary annual contribution shall for the purposes of this subsection be treated, as the Commissioners may direct, either as an expense incurred in the accounting period in which the sum is paid, or as an expense to be spread over such period of years as the Commissioners think proper.”.

32. Section 24 of the Finance Act, 1973 , shall apply for corporation tax as if the following subsection were inserted after subsection (8)—

“(9) Expenses incurred in providing business entertainment shall not, except to the extent that they are wholly, exclusively and necessarily laid out or expended for the purposes of a business, be included in computing any expenses of management in respect of which a deduction may be claimed under section 15 or 33 (2) of the Corporation Tax Act, 1976.”.

33. Section 26 of the Finance Act, 1973 , shall have effect for corporation tax as if after “Schedule E,” there were inserted—

“or

(c) to be taken into account for the purposes of a management expenses claim under section 15 or 33 (2) of the Corporation Tax Act, 1976,”.

34. The provisions of section 33 of the Finance Act, 1973 , shall have effect for purposes of corporation tax as they have effect for purposes of income tax.

35. In section 34 (2) of the Finance Act, 1973 , the reference to a return of total income from all sources as estimated in accordance with the provisions of the Income Tax Acts shall have effect for corporation tax as if it were or included a reference to a return under section 143.

36. (1) The references in paragraphs 1 and 3 of the Third Schedule to the Finance Act, 1973 , to section 33 of the said Act, and to section 550 of the Income Tax Act, 1967 , shall have effect for corporation tax as if they were or included references to those sections as they apply for purposes of corporation tax.

(2) The reference in paragraph 6 of the Third Schedule to the Finance Act, 1973 , to section 16 of the Finance (Miscellaneous Provisions) Act, 1968 , shall have effect for corporation tax as if it were a reference to section 157 of the Corporation Tax Act, 1976.

(3) The reference in paragraph 7 of the Third Schedule to the Finance Act, 1973 , to the Income Tax Acts shall have effect for corporation tax as if it were or included a reference to the Corporation Tax Act, 1976.

37. Section 8 (1) of the Finance (Taxation of Profits of Certain Mines) Act, 1974 , shall be amended by the substitution for “Act of 1967” of “ Income Tax Act, 1967 ,” and the said section 8 (1), as so amended, is set out in the Table to this paragraph.

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(1) Where a person carrying on the trade of working a qualifying mine incurs after the 31st day of March, 1974, capital expenditure on the acquisition of a scheduled mineral asset entitling him to work deposits of scheduled minerals and in connection with that trade he commences to work those deposits, he shall be entitled to mine development allowance under section 245 of the Income Tax Act, 1967 , in respect of such capital expenditure to the extent that he would have been entitled to such allowance if the said capital expenditure had been capital expenditure incurred in the development of the mine, but section 2 shall not apply in respect of any such expenditure.

38. Section 10 of the Finance (Taxation of Profits of Certain Mines) Act, 1974 , shall have effect for corporation tax as it has effect for income tax, and the references to the Income Tax Acts, to a year of assessment and to charging the profits of the said trade to income tax shall have effect accordingly as if they were references to the Corporation Tax Acts, to an accounting period and to computing the profits of the said trade for purposes of corporation tax.

39. For section 11 of the Finance (Taxation of Profits of Certain Mines) Act, 1974 , there shall be substituted the following section—

“11.—(1) Where, after the 31st day of March, 1974, a person resident in the State sells any scheduled mineral asset and the net proceeds of the sale consist wholly or partly of a capital sum, he shall, subject to the provisions of this section, be charged to tax under Case IV of Schedule D for the chargeable period in which the sum is received by him on an amount equal to that sum:

Provided that where that person is an individual and, not later than twelve months after the end of the year of assessment in which the sum is paid, by notice in writing to the inspector, he elects to be charged to tax for the said year of assessment and for each of the five succeeding years of assessment, on an amount equal to one-sixth of that sum, he shall be so charged.

(2) Where, after the 31st day of March, 1974, a person not resident in the State sells any scheduled mineral asset and the net proceeds of the sale consist wholly or partly of a capital sum, then—

(a) he shall be charged to tax in respect of that sum under Case IV of Schedule D for the chargeable period in which the sum is received by him, and

(b) section 434 of the Income Tax Act, 1967 , shall apply to that sum as if it were an annual payment payable otherwise than out of profits or gains brought into charge to tax:

Provided that where that person is an individual and, not later than twelve months after the end of the year of assessment in which the sum is paid, by notice in writing to the Revenue Commissioners, he elects that the said sum shall be treated for the purpose of tax for that year and for each of the five succeeding years as if one-sixth thereof, and no more, were included in his income chargeable to tax for each of those years respectively, it shall be so treated, and all such repayments and assessments of tax for each of those years shall be made as are necessary to give effect to the election, so, however, that—

(i) the election shall not affect the amount of tax falling to be deducted and accounted for under the said section 434,

(ii) where any sum is deducted under the said section 434, any adjustments necessary to give effect to the election shall be made by way of repayment of tax, and

(iii) the said adjustments shall be made year by year and as if one-sixth of the sum deducted had been deducted in respect of tax for each year, and no repayment of, or of any part of, that portion of the tax deducted which is to be treated as deducted in respect of tax for any year shall be made unless and until it is ascertained that the tax ultimately falling to be paid for that year is less than the amount of tax paid for that year.

(2A) In subsection (2) the word ‘tax’ shall mean income tax, unless the seller of the scheduled mineral asset, being a company, would be within the charge to corporation tax in respect of any proceeds of the sale not consisting of a capital sum.

(3) Where the scheduled mineral asset sold by a person was acquired by him by purchase and the price paid consisted wholly or partly of a capital sum, subsections (1) and (2) shall apply as if any capital sum received by him when he sells the asset were reduced by the amount of that sum:

Provided that nothing in this subsection shall affect the amount of tax falling to be deducted and accounted for under section 434 of the Income Tax Act, 1967 , by virtue of subsection (2), and where any sum is deducted under the said section 434, any adjustment necessary to give effect to the provisions of this subsection shall be made by way of repayment of tax.

(4) Where by virtue of an order made by the Minister for Industry and Commerce under section 14 of the Minerals Development Act, 1940 , scheduled minerals or rights to work such minerals are acquired and the said Minister pays compensation to any person in respect of such acquisition, that person shall be deemed, for the purposes of this section, to have sold a scheduled mineral asset for a capital sum equal to the amount of compensation paid to him and the preceding provisions of this section shall apply to the said compensation as they apply to a capital sum received in respect of a sale of a scheduled mineral asset.

(5) In this section any reference to the sale of a right to a scheduled mineral asset includes a reference to the grant of a licence to work scheduled minerals.

(6) In this section ‘chargeable period’ means an accounting period of a company or a year of assessment.”.

40. In section 18 (2) of the Finance (Taxation of Profits of Certain Mines) Act, 1974 , for “relates to corporation profits tax” to the end of the subsection there shall be substituted “has effect for purposes of corporation tax, be read and construed together with the Corporation Tax Acts”, and the said section 18 (2), as so amended, is set out in the Table to this paragraph.

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(2) This Act shall, so far as it relates to income tax, be read and construed together with the Income Tax Acts and shall, so far as it has effect for purposes of corporation tax, be read and construed together with the Corporation Tax Acts.

41. In section 4 (b) of the Finance Act, 1974 , for “433, 434 or 456” there shall be substituted “433 or 434”, and the said section 4 (b), as so amended, is set out in the Table to this paragraph.

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(b) from which tax is deductible by virtue of section 433 434 of the Income Tax Act, 1967 , or

42. For section 31 (3) (f) of the Finance Act, 1974 , there shall be substituted—

“(f) interest paid without deduction of tax by virtue of section 30 of the Corporation Tax Act, 1976, or

(g) interest which under section 97 of the Corporation Tax Act, 1976, is a distribution.”.

43. Section 33 (1) of the Finance Act, 1974 , shall be amended—

(1) by the substitution for “ section 323 of the Income Tax Act, 1967 ” of “section 155 (5) of the Corporation Tax Act, 1976”, and

(2) by the substitution for “ section 16 of the Finance (Miscellaneous Provisions) Act, 1968 ” in each place where it occurs of “section 157 of the Corporation Tax Act, 1976”,

and the said section 33 (1), as so amended, is set out in the Table to this paragraph.

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(1) (a) In this section and sections 34 and 35—

ordinary share capital” has the meaning assigned to it by section 155 (5) of the Corporation Tax Act, 1976;

control” has the meaning assigned to it by section 157 of the Corporation Tax Act, 1976;

material interest”, in relation to a company, means the beneficial ownership of, or the ability to control, directly or through the medium of a connected company or connected companies or by any other indirect means more than 5 per cent. of the ordinary share capital of the company.

(b) For the purposes of this section and sections 34 and 35 a company shall be regarded as connected with another company if it would be so regarded for the purposes of section 157 of the Corporation Tax Act, 1976, and if it is such a company as is referred to in subsection (2) (a).

44. The reference in section 38 (2) of the Finance Act, 1974 , to section 16 of the Finance (Miscellaneous Provisions) Act, 1968 , shall have effect for corporation tax as if it were a reference to section 157.

45. (1) Section 41 of the Finance Act, 1974 , shall have effect for corporation tax as for income tax and the references in subsection (2) of the said section to the Income Tax Acts and in subsection (7) of the said section to section 16 (3) of the Finance (Miscellaneous Provisions) Act, 1968 , shall have effect accordingly as if they were references to the Corporation Tax Acts and to section 157.

46. (1) Section 54 (1) of the Finance Act, 1974 , shall be amended by the insertion after “Part XXV of the Income Tax Act, 1967 ” of “, or Part IV or V of the Corporation Tax Act, 1976”, and the said section 54 (1), as so amended, is set out in the Table to this subparagraph.

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(1) In this section—

director” has the same meaning as in section 119 of the Income Tax Act, 1967 ;

emoluments” has the same meaning as in section 111 (4) of the Income Tax Act, 1967 ;

employee” means a person employed by any body of persons;

tax-relieved company” means a body corporate which has claimed and is entitled to relief from tax under Part XXV of the Income Tax Act, 1967 , or Part IV or V of the Corporation Tax Act, 1976.

(2) For section 54 (3) of the Finance Act, 1974 , there shall be substituted the following—

“(3) Where, for any year of assessment, a person—

(a) who is a director or employee of a tax-relieved company or of a body corporate connected with that company, or

(b) who is employed by a person connected with that company,

receives no emoluments in respect of services rendered by him to or for the benefit of the said company or to or for the benefit of any person connected with that company or receives emoluments in respect of such services which, in the opinion of the Revenue Commissioners, are not adequate as consideration for the services so rendered, and receives a distribution in respect of shares held by him in the said company, so much of that distribution (in this section referred to as the relevant part of the distribution) as is, in the opinion of the Revenue Commissioners in consideration of the services so rendered shall be deemed not to be a distribution for the purposes of Schedule F and shall be deemed to be emoluments of that person and shall be chargeable to tax under Schedule E as emoluments paid to him on the date on which the said distribution was made, and the amount of the emoluments to be so charged shall be the amount which is equal to the aggregate of the amount of the relevant part of the distribution and the amount of the tax credit appropriate thereto, and for this purpose the amount of the tax credit appropriate to the relevant part of the distribution shall be the amount of the tax credit to which the person would have been entitled in respect of the relevant distribution if the relevant distribution were a separate distribution made by the tax-relieved company.”.

(3) Section 54 (5) of the Finance Act, 1974 , shall be amended by the substitution in paragraph (b) for “dividend is paid” of “distribution is made”, and the said section 54 (5), as so amended, is set out in the Table to this subparagraph.

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(5) In considering for the purpose of this section whether emoluments paid to any person by a company are or are not adequate as consideration for services rendered, the Revenue Commissioners shall have regard to—

(a) the nature of the services rendered by that person,

(b) the emoluments received by that person from the company for services so rendered at a time when he did not hold shares in the company or did not hold the shares in respect of which the distribution is made which is the subject of their consideration by virtue of this section,

(c) the amount of emoluments which it would be reasonable to expect to be paid for such services, and

(d) any evidence tendered by or on behalf of the said person as to the adequacy of the emoluments in question.

(4) In section 54 (6) of the Finance Act, 1974 , for “dividend” in each place where it occurs there shall be substituted “distribution”, for “paid” there shall be substituted “made” and for “payable” there shall be substituted “made”, and the said section 54 (6), as so amended, is set out in the Table to this subparagraph.

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(6) Where shares in respect of which a distribution is made are held in a tax-relieved company by a person who is connected with another person (that other person being a person who if he held the shares and received the distribution would be a person to whom subsection (3) applies), then, for the purposes of the said subsection (3), the shares shall be regarded as being held by the second-mentioned person and the distribution shall be regarded as having been received by him in respect of the shares on the date on which the distribution was made.

(5) In section 54 (7) of the Finance Act, 1974 , for “dividend” in each place where it occurs other than in paragraph (c) there shall be substituted “distribution”, and the said section 54 (7), as so amended, is set out in the Table to this subparagraph.

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(7) In considering for the purpose of this section whether a distribution or part of a distribution is in consideration of services rendered, the Revenue Commissioners shall have regard to—

(a) all the classes of shares issued by the company concerned,

(b) the class or classes of shares in the said company held by the person aforesaid, the number of shares so held, the nominal value of, and the amount subscribed by him in respect of, such shares,

(c) the rate of dividend paid on the shares of each class,

(d) whether shares of the class held by the person aforesaid are held by any other person and, if so, the number of shares so held, and

(e) any other matter which appears to them relevant for the purpose of forming an opinion under this subsection.

47. (1) Section 55 (3) of the Finance Act, 1974 , shall have effect for purposes of corporation tax, and the reference to section 310 of the Income Tax Act, 1967 , shall have effect accordingly as if it were or included a reference to section 19.

(2) In section 55 (4) of the Finance Act, 1974 , for “ section 214 of the Income Tax Act, 1967 ,” there shall be substituted “section 15 or 33 (2) of the Corporation Tax Act, 1976,”, and the said section 55 (4), as so amended, is set out in the Table to this subparagraph.

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(4) For the purposes of this section, profits or gains shall not be treated as falling to be taken into account as a trading receipt by reason only that they are included in the computation required by section 15 or 33 (2) of the Corporation Tax Act, 1976.

48. Section 74 of the Finance Act, 1974 , shall have effect for corporation tax as for income tax, and references to the Income Tax Acts, to years of assessment and to a deduction in charging the profits of a trade shall have effect accordingly as if they were or included references to the Corporation Tax Acts, to accounting periods and to a deduction made in computing the trading income for corporation tax.

49. Part I of the Second Schedule to the Finance Act, 1975 , shall have effect for corporation tax as for income tax and shall have effect accordingly as if—

(1) references to years of assessment and to tax were or included references to accounting periods and to corporation tax, and

(2) the following paragraph were substituted for paragraph 2—

“2. So far as relates to relief under subsection (5) or (6) of section 81 of the Income Tax Act, 1967 , or section 16 or 19 of the Corporation Tax Act, 1976, or to the computation of profits or gains or losses of a trade or profession for a company's accounting period ending after the 5th day of April, 1975, section 19, paragraphs (b) and (c) of section 20 and sections 21 and 22 shall be deemed to have had effect as from the passing of the Finance Act, 1963, and as respects leases granted at any time.”.

50. The amendments in this Part of this Schedule shall not affect the liability to income tax for years of assessment ending on or before the 5th day of April, 1976, or the liability to corporation profits tax for accounting periods ending on or before that date, or the assessment, collection or recovery of either of those taxes or of interest thereon or other proceedings relating to those taxes or that interest.

PART II

Application and Adaptation of Capital Gains Tax Act, 1975

1. In section 2 (1), for the definitions of “controlled company” and “control” there shall be substituted—

“‘close company’ has the meaning assigned to it by section 94 of the Corporation Tax Act, 1976, and ‘control’ has the meaning assigned to it by section 102 of that Act”.

2. In section 33 (7) (b), for “controlled”, in each place where it occurs, there shall be substituted “close” and the said section 33 (7) (b), as so amended, is set out in the Table to this paragraph.

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(b) a person, in his capacity as trustee of a settlement, is connected with any individual who in relation to the settlement is a settlor, with any person who is connected with such an individual and with a body corporate which is deemed to be connected with that settlement, and a body corporate shall be deemed to be connected with a settlement in any year if at any time in the year it is a close company (or only not a close company because it is not resident in the State) and the shareholders then include the trustees of or a beneficiary under the settlement;

3. In section 35—

(1) in subsections (1), (3) and (5), for “controlled”, in each place where it occurs, there shall be substituted “close” and the said subsections (1), (3) and (5), as so amended, are set out in the Table to this paragraph, and

(2) subsection (4) shall be deleted.

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(1) If on or after the 6th day of April, 1974, a company which is a close company transfers an asset to any person otherwise than by way of a bargain made at arm's length and for a consideration of an amount or value less than the market value of the asset, an amount equal to the difference shall be apportioned among the issued shares of the company, and the holders of those shares shall be treated in accordance with the following provisions of this section.

(3) If the person owning any of the said shares at the date of transfer is itself a close company, an amount equal to the amount apportioned to the shares so owned under subsection (1) to that close company shall be apportioned among the issued shares of that close company, and the holders of those shares shall be treated in accordance with subsection (2), and so on through any number of close companies.

(5) This section shall apply to a company falling within section 36 as it applies to a close company.

4. In section 36 (1) (8), for “controlled”, in each place where it occurs, there shall be substituted “close” and the said section 36 (1) (8), as so amended, is set out in the Table to this paragraph.

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(1) This section applies as respects chargeable gains accruing to a company—

(a) which is not resident in the State, and

(b) which would be a close company if it were resident in the State.

(8) If the person owning any of the shares in the company at the time when the chargeable gain accrues to the company is itself a company which is not resident in the State but which would be a close company if it were resident in the State, an amount equal to the amount apportioned under subsection (3) out of the chargeable gain to the shares so owned shall be apportioned among the issued shares of the second-mentioned company, and the holders of those shares shall be treated in accordance with subsection (2), and so on through any number of companies.

5. For section 36 (4) (d) there shall be substituted—

“(d) a chargeable gain in respect of which the company is chargeable to tax by virtue of subsection (2) or (7) of section 4 (charge to tax on non-residents) or to corporation tax by virtue of section 8 (2) (b) of the Corporation Tax Act, 1976 (companies not resident in the State).”.

6. Section 44 shall have effect for purposes of corporation tax as it has effect for purposes of capital gains tax.

7. Section 49 (6) shall have effect for purposes of corporation tax as it has effect for purposes of capital gains tax.

8. In paragraph 2 (1) of Schedule 1, for “ section 214 of the Income Tax Act, 1967 ” there shall be substituted “section 33 of the Corporation Tax Act, 1976” and the said paragraph 2 (1), as so amended, is set out in the Table to this paragraph.

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(1) There shall be excluded from the consideration for a disposal of assets taken into account in the computation under this Schedule of the gain accruing on that disposal any money or money's worth charged to income tax as income of, or taken into account as a receipt in computing income, profits, gains or losses for the purposes of the Income Tax Acts of, the person making the disposal:

Provided that the exclusion from consideration under this subparagraph shall not be taken as applying to a computation in accordance with the provisions of Case I of Schedule D for the purpose of restricting relief in respect of expenses of management under section 33 of the Corporation Tax Act, 1976.

9. For paragraph 3 (3) (a) (ii) (iii) of Schedule 1 there shall be substituted—

“(ii) that expenditure was defrayed out of borrowed money,

(iii) the company charged to capital all or any part of the interest on that borrowed money referable to a period ending on or before the disposal, and

(iv) the company is chargeable to capital gains tax in respect of the gain,”.

10. In paragraph 22 (1) (a) of Schedule 1, for “controlled”, in each place where it occurs, there shall be substituted “close” and the said paragraph 22 (1) (a), as so amended, is set out in the Table to this paragraph.

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(a) at any time, including a time before the 6th day of April, 1974, any of the persons having control of a close company, or any person who (in the terms of section 33) is connected with a person having control of a close company, has transferred assets to the company, and

11. Paragraph 3 (4) of Schedule 3 shall have effect for purposes of corporation tax as it has effect for purposes of capital gains tax.

12. Paragraph 11 (6) of Schedule 4 shall have effect for corporation tax as for capital gains tax and references to capital gains tax shall have effect accordingly as if they were or included references to corporation tax.

13. The amendments in this Part of this Schedule shall not affect the liability to capital gains tax for years of assessment ending on or before the 5th day of April, 1976, or the assessment, collection or recovery of that tax or of interest thereon or other proceedings relating to that tax or interest.