PART I

Income Tax, Corporation Tax, And Corporation Profits Tax and Capital Gains Tax

Chapter I

Income Tax

1. — Section 142 of the Income Tax Act, 1967 , is hereby amended, with effect as on and from the 6th day of April, 1976, by the substitution for subsection (1) of the following subsections:

“(1) If for any year of assessment the claimant proves that he maintains at his own expense any person being—

(a) a relative of his, or of his wife, who is incapacitated by old age or infirmity from maintaining himself, or

(b) his or his wife's widowed mother, whether incapacitated or not, or

(c) a son or daughter of his who resides with him and on whose services he, by reason of old age or infirmity, is compelled to depend,

and being a person whose total income from all sources for that year of assessment does not exceed, or does not exceed by £95 or more, a sum equal to the specified amount, he shall be entitled in respect of each such person whom he so maintains to a deduction of £95 reduced, if the total income of the person so maintained exceeds the specified amount, by the amount of the excess.

(1A) for the purposes of this section ‘specified amount’ means the aggregate of the payments to which a person is entitled in that year of assessment in respect of an old age pension at the maximum rate under the Old Age Pension Acts, 1908 to 1977, if, throughout that year of assessment—

(a) he is unmarried and has no qualified children within the meaning of those Acts,

(b) he is over the age of 80 years (or such other age as may stand specified in those Acts for the time being in lieu of the said age of 80 years), and

(c) he does not qualify for the increase of such pension payable in certain circumstances for any period during which he is so incapacitated as to require full-time care and attention.”.

2. —(1) Section 236 of the Income Tax Act, 1967 , is hereby amended—

(a) by the substitution of “£2,000” for “£1,500” in each place where it occurs in subsections (1A) (a) and (IC) (which were inserted by the Finance Act, 1974 ), and

(b) by the substitution of “£650” for “£500” in each place where it occurs in subsection (1B) (a) (inserted by the said Finance Act, 1974 ) and in the said subsection (1C), and the said subsections (1A) (a), (1B) (a) and (1C), as so amended, are set out in the Table to this section.

(2) Part I of the First Schedule shall have effect for the purpose of supplementing this section.

TABLE

(1A) (a) shall not be more than the sum of £2,000, and

(1B) (a) shall not be more than the sum of £650, and

(1C) Where the condition in section 235 (1) (a) is satisfied as respects part only of the year, then for the said sums of £2,000 and £650 mentioned in subsections (1A) and (1B) there shall be substituted sums which respectively bear to £2,000 and £650 the same proportion as that part bears to the whole year.

3. — Section 59 of the Finance Act, 1974 , is hereby amended as on and from the 31st day of March, 1976, by the substitution in the last paragraph of subsection (3) of “if resident in the State would be, close companies within the meaning of the Corporation Tax Act, 1976 ” for “if incorporated in the State would be, companies within the meaning of section 530 (6) of the Income Tax Act, 1967 ”, and the said paragraph, as so amended, is set out in the Table to this section.

TABLE

The bodies corporate mentioned in the preceding provisions of this section are bodies corporate resident or incorporated outside the State which are, or if resident in the State would be, close companies within the meaning of the Corporation Tax Act, 1976 .

4. —In relation to any assessment to income tax for the year 1977-78 or any subsequent year of assessment, “September” shall be substituted for “July”—

(a) in subsections (1) and (2) (inserted by the Finance Act, 1976 ) of section 477 of the Income Tax Act, 1967 , in each place where it occurs, and

(b) in section 6 (2) (b) of the Finance Act, 1976 ,

and the said subsections (1) and (2) and the said section 6 (2) (b), as so amended, are set out in the Table to this section.

TABLE

477.—(1) Subject to the provisions of this section, tax contained in an assessment for any year shall be payable on or before the 1st day of September in that year, except that tax included in an assessment for any year which is made on or after the 1st day of September shall be deemed to be due and payable on the day next after the day on which the assessment is made.

(2) The following tax charged for any year, that is to say—

(a) tax charged under Schedule D on any individual in respect of the profits or gains of any trade or profession, and

(b) subject to the provisions of section 126, tax charged on any individual in respect of any office or employment,

shall, instead of being payable on or before the 1st day of September in that year or on such other date as is specified in subsection (1), be payable in two equal instalments, the first instalment on or before the 1st day of September in that year or on such other day as aforesaid and the second instalment on or before the following 1st day of January, and the provisions of this Act as to the recovery of tax shall apply to each instalment of the tax, in the same manner as they apply to the whole amount of the tax:

Provided that where the assessment is not made until after the said following 1st day of January, this subsection shall not have effect and the tax shall be due and payable as provided in subsection (1).

6. (2) (b) in relation to any assessment for the year 1977-78 or any subsequent year of assessment, “September” were substituted for “January”.

5. —(1) Where a person who is charged to income tax for the year 1977-78 or any subsequent year of assessment is an individual (other than an individual acting in a fiduciary or representative capacity), he shall, notwithstanding anything in the Income Tax Acts but subject to section 5 (3) of the Finance Act, 1974 , be charged to tax on his taxable income at the rates specified in the following Table and

(a) each of the first three rates in that Table, and

(b) the other rates in that Table,

shall be known, respectively, by the description specified in column (3) of that Table opposite the mention of the rate or rates, as the case may be, in column (2) of that Table.

TABLE

(2) Part II of the First Schedule shall have effect for the purpose of supplementing subsection (1).

6. —(1) Where a deduction falls to be made from the total income of an individual for the year 1977-78 or any subsequent year of assessment in respect of relief to which the individual is entitled under the provision mentioned in column (1) of the Table to this subsection and the amount of the deduction would, but for this section, be an amount specified in column (2) of the said Table, the amount of the deduction shall, in lieu of being the amount specified in the said column (2), be the amount specified in column (3) of the said Table opposite the mention of the amount in the said column (2).

TABLE

(2) Section 10 of the Finance Act, 1976 , shall have effect subject to the provisions of this section.

(3) Part III of the First Schedule shall have effect for the purpose of supplementing subsection (1).

7. —(1) In this section “the specified amount” means—

(a) in the case of a married man whose wife is living with him, £1,800,

(b) in the case of any other individual, £1,000:

Provided that in any case where section 28 of the Finance Act, 1974 , applies “the specified amount”, in relation to any year of assessment, means the amount specified in paragraph (a) or (b), as may be appropriate, reduced by the amount by which it would be reduced by virtue of the said section 28 if the specified amount was the aggregate amount of the deductions to be made from the total income of the individual concerned in respect of personal reliefs claimed by him for that year of assessment.

(2) Where, for the year 1977-78 or any subsequent year of assessment, an individual, who is entitled to a deduction under section 8 of the Finance Act, 1974 , makes a claim in that behalf and proves that his total income for that year does not exceed the specified amount, he shall be entitled to exemption from income tax.

(3) Where, for the year 1977-78 or any subsequent year of assessment, an individual would be entitled to exemption from income tax under subsection (2) but for the fact that his total income exceeds the specified amount, he shall be entitled to have the amount of income tax payable in respect of his total income reduced to an amount equal to one-half of the amount by which his total income exceeds the specified amount:

Provided that this subsection shall not apply in any case in which the total income of the individual exceeds £2,500.

(4) All such provisions of the Income Tax Acts as apply in relation to the deductions specified in sections 138 to 143 of the Income Tax Act, 1967 , shall apply in relation to exemption from or any reduction of tax under this section.

8. —The Finance Act, 1974 , is hereby amended by the substitution for section 54 of the following section—

“54.—(1) In this section—

‘associate’ has the same meaning as in section 103 (3) of the Corporation Tax Act, 1976 ;

‘company’ means any body corporate;

‘distribution’ has the same meaning as in Part IX of the Corporation Tax Act, 1976 ;

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

‘participator’ has the same meaning as in section 103 (1) of the Corporation Tax Act, 1976 ;

‘settlement’ and ‘settlor’ have the same meanings as in section 96 (3) (h) of the Income Tax Act, 1967 ;

‘tax-relieved company’ means a company 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 the purposes of this section—

(a) any question whether a person is connected with another shall be determined in accordance with the provisions of section 16 of the Finance (Miscellaneous Provisions) Act, 1968 ;

(b) a person who is a participator in a company which is a participator in another company (the second company) shall be deemed to be a participator in the second company, and where the second company is a participator in a third company, the person shall be deemed to be a participator in the third company, and so on.

(3) (a) Where a person (hereinafter in this section referred to as ‘an employee’) receives no emoluments in respect of service or services rendered by him to or for the benefit of a tax-relieved company or to or for the benefit of any person connected with that company or receives emoluments in respect of such service or services which, in the opinion of the Revenue Commissioners, are not adequate as consideration for the service or services rendered and a distribution is made at any time by the tax-relieved company to—

(i) the employee, or

(ii) an associate of the employee, or

(iii) a company in which the employee or an associate of the employee is, or is deemed to be, a participator, or

(iv) a settlement in relation to which the employee or any person connected with him is a settlor or a beneficiary,

so much of the aggregate of that distribution (in this section referred to as ‘the relevant part of the distribution’) and the amount of the tax credit appropriate thereto as is, in the opinion of the Revenue Commissioners, in consideration of the service or services rendered—

(I) shall be deemed to be paid to the employee under a contract of employment and to be emoluments,

(II) shall be deemed not to be income of any person other than the employee,

(III) shall be deemed to have accrued due to the employee from day to day during the period throughout which the service or services were rendered, and

(IV) shall, notwithstanding any provision to the contrary, be deemed to be emoluments in respect of which a notice has been given under section 125 (b) of the Income Tax Act, 1967 , and shall be chargeable to tax under Schedule E.

(b) The relevant part of any distribution which is deemed to be emoluments by virtue of paragraph (a) shall not be treated as a distribution for the purposes of Schedule F.

(c) For the purposes of this subsection 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 to whom the distribution was made would have been entitled under the provisions of sections 64 , 76 , 81 or 82 (2) of the Corporation Tax Act, 1976 , in respect of the relevant part of the distribution if that part were a separate distribution made to that person by the tax-relieved company.

(4) (a) Section 66 and subsections (6) and (7) of section 82 of the Corporation Tax Act, 1976 , shall not apply in relation to the relevant part of the distribution but there shall be allowed as a credit against the tax chargeable for any year of assessment or accounting period for which the relevant part of the distribution or any part thereof is chargeable to tax under subsection (3) an amount which bears to the tax credit, determined in accordance with paragraph (c) of the said subsection (3), the same proportion as the amount chargeable to tax by virtue of this section for the year of assessment or accounting period bears to the aggregate of the relevant part of the distribution and the tax credit appropriate thereto.

(b) Subject to the provisions of sections 211 (2) and 455 (3) of the Income Tax Act, 1967 , assessments under subsection (3) and any consequential adjustments of assessments under Schedule F may be made at any time.

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

(a) the nature of the service or services,

(b) the emoluments paid for similar service or services rendered at arm's length,

(c) the emoluments which it would be reasonable to expect to be paid for such service or services,

(d) any payment, other than emoluments or distributions, made to the person in respect of the service or services rendered, and

(e) any evidence tendered as to the adequacy of the emoluments or payment in question.

(6) In considering for the purposes of this section whether a distribution is wholly or partly in consideration of service or 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 by whom the distribution is received, 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 distribution in respect of the shares of each class,

(d) whether shares of the class held by that person 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.

(7) An appeal shall lie to the Appeal Commissioners with respect to any opinion of the Revenue Commissioners under this section in like manner as an appeal would lie against an assessment to tax, and the provisions of the Income Tax Acts relating to appeals shall apply and have effect accordingly.”.