Chapter VI

Income Tax and Corporation Tax: Relief for Certain Capital Expenditure

23. —(1) (a) In this section—

“certificate of reasonable cost” means a certificate granted by the Minister for the Environment for the purposes of this section, stating that the amount specified in the certificate in relation to the cost of construction of the house to which the certificate relates appears to him at the time of the granting of the certificate and on the basis of the information available to him at that time to be reasonable, and section 18 of the Housing (Miscellaneous Provisions) Act, 1979 , shall, with any necessary modifications, apply to a certificate of reasonable cost as if it were a certificate of reasonable value;

“certificate of reasonable value” has the meaning assigned to it by section 18 of the Housing (Miscellaneous Provisions) Act, 1979 ;

“house” includes any building or part of a building used or suitable for use as a dwelling and any out-office, yard, garden or other land appurtenant thereto or usually enjoyed therewith;

“lease”, “lessee”, “lessor” and “premium” have the meanings assigned to them by Chapter VI of Part IV of the Income Tax Act, 1967 ;

“qualifying lease”, in relation to a house, means a lease of the house the consideration for the grant of which consists—

(i) solely of periodic payments all of which are, or fall to be treated as, amounts by way of rent for the purposes of Chapter VI of Part IV of the Income Tax Act, 1967 , or

(ii) of payments of the kind mentioned in paragraph (i) together with a payment by way of premium which does not exceed 10 per cent. of the relevant cost of the house:

Provided that the lease shall not be a qualifying lease if the terms of the lease contain any provisions enabling the lessee or any other person, directly or indirectly, at any time to acquire any interest in the house for a consideration which is less than that which might be expected to be given at that time for the acquisition of the interest if the negotiations for that acquisition were conducted in the open market at arm's length;

“qualifying period” means the period commencing on the 29th day of January, 1981, and ending on the 31st day of March, 1984;

“qualifying premises” means a house—

(i) which is used solely as a dwelling, and

(ii) the total floor area of which—

(I) is not less than 30 square metres and not more than 75 square metres in the case where the house is a separate self-contained flat or maisonette in a building of two or more storeys, or

(II) is not less than 35 square metres and not more than 125 square metres in any other case, and

(iii) in respect of which there is in force either a certificate of reasonable cost the amount specified in which in respect of the cost of construction of the house to which the certificate relates is not less than the expenditure actually incurred on such construction or, if it is a new house provided for sale, a certificate of reasonable value wherein the amount for which the house to which the certificate relates is stated to represent reasonable value is not less than the net price paid for the house on the sale in respect of which the certificate is granted, and

(iv) which, without having been used, is first let in its entirety under a qualifying lease and thereafter throughout the remainder of the relevant period (save for reasonable periods of temporary disuse between the ending of one qualifying lease and the commencement of another such lease) continues to be let under such a lease;

“relevant cost”, in relation to a house, means, subject to subsection (3), an amount equal to the aggregate of—

(i) the expenditure incurred on the acquisition of, or of rights in or over, any land on which the house is constructed, and

(ii) the expenditure actually incurred on the construction of the house;

“relevant period”, in relation to a qualifying premises, means the period of ten years beginning with the date of the first letting of the premises under a qualifying lease;

“total floor area” means the total floor area of a house measured in the manner referred to in section 4 (2) (b) of the Housing (Miscellaneous Provisions) Act, 1979 .

(b) (i) For the purposes of determining, in relation to any claim under subsection (2), whether and to what extent expenditure incurred on the construction of a qualifying premises is incurred during the qualifying period, only such an amount of that expenditure as is determined by

the inspector, according to the best of his knowledge and judgment, to be properly attributable to work on the construction of the premises which was actually carried out during the qualifying period shall be treated as having been incurred during that period.

(ii) Where, by virtue of subsection (4), expenditure on the construction of any premises includes expenditure on the development of any land, subparagraph (i) shall have effect, with any necessary modifications, as if the references therein to the construction of any premises were references to the development of such land.

(iii) Any amount which, by virtue of subparagraph (i) or (ii), is determined by the inspector may be amended by the Appeal Commissioners or by the Circuit Court on the hearing, or the rehearing, of an appeal against that determination.

(c) For the purposes of this section, other than for the purposes mentioned in paragraph (b) (i), expenditure incurred on the construction of a qualifying premises shall be deemed to have been incurred on the date of the first letting of the premises under a qualifying lease.

(d) A person shall be regarded for the purposes of this section as connected with another person if he would be so regarded for the purposes of section 16 of the Finance (Miscellaneous Provisions) Act, 1968 .

(2) Where a person, having made a claim in that behalf, proves that he has incurred expenditure on the construction of a qualifying premises, he shall be entitled, in computing for the purposes of subsection (4) of section 81 of the Income Tax Act, 1967 , the amount of a surplus or deficiency in respect of the rent from the said premises, to a deduction of so much (if any) of the expenditure as falls to be treated under any of the provisions of this section as having been incurred by him in the qualifying period and all the provisions of Chapter VI of Part IV of the said Act shall apply as if the said deduction were a deduction authorised by the provisions of subsection (5) of the said section 81:

Provided that where any premium or other sum which is payable, directly or indirectly, under a qualifying lease, or otherwise under the terms subject to which the lease is granted, to or for the benefit of the lessor or to or for the benefit of any person connected with the lessor, or any part of such premium or sum, is not, or is not treated as, an amount by way of rent for the purposes of the said section 81, the expenditure falling to be treated as having been incurred in the qualifying period on the construction of the qualifying premises to which the qualifying lease relates shall be deemed, for the purposes of this subsection, to be reduced by the lesser of—

(a) the amount of the said premium or sum, or as the case may be, the said part of such premium or sum, and

(b) the amount which bears to the amount mentioned in paragraph (a) the same proportion as the amount of the expenditure actually incurred on the construction of the qualifying premises which falls to be treated under subsection (1) (b) as having been incurred in the qualifying period bears to the whole of the expenditure incurred on the said construction.

(3) (a) Where a qualifying premises forms part of a building or is one of a number of buildings in a single development, or forms part of a building which is itself one of a number of buildings in a single development, there shall be made such apportionment as is necessary—

(i) of the expenditure incurred on the construction of the said building or buildings, and

(ii) of the amount which would be the relevant cost in relation to the said building or buildings if the building or buildings, as the case may be, were a single qualifying premises,

for the purposes of determining the expenditure incurred on the construction of the qualifying premises and the relevant cost in relation to the qualifying premises.

(b) Any apportionment required by this paragraph shall be made by the inspector according to the best of his knowledge and judgment.

(c) An apportionment made under paragraph (a) may be amended by the Appeal Commissioners or by the Circuit Court on the hearing, or the rehearing, of an appeal against any deduction granted on the basis of the apportionment.

(4) In this section references to the construction of any premises shall be construed as including references to the development of the land on which the premises are constructed or which is used in the provision of gardens, grounds, access or amenities in relation to the premises and, without prejudice to the generality of the foregoing, as including, in particular—

(a) demolition or dismantling of any building on the land,

(b) site clearance, earth moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works,

(c) walls, power-supply, drainage, sanitation and water supply, and

(d) the construction of any outhouses or other buildings or structures for use by the occupants of the premises or for use in the provision of amenities for the occupants.

(5) Where a house is a qualifying premises and at any time during the relevant period in relation to the premises either of the following events occurs:

(a) the house ceases to be a qualifying premises, or

(b) the ownership of the lessor's interest in the house passes to any other person but the house does not cease to be a qualifying premises,

the person who, before the occurrence of the event, received or was entitled to receive a deduction under subsection (2) in respect of expenditure incurred on the construction of the qualifying premises shall be deemed to have received on the day before the day of the occurrence an amount by way of rent from the qualifying premises equal to the amount of the deduction.

(6) (a) Where the event mentioned in subsection (5) (b) occurs in the relevant period in relation to a house which is a qualifying premises, the person to whom the ownership of the lessor's interest in the said house passes shall be treated as having incurred in the qualifying period an amount of expenditure on the construction of the said house equal to the amount which, under any of the provisions of this section apart from the proviso to subsection (2), the said lessor was treated as having incurred in the qualifying period on the construction of the said house:

Provided that, in the case of a person who purchases such a house, the amount so treated as having been incurred by him shall not exceed the relevant price paid by him on the sale.

(b) For the purposes of this subsection and subsection (7), the relevant price paid by a person on the sale of a house is the amount which bears to the net price paid by him on that sale the same proportion as the amount of the expenditure actually incurred on the construction of the house which falls to be treated under subsection (1) (b) as having been incurred in the qualifying period bears to the relevant cost in relation to that house.

(7) (a) Subject to paragraph (b), where expenditure is incurred on the construction of a house and before the house is used it is sold, the person who buys the house shall be treated for the purposes of this section as having incurred in the qualifying period expenditure on the construction of the house equal to the amount of such expenditure which falls to be treated under subsection (1) (b) as having been incurred in the qualifying period or the relevant price paid by him on the sale, whichever is the lower:

Provided that where the house is sold more than once before it is used, the provisions of this subsection shall have effect only in relation to the last of those sales.

(b) Where expenditure is incurred on the construction of a house by a person carrying on a trade or part of a trade which consists, as to the whole or any part thereof, of the construction of buildings with a view to their sale and the house, before it is used, is sold in the course of that trade or, as the case may be, that part of that trade, the person who buys the house shall be treated, for the purposes of this section, as having incurred in the qualifying period expenditure on the construction of the house equal to the relevant price paid by him on the said sale (hereafter in this paragraph referred to as “the first sale”) and, in relation to any subsequent sale or sales of the house before the house is used, paragraph (a) shall have effect as if the reference to the amount of expenditure which falls to be treated as having been incurred in the qualifying period were a reference to the said relevant price paid on the first sale.

(8) A house shall not be a qualifying premises if it is occupied as a dwelling by any person who is connected with the person who is entitled, in relation to the expenditure incurred on the construction of the house, to a deduction under subsection (2), and the terms of the qualifying lease in relation to the house are not such as might have been expected to be included in the lease if the negotiations for the lease had been at arm's length.

(9) A house shall not be a qualifying premises unless—

(a) it complies with such conditions, if any, as may be determined by the Minister for the Environment from time to time for the purposes of section 4 of the Housing (Miscellaneous Provisions) Act, 1979 , in relation to standards of construction of houses and the provision of water, sewerage and other services therein, and

(b) persons authorised in writing by the Minister for the Environment for the purposes of this section are permitted to inspect it at all reasonable times upon production, if so requested by a person affected, of their authorisations.

(10) Paragraph 5 of Schedule 1 to the Capital Gains Tax Act, 1975 , shall have effect as if a deduction under subsection (2) were a capital allowance and as if any amount by way of rent deemed to have been received by a person under subsection (5) were a balancing charge.

(11) An appeal to the Appeal Commissioners shall lie on any question arising under this section or under section 24 , other than a question on which an appeal lies under section 18 of the Housing (Miscellaneous Provisions) Act, 1979 , in like manner as an appeal would lie against an assessment to income tax or corporation tax and the provisions of the Tax Acts relating to appeals shall apply and have effect accordingly.

24. —(1) This section applies to expenditure incurred on the conversion into two or more houses of a building which, prior to the conversion, had not been in use as a dwelling or had been in use as a single dwelling.

(2) As respects expenditure to which this section applies, section 23 shall, with any necessary modifications, apply as if the expenditure incurred on the conversion of the building into two or more houses had actually been incurred on the construction of the houses and as if—

(a) in paragraph (ii) of the definition of “qualifying lease”, the reference to the relevant cost of a house were a reference to the market value of the house at the time the conversion is completed:

Provided that, in the case of a house which is a part of a building and which is not saleable apart from the building of which it is a part, the market value of the house at the time the conversion is completed shall, for the purposes of this paragraph, be taken to be an amount which bears to the market value of the building at that time the same proportion as the total floor area of the house bears to the total floor area of the building,

(b) in paragraph (iv) of the definition of “qualifying premises”, “subsequent to the incurring of the expenditure on the conversion” were inserted after “without having been used”,

(c) the definition of “relevant cost” and subsections (6) (b) and (7) (b) were deleted,

(d) the references in subsection (3) of that section to relevant cost were deleted,

(e) the references in subsections (6) (a) and (7) (a) to the relevant price paid on the sale were references to—

(i) the net price paid on the sale, or

(ii) in case only a part of the expenditure to which this section applies falls to be treated, for the purposes of subsection (2) of that section, as having been incurred in the qualifying period, the amount which bears to the said net price the same proportion as that part bears to the whole of that expenditure,

(f) the references in subsection (7) (a) to a house being used were references to the house being used subsequent to the incurring of the expenditure on the conversion, and

(g) in subsection (9) (a), “section 5” were substituted for “section 4”.

(3) This section shall not apply in the case of a conversion unless planning permission in respect of the conversion has been granted under the Local Government (Planning and Development) Acts, 1963 and 1976.

25. —(1) In this section—

“multi-storey car-park” means a building or structure consisting of three or more storeys wholly in use for the purpose of providing, for members of the public generally without preference for any particular class of person, upon payment of an appropriate charge, parking space for mechanically propelled vehicles;

“relevant expenditure” means capital expenditure incurred on or after the 29th day of January, 1981, and before the 1st day of April, 1984, on the construction of a multi-storey car-park.

(2) All the provisions of the Tax Acts (other than section 25 of the Finance Act, 1978 ) relating to the making of allowances or charges in respect of capital expenditure on the construction of an industrial building or structure shall apply to relevant expenditure as if it were expenditure incurred on the construction of a building or structure in respect of which an allowance falls to be made for the purposes of income tax or corporation tax, as the case may be, under Chapter II of Part XV or under Chapter I of Part XVI of the Income Tax Act, 1967 , by reason of its use for a purpose specified in section 255 (1) (a) of that Act.

26. —(1) In this section—

“chargeable period” and “chargeable period or its basis period” have the meanings assigned to them by paragraph 1 (2) of the First Schedule to the Corporation Tax Act, 1976 ;

“qualifying period” means the period commencing on the 29th day of January, 1981, and ending on the 31st day of March, 1984;

“relevant agreement” means an agreement between a road authority and another person under section 9 of the Local Government (Toll Roads) Act, 1979 , by virtue of which that other person incurs relevant expenditure;

“relevant expenditure” means capital expenditure incurred by a person during the qualifying period by virtue of a relevant agreement, but does not include any expenditure in respect of which any person is entitled to a deduction, relief or allowance under any provision of the Tax Acts other than this section;

“relevant income” means income which arises to a person by virtue of a relevant agreement;

“road authority” has the meaning assigned to it by the Local Government (Toll Roads) Act, 1979 .

(2) Where a person, having made a claim in that behalf, proves, as respects a chargeable period, that relevant income was receivable by him in that chargeable period or its basis period and that he has incurred relevant expenditure, he shall, subject to subsection (3), be entitled, for the purpose only of ascertaining the amount (if any) of relevant income on which he is to be charged to tax for the chargeable period, to an allowance equal to one-half of the relevant expenditure:

Provided that the aggregate amount of all allowances made to that person under this section in relation to any relevant expenditure shall not exceed an amount equal to one-half of that expenditure.

(3) Where an allowance to which a person is entitled under this section cannot be given full effect for any chargeable period by reason of a want or deficiency of relevant income, then (so long as the person has relevant income), the amount unallowed shall be carried forward to the succeeding chargeable period and the amount so carried forward shall be treated for the purposes of this section, including any further application of this subsection, as the amount of a corresponding allowance for that period.

(4) An appeal to the Appeal Commissioners shall lie on any question arising under this section in like manner as an appeal would lie against an assessment to income tax or corporation tax and the provisions of the Tax Acts relating to appeals shall apply and have effect accordingly.

27. — Section 254 (1) (inserted by the Corporation Tax Act, 1976 ) of the Income Tax Act, 1967 , is hereby amended—

(a) by the substitution for paragraph (b) of the following paragraph:

“(b) The lessee referred to in paragraph (a) is a lessee occupying the building or structure on the construction of which the expenditure was incurred and who so occupies it—

(i) under a relevant lease, or

(ii) as respects such expenditure incurred after the 28th day of January, 1981, under a lease to which a relevant lease granted to the Industrial Development Authority, the Shannon Free Airport Development Company Limited or Údarás na Gaeltachta is reversionary.”,

(b) by the substitution for the definition of “appropriate chargeable period” in paragraph (c) of the following definition:

“‘appropriate chargeable period’ means, in relation to any person who has incurred expenditure on the construction of a building or structure, the chargeable period related to the expenditure or, if it is later, the chargeable period related to the event (which shall be regarded as an event within the meaning of paragraph 1 (2) (b) of the First Schedule to the Corporation Tax Act, 1976 ), such event being—

(i) the commencement of the tenancy in a case in which the first use to which the building or structure is put is a use by a person occupying it by virtue of a tenancy to which the relevant interest is reversionary, or

(ii) in a case to which paragraph (b) (ii) refers, the commencement of the tenancy to which the relevant interest is reversionary;”,

and

(c) by the insertion in paragraph (c) after the definitions of “lease” and “lessee” of the following definition:

“‘relevant lease’ means a lease to which the relevant interest is reversionary;”.

Chapter VII

Profits or Gains from Dealing in or Developing Land

28. —In relation to the computation for the purposes of income tax or corporation tax of the profits or gains or losses of any period ending on or after the 6th day of April, 1981, section 17 of the Finance (Miscellaneous Provisions) Act, 1968 , is hereby amended by the substitution of the following subsection for subsection (1)—

“(1) (a) Where, apart from this section, all or some of the activities of a business of dealing in or developing land would not be regarded as activities carried on in the course of a trade within Schedule D but would be so regarded if every disposal of an interest in land included among such activities (including a disposal of an interest in land which, apart from this section, is a disposal of the full interest in the land which the person carrying on the business had acquired) were treated as fulfilling both of the conditions specified in paragraph (b), the business shall be deemed to be wholly a trade within Schedule D or, as the case may be, part of such a trade and the profits or gains thereof shall be charged to tax under Case I of Schedule D accordingly.

(b) The conditions referred to in paragraph (a) are:

(i) that the disposal was a disposal of the full interest in the land which the person carrying on the business had acquired, and

(ii) that the interest disposed of had been acquired by such person in the course of the business.”.

29. —(1) This section is enacted to prevent the avoidance of tax by persons concerned with dealing in or developing land.

(2) (a) In relation to the computation for the purposes of income tax or corporation tax of the profits or gains or losses of any period ending on or after the 6th day of April, 1981, Part IV of the Finance (Miscellaneous Provisions) Act, 1968 , is hereby amended by the substitution of the following section for section 18:

“Computation under Case I of Schedule D of profits or gains from dealing in or developing land.

18.—(1) Where a business of dealing in or developing land is, or is to be regarded as, a trade within Schedule D or a part of such a trade, the provisions applicable to Case I of that Schedule shall, as respects the computation of the profits or gains of the business, have effect subject to the subsequent provisions of this section.

(2) (a) Any consideration other than rent or an amount treated as rent under section 83 of the Income Tax Act, 1967 , for the disposal of an interest in any land, or in a part of any land, shall be treated as a consideration for the disposal of trading stock and shall accordingly be taken into account as a trading receipt.

(b) Any interest in any land which is held by a person carrying on a trade (hereafter in this section referred to as the trader) and which has become trading stock of the trade shall thereafter, until the discontinuance of the trade, continue to be such trading stock.

(c) Where the trader has acquired an interest in any land otherwise than for consideration in money or money's worth, he shall, subject to paragraph (d), be deemed to have purchased the interest for a consideration equal to its market value at the time of acquisition.

(d) Where at the time of acquisition of an interest in any land the trade had not been commenced or the interest was not then appropriated as trading stock, the trader shall be deemed to have purchased the interest for a consideration equal to its market value at the time of its appropriation as trading stock.

(e) Any consideration (other than receipts falling within section 81 (1) (b) of the Income Tax Act, 1967 , the profits or gains arising from which are, by virtue of that section, chargeable to tax under Case V of Schedule D) for the granting by the trader of any right in relation to the development of any land shall be taken into account as a trading receipt.

(3) Account shall not be taken of any sum (hereafter in this subsection referred to as the relevant sum) which is paid or is payable at any time by the trader as consideration for the forfeiture or surrender of the right of any person to an annuity or other annual payment unless—

(a) the annuity or other annual payment arises under—

(i) a testamentary disposition, or

(ii) a liability incurred for—

(I) valuable and sufficient consideration all of which is required to be brought into account in computing for the purposes of income tax or corporation tax the income of the person to whom that consideration is given, or

(II) consideration given to a person who—

(A) has not at any time carried on a business of dealing in or developing land which is, or is to be regarded as, a trade or a part of a trade, and

(B) is not and was not at any time connected with any of the following persons—

(aa) the trader,

(bb) a person who is or was at any time connected with the trader, and

(cc) any other person who, in the course of a business of dealing in or developing land which is, or is to be regarded as, a trade or a part of a trade, holds or held an interest in land upon which the annuity or other annual payment was charged or reserved,

or

(b) the relevant sum is required to be brought into account in computing for the purposes of income tax or corporation tax the profits or gains of a trade of dealing in or developing land carried on by the person to whom the relevant sum is payable.

(4) Where—

(a) a sum (hereafter in this subsection referred to as the said sum) is payable—

(i) by a person (hereafter in this subsection referred to as the relevant person) who is not the trader,

(ii) as consideration for the forfeiture or surrender of the right of any person to an annuity or other annual payment, and

(b) the said sum is not required to be brought into account in computing for the purposes of income tax or corporation tax the profits or gains of a trade of dealing in or developing land carried on by the person to whom the said sum is payable, and

(c) the trader incurs expenditure (hereafter in this subsection referred to as the cost) in acquiring any interest in land upon which the annuity or other annual payment had been reserved or charged,

then—

(I) the trader shall be treated as having expended in acquiring that interest an amount equal to the amount which would have been expended if the right had not been forfeited or surrendered, and

(II) the excess of the cost over the amount determined in accordance with subparagraph (I) shall be treated for the purposes of subsection (3) as having been payable by the trader as consideration for the forfeiture or surrender of that right,

and for the purposes of this subsection all such apportionments and valuations shall be made as appear to the inspector or, on appeal, to the Appeal Commissioners, to be just and reasonable:

Provided that this subsection shall not apply where the relevant person carries on a trade of dealing in or developing land and pays the said sum in the course of carrying on that trade.”.

(b) Any provision of section 18 of the Finance (Miscellaneous Provisions) Act, 1968 , which applies in relation to the computation of the profits or gains or losses of any period ending before the 6th day of April, 1981, but which, by reason of this section, does not apply in relation to the computation of the profits or gains or losses of any period ending on or after that date, shall, in particular, not apply in relation to the determination of the value of the trading stock of a trade at the commencement of any period ending on or after that date.

(3) Part IV of the Finance (Miscellaneous Provisions) Act, 1968 , is hereby amended by the substitution of the following sections for sections 20, 21 and 22:

“Tax to be charged under Case IV on gains from certain disposals of land.

20.—(1) This section shall not apply to—

(a) a gain realised before the 6th day of April, 1981, or

(b) a gain accruing to an individual which, by virtue of section 25 (private residence) of the Capital Gains Tax Act, 1975 , is exempt from capital gains tax, or which would be so exempt but for the provisions of subsection (10) of that section.

(2) In this section and in section 21—

‘capital amount’ means any amount, in money or money's worth, which, apart from this section, does not fall to be included in any computation of income for the purposes of the Tax Acts, and other expressions which include the word ‘capital’ shall be construed accordingly;

‘chargeable period’ means an accounting period of a company or a year of assessment;

‘land’ includes any interest in land and references to the land include references to all or any part of the land;

‘share’ includes stock;

references to property deriving its value from land include references to—

(i) any shareholding in a company, or any partnership interest, or any interest in settled property, deriving its value or the greater part of its value directly or indirectly from land, and

(ii) any option, consent or embargo affecting the disposition of land.

(3) This section shall apply in any case where—

(a) land, or any property deriving its value from land, is acquired with the sole or main object of realising a gain from disposing of the land,

(b) land is held as trading stock, or

(c) land is developed by a company with the sole or main object of realising a gain from disposing of the land when developed,

and any gain of a capital nature is obtained from the disposal of the land—

(i) by the person acquiring, holding or developing the land, or by a person connected with that person, or

(ii) where any arrangement or scheme is effected as respects the land which enables the gain to be realised directly or indirectly by any transaction, or by any series of transactions, by any person who is a party to, or concerned in, the arrangement or scheme,

and this subsection shall apply whether the said gain is obtained by any such person for himself or for any other person.

(4) Where this section applies, the whole of any such gain as is mentioned in subsection (3) shall, for all the purposes of the Tax Acts, be treated—

(a) as being income which arises at the time when the gain is realised and which constitutes profits or gains chargeable to tax under Case IV of Schedule D for the chargeable period in which the gain is realised, and

(b) subject to the following provisions of this section, as being income of the person by whom the gain is realised.

(5) For the purposes of this section land shall be treated as disposed of if, by any one or more transactions, or by any arrangement or scheme, whether concerning the land or property deriving its value from the land, the property in the land, or control over the land, is effectually disposed of, and references in subsection (3) to the acquisition or development of land or property with the sole or main object of realising a gain from disposing of the land shall be construed accordingly.

(6) For the purposes of this section—

(a) where, whether by a premature sale or otherwise, a person directly or indirectly makes available to another person the opportunity of realising a gain, the gain of that other person shall be treated as having been obtained for him by the person first mentioned in this subsection, and

(b) any number of transactions may be regarded as constituting a single arrangement or scheme if a common purpose is discerned in them, or if there is other sufficient evidence of a common purpose.

(7) In applying this section account shall be taken of any method, direct or indirect, by which—

(a) any property or right is transferred or transmitted to another person, or

(b) the value of any property or right is enhanced or diminished,

and, accordingly, the occasion of the transfer or transmission of any property or right, by whatever method, and the occasion when the value of any property or right is enhanced, may be treated as an occasion on which tax becomes chargeable under this section.

(8) Subsection (7) shall apply in particular—

(a) to sales, contracts and other transactions made otherwise than for full consideration or for more than full consideration,

(b) to any method by which any property or right, or the control of any property or right, is transferred or transmitted to any person by assigning—

(i) share capital or other rights in a company,

(ii) rights in a partnership, or

(iii) an interest in settled property,

(c) to the creation of any option or consent or embargo affecting the disposition of any property or right, and to the consideration given for the option, or for the giving of the consent or the release of the embargo, and

(d) to the disposal of any property or right on the winding up, dissolution or termination of any company, partnership or trust.

(9) For the purposes of this section such method of computing a gain shall be adopted as is just and reasonable in the circumstances, taking into account the value of what is obtained for disposing of the land, and allowing only such expenses as are attributable to the land disposed of, and in applying this subsection—

(a) where an interest in land is acquired and the reversion is retained on disposal, account may be taken of the way in which the profits or gains under Case I of Schedule D of a person dealing in land are computed in such a case, and

(b) account may be taken of the adjustments to be made in computing such profits or gains under section 84 (2) and 85 (4) of the Income Tax Act, 1967 .

(10) Subsection (3) (c) shall not apply to so much of any gain as is fairly attributable to the period, if any, before the intention to develop the land was formed, and which would not fall under paragraph (a) or (b) of that subsection; and in applying this subsection account shall be taken of the treatment under Case I of Schedule D of a person who appropriates land as trading stock.

(11) If all or any part of the gain accruing to any person is derived from value, or an opportunity of realising a gain, provided directly or indirectly by some other person (whether or not put at the disposal of the person first mentioned in this subsection), subsection (4) (b) shall apply to the gain, or that part of it, with the substitution of that other person for the person by whom the gain was realised.

(12) Where there is a disposal of shares in—

(a) a company which holds land as trading stock, or

(b) a company which owns directly or indirectly 90 per cent. or more of the ordinary share capital of another company which holds land as trading stock,

and all the land so held is disposed of in the normal course of its trade by the company which held it, and so as to procure that all opportunity of profit in respect of the land arises to that company, then, notwithstanding subsection (3) (i), this section shall not apply to any gain accruing to the holder of shares as being a gain on property deriving value from that land (but without prejudice to any liability under subsection (3) (ii)).

(13) In ascertaining for the purposes of this section, the intentions of any person, the objects and powers of any company, partners or trustees, as set out in any memorandum or articles of association or other document, shall not be conclusive.

(14) For the purposes of ascertaining whether and to what extent the value of any property or right is derived from any other property or right, value may be traced through any number of companies, partnerships and trusts, and the property held by any company, partnership or trust shall be attributed to the shareholders, partners or beneficiaries at each stage in such manner as is just and reasonable.

(15) In applying this section—

(a) any expenditure or receipt or consideration or other amount may be apportioned by such method as is just and reasonable, and

(b) all such valuations shall be made as may be necessary to give effect to the provisions of the section.

(16) For the purposes of this section partners, or the trustees of settled property, or personal representatives, may be regarded as persons distinct from the individuals or other persons who are for the time being partners or trustees or personal representatives.

(17) This section shall apply to a person, whether resident in the State or not, if all or any part of the land in question is situated in the State.

Provisions supplementary to section 20.

21.—(1) (a) Where a person (hereafter in this subsection referred to as the first-mentioned person) is assessed to tax under section 20 and that assessment to tax arises in consequence of and in respect of consideration receivable by another person (hereafter in this subsection referred to as the second-mentioned person)—

(i) the first-mentioned person shall be entitled to recover from the second-mentioned person any part of that tax which the first-mentioned person has paid, and

(ii) if any part of that tax remains unpaid at the expiration of six months from the date when it became due and payable, it shall be recoverable from the second-mentioned person as though he were the person so assessed, but without prejudice to the right to recover the tax from the first-mentioned person,

and for the purposes of subparagraph (i), the inspector shall on request furnish a certificate specifying the amount of income in respect of which tax has been paid, and the amount of tax so paid; and the certificate shall be evidence, until the contrary is proved, of any facts stated therein.

(b) For the purposes of this subsection any amount which by virtue of section 20 is treated as the income of a person shall, notwithstanding any other provision of the Tax Acts, be treated as the highest part of his income.

(2) If it appears to the Revenue Commissioners that any person entitled to any consideration or other amount chargeable to tax under section 20 is not resident in the State, they may direct that section 434 of the Income Tax Act, 1967 (interest, etc., not payable out of taxed profits), shall apply to any payment forming part of that amount as if the payment were an annual payment charged with tax under Schedule D, but without prejudice to the final determination of the liability of that person, including any liability under subsection (1) (a) (ii).

(3) Section 20 shall have effect subject to any provision of the Tax Acts deeming income to be income of a particular person.

(4) Where, by virtue of section 20 (3) (c), any person is charged to tax on the realisation of a gain, and, by virtue of subsection (10) of that section, the computation of the gain proceeded on the footing that the land or some other property was appropriated at any time as trading stock, that land or other property shall be treated on that footing also for the purposes of paragraph 15 of Schedule 1 to the Capital Gains Tax Act, 1975 (appropriations to and from stock in trade).

(5) Where, by virtue of section 20 (11), the person charged to tax is a person other than the person for whom the capital amount was obtained or the person by whom the gain was realised, and the tax has been paid, then, for the purposes of paragraphs 2 and 4 of Schedule 1 to the Capital Gains Tax Act, 1975 (profits taxable as income to be excluded from tax on capital gains), the person for whom the capital amount was obtained or the person by whom the gain was realised, as may be appropriate, shall be regarded as having been charged to the tax so paid.

Power to obtain information.

22.—(1) The inspector may by notice in writing require any person to furnish him within such time as may be specified in the notice (not being less than thirty days) with such particulars as the inspector thinks necessary for the purposes of sections 20 and 21.

(2) The particulars which a person is obliged to furnish under this section, if he is required by notice so to do, include particulars—

(a) as to transactions or arrangements with respect to which he is, or was, acting on behalf of others, and

(b) as to transactions or arrangements which, in the opinion of the inspector, should properly be examined for the purposes of sections 20 and 21 notwithstanding that, in the opinion of the person to whom the notice is given, no liability to tax arises under those sections, and

(c) as to whether the person to whom the notice is given has taken, or is taking, any, and if so what, part in any, and if so what, transactions or arrangements of a description specified in the notice.

(3) Notwithstanding anything in subsection (2) a solicitor shall not be deemed for the purposes of subsection (2) (c) to have taken part in any transaction or arrangements by reason only that he has given professional advice to a client in connection with the transaction or arrangements, and shall not, in relation to anything done by him on behalf of a client, be compellable under this section, except with the consent of his client, to do more than state that he is or was acting on behalf of a client, and give the name and address of his client.”.

(4) Schedule 15 to the Income Tax Act, 1967 , is hereby amended by the insertion in column 2 thereof of “ Finance (Miscellaneous Provisions) Act, 1968 , section 22”.