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15 1983

FINANCE ACT, 1983

Chapter V

Income Tax and Corporation Tax

Amendment of section 58 (Schedule D deduction of payments to trustees) of Finance Act, 1982.

24. Section 58 (1) of the Finance Act, 1982 , is hereby amended with effect as on and from the 6th day of April, 1982—

(a) by the insertion after “the company concerned” of “or, in the case of a group scheme, by a participating company”, and

(b) by the insertion after the proviso of the following additional proviso:

“Provided also that the deduction to be allowed under this section or under any other provision of the Tax Acts in respect of any sum or the aggregate amount of any sums so expended in that accounting period shall not exceed such sum as is, in the opinion of the Revenue Commissioners, reasonable, having regard to the number of employees or directors of the company making the payment who have agreed to participate in the scheme, the services rendered by them to that company, the levels of their remuneration, the length of their service or similar factors.”,

and so much of the said section 58(1), as so amended, as precedes paragraph (a) thereof is set out in the Table to this section.

TABLE

58.—(1) As respects any accounting period, any sum expended in that accounting period by the company concerned or, in the case of a group scheme, by a participating company in making a payment or payments to the trustees of an approved scheme shall be included—

Amendment of provisions relating to restriction of relief for interest.

25. —(1) Section 21 of the Finance Act, 1982 , is hereby amended by the substitution of the following subsection for subsection (3)—

“(3) (a) Notwithstanding the provisions of subsection (2), the principal sections shall apply—

(i) in relation to a loan or loans made after the operative date but on or before the 9th day of February, 1983, to interest paid or payable on such loan or loans on or before the 5th day of April, 1985, and

(ii) in relation to a loan or loans made after the 9th day of February, 1983, to interest paid or payable on such loan or loans on or before the 5th day of April, 1983,

to the extent that the amount of the loan or the aggregate amount of the loans on which such interest is paid or payable in a year of assessment does not exceed the specified limit for the year of assessment and, if the said amount or the said aggregate amount on which interest is paid or payable on the loan or loans exceeds the specified limit for the year of assessment, the principal sections shall apply only to so much of that interest as bears to the whole of that interest the same proportion as that part of the said amount or the said aggregate amount which does not exceed the specified limit bears to the whole of the said amount or the said aggregate amount.

(b) In this subsection ‘specified limit’, in relation to a year of assessment, means—

(i) in the case of a husband who is assessed to tax for the year of assessment in accordance with the provisions of section 194 of the Income Tax Act, 1967 , £5,000,

(ii) in the case of a widowed person, £3,600, or

(iii) in any other case, £2,500.”.

(2) Section 23 of the Finance Act, 1982 , is hereby amended by the substitution of the following subsection for subsection (3)—

“(3) In relation to—

(a) relevant interest paid on or before the 5th day of April, 1985, on all loans made after the operative date but on or before the 9th day of February, 1983,

(b) relevant interest paid on or before the 5th day of April, 1983, on all loans made after the 9th day of February, 1983,

(c) interest—

(i) paid on or after the 6th day of April, 1983, on all loans made after the 9th day of February, 1983,

(ii) paid on or after the 6th day of April, 1985, on all loans whenever made,

(iii) paid after the operative date on an overdraft which was not in existence on that date,

(iv) paid on or after the 6th day of April, 1983, on an overdraft which was in existence on the operative date, and

(d) interest on an overdraft referred to in paragraph (c) (iv) where that interest is paid in the year ending on the 5th day of April, 1983, in so far as the amount of the interest exceeds the amount of the interest which would have been payable for that year on the amount of the overdraft on the operative date at the rate at which interest on that amount was chargeable on the operative date,

section 10 of the Corporation Tax Act, 1976 , shall have effect as if the following subsection were substituted for subsection (6)—

(6) Subject to subsection (7), interest shall not be treated as a charge on income.’.”.

Amendment of provisions relating to relief in respect of increase in stock values.

26. —(1) Section 31A (inserted by the Finance Act, 1976 ) of the Finance Act, 1975 , is hereby amended by the substitution of “1983” for “1982” (inserted by the Finance Act, 1982 )—

(a) in paragraph (iv) (inserted by the Finance Act, 1979 ) of the proviso (inserted by the Finance Act, 1977 ) to subsection (4) (a),

(b) in subsection (7) (inserted by the Finance Act, 1977 ), and

(c) in subsection (9) (inserted by the Finance Act, 1977 ) in each place where it occurs,

and the said paragraph, the said subsection (7) (other than the proviso) and the said subsection (9) (other than the proviso), as so amended, are set out in the Table to this subsection.

TABLE

(iv) a deduction shall not be allowed under the provisions of this section in computing a company's trading income for any accounting period which ends on or after the 6th day of April, 1983.

(7) Where in relation to an accounting period a company's opening stock value exceeds its closing stock value, the amount of the excess (in this section referred to as the company's “decrease in stock value”) shall, if the accounting period ends on a date before the 6th day of April, 1983, be treated in the computation of the company's trading income for the purposes of corporation tax, as a trading receipt of the company's trade for that accounting period:

(9) In the computation of a company's trading income for the purposes of corporation tax for any accounting period which ends on or after the 6th day of April, 1983, in which there is a decrease in stock value, there shall be treated as a trading receipt of the company's trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C where—

A is the aggregate amount of the company's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1983,

B is the aggregate amount of the company's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1983, and

C is the aggregate of the amounts which under this subsection are treated as trading receipts of the company's trade for preceding accounting periods:

(2) Section 12 of the Finance Act, 1976 , is hereby amended—

(a) by the substitution in subsection (3) of “1983-84” for “1982-83” (inserted by the Finance Act, 1982 ), and

(b) by the substitution of “1983” for “1982” (inserted by the Finance Act, 1982 ) in each place where it occurs in subsection (5) (inserted by the Finance Act, 1978 ) and subsection (6) (inserted by the Finance Act, 1977 ),

and the said subsection (3), the said subsection (5) (other than the proviso) and the said subsection (6) (other than the proviso), as so amended, are set out in the Table to this subsection.

TABLE

(3) Any deduction allowed by virtue of this section in computing a person's trading profits for an accounting period shall not have effect for any purpose of the Income Tax Acts for any year of assessment prior to the year 1974-75 or later than the year 1983-84.

(5) In the computation of a person's trading income for an accounting period in which there is a decrease in stock value and which ends on a date in the period from the 6th day of April, 1976, to the 5th day of April, 1983, the amount of that decrease shall be treated as a trading receipt of the trade for that accounting period:

(6) In the computation of a person's trading income for any accounting period in which there is a decrease in stock value and which ends on or after the 6th day of April, 1983, there shall be treated as a trading receipt of the trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C

where—

A is the aggregate amount of the person's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1983,

B is the aggregate amount of the person's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1983, and

C is the aggregate of the amounts which are treated as trading receipts of the person's trade for preceding accounting periods which ended on or after the 6th day of April, 1983:

(3) (a) Subject to paragraph (c), this subsection applies to any amount which, as respects an accounting period of a company ending on a date later than the 5th day of April, 1982, and earlier than the 6th day of April, 1983, would, apart from paragraph (b), fall to be treated by virtue of section 31A of the Finance Act, 1975 , as a trading receipt of the company's trade for that accounting period.

(b) Notwithstanding any provision to the contrary, an amount to which this subsection applies in relation to a company shall not be treated as a trading receipt of the company's trade for the accounting period mentioned in paragraph (a) but shall be treated as a trading receipt of that trade for the earliest accounting period of the company ending after the 5th day of April, 1983.

(c) This subsection shall not have effect as respects a trade of a company where the provisions of subsection (10) (inserted by the Finance Act, 1977 ) of the said section 31A apply in relation to an accounting period of the company ending before the 6th day of April, 1983.

(4) (a) Subject to paragraph (c), this subsection applies to any amount which, as respects an accounting period ending on a date later than the 5th day of April, 1982, and earlier than the 6th day of April, 1983, would, apart from paragraph (b), fall to be treated by virtue of section 12 of the Finance Act, 1976 , as a trading receipt of a person's trade for that accounting period.

(b) Notwithstanding any provision to the contrary, an amount to which this subsection applies in relation to a person shall not be treated as a trading receipt of the person's trade for the accounting period mentioned in paragraph (a) but shall be treated as a trading receipt of that trade for the next succeeding accounting period.

(c) This subsection shall not have effect as respects a trade where the provisions of subsection (8) (inserted by the Finance Act, 1977 ) of the said section 12 apply in relation to the accounting period mentioned in paragraph (a).

Application of section 31 (building societies) of Corporation Tax Act, 1976, for 1983-84.

27. —(1) Section 40 (1) of the Finance Act, 1977 (as extended by section 52 of the Finance Act, 1980 ) shall have effect in relation to the year 1983-84 as it has effect in relation to the years 1980-81 and 1981-82—

(a) as respects any building society which, on or before the 30th day of September, 1983, gives to the Revenue Commissioners an undertaking in writing that it will co-operate fully with the said Commissioners in any scheme of theirs for determining (having regard to the obligation imposed on the said Commissioners by the proviso to section 31 (1) of the Corporation Tax Act, 1976 ) the reduced rate referred to in paragraph (a) of the said section 31(1), and, in particular, that it will furnish the said Commissioners with such returns, information and other particulars as the Commissioners consider necessary for the purposes of such determination, and

(b) as respects any other building society, subject to the modification that the said reduced rate which, by virtue of the said section 40(1) (as extended by this subsection) would, for the year 1983-84, be 70 per cent. of the standard rate shall, for that year, be 75 per cent. of the standard rate.

(2) In this section “building society” has the same meaning as in section 31 of the Corporation Tax Act, 1976 .

Distributions: increase in tax credits, etc.

28. —(1) Section 28 (1) of the Finance Act, 1978 , shall not have effect in relation to distributions made on or after the 6th day of April, 1983.

(2) Section 45 (5) of the Corporation Tax Act, 1976 , shall have effect as respects distributions received on or after the 6th day of April, 1983, as if section 28 (3) of the Finance Act, 1978 , had not been enacted.

(3) (a) This subsection applies to a distribution that is made by a company on or after the 6th day of April, 1983, and to which section 64 of the Corporation Tax Act, 1976 , applies.

(b) Section 28 (7) of the Finance Act, 1978 , shall not apply to a distribution to which this subsection applies.

(c) The reference to certain tax credits in the definition of B in subsection (2) of section 64 of the Corporation Tax Act, 1976 , shall, in relation to distributions to which the said section 64 applies and which—

(i) were received by a company that makes a distribution to which this subsection applies,

and

(ii) were made after the 5th day of April, 1978, and before the 6th day of April, 1983,

be construed as a reference to forty-nine-thirty-ninths of those tax credits.

Application of section 23 (deduction for certain expenditure on construction of rented residential accommodation) of Finance Act, 1981.

29 —(1) Section 23 (hereafter in this section and in section 30 referred to as “the principal section”) of the Finance Act, 1981 , is hereby amended by the substitution in subsection (1) (a), in the definition of “qualifying period”, of “1987” for “1984”, and the said definition, as so amended, is set out in the Table to this subsection.

TABLE

qualifying period” means the period commencing on the 29th day of January, 1981, and ending on the 31st day of March, 1987;

(2) For the purposes of relief under the principal section for expenditure to which this section applies, the definition of “qualifying premises” in subsection (1) (a) of the principal section shall have effect as if the reference therein to 75 square metres were a reference to 90 square metres:

Provided that a house (being a flat or maisonette of the kind mentioned in the definition) the total floor area of which is more than 75 square metres shall not be a qualifying premises by virtue of this subsection unless it contains three or more bedrooms; and, for the purposes of this proviso, “bedroom” means a room which is certified by the Minister for the Environment—

(a) to have been designed and constructed for use as a bedroom, and

(b) to be suitable for such use.

(3) Where, by virtue of subsection (2) of the principal section, any expenditure to which this section applies falls to be taken into account for any chargeable period in computing, under section 81 (4) of the Income Tax Act, 1967 , a deficiency in respect of any rent from a qualifying premises, then, notwithstanding the said subsection (2), only so much of that expenditure as does not exceed the amount of that rent shall be so taken into account and subsection (4) shall apply as respects any subsequent chargeable period to any excess of that expenditure over the amount of that rent (hereafter in this section referred to as “excess expenditure”).

(4) Where, as respects any chargeable period in respect of which subsection (3) applies, there is an amount of excess expenditure, that amount shall be treated, for the purposes of subsection (2) of the principal section and of subsection (3) of this section (including any further application of this subsection), as if it were expenditure to which this section applies which, by virtue of the said subsection (2), falls to be taken into account for the next succeeding chargeable period in computing under section 81 (4) of the Income Tax Act, 1967 , a surplus or deficiency in respect of any rent from the qualifying premises.

(5) Where, under the proviso to subsection (2) of the principal section, there falls to be made any reduction of expenditure falling to be treated as having been incurred in the qualifying period but in part on or before the 31st day of March, 1984, and in part after that date, the amount of that reduction shall be apportioned to that part of the qualifying period falling on or before that date and to that part of the qualifying period falling after that date according to the respective amounts of the expenditure treated as having been incurred in those parts.

(6) Where, under subsection (6) or (7) of the principal section, or under either of those subsections as applied by section 24 of the Finance Act, 1981 , a person is treated as having incurred expenditure (hereafter in this subsection referred to as “the first-mentioned expenditure”) in the qualifying period on the construction of a house and an amount of expenditure actually incurred on the construction or conversion of that house falls to be treated as having been incurred in the qualifying period but in part on or before the 31st day of March, 1984, and in part after that date, the first-mentioned expenditure shall be treated as having been incurred in part on or before that date and in part after that date in the same proportions as the amount of expenditure actually incurred in the qualifying period fell to be so treated.

(7) (a) In this section—

chargeable period” means—

(i) in a case where any rent is chargeable to income tax, a year of assessment, and

(ii) in a case where any rent is chargeable to corporation tax, an accounting period;

expenditure to which this section applies” means expenditure incurred in the period (hereafter in this definition referred to as “the first-mentioned period”) commencing on the 1st day of April, 1984, and ending on the 31st day of March, 1987, on the construction of a qualifying premises; and for the purposes of determining whether and to what extent such expenditure was so incurred in the first-mentioned period, subsection (1) (b) of the principal section shall have effect as if the references in subparagraph (i) thereof to the qualifying period were references to the first-mentioned period and with any other necessary modifications.

(b) This section and section 30 shall be construed together with the principal section.

Application of section 24 (provisions supplementary to section 23) of Finance Act, 1981.

30. —(1) Subsections (2), (3) and (4) of section 29 shall, with any necessary modifications, apply to expenditure to which this section applies as they apply to expenditure to which that section applies.

(2) In this section “expenditure to which this section applies” means expenditure incurred in the period (hereafter in this definition referred to as “the first-mentioned period”) commencing on the 1st day of April, 1984, and ending on the 31st day of March, 1987, 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; and for the purposes of determining whether and to what extent such expenditure was so incurred in the first-mentioned period, subsection (1) (b) of the principal section shall have effect as if the references in subparagraph (i) thereof to the qualifying period were references to the first-mentioned period and with any other necessary modifications.