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9 1992

Finance Act, 1992

Chapter III

Corporation Tax

Amendment of section 84A (limitation on meaning of “distribution”) of Corporation Tax Act, 1976.

40. Section 84A (as amended by the Finance Act, 1991 ) of the Corporation Tax Act, 1976 , is hereby amended—

(a) in paragraph (b) of subsection (3A) (inserted by the Finance Act, 1990 )—

(i) by the substitution of “as is paid in respect of relevant principal specified in the list referred to in sub-paragraph (iv)” for “as is paid in that period”,

(ii) by the substitution in subparagraph (iv) of “before the 25th day of March, 1992, the specified trade of the borrower was included in a list prepared by the Industrial Development Authority and approved before that day” for “the specified trade of the borrower is selected by the Industrial Development Authority for inclusion in a list, approved”,

(b) as respects relevant principal advanced by a company on or after the 20th day of December, 1991, by the substitution of the following subsection for subsection (3B):

“(3B) (a) Notwithstanding subsections (2), (3) and (3A), any interest paid to a company in respect of relevant principal advanced by the company on or after the 20th day of December, 1991, shall not be treated as a distribution for the purposes of this Act in the hands of the company.

(b) Where, apart from this paragraph, any interest paid to a company in respect of relevant principal advanced by the company on or after the 20th day of December, 1991, would not be treated as a distribution for the purposes of this Act in the hands of the company by virtue only of the provisions of paragraph (a), then the provisions of that paragraph shall not apply in relation to so much of that interest as is paid in respect of relevant principal specified in the listreferred to in subparagraph (ii) of this paragraph if—

(i) the specified trade is a trade which the borrower commenced to carry on after the 31st day of January, 1990, or is a specified trade of the borrower in respect of which he is committed, under a business plan approved by the Industrial Development Authority, the Shannon Free Airport Development Company Limited or Údarás na Gaeltachta, to the creation of additional employment,

(ii) before the 25th day of March, 1992, the specified trade of the borrower was included in a list prepared by the Industrial Development Authority and approved before that day by the Minister for Industry and Commerce and the Minister for Finance, which list specifies a particular amount of relevant principal in respect of each trade which amount is considered to be essential for the success of that trade, and

(iii) the borrower, or a company connected (within the meaning of section 157 (5)) with the borrower, is not a company which commenced to carry on relevant trading operations (within the meaning of section 39B of the Finance Act, 1980 ) after the 20th day of April, 1990, or intends to commence to carry on such trading operations:

Provided that this paragraph shall not apply to any interest in respect of any relevant principal advanced after the time the total of the amounts of relevant principal to which this paragraph applies, advanced by all lenders who have made such advances, exceeds the aggregate of—

(a) £250,000,000, and

(b) the excess, if any, of the amount specified in the proviso to paragraph (b) of subsection (3A) over the total of the amounts of relevant principal to which that paragraph applies advanced by all lenders who have made such advances.”,

and

(c) in paragraph (b) of subsection (4A)—

(i) by the insertion after subparagraph (i) of the following proviso:

“Provided that this subparagraph shall not apply as respects any relevant period commencing on or after the 20th day of December, 1991, if in that relevant period the said rate exceeds the rate on the basis of which interest would have fallen to be computed if the relevant principal had continued to be denominated in the currency in which it was denominated on the 30th day of January, 1991,”,

(ii) in subparagraph (ii), with effect on and from the 30th day of January, 1991—

(I) by the deletion of “for the purposes of a specified trade”, and

(II) by the insertion in clause (II) of “for the purposes of a specified trade” before “of a borrower”,

and

(iii) by the insertion after subparagraph (ii) of the following proviso:

“Provided that this subparagraph shall not apply as respects any relevant period commencing on or after the 20th day of December, 1991—

(a) to such amount of interest as is paid in respect of a period (which shall be deemed to be a separate relevant period) commencing on the 20th day of December, 1991, and ending on the 31st day of December, 1991, as exceeds an amount determined by reference to the rate referred to in sub-paragraph (A) of paragraph (b) where the relevant principal was advanced on the 20th day of December, 1991, under an agreement entered into before that day, and

(b) in the case of any other interest, if in the relevant period or, where paragraph (a) applies, the part of the relevant period other than the period referred to in that paragraph, the rate on the basis of which interest in respect of the relevant security falls to be computed exceeds—

(A) a rate approved by the Minister for Finance in consultation with the Minister for Industry and Commerce,

or

(B) where it is lower than the rate so approved and the relevant principal was advanced on or after the 30th day of January, 1991, and before the 20th day of December, 1991, the rate which would have applied if the relevant principal had continued to be denominated in the currency in which it was denominated when it was advanced,”.

Amendment of section 21 (amendment of Part IX (Schedule F and company distributions) of Corporation Tax Act, 1976) of Finance Act, 1989.

41. Section 21 of the Finance Act, 1989 , is hereby amended, as respects interest paid on or before the 31st day of December, 1991, by the substitution of the following paragraph for paragraph (b) of subsection (2):

“(b) the interest or other distribution is paid on or before the 31st day of December, 1991, in respect of—

(i) a period before that date, and

(ii) a security issued before the 12th day of April, 1989.”.

Amendment of Part XXXII (government and other public loans) of Income Tax Act, 1967, and computation of losses.

42. —(1) Part XXXII of the Income Tax Act, 1967 , is hereby amended—

(a) as respects securities acquired by a company after the 29th day of January, 1992, whether they were issued before or after that date, by the addition of the following proviso to section 464:

“Provided that, notwithstanding that a security has been issued with such condition, where the security is held by or for a branch or agency through which a company carries on a trade or business in the State, which is such a trade or business, as the case may be, that, if the security had been issued without such condition, interest on, or other profits or gains from, the security accruing to the company would be chargeable to corporation tax under Case I of Schedule D, or in accordance with the provisions of section 43 of the Corporation Tax Act, 1976 , then such interest and profits or gains shall be charged to tax as if the security had been issued without such condition.”,

(b) as respects securities acquired by a company after the 15th day of May, 1992, whether they were issued before or after that date, by the substitution for section 470 of the following section:

Securities of Irish local authorities issued abroad.

470.—(1) Securities issued (whether before or after the commencement of this Act) outside the State by a local authority in the State for the purpose of raising any money which they are authorised to borrow, if issued under the authority of the Minister for Finance, shall not be liable to tax, except where they are held—

(a) by persons domiciled in the State or ordinarily resident in the State, or

(b) by or for a branch or agency through which a company carries on a trade or business in the State which is such a trade or business, as the case may be, that, if this section had not been enacted, interest on, or other profits or gains from them accruing to the company would be chargeable to corporation tax under Case I of Schedule D or in accordance with the provisions of section 43 of the Corporation Tax Act, 1976 .

(2) In this section ‘local authority’ includes any public body which is recognised as a local authority for the purpose of this section by the Minister for the Environment.”,

and

(c) as respects securities acquired by a company after the 15th day of May, 1992, whether they were issued before or after that date, by the addition of the following proviso to subsection (2) of section 474:

“Provided that, notwithstanding that a security has been issued as aforesaid with either or both such conditions, where the security is held by or for a branch or agency through which a company carries on a trade or business in the State, which is such a trade or business, as the case may be, that, if the security had been issued without any such conditions, interest on, or other profits or gains from, the security accruing to the company would be chargeable to corporation tax under Case I of Schedule D or in accordance with the provisions of section 43 of the Corporation Tax Act, 1976 , then such interest and profits or gains shall be charged to tax as if the security had been issued without any such conditions.”.

(2) Notwithstanding subsection (5) of section 16 or subsection (3) of section 18 of the Corporation Tax Act, 1976 , in ascertaining for the purposes of those sections whether and to what extent a company has incurred a loss in carrying on a trade in the State through a branch or agency, the interest on, and other profits or gains from, a security held by or for the branch or agency, shall be treated as a trading receipt of the trade if such interest or other profits or gains would, if sections 464 , 470 and 474 of the Income Tax Act, 1967 , had not been enacted, have been so treated, or have been included in an amount so treated.

(3) Subsection (2) shall have effect for the purposes of ascertaining whether and to what extent a company has incurred a loss—

(a) as if sections 470 and 474 of the Income Tax Act, 1967 , were not mentioned in that subsection, where, apart from that subsection, the company would be treated as having incurred a loss and that loss would be—

(i) set-off against the trading income or profits (whether of that company or any other company) of, or

(ii) incurred in,

an accounting period falling within the period from the 1st day of February, 1992, to the 15th day of May, 1992, and

(b) where, apart from that subsection, the company would be treated as having incurred a loss and that loss would be—

(i) set-off against the trading income or profits (whether of that company or any other company) of, or

(ii) incurred in,

an accounting period ending on or after the 15th day of May, 1992:

Provided that the amount of relief against income or profits of an accounting period—

(I) ending before the 1st day of February, 1992, where paragraph (a) of subsection (3) applies, or

(II) ending before the 15th day of May, 1992, where paragraph (b) of subsection (3) applies,

for a loss shall not be reduced by virtue of subsection (2) unless the loss was incurred in an accounting period ending on or after the date concerned.

(4) (a) For the purposes of subsections (2) and (3) and paragraph (b), an accounting period which begins before the 15th day of May, 1992, and ends on or after that date, shall be divided into one part, beginning on the day on which the accounting period begins and ending on the 14th day of May, 1992, and another part beginning on the 15th day of May, 1992, and ending on the day on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods.

(b) Where subsection (2) applies, for the purpose of ascertaining whether and to what extent a company has incurred a loss, by virtue of section 464 of the Income Tax Act, 1967 , being mentioned in that subsection, then for the purposes of subsections (2) and (3) an accounting period which begins before the 1st day of February, 1992, and ends on or after that date, shall be divided into one part, beginning on the day on which the accounting period begins and ending on the 31st day of January, 1992, and another part beginning on the 1st day of February, 1992, and ending on the day on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods.

Building societies (taxation of certain transactions).

43. —(1) In this section—

building society” means a building society incorporated, or deemed by section 124 (2) of the Building Societies Act, 1989 , to be incorporated, under that Act, and references to “society” shall be construed accordingly;

security” means an asset which is not a chargeable asset for the purposes of capital gains tax by virtue of section 19 of the Capital Gains Tax Act, 1975 .

(2) Where on or after the 29th day of January, 1992, a society sells or transfers a security and, apart from this subsection, all of the profit or gain or loss on the sale or transfer would be taken into account in computing, for the purposes of assessment to corporation tax, the trading income of the society's trade, then so much of the amount of the profit or gain or loss on the sale or transfer shall not be so taken into account as does not exceed—

(a) as respects sales or transfers in the period beginning on the 29th day of January, 1992, and ending on the 31st day of December, 1992, an amount equal to 75 per cent. of the profit or gain or loss,

(b) as respects sales or transfers in the year 1993, an amount equal to 50 per cent. of the profit or gain or loss, and

(c) as respects sales or transfers in the year 1994, an amount equal to 25 per cent. of the profit or gain or loss.

(3) (a) Section 29 (as amended by section 27 of the Finance Act, 1991 ), other than paragraph (b) of subsection (2A), of the Finance Act, 1984 , shall apply to the sale or transfer on or after the 29th day of January, 1992, of a security by a society notwithstanding that all or a part of the profit or gain or loss on the sale or transfer of the security is taken into account in computing, for the purposes of assessment to corporation tax, the trading income of the society's trade:

Provided that the amount of interest which, apart from this proviso, is chargeable on the sale or transfer of a security under the said section 29 by virtue of this subsection shall be reduced by—

(i) as respects sales or transfers in the period beginning on the 29th day of January, 1992, and ending on the 31st day of December, 1992, 25 per cent. of the said amount,

(ii) as respects sales or transfers in the year 1993, 50 per cent. of the said amount, and

(iii) as respects sales or transfers in the year 1994, 75 per cent. of the said amount.

(b) This subsection shall not apply to a sale or transfer of a security after the 31st day of December, 1994.

(4) Subsection (9) (as amended by section 34 of the Finance Act, 1986 ) of section 31 of the Corporation Tax Act, 1976 , is hereby repealed and shall be deemed not to have applied or had effect for accounting periods ending on or after the 1st day of April, 1989.

Amendment of Part III (special classes of companies) of Corporation Tax Act, 1976.

44. Part III of the Corporation Tax Act, 1976 , is hereby amended, as respects accounting periods ending on or after the 1st day of January, 1992, for the purposes of paragraphs (a), (b), (c) and (e) and as respects accounting periods ending on or after the 1st day of January, 1993, for the purposes of paragraphs (d) and (f)

(a) by the substitution for paragraph (a) of subsection (1) of section 33 of the following paragraph:

“(a) there shall be deducted from the amount treated as expenses of management for any accounting period—

(i) any repayment or refund receivable in the period of the whole or part of a sum disbursed by the company (for that period or any earlier period) as expenses of management, including commissions (in whatever manner described),

(ii) reinsurance commissions earned by the company in the period, and

(iii) the amount of any fines or fees receivable in the period or profits arising from reversions in the period,

and in calculating profits arising from reversions the company may set off against those profits any losses arising from reversions in any previous accounting period during which any enactment granting this relief was in operation so far as they have not already been so set off, and”,

(b) by the addition after subsection (2) of section 33 of the following subsection:

“(3) The relief under this section available to an overseas life assurance company in respect of its expenses of management shall be limited to expenses attributable to the life assurance business carried on by the company at or through its branch or agency in the State.”,

(c) by the insertion after section 33 of the following section:

Acquisition expenses.

33A.—(1) For the purposes of this section and subject to subsections (2), (3) and (4), the acquisition expenses for any period of an assurance company carrying on life assurance business shall be such of the following expenses of management, including commissions (in whatever manner described), as are for that period attributable to the company's life assurance business (excluding pension business and general annuity business), that is to say:

(a) expenses of management which are disbursed solely for the purpose of the acquisition of business, and

(b) so much of any other expenses of management which are disbursed partly for the purpose of the acquisition of business and partly for other purposes as are properly attributable to the acquisition of business,

reduced by—

(i) any repayment or refund receivable in the period of the whole or part of management expenses falling within paragraph (a) or (b) and disbursed by the company (for that period or any earlier period), and

(ii) reinsurance commission earned by the company in that period which is referable to life assurance business (excluding pension business and general annuity business).

(2) Subsection (1) shall not apply to acquisition expenses in respect of policies of life assurance issued before the 1st day of April, 1992, but without prejudice to the application of that subsection to any commission (in whatever manner described) attributable to a variation on or after that date in a policy of life assurance issued before that date, and, for this purpose, the exercise of any rights conferred by a policy shall be regarded as a variation of it.

(3) In subsection (1) ‘the acquisition of business’ includes the securing on or after the 1st day of April, 1992, of the payment of increased or additional premiums in respect of a policy of assurance which has already been issued before, on or after that date.

(4) For the purposes of subsection (1) and in relation to any period, the expenses of management attributable to a company's life assurance business (excluding pension business and general annuity business) are expenses—

(a) which are disbursed for that period (disregarding any treated as so disbursed by subsection (2) of section 15), and

(b) which, disregarding subsection (5), are deductible as expenses of management of such life assurance business in accordance with section 33.

(5) Notwithstanding anything contained in section 33 and subject to subsection (6), only one-seventh of the acquisition expenses for any accounting period (hereafter in this section referred to as ‘the base period’) shall be treated as deductible under that section for the base period, and in subsections (7) and (8) any reference to the full amount of the acquisition expenses for the base period is a reference to the amount of those expenses which would be deductible for that period apart from this subsection.

(6) Subsection (5) shall have effect in the case of acquisition expenses for an accounting period or part of an accounting period falling wholly within the year ending on—

(a) the 31st day of December, 1992, as if for one-seventh there were substituted five-sevenths, and

(b) the 31st day of December, 1993, as if for one-seventh there were substituted three-sevenths.

(7) Where, by virtue of subsection (5) and, where appropriate, subsection (6), only a fraction of the full amount of the acquisition expenses for the base period is deductible under section 33 for that period, then, subject to subsection (8) a further one-seventh of the full amount shall be so deductible for each succeeding accounting period after the base period until the whole of the full amount has become so deductible, except that, for any accounting period of less than a year, the fraction of one-seventh shall be proportionately reduced.

(8) For any accounting period for which the fraction of the full amount of the acquisition expenses for the base period which would otherwise be deductible in accordance with subsection (7) exceeds the balance of those expenses which has not become deductible for earlier accounting periods, only that balance shall be deductible.”,

(d) by the insertion after section 46 of the following sections:

Deemed disposal and reacquisition of certain assets.

46A.—(1) In this section and section 46B—

average’, in relation to two amounts, means one-half of the aggregate of those two amounts;

closing’, in relation to an accounting period, means the position at the end of the valuation period which coincides with that accounting period or in which that accounting period falls;

collective investment undertaking’ has the meaning assigned to it in section 18 of the Finance Act, 1989 ;

foreign life assurance fund’ has the meaningassigned to it in section 42;

investment reserve’, in relation to an assurance company, means the excess of the value of the assets of the company's life business fund over the liabilities of the life business;

life business fund’ means the fund maintained by an assurance company in respect of its life assurance business or, where the company carries on both ordinary life assurance business and industrial assurance business, both of the funds so maintained;

linked assets’ means assets of an assurance company which are identified in its records as assets by reference to the value of which benefits provided for under a policy or contract are to be determined;

market value’ has the meaning assigned to it in section 49 of the Capital Gains Tax Act, 1975 ;

opening’, in relation to an accounting period, means the position at the beginning of the valuation period which coincides with that accounting period or in which that accounting period falls;

trading company’ means a company—

(a) whose business consists of the carrying on of insurance business, or the carrying on of any other trade which does not consist to any extent of dealing in commodities, currency, securities, debts or other assets of a financial nature, or

(b) whose business consists wholly or mainly of the holding of shares or securities of trading companies which are its 90 per cent. subsidiaries;

units’ has the same meaning as it has in section 18 of the Finance Act, 1989 ;

with-profits liabilities’ means liabilities in respect of policies or contracts under which the policy holders or annuitants are eligible to participate in surplus.

(2) Where, on the day on which the accounting period of an assurance company ends, the assets of its life business fund include—

(a) units in a collective investmentundertaking, or

(b) relevant interests in an offshore fund,

then, subject to the following provisions of this section and to section 46B, the company shall, for the purposes of corporation tax on capital gains, be deemed to have disposed of and immediately reacquired each of those assets at its market value on the said day:

Provided that, as respects a disposal of such assets, being a disposal which is deemed to have been made by virtue of this section and not any other disposal, subsection (1) of section 3 of the Capital Gains Tax (Amendment) Act, 1978 , shall apply as if paragraph (b) had been deleted from subsection (3) of the said section 3.

(3) Subsection (2) shall not apply to assets linked solely to pension business or to assets of the foreign life assurance fund and, in relation to other assets which are not assets linked solely to life assurance business (excluding pension business and general annuity business), shall apply only to the relevant chargeable fraction for an accounting period of each class of asset.

(4) In subsection (3) ‘the relevant chargeable fraction for an accounting period’—

(a) in relation to linked assets, means the fraction of which—

(i) the denominator is the average of such of the opening and closing life business liabilities as are liabilities in respect of benefits to be determined by reference to the value of linked assets, other than assets linked solely to life assurance business (excluding pension business and general annuity business) or pension business and assets of the foreign life assurance fund, and

(ii) the numerator is the average of such of opening and closing liabilities within subparagraph (i) as are liabilities of business the profits of which are not charged to tax under Case I or Case IV of Schedule D,

and

(b) in relation to assets other than linked assets, means the fraction of which—

(i) the denominator is the aggregate of—

(I) the average of the opening and closing life business liabilities, other than liabilities in respect of benefits to be determined by reference to the value of linked assets and liabilities of the foreign life assurance business, and

(II) the average of the opening and closing amounts of the investment reserve,

and

(ii) the numerator is the aggregate of—

(I) the average of the opening and closing liabilities within sub-paragraph (i) as are liabilities of business the profits of which are not charged to tax under Case I or Case IV of Schedule D, and

(II) the average of the appropriate parts of the opening and closing amounts of the investment reserve.

(5) (a) In this subsection ‘liabilities’ does not include the liabilities of the foreign life assurance business.

(b) In subsection (4) ‘appropriate part’ in relation to the investment reserve, means—

(i) where none, or none but an insignificant proportion, of the liabilities of the life business are with-profits liabilities, the part of that reserve which bears to the whole the same proportion as the amount of the liabilities of business, the profits of which are not charged to tax under Case I or Case IV of Schedule D, which are not linked liabilities bears to the whole amount of the liabilities of the life business which are not linked liabilities, and

(ii) in any other case, the part of that reserve which bears to the whole the same proportion as the amount of the with-profits liabilities of business, the profits of which are not charged to tax under Case I or Case IV of Schedule D, bears to the whole amount of the with-profits liabilities of the life business.

(6) For the purposes of this section assets of the foreign life assurance fund and liabilities of the foreign life assurance business shall be left out of account in determining the investment reserve.

(7) For the purposes of this section an interest is a relevant interest in an offshore fund if—

(a) it is a material interest in an off-shore fund for the purposes of Chapter VII of Part I of the Finance Act, 1990 , or

(b) it would be such an interest if the shares and interests excluded by subsections (6) and (8) of section 65 of the Finance Act, 1990 , were limited to shares or interests in trading companies.

Gains or losses arising by virtue of section 46A.

46B.—(1) Subject to subsections (2) and (3), chargeable gains or allowable losses which would otherwise accrue on disposals deemed by virtue of section 46A to have been made in a company's accounting period (other than a period in which the company ceased to carry on life business) shall be treated, subject to paragraphs (b) and (c), as not accruing to it, but instead—

(a) there shall be ascertained the difference (hereafter in this section referred to as ‘the net amount’) between the aggregate of those gains and the aggregate of those losses, and

(b) one-seventh of the net amount shall be treated as a chargeable gain or, where it represents an excess of losses over gains, as an allowable loss accruing to the company in the accounting period, and

(c) a further one-seventh shall be treated as a chargeable gain or, as the case may be, as an allowable loss accruing in each succeeding accounting period until the whole amount has been accounted for.

(2) For any accounting period of less than one year, the fraction of one-seventh referred to in subsection (1) (c) shall be proportionately reduced; and where this subsection has had effect, in relation to any accounting period before the last for which subsection (1) (c) applies, the fraction treated as accruing in that last accounting period shall be reduced so as to secure that no more than the whole of the net amount has been accounted for.

(3) Where a company ceases to carry on life business before the beginning of the last of the accounting periods for which paragraph (c) of subsection (1) would apply in relation to a net amount, the fraction of that amount that is treated as accruing in the accounting period in which the company ceases to carry on life business shall be such as to secure that the whole of the net amount has been accounted for.”,

(e) by the deletion of section 47, and

(f) by the insertion, in subsection (1) of section 50, of “including sections 46A and 46B (inserted by the Finance Act, 1992)”, after “sections 33 to 49”.

Credit for bank levy.

45. —(1) (a) In this section—

accounting profit” means the amount of profit, after taxation and before extraordinary items—

(i) shown in the profit and loss account—

(I) in the case of a company resident in the State, which is required under section 148 of the Companies Act, 1963 , to be laid before the annual general meeting of the company, or which would be so shown but for subsection (4) of section 149 of the said Act of 1963, and

(II) in the case of a company which is not resident in the State and which is carrying on a trade in the State through a branch or agency, of the said branch or agency and which is certified by the auditor appointed under section 160 of the Companies Act, 1963 , or under the law of the state in which the company is incorporated and which corresponds to that section, as presenting a true and fair view of the profit or loss attributable to the said branch or agency,

(ii) reduced by the amount of such profit as is attributable to—

(I) dividends received from companies resident in the State which are members of the group of which that company is a member,

(II) gains on disposal of capital assets,

(III) relevant trading operations within the meaning of section 39B (inserted by the Finance Act, 1987 ) of the Finance Act, 1980 ,

(IV) trading operations carried on outside of the State and in respect of which the company is chargeable to corporation tax in the State and to tax on income in another state, and

(V) dividends received from companies which are not resident in the State,

and

(iii) increased—

(I) as respects income from sources specified in subparagraphs (III), (IV) and (V) of paragraph (ii), by an amount determined by the formula—

100 × T

_______

R

where—

T is the corporation tax chargeable in respect of that income computed in accordance with the provisions of the Corporation Tax Acts and after allowing relief under Chapter VI of Part I of the Finance Act, 1980 , and Part XXII of the Income Tax Act, 1967 , and

R is the rate of corporation tax for the accounting period concerned and to which section 1 of the Corporation Tax Act, 1976 , relates:

Provided that the proviso to subsection (1B) of section 13 (as amended by the Finance Act, 1988 ) of the Corporation Tax Act, 1976 , shall apply for the purposes of this subparagraph as it applies for the purposes of that section, and

(II) by the amount of stamp duty charged under section 200 , section 64 of the Finance Act, 1989 , or section 108 of the Finance Act, 1990 , and under section 94 of the Finance Act, 1986 , as has been taken into account in computing the said amount of profit, after taxation and before extraordinary items;

adjusted group base tax”, in relation to a relevant period, means—

(i) an amount determined by the formula—

T × P

_______

B

where—

T is the group base tax,

P is the group profit of the relevant period, and

B is the group base profit,

or

(ii) if it is greater, the group advance corporation tax of the relevant period;

advance corporation tax”, in relation to a relevant period, means the aggregate of the amounts of advance corporation tax paid or treated as paid by a company, and not repaid, under Chapter VII of Part I of the Finance Act, 1983 , in respect of distributions made in accounting periods falling wholly or partly within the relevant period; and, where an accounting period falls partly within a relevant period, the aggregate shall include a part of the advance corporation tax so paid proportionate to the part of the accounting period falling within the said relevant period;

base profit”, in relation to a company, means one-half of the aggregate of the amounts of accounting profit of a company for accounting periods falling wholly or partly in the period beginning on the 1st day of April, 1989, and ending on the 31st day of March, 1991; and, where an accounting period falls partly within the said period, the aggregate shall include a part of the accounting profit of the accounting period proportionate to the part of the accounting period falling within the said period;

base tax” means one-half of the aggregate of the corporation tax, chargeable on a company, exclusive of the part of the company's profits attributable to chargeable gains and before the set off of advance corporation tax under Chapter VII of Part I of the Finance Act, 1983 , for accounting periods falling wholly or partly in the period beginning on the 1st day of April, 1989, and ending on the 31st day of March, 1991; and, where an accounting period falls partly within the said period, the aggregate shall include a part of the corporation tax so chargeable for the accounting period proportionate to the part of the accounting period falling within the said period;

group advance corporation tax”, in relation to a relevant period, means the aggregate of the amounts of advance corporation tax in relation to the relevant period of companies which, throughout the relevant period, are members of the group;

group base profit” means the aggregate of the amounts of base profit of companies which, throughout the relevant period, are members of the group;

group base tax” means the aggregate of the amounts of base tax of companies which, throughout the relevant period are members of the group:

Provided that where the amount of the group base tax is an amount which is—

(i) greater than 43 per cent., or

(ii) lower than 10 per cent.,

of the group base profit, computed in accordance with this section but without regard to subparagraphs (III), (IV) and (V) of paragraph (ii), or subparagraph (I) of paragraph (iii), of the definition of accounting profit, the group base tax shall be deemed to be an amount equal to 25 per cent. of the said group base profit as so computed;

group profit”, in relation to a relevant period, means the aggregate of the amounts of profit of the relevant period of companies which, throughout the said period, are members of the group;

group tax liability”, in relation to a relevant period, means the aggregate of the amounts of tax liability of the relevant period of companies which, throughout the said period, are members of the group;

levy payment” means the aggregate of the amounts charged in the year 1992 or in any later year under section 200 and which have been paid on or before the date by which the amounts are payable by companies which are members of a group;

profit”, in relation to a relevant period, means the aggregate of the accounting profit, computed on the same basis as that on which the base profit of the company is computed, of a company for accounting periods falling wholly or partly within the relevant period; and, where an accounting period falls partly within a relevant period, the aggregate shall include a part of the accounting profit of the accounting period proportionate to the part of the accounting period falling within the said relevant period;

relevant period”, in relation to a levy payment, means a period beginning on the 1st day of April preceding the date on or before which the levy payment falls to be made and ending on the 31st day of March next after the said date;

tax liability”, in relation to a relevant period, means the aggregate of the corporation tax which, apart from this section, would be chargeable on a company, exclusive of the part of the company's profits attributable to chargeable gains and before the set-off of advance corporation tax under Chapter VII of Part I of the Finance Act, 1983 , for accounting periods falling wholly or partly within the relevant period; and, where an accounting period falls partly within the said period, the aggregate shall include a part of the corporation tax so chargeable for the accounting period proportionate to the part of the accounting period falling within the said period.

(b) For the purposes of this section—

(i) two companies shall be deemed to be members of a group if one is a 75 per cent. subsidiary of the other or both are 75 per cent. subsidiaries of a third company:

Provided that—

(I) in determining whether one company is a 75 per cent. subsidiary of another, the other company shall be treated as not being the owner—

(A) of any share capital which it owns directly in a company if a profit on sale of the shares would be treated as a trading receipt of its trade, or

(B) any share capital which it owns indirectly, and which is owned directly by a company for which a profit on the sale of the shares would be a trading receipt,

and

(II) a company which is an assurance company within the meaning of section 50 of the Corporation Tax Act, 1976 , shall not be a member of a group,

(ii) sections 108 to 114 of the Corporation Tax Act, 1976 , shall apply for the purposes of this paragraph as they apply for the purposes of Part XI of that Act,

(iii) a company and all its 75 per cent. subsidiaries form a group, and where that company is a member of a group as being itself a 75 per cent. subsidiary that group shall comprise all its 75 per cent. subsidiaries and the first-mentioned group shall be deemed not to be a group:

Provided that a company which is not a member of a group shall be treated as if it were a member of a group which consists of that company and accordingly, references to group advance corporation tax, group base profit, group base tax, group profit and group tax liability shall be construed as if they were, respectively, references to advance corporation tax, base profit, base tax, profit and tax liability of that company,

(iv) the part of a company's profits attributable to chargeable gains for an accounting period shall be taken to be the amount brought into the company's profits for that period for the purposes of corporation tax in respect of chargeable gains before any deduction for charges on income, expenses of management or other amounts which can be deducted from or set against or treated as reducing profits of more than one description,

(v) the income or profit attributable to any trading operations or dividends shall be such amount of the said income or profit as appears to the inspector or, on appeal, to the Appeal Commissioners to be just and reasonable, and

(vi) corporation tax chargeable in respect of any income is the corporation tax which would not have been chargeable but for that income.

(2) Where, for a relevant period in relation to a levy payment, the group tax liability exceeds the adjusted group base tax of that relevant period, all or part of the levy payment, not being greater than the excess of the said group tax liability over the said adjusted group base tax, may be set against the group tax liability of the relevant period in accordance with this section.

(3) Where, under subsection (2), an amount of levy payment may be set against the group tax liability of a relevant period, so much of the amount as bears to that amount the same proportion as the tax liability of the relevant period of a company which is a member of the group bears to the group tax liability of the relevant period shall be apportioned to the said company:

Provided that the companies which are members of the group may, by giving notice in writing to the appropriate inspector within a period of 9 months after the end of the relevant period, elect to have the said amount apportioned in such manner as is specified in the notice.

In this subsection “appropriate inspector” has the meaning assigned to it in section 9 of the Finance Act, 1988 .

(4) Where an amount is apportioned to a company under subsection (3), that amount shall be set against the tax liability of the relevant period of the said company and to the extent that an amount is so set off, it shall be treated, for the purposes of the Corporation Tax Acts, as if it were a payment of corporation tax made on the day on which the said corporation tax falls to be paid:

Provided that an amount, or part of an amount, which falls to be treated as if it were a payment of corporation tax may not be repaid to a company by virtue of a claim to relief under the Corporation Tax Acts or for any other reason.

(5) Where, under subsection (4), an amount is to be set against the tax liability of a relevant period of a company and the tax liability of the relevant period consists of the aggregate of corporation tax chargeable for more accounting periods than one, the amount shall be set against the corporation tax of each of those accounting periods in the proportion which the corporation tax of the accounting period or the part of the accounting period, as the case may be, and which is included in the tax liability of the relevant period bears to the tax liability of the said relevant period.

(6) Where—

(a) the end of an accounting period (hereafter in this subsection referred to as “the first-mentioned accounting period”) of a company which is a member of a group does not coincide with the end of the relevant period,

(b) the tax liability of—

(i) one or more accounting periods of the company ending after the end of the first-mentioned accounting period, or

(ii) one or more accounting periods of any other member of the group ending after the end of the first-mentioned accounting period,

falls to be taken into account in determining the amount of the levy payment which may be set off under this section against the corporation tax of—

(I) the first-mentioned accounting period, or one or more accounting periods ending before the end of that period, of the company, or

(II) one or more accounting periods of any other member of the group ending on or before the end of the first-mentioned accounting period,

and

(c) on the specified return date (within the meaning of section 9 of the Finance Act, 1988 ) it is not possible—

(i) for the first-mentioned accounting period, or any other accounting period ending before the end of that period, of the company, or

(ii) for one or more accounting periods of any other member of the group ending on or before the end of the first-mentioned accounting period,

to determine the amount of the levy payment which may be so set off,

then, the amount of levy payment which may be set off under this section against the corporation tax of an accounting period shall be taken to be the amount which would have been so set off if a period, that is to say a period of 12 months ending on the last day of the most recent accounting period of the parent company (being a member of the group which is not a subsidiary of any other member of the group) which ends in the relevant period, were the relevant period:

Provided that where a part only of that period of 12 months falls after the 31st day of March, 1992, the amount to be set off under this subsection shall be reduced to an amount proportionate to the part of the said period of 12 months falling after that day.

(7) (a) A company shall deliver, as soon as they become available, such particulars as are required to determine the amount of levy payment which, apart from subsection (6), falls to be set off against the corporation tax of an accounting period.

(b) Where an amount of levy payment has been set off against corporation tax of an accounting period under subsection (6) and the company delivers such particulars as are required to be delivered in accordance with paragraph (a), the inspector shall adjust any computation or assessment by reference to the difference between these amounts and any amount of corporation tax overpaid shall be repaid and any amount of corportion tax underpaid shall be paid.

(8) (a) An amount of tax to be repaid under subsection (7) shall be repaid with interest in all respects as if it were a repayment of preliminary tax under section 12 (7) of the Finance Act, 1988 .

(b) Interest shall not be charged under section 550 of the Income Tax Act, 1967 , on any amount of tax underpaid under the provisions of this subsection unless the amount is not paid within one month of the date on which the amount of the underpayment is notified to the chargeable person by the inspector and the amount of tax so unpaid shall not be treated as part of the tax payable for the chargeable period for the purposes of section 18 (3) (b) of the Finance Act, 1988 .

Restriction of certain losses and charges on income and consequential amendments.

46. —(1) Part II of the Corporation Tax Act, 1976 , is hereby amended, as respects accounting periods ending on or after the 1st day of April, 1992—

(a) by the insertion after section 10 of the following section:

Restriction of certain charges on income.

10A.—(1) (a) In this section ‘trade’, ‘income from the sale of goods’, ‘charges on income paid for the purpose of the sale of goods’ and ‘the sale of goods and merchandise’ have the same meanings, respectively, as they have in subsection (1) (as amended by section 46 of the Finance Act, 1992) of section 116A (inserted by section 34 of the Finance Act, 1988 ) for the purposes of that section.

(b) For the purposes of this section—

(i) where an accounting period begins before the 1st day of April, 1992, and ends on or after that date, it shall be divided into one part, beginning on the day on which the accounting period begins and ending on the 31st day of March, 1992, and another part, beginning on the 1st day of April, 1992, and ending on the day on which the accounting period ends, and both parts of the accounting period shall be treated as if they were separate accounting periods, and

(ii) where an accounting period begins before the 1st day of January, 2011, and ends on or after that date, it shall be divided into one part beginning on the day on which the accounting period begins and ending on the 31st day of December, 2010, and another part, beginning on the 1st day of January, 2011, and ending on the day the accounting period ends, and both parts shall be treated as if they were separate accounting periods.

(2) Notwithstanding section 10, so much of the total amount of charges on income paid for the purpose of the sale of goods by a company, in an accounting period falling within the period from the 1st day of April, 1992, to the 31st day of December, 2010, in the course of a trade or trades, as the case may be, shall not be allowed as a deduction against the total profits of the company for the period as exceeds the total amount, reduced by any loss relief under subsection (3) of section 16A (inserted by section 46 of the Finance Act, 1992), of the company's income from the sale of goods in the course of the trade or trades, as the case may be, in the period.

(3) (a) Notwithstanding the provisions of subsection (3) of section 41 of the Finance Act, 1980 , in determining the income of a company, referred to in the expression ‘the income from the sale of those goods’, for the purposes of subsection (2) of the said section 41, it shall be the sum determined by subsection (3) of the said section 41 for that period reduced by any charges on income paid for the purpose of the sale of goods which are allowed as a deduction against the total profits of the company for that period and paid on or after the 1st day of April, 1992.

(b) Where for any accounting period of a company—

(i) the corporation tax referable to the income of the company from the sale of goods falls to be reduced under section 41 of the Finance Act, 1980 , and

(ii) charges on income paid, on or after the 1st day of April, 1992, for the purpose of the sale of goods have been allowed as a deduction against total profits,

then, notwithstanding section 46 of the said Act, the charges on income paid for the purpose of the sale of goods shall be deducted from the amount of the relevant deduction in relation to the period for charges on income in subsection (1) of section 46 of the said Act.”,

(b) in subsection (1) of section 16 by the insertion after “subsection (2)” of “or under section 16A (3) (inserted by section 46 of the Finance Act, 1992)”, and

(c) by the insertion after section 16 of the following section:

Restriction of certain losses.

16A.—(1) (a) In this section ‘trade’, ‘income from the sale of goods’, ‘a loss from the sale of goods’, and ‘the sale of goods and merchandise’ have the same meanings, respectively, as they have in subsection (1) (as amended by section 46 of the Finance Act, 1992) of section 116A (inserted by section 34 of the Finance Act, 1988 ).

(b) Paragraph (b) of subsection (1) of section 10A (inserted by section 46 of the Finance Act, 1992) shall have effect for the purposes of this section as it has effect for the purposes of that section.

(2) Notwithstanding subsection (2) of section 16, for the purposes of that subsection the amount of a loss in a trade incurred by a company in an accounting period ending on or after the 1st day of April, 1992, shall be deemed to be reduced by the amount of a loss from the sale of goods, if any, incurred in the trade by the company in the accounting period.

(3) Where in an accounting period ending on or after the 1st day of April, 1992, a company carrying on a trade incurs a loss from the sale of goods, the company may make a claim requiring that the loss be set off for the purposes of corporation tax against its income from the sale of goods—

(a) of that accounting period, and

(b) if it was then carrying on the first-mentioned trade and if the claim so requires, of preceding accounting periods ending within the time specified in subsection (4),

and, subject to any relief for an earlier loss, to the extent that the trading income of any of those accounting periods consists of, or includes, income from the sale of goods, that trading income shall then be reduced by so much of the loss as cannot be relieved against trading income of a later accounting period.

(4) For the purposes of subsection (3), the time referred to in paragraph (b) of that subsection is the time immediately preceding the accounting period first-mentioned in subsection (3) equal in length to that accounting period:

Provided that the amount of the reduction which may be made under subsection (3) in the trading income of an accounting period falling partly before that time shall not exceed such part of the income from the sale of goods included in that trading income as bears to the said income from the sale of goods the same proportion as the part of the accounting period falling within the said time bears to the whole of that accounting period.

(5) (a) In subsection (3) of section 41 of the Finance Act, 1980 , and for the purposes of determining ‘the amount’ in the expression ‘the amount of the company's income for the relevant accounting period from the sale in the course of the trade mentioned in that subsection of goods and merchandise’, it shall be determined in accordance with subsection (4) of the said section 41 as if no relief for a loss in a trade had been claimed under this section.

(b) Notwithstanding the provisions of subsection (3) of the said section 41, for the purposes of determining ‘the income’ in the expression ‘the income from the sale of those goods’ in an accounting period for the purposes of subsection (2) of the said section 41, it shall be the sum determined by subsection (3) of the said section 41 for that period reduced by any relief for a loss in a trade allowed under this section against income of the trade mentioned in subsection (2) of the said section 41 in that period.

(6) This section shall not apply to so much of a company's loss from the sale of goods in the course of a trade in an accounting period as does not exceed the amount of the capital allowances under Part XIII , XV or XVI of the Income Tax Act, 1967 , section 11 of the Finance Act, 1967, section 26 of the Finance Act, 1971 , or section 25 of the Finance Act, 1978 , which fall to be made for the accounting period in taxing the trade:

Provided that for the purposes of this subsection no account shall be taken of capital allowances other than capital allowances in respect of machinery or plant or an industrial building or structure—

(a) which is provided for the purposes of a project approved within the period of two years ending on the 31st day of December, 1988, by the Industrial Development Authority,

(b) the expenditure on the provision of which is incurred on or before the 31st day of March, 1995, and

(c) more than half of the expenditure on the provision of which was incurred, or was the subject of a binding contract entered into, before the 1st day of April, 1992.

(7) This section shall not apply to so much of a company's loss from the sale of goods in the course of a trade in an accounting period as does not exceed the amount of the capital allowances under section 42 (2) of the Finance Act, 1986 , deducted by the company in computing the loss which it has incurred in that period in carrying on trading operations specified in a certificate given to it, and not subsequently revoked, by the Minister for Finance under section 39B (2) of the Finance Act, 1980 .”,

and the said subsection (1) of section 16, as amended by paragraph (b), is set out in the Table to this section.

(2) Section 116A (inserted by section 34 of the Finance Act, 1988 ) of the Corporation Tax Act, 1976 , is hereby amended—

(a) in paragraph (a) of subsection (1) by the insertion, in subparagraph (i) of the definition of “income from the sale of goods”, after “section” of “or loss relief under subsection (3) of section 16A (as inserted by section 46 of the Finance Act, 1992)”,

(b) in subparagraph (ii) of paragraph (b) of subsection (1) by the substitution of “the 1st day of January, 2011,” for “the 1st day of January, 2001,” in both places where it occurs and of “the 31st day of December, 2010,” for “the 31st day of December, 2000,”, and

(c) in subsection (2) by the substitution for paragraph (a) of the following paragraph:

“(a) Notwithstanding subsections (1) and (6) of section 116 and section 117, if, in any accounting period falling within the period from the 1st day of January, 1989, to the 31st day of December, 2010, the surrendering company incurs a loss from the sale of goods or an excess of charges on income paid for the purpose of the sale of goods, that loss or excess may be set off for the purposes of corporation tax against income from a trade of the claimant company for its corresponding accounting period to the extent of that income or, if it is less, to the extent of the income from the sale of goods in the course of the trade reduced by—

(i) any loss relief under subsection (3) of section 16A (inserted by section 46 of the Finance Act, 1992), and

(ii) charges on income paid for the purposes of the sale of goods within the meaning of section 10A (inserted by section 46 of the Finance Act, 1992),

but no other relief shall be given in respect of that loss or excess to a company other than the surrendering company.”,

and the said subparagraph (i) of the definition of “income from the sale of goods” and the said subparagraph (ii) of paragraph (b) of subsection (1), as so amended, are set out in the Table to this section.

TABLE

(1) Where in any accounting period a company carrying on a trade incurs a loss in the trade, the company may make a claim requiring that the loss be set off for purposes of corporation tax against any trading income from the trade in succeeding accounting periods; and (so long as the company continues to carry on the trade) its trading income from the trade in any succeeding accounting period shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot, on that claim or on a claim (if made) under subsection (2) or under section 16A (3) (inserted by section 46 of the Finance Act, 1992), be relieved against income or profits of an earlier accounting period.

(i) no group relief under this section or loss relief under subsection (3) of section 16A (inserted by section 46 of the Finance Act, 1992) were allowed against income from the trade in that period,

(ii) where an accounting period begins before the 1st day of January, 2011, and ends on or after that date it shall be divided into one part beginning on the day on which the accounting period begins and ending on the 31st day of December, 2010, and another part, beginning on the 1st day of January, 2011, and ending on the day the accounting period ends, and both parts shall be treated as if they were separate accounting periods.

Amendment of section 39 (meaning of “goods”) of Finance Act, 1980.

47. Section 39 (as amended by the Finance Act, 1991 ) of the Finance Act, 1980 , is hereby amended, as respects accounting periods ending on or after the 1st day of April, 1992—

(a) by the insertion, after the existing proviso to subsection (1), of the following proviso:

“Provided also that sections 108 to 113 of the Corporation Tax Act, 1976 , shall apply for the purposes of paragraph (b) of the first proviso to this subsection as they apply for the purposes of Part XI of that Act.”,

(b) by the substitution, in subsection (5) (inserted by the Finance Act, 1990 ), of “this section” for “the definition of ‘goods’ in subsection (1)”,

(c) as respects any relevant accounting period (within the meaning of section 38 of the Finance Act, 1980 ) or any part of such accounting period commencing on or after the 1st day of April, 1992, by the insertion, after subsection (1CC7), of the following subsections—

“(1CC8) (a) In this subsection—

agricultural society’ means a society—

(i) in relation to which both the following conditions are satisfied:

(I) the number of the society's members is not less than 50, and

(II) all or a majority of the society's members are persons who are mainly engaged in, and derive the principal part of their income from, husbandry,

or

(ii) to which a certificate under paragraph (b) (i) relates;

fishery society’ means a society—

(i) in relation to which both the following conditions are satisfied:

(I) the number of the society's members is not less than 20, and

(II) all or a majority of the society's members are persons who are mainly engaged in, and derive the principal part of their income from, fishing,

or

(ii) to which a certificate under paragraph (b) (ii) relates;

qualifying goods’ means goods purchased by a society from its members where such goods, in relation to the said members, are or would, but for subsection (3) (as amended by section 32 of the Finance Act, 1991 ) of section 39 of the Finance Act, 1980 , be goods for the purposes of this Chapter;

qualifying society’ means an agricultural society or a fishery society—

(i) which carries on a trade which consists wholly or mainly of the sale by wholesale of qualifying goods, and

(ii) all or a majority of the members of which are agricultural societies or fishery societies;

selling by wholesale’ means selling goods of any class to a person who carries on a business of selling goods of that class or who uses goods of that class for the purposes of a trade or undertaking carried on by him;

society’ means a society registered under the Industrial and Provident Societies Acts, 1893 to 1978.

(b) (i) The Minister for Finance may, on the recommendation of the Minister for Agriculture, give a certificate entitling a society to be treated, for the purposes of this subsection, as an agricultural society notwithstanding that one or both of the conditions in paragraph (a) of the definition of ‘agricultural society’ is or are not complied with in relation to the society.

(ii) The Minister for Finance may, on the recommendation of the Minister for the Marine, give a certificate entitling a society to be treated, for the purposes of this subsection, as a fishery society notwithstanding that one or both of the conditions in paragraph (a) of the definition of ‘fishery society’ is or are not complied with in relation to the society.

(iii) A certificate given under—

(I) paragraph (a) or (b) of subsection (2) of section 70 of the Finance Act, 1963 ,

(II) paragraph (a) or (b) of subsection (2) of section 220 of the Income Tax Act, 1967 , or

(III) paragraph (a) or (b) of subsection (2) of section 18 of the Finance Act, 1978 ,

shall, unless it has been revoked, be deemed to be a certificate under this paragraph.

(iv) A certificate under subparagraph (i) or (ii) of this paragraph—

(I) shall have effect as from such date, whether before or after the date on which it is given, as may be stated therein, and

(II) shall be published in the Iris Oifigiúil, as soon as may be, after it is given.

(v) A certificate under this paragraph may be revoked by the Minister for Finance at any time and notice of any such revocation shall be published, as soon as may be, in the Iris Oifigiúil.

(c) The following provisions shall apply, for the purposes of relief under this Chapter, in relation to a qualifying society:

(i) qualifying goods sold by wholesale in the course of its trade by the qualifying society shall be deemed to have been manufactured by the qualifying society, notwithstanding that the society which manufactured the said goods has claimed, or is entitled to claim, relief under this Chapter in respect of the sale by it of those goods,

(ii) any amount receivable from the sale of qualifying goods by the qualifying society shall be regarded as an amount receivable from the sale of goods, and

(iii) subsection (1D) shall have effect as respects the society in relation to a claim by it for relief from tax by virtue of this subsection as it has effect as respects a company in relation to a claim by it for relief from tax by virtue of subsection (1B) or (1C).

(1CC9) (a) In this subsection—

agricultural society’ and ‘society’ have, respectively, the meanings assigned to them in subsection (1CC8);

milk product’ means butter, whey-butter, cream, cheese, condensed milk, dried or powdered milk, dried or powdered skim-milk, dried or powdered whey, chocolate crumb, casein, butter-oil, lactose, and any other product which is made wholly or mainly from milk or from a by-product of milk and which is approved for the purposes of this section by the Minister for Finance after consultation with the Minister for Agriculture;

qualifying company’ means a company in respect of which the Minister for Agriculture, after consultation with the Minister for Finance, gives a certificate stating that he is satisfied that—

(i) (I) as respects a company which has not commenced to trade, that it intends to so carry on a qualifying trade, or

(II) as respects a company which has carried on a trade for a period which does not exceed a period of 3 years, that it carries on a qualifying trade and intends to so carry on the qualifying trade,

as to be entitled to a certificate under paragraph (ii) immediately after the expiration of a period of 3 years commencing on the date on which it commenced to carry on the said trade, or

(ii) in any other case, the company carries on a trade which, as respects the period commencing 3 years before and ending immediately before the date from which the certificate is to have effect, consisted wholly or mainly of a qualifying trade;

qualifying trade’ means a trade carried on by a company which consists wholly or mainly of the manufacture of milk products and where the trade consists wholly or mainly of the manufacture of milk products by the company and the distribution by it of the said milk products it shall be deemed to consist wholly or mainly of the manufacture of milk products;

relevant product’ means milk purchased by an agricultural society from its members which milk is sold by the agricultural society to a qualifying company.

(b) A certificate given under this subsection shall have effect for a period commencing on such date, whether before or after the date on which it is given, as may be stated therein and ending on a day which is 2 years after that date.

(c) The following provisions shall apply, for the purposes of relief under this Chapter, in relation to the sale by an agricultural society of relevant products:

(i) relevant products shall be deemed to have been manufactured by the agricultural society,

(ii) any amount receivable from the sale of relevant products by the agricultural society shall be regarded as an amount receivable from the sale of goods, and

(iii) subsection (1D) shall have effect as respects the agricultural society in relation to a claim by it for relief from tax by virtue of this subsection as it has effect as respects a company in relation to a claim by it for relief from tax by virtue of subsection (1B) or (1C).”,

and

(d) by the addition of the following subsection after subsection (5):

“(6) For the purposes of this Chapter, where in a relevant accounting period a company renders advertising services in the course of a trade carried on by it and which consists wholly or partly of the production of a newspaper, magazine or other similar product, then—

(a) any amount receivable in payment for the rendering of such services shall not be regarded as an amount receivable from the sale of goods, and

(b) for the purposes of section 41, the company's income from the trade for a relevant accounting period shall be regarded as not derived solely from the sale of goods and merchandise.”.

Termination of relief in respect of certain transactions of agricultural and fishery societies.

48. —(1) (a) In this section—

exempted transactions” has the meaning assigned to it by section 18 of the Finance Act, 1978 ;

society” means a society registered under the Industrial and Provident Societies Acts, 1893 to 1978, which is an agricultural society or a fishery society within the meaning of section 18 of the Finance Act, 1978 .

(b) For the purposes of this section—

(i) where an accounting period of a society begins before and ends after the 1st day of April, 1992, that period shall be divided into one part beginning on the day on which the accounting period begins and ending on the 31st day of March, 1992, and another part beginning on the 1st day of April, 1992, and ending on the day on which the accounting period ends, and both parts of the accounting period shall be treated as if they were separate accounting periods, and

(ii) the amount of trading income attributable to any transactions in an accounting period shall be taken to be the amount which bears to the full amount of the trading income of the period the same proportion as the aggregate of the amounts receivable by the society, by virtue of those transactions, from the sale of goods and the provision of services bears to the aggregate of all amounts received by the society, by virtue of transactions in the period, from the sale of goods and the provision of services.

(2) In the case of a trade carried on by a society—

(a) no transaction on or after the 1st day of April, 1992, shall be regarded as an exempted transaction for the purposes of section 18 of the Finance Act, 1978 , and

(b) sections 16 (1), 182 and 184 of the Corporation Tax Act, 1976 , shall apply to a society for accounting periods ending on or after the 1st day of April, 1992, as if—

(i) section 18 , other than subsection (9), of the Finance Act, 1978 , had not been enacted,

(ii) the society had made all such claims under the said sections 16 (1), 182 and 184 as it was entitled to make, and

(iii) such set-off of, or relief for, losses had been duly made in accordance with those claims:

Provided that—

(I) such part of the trading income of a society as is not income from the sale of goods (within the meaning of section 41 of the Finance Act, 1980 ) shall be reduced by so much of the said part as is attributable to transactions which would, but for this subsection, be exempted transactions as does not exceed—

(A) as respects accounting periods falling wholly or partly in the period commencing on the 1st day of April, 1992, and ending on the 31st day of December, 1992, two-thirds of the trading income so attributable, and

(B) as respects accounting periods falling wholly or partly in the year 1993, one-third of the trading income so attributable,

and

(II) paragraph (I) of this proviso shall not apply for the purposes of Chapter VI of Part I of the Finance Act, 1980 .

(3) For the purposes of subsection (2), where an accounting period falls partly in a year or period, the part of the accounting period falling into the year or period shall be regarded as a separate accounting period.

Recovery of tax credits from companies.

49. —(1) Section 25 of the Corporation Tax Act, 1976 , is hereby amended, as respects any accounting period ending on or after the 1st day of April, 1992, by the insertion, after subsection (5), of the following subsection:

“(5A) Where a company makes a claim under subsection (5) in respect of an accounting period, any income tax payable by virtue of that subsection shall, for the purposes of the charge, assessment, collection and recovery from the company of that tax and of any interest or penalties thereon, be treated and described as corporation tax payable by that company for that accounting period, notwithstanding that for all other purposes of the Tax Acts it is income tax.”.

(2) Section 26 of the Corporation Tax Act, 1976 , is hereby amended, as respects any accounting period ending on or after the 1st day of April, 1992, by the insertion, after subsection (4), of the following subsection:

“(4A) Where a company makes a claim under subsection (4) in respect of an accounting period, any income tax payable by virtue of that subsection shall, for the purposes of the charge, assessment, collection and recovery from the company of that tax and of any interest or penalties thereon, be treated and described as corporation tax payable by that company for that accounting period, notwithstanding that for all other purposes of the Tax Acts it is income tax.”.

Group payments.

50. —(1) Section 105 of the Corporation Tax Act, 1976 , is hereby amended—

(a) by the substitution of the following subsections for subsections (1) and (2):

“(1) Where a company receives from another company (both being companies resident in the State) any payments to which this section applies, and either—

(a) the company making the payment is—

(i) a 51 per cent. subsidiary of the other or of a company so resident of which the other is a 51 per cent. subsidiary, or

(ii) a trading or holding company owned by a consortium the members of which include the company receiving the payments, or

(b) the company receiving the payment is a 51 per cent. subsidiary of the company making the payment,

then, subject to the following provisions of this section, those payments shall be made without deduction of income tax and neither section 434 (which relates to payments not payable out of taxed profits) of the Income Tax Act, 1967 , nor section 31 (which relates to interest payments by companies) of the Finance Act, 1974 , shall apply thereto.

(2) The payments to which this section applies are any payments which, for the purposes of corporation tax, are charges on income of the company making them or would be so if they were not deductible in computing profits or any description of profits or if section 10 (6) (which relates to restriction of allowance of charges on income) did not apply to them:

Provided that this section shall not apply to payments received by a company on any investments, if a profit on the sale of those investments would be treated as a trading receipt of that company.”,

and

(b) by the deletion in subsection (3) of “an election under”.

(2) Section 106 of the Corporation Tax Act, 1976 , is hereby repealed.

(3) This section shall apply and have effect as on and from the date of the passing of this Act.

Amendment of section 44 (group dividends) of Finance Act, 1983.

51. —(1) Section 44 of the Finance Act, 1983 , is hereby amended—

(a) in subsection (1)—

(i) by the deletion of “, the company receiving the dividends and the company paying them may jointly elect that this subsection shall apply to the dividends received from the latter by the former, and so long as the election is in force”, and

(ii) by the insertion of the following proviso to that subsection:

“Provided that the company paying the dividends may elect, by notice in writing to the inspector, that the provisions of this section shall not apply or have effect in relation to any amount of dividends specified in the notice.”,

(b) in subsection (3), by the deletion of “an election under”, and

(c) by the substitution of the following subsection for subsection (7):

“(7) An election under the proviso to subsection (1) shall not be valid unless—

(a) it is made before the due date for the payment, by the company paying the dividends, of advance corporation tax for the accounting period in which the dividends are paid, and

(b) the advance corporation tax in respect of those dividends has been paid.”.

(2) This section shall apply and have effect as on and from the date of the passing of this Act.

Amendment of section 39A (relief in relation to income from certain trading operations carried on in Shannon Airport) of Finance Act, 1980.

52. Section 39A (as amended by section 33 of the Finance Act, 1991 ) of the Finance Act, 1980 , is hereby amended—

(a) in subsection (2), by the substitution of “subsection (4), (4A) or (4B)” for “subsection (4) or (4A)”, and

(b) by the insertion after subsection (4A) (inserted by the Finance Act, 1986 ) of the following subsection:

“(4B) Where the Minister and a company, in relation to which a certificate under subsection (2) has been given, agree to the revocation of that certificate and its replacement with another certificate to be given to the company under subsection (2), the Minister may, by notice in writing served by registered post on the company, revoke the first-mentioned certificate with effect from such date as may be specified in the notice:

Provided that the provisions of this subsection shall not affect the operation of subsection (4) or (4A).”,

and the said subsection (2), as so amended, is set out in the Table to this section.

TABLE

(2) Subject to subsections (5) and (6), the Minister may give a certificate certifying that such trading operations of a qualified company as are specified in the certificate are, with effect from a date to be specified in the certificate, relevant trading operations for the purpose of this section, and any certificate so given shall, unless it is revoked under subsection (4), (4A) or (4B), remain in force until the 31st day of December, 2005.

Amendment of section 39B (relief in relation to income from certain trading operations carried on in Custom House Docks Area) of Finance Act, 1980.

53. Section 39B (as amended by section 34 of the Finance Act, 1991 ) of the Finance Act, 1980 , is hereby amended—

(a) in subsection (2), by the substitution of “subsection (4), (5) or (5A)” for “subsection (4) or (5)”, and

(b) by the insertion after subsection (5) of the following subsection:

“(5A) Where the Minister and a company, in relation to which a certificate under subsection (2) has been given, agree to the revocation of that certificate and its replacement with another certificate to be given to the company under subsection (2), the Minister may, by notice in writing served by registered post on the company, revoke the first-mentioned certificate with effect from such date as may be specified in the notice:

Provided that the provisions of this subsection shall not affect the operation of subsection (4) or (5).”,

and the said subsection (2), as so amended, is set out in the Table to this section.

TABLE

(2) Subject to subsections (6) and (7), the Minister may give a certificate certifying that such trading operations of a company as are specified in the certificate are, with effect from a date to be specified in the certificate, relevant trading operations for the purposes of this section, and any certificate so given shall, unless it is revoked under subsection (4), (5) or (5A), remain in force until the 31st day of December, 2005.

Amendment of section 41 (basis of relief from corporation tax) of Finance Act, 1980.

54. Section 41 (as amended by section 52 of the Finance Act, 1990 ) of the Finance Act, 1980 , is hereby amended by the substitution of the following subsection for subsection (1):

“(1) For the purposes of this section ‘relevant corporation tax’ means the corporation tax which, apart from—

(a) this section,

(b) sections 25 and 26 (as amended by section 49 of the Finance Act, 1992), and sections 58 , 101 , 152 , 162 , 182 and 184 , of the Corporation Tax Act, 1976 , and

(c) section 51 of the Finance Act, 1990 ,

would be chargeable for the relevant accounting period exclusive of the corporation tax chargeable on the part of the company's profits attributable to chargeable gains for that period; and that part shall be taken to be the amount brought into the company's profits for that period for the purposes of corporation tax in respect of chargeable gains before any deduction for charges on income, expenses of management or other amounts which can be deducted from or set against or treated as reducing profits of more than one description.”.

Late submission of returns: restriction of certain claims to relief.

55. —(1) Notwithstanding any other provision of the Tax Acts, where, in relation to a chargeable period, a company fails to deliver a return of income for the chargeable period on or before the specified return date for the chargeable period the following provisions shall apply and have effect, that is to say:

(a) any claim in respect of the chargeable period under section 14 (6), 16 (2) or 19 (2) of the Corporation Tax Act, 1976 , shall be restricted so that the amount by which the company's profits of that or any other chargeable period fall to be reduced by virtue of the claim is 50 per cent. of the amount it would have been if this section had not been enacted,

(b) the total amount of group relief which the company may claim in respect of the chargeable period shall not exceed 50 per cent. of the company's profits of the chargeable period as reduced by any other relief from tax other than group relief,

(c) the total amount of the loss referred to in subsection (1) of section 116 of the Corporation Tax Act, 1976 , for the chargeable period and the total amount of the excess referred to in subsection (2), (3) or (6) of the said section 116 for that period shall each be treated for the purposes of Part XI of the said Act as reduced by 50 per cent.,

(d) any claim in respect of the chargeable period under section 39 (2) of the Finance Act, 1983 , shall be restricted so that the amount of advance corporation tax which is treated as if it were advance corporation tax paid in respect of distributions made by the company in any preceding chargeable period is 50 per cent. of the amount which would have been so treated if this section had not been enacted, and

(e) the company may not surrender under section 45 (1) of the Finance Act, 1983 , more than 50 per cent. of the excess of the total amount of advance corporation tax it has paid (and which has not been repaid) in respect of a dividend or dividends paid by it in the chargeable period over the amount of such advance corporation tax which, under section 39 (1) of the said Act, is set against its liability to corporation tax for the chargeable period.

(2) (a) In this section—

chargeable period” means an accounting period of a company;

group relief” has the meaning assigned to it by section 107 of the Corporation Tax Act, 1976 ;

return of income” means a return which a company is required to deliver under the provisions of section 10 of the Finance Act, 1988 ;

specified return date for the chargeable period” has the meaning assigned to it by section 9 of the Finance Act, 1988 .

(b) Subparagraphs (i) and (ii), and subparagraph (iii) (as amended by section 25 of the Finance Act, 1990 ), of paragraph (b) of subsection (1) of section 48 of the Finance Act, 1986 , shall apply for the purposes of this section as they apply for the purposes of that section.

(3) This section shall apply and have effect as respects chargeable periods ending on or after the 1st day of April, 1992.

Relief for gifts to The Enterprise Trust Ltd.

56. —(1) In this section “the company” means the company incorporated on the 30th day of October, 1991, as The Enterprise Trust Limited.

(2) This section applies to a gift of money which—

(a) on or after the 1st day of April, 1992, and before the 31st day of March, 1994, is made to the company and accepted by it,

(b) is to be applied by the company solely for the objects set out in its memorandum of association,

(c) would not, apart from subsection (3), be deductible in computing for the purposes of corporation tax the profits or gains of a trade or profession, and

(d) is not income to which the provisions of section 439 of the Income Tax Act, 1967 , apply.

(3) Subject to subsection (2), where a company makes a gift to which this section applies and claims relief from tax by reference thereto, the net amount thereof shall, for the purposes of corporation tax, be treated as—

(a) a deductible trading expense of a trade carried on by the company, or

(b) an expense of management deductible in computing the total profits of the company, incurred by it in the accounting period in which the gift is made:

Provided that in determining the net amount of the gift, the amount or value of any consideration received by the said company as a result of making the gift, whether received directly or indirectly from the company or any other person, shall be deducted from the amount of the gift.

(4) A claim under this section shall be made with the return required to be delivered under section 10 of the Finance Act, 1988 , for the accounting period in which the payment is made.

Amendment of section 39 (exemption of certain income of Nítrigin Éireann Teoranta) of Finance Act, 1988.

57. Section 39 of the Finance Act, 1988 , is hereby amended by the substitution in paragraph (a) of “31st day of December, 1999,” for “31st day of December, 1992,”.

Amendment of section 35 (relief for investment in films) of Finance Act, 1987.

58. Section 35 of the Finance Act, 1987 (as amended by section 28 of the Finance Act, 1989 ), is hereby amended in subsection (1), by the substitution, in the definition of “qualifying period”, of “the 31st day of March, 1995” for “the fifth anniversary of that date”.