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22 1997

FINANCE ACT, 1997

PART I

Income Tax, Corporation Tax and Capital Gains Tax

Chapter I

Income Tax

Amendment of provisions relating to exemption from income tax.

1. —As respects the year of assessment 1997-98 and subsequent years of assessment, the Finance Act, 1980 , is hereby amended—

(a) in section 1, by the substitution, in subsection (2) (inserted by the Finance Act, 1989 ), of “£8,000” and “£4,000”, respectively, for “£7,800” and “£3,900” (inserted by the Finance Act, 1996), and

(b) in section 2, by the substitution, in subsection (6) (inserted by the Finance Act, 1989 )—

(i) of “£9,200” and “£10,400”, respectively, for “£9,000” and “£10,200” (inserted by the Finance Act, 1996), in paragraph (a), and

(ii) of “£4,600” and “£5,200”, respectively, for “£4,500” and “£5,100” (inserted by the Finance Act, 1996), in paragraph (b),

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

TABLE

(2) In this section “the specified amount” means, subject to subsection (3)—

(a) in a case where the individual would, apart from this section, be entitled to a deduction specified in section 138 (a) of the Income Tax Act, 1967 , £8,000, and

(b) in any other case, £4,000.

(6) In this section “the specified amount” means, subject to subsection (3) of section 1—

(a) in a case where the individual would, apart from this section, be entitled to a deduction specified in section 138 (a) of the Income Tax Act, 1967 , £9,200:

Provided that, if at any time during the year of assessment either the individual or his spouse was of the age of seventy-five years or upwards, “the specified amount” means £10,400, and

(b) in any other case, £4,600:

Provided that, if at any time during the year of assessment the individual was of the age of seventy-five years or upwards, “the specified amount” means £5,200.

Alteration of rates of income tax.

2. Section 2 of the Finance Act, 1991 , is hereby amended, as respects the year of assessment 1997-98 and subsequent years of assessment, by the substitution of the following Table for the Table to that section:

TABLE

PART I

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first £9,900

26 per cent.

the standard rate

The remainder

48 per cent.

the higher rate

PART II

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first £19,800

26 per cent.

the standard rate

The remainder

48 per cent.

the higher rate

Personal reliefs.

3. —(1) Where a deduction falls to be made from the total income of an individual for the year of assessment 1997-98 or any subsequent year of assessment in respect of relief to which the individual is entitled under a provision mentioned in column (1) of the Table to this subsection and the amount of the deduction would, but for this section, be an amount specified in column (2) of the said Table, the amount of the deduction shall, in lieu of being the amount specified in the said column (2), be the amount specified in column (3) of the said Table opposite the mention of the amount in the said column (2).

TABLE

Statutory provision

Amount to be deducted from total income for the year 1996-97

Amount to be deducted from total income for the year 1997-98 and subsequent years

(1)

(2)

(3)

£

£

Income Tax Act, 1967 :

section 138

(married person)

5,300

5,800

(widowed person bereaved in the year of assessment)

5,300

5,800

(widowed person)

3,150

3,400

(single person)

2,650

2,900

section 138 A

(additional allowance for widowed persons and others in respect of children)

(widowed person)

2,150

2,400

(other person)

2,650

2,900

Finance Act, 1974 :

section 8

(age allowance)

(single or widowed person)

200

400

(married person)

400

800

(2) Section 3 of the Finance Act, 1986 , and section 3 of the Finance Act, 1996, shall have effect subject to the provisions of this section.

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

Amendment of provisions relating to the taxation of certain social welfare benefits.

4. —(1) Section 15 of the Finance Act, 1992 , is hereby amended, in subsection (2) (inserted by the Finance Act, 1995), by the insertion of the following additional proviso:

“Provided also that the aggregate of the amounts of disability benefit, or of injury benefit, or of both disability benefit and injury benefit, payable to a person in respect of—

(a) for the year of assessment 1997-98, the first 18 days, and

(b) for the year of assessment 1998-99 and subsequent years of assessment, the first 36 days,

incapacity for work for which the person is entitled to payment of either disability benefit or injury benefit shall be disregarded for all the purposes of the Income Tax Acts.”.

(2) (a) Notwithstanding the provisions of section 15 (as amended by subsection (1) of the Finance Act, 1992 , and the Finance Act, 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order, 1994 (S.I. No. 19 of 1994), the said section 15 shall not apply, as respects the year of assessment 1997-98, in relation to unemployment benefit paid or payable to a person employed in short-time employment.

(b) In this subsection, “short-time employment” has the same meaning as it has for the purposes of the Social Welfare Acts but also includes such an employment as is referred to in section 79 (2) (b) of the Social Welfare (Consolidation) Act, 1993 .

Amendment of section 4 (separated spouses: adaptation of special provisions as to married persons) of Finance Act, 1983 .

5. —As respects the year of assessment 1997-98 and subsequent years of assessment—

(a) section 4 of the Finance Act, 1983 , is hereby amended by the insertion of the following subsection after subsection (2):

“(3) Notwithstanding the provisions of subsection (1), where a payment to which section 3 applies is made in a year of assessment by a spouse who is a party to marriage, that has been dissolved, for the benefit of the other spouse and—

(a) the dissolution was under either—

(i) section 5 of the Family Law (Divorce) Act, 1996, or

(ii) the law of a country or jurisdiction other than the State, being a divorce that is entitled to be recognised as valid in the State,

(b) both spouses are resident in the State for tax purposes for that year of assessment, and

(c) neither spouse has entered into another marriage,

then, the other provisions of this section shall, with any necessary modifications, have effect in relation to the spouses for that year of assessment as if their marriage had not been dissolved.”,

and

(b) section 49 of the Family Law Act, 1995, and section 32 of the Family Law (Divorce) Act, 1996, are hereby repealed.

Amendment of section 127 (regulations) of Income Tax Act, 1967 .

6. —(1) Section 127 of the Income Tax Act, 1967 , is hereby amended by the insertion of the following after subsection (5):

“(5A) (a) Notwithstanding the provisions of subsection (5), regulations made in accordance with the provisions of paragraphs (f) and (g) of subsection (1) shall not apply to an employer (being an individual) who pays emoluments to an employee engaged by that employer in a domestic employment where—

(i) the emoluments from that employment are less than £30 per week, and

(ii) the employer has only one such employee.

(b) In this subsection—

domestic employee’ means an employee who is employed solely on domestic duties (including the minding of children) in the employer's private dwelling house;

domestic employment’ means employment by reference to which an employee is a domestic employee.”.

(2) This section shall apply and have effect as on and from the 6th day of June, 1997.

Amendment of section 15 (relief for fees paid for part-time third level education) of Finance Act, 1996.

7. —Section 15 of the Finance Act, 1996, is hereby amended—

(a) in subsection (1)—

(i) by the substitution of the following for the definition of “approved college”:

“‘approved college’, in relation to a year of assessment, means a college or institution in the State, or a college or institution in another Member State of the European Union providing distance education in the State, which—

(a) provides courses to which a scheme approved by the Minister under the Local Authority (Higher Education) Grants Acts, 1968 to 1992, applies, or

(b) operates in accordance with a code of standards, which from time to time, may with the consent of the Minister for Finance, be laid down by the Minister,

and which the Minister approves of for the purposes of this section;”,

(ii) by the substitution of the following for the definition of “qualifying individual”:

“‘qualifying individual’ means—

(a) an individual other than an individual who has been conferred with a certificate, diploma or degree in respect of the completion by him or her of an undergraduate course of study of not less than 2 academic years duration, or

(b) an individual who has been conferred with a certificate or diploma as referred to in paragraph (a) and who is pursuing an approved course in respect of which the approved college certifies that the certificate or diploma, as the case may be, with which he or she has been conferred, has qualified him or her for exemption for one or more years of study from the normal duration of the approved course but is not otherwise an individual who is not a qualifying individual for the purposes of paragraph (a).”,

and

(b) by the insertion of the following subsection after subsection (2):

“(2A) Notwithstanding the provisions of subsection (2), where, for any year of assessment—

(a) the spouse of a qualifying individual is assessed to tax in accordance with the provisions of section 194 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , and

(b) qualifying fees are paid by the qualifying individual, or paid by that spouse on behalf of the qualifying individual, in respect of an approved course for the academic year in relation to that course commencing in that year of assessment,

then, relief under this section shall, except where the provisions of section 197 (as so inserted) of the Income Tax Act, 1967 , apply, be granted to the spouse of the qualifying individual in respect of the qualifying fees so paid as if he or she were a qualifying individual and the qualifying fees had been paid by him or her on his or her own behalf.”.

Relief for fees paid for training courses.

8. —(1) In this section—

An Foras” means An Foras Áiseanna Saothair;

approved course provider” means a person providing approved courses who—

(a) operates in accordance with a code of standards which from time to time may, with the consent of the Minister for Finance, be agreed between An Foras and the Minister, and

(b) is approved of by An Foras for the purposes of this section;

approved course” means a course of study or training, other than a post graduate course, provided by an approved course provider which—

(a) is confined to—

(i) such aspects of information technology, or

(ii) such foreign languages,

as are approved of by the Minister, with the consent of the Minister for Finance, for the purposes of this section,

(b) is of less than two years duration,

(c) results in the awarding of a certificate of competence, and

(d) having regard to a code of standards which, from time to time, may, with the consent of the Minister for Finance, be agreed between An Foras and the Minister in relation to—

(i) the quality and standard of training to be provided on the approved course, and

(ii) the methods and facilities to be used by the course provider in delivering the course and in assessing competence,

is approved of by An Foras for the purposes of this section;

certificate of competence”, in relation to an approved course, means a certificate awarded in accordance with the standards set out in the code of standards referred to in paragraph (d) of the definition of “approved course” and certifying that a minimum level of competence has been achieved by the individual to whom the certificate is awarded;

foreign language” means a language other than an official language of the State;

the Minister” means the Minister for Enterprise and Employment;

qualifying fees”, in relation to an approved course, means the amount of fees chargeable in respect of tuition to be provided in relation to such course where the net amount of such fees are not less than £250 and to the extent that they do not exceed £1,000.

(2) (a) Subject to the provisions of this section, where an individual makes a claim in that behalf and proves that—

(i) he or she has on his or her own behalf made a payment in respect of qualifying fees in respect of an approved course, and

(ii) has been awarded a certificate of competence in respect of that course,

the income tax to be charged on the individual, other than in accordance with section 5(3) of the Finance Act, 1974 , for the year of assessment in which that certificate of competence is awarded, shall be reduced by an amount which is the lesser of—

(I) the amount equal to the appropriate percentage of the aggregate of all such payments proved to be so made, and

(II) the amount which reduces that income tax to nil.

(b) In this subsection “appropriate percentage”, in relation to a year of assessment, means a percentage equal to the standard rate of tax for that year.

(3) Where, for a year of assessment in which an individual is awarded a certificate of competence—

(a) the spouse of the individual is assessed to tax in accordance with the provisions of section 194 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , and

(b) qualifying fees are paid by the individual, or paid by that spouse on behalf of the individual, in respect of the approved course,

then, relief under this section shall, except where the provisions of section 197 (as so inserted) of the Income Tax Act, 1967 , apply, be granted to the spouse of the individual in respect of the qualifying fees so paid as if the qualifying fees had been paid by him or her on his or her own behalf.

(4) Relief under this section shall not be given in respect of an individual for a year of assessment in respect of more than one approved course.

(5) For the purposes of this section a payment in respect of qualifying fees shall be regarded as not having been made in so far as any sum, in respect of or by reference to such fees, has been or is to be received either directly or indirectly by an individual from any source whatsoever by way of grant, scholarship or otherwise.

(6) An Foras, where it is satisfied that an approved course provider, or an approved course provided by an approved course provider, no longer meets the appropriate code of standards laid down, may by notice in writing given to the approved course provider withdraw the approval of that course provider or approved course, as the case may be, from such date as it considers appropriate and this section shall cease to apply to that course provider or that course, as the case may be, with effect from that date.

(7) (a) As soon as may be practicable after it has—

(i) approved a course provider or a course for the purposes of this section, or

(ii) withdrawn such approval,

An Foras shall notify the Revenue Commissioners in writing of such approval or withdrawal of approval.

(b) If any question arises as to whether—

(i) a course provider is an approved course provider, or

(ii) a training course is an approved course,

for the purposes of this section, the Revenue Commissioners may consult with An Foras.

(8) Part II of the Table to section 137 (inserted by the Finance Act, 1996) of the Income Tax Act, 1967 , is hereby amended by the addition of “ Section 8 of the Finance Act, 1997”.

(9) Section 198 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , is hereby amended, in subsection (1)(a), by the insertion of the following additional subparagraph:

“(xix) so far as it flows from relief under section 8 of the Finance Act,1997, in the proportions in which they incurred the expenditure giving rise to the relief,”.

(10) Any relief under this section shall be in substitution for and not in addition to any relief to which the individual might be entitled to in respect of the same payment under any other provision of the Income Tax Acts.

(11) This section shall come into operation on such date as may be fixed by order of the Minister for Finance.

Amendment of Chapter III (Income Tax: Relief for Investment in Corporate Trades) of Part I of Finance Act, 1984 .

9. —Chapter III of Part I of the Finance Act, 1984 , is hereby amended—

(a) in subsection (1) of section 11, by the substitution, as on and from the 6th day of April, 1997, of the following definition for the definition of “unquoted company”:

“‘unquoted company’ means a company none of whose shares, stocks or debentures—

(i) are listed in the official list of a stock exchange, or

(ii) are quoted on an unlisted securities market of a stock exchange other than on the market known as the Developing Companies Market of the Irish Stock Exchange.”,

(b) in section 14A (inserted by the Finance Act, 1995), by the substitution, as respects a subscription for eligible shares made on or after the 2nd day of June, 1995, of the following subsection for subsection (3):

“(3) The individual shall, throughout the relevant period, possess at least 15 per cent. of the issued ordinary share capital of the company in which that individual makes a relevant investment.”,

(c) in section 16, by the substitution, as respects a relevant investment made on or after the passing of this Act, of the following subparagraph for subparagraph (iic) of paragraph (a) of subsection (2):

“(iic) the rendering of such services as are referred to in subparagraph (ii) in respect of which an industrial development agency or a County Enterprise Board (being a board referred to in the Schedule to the Industrial Development Act, 1995) has provided financial support of not less than £2,000 towards the undertaking of a feasibility study by a person approved of by the agency or the County Enterprise Board into the potential commercial viability of the services to be rendered,”,

and

(d) in section 16A (inserted by the Finance Act, 1995), as respects a relevant investment made on or after the passing of this Act, by the addition of the following after subsection (6):

“(7) (a) For the purposes of this Chapter, a certificate under subsection (2) may, instead of being given by an authority, be given by a County Enterprise Board (being a board referred to in the Schedule to the Industrial Development Act, 1995) to a company carrying on or intending to carry on one or more such qualifying trading operations as are mentioned in—

(i) subparagraph (i) (as amended by the Finance Act, 1993 ),

(ii) subparagraph (ii) (inserted by the Finance Act, 1990 ), and

(iii) subparagraph (iic) (inserted by the Finance Act, 1997),

of paragraph (a) of subsection (2) of section 16 and the provisions of subsections (2) and (6) of this section shall, subject to the modification specified in paragraph (b) and any other necessary modification, apply accordingly.

(b) The modification referred to in paragraph (a) is that, for the purposes of this subsection, the guidelines of the kind mentioned in subsection (2)(b) shall be agreed between the Minister for Finance and the Minister for Arts, Culture and the Gaeltacht or the Minister for Enterprise and Employment, as may be appropriate in the circumstances.”.

Amendment of section 14 (relief to individuals on loans applied in acquiring interest in companies) of Finance Act, 1992 .

10. —As on and from the 6th day of April, 1997, section 14 of the Finance Act, 1992 , is hereby amended by the substitution of the following definition for the definition of “quoted company”:

“‘quoted company’ means a company whose shares, or any class of whose shares—

(a) are listed in the official list of the Irish Stock Exchange or any other stock exchange, or

(b) are quoted on an unlisted securities market of any stock exchange;”.

Income from scholarships.

11. —(1) Section 353 of the Income Tax Act, 1967 , is hereby amended by the substitution of the following for subsections (2) and (3):

“(2) Nothing in subsection (1) shall be construed as conferring on any person other than the person holding the scholarship in question any exemption from a charge to tax.

(3) Notwithstanding the provisions of subsection (2), a payment of income arising from a relevant scholarship which is—

(a) provided from a trust fund or under a scheme, and

(b) held by a person receiving full-time instruction at a university, college, school or other educational establishment,

shall be exempt from tax if, in the year of assessment in which the payment is made, not more than 25 per cent. of the total amount of the payments made from that fund, or under that scheme, in respect of scholarships held as mentioned in paragraph (b) is attributable to relevant scholarships.

(4) (a) In this section—

relevant body’ means a body corporate, unincorporated body, partnership, individual or other body;

relevant scholarship’ means a scholarship provision for which is made, either directly or indirectly, by a relevant body or a person connected with that relevant body and where payments are made, either directly or indirectly, in respect of such a scholarship to—

(i) an employee or, where the relevant body is a body corporate, a director of the relevant body, or

(ii) the spouse, family, dependants or servants of such employee or director;

scholarship’ includes an exhibition, bursary or other similar educational endowment.

(b) A person shall be regarded as connected with a relevant body for the purposes of this subsection, if that person is—

(i) a trustee of a settlement, within the meaning of section 131 of the Finance Act, 1996, made by the relevant body, or

(ii) a relevant body,

and that person would be regarded as connected with the relevant body for the purposes of the said section 131.

(5) If any question arises whether any income is income arising from a scholarship held by a person receiving full-time instruction at a university, college, school or other educational establishment, the Revenue Commissioners may consult the Minister for Education.”.

(2) This section shall apply and have effect in relation to a payment made on or after the 26th day of March, 1997, other than a payment made before the 6th day of April, 1998, in respect of a scholarship awarded before the said 26th day of March, 1997.

(3) For the purpose of ascertaining, in accordance with the provisions of subsection (3) (as inserted by this section) of section 353 of the Income Tax Act, 1967 , the percentage of the total amount of the payments made in the year of assessment 1996-97 in respect of scholarships from any fund or under any scheme which, apart from the said subsection (3), would be chargeable to tax, this section shall be deemed to have applied and had effect in relation to all such payments made in that year.

(4) Section 178 of the Income Tax Act, 1967 , is hereby amended, in subsection (1), by the insertion of the following after paragraph (aaa) (inserted by the Finance Act, 1982 ):

“(aaaa) particulars of any relevant scholarships (within the meaning of section 353 (as amended by the Finance Act, 1997) of the Income Tax Act, 1967 ) in relation to those persons;”.

Amendment of section 115 (exemptions and reliefs in respect of tax under section 114) of Income Tax Act, 1967 .

12. Section 115 of the Income Tax Act, 1967 , is hereby amended in subsection (1A) (inserted by the Finance Act, 1993 )—

(a) by the insertion in paragraph (a) of the following after subparagraph (iii):

“(iv) a benefit paid in pursuance of any statutory scheme (within the meaning of Chapter II of Part I of the Finance Act, 1972 ), other than a payment representing normal retirement benefits, which is made in consideration or in consequence of, or otherwise in connection with, the termination of the holding of an office or employment in circumstances—

(I) of redundancy or abolition of office, or

(II) for the purposes of facilitating improvements in the organisation of the employing company, organisation, Department or other body by which greater efficiency or economy can be effected,

and for the purposes of this subparagraph, ‘normal retirement benefits’ means recognised superannuation benefits customarily payable to an individual on retirement at normal retirement date under the relevant statutory scheme, notwithstanding that, in relation to the termination of an office or employment in the circumstances described in this subparagraph, such benefits may be paid earlier than the designated retirement date or may be calculated by reference to a period greater than the individual's actual period of service in the office or employment, and includes benefits described as short service gratuities which are calculated on a basis approved by the Minister for Finance.”,

and

(b) by the insertion, in paragraph (b), of the following after subparagraph (ii):

“(iii) Subparagraph (iv) of paragraph (a) shall apply and have effect in relation to any statutory scheme established or amended after the passing of the Finance Act, 1997.”.

Tax deductions from payments made to subcontractors.

13. —(1) Section 17 of the Finance Act, 1970 , is hereby amended—

(a) by the substitution in subsection (1), with effect from the 6th day of October, 1997, of the following for paragraph (a) of the definition of “forestry operations” (inserted by the Finance Act, 1992 ):

“(a) the planting, thinning, lopping or felling of trees in woods, forests or other plantations;

(aa) the maintenance of woods, forests and plantations and the preparation of land, including woods or forests which have been harvested, for planting;”,

(b) by the substitution of the following for clause (C) of subsection (4)(C)(ii):

“(C) in respect of—

(I) employment contributions and self-employment contributions under the Social Welfare Acts,

(II) health contributions under the Health Contributions Act, 1979 , and

(III) Employment and Training Levy under the Youth Employment Agency Act, 1981 , as amended by the Labour Services Act, 1987 .”,

and

(c) by the insertion, as respects offences committed or penalties incurred on or after the passing of this Act, of the following after subsection (10):

“(10A) Notwithstanding the provisions of any other enactment, summary proceedings in respect of offences under this section may be instituted within 10 years of the commission of the offence.

(10B) The provisions of sections 128(4), 500(4), 501(3), 502(3), 506 and 507 of the Income Tax Act, 1967 , shall, with any necessary modifications, apply for the purposes of this section and any regulations made thereunder as they apply for the purposes of those provisions.”.

(2) Schedule 15 to the Income Tax Act, 1967 , is hereby amended, as respects acts or omissions occurring on or after the passing of this Act, by—

(a) the deletion in column 2 of “Regulations under section 17 of the Finance Act, 1970 ”,

(b) the insertion in columns 1 and 3 of “ Finance Act, 1970 , section 17 and Regulations made thereunder”, and

(c) the insertion in column 3 of “ Finance Act, 1970 , section 17A”.

Tax relief for agreed pay restructuring.

14. —(1) (a) In this section—

basic pay”, in relation to a participating employee of a qualifying company, means the employee's emoluments (other than non-pecuniary emoluments) from the company in respect of an employment held with the company;

collective agreement” means an agreement entered into by a company with, or on behalf of, one or more than one body representative of employees of the company where each such body is either the holder of a negotiation licence under the Trade Union Act, 1941 or is an excepted body within the meaning of section 6 of that Act as amended by the Trade Union Act, 1942 ;

control”, in relation to a qualifying company, means the power of a person to secure, by means of the holding of shares or the possession of voting power in or in relation to that qualifying company or any other qualifying company, or by virtue of any power conferred by the articles of association or any other document regulating that or any other qualifying company, that the affairs of the first-mentioned qualifying company are conducted in accordance with the wishes of that person and, in relation to a partnership, means the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership;

emoluments” has the meaning assigned to it by section 138B (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 ;

employment” means an office or employment of profit such that any emoluments thereof fall to be charged to tax under Schedule E;

the Minister” means the Minister for Enterprise and Employment;

participating employee”, in relation to a qualifying company, means a qualifying employee who is a participant in a relevant agreement with the company;

qualifying company” means a company to which the Minister has issued a certificate under subsection (2) which certificate has not been withdrawn under that subsection;

qualifying employee”, in relation to a qualifying company, means an employee of the company in receipt of emoluments from the company;

reduced basic pay”, in relation to a participating employee, means the basic pay of the employee as reduced by the substantial reduction provided for in the relevant agreement concerned;

relevant agreement”, in relation to a qualifying company, means a collective agreement covering all, or substantially all, of the qualifying employees of the company—

(a) which provides, amongst other things, for—

(i) a substantial reduction in the basic pay of the participating employees,

(ii) the payment of the reduced basic pay to the participating employees for the duration of the relevant period, and

(iii) the payment to the participating employees of a lump sum to compensate for that reduction,

and

(b) which is registered with the Labour Relations Commission;

relevant date”, in relation to a relevant agreement, means the date the relevant agreement was registered with the Labour Relations Commission;

relevant period”, in relation to a relevant agreement, means the period of 5 years commencing with the relevant date in relation to that agreement;

specified amount”, in relation to a participating employee, means £6,000 together with £200 for each complete year of service (subject to a maximum of 20 years), up to the relevant date, of the employee in the service of the qualifying company.

(b) For the purposes of this section—

(i) a reduction in the basic pay of a participating employee shall not be regarded as substantial unless it amounts to at least 10 per cent. of the average for one year of the employee's basic pay ascertained by reference to such pay for the two year period ending with the relevant date, and

(ii) employments in respect of which payments to which this section applies are made shall be treated as held with associated qualifying companies if, on the date of any of those payments, one of those companies is under the control of the other or of a third person who controls or is under the control of the other on that or any other such date.

(2) (a) The Minister, on the making of an application in that behalf by a company, may, in accordance with guidelines laid down for the purpose by the Minister with the agreement of the Minister for Finance, give a certificate to a company stating that, for the purposes of this section, it may be treated as a qualifying company.

(b) The Minister may not grant a certificate to a company under this subsection unless the Minister is satisfied, on advice from the Labour Relations Commission, that—

(i) the company is faced with an actual or imminent substantial adverse change to its competitive environment which will determine its survival, and

(ii) to meet that change and achieve its survival, it is necessary for it to enter into a relevant agreement with its qualifying employees, and

(iii) the relevant agreement into which it is proposed to enter is designed for the sole purpose of addressing, and can be reasonably expected to address, that change.

(c) An application under paragraph (a) shall be in such form as the Minister may direct and shall contain such information in relation to the company, its trade or business and the terms of the relevant agreement into which it proposes to enter with its qualifying employees as may be specified in the guidelines referred to in that paragraph.

(d) A certificate issued by the Minister under paragraph (a) shall contain such conditions as the Minister considers appropriate and specifies therein.

(e) Any cost incurred by the Labour Relations Commission in providing advice to the Minister in accordance with paragraph (b) shall be reimbursed by the company concerned to the Commission.

(f) Where, during the relevant period, a qualifying company fails to comply with any of the conditions to which a certificate given to it under paragraph (a) is subject, the Minister may, by notice in writing to the company, revoke the certificate.

(g) The Minister may not give a certificate under paragraph (a) at any time on or after the 6th day of April, 2000.

(3) (a) An agreement shall not be a relevant agreement for the purposes of this section unless and until it has been registered with the Labour Relations Commission.

(b) A qualifying company shall, within the period of one month from the date of each of the first 5 anniversaries of the relevant date or such longer period as the Labour Relations Commission may in writing allow, confirm to the Commission, in such form as the Commission shall direct, that all the terms of the relevant agreement, to the extent that they are still relevant, continue to be in force.

(4) Nothing in this section shall be construed as preventing a participating employee from receiving, during the relevant period, an increase in basic pay—

(a) which is—

(i) provided for under the terms of the agreement known as Partnership 2000 for Inclusion, Employment and Competitiveness entered into by the Government and the Social Partners in December, 1996, or any similar increase under an agreement, whether negotiated on a national basis or otherwise, which succeeds that agreement or which succeeds an agreement which succeeds the first-mentioned agreement, or

(ii) part of an incremental scale under the terms of the employee's contract of employment and which was in place 12 months prior to the relevant date,

and

(b) which is determined by reference to the employee's reduced basic pay or that pay as subsequently increased as aforesaid.

(5) (a) This section applies to a payment made to a participating employee by a qualifying company under a relevant agreement.

(b) A payment to which this section applies shall, to the extent that the payment does not exceed the specified amount, be exempt from any charge to tax.

(c) Where two or more payments to which this section applies are made to or in respect of the same person in respect of the same employment or in respect of different employments held with the same qualifying company or an associated qualifying company, this subsection shall apply as if those payments were a single payment of an amount equal to the aggregate of those payments; and the amount of any payment chargeable to tax shall be ascertained as follows, that is to say—

(i) where the payments are treated as income of different years of assessment, the specified amount shall be deducted from a payment treated as income of an earlier year before any payment treated as income of a later year, and

(ii) subject to subparagraph (i), the specified amount shall be deducted from a payment made earlier in a year of assessment before any payment made later in that year.

(6) If, during the relevant period—

(a) the Minister revokes, in accordance with the provisions of paragraph (f) of subsection (2), a certificate given to a company under paragraph (a) of that subsection, or

(b) a qualifying company fails to meet the requirements of paragraph (b) of subsection (3), or

(c) a participating employee receives an increase in reduced basic pay, other than as provided for in subsection (4),

then, any relief granted under this section, where paragraph (a) or (b) applies, to all the participating employees of the company or, where paragraph (c) applies, to the participating employee concerned, shall be withdrawn by the making of an assessment to tax under Case IV of Schedule D for the year of assessment for which the relief was granted.

(7) Where, during the relevant period, a participating employee receives a payment from a qualifying company, other than a payment to which this section applies, which is chargeable to tax by virtue of section 114 of the Income Tax Act, 1967 , any relief from tax in respect of that payment under the provisions of section 115(3) of, or Schedule 3 to, that Act, shall be reduced by the amount of any relief given under this section in respect of a payment, made in that period, to which this section applies.

(8) The provisions of section 115 of, and Schedule 3 to, the Income Tax Act, 1967 , and section 3 of the Finance Act, 1968 , shall not apply or have effect in relation to a payment to which this section applies.

Amendment of section 4 (charge of tax on sums applied outside the State in repaying certain loans) of Finance Act, 1971 .

15. Section 4 of the Finance Act, 1971 , is hereby amended by the addition after subsection (5) of the following subsection:

“(6) In relation to income applied in or towards satisfaction of a debt for money lent on or after the 20th day of February, 1997, or a debt incurred for satisfying in whole or in part any such debt, this section shall apply and have effect as if the references to ordinarily resident in the State in subsection (1) and subsection (2) were references to resident or ordinarily resident in the State.”.