PART 31

Taxation of Settlors, Etc., in Respect of Settled or Transferred Income

CHAPTER 1

Revocable dispositions for short periods and certain dispositions in favour of children

791. —(1) In this Chapter and in paragraph 27 of Schedule 32 , except where the context otherwise requires, “disposition” includes any trust, covenant, agreement or arrangement.

(2) Any income of which any person (in this subsection referred to as “the first-mentioned person”) is able or has been able, without the consent of any other person by means of the exercise of any power of appointment, power of revocation or otherwise however by virtue or in consequence of a disposition made directly or indirectly by the first-mentioned person, to obtain for the first-mentioned person the beneficial enjoyment shall be deemed for the purposes of the Income Tax Acts to be the income of the person who is or was able to obtain such beneficial enjoyment, and not to be the income of any other person.

(3) Where any power referred to in subsection (2) may be exercised by a person with the consent of the wife or husband of the person, the power shall for the purposes of subsection (2) be deemed to be exercisable without the consent of another person, except where the husband and wife are living apart either by agreement or under an order of a court of competent jurisdiction.

(4) Where any power referred to in subsection (2) is exercisable by the wife or husband of the person who made the disposition, the power shall for the purposes of subsection (2) be deemed to be exercisable by the person who made the disposition.

792. —(1) (a) In this subsection, “relevant individual” means an individual who is—

(i) permanently incapacitated by reason of mental or physical infirmity, or

(ii) aged 65 years or over.

(b) Any income which, by virtue of or in consequence of any disposition made directly or indirectly by any person (other than a disposition made for valuable and sufficient consideration), is payable to or applicable for the benefit of any other person, but excluding any income which—

(i) arises from capital of which the disponer by the disposition has divested absolutely himself or herself in favour of or for the benefit of the other person,

(ii) being payable to any university or college, being a university or college in the State, for the purpose of enabling that university or college to carry on research, is so payable for a period which is or may be 3 years or longer,

(iii) being payable to any body of persons to which section 209 applies, is so payable for a period which is or may be 3 years or longer,

(iv) being payable to a relevant individual for the individual's own use, is so payable for a period which exceeds or may exceed 6 years, or

(v) being applicable for the benefit of a named relevant individual, is so applicable for a period which exceeds or may exceed 6 years,

shall be deemed for the purposes of the Income Tax Acts to be the income of the person, if living, by whom the disposition was made and not to be the income of any other person.

(2) (a) This subsection shall apply to a disposition or dispositions of a kind or kinds referred to in subparagraphs (ii) to (v) of subsection (1)(b) made directly or indirectly by a person being an individual (in this subsection referred to as “the disponer”) except in so far as, by virtue or in consequence of such disposition or dispositions, income is payable or applicable in a year of assessment, in the manner referred to in subparagraph (iv) or (v) of that subsection, to or for the benefit of an individual referred to in subsection (1)(a)(i).

(b) Notwithstanding subsection (1), in relation to the disponer, any income which—

(i) is payable or applicable in a year of assessment by virtue or in consequence of a disposition or dispositions to which this subsection applies, and

(ii) is in excess of 5 per cent of the total income of the disponer for the year of assessment,

shall be deemed for the purposes of the Income Tax Acts to be the income of the disponer, if living, and not to be the income of any other person.

(c) Where paragraph (b) applies in relation to the disponer, for the purpose of determining for income tax purposes the amount of income which remains the income of persons other than the disponer for a year of assessment by virtue or in consequence of a disposition or dispositions to which this subsection applies, the aggregate of the income so remaining shall be apportioned amongst those other persons in proportion to their entitlements under such disposition or dispositions for that year.

(3) (a) In this subsection, “fund” means a fund—

(i) held on irrevocable trusts under the law of the State,

(ii) administered in the State, and

(iii) having for its sole purpose the granting of financial or other aid to universities, colleges or schools in the State in order to assist such universities, colleges or schools to teach any one or more of the natural sciences.

(b) The reference in subsection (1)(b) to any university or college, being a university or college in the State, for the purpose of enabling that university or college to carry on research shall include references to income payable—

(i) to any university, college or school, being a university, college or school in the State, for the purpose of assisting such university, college or school to teach any one or more of the natural sciences, or

(ii) to a fund within the meaning of this subsection.

(4) As respects the year of assessment 1997-98, this section shall apply subject to paragraph 27 of Schedule 32 in respect of a disposition to which that paragraph applies by a person in so far as, by virtue or in consequence of such a disposition, income is payable in that year of assessment to or for the benefit of an individual to whom that paragraph applies.

793. —(1) Where by virtue of section 792 any income tax becomes chargeable on and is paid by the person by whom the disposition was made, that person shall be entitled—

(a) to recover from any trustee or other person to whom the income is payable by virtue or in consequence of the disposition the amount of the tax so paid, and

(b) for that purpose to require the Revenue Commissioners to furnish to that person a certificate specifying the amount of the income in respect of which that person has so paid tax and the amount of the tax so paid, and any certificate so furnished shall be evidence until the contrary is proved of the matters of fact stated in that certificate.

(2) Where any person obtains in respect of any allowance or relief a repayment of income tax in excess of the amount of the repayment to which that person would but for section 792 have been entitled, an amount equal to the excess shall be paid by that person to the trustee or other person to whom the income is payable by virtue or in consequence of the disposition or, where there are 2 or more such persons, shall be apportioned among those persons as the case may require.

(3) Where any question arises as to the amount of any payment or as to any apportionment to be made under subsection (2), that question shall be decided by the Appeal Commissioners whose decision on that question shall be final.

(4) Any income which is deemed by virtue of this Chapter to be the income of any person shall be deemed to be the highest part of that person's income.