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39 1997

TAXES CONSOLIDATION ACT, 1997

PART 36

Miscellaneous Special Provisions

Allowances for expenses of members of Oireachtas.

[ Section 4 of the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992 ]

836. —(1) An allowance payable under section 3 of the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992 , shall be exempt from income tax and shall not be reckoned in computing income for the purposes of the Income Tax Acts.

(2) Sections 114 and 115 shall not apply in relation to expenses in full settlement of which an allowance is payable under section 3 of the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992 , and no claim shall lie under those sections in respect of those expenses; but where a Minister of the Government, the Attorney General or a Minister of State, being—

(a) a member of Dáil Éireann for a constituency outside the county borough and the administrative county of Dublin, or

(b) a member of Seanad Éireann whose main residence is situated outside that county borough and administrative county,

is, arising out of the performance of his or her duties as an office holder or as a member of the Oireachtas, obliged to maintain a second residence in addition to his or her main residence, he or she shall be granted a deduction under section 114 in respect of expenses incurred by him or her in maintaining that second residence.

Members of the clergy and ministers of religion.

[ITA67 s544(1); FA69 s65(1) and Sch5 PtI]

837. —In assessing the income tax chargeable under any Schedule on a member of the clergy or minister of any religious denomination, the following deductions may be made from any profits, fees or emoluments of his or her profession—

(a) any sums of money paid or expenses incurred by him or her wholly, exclusively and necessarily in the performance of his or her duty as a member of the clergy or minister of any religious denomination;

(b) such part of the rent (not exceeding one-eighth), as the inspector by whom the assessment is made may allow, paid by him or her in respect of a dwelling house any part of which is used mainly and substantially for the purposes of his or her duty as a member of the clergy or minister of any religious denomination.

Special portfolio investment accounts.

[FA93 s14 (other than proviso to sub(4)(c) and sub(6)(b)); FA94 s12(2) and s34(b); FA95 s11(2); FA96 s37(1); FA97 s31, s146(1) and Sch9 PtI par17(1)]

838. —(1) (a) In this section—

designated broker” means a person—

(i) which is a dealing member firm of the Irish Stock Exchange or a member firm (which carries on a trade in the State through a branch or agency) of a stock exchange of any other Member State of the European Communities, and

(ii) which has sent to the Revenue Commissioners a notification of its name and address and of its intention to accept specified deposits;

gains” means chargeable gains within the meaning of the Capital Gains Tax Acts, including gains which but for section 607 would be chargeable gains;

market value” shall be construed in accordance with section 548 ;

ordinary shares” means shares forming part of a company's ordinary share capital;

qualifying shares” means ordinary shares in a company which are—

(i) listed in the official list of the Irish Stock Exchange, or

(ii) quoted on the market known as the Developing Companies Market, or the market known as the Exploration Securities Market, of the Irish Stock Exchange,

other than—

(I) shares in an investment company within the meaning of Part XIII of the Companies Act, 1990 ,

(II) shares in an undertaking for collective investment in transferable securities within the meaning of the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 1989 (S.I. No. 78 of 1989), or

(III) shares in a company, being shares the market value of which may be expected to approximate at all times to the market value of the proportion of the assets of the company which they represent;

relevant income or gains” means the aggregate of the income and gains, including losses, arising from relevant investments, but only so much of income arising to or gains accruing to the special portfolio investment account shall be relevant income or gains as is or is to be—

(i) paid to, or

(ii) accumulated or invested for the benefit of,

the individual in whose name the special portfolio investment account is held, or would be so paid, accumulated or invested if any gains accruing to the account in accordance with subsection (4)(e) were gains on an actual disposal of the assets concerned;

relevant investment” means an investment in—

(i) qualifying shares and specified qualifying shares, or

(ii) qualifying shares, specified qualifying shares and securities,

as the case may be, acquired by a designated broker by the expenditure of money contributed by means of a specified deposit, and held by a designated broker in a special portfolio investment account;

securities” means securities—

(i) issued under the authority of the Minister for Finance, or

(ii) issued by the Electricity Supply Board, Radio Telefís Éireann, ICC Bank plc, Bord Telecom Éireann, Irish Telecommunications Investments plc, Córas Iompair Éireann, ACC Bank plc, Bord na Móna, Aerlínte Éireann cuideachta phoiblí theoranta, Aer Lingus plc or Aer Rianta cuideachta phoiblí theoranta,

which are listed in the official list of the Irish Stock Exchange;

special portfolio investment account” means an account opened on or after the 1st day of February, 1993, in which a relevant investment is held and in respect of which the conditions referred to in paragraph (c) are complied with;

specified deposit” means a sum of money paid by an individual to a designated broker for the purpose of acquiring assets which will form part of a relevant investment;

specified qualifying shares”, in relation to a special portfolio investment account, means qualifying shares in a company which when the shares are acquired for the account has an issued share capital the market value of which is less than £100,000,000.

(b) For the purposes of this section, Chapter 4 of Part 8 shall be construed as if—

(i) references to “deposit”, “interest”, “relevant deposit”, “relevant deposit taker”, “relevant interest” and “special savings account” were respectively references to “specified deposit”, “income or gains”, “relevant investment”, “designated broker”, “relevant income or gains” and “special portfolio investment account” within the meaning of this section, and

(ii) subsections (4) and (5) of section 258 and section 259 had not been enacted.

(c) Notwithstanding subsection (3), section 264 shall apply to a special portfolio investment account as if—

(i) paragraphs (d) to (i) of subsection (1) of that section had not been enacted, and

(ii) the conditions in subsection (2) of this section had been included in subsection (1) of that section.

(2) The conditions referred to in subsection (1)(c)(ii) are:

(a) each special portfolio investment account and all assets held in such an account shall be kept separately from all other investment accounts, if any, operated by a designated broker;

(b) the amount of a specified deposit or, if there is more than one, the aggregate of such amounts in respect of assets held at the same time as part of a special portfolio investment account shall not exceed—

(i) in the case of a special portfolio investment account in respect of which—

(I) the first specified deposit was made on or before the 5th day of April, 2000, and

(II) an amount (in this paragraph referred to as “the particular amount”) equal to the whole or a part of the specified deposit or specified deposits has been used to acquire shares in a company quoted on the market known as the Developing Companies Market of the Irish Stock Exchange

and those shares are at that time held as assets of the special portfolio investment account,

£50,000 increased by the lesser of—

(A) the particular amount, and

(B) £10,000,

and

(ii) in the case of any other special portfolio investment account, £50,000;

(c) the designated broker shall ensure that the aggregate of the market value of a relevant investment does not exceed £50,000 at any time on or after the fifth anniversary of the date on which the first specified deposit was made by an individual in respect of that relevant investment;

(d) the aggregate of the consideration given for shares which are at any time before the 1st day of February, 1994, assets of a special portfolio investment account shall not be less than—

(i) as respects qualifying shares, 40 per cent, and

(ii) as respects specified qualifying shares, 6 per cent,

of the aggregate of the consideration given for the assets of the account at that time;

(e) the aggregate of the consideration given for shares which are at any time within the year ending on the 31st day of January, 1995, assets of a special portfolio investment account shall not be less than—

(i) as respects qualifying shares, 45 per cent, and

(ii) as respects specified qualifying shares, 9 per cent,

of the aggregate of the consideration given for the assets of the account at that time;

(f) the aggregate of the consideration given for shares which are at any time within the year ending on the 31st day of January, 1996, assets of a special portfolio investment account shall not be less than—

(i) as respects qualifying shares, 50 per cent, and

(ii) as respects specified qualifying shares, 10 per cent,

of the aggregate of the consideration given for the assets of the account at that time;

(g) the aggregate of the consideration given for shares which are at any time on or after the 1st day of February, 1996, assets of a special portfolio investment account shall not be less than—

(i) as respects qualifying shares, 55 per cent, and

(ii) as respects specified qualifying shares, 10 per cent,

of the aggregate of the consideration given for the assets of the account at that time;

and for the purposes of—

(I) paragraphs (b) and (c), a disposal of shares or securities, being shares or securities, as the case may be, of the same class acquired for a special portfolio investment account at different times, shall be assumed to be a disposal of shares or securities, as the case may be, acquired later, rather than of shares or securities, as the case may be, acquired earlier for the special portfolio investment account, and

(II) paragraphs (d) to (g), the amount of the consideration given for shares shall be determined in accordance with sections 547 and 580 .

(3) Chapter 4 of Part 8 (other than section 259 ) shall, subject to this section and with any other necessary modifications, apply to special portfolio investment accounts as it applies to special savings accounts; but that Chapter shall so apply as if, in relation to relevant interest payable in respect of a relevant deposit or relevant deposits held in a special savings account, the rate of appropriate tax were 10 per cent.

(4) (a) Paragraphs (b) to (h) shall apply notwithstanding any other provision of the Tax Acts and the Capital Gains Tax Acts.

(b) Where for any year of assessment a loss arises from the computation of relevant income or gains, that loss shall be included in the computation of the relevant income or gains of the special portfolio investment account for the next year of assessment, and, in so far as relief for the loss cannot be so given, it shall be set against such relevant income or gains in the next year of assessment and, where appropriate, in each subsequent year of assessment in so far as it cannot be so relieved, and no further relief shall be allowed under any provision of the Tax Acts or the Capital Gains Tax Acts in respect of that loss.

(c) Sections 556 , 601 , 607 and 1028(4) shall not apply in relation to any gains referable to a relevant investment.

(d) (i) In this paragraph—

the appropriate amount in respect of the interest” means the appropriate amount in respect of the interest which would be determined in accordance with Schedule 21 if the designated broker were the first buyer and the designated broker carried on a trade to which section 749 (1) applies; but, in so determining the appropriate amount in respect of the interest in accordance with Schedule 21 , paragraph 3(4) of that Schedule shall apply as if “in the opinion of the Appeal Commissioners” were deleted;

securities” has the same meaning as in section 815 .

(ii) Subject to subparagraph (iii), where—

(I) in a year of assessment (in this subparagraph referred to as “the first year of assessment”) securities which are assets of a special portfolio investment account are disposed of, and

(II) in the following year of assessment interest becoming payable in respect of the securities is receivable by the special portfolio investment account,

then, for the purposes of computing the relevant income or gains for the first year of assessment, the price paid by the designated broker for the securities shall be treated as reduced by the appropriate amount in respect of the interest.

(iii) Where for a year of assessment subparagraph (ii) applies so as to reduce the price paid for securities, the amount by which the price paid for the securities is reduced shall be treated as a loss arising in the following year of assessment from the disposal of the securities.

(e) For the purpose of computing relevant income or gains of a special portfolio investment account for a year of assessment, each asset of a special portfolio investment account on the 5th day of April in that year of assessment shall be deemed to have been disposed of and immediately reacquired by the designated broker on that day at the asset's market value on that day.

(f) Subject to subsection (5), where in a year of assessment the relevant income or gains of a special portfolio investment account includes a distribution from a company resident in the State—

(i) the aggregate of the amount or value of that distribution and the amount of the tax credit in respect of that distribution shall be taken into account in computing the relevant income or gains for that year of assessment, and

(ii) the designated broker may set the tax credit against appropriate tax payable in respect of that special portfolio investment account for the year of assessment in which the distribution is made and, where the tax credit exceeds that appropriate tax, may claim to have the excess paid to the designated broker in that person's capacity as the designated broker for that special portfolio investment account.

(g) A tax credit in respect of a distribution to which paragraph (f) applies shall not be available for any purpose other than that specified in that paragraph.

(h) Capital gains tax shall not be chargeable on the disposal of assets held as part of a relevant investment; but this paragraph shall not prevent any such disposals from being taken into account in computing the amount of relevant income or gains on which appropriate tax is payable.

(5) (a) In this subsection—

eligible shares” has the same meaning as in section 488 ;

qualifying company” has the meaning assigned to it by section 495 .

(b) Without prejudice to the treatment of losses on eligible shares as allowable losses, gains accruing on the disposal or deemed disposal of eligible shares in a qualifying company shall not for the purposes of computing appropriate tax in accordance with subsection (6) be treated as gains.

(c) Distributions included in the relevant income or gains of a special portfolio investment account in respect of eligible shares in qualifying companies shall not be taken into account in computing appropriate tax in accordance with subsection (6); but, notwithstanding subsection (4)(f) or section 136 , the tax credit in respect of a distribution to which this subsection applies shall be disregarded for the purposes of the Tax Acts and the Capital Gains Tax Acts.

(6) (a) For the purposes of sections 257 and 258 , a designated broker shall, in relation to each special portfolio investment account—

(i) be deemed to have made a payment on the 5th day of April in each year of assessment of the amount of relevant income or gains for that year of assessment, and

(ii) be liable to make a payment of appropriate tax in relation to such payment.

(b) The designated broker may deduct an amount on account of any such payment of appropriate tax and the individual beneficially entitled to the assets in the special portfolio investment account shall allow such deduction from any income or from the proceeds of the sale of any assets which the designated broker holds as part of the special portfolio investment account; but, where there are no such funds or insufficient funds available out of which the designated broker may satisfy the appropriate tax, the amount of such tax shall be an amount due to the designated broker from the person beneficially entitled to the relevant investment.

(c) For the purposes of this section, section 258 shall apply as if in subsection (2) of that section “on or before the 1st day of November following that year of assessment” were substituted for “within 15 days from the end of the year of assessment”.

(7) Part 16 shall not apply in relation to any shares which form part of a relevant investment.

Limits to special investments.

[FA93 s16; FA94 s34(c) to (g)]

839. —(1) Subject to subsection (2), an individual shall not at the same time have a beneficial interest in investments of more than one of the following classes of investment—

(a) special savings accounts within the meaning of section 256 (1) (such an account being referred to subsequently in this section as a “special savings account”);

(b) special investment policies within the meaning of section 723 (1);

(c) special investment units within the meaning of section 737 ;

(d) special portfolio investment accounts within the meaning of section 838 .

(2) (a) An individual, whether married or not, who does not have a joint interest in an investment of a class mentioned in subsection (1) may have a beneficial interest, that is not a joint interest, in 2 such investments, being a special savings account and an investment of a class mentioned in paragraph (b), (c) or (d) of that subsection, during a period throughout which—

(i) as respects the special savings account, the condition specified in section 264 (1) (i) would be satisfied if “£25,000” were substituted for “£50,000” in that condition, or

(ii) as respects the other investment, the condition specified in section 723 (3) (b), 737 (3) (a) (ii) or 838 (2) (b) relevant to that investment would be satisfied if “£25,000” were substituted for “£50,000” in those conditions.

(b) A couple married to each other, neither of whom has an interest, that is not a joint interest, in an investment of a class mentioned in subsection (1), may have a joint beneficial interest—

(i) in 2 or 3 such investments, so long as those investments include a special savings account and an investment of a class mentioned in paragraph (b), (c) or (d) of that subsection, or

(ii) in 4 such investments, being 2 special savings accounts and 2 other investments of a class (which need not be the same class for the 2 investments) mentioned in paragraph (b), (c) or (d) of that subsection, during a period throughout which—

(I) as respects the special savings accounts, the condition specified in section 264 (1) (i) would be satisfied if “£25,000” were substituted for “£50,000” in that condition, or

(II) as respects the other investments, the condition specified in section 723 (3) (b), 737 (3) (a) (ii) or 838 (2) (b) relevant to each of those investments would be satisfied if “£25,000” were substituted for “£50,000” in those conditions.

(3) So long as an individual, whether married or not, does not have a beneficial interest in an investment of a class mentioned in subsection (1) other than—

(a) a beneficial interest, whether or not a joint interest, in one investment, or

(b) a joint beneficial interest in 2 investments, of a class (which need not be the same class where there are 2 investments) mentioned in paragraph (b), (c) or (d) of subsection (1), then, sections 723 , 737 and 838 shall apply to that one investment or those 2 investments, as the case may be, as if every reference to £50,000 in those sections were a reference to £75,000.

(4) Where an individual may hold a beneficial interest, whether jointly or otherwise, in an investment of a class mentioned in subsection (1) only for as long as a condition specified in the Tax Acts in respect of the investment would be satisfied if a reference to £25,000 were substituted for a reference to £50,000 in the condition so specified, then, any provision of those Acts which apart from this subsection would have the effect at any time of restricting that investment to an investment the value of which does not exceed £50,000 shall apply to that investment as if the reference to £50,000 in the provision were a reference to £25,000.

(5) Any declaration referred to in—

(a) paragraph (b) of the definition of “special savings account” in section 256 (1),

(b) paragraph (b) of the definition of “special investment policy” in section 723 (1), or

(c) paragraph (b) of the definition of “special investment units” in section 737 (1),

shall contain—

(i) such information in relation to the beneficial interest, which at the time the declaration is made the individual making the declaration holds, whether jointly or otherwise, in investments of a class mentioned in subsection (1), and

(ii) such undertakings, to the person to whom the declaration is made, to supply at any later time information in relation to such interests of that individual at that later time,

as the Revenue Commissioners may reasonably require for the purposes of this section.

Business entertainment.

[FA 82 s20(1) to (6) and (8)]

840. —(1) In this section—

business entertainment” means entertainment (including the provision of accommodation, food and drink or any other form of hospitality in any circumstances whatever) provided directly or indirectly by—

(a) any person (in this definition referred to as “the first-mentioned person”),

(b) any person who is a member of the first-mentioned person's staff, or

(c) any person providing or performing any service for the first-mentioned person, the entertainment being entertainment that is provided in the course of, or is incidental to, the provision or performance of the service,

in connection with a trade carried on by the first-mentioned person, but does not include anything provided by that person for bona fide members of that person's staff unless its provision for them is incidental to its provision also for others;

a reference to expenses incurred in, or to the use of an asset for, providing entertainment includes a reference to expenses incurred in, or to the use of an asset for, providing anything incidental thereto;

a reference to a trade includes a reference to a business, profession or employment;

a reference to the members of a person's staff is a reference to persons employed by the person, directors of a company or persons engaged in the management of the company being for this purpose deemed to be persons employed by the company.

(2) In respect of any expenses incurred in providing business entertainment, no sum shall be—

(a) deducted in computing the amount of profits or gains chargeable to tax under Schedule D,

(b) included in computing any expenses of management in respect of which a deduction may be claimed under section 83 or 707 , or

(c) allowed under section 114 .

(3) (a) In this subsection, “the specified provisions” means the provisions of Part 9 relating to machinery or plant.

(b) Where any asset is used or is provided for use wholly or partly for the purpose of providing business entertainment, no allowance under any of the specified provisions shall be made for any year of assessment or for any accounting period of a company in respect of the use of the asset or the expenditure incurred in the provision of the asset to the extent that it is used or is to be used for that business entertainment.

(4) The expenses to which subsection (2) applies include in the case of any person any sum paid by that person to, on behalf of or placed by that person at the disposal of a member of that person's staff for the purpose of defraying expenses incurred or to be incurred by the member of the staff in providing business entertainment.

(5) This section shall apply in relation to the provision of a gift as it applies in relation to the provision of entertainment.

(6) (a) Where by reason of the provision or performance of a service an amount is paid or payable to a person referred to in paragraph (c) of the definition of “business entertainment”, so much of the amount as is equal to the cost of any business entertainment that is provided in the course of, or is incidental to the provision or performance of, the service shall be deemed to be incurred in providing business entertainment.

(b) The cost of any business entertainment shall be determined by the inspector according to the best of his or her knowledge and judgment.

(c) A determination made under paragraph (b) may be amended by the Appeal Commissioners or by the Circuit Court on the hearing or the rehearing of an appeal against any deduction (including a case where no deduction is granted) granted on the basis of the determination.

Voluntary Health Insurance Board: restriction of certain losses and deemed disposal of certain assets.

[FA97 s61(1), (3) and (4)]

841. —(1) In this section—

the Board” means the Voluntary Health Insurance Board;

market value” shall be construed in accordance with section 548 .

(2) Section 396 shall not apply to a loss incurred by the Board in an accounting period ending before the 1st day of March, 1997.

(3) Notwithstanding any other provision of the Tax Acts, bonds and shares held by the Board on the 28th day of February, 1997, in the course of the business of carrying out schemes of voluntary health insurance shall be deemed to have been disposed of and immediately reacquired by the Board on that date at the assets' market value on that date.

Replacement of harbour authorities by port companies.

[FA97 s48]

842. —(1) In this section, “relevant port company” has the same meaning as in paragraph 1 of Schedule 26.

(2) Schedule 26 shall apply where assets are vested in, or transferred to, a relevant port company pursuant to the Harbours Act, 1996.

(3) This section and Schedule 26 shall apply from the 1st day of March, 1997.

Capital allowances for buildings used for third level educational purposes.

[FA97 s25]

843. —(1) In this section—

approved institution” means an institution in the State in receipt of public funding which provides courses to which a scheme approved by the Minister for Education and Science under the Local Authorities (Higher Education Grants) Acts, 1968 to 1992, applies;

qualifying expenditure” means capital expenditure incurred on—

(a) the construction of a qualifying premises, or

(b) the provision of machinery or plant,

which, following receipt of the advice of An tÚdarás, is approved for that purpose by the Minister for Education and Science with the consent of the Minister for Finance;

qualifying premises” means a building or structure which—

(a) apart from this section is not an industrial building or structure within the meaning of section 268 , and

(b) (i) is in use for the purposes of third level education provided by an approved institution,

(ii) is let to an approved institution on bona fide commercial terms for such consideration as might be expected to be paid in a letting of the building or structure which was negotiated on an arm's length basis, but does not include any part of a building or structure in use as or as part of a dwelling-house;

An tÚdarás” means the Body established by section 2 of the Higher Education Authority Act, 1971 .

(2) Subject to subsections (3) to (7), the provisions of the Tax Acts (other than section 317 (2)) relating to the making of allowances or charges in respect of capital expenditure incurred on the construction of an industrial building or structure shall, notwithstanding anything to the contrary in those provisions, apply in relation to qualifying expenditure on a qualifying premises—

(a) as if the qualifying premises were, at all times at which it is a qualifying premises, a building or structure in respect of which an allowance is to be made for the purposes of income tax or corporation tax, as the case may be, under Part 9 by reason of its use for a purpose specified in section 268 (1) (a), and

(b) where any activity carried on in the qualifying premises is not a trade, as if it were a trade.

(3) In relation to qualifying expenditure on a qualifying premises section 272 shall apply as if—

(a) in subsection (3) (a) (ii) of that section the reference to 4 per cent were a reference to 15 per cent, and

(b) in subsection (4) (a) (ii) of that section the reference to 25 years were a reference to 7 years.

(4) No allowance shall be made under subsection (2) unless, before the commencement of construction of a qualifying premises, the Minister for Finance certifies that—

(a) an approved institution has procured or otherwise secured a sum of money, none of which has been met directly or indirectly by the State, which sum is not less than 50 per cent of the qualifying expenditure to be incurred on the qualifying premises, and

(b) such sum is to be used solely by the approved institution for the following purposes—

(i) paying interest on money borrowed for the purpose of funding the construction of the qualifying premises,

(ii) paying any rent on the qualifying premises during such times as the qualifying premises is the subject of a letting on such terms as are referred to in paragraph (b) (ii) of the definition of “qualifying premises”, and

(iii) purchasing the qualifying premises following the termination of the letting referred to in subparagraph (ii).

(5) Notwithstanding section 274 (1), no balancing charge shall be made in relation to a qualifying premises by reason of any of the events specified in that section which occurs more than 7 years after the qualifying premises was first used.

(6) This section shall come into operation on the 1st day of July, 1997.

(7) The Minister for Finance may not give a certificate under subsection (4) at any time later than the 1st day of July, 2000.

Companies carrying on mutual business or not carrying on a business.

[CTA76 s29]

844. —(1) Subject to subsection (2), where a company carries on any business of mutual trading or mutual insurance or other mutual business, the provisions of the Corporation Tax Acts and of Schedule F relating to distributions shall apply to distributions made by the company, notwithstanding that they are made to persons participating in the mutual activities of that business and derive from those activities, but shall so apply only to the extent to which the distributions are made out of profits of the company which are brought into charge to corporation tax or out of franked investment income.

(2) In the case of a company carrying on any mutual life assurance business, the provisions of the Corporation Tax Acts and of Schedule F relating to distributions shall not apply to distributions made to persons participating in the mutual activities of that business and derived from those activities; but, if the business includes annuity business, the annuities payable in the course of that business shall not be treated as charges on the income of the company to any greater extent than if that business were not mutual but were being carried on by the company with a view to the realisation of profits for the company.

(3) Subject to subsections (1) and (2), the fact that a distribution made by a company carrying on any such business is derived from the mutual activities of that business and the recipient is a person participating in those activities shall not affect the character which the payment or other receipt has for the purposes of corporation tax or income tax in the hands of the recipient.

(4) Where a company does not carry on and never has carried on a trade or a business of holding investments, and is not established for purposes which include the carrying on of a trade or of such a business, the provisions of the Corporation Tax Acts and of Schedule F relating to distributions shall apply to distributions made by the company only to the extent to which the distributions are made out of profits of the company which are brought into charge to corporation tax or out of franked investment income.

Corporation tax: treatment of tax-free income of non-resident banks, insurance businesses, etc.

[CTA76 s51(1), (2), (3) (a), (4), (5) and (6)]

845. —(1) In this section, “insurance business” includes assurance business within the meaning of section 3 of the Insurance Act, 1936 .

(2) In this section and in section 846 , “tax-free securities” means securities to which section 43 , 49 or 50 applies and which were issued with a condition regulating the treatment of the interest on the securities for tax purposes such that the interest on the securities is excluded in computing income or profits.

(3) (a) In this subsection, “securities” includes stocks and shares.

(b) Where a banking business, an insurance business or a business consisting wholly or partly in dealing in securities is carried on in the State by a person not resident in the State, then—

(i) in computing for the purposes of the Tax Acts the profits arising from, or loss sustained in, the business, and

(ii) in the case of an insurance business, also in computing the profits or loss from pension business and general annuity business under section 715 ,

section 76 shall not prevent the inclusion of interest, dividends and other payments to which section 35 or 63 extends notwithstanding the exemption from tax conferred by those sections respectively.

(4) Where—

(a) any business referred to in subsection (3) (b) is carried on in the State by a person not ordinarily resident in the State, and

(b) in making any computation referred to in that subsection with respect to that business, interest on tax-free securities is excluded by virtue of a condition of the issue of such securities,

any expenses attributable to the acquisition or holding of, or to any transaction in, the securities (but not including in those expenses any interest on borrowed money), and any profits or losses so attributable, shall also be excluded in making that computation.

(5) In the case of an overseas life assurance company (within the meaning of section 706 ), in computing for the purposes of section 726 the income from the investments of the life assurance fund of the company, any interest, dividends and other payments to which section 35 or 63 extends shall be included notwithstanding the exemption from tax conferred by those sections respectively.

Tax-free securities: exclusion of interest on borrowed money.

[CTA76 s52(1) to (4) and (6)]

846. —(1) This section shall apply where section 845 (4) applies to a business for any accounting period.

(2) Up to the amount determined under this section (in this section referred to as “the amount ineligible for relief”), interest becoming due for payment on money borrowed for the purposes of the business—

(a) shall be excluded in any computation under the Tax Acts of the profits or loss arising from the business, and

(b) shall be excluded from the definition of “charges on income” in section 243 .

(3) In determining the amount ineligible for relief, account shall be taken of all money borrowed for the purposes of the business outstanding in the accounting period up to the total cost of the tax-free securities held for the purposes of the business in that period; but account shall not be taken of any borrowed money carrying interest which apart from subsection (2) would not be included in the computation under paragraph (a) of that subsection and would not be treated as a charge on income for the purposes of the Corporation Tax Acts.

(4) The amount ineligible for relief shall be equal to a year's interest on the amount of money borrowed which is to be taken into account under subsection (3) at a rate equal to the average rate of interest in the accounting period on money borrowed for the purposes of the business, except that in the case of an accounting period of less than 12 months interest shall be taken for that shorter period instead of for a year.

(5) For the purposes of this section, the cost of a holding of tax-free securities which has fluctuated in the accounting period shall be the average cost of acquisition of the initial holding, and of any subsequent acquisitions in the accounting period, applied to the average amount of the holding in the accounting period, and this subsection shall be applied separately to securities of different classes.

Tax relief for certain branch profits.

[FA95 s29]

847. —(1) (a) In this section—

investment plan” means a plan of a company resident in the State—

(i) which involves the investment by the company or by a company associated with it of substantial permanent capital in the State for the purposes of the creation before a date specified in the plan of substantial new employment in the State in trading operations carried on or to be carried on in the State by the company or the company associated with it, and

(ii) which has been submitted before the commencement of its implementation to the Minister by the company for the purpose of enabling it to obtain relief under this section;

the Minister” means the Minister for Finance;

qualified company” means a company to which the Minister, following consultation with the Minister for Enterprise and Employment, has given a certificate, which certificate has not been revoked, under subsection (2);

qualified foreign trading activities” means trading activities carried on by a qualified company through a branch or agency outside the State in a territory specified in the certificate given under subsection (2) to the company by the Minister following consultation with the Minister for Enterprise' Trade and Employment.

(b) For the purposes of this section—

(i) a company shall be associated with another company where one of the companies is a 75 per cent subsidiary of the other company or both companies are 75 per cent subsidiaries of a third company; but, in determining whether one company is a 75 per cent subsidiary of another company, the other company shall be treated as not being the owner of—

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

(II) 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,

(ii) sections 412 to 418 shall apply for the purposes of this paragraph as they would apply for the purposes of Chapter 5 of Part 12 if section 411 (1) (c) were deleted,

(iii) where a trade carried on by a qualified company consists partly of qualified foreign trading activities and partly of other trading activities, the company shall be treated as if it were carrying on distinct trades consisting of such qualified foreign trading activities and of such other trading activities,

(iv) there shall be attributed to each trade carried on, or treated under subparagraph (iii) as carried on, such profits or gains or losses as might have been expected to be made if each trade had been carried on under the same or similar conditions by a person independent of, and dealing at arm's length with, the person carrying on the other trade, and

(v) there shall be made all necessary apportionments as are just and reasonable for the purposes of computing—

(I) profits or gains or losses arising from, and

(II) the amount of any charges on income, expenses of management or other amount which can be deducted from or set off against or treated as reducing profits of more than one description as is incurred for the purposes of,

a trade carried on, or treated under subparagraph (iii) as carried on, by a qualified company.

(2) Where a plan has been duly submitted by a company resident in the State and the Minister, following consultation with the Minister for Enterprise, Trade and Employment, is satisfied that—

(a) the plan is an investment plan,

(b) the company, or a company associated with it, will, before a date specified in the plan and approved by the Minister, make the substantial permanent capital investment in the State under the investment plan for the purposes of the creation of the substantial new employment in the State,

(c) the creation of substantial new employment in the State under the investment plan will be achieved, and

(d) the maintenance of the employment so created in trading operations in the State will be dependent on the carrying on by the company of qualified foreign trading activities,

then, the Minister may give a certificate certifying that the company is a qualified company with effect from a date specified in the certificate.

(3) (a) The Minister shall draw up guidelines for determining whether for the purposes of subsection (2) a company and companies associated with it will create substantial new employment and will make a substantial permanent capital investment in the State.

(b) Without prejudice to the generality of paragraph (a), guidelines under that paragraph may—

(i) include a requirement for specified levels of—

(I) employment in the State, and

(II) permanent capital investment in the State,

and

(ii) specify such criteria for the purposes of this subsection as the Minister considers appropriate.

(4) A certificate issued under subsection (2) may be given subject to such conditions as the Minister, following consultation with the Minister for Enterprise, Trade and Employment, considers proper and specifies in the certificate.

(5) Where in the case of a company in relation to which a certificate under subsection (2) has been given the Minister, following consultation with the Minister for Enterprise, Trade and Employment, forms the opinion that such certificate ought to be revoked because any condition subject to which the certificate was given has not been complied with, the Minister may by notice in writing served by registered post on the company revoke the certificate with effect from such date as may be specified in the notice.

(6) Notwithstanding any other provision of the Corporation Tax Acts—

(a) profits or gains or losses arising from the carrying on of qualified foreign trading activities shall be disregarded for the purposes of those Acts, and

(b) no amount of any charges on income, expenses of management or other amount which apart from this paragraph may be deducted from or set off against or treated as reducing profits of more than one description, shall be so deducted, set off or treated, as is incurred for the purposes of a trade carried on, or treated under subsection (1) (b) (iii) as carried on, by a qualified company which consists of qualified foreign trading activities.

(7) A gain shall not be a chargeable gain for the purposes of the Capital Gains Tax Acts if it accrues to a qualified company on the disposal of an asset, other than an asset specified in paragraphs (a) to (d) of section 980 (2), used wholly and exclusively for the purposes of a trade carried on, or treated under subsection (1) (b) (iii) as carried on, by a qualified company which consists of qualified foreign trading activities.

(8) An inspector may by notice in writing require a qualified company to furnish him or her with such information or particulars as may be necessary for the purposes of giving relief under this section.

Designated charities: repayment of tax in respect of donations.

[FA95 s8(1) (a) and (c) and (2) to (7)]

848. —(1) (a) In this section—

appropriate certificate”, in relation to a donation to a designated charity, means a certificate which is in such form as the Revenue Commissioners may prescribe and which contains—

(i) statements to the effect that—

(I) the donation satisfies the requirements of subsection (6), and

(II) the donor has paid or will pay to the Revenue Commissioners income tax of an amount equal to income tax at the standard rate for the relevant year of assessment on the grossed up amount of the donation, but not being—

(A) income tax which the donor is entitled to charge against any other person or to deduct, retain or satisfy out of any payment which the donor is liable to make to any other person, or

(B) appropriate tax within the meaning of Chapter 4 of Part 8 ,

and

(ii) the identifying number, known as the Revenue and Social Insurance (RSI) Number, of the donor;

designated charity” means any body or institution in the State which, following application by it to the Minister in such form and containing such information as the Minister may require, is designated for the purposes of this section by the Minister with the consent of the Minister for Finance;

the Minister” means the Minister for Foreign Affairs;

qualifying donation” shall be construed in accordance with subsection (5);

relevant year of assessment”, in relation to a qualifying donation, means the year of assessment in which the qualifying donation is made.

(b) For the purposes of this section, references, in relation to a donation, to the grossed up amount are to the amount which after deducting income tax at the standard rate for the relevant year of assessment leaves the amount of the donation.

(2) A body or institution shall not be designated by the Minister for the purposes of this section unless it shows to the satisfaction of the Minister that—

(a) it is a body of persons or trust established for charitable purposes only,

(b) it has been granted exemption from tax for the purposes of section 207 for a period of not less than 3 years before the date of the making of the application,

(c) the person concerned in the management or control of the body or institution ensures that in respect of each financial year of the body or institution there is prepared and furnished to the Minister—

(i) audited accounts comprising—

(I) an income and expenditure account or a profit and loss account, as appropriate, for its most recent financial year, and

(II) a balance sheet as at the last day of that financial year,

and

(ii) a report as to the activities of the body or institution, having regard to its charitable purposes, and

(d) it has as its sole object, relief and development in a country or countries where the country or countries concerned is or are for the time being on the List of Aid Recipients (Part 1: Aid to Developing Countries and Territories) produced by the Development Aid Committee of the Organisation for Economic Co-operation and Development.

(3) The Minister shall—

(a) maintain a list of the bodies and institutions designated for the purposes of this section, and

(b) from time to time as the Minister sees fit cause such list to be published in Iris Oifigiúil.

(4) Where the Minister is satisfied that a body or institution ceases to comply with subsection (2), the Minister shall, with the consent of the Minister for Finance—

(a) withdraw the designation previously granted and such withdrawal shall apply from the beginning of the year of assessment in which notice in accordance with paragraph (b) is given, and

(b) cause notice of such withdrawal to be published in Iris Oifigiúil within one month of such withdrawal.

(5) For the purposes of this section, a donation to a designated charity shall be a qualifying donation if—

(a) it is made by an individual (in this section referred to as “the donor”),

(b) it satisfies the requirements of subsection (6), and

(c) the donor—

(i) has given an appropriate certificate in relation to the donation to the designated charity, and

(ii) has paid the tax referred to in such appropriate certificate and is not entitled to claim a repayment of that tax or any part of that tax.

(6) A donation shall satisfy the requirements of this subsection if—

(a) it takes the form of the payment of a sum or sums of money,

(b) it is not subject to a condition as to repayment,

(c) neither the donor nor any person connected with the donor receives a benefit in consequence of making it,

(d) it is not conditional on or associated with, or part of an arrangement involving, the acquisition of property by the designated charity, otherwise than by means of gift, from the donor or a person connected with the donor,

(e) the sum or the aggregate of the sums paid in the relevant year of assessment to the designated charity is not less than £200,

(f) the sum or the aggregate of the sums paid does not, when aggregated with any other qualifying donation or qualifying donations made by the donor in the relevant year of assessment, exceed £750, and

(g) the donor is resident in the State for the relevant year of assessment.

(7) Where a donation is a qualifying donation, the Tax Acts shall apply in relation to the designated charity as if—

(a) the grossed up amount of the donation were an annual payment which was the income of the designated charity received by it under deduction of tax at the standard rate for the relevant year of assessment, and

(b) the provisions of those Acts which apply in relation to a claim to repayment of tax applied in relation to any claim to repayment of such tax by a designated charity;

but, if the total amount of the tax referred to in paragraph (i) (II) of the definition of “appropriate certificate” is not paid, the amount of any repayment which would otherwise be made to a designated charity in accordance with this section shall not exceed the amount of tax actually paid by the donor.

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