AN ACT TO CHARGE AND IMPOSE ON CERTAIN PROFITS A DUTY OF INLAND REVENUE TO BE KNOWN AS CORPORATION TAX, TO AMEND THE LAW RELATING TO INLAND REVENUE AND TO MAKE FURTHER PROVISIONS IN CONNECTION WITH FINANCE.

[31st March, 1976]

BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:

PART I GENERAL SYSTEM OF TAXATION

Introduction for companies of corporation tax in place of income tax, corporation profits tax and capital gains tax.

1.—(1) For the financial year 1974 and each subsequent financial year there shall be charged on profits of companies a tax, to be called corporation tax, at the rate of 50 per cent.

(2) For years of assessment after the year 1975-76 the provisions of the Income Tax Acts relating to the charge of income tax shall not apply to income of a company (not arising to it in a fiduciary or representative capacity) if—

( a ) the company is resident in the State, or

( b ) the income is, in the case of a company not so resident, within the chargeable profits of the company as defined for the purposes of corporation tax.

(3) A company shall not be chargeable to capital gains tax in respect of gains accruing to it so that it is chargeable in respect of them to corporation tax.

(4) Corporation profits tax shall not be chargeable for accounting periods or parts of accounting periods falling after the 5th day of April, 1976.

(5) In this Act, unless the context otherwise requires—

( a ) "company", means any body corporate but does not include—

(i) a health board;

(ii) a vocational education committee established under the Vocational Education Act, 1930 ,

(iii) a committee of agriculture established under the Agriculture Act, 1931 , or

(iv) a local authority, and for this purpose "local authority" has the meaning assigned to it by section 2 (2) of the Local Government Act, 1941 , and includes a body established under the Local Government Services (Corporate Bodies) Act, 1971 ;

( b ) "the financial year 1974" means the period of nine months beginning on the 1st day of April, 1974;

( c ) "profits" means income and chargeable gains, and "chargeable gains" has the same meaning as in the Capital Gains Tax Act, 1975 , but does not include gains accruing on disposals which were made before the 6th day of April, 1976:

( d ) "trade" includes "vocation" and includes also an office or employment;

( e ) such other words and expressions as are specified in section 155 (interpretation) have the meanings given by or indicated in that section.

Irish resident company distributions not chargeable to corporation tax.

2.—Except as otherwise provided by this Act, corporation tax shall not be chargeable on dividends and other distributions of a company resident in the State, nor shall any such dividends or distributions be taken into account in computing income for corporation tax.

Income tax on payments made or received by a company resident in the State.

3.—(1) No payment made after the 5th day of April, 1976, by a company resident in the State shall by virtue of this section or otherwise be treated for any purpose of the Income Tax Acts as paid out of profits or gains brought into charge to income tax; nor shall any right or obligation under the Income Tax Acts to deduct income tax from any payment be affected by the fact that the recipient is a company not chargeable to income tax in respect of the payment.

(2) Subject to the provisions of this Act, where after the 5th day of April, 1976, a company resident in the State receives any payment on which it bears income tax by deduction, the income tax thereon shall be set off against any corporation tax assessable on the company by an assessment made for the accounting period in which that payment falls to be taken into account for corporation tax (or would fall to be taken into account but for any exemption from corporation tax); and accordingly in respect of that payment the company, unless wholly exempt from corporation tax, shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due.

(3) References in this section to payments received by a company apply to any received by another person on behalf of or in trust for the company, but not to any received by the company on behalf of or in trust for another person.

Claims for repayment of income tax deducted from receipts.

4.—Effect shall be given—

( a ) to section 1 (2), and to that section as modified by sections 3 (2) and 8 (3), and

( b ) so far as the exemptions from income tax conferred by the Corporation Tax Acts call for repayment of tax, to those exemptions.

by means of a claim.

Explanation of tax credit to be annexed to interest and dividend warrants.

5.—(1) Every warrant or cheque or other order drawn or made, or purporting to be drawn or made, in payment by any company of any dividend, or of any interest which is a distribution, shall have annexed thereto or be accompanied by a statement in writing showing—

( a ) the amount of the dividend (distinguishing a dividend or any part of it which is paid out of capital profits of the company) or interest paid,

( b ) (whether or not the recipient is a person entitled to a tax credit in respect thereof) the amount of the tax credit to which a recipient who is such a person is entitled in respect thereof, and

( c ) the period for which the dividend or interest is paid.

(2) If a company fails to comply with any of the provisions of this section the company shall incur a penalty of £10 in respect of each offence but the aggregate amount of the penalties imposed under this section on any company in respect of offences connected with any one distribution of dividends or interest shall not exceed £100.

PART II CORPORATION TAX

General scheme of corporation tax.

6.—(1) Subject to any exceptions provided for by this Act, a company shall be chargeable to corporation tax on all its profits wherever arising.

(2) A company shall be chargeable to corporation tax on profits accruing for its benefit under any trust, or arising under any partnership, in any case in which it would be so chargeable if the profits accrued to it directly; and a company shall be chargeable to corporation tax on profits arising in the winding up of the company, but shall not otherwise be chargeable to corporation tax on profits accruing to it in a fiduciary or representative capacity except as respects its own beneficial interest (if any) in those profits.

(3) Corporation tax for any financial year shall be charged on profits arising in that year; but assessments to corporation tax shall be made on a company by reference to accounting periods, and the amount chargeable (after making all proper deductions) of the profits arising in an accounting period shall, where necessary, be apportioned between the financial years in which the accounting period falls.

(4) ( a ) Except as otherwise provided by this subsection, corporation tax assessed for an accounting period shall be paid in two equal instalments as follows—

(i) the first instalment within nine months from the end of the accounting period or, if it is later, within two months from the making of the assessment; and

(ii) the second instalment within fifteen months from the end of the accounting period or, if it is later, within two months from the making of the assessment.

( b ) Where, in respect of a source of income, a company is within the charge to income tax under Schedule D for the year of assessment 1975-76, and in respect of that source of income comes within the charge to corporation tax on or before the 6th day of April, 1975, then (so long as the company continues to be within the charge to corporation tax in respect of that source of income) the second instalment of corporation tax assessed for an accounting period shall be paid as follows—

(i) in respect of the first accounting period for which the company is within the charge to corporation tax—

(I) where that accounting period is a period of twelve months, on or before the 1st day of January, 1977, and

(II) where that accounting period is a period of less than twelve months, within the like interval from the end of the accounting period as the 1st day of January, 1977, would have been from the end of the first accounting period if that accounting period had been a period of twelve months commencing on the date on which the company comes within the charge to corporation tax; and

(ii) in respect of any subsequent accounting period, within the like interval from the end of such accounting period as there was between the end of the first accounting period for which the company was within the charge to corporation tax and the date on or before which the second instalment of corporation tax for that first accounting period would have become payable if the assessment for that accounting period had been made on the day immediately following the end of that accounting period:

Provided that in no case shall the second instalment of corporation tax assessed for an accounting period become payable before the expiration of nine months from the end of the accounting period for which it is assessed or before the expiration of two months from the making of the assessment.

(5) Corporation tax shall be under the care and management of the Revenue Commissioners who may do all such acts as may be deemed necessary and expedient for raising, collecting, receiving and accounting for the tax in the like manner as they are authorised to do with relation to any other duties under their care and management.

(6) Section 1 of the Provisional Collection of Taxes Act, 1927 , is hereby amended by the insertion of "and corporation tax" before "but no other tax or duty".

(7) Section 39 of the Inland Revenue Regulation Act, 1890, is hereby amended by the insertion of "corporation tax," before "stamp duties".

Tax on company in liquidation.

7.—An assessment on a company's profits for an accounting period which falls after the commencement of the winding up of the company shall not be invalid because made before the end of the accounting period.

Companies not resident in the State.

8.—(1) A company not resident in the State shall not be within the charge to corporation tax unless it carries on a trade in the State through a branch or agency but, if it does so, it shall, subject to any exceptions provided for by this Act, be chargeable to corporation tax on all its chargeable profits wherever arising.

(2) For purposes of corporation tax the chargeable profits of a company not resident in the State but carrying on a trade there through a branch or agency shall be—

( a ) any trading income arising directly or indirectly through or from the branch or agency, and any income from property or rights used by, or held by or for, the branch or agency (but so that this, paragraph shall not include distributions received from companies resident in the State); and

( b ) such chargeable gains as, but for this Act would be charge able to capital gains tax in the case of a company which is not resident in the State:

Provided that such chargeable profits shall not include chargeable gains accruing to the company on the disposal of assets which, at or before the time when the chargeable gains accrued, were not used in or for the purposes of the trade and were not used or held or acquired for the purposes of the branch or agency.

(3) Subject to section 45 (overseas life assurance companies), where in the year 1976-77 or any later year of assessment, a company not resident in the State receives any payment on which it bears income tax by deduction, and the payment forms part of, or is to be taken into account in computing, the company's income chargeable to corporation tax, the income tax thereon shall be set off against any corporation tax assessable on that income by an assessment made for the accounting period in which the payment falls to be taken into account for corporation tax; and accordingly in respect of that payment the company shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due.

(4) Without prejudice to the general application of income tax procedure to corporation tax, the provisions of Chapter II of Part TX of the Income Tax Act, 1967 (Special Provisions as to Non-residents and Temporary Residents), and section 209 in Chapter III of the said Part (liability of trustees, etc.) relating to the assessment and charge of income tax on persons not resident in the State, so far as they are applicable to tax chargeable on a company, shall apply with any necessary adaptations in relation to corporation tax chargeable on companies not resident in the State.

Basis of, and periods for, assessment.

9.—(1) Except as otherwise provided by this Act, corporation tax shall be assessed and charged for any accounting period of a company on the full amount of the profits arising in the period (whether or not received in or remitted to the State) without any other deduction than is authorised by this Act.

(2) An accounting period of a company shall begin for purposes of corporation tax whenever—

( a ) the company, not then being within the charge to corporation tax, comes within it whether by the coming into force of any provision of this Act, or by the company becoming resident in the State or acquiring a source of income, or otherwise; or

( b ) an accounting period of the company ends without the company then ceasing to be within the charge to corporation tax.

(3) An accounting period of a company shall end for purposes of corporation tax on the first occurrence of any of the following—

( a ) the expiration of twelve months from the beginning of the accounting period;

( b ) an accounting date of the company or, if there is a period for which the company does not make up accounts, the end of that period;

( c ) the company beginning or ceasing to trade or to be, in respect of the trade or (if more than one) of all the trades carried on by it, within the charge to corporation tax;

( d ) the company beginning or ceasing to be resident in the State;

( e ) the company ceasing to be within the charge to corporation tax.

(4) For the purposes of this section a company resident in the State, if not otherwise within the charge to corporation tax, shall he treated as coming within the charge to corporation tax on the 6th day of April, 1976, or at the time when it commences to carry on business, whichever is the later.

(5) If a company carrying on more than one trade makes up accounts of any of them to different dates, and does not make up general accounts for the whole of the company's activities, subsection (3) (b) shall apply with reference to the accounting date of such one of the trades as the Revenue Commissioners may determine.

(6) If, on or after the 6th day of April, 1976, a chargeable gain or allowable loss accrues to a company at a time not otherwise within an accounting period of the company, an accounting period of the company shall then begin for the purposes of corporation tax, and the gain or loss shall accrue in that accounting period.

(7) Notwithstanding anything in the preceding subsections, where a company is wound up, an accounting period shall end and a new one begin with the commencement of the winding up, and thereafter an accounting period shall not end otherwise than by the expiration of twelve months from its beginning or by the completion of the winding up.

For this purpose a winding up is to be taken to commence on the passing by the company of a resolution for the winding up of the company, or on the presentation of a winding up petition if no such resolution has previously been passed and a winding up order is made on the petition, or on the doing of any other act for a like purpose in the case of a winding up otherwise than under the Companies Act, 1963 .

(8) Where it appears to the inspector that the beginning or end of any accounting period of a company is uncertain, he may make an assessment on the company for such period, not exceeding twelve months, as appears to him appropriate, and that period shall be treated for all purposes as an accounting period of the company unless either the inspector on further facts coming to his knowledge sees fit to revise it or on an appeal against the assessment in respect of some other matter the company shows the true accounting periods; and if on an appeal against an assessment made by virtue of this subsection the company shows the true accounting periods the assessment appealed against shall, as regards the period to which it relates, have effect as an assessment or assessments for the true accounting periods, and there may be made such other assessments for any such periods or any of them as might have been made at the time when the assessment appealed against was made.

Allowances of charges on income.

10.—(1) In computing the corporation tax chargeable for any accounting period of a company any charges on income paid by the company in the accounting period, but not before the 6th day of April, 1976, so far as paid out of the company's profits brought into charge to corporation tax, shall be allowed as deductions against the total profits for the period as reduced by any other relief from tax other than group relief.

(2) Subject to the following subsections and to any other express exceptions, "charges on income" means for the purposes of corporation tax payments of any description mentioned in subsection (3), not being dividends or other distributions of the company, but no payment which is deductible in computing profits or any description of profits for purposes of corporation tax shall be treated as a charge on income.

(3) Subject to subsections (4) to (7), the payments referred to in subsection (2) are—

( a ) any yearly interest, annuity or other annual Payment and any such other payments as are mentioned in section 93 (taxation of rents under long leases and certain other payments) or section 433 (2) (yearly interest, etc., payable wholly out of taxed profits) of the Income Tax Act, 1967 , and

and for the purposes of this section any interest payable by a company as mentioned in paragraph (b) shall he treated as paid on its being debited to the company's account in the books of the person to whom it is payable.

(4) No such payment as is mentioned in subsection (3) (a) made by a company to a person not resident in the State shall be treated as a charge on income unless the company is resident in the State and either—

( a ) the company deducts income tax from the payment in accordance with section 434 of the Income Tax Act, 1967 (interest. etc., not payable out of taxed profits), or the provisions of that section as applied by section 31 of the Finance Act, 1974 , and accounts under section 151 (income tax on payments) for the tax so deducted; or

( b ) the payment is one payable out of income which is brought into charge to tax under Case III of Schedule D and which arises from securities and possessions outside the State.

(5) No such payment made by a company as is mentioned in subsection (3) shall be treated as a charge on income if—

( a ) the payment is charged to capital, or the payment is not ultimately borne by the company; or

( b ) the payment is not made under a liability incurred for a valuable and sufficient consideration and, in the case of a company not resident in the State, incurred wholly and exclusively for the purposes of a trade carried on by it in the State through a branch or agency:

Provided that for the purposes of paragraph (b) a payment falling within section 439 (1) (ii) or (iia) of the Income Tax Act, 1967 (dispositions for short periods), shall be treated as incurred for valuable and sufficient consideration.

(6) Subject to subsection (7), any yearly or other interest such as is mentioned in subsection (3) shall be treated for the purposes of this section as a charge on income paid in any accounting period only to the extent that it does not exceed the lesser of—

( a ) an amount calculated at the rate of £2,000 per annum, and

( b ) in relation to a company which is connected with an individual or another company within the meaning of section 157 (connected persons), an amount determined

by the formula

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where—

A is the total amount of interest payable by the company in respect of the accounting period,

B is the aggregate amount of the interest payable in respect of the accounting period by the company and all the persons with whom it is connected, and

C is the number of months or fractions of months comprised in the accounting period;

and for this purpose all such apportionment's and aggregations as may be necessary shall be made:

Provided that for the purposes of paragraph (b) interest shall be deemed not to include any amount which the company or any person with whom it is connected is entitled to deduct in computing income of any description, or any amount to which the provisions of sub-section (7) or of section 32 , 34 or 36 of the Finance Act, 1974 (borrowings related to acquisition of interest in other companies, or recovery of, or replacement of capital), apply.

(7) Subject to subsection (8), the provisions of subsection (6) shall not apply to any payment of interest on a loan to a company to defray money applied for a purpose mentioned in section 33 (2) of the Finance Act, 1974 , if the conditions specified in subsection (3) of that section and in section 35 (4) of that Act are fulfilled.

(8) The provisions of section 35 of the Finance Act, 1974 , excluding subsection (5) thereof, shall have effect for corporation tax as for income tax; and references to section 33 of the Finance Act, 1974 , to the investing company and to the borrower, to interest eligible for relief, and to affording relief for interest shall have effect accordingly as it they were or included references to subsection (7) of this section, to such a company as is mentioned in the said subsection (7), to interest to be treated as a charge on income, and to treating part only of a payment of interest as a charge on income.

Computation of income: application of income tax principles.

11.—(1) Except as otherwise provided by this Act or any other enactment relating to income tax or corporation tax, the amount of any income shall for purposes of corporation tax be computed in accordance with income tax principles, all questions as to the amounts which are or are not to be taken into account as income, or in computing income, or charged to tax as a person's income, or as to the time when any such amount is to be treated as arising, being determined in accordance with income tax law and practice as if accounting periods were years of assessment.

(2) For the purposes of this section "income tax law" means, in relation to any accounting period, the law applying, for the year of assessment in which the period ends, to the charge on individuals of income tax, except that—

( a ) it includes also all such enactment's of the Income Tax Acts applying for the year 1975-76 as make special provision for companies in relation to matters referred to in subsection (1), and

( b ) it does not include such of the enactment's of the Income Tax Acts so applying as make special provision for individuals in relation to those matters.

(3) Accordingly for purposes of corporation tax income shall be computed, and the assessment shall be made, under the like Schedules and Cases as apply for purposes of income tax, and in accordance with the provisions applicable to those Schedules and Cases, but (subject to the provisions of this Act) the amounts so computed for the several sources of income, if more than one, together with any amounts to be included in respect of chargeable gains, shall be aggregated to arrive at the total profits.

(4) Nothing in this section shall be taken to mean that income arising in any period is to be computed by reference to any other period (except in so far as this results from apportioning to different parts of a period income of the whole period).

(5) Subject to section 12 and to any enactment applied by this section which expressly authorises such a deduction, no deduction shall be made in computing income from any source—

( a ) in respect of dividends or other distributions; nor

( b ) in respect of any yearly interest, annuity or other annual payment or any such other payments as are mentioned in section 93 or 433 (2) of the Income Tax Act, 1967 , but not including sums which are, or but for any exemption would be, chargeable under Case V of Schedule D.

(6) Without prejudice to the generality of subsection (1), any provision of the Income Tax Acts (excluding the provisions of Part XXV of the Income Tax Act, 1967 (Temporary Relief from Taxation)), or of any other statute, which confers an exemption from income tax, or which provides for the disregarding of a loss, or which provides for a person to be charged to income tax on any amount (whether expressed to be income or not, and whether an actual amount or not), shall, except as otherwise provided, have the like effect for purposes of corporation tax.

(7) This section shall not have effect so as to apply for the purposes of corporation tax anything in section 76 of the Income Tax Act, 1967 (foreign securities and possessions).

(8) Where, by virtue of this section or otherwise, any enactment applies both to income tax and to corporation tax, it shall not be affected in its operation by the fact that they are distinct taxes but, so far as is consistent with the Corporation Tax Acts, shall apply in relation to income tax and corporation tax as if they were one tax, so that, in particular, a matter which in a case involving two individuals is relevant for both of them in relation to income tax shall in a like case involving an individual and a company be relevant for him in relation to that tax and for it in relation to corporation tax; and for that purpose in any such enactment references to a relief from or charge to income tax, or to a specified provision of the Income Tax Acts shall, in the absence of or subject to any express adaptation, be construed as being or including a reference to any corresponding relief from or charge to corporation tax, or to any corresponding provision of the Corporation Tax Acts.

Miscellaneous special rules for Computation of income.

12.—(1) For purposes of corporation tax, income tax law as applied by section 11 shall have effect subject to the following subsections.

(2) Where a company begins or ceases to carry on a trade, or to be, within the charge to corporation tax in respect of a trade, the company's income shall be continued as if that were the commencement or, as the case may be, discontinuance of the trade, whether or not the trade is in fact commenced or discontinued:

Provided that where any provision of the Income Tax Acts is applied for corporation tax by this Act, this subsection shall not have effect for any purpose of that provision if under any enactment a trade is not to be treated as permanently discontinued for the corresponding income tax purpose.

(3) In computing income from a trade section 11 (5) (b) shall not prevent the deduction of yearly interest.

(4) In computing a company's income for any accounting period from the letting of rights to work minerals in the State there may be deducted any sums disbursed by the company wholly, exclusively and necessarily as expenses of management or supervision of those minerals in that period:

Provided that any enactments restricting the relief from income tax that might be given under section 553 of the Income Tax Act, 1967 (allowance to owner of mineral rights for expenses), shall apply to restrict in like manner the deductions that may be made under this subsection.

(5) Where a company is chargeable to corporation tax in respect of a trade under Case III of Schedule D, the income from the trade shall be computed in accordance with the provisions applicable to Case I of Schedule D.

(6) The amount of any income arising from securities and possessions in any place outside the State shall be treated as reduced (where such a deduction cannot be made under, and is not forbidden by, any provision of the Income Tax Acts applied by this Act) by any sum which has been paid in respect of income tax in the place where the income has arisen.

(7) Paragraphs (e) and (f) of Case III of Schedule D in section 53 (1) of the Income Tax Act, 1967 , shall for purposes of corporation tax extend to companies not resident in the State, so far as those companies are chargeable to tax on income of descriptions which in the case of companies resident in the State. fall within those paragraphs (but without prejudice to any provision of the Income Tax Acts specially exempting non-residents from income tax on any particular description of income).

(8) The provisions of section 64 (1) of the Income Tax Act, 1967 , shall not apply in computing income from a trade.

Computation of chargeable gains.

13.—(1) Subject to the provisions of this section, the amount to be included in respect of chargeable gains in a company's total profits for any accounting period shall be the following amount reduced by 48 per cent. thereof, namely, the total amount of chargeable gains accruing to the company in the accounting period after deducting (a) any allowable losses accruing to the company in the accounting period and (b) any allowable losses previously accruing to the company while it has been within the charge to corporation tax so far as they have not been allowed as a deduction from chargeable gains accruing in any previous accounting period.

(2) Except as otherwise provided by this Act the chargeable gains and allowable losses shall for purposes of corporation tax be computed in accordance with the principles applying for capital gains tax all questions as to the amounts which are or are not to be taken into account as chargeable gains or as allowable losses, or in computing gains or losses, or charged to tax as a person's gain, or as to the time when any such amount is to be treated as accruing being determined in accordance with the provisions relating to capital gains tax as If accounting periods were years of assessment.

(3) Subject to subsection (5), where the enactments relating to capital gains tax contain any reference to income tax or to the Income Tax Acts the reference shall, in relation to a company be construed as a reference to corporation tax or to the Corporation Tax Acts, but—

( a ) this subsection shall not affect the references to income tax in paragraph 4 (2) of Schedule 1 to the Capital Gains Tax Act, 1975 (exclusion of expenditure by reference to hypothetical income tax),

( b ) nothing in this section shall be taken as applying for corporation tax section 6 of the said Act (capital gains accruing to an individual: alternative charge), and

( c ) in so far as the said provisions operate by reference to matters of any specified description, account shall for corporation tax be taken of matters of that description which are confined to companies, but not of any which are confined to individuals.

(4) The Capital Gains Tax Act, 1975 , as extended by this section shall not be affected in its operation by the fact that capital gains tax and corporation tax are distinct taxes but, so far as is consistent with this Act, shall apply in relation to capital gains tax and corporation tax on chargeable gains as if they were one tax, so that, in particular, a matter which in a case involving two individuals is relevant for both of them in relation to capital gains tax shall in a like case involving an individual and a company be relevant for them in relation to that tax and for it in relation to corporation tax.

(5) Where assets of a company are vested in a liquidator, this section and the enactments applied by this section shall apply as if the assets were vested in, and the acts of the liquidator in relation to the assets were the acts of, the company (acquisitions from or disposals to him by the company being disregarded accordingly).

Deductions and additions in computation of profits for capital allowances and related charges.

14.—(1) In computing for purposes of corporation tax a company's profits for any accounting period there shall be made in accordance with this section all such deductions and additions as are required to give effect to the provisions of the Income Tax Acts which relate to allowances (including investment allowances) and charges in respect of capital expenditure, as those provisions are applied by this Act.

(2) ( a ) Allowances and charges which fall to be made for any accounting period in taxing a trade shall be given effect by treating the amount of any allowance as a trading expense of the trade in that period and by treating the amount on which any such charge is to be made as a trading receipt of the trade in that period.

( b ) (i) A company to which an allowance under Part XV of the Income Tax Act, 1967 (Initial Allowances for Certain Capital Expenditure on Machinery and Plant and on Industrial Buildings and Structures), or under section 294 (1) (a) of the said Act (allowances for expenditure on dredging) as applied to corporation tax by this Act, falls to be made in taxing a trade for any accounting period may disclaim the allowance by notice in writing given to the inspector not later than two years after the end of that period.

(ii) Any such notice shall be accompanied by a certificate signed by the person by whom the notice is given giving such particulars as show that the allowance would fall to be made if no such notice were given and the amount which would so fall to be made.

(iii) Where notice is given under subparagraph (i) for any accounting period the inspector may make an assessment to corporation tax on the company for that accounting period on the amount, or the further amount, which in his opinion ought to be charged.

(3) Where an allowance falls to be made to a company for any accounting period which is to be given by discharge or repayment of tax or in charging its income under Case V of Schedule D, and is to be available primarily against a specified class of income, it shall, as far as may be, be given effect by deducting the amount of the allowance from any income of the period, being income of the specified class.

(4) Balancing charges for any accounting period not failing to be made in taxing a trade shall, notwithstanding any provision for them to be made under Case IV or V of Schedule D, as the case may be, be given effect by treating the amount on which the charge is to be made as income of the same class as that against which the corresponding allowances are available or primarily available.

(5) Where an allowance which is to be made for any accounting period by way of discharge or repayment of tax, or in charging income under Case V of Schedule D, as the case may be, cannot be given full effect under subsection (3) in that period by reason of a want or deficiency of income of the relevant class, then (so long as the company remains within the charge to tax) the amount unallowed shall be carried forward to the succeeding accounting period, except in so far as effect is given to it under subsection (6); and the amount so carried forward shall be treated for purposes of this section, including any further application of this subsection, as the amount of a corresponding allowance for that period.

(6) Where an allowance (other than an allowance which is carried forward from an earlier accounting period) which is to be made for any accounting period by way of discharge or repayment of tax, or in charging income under Case V of Schedule D as the case may be, and which is available primarily against income of a specified class cannot be given full effect under subsection (3) in that period by reason of a want or deficiency of income of that class, the company may claim that effect shall be given to the allowance against the profits (of whatever description) of that accounting period and, if the company was then within the charge to tax, of preceding accounting periods enduring with-in the time specified in subsection (7); and, subject to that subsection and to any relief for earlier allowances or for losses, the profits of any of those accounting periods shall then be treated as reduced by the amount unallowed under subsection (3), or by so much of that amount as cannot be given effect under this subsection against profits of a later accounting period.

(7) The time referred to in subsection (6) is a time immediately preceding the accounting period first mentioned in subsection (6) equal in length to the accounting period for which the allowance falls to be made; but the amount or aggregate amount of the reduction which may be made under that subsection in the profits of an accounting period falling partly before that time shall not, with the amount of any reduction failing to be made therein under any corresponding provision of this Act relating to losses, exceed a part of those profits proportionate to the part of the period falling within that time.

(8) A claim under subsection (6) shall be made by notice in writing given to the inspector not later than two years from the end of the accounting period in which an allowance cannot be given full effect under subsection (3).

Deduction of management expenses of Investment companies (including savings banks).

15.—(1) In computing for purposes of corporation tax the total profits for any accounting period of an investment company resident in the State there shall be deducted any sums disbursed on or after the 6th day of April, 1976, as expenses of management (including commissions) for that period, except any such expenses as are deductible in computing income for the purposes of Case V of Schedule D:

Provided that there shall be deducted from the amount treated as expenses of management the amount of any income derived from sources not charged to tax, other than franked investment income.

(2) Where in any accounting period of an investment company the expenses of management deductible under subsection (1), together with any charges on income paid in the accounting period wholly and exclusively for purposes of the company's business, exceed the amount of the profits from which they are deductible, the excess shall be carried forward to the succeeding accounting period; and the amount so carried forward shall be treated for purposes of this section (other than subsection (4) ), including any further application of this subsection, as if it had been disbursed as expenses of management for that accounting period.

(3) For the purposes of subsections (1) and (2) there shall be added to a company's expenses of management in any accounting period the amount of any allowances falling to be made to the company for that period by virtue of section 37 of the Finance Act, 1968 (relief for payments in respect of redundancy), or section 16 of the Finance Act, 1972 (certain approved occupational pension schemes: exemptions and reliefs).

(4) Where an investment company proves that, in any accounting period, it has received tranked investment income, it shall be entitled to claim payment of the amount of the tax credit comprised in so much of that income as is equal to the amount of any excess for the accounting period computed under subsection (2) but excluding any amount carried forward from a previous accounting period:

Provided that any excess in respect of which relief is given under this subsection shall not be carried forward under subsection (2).

(5) Notice of any claim under subsection (4), together with the particulars thereof, shall be given in writing to the inspector within two years after the end of the accounting period in respect of which the claim is made, and where the inspector objects to such claim the Appeal Commissioners shall hear and determine the same in like manner as in the case of an appeal to them against an assessment under Schedule D, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

(6) For purposes of this section and of other provisions of this Act relating to expenses of management "investment company" means any company whose business consists wholly or mainly in the making of investments, and the principal part of whose income is derived therefrom, but includes any savings bank or other bank for savings.

Relief for trading losses other than terminal losses.

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

(2) Where in any accounting period a company carrying on a trade incurs a loss in the trade, then (subject to subsection (4)) the company may make a claim requiring that the loss be set off for purposes of corporation tax against profits (of whatever description) of that accounting period and, if the company was then carrying on the trade and the claim so requires, of preceding accounting periods ending within the time specified in subsection (3); and, subject to that subsection and to any relief for an earlier loss, the profits of any of those periods shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection against profits of a later accounting period.

(3) The time referred to in subsection (2) is a time immediately preceding the accounting period first mentioned in subsection (2) equal in length to the accounting period in which the loss is incurred; but the amount of the reduction which may be made under that subsection in the profits of an accounting period falling partly before that time shall not exceed a part of those profits proportionate to the part of the period falling within that time.

(4) Subsection (2) shall not apply to trades falling within Case III of Schedule D.

(5) The amount of a loss incurred in a trade in an accounting period shall be computed for purposes of this section in like manner as trading income from the trade in that period would have been computed.

(6) For purposes of this section "trading income" means, in relation to any trade, the income which falls or would fall to be included in respect of the trade in the total profits of the company; but where in an accounting period a company incurs a loss in a trade in respect of which it is within the charge to corporation tax under Case I or III of Schedule D, and in any later accounting period to which the loss or any part of it is carried forward under subsection (1) relief in respect thereof cannot be given, or cannot wholly be given, because the amount of the trading income of the trade is insufficient, any interest or dividends on investments which would fall to be taken into account as trading receipts in computing that trading income but for the fact that they have been subjected to tax under other provisions shall be treated for purposes of subsection (1) as if they were trading income of the trade.

(7) Where in an accounting period the charges on income paid by a company—

( a ) exceed the amount of the profits against which they are deductible, and

( b ) include payments made wholly and exclusively for the purposes of a trade carried on by the company,

then, up to the amount of that excess or of those payments, whichever is the less, the charges on income so paid shall in computing a loss for purposes of subsection (1) be deductible as if they were trading expenses of the trade.

(8) In this section references to a company carrying on a trade refer to the company carrying it on so as to be within the charge to corporation tax in respect of it.

(9) Where—

( a ) a claim is made under subsection (2), and

( b ) the claim relates to a loss (arrived at by apportionment if necessary) incurred in a trade in the twelve months immediately preceding the date on which the company ceases to carry on such trade, and

( c ) the claim is a claim to have any part of the loss set off against profits of an accounting period preceding the accounting period in which the loss was incurred,

then, such set-off shall not apply so as to reduce the amount on which the company is chargeable to corporation tax for such preceding accounting period to an amount less than an amount the corporation tax chargeable on which for that preceding accounting period is a sum equal to the excess of the tax credits comprised in the franked payments made by the company in that preceding accounting period over the tax credits comprised in the franked investment income received by the company in the said preceding accounting period.

(10) A claim under subsection (2) shall be made within two years from the end of the accounting period in which the loss is incurred.

Restriction of relief for losses in farming or market gardening.

17.—(1) In this section—

"prior three years" in relation to a loss incurred in an accounting period, means the last three years before the beginning of the accounting period;

"prior period of loss" means the prior three years, or, if losses were incurred in successive accounting periods amounting in all to a period longer than three years (and ending when the prior three years end), that longer period;

"farming" has the same meaning as in subsection (1) (inserted by the Finance Act, 1975 ) of section 13 of the Finance Act, 1974 (taxation of farming profits);

"market gardening" has the same, meaning as in section 54 of the Income Tax Act, 1967 (market gardening).

(2) ( a ) Any loss incurred in a trade of farming or market gardening shall not be available for relief under section 16 (2) unless it is shown that, for the accounting period in which the loss is claimed to have been incurred, the trade was being carried on a commercial basis and with a view to the realisation of profits in the trade.

( b ) Without prejudice to paragraph (a), any loss incurred in any accounting period in a trade of farming or market gardening shall not be available for relief under section 16 (2), if a loss, computed without regard to capital allowances, was incurred in carrying on that trade in that accounting period, and in each of the accounting periods wholly or partly comprised in the prior three years: and for the purpose of this paragraph" loss computed without regard to capital allowances" means a loss ascertained in accordance with the rules of Case I of Schedule D, but so that, notwithstanding section 14, no account shall be taken of any allowance or charge which otherwise would be taken into account under that section.

( c ) For the purposes of this section, the fact that a trade of farming or market gardening was being carried on at any time so as to afford a reasonable expectation of profit shall be conclusive evidence that it was then being carried on with a view to the realisation of profits.

( d ) For the purposes of this subsection shall not restrict relief for any loss if it is shown by the claimant company that the whole of its farming or market gardening activities in the year next following the prior three years are of such a nature, and carried on in such a way, as would have justified a reasonable expectation of the realisation of profits in the future if they had been undertaken by a competent farmer or market gardener, but that, if that farmer or market gardener had undertaken those activities at the beginning of the prior period of loss, he could not reasonably have expected the activities to become profitable until after the end of the year next following the prior period of loss.

( e ) This subsection shall not restrict relief where the carrying on of the trade forms part of and is ancillary to a larger trading undertaking.

(3) Subsection (2) shall not restrict relief for any loss if the trade was set up and commenced within the prior three years, and, for the purposes of this subsection, a trade shall be treated as discontinued, and a new trade set up, in any event which under any of the provisions of the Tax Acts is to be treated as equivalent to the permanent discontinuance or setting up of a trade:

Provided that a trade shall not be treated as discontinued if under section 20 (2) it is not to be treated as discontinued for the purpose of capital allowances and charges.

(4) Where a trade of farming or market gardening is or falls to be treated as being carried on for a part only of an accounting period by reason of its being set up and commenced, or discontinued, or both, in that accounting period, subsection (2) shall have effect in relation to that trade as regards that part of that accounting period.

(5) Where at any time there has been a change in the persons engaged in carrying on a trade of farming or market gardening, this section shall, notwithstanding subsection (3), apply to any person who was engaged in carrying on the trade immediately before and immediately after the change as if the trade were the same before and after without any discontinuance, and as if a person and another person with whom he is connected were the same person.

In this subsection any question as to whether persons are connected shall be determined in accordance with the provisions of section 157 and accordingly relief from corporation tax may be restricted under this section by reference to losses some of which are incurred in years of assessment and some, computed without regard to capital allowances, are incurred in a company's accounting periods.

Relief for terminal loss in a trade.

18.—(1) Where a company ceasing to carry on a trade has in any accounting period falling wholly or partly within the previous twelve months incurred a loss in the trade, the company may claim to set the loss off for purposes of corporation tax against trading income from the trade in accounting periods falling wholly or partly within the three years preceding those twelve months (or within any less period throughout which the company has carried on the trade); and, subject to the following subsections and to any relief for earlier losses, the trading income of any of those periods shall be then treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection against income of a later accounting period:

Provided that relief shall not be given under this subsection in respect of any loss in so far as the loss has been or can be otherwise taken into account so as to reduce or relieve any charge to tax.

(2) Where a loss is incurred in an accounting period falling partly outside the twelve months mentioned in subsection (1), relief shall be given under that subsection in respect of a part only of that loss proportionate to the part of the period falling within those twelve months, and the amount of the reduction which may be made under that subsection in the trading income of an accounting period falling partly outside the three years there mentioned shall not exceed a part of that income proportionate to the part of the period falling within those three years.

(3) Section 16 (5) to (8) shall apply for purposes of this section as they apply for purposes of section 16 (1); and relief shall not be given under this section in respect of a loss incurred in a trade so as to interfere with any relief under section 10 in respect of payments made wholly and exclusively for purposes of that trade.

(4) When the tax credits comprised in the total amount of the franked payments made by a company in an accounting period exceed the tax credits comprised in the total amount of the franked investment income received by the company in that accounting period, then, the set-off of loss provided for by subsection (1) shall not apply so as to reduce the amount on which the company is chargeable to corporation tax to an amount less than an amount the corporation tax chargeable on which for that period is a sum equal to the excess:

Provided that where the accounting period falls partly outside the three years mentioned in subsection (1) the excess of the tax credits to be taken into account for the purpose of this subsection shall be the part of the excess for the whole of the accounting period proportionate to the part of the accounting period which falls within the three years mentioned in subsection (1).

Losses in transactions from which income would be chargeable under Case IV or V of Schedule D.

19.—(1) Where in any accounting period a company incurs a loss in a transaction in respect of which the company is within the charge to corporation tax under Case IV of Schedule D, the company may claim to set the loss off against the amount of any income arising from transactions in respect of which the company is assessed to corporation tax under that Case for the same or any subsequent accounting period; and the company's income in any accounting period from such transactions shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this section against income of an earlier accounting period:

Provided that where a company sustains a loss in a transaction which, if profit had arisen from it, would be chargeable to tax by virtue of section 55 (1) or (2) of the Finance Act, 1974 (transactions in certificates of deposit), then, if the company is chargeable to tax in respect of the interest payable on the amount of money the right to which has been disposed of, the amount of that interest shall be included in the amounts against which the company may claim to set off the amount of its loss under this subsection.

(2) Where in any accounting period a company is within the charge to corporation tax under Case V of Schedule D and the aggregate of the deficiencies, computed in accordance with section 81 (4) of the Income Tax Act, 1967 (taxation of rents under short leases), exceeds the aggregate of the surpluses as so computed the excess may, on a claim being made in that behalf, be deducted from or set off, as far as may be, against the amount of any income in respect of which the company is assessed to corporation tax under the said Case V for previous accounting periods ending within the time specified in subsection (3); and, subject to that subsection and to any relief for an earlier excess of deficiencies, the said income of any of those periods shall then be treated as reduced, as far as may be, by the amount of the excess, and any portion of the excess for which relief is not so given shall be set off against the income in respect of which the company is assessed to corporation tax under Case V of Schedule D for any subsequent accounting period:

Provided that any relief under this subsection by way of carrying forward any portion of such excess shall be given as far as possible from the first subsequent assessment and, so far as it cannot be so given, then from the next assessment and so on.

(3) The time referred to in subsection (2) is a time immediately preceding the accounting period first mentioned in subsection (2) equal in length to the accounting period in which the excess of deficiencies occurred, but the amount of the reduction which may be made under that subsection in the income of an accounting period falling partly before that time shall not exceed a part of that income proportionate to the part of the period falling within that time.

(4) A claim under subsection (2) shall be made within two years from the end of the accounting period in which the excess of deficiencies was incurred.

Company reconstructions without change of ownership.

20.—(1) Where on or after the 6th day of April, 1976, on a company ("the predecessor") ceasing to carry on a trade, another company ("the successor") begins to carry it on, and—

( a ) on or at any time within two years after that event the trade or an interest amounting to not less than a three-fourths share in it belongs to the same persons as the trade or such an interest belonged to at some time within a year before that event; and

( b ) the trade is not, within the period taken for the comparison under paragraph (a), carried on otherwise than by a company which is within the charge to tax in respect of it:

then this Act shall have effect subject to subsections (2) to (5).

In paragraphs (a) and (b) references to the trade shall apply also to any other trade of which the activities comprise the activities of the first-mentioned trade.

(2) The trade shall not be treated as permanently discontinued nor a new trade as set up and commenced for the purpose of the allowances and charges provided for by section 14; but there shall be made to or on the successor in accordance with that section al such allowances and charges as would, if the predecessor had continued to carry on the trade, have fallen to be made to or on it and the amount of any such allowance or charge shall be computed as if the successor had been carrying on the trade since the predecessor began to do so and as if everything done to or by the predecessor had been done to or by the successor (but so that no sale or transfer which on the transfer of the trade is made to the successor by the predecessor of any assets in use for the purpose of the trade shall be treated as giving rise to any such allowance or charge).

(3) The predecessor shall not be entitled to relief under section 18, except as provided by subsection (5) of this section; and, subject to any claim made by the predecessor under section 16 (2), the successor shall be entitled to relief under section 16 (1), as for a loss sustained by the successor in carrying on the trade, for any amount for which the predecessor would have been entitled to claim relief if it had continued to carry on the trade.

(4) Any securities within the meaning of section 367 of the Income Tax Act, 1967 (purchase and sale of securities), which at the time when the predecessor ceases to carry on the trade form part of the trading stock belonging to the trade shall be treated for purposes of that section as having been sold at that time in the open market by the predecessor and as having been purchased at that time in the open market by the successor.

(5) On the successor ceasing to carry on the trade—

( a ) if the successor does so within four years of succeeding to it, any relief which might be given to the successor under section 18 on its ceasing to carry on the trade may, so far as it cannot be given to the successor, be given to the predecessor as if the predecessor had incurred the loss (including any amount treated as a loss under section 18 (3) ); and

( b ) if the successor ceases to carry on the trade within one year of succeeding to it, relief may be given to the predecessor under section 18 in respect of any loss incurred by it (or amount treated as such a loss under section 18 (3) );

but for the purposes of section 18, as it applies by virtue of this subsection to the giving of relief to the predecessor, the predecessor shall be treated as ceasing to carry on the trade when the successor does so.

(6) Where the successor ceases to carry on the trade within the period taken for the comparison under subsection (1) (a) and, on its doing so a third company begins to carry on the trade, then no relief shall be given to the predecessor by virtue of subsection (5) by reference to that event, but subject to that subsections (2) to (5) shall apply both in relation to that event (together with the new predecessor and successor) and to the earlier event (together with the original predecessor and successor), but so that—

( a ) in relation to the earlier event " successor " shall include the successor at either event; and

( b ) in relation to the later event " predecessor " shall include the predecessor at either event;

and if the conditions of this subsection are thereafter again satisfied, it shall apply again in like manner.

(7) Where, on a company ceasing to carry on a trade, another company begins to carry on the activities of the trade as part of its trade, then that part of the trade carried on by the successor shall be treated for the purposes of this section as a separate trade, if the effect of so treating it is that subsection (1) or (6) has effect on that event in relation to that separate trade; and where, on a company ceasing to carry on part of a trade, another company begins to carry on the activities of that part as its trade or part of its trade, the predecessor shall for purposes of this section be treated as having carried on that part of its trade as a separate trade if the effect of so treating it is that subsection (1) or (6) has effect on that event in relation to that separate trade.

(8) Where under subsection (7) any activities of a company's trade fall, on the company ceasing or beginning to carry them on, to be treated as a separate trade, any necessary apportionment shall be made of receipts or expenses.

(9) Where, by virtue of subsection (8), any sum falls to be apportioned and, at the time of the apportionment, it appears that it is material as respects the liability to tax (for whatever period) of two or more companies, any question which arises as to the manner in which the sum is to be apportioned shall be determined, for the purposes of the tax of all those companies, by the Appeal Commissioners, who shall determine the question in like manner as if it were an appeal against an assessment, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

Provided that all the said companies shall be entitled to appear and be heard by the Appeal Commissioners or to make representations to them in writing.

(10) Any relief obtainable under this section by way of discharge or repayment of tax shall be given on the making of a claim.

(11) For the purposes of this section—

( a ) a trade carried on by two or more persons shall be treated as belonging to them in the shares in which they are entitled to the profits of the trade;

( b ) a trade or interest therein belonging to any person as trustee (otherwise than for charitable or public purposes) shall be treated as belonging to the persons for the time being entitled to the income under the trust;

( c ) a trade or interest therein belonging to a company shall, where the result of so doing is that subsection (1) or (6) has effect in relation to an event, be treated in any of the ways permitted by subsection (12).

(12) For the purposes of this section, a trade or interest therein which belongs to a company engaged in carrying it on may be regarded—

( a ) as belonging to the persons owning the ordinary share capital of the company and as belonging to them in proportion to the amount of their holdings of that capital, or

( b ) in the case of a company which is a subsidiary company, as belonging to a company which is its parent company, or as belonging to the persons owning the ordinary share capital of that parent company, and as belonging to them in proportion to the amount of their holdings of that capital,

and any ordinary share capital owned by a company may, if any person or body of persons has the power to secure by means of the holding of shares or the possession of voting power in or in relation to any company, or by virtue of any power conferred by the articles of association or other document regulating any company, that the affairs of the company owning the share capital are conducted in accordance with his or their wishes, be regarded as owned by the person or body of persons having that power.

(13) For the purposes of subsection (12)—

( a ) references to ownership shall be construed as references to beneficial ownership;

( b ) a company shall be deemed to be a subsidiary of another company if and so long as not less than 75 per cent. of its ordinary share capital is owned by that other company, whether directly or through another company or other companies, or partly directly and partly through another company or other companies;

( c ) the amount of ordinary share capital of one company owned by a second company through another company or other companies, or partly directly and partly through another company or other companies, shall be determined in accordance with section 156 (5) to (10) (subsidiaries); and

( d ) where any company is a subsidiary of another company, that other company shall be considered as its parent company unless both are subsidiaries of a third company.

(14) In determining, for the purposes of this section, whether or to what extent a trade belongs at different times to the same persons, persons who are relatives of one another and the persons from time to time entitled to the income under any trust shall respectively be treated as a single person, and for this purpose "relative" means husband, wife, ancestor, lineal descendant, brother or sister.

Application and adaptation of Income Tax Acts as to capital allowances.

21.—(1) Except in so far as this Act otherwise provides—

( a ) Parts XIII to XVIII of the Income Tax Act, 1967 ,

( b ) section 11 of the Finance Act, 1967 ,

( c ) section 4 of the Finance Act, 1968 ,

( d ) section 4 of the Finance Act, 1969 ,

( e ) section 14 of the Finance Act, 1970 ,

( f ) sections 22 , 23 , 24 and 26 of the Finance Act, 1971 ,

( g ) sections 9 and 25 of the Finance Act, 1973 ,

( h ) sections 1 to 7 of the Finance (Taxation of Profits of Certain Mines) Act, 1974 ,

( i ) sections 22 and 25 of the Finance Act, 1974 , and

( j ) any other provisions of the Income Tax Acts relating to the making of allowances or charges under or in accordance with those Parts and sections,

shall apply equally for purposes of corporation tax and for purposes of income tax and to that intent those Parts and sections shall be amended in accordance with the First Schedule.

(2) Sections 241 (3) (4) (9), 246 (3), 249, 251 (5), 254 (6), 262, 295, 296, 297 and 305 (4) of the Income Tax Act, 1967 , sections 22 (4) and 23 of the Finance Act, 1971 , and section 22 (5) (6) (7) of the Finance Act, 1974 , shall not apply for purposes of corporation tax.

(3) For purposes of corporation tax the right to an allowance or liability to a charge for an accounting period, and the rate or amount of any such allowance or charge, shall be determined under the provisions referred to in subsection (1) by applying the law in force for the year of assessment in which the accounting period ends.

(4) Where a company not resident in the State is within the charge to corporation tax in respect of one source of income and to income tax in respect of another source, then in applying the provisions referred to in subsection (1) allowances related to any source of income shall be given effect against income chargeable to the same tax as is chargeable on income from that source.

Double taxation relief.

22.—(1) Subject to any express amendments made by this Act, Part XXII of the Income Tax Act, 1967 (Relief from Double Taxation), together with any other enactment relating or referring to double taxation relief, and (except in so far as arrangements made after the passing of this Act provide otherwise) any arrangements made under section 361 of the Income Tax Act, 1967 (agreements for relief from double taxation), in relation to corporation profits tax, shall have effect in relation to corporation tax and income chargeable thereto as they are expressed to have effect in relation to corporation profits tax and profits chargeable thereto, and not as they have effect in relation to income tax:

Provided that this section shall not affect the operation, as they are applied to corporation tax by this Act, of section 361 (7) of the Income Tax Act, 1967 , and paragraph 13 of Schedule 10 to that Act (claims for credit for foreign tax).

(2) The necessary apportionments as respects corporation tax shall be made where arrangements having the force of law by virtue of section 361 of the Income Tax Act, 1967 (as applied to corporation tax by subsection (1)) apply to the unexpired portion of an accounting period current at a date specified by the arrangements, and any such apportionment shall be made in proportion to the number of months or fractions of months in the part of the relevant accounting period before the said date and in the remaining part thereof respectively.

Double taxation relief: supplementary.

23.—(1) The provisions applied to corporation tax in respect of income by section 22 shall apply also to corporation tax in respect of chargeable gains, and for that purpose—

( a ) references in those provisions to income shall be construed as references to chargeable gains; and

( b ) references in those provisions to taxes of a similar character, or corresponding, to corporation tax shall be construed as references to taxes on chargeable gains;

and section 361 (7) (8) of the Income Tax Act, 1967 , shall have effect accordingly.

(2) For the purposes of paragraph 4 of Schedule 10 to the Income Tax Act, 1967 (which, as applied to corporation tax by section 22, limits the credit for foreign tax allowable against corporation tax in respect of any income to the corporation tax attributable to that income and, by virtue of subsection (1), applies similarly in relation to chargeable gains), the corporation tax attributable to any income or gain ("the relevant income or gain") shall be determined in accordance with subsections (3) and (4).

(3) Subject to subsection (4), the amount of corporation tax attributable to the relevant income or gain shall be treated as equal to such proportion of the amount of that income or gain as corresponds to the rate of corporation tax payable by the company (before any credit for double taxation relief) on its income or chargeable gains for the accounting period in which the income arises or the gain accrues ("the relevant accounting period").

(4) Where in the relevant accounting period there is any deduction to be made for charges on income, expenses of management or other amounts which can be deducted from or set off against or treated as reducing profits of more than one description—

( a ) the company may for the purposes of this section allocate the deduction in such amounts and to such of its profits for that period as it thinks fit; and

( b ) the amount of the relevant income or gain shall be treated for the purposes of subsection (3) as reduced or, as the case may be, extinguished by so much (if any) of the deduction as is allocated to it.

Franked investment income and franked payment.

24.—(1) Income of a company resident in the State which consists of a distribution in respect of which the company is entitled to a tax credit (and which accordingly represents income equal to the aggregate of the amount or value of the distribution and the amount of that credit) is in this Act referred to as "franked investment income" of the company.

(2) The sum of the amount or value of a distribution made by a company resident in the State and the amount of the tax credit in respect of it is in this Act referred to as "a franked payment", and references to any accounting or other period in which a franked payment is made are references to the period in which the distribution in question is made.

Set-off of losses etc. against franked investment income.

25.—(1) Where in any accounting period a company receives franked investment income the company may on making a claim for the purpose require that the franked investment income or part thereof shall for all or any of the purposes mentioned in subsection (2) be treated as if it were a like amount of profits chargeable to corporation tax, and subject to subsections (4) and (5) it shall be entitled to have paid to it the value of the tax credit comprised in the income or in the part thereof so treated.

(2) The purposes for which a claim may be made under subsection (1) are those of—

( a ) the setting of trading losses against total profits under section 16 (2);

( b ) the deduction of charges on income under section 10;

( c ) the setting of certain capital allowances against total profits under section 14 (6).

(3) Where a company makes a claim under this section for any accounting period, the reduction falling to be made in profits of that accounting period shall be made as far as may be in profits chargeable to corporation tax rather than in the amount treated as profits so chargeable under this section.

(4) Where a claim under this section relates to section 16 (2) or 14 (6) and an accounting period of the company falls partly before and partly within the time mentioned in that subsection, then—

( a ) the restriction imposed by section 16 (3) or by section 14 (6) on the amount of the relief shall be applied only to any relief to be given apart from this section, and shall be applied without regard to any amount treated as profits of the accounting period under this section; but

( b ) relief under this section shall be given only against a part of the amount so treated proportionate to the part of the accounting period falling within the said time.

(5) Where a company has obtained payment of a tax credit on a claim under this section or under section 15 (4) and apart from such a claim any amount could be set off against or deducted from profits of a subsequent accounting period, then the company may claim that the amount shall be so set off or deducted but in that case to the extent to which the amount was used to obtain payment of a tax credit, such tax credit shall be recoverable from the company by an assessment on it to income tax under Case IV of Schedule D for the year of assessment in which the subsequent accounting period ends on an amount the income tax on which at the standard rate for the said year of assessment is equal to the amount of the said tax credit and this assessment shall be made not later than two years from the end of the subsequent accounting period:

Provided that relief under this subsection shall not be given against the profits of an accounting period if such relief could be given against the profits of an earlier accounting period.

(6) The time limits for claims under this section shall be as follows—

( a ) if and so far as the purpose for which the claim is made is the setting of trading losses against total profits under section 16 (2), two years from the end of the accounting period in which the trading loss is incurred;

( b ) if and so far as the purpose for which the claim is made is the deduction of charges on income under section 10 or the setting of capital allowances against total profits under section 14 (6), two years from the end of the accounting period in which the charges were paid or the capital allowances fell to be made;

( c ) if the claim is a claim under subsection (5), two years from the end of the accounting period in respect of which the claim is made.

(7) Any amount on which by virtue of this section income tax is charged on a company by an assessment under Case IV of Schedule D shall not be regarded as income of the company for any purpose of the Tax Acts.

Set-off of loss brought forward or terminal loss against franked investment income in the case of financial concerns.

26.—(1) Where in any accounting period a company receives franked investment income, the company, instead of or in addition to making a claim under section 25, may on making a claim for the purpose require that the franked investment income shall be taken into account for relief under section 16 (1) or 18, up to the amount of such income received in the accounting period which, if chargeable to corporation tax, would have been so taken into account by virtue of section 16 (6); and (subject to the restriction to the said amount of franked investment income) the following subsections shall have effect where the company makes a claim under this section for any accounting period.

(2) The amount to which the claim relates shall for the purposes of the claim be treated as trading income of the accounting period.

(3) The reduction falling to be made in trading income of an accounting period shall be made as far as may be in trading income chargeable to corporation tax rather than in the amount treated as trading income so chargeable under this section:

Provided that where the claim is made under section 18—

( a ) the loss in trade shall be set primarily against income chargeable to corporation tax (exclusive of income so treated as chargeable by this section) for the accounting periods referred to in section 18 (1) and the set-off of loss against franked investment income provided for by this section shall apply to the balance only of such loss which has not been set off under the provisions of section 18 (1); so that the set-off against franked investment income of such balance of loss as is referred to above shall be effected in a later rather than an earlier accounting period falling within the three years mentioned in section 18 (1); and

( b ) where the aggregate of the tax credits comprised in the total amount of the franked investment income of an accounting period exceeds the aggregate of the tax credits comprised in the franked payments made in that accounting period, then the payment of tax credit to the company shall not exceed a sum equal to the excess; and for this purpose when the accounting period falls partly outside the three years mentioned in section 18 (1) the said excess shall be the part of the excess for the whole of the accounting period proportionate to the part of the accounting period which falls within the said three years.

(4) Where a company has obtained payment to it of a tax credit by virtue of this section on a claim under section 16 (1) and apart from such a claim a loss could be set off against or deducted from profits of a subsequent accounting period, then the company may claim that the loss shall be so set off or deducted but, in that case, to the extent to which the loss was used to obtain payment of a tax credit, such tax credit shall be recovered from the company by an assessment on it to income tax under Case IV of Schedule D for the year of assessment in which the subsequent accounting period ends on an amount the income tax on which at the standard rate for the said year of assessment is equal to the amount of the said tax credit and this assessment shall be made not later than two years from the end of the subsequent accounting period.

(5) If the claim relates to section 18 and an accounting period of the company falls partly outside the three years mentioned in subsection (1) of that section, then—

( a ) the restriction imposed by subsection (2) of that section on the amount of the reduction that may be made in the trading income of that period shall be applied only to any relief to be given apart from this section, and shall be applied without regard to any amount treated as trading income of the period by virtue of this section, but

( b ) relief under this section shall be given only against a part of the amount so treated proportionate to the part of the accounting period falling within the three years in question.

(6) Any amount on which by virtue of this section income tax is charged on a company by an assessment under Case IV of Schedule D shall not be regarded as income of the company for any purpose of the Tax Acts.

Change in ownership of company: disallowance of trading losses.

27.—(1) If—

( a ) within any period of three years there is both a change in the ownership of a company and (either earlier or later in that period, or at the same time) a major change in the nature or conduct of a trade carried on by the company, or

( b ) at any time after the scale of the activities in a trade carried on by a company has become small or negligible, and before any considerable revival of the trade, there is a change in the ownership of the company,

no relief shall be given—

(i) under section 16 by setting a loss incurred by the company in an accounting period beginning before the change of ownership against any income or other profits of an accounting period ending after the change of ownership; nor

(ii) under section 182 (relief in respect of unrelieved losses etc. carried forward from the year 1975-76) or 184 (relief in respect of corporation profits tax losses) against corporation tax payable for any accounting period ending after the change of ownership.

(2) In applying this section to the accounting period in which the change of ownership occurs, the part ending with the change of ownership, and the part after, shall be treated as two separate accounting periods, and the profits or losses of the accounting period shall be apportioned to the two parts.

The apportionment shall be on a time basis according to the respective lengths of those parts except that, if it appears that that method would work unreasonably or unjustly, such other method shall be used as appears just and reasonable.

(3) In subsection (1) "major change in the nature or conduct of a trade" includes—

( a ) a major change in the type of property dealt in, or services or facilities provided, in the trade, or

( b ) a major change in customers, outlets or markets of the trade,

and this section applies even if the change is the result of a gradual process which began outside the period of three years mentioned in subsection (1) (a).

(4) In relation to any relief available under section 20, subsection (1) shall apply as if any loss sustained by a predecessor company had been sustained by a successor company and as if the references to a trade included references to the trade as carried on by a predecessor company.

(5) Where relief in respect of a company's losses has been restricted under this section then, notwithstanding section 304 (6) of the Income Tax Act, 1967 (provisions as to interpretation for purposes of Part XVI of that Act), in applying the provisions of Part XVI of that Act (Annual Allowances for Certain Capital Expenditure) in relation to balancing charges to the company by reference to any event after the change of ownership of the company, any allowance or deduction falling to be made in taxing the company's trade for any chargeable period before the change of ownership shall be disregarded unless the profits or gains of that chargeable period or of any subsequent chargeable period before the change of ownership were sufficient to give effect to the allowance or deduction.

In applying this subsection it shall be assumed that any profits or gains are applied in giving effect to any such allowance or deduction in preference to being set off against any loss which is not attributable to such an allowance or deduction.

(6) Where the operation of this section depends on circumstances or events at a time after the change of ownership (but not more than three years after), an assessment to give effect to the provisions of this section shall not be out of time if made within ten years from that time, or the latest of those times.

(7) Notwithstanding the repeal by this Act of section 39 of the Finance Act, 1973 , the provisions of the Fifth Schedule to that Act (Disallowance of Trading Losses and Restriction of Capital Allowances), except paragraphs 8 and 10 of Part I thereof, shall have effect, as if enacted in this Act, for the purpose of supplementing this section with the substitution, for references to section 39 of that Act, of references to this section.

(8) This section shall not apply if the change of ownership took place before the 16th day of May, 1973, and subsection (1) (a) shall not apply if the major change in the nature or conduct of the trade was completed before that date; but in other respects this section shall have effect by reference to circumstances and events before that date, as well as by reference to later circumstances and events.

PART III SPECIAL CLASSES OF COMPANIES

Reduction of corporation tax liability of small companies.

28.—(1) Where in any accounting period the profits of a company resident in the State do not exceed the lower relevant maximum amount, the company may claim that the corporation tax charged on its income for that period shall be calculated as if the rate of corporation tax for the financial year 1974 and each subsequent financial year were 40 per cent. (instead of being the rate fixed for companies generally).

(2) Where in any accounting period the profits of any such company exceed the lower relevant maximum amount but do not exceed the upper relevant maximum amount, the company may claim that the corporation tax charged on its income for that period shall be reduced by a sum equal to 10 per cent. of the following amount—

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where M is the upper relevant maximum amount, P is the amount of the profits and I is the amount of the income.

(3) The lower and upper relevant maximum amounts mentioned in the foregoing subsections shall be determined as follows—

( a ) where the company has no associated company in the accounting period those amounts are £5,000 and £10,000 respectively;

( b ) where the company has one or more associated companies in the accounting period, the lower relevant maximum amount is £5,000 divided by one plus the number of those associated companies and the upper relevant maximum amount is £10,000 divided by one plus the number of these associated companies.

(4) In applying subsection (3) to any accounting period of a company, an associated company which has not carried on any trade or business at any time in that accounting period (or, if an associated company during part only of that accounting period, at any time in that part of that accounting period) shall be disregarded and for the purposes of this section a company is to be treated as an "associated company" of another at a given time if at that time one of the two has control of the other or both are under the control of the same person or persons.

In this subsection "control" shall be construed in accordance with section 102 (meaning of "associated company" and "control").

(5) In determining how many associated companies a company has in an accounting period or whether a company has an associated company in an accounting period, an associated company shall be counted even if it was an associated company for part only of the accounting period, and two or more associated companies shall be counted even if they were associated companies for different parts of the accounting period.

(6) For an accounting period of less than twelve months the relevant maximum amounts determined in accordance with subsection (3) shall be proportionately reduced.

(7) For the purposes of the foregoing subsections the profits of a company for an accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne, with the addition of franked investment income other than franked investment income which the company (if a member of a group) receives from companies within the group.

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

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

29.—(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 this Act 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 this Act 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 the 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 the preceding subsections, 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 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 this Act 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.

Industrial and provident societies.

30.—(1) The provisions of section 218 of the Income Tax Act, 1967 (industrial and provident societies: interpretation), shall have effect for the interpretation of this section.

(2) Notwithstanding anything in the Tax Acts, any share or loan interest paid by a society—

( a ) shall be paid without deduction of income tax and shall be charged under Case III of Schedule D, and

( b ) shall not be treated as a distribution:

Provided that paragraph (a) shall not apply to any share interest or loan interest payable to a person whose usual place of abode is not within the State.

(3) In computing the corporation tax payable for any accounting period of a society, section 10 (allowance of charges on income) shall have effect subject to—

( a ) the insertion of "the appropriate proportion of" in subsection (1) after the word "company" where it first occurs, and

( b ) the deletion of the word "yearly" from subsection (3) (a).

(4) For the purposes of section 10 as modified by subsection (3) of this section, "the appropriate proportion" of any amount of charges on income paid by a society in an accounting period means the portion of that amount which bears to the whole the same proportion as the aggregate amount of the society's income and franked investment income for the accounting period bears to what would, but for section 220 of the Income Tax Act, 1967 (disregard of profits or losses attributable to certain transactions), have been the aggregate amount of the society's income and franked investment income for that accounting period:

Provided that in relation to the aggregate amount of interest paid in any accounting period the appropriate proportion of that interest shall not exceed £2,000 it the accounting period is a period of twelve months, and shall not exceed a proportionate part of £2,000 if the accounting period is a period of less than twelve months.

(5) In section 219 of the Income Tax Act, 1967 (deduction as expenses of certain sums, etc.)—

( a ) in subsection (4) (b) for "any annual allowance" there shall be substituted "any writing-down allowance", and for "any year of assessment "there shall be substituted 14 any chargeable period", and

( b ) in subsection (4) (c) for "any year of assessment" there shall be substituted "any chargeable period".

(6) Section 220 of the Income Tax Act, 1967 (disregard of profits or losses attributable to certain transactions), is hereby amended by the substitution of the following subsection for subsection (5)—

"(5) Where for any chargeable period any capital allowances or any balancing charges under Part XVI fall to be made in taxing the trade of a society and a proportion of the profits, or as the case may be, the loss of that period is disregarded under this section, the amount of allowances or the amount of charges which, but for this subsection, would have been made shall be diminished in like proportion.".

(7) All amounts receivable by an agricultural society or a fishery society from the sale of goods, being amounts which are so receivable by virtue of exempted transactions, shall be disregarded for the purposes of section 58 (export sales relief: basis of relief from corporation tax) and in this subsection "agricultural society" and fishery society" have the same meaning as in section 220 of the Income Tax Act, 1967 .

(8) Section 220 (7) of the Income Tax Act, 1967 , shall apply in relation to corporation tax as it applies in relation to income tax.

(9) On or before the 1st day of May in each year, every society shall deliver to the inspector a return in such form as the Revenue Commissioners may prescribe, showing—

( a ) the name and place of residence of every person to whom share interest or loan interest amounting to the sum of £70 or more has been paid by the society in the year of assessment which ended next before the said 1st day of May, and

( b ) the amount of such share interest or loan interest paid in that year to each of those persons,

and if such a return is not duly made as respects any year of assessment the society shall not be entitled to any deduction under section 219 (1) (deduction as expenses of certain sums etc.) or 81 (5) (e) of the Income Tax Act, 1967 (taxation of rents under short leases: deduction of loan interest), or section 10 (allowance of charges on income) in respect of any payments of share interest or loan interest which it was required to include in the return, and all such assessments and additional assessments shall be made as may be necessary to give effect to this subsection.

(10) The amendments made by subsections (5) and (6) shall not have effect in relation to income tax for the year 1975-76 or any earlier year of assessment.

Building societies.

31.—(1) The Revenue Commissioners and any building society may, as respects 1976-77 and any later year of assessment, enter into arrangements whereby—

( a ) on such sums as may be determined in accordance with the arrangements the society is liable to account for and pay an amount representing income tax calculated in part at the standard rate and in part at a reduced rate which takes into account the operation of the subsequent provisions of this section; and

( b ) provision is made for any incidental or consequential matters,

and any such arrangements shall have effect notwithstanding anything in this Act:

Provided that in exercising their powers of entering into arrangements under this section, the Revenue Commissioners shall, subject to subsection (3) (c) and paragraph (i) of the proviso to the said subsection, at all times aim at securing that (if the amount so payable by the society under the arrangements is regarded as income tax for the year of assessment) the total income tax becoming payable to, and not becoming repayable by, the State is, when regard is had to the operation of the subsequent provisions of this section, as nearly as may be the same in the aggregate as it would have been if those powers had never been exercised.

(2) Where for any year of assessment a building society enters into arrangements under this section, dividends or interest payable in respect of shares in, or deposits with or loans to, the society shall be dealt with for the purposes of corporation tax as follows—

( a ) in computing for any accounting period ending in the year of assessment the total profits of the society there shall be allowed as a deduction the actual amount paid or credited in the accounting period of any such dividends or interest, together with the amount accounted for and paid by the society in respect thereof as representing income tax.

( b ) in computing the income of a company which is paid or credited in the year of assessment with any such dividends or interest, the company shall be treated as having received an amount which, after deduction of income tax at the standard rate for the year of assessment, is equal to the amount paid or credited, and shall be entitled to a set-off or repayment of income tax accordingly.

( c ) no part of any such dividends or interest paid or credited in the year of assessment shall be treated as a distribution of the society or as franked investment income of any company resident in the State.

(3) Notwithstanding anything in the Tax Acts, where any arrangements under this section are in force in the case of any society as respects any year of assessment—

( a ) income tax shall not be deducted from any dividends or interest payable in that year in respect of shares in or deposits with or loans to that society.

( b ) subject to subsection (2) (b), no repayment of income tax and, subject to paragraph (i) of the proviso to this subsection, no assessment to income tax shall be made in respect of any such dividends or interest to or on the person receiving or entitled to the dividends or interest,

( c ) any amounts paid or credited in respect of any such dividends or interest, and no more, shall be treated as income in computing the total income of an individual entitled to those amounts, and

( d ) subject to section 3 (1) (income tax on payments made or received by a company resident in the State), the amounts so paid or credited (and no more) shall, in applying section 433 (yearly interest, etc., payable wholly out of taxed profits) of the Income Tax Act, 1967 , to other payments, be treated as profits or gains which have been brought into charge to income tax:

Provided that—

(i) paragraph (b) shall not prevent an assessment in respect of income tax at the higher rates and for the purpose of charging to tax at the higher rates any amounts treated as income in accordance with paragraph (c), credit under section 4 (e) of the Finance Act, 1974 (charge to tax of income from which tax has been deducted), shall be given as if, by virtue of the provisions of Schedule D, tax had been deducted (at the standard rate for the year of assessment in which those amounts were paid or credited) from the amounts charged to tax at the higher rates:

(ii) the provisions of this subsection shall not apply in relation to interest on any bank loan; and

(iii) the provisions of this subsection shall not apply in relation to any interest which is payable in respect of a loan to the society under a contract made before the beginning of the first year of assessment as respects which the society enters into arrangements under subsection (1), if and to the extent that, both at the time of the making of the contract and at the time when the interest becomes payable, it is contemplated by the parties that tax shall be deducted on payment of the interest.

(4) Where any arrangements made under this section are in force in the case of any society as respects any year of assessment then, notwithstanding anything in the Tax Acts, income tax shall not be deducted upon payment to the society of any interest on advances, being interest payable in that year.

(5) If in the course of, or as part of, a union or amalgamation of two or more building societies, or a transfer of engagements from one building society to another, there is a disposal of an asset by one society to another, both shall be treated for purposes of corporation tax in respect of chargeable gains as if the asset were acquired from the one making the disposal for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to the one making the disposal.

(6) Any arrangements made under this section as respects any year of assessment shall, if made after the beginning of that year, be deemed to have come into force at the beginning thereof, and any necessary adjustments shall be made in relation to any sums paid or credited before the date of the making of the arrangements.

(7) In this section "dividend" includes any distribution as defined for the purposes of this Act whether described as a dividend or otherwise.

(8) In this section "building society" means a building society within the meaning of the Building Societies Acts, 1874 to 1974.

(9) Notwithstanding anything in this Act, where for any year of assessment a building society enters into any arrangement under this section, the profits of the society in so far as they consist of income, shall, for any accounting period ending in the year of assessment be charged to corporation tax at the reduced rate provided for by section 79 (reduced rate of corporation tax for certain income), and, for the purposes of this subsection, the income of a society for an accounting period is its income for that period as defined in section 28 (8) for the purposes of that section.

(10) Where, under this section, a building society enters into arrangements for the year of assessment 1976-77 and is within the charge to corporation tax in respect of an accounting period which ends before the 6th day of April, 1976, subsection (2) (a) shall have effect in relation to such accounting period with the substitution for the reference to the amount accounted for and paid by the society in respect of the dividends and interest as representing income tax of a reference to the amount computed by reference to the dividends or interest in accordance with the provision made by any arrangements subsisting between such society and the Revenue Commissioners for the year 1975-76 with reference to dividends and interest for charging the society to income tax for that year.

Partnerships involving companies.

32.—(1) Subject to this section, the provisions of section 71 (1) (2) (a) (3) of the Income Tax Act, 1967 (separate assessment of partners), shall have effect for purposes of corporation tax as they have effect for purposes of income tax.

(2) Where the whole or part of an accounting period of a company is, or is part of, a period for which an account of a partnership trade has been made up, any necessary apportionments shall be made in computing the profits from or loss sustained in the company's several trade for the accounting, period of the company.

(3) ( a ) Where a capital allowance equal to an appropriate share of a joint allowance would be made, if section 1 (2) (introduction for companies of corporation tax in place of income tax and corporation profits tax) had not been enacted, in charging to income tax the profits of a company's several trade for any year of assessment, the relevant amount shall for corporation tax purposes be treated as a trading expense of the company's several trade for any accounting period of the company any part of which falls within that year of assessment.

( b ) Where a balancing charge equal to an appropriate share of a joint charge would be made, if section 1 (2) had not been enacted, in charging to income tax the profit of a company's several trade for any year of assessment, the relevant amount shall for corporation tax purposes be treated as a trading receipt of the company's several trade for any accounting period of the company any part of which falls within that year of assessment.

( c ) In this subsection the "relevant amount" means—

(i) where the year of assessment and the accounting period coincide, the whole amount of the appropriate share of the joint allowance, or, as the case may be, the whole amount of the appropriate share of the joint charge, and

(ii) where part only of the year of assessment falls within the accounting period, such portion of the appropriate share of the joint allowance, or, as the case may be, such portion of the appropriate share of the joint charge as is apportioned to that part of the year of assessment which falls within the accounting period:

Provided that the relevant amount shall not include any part of the appropriate share of a joint allowance, or, as the case may be, any part of the appropriate share of a joint charge which was made in charging the profits of the company's several trade for the year 1974-75 or 1975-76.

( d ) Notwithstanding the provisions of section 72 (8) of the Income, Tax Act, 1967 (capital allowances and balancing charges in partnership cases), any reference in this subsection to a joint allowance for a year of assessment does not include a reference to any capital allowance which is or could be brought forward from a previous year of assessment.

(4) Where, under this section, an amount falls to be apportioned to a part of an accounting period of a company, to a part of a period for which an account of a partnership trade has been made up or to a part of a year of assessment, the apportionment shall be made by reference to the number of mouths or fractions of months contained in that part, and in the remainder of that period or year.

(5) In this section profits shall not be taken as including chargeable gains.

Expenses of management of assurance companies.

33.—(1) Subject to the provisions of sections 34 and 35, section 15 (deduction of management expenses of investment companies) shall apply for computing the profits of a company carrying on life business, whether mutual or proprietary, (and no, charged to corporation tax in respect of it under Case I of Schedule D), whether or not the company is resident in the State, as that section applies in relation to an investment company except that—

( a ) there shall be deducted from the amount treated as expenses of management for any accounting period the amount of any fines, fees or profits arising from reversions and in calculating profits arising from reversions the company may set off against those profits any losses arising from reversions in any previous accounting period during which any enactment granting this relief was in operation so far as they have not already been so set off, and

( b ) no deduction shall be made under the proviso to section 15 (1).

(2) Relief under subsection (1) shall not be given to any such company, so far as it would, if given in addition to all other reliefs to which the company is entitled, reduce the corporation tax borne by the company on the income and gains of its life business for any accounting period to less than would have been paid if the company had been charged to tax in respect of that business under Case I of Schedule D; and where relief has been withheld in respect of any accounting period by virtue of this subsection, the excess to be carried forward by virtue of section 15 (2) shall be increased accordingly.

For the purposes of this subsection—

( a ) any tax credit to which the company is entitled in respect of a distribution received by it shall be treated as an equivalent amount of corporation tax borne or paid in respect of that distribution; and

( b ) any payment in respect of that credit under section 15 (4), 25 (set-off of losses etc. against franked investment income) or 26 (set-off of loss brought forward or terminal loss against franked investment income of financial concerns) shall be treated as reducing the tax so treated as borne or paid; and

( c ) section 38 shall apply for the purposes of computing the profits of the life assurance business or the industrial assurance business, as the case may be, which would have been charged to tax under Case I of Schedule D.

The reference in paragraph 2 (1) of Schedule 1 to the Capital Gains Tax Act, 1975 (exclusion from consideration for disposals of sums chargeable to income tax), to computing income or profits or gains or losses shall not be taken as applying to a computation of a company's income for the purposes of this subsection.

Companies carrying on life business.

34.—(1) Where an assurance company carries on life business in conjunction with insurance business of any other class, the life business shall, for the purposes of corporation tax, be treated as a separate business from any other class of business carried on by the company.

(2) In ascertaining for the purposes of section 16 or 18 (relief for losses) whether and to what extent a company has incurred a loss on its life business any profits derived from the investments of its life assurance fund (including franked investment income of a company resident in the State) shall be treated as part of the profits of that business.

Profits of life business.

35.—(1) Where the profits of an assurance company in respect of its life business are, for the purposes of this Act, computed in accordance with the provisions applicable to Case I of Schedule D, the following provisions shall have effect—

( a ) such part of those profits as belongs or is allocated to, or is expended on behalf of, policy holders or annuitants shall be excluded in making the computation;

( b ) such part of those profits as is reserved for policy holders or annuitants shall also be excluded in making the computation, but if any profits so excluded as being so reserved cease at any time to be so reserved and are not allocated to, or expended on behalf of, policy holders or annuitants then those profits shall be treated as profits of the company for the accounting period in which they ceased to be so reserved.

(2) Where an assurance company carries on both life assurance business and industrial assurance business, the business of each such class shall, for the purposes of this Act, be treated as though it were a separate business and section 33 shall apply separately to each such class of business.

Investment income reserved for policy holders.

36.—(1) A claim may be made under this section by an assurance company carrying on life business in respect of unrelieved income from investments held in connection with that business.

(2) If on the claim the company proves that it has, for any financial year for which the rate of corporation tax exceeds the standard rate of income tax for the year of assessment in which that year ends, borne corporation tax in respect of any of the said unrelieved income, the company shall be entitled to repayment of so much of that tax borne by it for that year as is equal to the amount by which—

( a ) the corporation tax borne by the company for that year in respect of the part specified in subsection (5) of the said unrelieved income,

exceeds—

( b ) the corporation tax which would have been so borne in respect of that part of that income if the rate of corporation tax for that year had been equal to the standard rate of income tax for the said year of assessment.

(3) For the purposes of this section and section 37—

( a ) "unrelieved income" means income which has not been excluded from charge to tax by virtue of any provision and against which no relief has been allowed by deduction or set-off;

( b ) the amount of tax which has been or would be borne by a company shall be taken to be the amount of tax which has been or would be so borne after allowance of any relief to which the company is or would be entitled otherwise than under the provisions of this section.

(4) The franked investment income from investments held in connection with a company's life business shall be apportioned between policy holders or annuitants and shareholders by attributing to policy holders or annuitants such fraction of the said income as the fraction of the profits of the company's life business which, on a computation of such profits in accordance with the provisions applicable to Case 1 of Schedule D (whether or not the company is in fact charged to tax under that Case for the relevant accounting period or periods) would be excluded under section 35 (1) (a) (b):

Provided that, if the franked investment income exceeds the profits as computed in accordance with those provisions other than section 35, the part attributable to policy holders or annuitants shall be that fraction of the income so far as not exceeding the profits, together with the amount of the excess.

(5) ( a ) Where the aggregate of the said unrelieved income and the shareholders' part of the franked investment income exceeds the profits of the company in respect of its life business for the relevant accounting periods computed in accordance with the provisions of Case I of Schedule D as extended by sections 35 and 38 (whether or not the company is charged to tax under that Case) the said part shall be the amount of that excess or the unrelieved income whichever is the less, and

( b ) where the said aggregate is less than the profits of the company's life business as so computed the provisions of subsection (2) shall not apply.

Chargeable gain reserved for policy holders.

37.—(1) The policy holders' share of the life assurance gains shall not be reduced under section 13 (computation of chargeable r gains) but corporation tax charged on so much of that share as remains after setting against it the amounts referred to in subsection (2) (c) shall be calculated as if the rate of corporation tax were 26 per cent.

(2) For the purposes of this section there shall be ascertained the policy holders' share and the remainder (in this section referred to as the residual part) of the life assurance gains and of the relevant reliefs: and—

( a ) the residual part of the relevant reliefs shall be set against so much of the residual part of those gains as remains after reducing it in accordance with section 13; and

( b ) if the residual part of the relevant reliefs exceeds the residual part, as so reduced, of those gains, the excess (or so much of it as does not, together with the policy holders' share of the relevant reliefs, exceed the policy holders' share of those gains) shall be added to the policy holders' share of the relevant reliefs; and—

( c ) the policy holders' share of the relevant reliefs, with any addition made under paragraph (b), shall be set against the policy holders' share of the life assurance gains.

(3) For the purposes of this section—

( a ) the life assurance gains are such part of the amount which, if the words "reduced by 48 per cent. thereof" in section 13 (1) were deleted, would be included in the company's total profits as is attributable to gains from investments held in connection wish the company's life business:

( b ) the relevant reliefs are such of the sums to be deducted from or set off against the company's profits as are deducted from or set off against the life assurance gains:

( c ) (i) where paragraph (a) of section 36 (5) applies to unrelieved income, the amount of the policy holders' share of the life assurance gains or of the relevant reliefs is the full amount; and

(ii) where paragraph (b) of section 36 (5) applies to unrelieved income all the life assurance gains and relevant reliefs shall be included in the residual part.

Life business: computation of profits.

38.—For the purposes of sections 33, 36 and 37 the exclusion by section 2 from the charge to corporation tax of franked investment income shall not prevent such income of a company resident in the State which is attributable to the investments of the company's the assurance fund from being taken into account as part of the profits in computing trading income in accordance with the provisions applicable to Case I of Schedule D.

Annuity business: separate charge on profits.

39.—(1) Except in the case of an assurance company charged to tax in accordance with the provisions applicable to Case I of Schedule D in respect of the profits of its life assurance business, profits arising to an assurance company from pension business or from general annuity business, shall be treated as annual profits or gains within Schedule D, and be chargeable to corporation tax under Case IV of that Schedule, and for that purpose—

( a ) the business of each such class shall be treated separately, and

( b ) subject to the foregoing paragraph and subsection (2), the profits therefrom shall be computed in accordance with the provisions applicable to Case I of Schedule D.

(2) In making the said computation—

( a ) section 35 (1) shall apply with the necessary modifications and, in particular, with the omission therefrom of all references to policy holders other than holders of policies referable to pension business, and

( b ) no deduction shall be allowed in respect of any expense being an expense of management referred to in section 33 or 47, and

( c ) there may be set off against the profits of pension business or general annuity business any loss, to be computed on the same basis as the profits, which was sustained in the same class of business in any previous accounting period while the company was within the charge to corporation tax in respect of that class of business so far as it has not already been so set off.

(3) Section 19 (losses in transactions from which income would be chargeable under Case IV or V of Schedule D) shall not be taken as applying to a loss sustained by a company on its general annuity business or pension business.

(4) The treatment of an annuity as containing a capital element for the purposes of section 239 of the Income Tax Act, 1967 (capital element in certain purchased annuities), shall not prevent the full amount of the annuity from being deductible in computing profits or from being treated as a charge on income for the purposes of the Corporation Tax Acts.

General annuity business.

40.—(1) In the case of a company carrying on general annuity business, the annuities paid by the company, so far as referable to that business and so far as they do not exceed the taxed income of the part of the annuity fund so referable, shall be treated as charges on income.

(2) In computing under section 39 the profits arising to an assurance company from general annuity business—

( a ) taxed income shall not be taken into account as part of those profits, and

( b ) of the annuities paid by the company and referable to general annuity business—

(i) those which under subsection (1) are treated as charges on income shall not be deductible, and

(ii) those which are not so treated shall, notwithstanding section 11 (computation of income: application of income tax principles), be deductible.

(3) In this section "taxed income" means income charged to corporation tax otherwise than under section 39, and franked investment income.

(4) A company which is not resident in the State but carries on through a branch or agency there any general annuity business shall not be entitled to treat any part of the annuities paid by it which are referable to that business as paid out of profits or gains brought into charge to income tax.

Pension business.

41.—(1) Exemption from corporation tax shall be allowed in respect of income from, and chargeable gains in respect of, investments and deposits of so much of an assurance company's life assurance fund and separate annuity fund, if any, as is referable to pension business.

(2) The exemption from tax conferred by subsection (1) shall not exclude any sums from being taken into account as receipts in computing profits or losses for any purpose of the Corporation Tax Acts.

(3) Subject to subsection (4) the exclusion by section 2 from the charge to corporation tax of franked investment income shall not prevent such income being taken into account as part of the profits in computing under section 39 income from pension business.

(4) If for any accounting period there is, apart from this subsection, a profit arising to an assurance company from pension business (computed in accordance with the provisions of section 39) and the company so elects as respects all or any part of its franked investment income arising in that period, being an amount of franked investment income not exceeding the amount of the said profit, subsections (1) and (3) shall not apply to the franked investment income to which the election relates.

An election under this subsection shall be made by notice in writing given to the inspector not later than two years after the end of the accounting period to which the election relates, or within such longer period as the Revenue Commissioners may by notice in writing allow.

(5) In computing under section 39 the profits from pension business, annuities shall be deductible notwithstanding section 11 (5) and a company shall not be entitled to treat as paid out of profits or gains brought into charge to income tax any part of the annuities paid by the company which is referable to pension business.

Foreign life assurance funds.

42.—(1) Corporation tax under Case III of Schedule D on income arising from securities and possessions in any place outside the State which form part of the investments of the foreign life assurance fund of an assurance company shall be computed on the full amount of the actual sums received in the State from remittances payable in the State, or from property imported, or from money or value arising from property not imported, or from money or value so received on credit or on account in respect of such remittances, property, money or value brought into the State without any deduction or abatement.

(2) Where—

( a ) any securities issued by the Minister for Finance with a condition in the terms specified in section 464 of the Income Tax Act, 1967 (issue of securities with exemption from tax), or

( b ) any stocks or other securities to which section 474 (exemption of certain securities from tax) of the said Act applies and which are issued with either or both of the conditions specified in subsection (2) of that section,

for the time being form part of the investments of the foreign life assurance fund of an assurance company, the income arising from any of those stocks or securities, if applied for the purposes of that fund or reinvested so as to form part of that fund, shall not be liable to tax.

(3) Where the Revenue Commissioners are satisfied that any income arising from the investments of the foreign life assurance fund of an assurance company has been remitted to the State and invested, as part of the investments of that fund, in any stocks or securities issued as aforesaid, that income shall not be liable to tax and any tax paid thereon shall, if necessary, be repaid to the company on the making of a claim.

(4) Where income from the investments of the foreign life assurance fund of an assurance company has been relieved from tax in pursuance of the provisions of this section a corresponding reduction shall be made—

( a ) in the relief granted under section 33 in respect of expenses of management, and

( b ) in any amount on which the company is chargeable to tax by virtue of section 39—

(i) in respect of general annuity business, or

(ii) in respect of pension business,

in so far as the investment income relieved is referable to general annuity business or pension business as the case may be.

(5) In this section "foreign life assurance fund"—

( a ) means any fund representing the amount of the liability of an assurance company in respect of its life business with policy holders and annuitants residing outside the State whose proposals were made to, or whose annuity contracts were granted by, the company at or through a branch or agency outside the State, and

( b ) where such a fund is not kept separately from the life assurance fund of the company, means such part of the life assurance fund as represents the liability of the company under such policies and annuity contracts, such liability being estimated in the same manner as it is estimated for the purposes of the periodical returns of the company.

(6) While agreements mentioned in Part I of Schedule 6 to the Income Tax Act, 1967 , remain in force, subsection (5) shall have effect as if after "State" in each place where it occurs, there were inserted ",Northern Ireland and Great Britain".

(7) Where an assurance company having its head office in the State carries on business in Northern Ireland or Great Britain and under provisions of the law therein corresponding with section 41 exemption from corporation tax is allowable in respect of income from investments and deposits referable to pension business, this section shall have effect in relation to the income so exempt in Northern Ireland and Great Britain with the omission of subsection (6).

(8) Where this section has effect in relation to income arising from investments of any part of an assurance company's life assurance fund, it shall have the like effect in relation to chargeable gains accruing from the disposal of any such investments, and losses so accruing shall not be allowable losses.

Overseas life assurance companies: investment income.

43.—(1) Any income of an overseas life assurance company from the investments of its life assurance fund (excluding the pension fund and general annuity fund, if any), wherever received, shall, to the extent provided in this section, be deemed to be profits comprised in Schedule D and shall be charged to corporation tax under Case III of Schedule D.

(2) Distributions received from companies resident in the State shall be brought into account under this section notwithstanding their exclusion from the charge to corporation tax.

(3) A portion only of the income from the investments of the life assurance fund (excluding the pension fund and general annuity fund, if any) shall be charged in accordance with subsection (1), and for any accounting period that portion shall be determined by the formula

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where—

A is the total income from those investments for that period,

B is the average of the liabilities for that period to policy holders resident in the State and to policy holders resident outside the State whose proposals were made to the company at or through its branch or agency in the State, and

C is the average of the liabilities for that period to all the company's policy holders,

but any reference in this subsection to liabilities does not include liabilities in respect of general annuity and pension business.

(4) For the purposes of this section—

( a ) the liabilities of an assurance company attributable to any business at any time shall be ascertained by reference to the net liabilities of the company as valued by an actuary for the purposes of the relevant periodical return, and

( b ) the average of any liabilities for an accounting period shall be taken as one-half of the aggregate of the liabilities at the beginning and end of the valuation period which coincides with that accounting period or in which that accounting period falls.

(5) ( a ) Where the average of branch liabilities for an accounting period exceeds the mean value for the accounting period of the assets to which this subsection applies, the amount to be included in profits under section 13 (1), or that subsection as modified by section 37, shall be an amount determined by the formula

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where—

A is the amount which apart from this subsection would be so included in profits,

B is the average of branch liabilities for the accounting period, and

C is the mean value for the accounting period of the assets to which this subsection applies.

( b ) For the purposes of this subsection—

(i) "the average of branch liabilities for an accounting period" means the aggregate of the amounts represented by B in subsection (3), B in section 44 (2) and the average of the liabilities attributable to pension business for the accounting period, and

(ii) "the assets to which this subsection applies" are assets the gains from the disposal of which are chargeable to corporation tax by virtue of section 4 (2) (6) (8) (a) of the Capital Gains Tax Act, 1975 , with the addition of assets the gains from the disposal of which would, but for sections 19 and 24 of, and paragraph 2 of Schedule 1 to, that Act, be so chargeable.

(6) Section 75 (1) of the Income Tax Act, 1967 (income chargeable under Case III), as applied to corporation tax, shall not apply to income to which subsection (1) applies.

Overseas life assurance companies: general annuity and pension businesses.

44.—(1) Nothing in the Corporation Tax Acts shall prevent the distributions of companies resident in the State from being taken into account as part of the profits in computing, under section 39, the profits arising from pension business and general annuity business to an overseas life assurance company.

(2) Any charge to tax under section 39 for any accounting period on profits arising to an overseas life assurance company from general annuity business shall extend only to a portion of the profits arising from that business and that portion shall be determined by the formula

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where—

A is the total amount of those profits,

B is the average of the liabilities attributable to that business for the relevant accounting period in respect of contracts with persons resident in the State or contracts with persons resident outside the State whose proposals were made to the company at through its branch or agency in the State, and

C is the average of the liabilities attributable to that business for that accounting period in respect of all contracts.

(3) For the purposes of this section—

( a ) the liabilities of an assurance company attributable to general annuity business at any time shall be ascertained by reference to the net liabilities of the company as valued by an actuary for the purposes of the relevant periodical return, and

Overseas life assurance companies: income tax, foreign tax and tax credit.

45.—(1) Section 12 (6) (miscellaneous special rules for computation of income) shall not affect the liability to tax of an overseas life assurance company in respect of the investment income of its life assurance fund under section 43 or in respect of the profits of its annuity business under the provisions of sections 39, 41 and 44.

(2) For the purposes of section 8 (3) (set-off by non-resident companies of income tax deducted from payments received against corporation tax), as it applies to life business, the amount of the income tax referred to in that subsection which shall be available for set-off under that subsection in an accounting period shall be limited in accordance with subsections (3) and (4).

(3) If the company is chargeable to corporation tax for an accounting period in accordance with section 43 in respect of the income from the investments of its life assurance fund, the amount of income tax available for set-off against any corporation tax assessed for that period on that income shall not exceed an amount equal to income tax at the standard rate on the portion of income from investments which is chargeable to corporation tax by virtue of subsection (3) of that section.

(4) If the company is chargeable to corporation tax for an accounting period in accordance with section 44 on a proportion of the total amount of the profits arising from its general annuity business, the amount of income tax available for set-off against any corporation tax assessed for that period on those profits shall not exceed an amount equal to income tax at the standard rate on the like proportion of the income from investments included in computing those profits.

(5) Where an overseas life assurance company receives a distribution in respect of which it is entitled to a tax credit the, company may claim to have that credit set off against any corporation tax assessed on the company under section 43 or 44 for the accounting period in which the distribution is received, but the restriction in subsections (3) and (4) on the amount of income tax that may be set off against corporation tax assessed under the said section 43 or 44 shall apply to the aggregate of that income tax and of the tax credit that can be so set off by virtue of this subsection.

(6) Paragraph 3 (6) of Schedule 1 to the Capital Gains Tax Act, 1975 (rules for computation of capital gains), shall not affect the liability to tax under section 43 of an overseas life assurance company in respect of gains from the disposal of investments held in connection with its life business.

Overseas life assurance companies: distributions set off against income.

46.—(1) Where an overseas life assurance company receives a distribution from a company resident in the State and relief in respect of the distribution is not available or is not claimed under arrangements made under section 361 of the Income Tax Act, 1967 (agreements for relief from double taxation of income), as applied for purposes of corporation tax, the overseas life assurance company shall be deemed for the purposes of sections 39, 41, 43, 44 and 45 to be entitled to such a tax credit in respect of the distribution as it would be entitled to if it were a company resident in the State; and accordingly for the purposes of those provisions the income represented by the distribution shall be the aggregate of the distribution and the tax credit.

(2) Where under subsection (1) an overseas life assurance company is deemed to be entitled to a tax credit in respect of a distribution, it may claim to have the income represented by the distribution set off, subject to subsection (3), against its profits chargeable to tax under section 39 or against its income chargeable to tax in accordance with section 43 or partly against the one and partly against the other; but to the extent that any income is so set off the tax credit included in it shall not be payable and shall not be set off against corporation tax under section 45 (5).

(3) The amounts that an overseas life assurance company may by virtue of this section set off against profits or income of any description shall not exceed the amount of the profits or income of that description and shall be further limited as follows—

( a ) the amount set off against profits arising from general annuity business shall not exceed a portion of the company's income from investments referable to that business, and that portion shall be determined by the same formula as determines under section 44 the portion of those profits which is chargeable to tax: and

( b ) the amount set off against profits from pension business shall not exceed such of its income referable to that business as is represented by distributions in respect of which the company is deemed to be entitled to a tax credit by virtue of this section, and shall not reduce any other income.

(4) Where by virtue of a set-off under this section income or profits of any description are reduced by any amount, that amount shall be left out of account in determine the amount of income tax which is available for set-off against corporation tax under section 8 (3).

(5) A claim under this section in respect of a distribution shall not prevent the making of a subsequent claim for relief in respect of that distribution under arrangements made under the said section 361; but where such a subsequent claim is made the claim under this section shall be deemed never to have been made, and no adjustment (whether by additional assessments or otherwise) to which the subsequent claim gives rise shall be out of time if it is made within twelve months after the making of the subsequent claim.

Overseas life assurance companies: expenses of management.

47.—(1) For the purposes of relief under section 33, the expenses of management of an overseas life assurance company shall be apportioned between its pension business, its general annuity business and its life assurance business (excluding such pension business and general annuity business) and the amount referable to each such class of business shall be such amount as bears to the total expenses of management the same proportion as the average of the liabilities for the accounting period attributable to that class in respect of policies and contracts bears to the average of liabilities of the company for that period in respect of all policies and contracts of its life assurance business.

(2) Where an overseas life assurance company is charged to corporation tax under Case III of Schedule D on a proportion of the income from investments of its life assurance fund in accordance with section 43, relief under section 33 in respect of the expenses of management referable to that class of business under subsection (1) shall be computed by reference to a like proportion of the expenses so referable.

(3) Where an overseas life assurance company is charged to corporation tax under Case IV of Schedule D on a proportion of the profits of its general annuity business in accordance with section 44, the relief under section 33 in respect of expenses of management referable to that class of business under subsection (1) shall be computed by reference to a like proportion of such expenses so referable.

(4) Where an overseas life assurance company is charged to corporation tax under Case IV of Schedule D in respect of pension business, relief under section 33 in respect of the expenses of management referable to that class of business under subsection (1) shall be computed by reference to the full amount of expenses so referable.

(5) For the purposes of this section the liabilities of an assurance company attributable to any business at any time shall be ascertained by reference to the net liabilities of the company as valued by an actuary for the purposes of the relevant periodical return.

(6) For the purposes of this section, the average of any liabilities for an accounting period shall be taken as one-half of the aggregate of the liabilities at the beginning and end of the valuation period which coincides with that accounting period or in which that accounting period falls.

Life policies carrying rights not in money.

48.—Where any investments or other assets are, in accordance with a policy issued in the course of life business carried on by an assurance company, transferred to the policy holder, the policy holder's acquisition of the assets, and the disposal of them to him, shall be deemed to be for a consideration equal to the market value of the assets—

( a ) for the purposes of the Capital Gains Tax Act, 1975 , and

( b ) for the purposes of computing income in accordance with Case I or IV of Schedule D.

Benefits from life policies issued before 6th April, 1974.

49.—(1) This section applies in relation to policies of life assurance issued before the 6th day of April, 1974, by a company carrying on life business, being policies which—

( a ) provide for benefits consisting to any extent of investments of a specified description or of a sum of money to be determined by reference to the value of such investments, but

( b ) do not provide for the deduction from those benefits of any amount by reference to tax chargeable in respect of chargeable gains.

(2) Where—

( a ) the investments of the company's life assurance fund, so far as referable to those policies, consist wholly or mainly of investments of the description so specified, and

( b ) on the company becoming liable under any of those policies for any such benefits (including benefits to be provided on the surrender of a policy), a chargeable gain accrues to the company from the disposal, in meeting or for the purpose of meeting that liability, of investments of that description forming part of its life assurance fund, or would so accrue if the liability were met by or from the proceeds of such a disposal,

then the company shall be entitled as against the person receiving the benefits to retain thereout a part thereof not exceeding in amount or value corporation tax at the full rate in respect of the chargeable gain referred to in paragraph (b) computed without regard to any amount retained under this subsection and reduced in accordance with section 13 (1).

Interpretation.

50.—(1) This section has effect for the interpretation of sections 33 to 49 and this section.

(2) Unless the context otherwise requires—

"actuary" has the meaning assigned to it in section 3 of the Insurance Act, 1936 ;

"annuity business" means the business of granting annuities on human life;

"annuity fund" means, where an annuity fund is not kept separately from the life assurance fund of an assurance company, such part of the life assurance fund as represents the liability of the company under its annuity contracts, as stated in its periodical returns;

"assurance company" has the meaning assigned to it in section 3 of the Insurance Act, 1936 ;

"general annuity business" means any annuity business which is not pension business and "pension business" shall be construed in accordance with subsections (3) and (4);

"life business" includes "life assurance business" and "industrial assurance business" which have the meanings assigned to them in section 3 of the Insurance Act, 1936 , and where a company carries on both businesses may mean either;

"life assurance fund" and "industrial assurance fund" have the meanings assigned to them in the Insurance Acts, 1909 to 1969, and life assurance fund, in relation to industrial assurance business, means the industrial assurance fund;

"overseas life assurance company" means an assurance company having its head office outside the State but carrying on life assurance business through a branch or agency in the State;

"pension fund" and "general annuity fund" shall be construed in accordance with subsection (3);

"periodical return", in relation to an assurance company, means a return deposited with the Minister for Industry and Commerce under the Assurance Companies Act, 1909, and the Insurance Act, 1936 ;

"policy" and "premium" have the meanings assigned to them in section 3 of the Insurance Act, 1936 ;

"valuation period" means the period in respect of which an actuarial report is made under section 5 of the Assurance Companies Act, 1909, as extended by section 55 of the Insurance Act, 1936 .

(3) Any division to be made between general annuity business, pension business and other life assurance business shall be made on the principle of—

( a ) referring to pension business any premiums falling within subsection (4), together with the incomings, outgoings and liabilities referable to those premiums, and the policies and contracts under which they are or have been paid.

( b ) allocating to, general annuity business all other annuity business,

and references to "pension fund" and "general annuity fund" shall be construed accordingly whether or not such funds are kept separately from the assurance company's life assurance fund.

(4) The premiums to be referred to pension business are those payable under contracts falling (at the time when the premium is payable) within one or other of the following descriptions, that is to say—

( a ) any contract with an individual who is, or would but for an insufficiency of profits or gains be, chargeable to tax in respect of relevant earnings (as defined in section 235 of the Income Tax Act, 1967 (retirement annuities: relief for premiums)) from a trade, profession, office or employment carried on or held by him, being a contract approved by the Revenue Commissioners under that section or section 235A (approval of contracts for dependants or for life assurance) of the Income Tax Act, 1967 (inserted by section 66 of the Finance Act, 1974 );

( b ) any contract (including a contract of assurance) entered into for the purposes of, and made with the persons having the management of, an exempt approved scheme as defined in Chapter II of Part I of the Finance Act, 1972 , being a contract so framed that the liabilities undertaken by the assurance company under the contract correspond with liabilities against which the contract is intended to secure the scheme;

( c ) any contract with the trustees or other persons having the management of a superannuation fund within the meaning of section 222 of the Income Tax Act, 1967 (exemption of superannuation funds), or of a scheme approved under section 235 or 235A of that Act or under both of those sections, being a contract which—

(i) was entered into for the purposes only of that fund or scheme or, in the case of a fund part only of which is approved under the said section 222, then for the purposes only of that part of that fund, and

(ii) (in the case of a contract entered into or varied on or after the 6th day of April, 1958) is so framed that the liabilities undertaken by the assurance company under the contract correspond with liabilities against which the contract is intended to secure the fund (or the relevant part of it) or the scheme,

and in this and the last preceding subsection "premium" includes any consideration for an annuity.

Treatment of tax-free income of non-resident banks, etc.

51.—(1) 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 therein, then—

( a ) in computing for the purposes of this Act the profits arising from, or loss sustained in, the business, and

( b ) in the case of an insurance business, also in computing the profits or loss from pension business and general annuity business under section 39,

the provisions of section 11 shall not prevent the inclusion of interest, dividends and other payments to which section 50 (securities of foreign territories)or 462 (exemption of dividends of non-residents)of the Income Tax Act, 1967 , extends notwithstanding the exemption from tax conferred by those sections respectively.

(2) Where—

( a ) any such business as aforesaid is carried on in the State by a person not ordinarily resident therein, and

( b ) in making any such computation as aforesaid 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.

(3) In the case of an overseas life assurance company as defined in section 50—

( a ) in computing for the purposes of section 43 the income from the investments of the life assurance fund of the company, any interest, dividends and other payments to which section 50 or section 462 of the Income Tax Act, 1967 , extends shall be included notwithstanding the exemption from tax conferred by those sections respectively.

( b ) where in computing the said income interest on any tax-free securities is excluded by virtue of a condition of the issue of such securities, the relief under section 47 (2) shall be reduced so as to bear to the amount of relief which would be granted but for this paragraph the said proportion as the amount of that income, excluding the said interest, bears to the amount of that income including that interest, and

( c ) where subsection (2) applies to the pension business or general annuity business of the company the relief under section 47 (3) or (4), as the case may be, shall be reduced so as to bear to the amount of the relief which would be so granted but for this paragraph the same proportion as the amount of the income (excluding interest on tax-free securities) from investments and deposits of the company's life assurance fund and separate annuity fund, if any, referable to that business bears to the said income so referable including such interest.

(4) In this section and in section 52 "tax-free securities" means securities to which section 464 (issue of securities with exemption from tax) of the Income Tax Act, 1967 , applies and which were issued with a condition regulating the treatment of the interest thereon for tax purposes such that interest on the securities is excluded in computing income or profits.

(5) In this section "insurance business" includes assurance business within the meaning of section 3 of the Insurance Act, 1936 .

(6) In subsection (1) "securities" includes stocks and shares.

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

52.—(1) This section has effect where section 51 (2) applies to a business for any accounting period.

(2) Up to the amount determined under this section (called the amount ineligible for relief) interest becoming due for payment on or after the 6th day of April, 1976, on money borrowed for the purposes of the business—

( a ) shall be excluded in any computation under this Act of the profits (or loss) arising from the business or, where subsection (5) applies, arising from any annuity business or pension business forming part of the life business, and

( b ) shall be excluded from the definition of "charges on income" in section 10.

(3) In determining the amount ineligible for relief, account shall be taken of all money borrowed for the purposes of the business which, is 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:

Provided that account shall not be taken of any borrowed money carrying interest which, apart from subsection (2), does not fall to be included in the computations under paragraph (a) of that subsection, and is not to be treated as a charge on income for the purposes of this Act.

(4) Subject to subsection (5), 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 twelve months, interest shall be taken for that shorter period instead of for a year.

(5) Where relief for expenses of management is to be granted to an overseas life assurance company for any accounting period and that relief falls to be reduced under section 51 (3) (b) the amount ineligible for relief shall be a fraction of the amount of interest in the accounting period on money borrowed for the purposes of the life business (excluding pension business and general annuity business, if any) and that fraction shall be the fraction which is income from tax-free securities divided by total investment income of the life assurance fund.

(6) 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.

PART IV PROFITS FROM EXPORT OF CERTAIN GOODS

Definition of "relevant accounting period".

53.—In this Part "relevant accounting period" means an accounting period or part of an accounting period of a company within the period of fifteen years from the later of the two following dates, that is to say—

( a ) the 1st day of October, 1956, or

( b ) the first day of the basis period for the year of assessment which was the company's first year of claim for the purposes of relief under Chapter IV of Part XXV of the Income Tax Act, 1967 (Profits from Export of Certain Goods), or, if there was no such first year of claim, the 6th day of April, 1975.

Meaning of "goods".

54.—In this Part "goods" means goods manufactured within the State by the person who exports them or some of them and who in relation to the relevant accounting period is the company claiming relief under this Part:

Provided that where there are two companies one of which manufactures goods and the other of which exports them in the course of its trade and where one of the companies holds more than 90 per cent. of the ordinary shares in the other company or where persons who have a controlling interest in one company hold, either directly or indirectly, more than 90 per cent. of the ordinary shares in the other company, the goods manufactured by one of the companies shall, when exported in the course of its trade by the other company, be deemed to be manufactured by that other company.

(2) The definition of "goods" contained in subsection (1) shall include—

( a ) fish produced within the State on a fish farm, and

( b ) cultivated mushrooms, cultivated within the State,

and, in a case in which books or greeting cards are printed within the State otherwise than by their publisher and they or some of them are exported by their publisher (not being a case to which the proviso to subsection (1) applies), the books or greeting cards, as the case may be, shall be regarded, for the purposes of subsection (1), as having been manufactured within the State by their publisher.

(3) ( a ) The definition of "goods" contained in subsection (1) shall include goods manufactured within the State which do not come within that definition and which are exported by the person who in relation to the relevant accounting period is the company claiming relief under this Part where the selling by such person of the goods so exported is selling by wholesale.

( b ) "Selling by wholesale" in paragraph (a) means selling goods of any class to a person who carries on a business of selling goods of that class or who uses goods of that class for the purposes of a trade or undertaking carried on by him.

Ship building and repair.

55.—(1) In the case of a company carrying on the trade of building or repairing ships, the following provisions shall apply for the purposes of relief under this Part—

( a ) repairs carried out within the State to a ship shall be regarded as the manufacture within the State of goods and, to the extent to which any such repairs have been carried out within the State to a ship which is wholly owned by persons who are not ordinarily resident in the State, the ship shall be regarded as goods which are manufactured within the State and exported by the person who manufactures them and any amount receivable in payment for repairs carried out within the State to a ship shall be regarded as an amount receivable from the sale of goods;

( b ) where, as respects any relevant accounting period, the company, by notice in writing given to the inspector within twelve months after the end of that period, so elects, this Part shall apply in the case of that period—

(i) as if all ships built by the company within the State had been exported by the company,

(ii) as if all ships to which repairs were carried out by the company within the State were, to the extent of such repairs, goods exported by the company, and

(iii) as if amounts receivable by the company in payment for the building within the State or for the repair within the State of ships were amounts receivable from the sale of goods exported by the company out of the State.

(2) In subsection (1) (a) (b) any reference to repair or building includes a reference to repair or building effected at any time.

Export of certain goods.

56.—(1) In this section—

"the Board" means An Bord Bainne Co-operative Limited;

"the Commission" means the Pigs and Bacon Commission;

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

"pigmeat product" means bacon and cuts thereof including ham, pork carcases and pork sides and cuts thereof, unrendered pig fat and canned pigmeat products.

(2) Where—

( a ) a company produces a pigmeat product and sells it to the Commission, and

( b ) that product is exported out of the State by the Commission,

this Part shall apply as if the said product had been exported out of the State by the company, and any amount receivable by the company from the sale of the said product to the Commission shall be deemed for the purposes of this Part to be an amount receivable from the sale of goods so exported.

(3) Where—

( a ) a company manufactures a milk product and sells it to the Board, and

( b ) that product is exported out of the State by the Board,

this Part shall apply as if the said product had been exported out of the State by the company, and any amount receivable by the company from the sale of the said product to the Board shall be deemed for the purposes of this Part to be an amount receivable from the sale of goods so exported.

Standard period.

57.—The standard period in relation to a company's trade shall, for the purposes of this Part, be the period of one year ending on the 30th day of September, 1956, or, if the company so elects, the period of one year ending on the 30th day of September, 1955, and that standard period shall be applicable in relation to the trade whether or not, during the whole or part of that standard period, the trade was carried on by a person other than the company by which it is carried on in the relevant accounting period or separate parts of the trade were carried on by different persons, but that standard period shall not be applicable where the trade was not in existence before the end of that standard period.

Basis of relief from corporation tax.

58.—(1) Where a company claims and proves as respects a relevant accounting period—

( a ) that, during the standard period in relation to the trade, goods were, in the course of the trade, exported out of the State,

( b ) that, during the relevant accounting period, goods were, in the course of the trade, exported out of the State, and

( c ) that the total amount receivable from the sale of the last-mentioned goods was in excess of the total amount (in this section referred to as the standard amount) receivable from the sale of the goods exported during the standard period,

corporation tax payable by the company for the relevant accounting period, so far as it is referable to the income attributable to the said excess, shall be reduced to nil; and the corporation tax referable to the income attributable to the said excess shall be such an amount as bears to the relevant corporation tax, as defined in subsection (10), the same proportion as the income attributable to the said excess bears to the total income brought into charge to corporation tax.

(2) For the purposes of subsection (1) "the income attributable to the said excess" shall, be taken to be such sum as bears to the amount of the company's income for the relevant accounting period, which is attributable to the sale of goods (whether exported or not), the same proportion as the amount of the said excess bears to the total amount receivable by the company from such sale in the relevant accounting period.

(3) Where a company claims and proves as respects a relevant accounting period—

( a ) that, during the standard period in relation to the trade, no goods were, in the course of the trade, exported out of the State or that the standard period is not applicable, and

( b ) that, during the relevant accounting period, goods were, in the course of the trade, exported out of the State,

corporation tax payable by the company for the relevant accounting period, so far as it is referable to the income from the sale of the goods so exported, shall be reduced to nil; and the corporation tax referable to the income from the sale of goods so exported shall be such an amount as bears to the relevant corporation tax the same proportion as the income from the sale of goods so exported bears to the total income brought into charge to corporation tax.

(4) For the purposes of subsection (3) "the income from the sale of the goods so exported" shall be taken to be such sum as bears to the amount of the company's income for the relevant accounting period, which is attributable to the sale of goods (whether exported or not), the same proportion as the amount receivable in the relevant accounting period from the sale of goods exported bears to the total amount receivable by the company from the sale of goods (whether exported or not) in the relevant accounting period.

(5) In a case in which the preceding provisions of this section apply, and the export out of the State in the relevant accounting period consisted of or included goods with respect to which section 54 (3) provides for the inclusion thereof in the definition of "goods", this Part shall have effect subject to the insertion, in subsections (2) and (4), of "and off merchandise (whether exported or not) other than such goods" after "goods (whether exported or not)" wherever the latter words occur.

(6) In relation to a company which has obtained relief from corporation tax under subsection (1) or (3) of this section, from income tax under section 404 (1) or (3) of the Income Tax Act, 1967 (basis of relief from tax on profits from exports), or from corporation profits tax under section 13 (1) or (3) of the Finance (Miscellaneous Provisions) Act, 1956 (basis of relief from corporation profits tax), this section shall apply as respects any accounting period or part of an accounting period of the company within the period of five years commencing on the expiration of the period comprising the company's relevant accounting periods within the meaning of section 53 as if—

( a ) "relevant accounting period", wherever occurring in this Part, referred to it, and

( b ) for "shall be reduced to nil" in subsections (1) and (3) of this section there were substituted—

(i) in case it is an accounting period or part of an accounting period within the first of those years, "shall be reduced by 80 per cent.",

(ii) in case it is an accounting period or part of an accounting period within the second of those years, "shall be reduced by 65 per cent.",

(iii) in case it is an accounting period or part of an accounting period within the third of those years, "shall be reduced by 50 per cent.",

(iv) in case it is an accounting period or part of an accounting period within the fourth of those years, "shall be reduced by 35 per cent.", and

(v) in case it is an accounting period or part of an accounting period within the fifth of those years, "shall be reduced by 15 per cent." :

Provided that this subsection shall not apply to an accounting period or part of an accounting period falling after the 5th day of April, 1990.

(7) ( a ) Where a relevant accounting period is a period of less than twelve months, the standard amount shall, for the purpose of ascertaining the excess referred to in subsection (1), be taken to be such part thereof as bears to the whole of the said amount the same proportion as the relevant accounting period bears to twelve months.

( b ) Where a relevant accounting period is part of an accounting period of a company, the total amount receivable from the sale of goods (whether exported or not), the total amount receivable from the sale of goods exported out of the State and the amount of the company's income which is attributable to the sale of goods (whether exported or not) shall be taken to be such part of each such amount as bears to the whole of each such amount the same proportion as the length of the relevant accounting period bears to the length of the accounting period of the company.

(8) Where, on or after the day on which the standard period commenced, any change takes place whereby a part of a trade becomes transferred to any person, the standard amount shall, as respects any relevant accounting period in which, or prior to which, the change occurs, be apportioned for the purposes of subsection (1), and every such apportionment shall be made in such manner as the Revenue Commissioners consider just, having regard to all the circumstances.

(9) A reduction shall not be made under this section in respect of corporation tax payable on income from any mining operations.

(10) For the purposes of this section "relevant corporation tax" means the corporation tax which, apart from this section and sections 184 (relief in respect of corporation profits tax losses) and 186 (transitional relief for certain payments and management expenses), would be chargeable for the relevant accounting period exclusive of the corporation tax charged on the company's chargeable gains for that period.

Certain manufacturing service.

59.—(1) Where a company carries on a trade which consists of or includes the rendering to another person of services by way of subjecting commodities or materials belonging to that person to any process of manufacturing, and all or some of such services are rendered to a person who is not resident in the State in relation to commodities or materials which have been imported into the State and, after the services have been rendered, the commodities or materials, or the products or articles into which they have been converted, are exported out of the State while continuing to belong to that person, the following provisions shall, if the company so elects, apply for the purposes of relief under this Part—

( a ) the rendering in the State of such services shall be regarded as the manufacture of goods and any amount receivable in payment therefor shall be regarded as an amount receivable from the sale of goods, and

( b ) the company shall be regarded in relation to any such services as are rendered to a person who is not resident in the State as having exported goods out of the State and any payment receivable by it for the services shall be regarded as an amount receivable from the sale of goods so exported.

(2) Any election under subsection (1) shall be made by notice in writing delivered to the inspector and shall have effect as respects every relevant accounting period for which relief under this Part is claimed by the company by which it is made and shall also have effect as if it were an election made under section 29 of the Finance Act, 1966 (profits from exports: relief from corporation profits tax), or section 406 of the Income Tax Act, 1967 (certain manufacturing services), or both of those sections:

Provided that where, before an election was made by it under this section, a company has made a distribution nor an accounting period and the tax credit to which the recipient of that distribution is entitled exceeds the tax credit to which that recipient would have been entitled if the election had been made before the date of the distribution, any relief from corporation tax which would otherwise have been allowable to the company shall be reduced by the amount of the excess.

(3) Where for any year of assessment the income of any person consists of or includes a distribution in respect of which the proviso to subsection (2) has had effect, the person may claim to have the income tax chargeable on his income for that year reduced to the amount which would have been so chargeable if the election under subsection (1) had been made before the date of the distribution.

(4) Where for any accounting period the franked investment income of a company consists of or includes a distribution in respect of which the proviso to subsection (2) has had effect, the company may claim to have paid to it an amount equal to the excess of the tax credit to which it was entitled in respect of the distribution on the date on which the distribution was made over the tax credit to which it would have been entitled in respect of the distribution if the election under subsection (1) had been made before the date of the distribution:

Provided that for the purposes of section 15 (4) (management expenses: investment companies), section 25 (set-off of losses etc. against franked investment income) and section 26 (set-of of loss brought forward or terminal loss: financial concerns) any such distribution as aforesaid shall be treated as representing income equal to the aggregate of the amount of that distribution and the amount of the tax credit to which the company would have been entitled if the election under subsection (1) had been made before the date of the distribution.

(5) An election made under section 29 of the Finance Act, 1966 , or section 406 of the Income Tax Act, 1967 , shall have effect as if it were an election made under subsection (1).

(6) The inspector may by notice in writing require a company claiming relief from tax by virtue of subsection (1) to furnish him with such information or particulars as may be necessary for the purpose of giving effect to that subsection, and section 58 (1) (3) shall have effect as if the matters of which proof is required thereby included the information or particulars specified in a notice under this subsection.

Relief for engineering services in relation to works outside the State.

60.—(1) In this section "engineering services" means design and planning services the work on the rendering of which is carried out in the State in connection with chemical, civil, electrical or mechanical engineering works executed outside the State.

(2) Where a company carries on a trade which consists of or includes the rendering to another person of engineering services and all or some of such services are rendered to a person who is not resident in the State, the following provisions shall, if the company so elects, apply for the purposes of relief under this Part—

( a ) the rendering of such services shall be regarded as the manufacture of goods and any amount receivable in payment therefor shall be regarded as an amount receivable from the sale of goods, and

( b ) where such services are rendered to a person who is not resident in the State, the company shall be regarded as having exported goods out of the State and any payment receivable by it for the services shall be regarded as an amount receivable from the sale of goods so exported.

(3) Any election under subsection (2) shall be made by notice in writing delivered to the inspector and shall have effect as respects every relevant accounting period for which relief under this Part is claimed by the company by which it is made and shall also have effect as if it were an election made under section 34 of the Finance Act, 1968 (relief on engineering services in relation to works outside the State).

(4) An election made under section 34 of the Finance Act, 1968 , shall have effect as if it were an election made under subsection (2).

(5) The inspector may by notice in writing require a company claiming relief from tax by virtue of subsection (2) to furnish him with such information or particulars as may be necessary for the purpose of giving effect to that subsection, and section 58 (1) (3) shall have effect as if the matters of which proof is required thereby included the information or particulars specified in a notice under this subsection.

Adjustments of certain amounts.

61.—(1) Where a company claims relief pursuant to this Part and it appears to the inspector that, in the case of goods of a particular class, the relationship between the amount receivable from the sale in any period of goods exported and the amount receivable from the sale in that period of goods not exported is affected by the payment by the company of any duty in respect of the goods or the materials used in their manufacture, the inspector shall apply subsection (2) or (3), whichever appears to him to be appropriate, in arriving at an amount receivable from the sale in that period of such goods, and any relief to the company by reference to the sale of goods in that period shall be computed accordingly.

(2) ( a ) An amount receivable from the sale of goods exported out of the State shall be deemed to be increased by the amount of any drawback, rebate or repayment of duty, being duty payable in the State, received by the company in respect of such goods and to be reduced by the amount of any duty paid in any territory outside the State by the company in respect of the import of such goods into that territory.

( b ) An amount receivable from the sale of goods not exported shall be deemed to be increased by the amount of any rebate or repayment of duty, being duty payable in the State, received by the company in respect of such goods.

(3) ( a ) An amount receivable from the sale of goods exported out of the State shall be deemed to be reduced by the amount of any duty paid in any territory outside the State by the company in respect of the import of such goods into that territory.

( b ) An amount receivable from the sale of goods not exported shall be deemed to be reduced by the amount of any duty, being duty payable in the State, paid by the company in respect of such goods.

(4) The inspector may by notice in writing require the company to furnish him with such information or particulars as may be necessary for the purpose of giving effect to this section, and section 58 (1) (3) shall have, effect as if the matters of which proof is required thereby included the information or particulars specified in a notice under this subsection.

(5) Where an accounting period of a company is part of a period of account of the company the amount of any duty and the amount of any drawback, rebate or repayment of duty shall for the purposes of this section be such sum as bears to these amounts for the period of account the same proportion as the length of the accounting period bears to the length of the period of account.

Transactions between associated persons and company succeeding to trade of another company.

62.—(1) Where a company claiming, relief under this Part (hereafter in this subsection referred to as the buyer) buys from another person (hereafter in this subsection referred to as the seller) and—

( a ) the seller has control over the buyer or, the seller being a company or partnership, the buyer has control over the seller or some other person has control over both the seller and the buyer, and

( b ) the price in the transaction is less than that which might have been expected to obtain if the parties to the transaction had been independent parties dealing at arm's length,

then, the income of the buyer which is attributable to sales shall, for the purposes of this Part, be computed as if the price in the transaction had been that which would have obtained if the transaction had been a transaction between independent persons dealing as aforesaid.

(2) In this section "control" has the meaning assigned to it by section 158.

(3) Where a company (hereafter in this subsection referred to as the succeeding company) succeeds to a trade or a part of a trade which, on or after the 6th day of April, 1960, was carried on by another company (hereafter in this subsection referred to as the original company) and the original company has or could have made a claim to relief under this Part or under Chapter IV of Part XXV of the Income Tax Act, 1967 , then relief in so far as such relief relates to the trade or the part of the trade in question shall be granted to the succeeding company only as respects the remaining relevant accounting periods for which such relief might have been claimed by the original company if it had continued to carry on the trade or the part of the trade in question.

(4) The inspector may by notice in writing require the company to furnish him with such information or particulars as may be necessary for the purposes of this section, and section 58 (1) (3) shall have effect as if the matters of which proof is required thereby included the information or particulars specified in a notice under this subsection.

(5) Where a company claims relief under this Part otherwise than by virtue of the provisions of section 54 (3), the foregoing provisions of this section shall have effect only in respect of transactions and successions occurring after the 19th day of April, 1961.

Production of documents and records.

63.—(1) Upon request made to him by an authorised officer at any premises of a company claiming relief under this Part, any person employed by the company at the premises shall produce to the authorised officer all such invoices, accounts, books and other documents and records whatsoever relating to purchase and sale of goods by the company as may be in such person's power, possession and procurement and, on production thereof, shall permit the authorised officer to examine them and take copies thereof or extracts therefrom.

(2) If a person requested under subsection (1) does not comply with the requirements of that subsection, he shall be liable to a penalty of £100.

(3) All penalties under this section may, without prejudice to any other method of recovery, be proceeded for and recovered summarily in the same manner as in summary proceedings for recovery of any fine or penalty under any Act relating to the excise.

(4) Where, in pursuance of this section, an authorised officer requests production of any documents or records, he shall, on request, show his authorisation for the purposes of this section to the person concerned.

(5) In this section "authorised officer" means an officer of the Revenue Commissioners authorised by them in writing for the purposes of this section.

Distributions.

64.—(1) This section applies to a distribution (hereafter in this section referred to as a relevant distribution) made, or deemed to have been made, by a company for an accounting period wholly or in part out of—

( a ) the company's income for that accounting period the corporation tax in respect of which has been reduced under this Part, or

( b ) a distribution or distributions received by the company in that accounting period in respect of which the tax credit is determined in accordance with this section.

(2) Where a relevant distribution is made or is deemed for the purposes of this section to have been made by a company for an accounting period, the tax credit to which the recipient of the relevant distribution is - entitled in respect of it shall be an amount arrived at by applying a fraction determined by the formula [image not available: a7y1976pivs64-1.bmp] to the amount of the relevant distribution

where—

A is an amount arrived at by applying to the amount of the company's distributable income for the accounting period, excluding distributions received by the company in that period, the fraction [image not available: a7y1976pivs64-2.bmp] where D is the standard rate per cent. for the year of assessment in which the relevant distribution is made reduced in the same proportion as the company's liability to corporation tax on its income for the accounting period is reduced under section 58, subject to paragraph (c) of the proviso to section 182 (3) (transitional relief for income tax losses, etc.) and paragraph (iii) of the proviso to section 184 (3) (relief in respect of corporation profits tax losses),

B is the aggregate of the tax credits in respect of the amount referred to in subsection (4) (b), and

C is the amount of the company's distributable income for the accounting period.

(3) For the purposes of this section—

( a ) where the total amount of the distributions made by a company for an accounting period exceeds the distributable income of the company for that accounting period, the excess shall be deemed for the purposes of this section to be a distribution for the immediately preceding accounting period;

( b ) where the total amount of the distributions made or deemed under paragraph (a) to have been made by a company for the immediately preceding accounting period exceeds the distributable income of the company for that accounting period, the excess shall be deemed to be a distribution for the next immediately preceding accounting period and so on.

( c ) where the total amount of the distributions made or deemed under this subsection to have been made for the first accounting period for which the company came within the charge to corporation tax exceeds the distributable income of the company for that accounting period—

(i) the excess shall be deemed to be a distribution for the company's period of account which ended on the accounting date last before the 6th day of April, 1975, or, if there was no such period of account, to be a distribution for the year which ended on the 5th day of April, 1976, and

(ii) the tax credit in respect of the excess which is so deemed shall be an amount equal to the amount of income tax which, under section 410 of the Income Tax Act, 1967 , the company would have been entitled to deduct from a dividend of such an amount as after deduction of that tax would equal the amount, of the excess and for this purpose it shall be assumed that the dividend was paid on the 5th day of April, 1976, and was in respect of the said period of account or year which ended on the 5th day of April, 1976, as the case may be.

(4) For the purposes of this section the distributable income of a company for an accounting period shall be the aggregate of the following amounts—

( a ) the income of the company charged to corporation tax for the accounting period as defined in section 28 (8) less the amount of corporation tax payable by the company for the accounting period which is attributable to that income, and

( b ) an amount equal to the distributions received by the company in the accounting period which is comprised in its franked investment income of the accounting period, other than franked investment income against which relief is given under section 15 (4), 25 or 26, and which relief was not subsequently withdrawn under the provisions of those sections.

(5) Where a period of account for or in respect of which a company makes a distribution is not an accounting period and part of the period of account falls within an accounting period, the portion of the distribution to be treated for the purposes of this section as being for or in respect of the accounting period shall be the same proportion as the said part of the period of account bears to the whole of that period.

(6) Where a company makes a distribution which is not expressed to be for or in respect of a specified period the distribution shall be treated for the purposes of this section as having been made for the accounting period in which it is made.

(7) Where the income of a company for an accounting period includes a dividend from which income tax was deducted under section 456 of the Income Tax Act, 1967 , then for the purposes of this section the amount of tax so deducted shall be deemed to be a tax credit in respect of a distribution of an amount equal to the amount of the dividend reduced by the amount of tax so deducted.

(8) In relation to a relevant distribution (other than a supplementary distribution under section 65), section 5 (dividend warrants) and section 83 (5) (Schedule F) shall apply so that the statements provided for by those sections shall show, in addition to the particulars to be given apart from this section, the amount of the tax credit which would apply in respect of the distribution if it were not a relevant distribution.

(9) The inspector may by notice in writing require a company to furnish him with such information or particulars as may be necessary for the purposes of this section and if the company does not comply with the requirements of the notice it shall be liable to a penalty of £100.

Dividends and other distributions at gross rate or of gross amount.

65.—(1) Where a company makes a distribution in respect of any right or obligation to which section 178 (dividends at gross rate or of gross amount) relates and the tax credit in respect of that distribution is calculated in accordance with section 64 then, the company shall make a supplementary distribution of an amount equal to the excess of the amount of the tax credit which would have applied to the distribution if section 64 had not been enacted over the amount of the tax credit which in accordance with the said section 64 applies to the distribution, and the person to whom the distribution and the supplementary distribution are made shall be regarded as having received one distribution consisting of the aggregate of the distribution and the supplementary distribution.

(2) Notwithstanding the provisions of section 88 the recipient of a supplementary distribution under subsection (1) shall not be entitled to a tax credit in respect of it.

(3) In relation to any supplementary distribution within the meaning of subsection (1), section 5 shall apply to the company so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

Effect of reduction of tax credit.

66.—(1) Nothing in this section shall affect the amount of income for the purposes of Schedule F which is represented by a distribution.

(2) In this section the relieved amount for a year of assessment in relation to an individual is an amount determined by the formula

[image not available: a7y1976pivs66-1.bmp]

where—

A is the aggregate amount of income on which the individual is chargeable under Schedule F for that year of assessment in respect of distributions to which section 64 applies,

B is the aggregate amount of the tax credits which are included in the amount referred to at A, and

C is the standard rate per cent. for the year of assessment.

(3) ( a ) An individual whose income for a year of assessment includes a distribution or distributions (in this subsection referred to as the said distribution or the said distributions) to which section 64 applies shall be assessed and charged to tax as if—

(i) the highest part of his income were the relieved amount, and

(ii) the next highest part of his income were the excess (in this section referred to as the said excess) of the amount of income represented by the said distribution (or the aggregate of the said distributions as the case may be) over the relieved amount.

( b ) Notwithstanding the provisions of section 64, the total amount of the tax credits which, by virtue of section 88, an individual may claim to have set against the tax charged on his income or to have paid to him, shall—

(i) in relation to so much of the relieved amount as is charged to tax at a rate or rates higher than the reduced rate be an amount equal to the amount of tax so charged,

(ii) in relation to that part of the said excess which is charged to tax at a rate or rates higher than the reduced rate be a sum equal to income tax at the standard rate for the year of assessment in which the distribution is made on that part of the said excess,

(iii) in relation to so much of his income which is represented by the said distribution (or the aggregate of the said distributions as the case may be) as is charged to tax at the reduced rate be tax at the reduced rate on the amount so charged together with tax on the same amount at a rate per cent.

equal to [image not available: a7y1976pivs66-2.bmp] where—

D is the difference between the standard rate per cent. and the reduced rate per cent. for the year of assessment and for this purpose "the reduced rate per cent." for a year of assessment means 26 where the reduced rate for that year is 26 per cent. and similarly with reference to the reduced rate per cent. for a year of assessment for which the reduced rate is other than 26 per cent.,

E is the rate of imputation per cent. for the year of assessment, and for this purpose "the rate of imputation per, cent." for a year of assessment means an amount determined by the formula

[image not available: a7y1976pivs66-3.bmp]

where A and B have the same meanings as in subsection (2), and

F is the standard rate per cent for the year of assessment, and

(iv) in relation to so much of his income which is represented by the said distribution (or the aggregate of the said distributions as the case may be) as is not included in his taxable income be a proportionate part of the tax credit which under section 64 is applicable to the said distribution (or, as the case may be, a proportionate part of the aggregate amount of tax credits which under section 64 are applicable to the said distributions).

Distributions to non-resident individuals.

67.—Where for any year of assessment the income of an individual who for that year is not resident in the State includes an amount in respect of a distribution to which section 64 applies, the distribution shall be treated as representing income equal to an amount determined by the formula

[image not available: a7y1976pivs67-1.bmp]

where—

A is the amount of the tax credit to which the individual would have been entitled in respect of the distribution if he were resident in the State for the year of assessment, and

B is the standard rate per cent. for that year of assessment.

Appeals.

68.—An appeal to the Appeal Commissioners shall lie on any question arising under this Part in like manner as an appeal would lie against an assessment to corporation tax and the provisions of this Act relating to appeals shall apply and have effect accordingly.

PART V PROFITS FROM TRADING WITHIN SHANNON AIRPORT

Definitions.

69.—In this Part—

"the airport" has the same meaning as in the Customs-free Airport Act, 1947 ;

"company" means any company carrying on a trade;

"the Minister" means the Minister for Finance.

Exempted trading operations.

70.—(1) In this section "qualified company" means a company the whole or part of the trade of which is carried on within the airport

(2) Subject to subsections (5) and (6), the Minister may give a certificate certifying that such trading operations of a qualified company as are specified in the certificate are, with effect as from their commencement, exempted trading operations for the purposes of this Part, and any certificate so given shall, unless it is revoked under subsection (4), remain in force until the 5th day of April, 1990:

Provided that where the Minister has given a certificate under section 3 (2) of the Finance (Miscellaneous Provisions) Act, 1958 , or under the said section 3 (2) and section 374 (2) of the Income Tax Act, 1967 (exempted trading operations), such certificate shall, until it is revoked, have effect as if it were a certificate given under this section.

(3) A certificate under subsection (2) may be given either without conditions or subject to such conditions as the Minister considers proper and specifies therein.

(4) Where, in the case of a company in relation to which a certificate, under subsection (2) has been given—

( a ) the trade of the company ceases or becomes carried on wholly outside the airport, or

( b ) the Minister is satisfied that the company has failed to comply with any condition subject to which the certificate was given,

the Minister may, by notice in writing served by registered post on the company, revoke the certificate.

(5) The Minister shall not certify, under subsection (2), that a trading operation is an exempted trading operation unless it falls within one or more of the following classes of trading operations—

( a ) the sale of goods exported, or to be exported, out of the State by the qualified company (whether acting as principal or agent), being goods which have been produced, manufactured or processed within the airport by the qualified company,

( b ) the sale of goods exported, or to be exported, out of the State by the qualified company, being goods which have been imported into the State and which have been packaged or handled within the airport by the qualified company,

( c ) the repair or maintenance, within the airport, of aircraft,

( d ) the rendering, within the airport or outside the State, of services entailing the use of aircraft or air transport,

( e ) other trading operations in regard to which the Minister is of opinion, after consultation with the Minister for Transport and Power, that they contribute to the use or development of the airport.

( f ) trading operations which are ancillary to any of those described in the foregoing paragraphs of this subsection.

(6) The Minister shall not certify, under subsection (2), that any of the following trading operations is an exempted trading operation—

( a ) the sale of goods brought, or to be brought, from the airport into any other part of the State otherwise than in the course of being exported out of the State,

( b ) the rendering, to persons resident in the State outside the airport of services,

( c ) the production or manufacture of goods outside the airport,

( d ) the operation of an air transport service other than an air transport service which—

(i) is operated between the airport and a place outside the State, and

(ii) is not so operated under an international bilateral agreement to which the Government is a party,

( e ) the rendering within the State of—

(i) services to embarking or disembarking aircraft passengers, including hotel, catering, money changing or transport (other than air transport) services, or

(ii) services in connection with the landing, departure, loading or unloading of aircraft,

( f ) the sale of goods by retail,

( g ) the sale of consumable goods for the fuelling of aircraft or for shipment as aircraft stores.

Disregard of income or losses in the case of exempted trading operations.

71.—(1) Except as otherwise provided, income arising from, or losses sustained in, exempted trading operations shall not be taken into account for any purpose of this Act in relation to the company by which such operations are carried on.

(2) Where the trade carried on by a company consists partly of exempted trading operations and partly of other trading operations, the amount of the income arising from, or of the loss sustained in, such other trading operations shall, for any purpose of this Act, be computed as it would have been computed for that purpose if the company were carrying on two distinct trades consisting respectively of the exempted trading operations and of the other trading operations.

Transactions between associated persons.

72.—(1) Where, in the course of exempted trading operations, the company carrying on the operations (hereafter in this subsection referred to as the buyer) buys goods from another person (hereafter in this subsection referred to as the seller) and—

( a ) the seller has control over the buyer or, the seller being a body corporate or partnership, the buyer has control over the seller or some other person has control over both the seller and the buyer, and

( b ) the goods are sold at a price less than the price which they might have been expected to fetch if the parties to the transaction had been independent parties dealing at arm's length,

then, a computation of the income or losses of the seller, for any purpose of the Tax Acts, shall be made as if the goods had been sold for the price which they would have fetched if the transaction had been a transaction between independent persons dealing as aforesaid.

(2) In this section "control" has the meaning assigned to it by section 158.

Delivery of statements, etc.

73.—Where the Minister has given a certificate under section 70 (2) or under the sections mentioned in the proviso thereto—

( a ) the provisions of the Tax Acts relating to the delivery of statements or returns of profits shall continue to have effect in relation to the company concerned as if the certificate had not been given, and

( b ) the Revenue Commissioners may by notice in writing require the company concerned to furnish them, within such time as they may direct, with such accounts and other particulars as the Revenue Commissioners think necessary for the purposes of this Part.

Exception from Part IV.

74.—Notwithstanding anything in Part IV (Profits from Export of Certain Goods) no amount receivable from the sale of goods exported out of the State in the course of exempted trading operations shall be taken into account for any purpose of that Part.

Reduction of capital allowances.

75.—Where the trade carried on by a company consists partly of exempted trading operations and partly of other trading operations, the amount of any capital allowances to which, but for this section, the company would have been entitled shall be reduced by such amount, if any, as the Appeal Commissioners consider just having regard to section 71.

Distributions.

76.—(1) Where a distribution for an accounting period is made by a body corporate in part out of income from exempted trading operations and in part out of other profits, the distribution shall be treated as if it consisted of two distributions respectively made out of income from exempted trading operations and out of other profits.

(2) ( a ) So much of any distribution as has been made out of income from exempted trading operations—

(i) shall not, subject to section 54 of the Finance Act, 1974 (charge to tax in respect of certain dividends received by directors and employees), be regarded as income for any purpose of the Income Tax Acts; and

(ii) shall, where the recipient of such distribution is a body corporate, be deemed for the purposes of this Part to be income from exempted trading operations.

( b ) The recipient of any distribution, including part of a distribution treated under subsection (1) as a distribution, made out of income from exempted trading operations shall not be entitled to a tax credit in respect of that distribution.

(3) ( a ) Where a body corporate makes a distribution, including part of a distribution treated under subsection (1) as a distribution, in respect of any right or obligation to which section 178 (dividends at gross rate or of gross amount) relates and the distribution is made out of income from exempted trading operations, the body corporate shall make a supplementary distribution of an amount equal to the amount of the tax credit which would have applied in respect of the distribution if subsection (2) (b) had not been enacted.

( b ) Subsection (2) shall apply to a supplementary distribution under this subsection as if that supplementary distribution were a distribution made wholly out of income from exempted trading operations.

(4) In relation to any distribution (not being a supplementary distribution under this section), including part of a distribution treated under subsection (1) as a distribution, made by a body corporate out of income from exempted trading operations, section 5 (dividend warrants) and section 83 (5) (Schedule F) shall apply to the body corporate so that the statements provided for by those sections shall show, as respects each such distribution, in addition to the particulars required to be given apart from this section, that the distribution is made out of income from exempted trading operations.

(5) In relation to any supplementary distribution under subsection (3), section 5 shall apply to the body corporate so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

(6) Where a body corporate makes a distribution for an accounting period, the distribution shall be regarded for the purposes of this section as having been made out of the distributable income (as defined in section 64 (4)) of that period to the extent of that income and in relation to the excess of the distribution over that income out of the most recently accumulated income.

(7) Section 64 (5) (6) (distributions: tax credit and export sales relief) shall apply for the purposes of this section as they apply for purposes of that section.

(8) In this section "other profits" includes a dividend or other distribution of a body corporate which is resident in the State but does not include a distribution to which subsection (2) (a) (ii) applies.

Provision for charges on income.

77.—Where charges on income, which are payable out of the income of a trade consisting partly of exempted trading operations and partly of other trading operations, are paid in an accounting period by a company there shall be treated as paid out of profits brought into charge to corporation tax only the portion of the charges so payable which bears to the total amount thereof the same proportion as the amount of the income of the trade actually charged to tax bears to the amount of such income which would have been charged to tax if this Part had not been enacted.

PART VI ASSOCIATED COMPANIES: RELIEF UNDER PARTS IV AND V

Relief in relation to transactions between associated companies.

78.—(1) In this section—

"the airport" has the same meaning as in the Customs-free Airport Act, 1947 ;

"company" has the same meaning as in section 69 (definitions);

"control" has the meaning assigned to it by section 158;

"exempted trading operation" means a trading operation in respect of which there is in force a certificate given, before the 6th day of April, 1967, under section 3 (2) of the Finance (Miscellaneous Provisions) Act, 1958 , or, on or after that date, under the said section 3 (2) and section 374 (2) of the Income Tax Act, 1967 , or under section 70 (exempted trading operations) of this Act:

"goods", where it, occurs in subsection (3), has the same meaning as in Part IV (Profits from Export of Certain Goods);

"other trading operation" means a trading operation which is carried on wholly within the airport other than an exempted trading operation;

"qualified company" has the same meaning as in section 70 (1).

(2) Where a qualified company (in this subsection referred to as the seller) which carries on a trade consisting partly of exempted trading operations and partly of other trading operations sells goods in the course of the other trading operations to a company (in this subsection referred to as the buyer) which carries on a trade in the State wholly outside the airport, and—

( a ) the other trading operations would have been exempted trading operations if the goods had been exported out of the State by the seller, and

( b ) the seller has control over the buyer or the buyer has control over the seller or some other person has control over both the buyer and the seller, and

( c ) the goods are appropriated as trading stock of the buyer, and

( d ) the goods are subjected by the buyer to a process of manufacture in the State, and

( e ) the inspector is satisfied that the goods have been, or will be, exported out of the State by the buyer either as components of other goods or otherwise, and

( f ) the other trading operations consist wholly of the sale of goods to the buyer and any goods sold by the buyer in the course of his trade (other than goods exported out of the State) are sold to the seller,

the income arising from, or losses sustained in, the other trading operations shall be deemed, notwithstanding section 70 (6) (a) or any certificate under section 70 (2) or any certificate having effect, by virtue of the proviso to section 70 (2), as if it were a certificate under the said section 70 (2), to arise from, or to be sustained in, exempted trading operations and Part V (Profits from trading within Shannon Airport) shall apply accordingly.

(3) Where a company (in this subsection referred to as the seller) which is not a qualified company sells goods to a person (in this subsection referred to as the buyer) who is either a qualified company which carries on a trade consisting partly of exempted trading operations and partly of other trading operations or a company which carries on a trade in the State wholly outside the airport, and—

( a ) the seller would have been entitled to claim relief under Part IV in respect of the profits attributable to the sale of the goods if they had been exported out of the State, and

( b ) the seller has control over the buyer or the buyer has control over the seller or some other person has control over both the buyer and the seller, and

( c ) the goods are appropriated as trading stock of the buyer, and

( d ) the goods are subjected by the buyer to a process of manufacture in the State, and

( e ) the inspector is satisfied that the goods have been, or will be, exported out of the State by the buyer either as components of other goods or otherwise, and

( f ) any goods sold by the seller in the course of his trade (other than goods exported out of the State) are sold to the buyer and any goods sold by the buyer in the course of his trade (other than goods exported out of the State) are sold to the seller,

Part IV shall apply as if the goods has been exported out of the State by the seller and any amount receivable by the seller from the sale of the goods to the buyer shall be deemed to be an amount receivable from the sale of goods so exported.

PART VII SPECIAL EXEMPTIONS

Reduced rate of corporation tax for certain income.

79.—(1) Where in any accounting period the profits of a company include any income to which this section applies—

( a ) the corporation tax charged on that income for the accounting period shall, notwithstanding the provisions of section 1 (introduction for companies of corporation tax in place of income tax and corporation profits tax), be calculated as if the rate of corporation tax for the financial year 1974 and each subsequent financial year were 35 per cent., and

( b ) the income shall be disregarded for all purposes of section 28 (reduction of corporation tax liability of small companies).

(2) For the purposes of this section the income of a company for an accounting period is its income for that period as defined in section 28 for the purposes of that section.

(3) The income to which this section applies is—

( a ) in the case of a public utility company which, by or by virtue of any Act, is precluded in respect of the whole of the trade or business carried on by it either from charging any higher price or from distributing any higher rate of dividend than that authorised by or by virtue of such Act, any income of such company;

( b ) in the case of a public utility company which, by or by virtue of any Act, is precluded in respect of part only of the trade or business carried on by it either from charging any higher price or from distributing any higher rate of dividend than that authorised by or by virtue of such Act, so much of the income of such company as is derived from the part of its trade or business to which such preclusion applies;

( c ) in the case of a company which owns a controlling interest in and directs or is entitled to direct the management of any public utility company, the income derived by the first-mentioned company from such public utility company;

( d ) the income of The Agricultural Credit Corporation Limited;

( e ) the income of a company which carries on a railway undertaking;

( f ) the income of an association which is registered under section 24 of the Companies Act, 1963 , as a company with limited liability without the addition of the word "limited" to its name, so long as it continues to be so registered;

( g ) the income of a company which is established solely for the advancement of religion or education and which under its memorandum or articles of association is prohibited from distributing any part of its profits to its members;

( h ) the income of a company formed before the 4th day of August, 1920, whose assets consist wholly of stock or other securities issued by any public authority and formerly held by the persons by whom the company was formed;

( i ) the income of a company which is precluded by its constitution from distributing any part of its profits amongst its members; and

( j ) so much of the income of an investment trust company as is derived from dividends and other distributions received from any body corporate which is liable to the tax in Northern Ireland and Great Britain known as corporation tax to the extent that such dividends and distributions have been paid out of profits which have borne that tax.

(4) In this section "public utility company" means a company which carries on in the State any tramway, dock or canal undertaking.

(5) For the purposes of subsection (3) (i), a company shall be regarded as being precluded by its constitution from distributing any part of its profits amongst its members if, but only if—

( a ) it is a company within the meaning of the Companies Act, 1963 , and its memorandum or articles of association contain provisions—

(i) prohibiting the distribution of any part of its profits amongst its members by way of dividend, bonus or otherwise, and

(ii) securing that if, after the satisfaction of all the debts and liabilities of the company on its winding up or dissolution, any property of the company is undisposed of, it shall not be given to or distributed amongst its members but shall be—

(I) given to the Minister for Finance for the benefit of the Central Fund, or

(II) given to a body of persons (within the meaning of the Income Tax Acts) selected by the members of the company at or before the time of the winding up or dissolution aforesaid the objects of which are similar to the objects of the company, and the constitution or other governing rules of which contains or contain provisions prohibiting (to an extent at least as great as the extent of the prohibitions referred to in relation to the company in this and the other subparagraphs of this paragraph) the distribution of any part of its income or property amongst its members or proprietors, or

(III) given to a body of persons (within the meaning of the Income Tax Acts) or trust established for charitable purposes only, and

(iii) securing that the aforementioned provisions may not be altered or deleted without the previous consent or approval of the Minister for Finance, or the previous consent or approval of any other Minister of State given after consultation with the Minister for Finance; or

( b ) it is a company, established by or under a statute (within the meaning of section 3 of the Interpretation Act, 1937 ) and named therein, or incorporated by or under a charter, and—

(i) is prohibited by or under the statute or charter, as the case may be, from distributing any part of its profits amongst its members by way of dividend, bonus or otherwise or, if not so prohibited, is not authorised by or under the statute or charter to distribute any part of its profits amongst its members, or

(ii) is required to apply its income and property as directed by or under the statute or charter or by a Minister of State.

(6) Where provisions of the kind specified in subsection (5) (a) are contained in the memorandum or articles of association of a company and those provisions are altered or deleted without the previous consent or approval of the Minister for Finance, or the previous consent or approval of any other Minister of State given after consultation with the Minister for Finance, as the case may be, then—

( a ) where the company makes a distribution out of income to which this section applies or out of profits which were, by virtue of section 43 (3) of the Finance Act, 1922, not charged to corporation profits tax or out of that income and those profits, the company shall be assessed to income tax at the standard rate under Case IV of Schedule D on an amount the income tax on which at the standard rate for the year in which the distribution is made is equal to the amount of the tax credit which would apply in respect of the distribution if the person receiving it were an individual resident in the State;

( b ) where the company distributes, on or after the 27th day of November, 1975, its assets amongst its members or proprietors on the winding up or dissolution of the company the company shall be assessed to income tax for the year of assessment in which the winding up or dissolution occurs at the standard rate under Case IV of Schedule D on an amount determined by the formula

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where—

A is the standard rate per cent. for the year of assessment in which the winding up or dissolution occurs, and

D is the amount by which the total value of the assets distributed to the members or proprietors on the winding up or dissolution exceeds the amount of the paid up share capital of the company.

(7) ( a ) In this section—

"investment trust company" means a company which complies with the following conditions—

(i) it is incorporated and resident in the State,

(ii) it has issued for public subscription not less than 80 per cent. in nominal value of its shares carrying voting rights, whether immediate or to arise in certain future circumstances,

(iii) its business consists mainly in the making of investments,

(iv) the distribution as dividend of surpluses arising from the realisation of investments is prohibited by the company's memorandum or articles of association;

"Irish securities" means securities of the Government, securities guaranteed by the Minister for Finance and any stocks, shares, debentures, bonds or obligations of any municipal corporation in the State, or any company or other body corporate incorporated in the State;

"securities" includes stocks, shares, bonds and obligations of any Government, municipal corporation, company or other body corporate.

( b ) The provisions of subsection (1) shall not apply to the income of an investment trust company for any accounting period unless the following conditions are satisfied—

(i) throughout the accounting period—

(I) the value of the Irish securities held by the investment trust company was not less than 15 per cent. of the value of the securities held by the investment trust company,

(II) the securities (whether of one class or more than one class) held by the investment trust company in any one body corporate, other than an investment trust company, did not represent more than 15 per cent. by value of the first-mentioned investment trust company's securities,

(III) the number of shareholders was not less than fifty and no one shareholder was the beneficial owner of more than 49 per cent. of the shares of the investment trust company,

(IV) the value of the securities quoted on a recognised stock exchange which were held by the investment trust company was not less than 85 per cent. of the value of the securities held by the investment trust company,

and

(ii) the investment trust company did not retain more than 15 per cent. of its profits—

(I) in any accounting period, and

(II) in any period (not being a period for which the company was within the charge to corporation tax) for which accounts of the company were made up and which ended on or after the 29th of July, 1968.

( c ) The Minister for Finance may, after consultation with the Revenue commissioners, direct that the provisions of subsection (1) shall apply in relation to an investment trust company for any accounting period notwithstanding that one or more of the conditions stated in paragraph (b) (i) of this subsection was or were not complied with and notification of any such direction shall be published in Iris Oifigiúil as soon as may be after it is given.

(8) Any amount on which by virtue of this section income tax is charged on a company by an assessment under Case IV of Schedule D shall not be regarded as income of the company for any purpose of the Tax Act.

Exemption of income from carrying out of voluntary health insurance schemes.

80.—Income of the Voluntary Health Insurance Board arising from the business of carrying out under section 4 of the Voluntary Health Insurance Act, 1957 , schemes of voluntary health insurance shall be exempt from corporation tax.

PART VIII DISTRIBUTIONS OUT OF CERTAIN PROFITS FROM MINING

Distributions: profits of certain mines.

81.—(1) In this section—

"exempted income" means income in respect of which a company has obtained relief under the Finance (Profits of Certain Mines) (Temporary Relief from Taxation) Act, 1956 , or under Chapter II of Part XXV of the Income Tax Act, 1967 (Profits of Certain Mines), and

"other income" means income of a company which is not exempted income.

(2) Where a distribution for an accounting period is made by a company wholly out of exempted income, the distribution shall not be regarded as income for any purpose of the Income Tax Acts and, notwithstanding the provisions of section 88 (tax credit for certain recipients of distributions), the recipient of the distribution shall not be entitled to a tax credit in respect of it.

(3) Where a distribution for an accounting period is made by a company in part out of exempted income and in part out of other income, the distribution shall be treated as if it consisted of two distributions respectively made out of exempted income and other income and subsection (2) shall apply to such part of the distribution as is made out of exempted income as it applies to a distribution made wholly out of exempted income.

(4) Any distribution, including part of a distribution treated under subsection (3) as a distribution, made out of exempted income shall, where the recipient is a company resident in the State, be deemed for the purposes of this section to be exempted income of the company.

(5) ( a ) Where a company makes a distribution, including part of a distribution treated under subsection (3) as a distribution, in respect of any right or obligation to which section 178 (dividends at gross rate or of gross amount) relates and the distribution is made out of exempted income, the company shall make a supplementary distribution of an amount equal to the amount of the tax credit which would have applied in respect of the distribution if subsection (2) had not been enacted.

( b ) Subsection (2) shall apply to a supplementary distribution under this subsection as if the supplementary distribution were a distribution made out of exempted income and section 5 (dividend warrants) shall apply so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

(6) Sections 64 (5) (6) (distributions in relation to export sales relief) and 76 (6) (distributions out of profits from trading within Shannon Airport) shall apply for the purposes of this section as they apply for the purposes of those sections.

(7) In relation to any distribution (not being a supplementary distribution under this section), including part of a distribution treated under subsection (3) as a distribution, made out of exempted income, sections 5 and 83 (5) (Schedule F) shall apply so that the statements provided for by those sections shall show, in addition to the particulars required to be given apart from this section, that the distribution is made out of exempted income.

Distributions out of profits from coal, gypsum and anhydrite mining operations.

82.—(1) For the purposes of this section, "relieved income" means the income of a company—

( a ) on which income tax was paid at a reduced rate by virtue of section 395 (1) of the Income Tax Act, 1967 (relief—existing coal-mining operations), section 7 (relief—new coal-mining operations) or section 8 (relief—existing coal-mining operations) of the Finance (Miscellaneous Provisions) Act, 1956 , or section 32 of the Finance Act, 1960 (extension of relief for new mining operations to gypsum and anhydrite mining), or

( b ) on which income tax was borne by deduction at a reduced rate under section 396 (1) of the Income Tax Act, 1967 (dividends), or section 9 of the Finance (Miscellaneous Provisions) Act, 1956 (dividends, etc.), or

( c ) which is franked investment income the tax credit comprised in which has been reduced under this section.

(2) The tax credit in respect of a distribution made wholly out of relieved income shall, notwithstanding section 88, be the amount arrived at by applying to the amount of the distribution the fraction

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where—

A is 50 per cent. of the standard rate per cent. for the year of assessment in which the distribution is made.

(3) Where a distribution is made in part out of relieved income and in part out of other income, the distribution shall be treated as if it consisted of two distributions respectively made out of relieved income and out of other income and the tax credit in respect of each such distribution shall be calculated in accordance with subsection (2) and section 88 respectively.

(4) Any distribution, including part of a distribution treated under subsection (3) as a distribution, made out of relieved income shall, where the recipient s a company resident in the State, be deemed for the purposes of this section to be relieved income of that company.

(5) Subject to subsection (7), for the purposes of Schedule F and all other purposes of the Tax Acts a distribution made by a company out of relieved income shall be treated as representing income equal to the aggregate of the amount or value of that distribution and the amount of the tax credit in respect of it calculated in accordance with this section.

(6) Where for a year of assessment the taxable income of an individual which is chargeable at the reduced rate or the standard rate includes income represented by distributions made out of relieved income, his liability to income tax in respect of the income represented by such distributions shall be an amount equal to the tax on that income calculated at 50 per cent. of the reduced rate or of the standard rate, as the case may be, for the year of assessment in which the distributions were made.

(7) Where for a year of assessment the taxable income of an individual which is chargeable at the higher rates includes income represented by distributions made out of relieved income, his liability to income tax at the higher rates in respect of the income represented by such distributions shall be an amount equal to the tax, calculated at the higher rates for the year of assessment in which the distributions were made, on the income reduced by 50 per cent. and credit shall be given against that tax of an amount equal to tax at the standard rate for the said year on the amount of the income as so reduced.

(8) Where a company makes a distribution (including part of a distribution which is treated as a distribution under subsection (3)) in respect of any right or obligation to which section 178 relates and the tax credit in respect of that distribution is calculated in accordance with subsection (2), then the company shall make a supplementary distribution of an amount equal to the excess of the tax credit which would have applied to the distribution if this section had not been enacted over the amount of the tax credit which in accordance with subsection (2) applies to the distribution and the person to whom the distribution and the supplementary distribution are made shall be regarded as having received one distribution consisting of the aggregate of the distribution and the supplementary distribution.

(9) Notwithstanding section 88, the recipient of a supplementary distribution under subsection (8) shall not be entitled to a tax credit in respect of such supplementary distribution and section 5 (dividend warrants) shall apply so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

(10) Sections 64 (5) (6) and 76 (6) shall apply for the purposes of this section as, they apply for the purposes of those sections respectively.

(11) In relation to any distribution (not being a supplementary distribution under this section), including part of a distribution treated under subsection (3) as a distribution, made by a company out of relieved income, sections 5 and 83 (5) shall apply so that the statements provided for by those sections shall show, in addition to the particulars required to be given apart from this section, that the distribution is made out of relieved income and shall also show the amount of the tax credit which would apply in respect of the distribution if it were not made out of relieved income.

PART IX SCHEDULE F AND COMPANY DISTRIBUTIONS

Schedule F.

83.—(1) Income tax for any year of assessment after the year 1975-76 shall be chargeable under a new Schedule, to be called Schedule F, in respect of dividends and other distributions in that year of a company resident in the State.

(2) The Schedule referred to as Schedule F is as follows—

SCHEDULE F

1. Income tax under this Schedule shall be chargeable for any year of assessment in respect of all dividends and other distributions in that year of a company resident in the State which are not specially excluded from income tax, and for the purposes of income tax all such distributions shall be regarded as income however they fall to be dealt with in the hands of the recipient.

2. For the purposes of this Schedule and all other purposes of the Tax Acts any such distribution as aforesaid in respect of which a person is entitled to a tax credit shall be treated as representing income equal to the aggregate of the amount or value of that distribution and the amount of that credit, and income tax under this Schedule shall accordingly be charged on that aggregate.

(3) No distribution which is chargeable under Schedule F shall be chargeable under any other provision of the Income Tax Acts.

(4) Where for any year of assessment the income of a person who for that year is not resident in the State includes an amount in respect of a distribution made by a company which is resident in the State—

( a ) that person's liability under any assessment to income tax made in respect of the distribution shall be reduced by a sum equal to income tax at the standard rate for that year on the said amount, and

( b ) the amount or value of the distribution shall be treated for the purposes of sections 433 (yearly interest, etc., payable wholly out of taxed profits) and 434 (interest, etc., not payable out of taxed profits) of the Income Tax Act, 1967 , as not brought into charge to income tax.

(5) A company which makes a distribution (not being a distribution to which section 5 (1) refers) shall, if the recipient so requests in writing, furnish to him a statement in writing showing the amount or value of the distribution and (whether or not the recipient is a person entitled to a tax credit in respect of the distribution) the amount of the tax credit to which a recipient who is such a person is entitled in respect thereof.

The duty imposed by this subsection shall be enforceable at the suit or instance of the person requesting the statement.

Matters to be treated as distributions.

84.—(1) The following provisions of this Part, together with section 96 (payments, etc., to participators and associates) and section 97 (interest paid to directors and directors' associates), shall, subject to any express exceptions, have effect with respect to the meaning in this Act of "distribution" and for determining the persons to whom certain distributions are to be treated as made; but references in this Act to distributions of a company shall not apply to distributions made in respect of share capital in a winding up.

(2) In relation to any company "distribution" means—

( a ) any dividend paid by the company, including a capital dividend;

( b ) any other distribution out of assets of the company (whether in cash or otherwise) in respect of shares in the company, except, subject to section 86, so much of the distribution, if any, as represents a repayment of capital on the shares or is, when it is made, equal in amount or value to any new consideration received by the company for the distribution;

( c ) any amount met out of assets of the company (whether in cash or otherwise) in respect of the redemption of any security issued by the company in respect of shares in or securities of the company otherwise than wholly for new consideration, or in the redemption of such part of any such security so issued as is not properly referable to new consideration;

( d ) any interest (excluding interest paid before the 6th day of April, 1976) or other distribution out of assets of the company in respect of securities of the company (except so much, if any, of any such distribution as represents the principal thereby secured, and, without prejudice to section 87 (9), for this purpose no amount shall be regarded as representing the principal secured by a security in so far as it exceeds any new consideration which has been received by the company for the issue of the security), where the securities are—

(i) securities issued as mentioned in paragraph (c), but excluding securities issued before the 27th day of November, 1975; or

(ii) securities convertible directly or indirectly into shares in the company or securities carrying any right to receive shares in or securities of the company, not being (in either case) securities quoted on a recognised stock exchange nor issued on terms which are reasonably comparable with the terms of issue of securities so quoted, or

(iii) securities under which—

(I) the consideration given by the company for the use of the principal secured is to any extent dependent on the results of the company's business or any part of it, or

(II) the consideration so given represents more than a reasonable commercial return for the use of that principal; provided that this shall not operate so as to treat as a distribution so much of the interest or other distribution as represents a reasonable commercial return for the use of that principal; or

(iv) securities issued by the company and held by a company not resident in the State, where—

(I) the company which issued the securities is a 75 per cent. subsidiary of the other company; or

(II) both are 75 per cent. subsidiaries of a third company which is not resident in the State; or

(III) except where 90 per cent. or more of the share capital of the company which issued the securities is directly owned by a company resident in the State both the company which issued the securities and the company not resident in the State are 75 per cent. subsidiaries of a third company which is resident in the State; or

(v) securities which are connected with shares in the company, where "connected with" means that in consequence of the nature of the rights attaching to the securities or shares, and in particular of any terms or conditions attaching to the right to transfer the shares or securities, it is necessary or advantageous for a person who has, or disposes of or acquires, any of the securities also to have, or to dispose of or acquire, a proportionate holding of the shares;

( e ) any such amount as is required to be treated as a distribution by subsection (3) or by section 85.

(3) Where on a transfer of assets or liabilities by a company to its members or to a company by its members, the amount or value of the benefit received by a member (taken according to its market value) exceeds the amount or value (so taken) of any new consideration given by him, the company shall be treated as making a distribution to him of an amount equal to the difference:

Provided that, where the company and the member receiving the benefit are both resident in the State and either the former is a subsidiary of the latter or both are subsidiaries of a third company also so resident, the said amount shall not be treated as a distribution.

(4) The question whether one company is a subsidiary of another for the purpose of subsection (3) shall be determined as a question whether it is a 51 per cent. subsidiary of that other, except that that other shall be treated as not being the owner—

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

( b ) of 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; or

( c ) of any share capital which it owns directly or indirectly in a company not resident in the State.

(5) ( a ) No transfer of assets (other than cash) or of liabilities between one company and another shall constitute, or be treated as giving rise to, a distribution by virtue of subsection (2) (b) or (3) if they are companies—

(i) both of which are resident in the State and neither of which is a 51 per cent. subsidiary of a company not so resident; and

(ii) which neither at the time of the transfer nor as a result of it are under common control.

( b ) For the purposes of this subsection two companies are under common control if they are under the control of the same person or persons, and for this purpose "control" shall have the meaning assigned to it by section 158.

( c ) Any amount which would be a distribution by virtue of subsection (3) apart from the proviso to that subsection (groups of companies resident in the State), shall not constitute a distribution by virtue of subsection (2) (b).

Bonus issues following repayment of share capital.

85.—(1) Where a company—

( a ) repays any share capital, or has done so at any time on or after the 27th day of November, 1975; and

( b ) at or after the time of that repayment issues as paid up otherwise than by the receipt of new consideration any share capital;

the amount so paid up shall be treated as a distribution made in respect of the shares on which it is paid up, except in so far as that amount exceeds the amount or aggregate amount of share capital so repaid less any amounts previously so paid up and treated by virtue of this subsection as distributions.

(2) Subsection (1) shall not apply where the repaid share capital consists of fully paid up preference shares—

( a ) if those shares existed as issued and fully paid preference shares on the 27th day of November, 1975, and throughout the period from that date until the repayment those shares continued to be fully paid preference shares, or

( b ) if those shares were issued after the 27th day of November, 1975, as fully paid preference shares wholly for new consideration not derived from ordinary shares and throughout the period from their issue until the repayment those shares continued to he fully paid preference shares.

(3) In this section—

"ordinary shares" means shares other than preference shares;

"preference shares" means shares—

( a ) which do not carry any right to dividends other than dividends at a rate per cent. of the nominal value of the shares which is fixed, and

( b ) which carry rights in respect of dividends and capital which are comparable with those general for fixed-dividend shares quoted on a stock exchange in the State;

"new consideration not derived from ordinary shares" means new consideration other than consideration consisting of the surrender, transfer or cancellation of ordinary shares of the company or any other company or consisting of the variation of rights in ordinary shares of the company or any other company, and other than consideration derived from a repayment of share capital paid in respect of ordinary shares of the company or of any other company.

(4) Except in relation to a close company within the meaning of section 94 (meaning of close company)this section shall not apply if the issue of share capital mentioned in paragraph (b) of subsection (1)—

( a ) is of share capital other than redeemable share capital; and

( b ) takes place more than ten years after the repayment of share capital mentioned in paragraph (a) of that subsection.

Matters to be treated or not treated as repayments of share capital.

86.—(1) Where—

( a ) a company issues any share capital as paid up otherwise than by the receipt of new consideration, or has done so on or after the 27th day of November, 1975; and

( b ) any amount so paid up does not fall to be treated as a distribution;

then for the purposes of sections 84 and 85 distributions afterwards made by the company in respect of shares representing that share capital shall not be treated as repayments of share capital, except to the extent to which those distributions, together with any relevant distributions previously so made, exceed the amounts so paid up (then or previously) on such shares after that date and not falling to be treated as distributions.

(2) In subsection (1) "relevant distribution" means so much of any distribution made in respect of shares representing the relevant share capital as apart from that subsection would be treated as a repayment of share capital, but by virtue of that subsection cannot be so treated.

(3) For the purposes of subsection (1) all shares of the same class shall be treated as representing the same share capital, and where shares are issued in respect of other shares, or are directly or indirectly converted into or exchanged for other shares, all such shares shall be treated as representing the same share capital.

(4) Where share capital is issued at a premium representing new consideration, the amount of the premium is to be treated as forming Part of that share capital for the purpose of determining under this Part whether any distribution made in respect of shares representing the share capital is to be treated as a repayment of share capital:

Provided that this subsection shall not have effect in relation in any part of the premium after that part has been applied in paying up share capital.

(5) Subject to subsection (4), premiums paid on redemption of share capital are not to be treated as repayments of capital.

(6) Except in relation to a close company within the meaning of section 94, subsection (1) shall not prevent a distribution being treated as a repayment of share capital if it is made—

( a ) more than ten years after the issue of share capital mentioned in paragraph (a) of that subsection; and

( b ) in respect of share capital other than redeemable share capital.

Distribution supplemental.

87.—(1) In this Part "new consideration" means consideration not provided directly or indirectly out of the assets of the company, and in particular does not include amounts retained by the company by way of capitalising a distribution:

Provided that where share capital has been issued at a premium representing new consideration, any part of that premium afterwards applied in paying up share capital shun be treated as new consideration also for that share capital, except in so far as the premium has been taken into account under section 86 (4) so as to enable a distribution to be treated as a repayment of share capital.

(2) ( a ) No consideration derived from the value of any share capital or security of a company, or from voting or other rights in a company, shall be regarded for the purposes of this Part as new consideration received by the company unless the consideration consists of—

(i) money or value received from the company as a distribution;

(ii) money received from the company as a payment which for those purposes constitutes a repayment of that share capital or of the principal secured by that security; or

(iii) the giving up of the right to that share capital or security on its cancellation, extinguishment or acquisition by the company.

( b ) No amount shall be regarded as new consideration by virtue of paragraph (a) (ii) or (iii) in so far as it exceeds any new consideration received by the company for the issue of the share capital or security in question or, in the case of share capital which constituted a distribution on issue, the nominal value of that share capital.

(3) Where two or more companies enter into arrangements to make distributions to each other's members, all parties concerned may for the purposes of this Part be treated as if anything done by any of those companies had been done by any other, and this subsection applies however many companies participate in the arrangements.

(4) ( a ) In this Part the expressions "in respect of shares in the company" and "in respect of securities of the company" in relation to a company which is a member of a 90 per cent. group, mean respectively in respect of shares in that company or any other company in the group and in respect of securities of that company or any other company in the group.

( b ) Without prejudice to section 84 (2) (b) as extended by the immediately preceding paragraph, in relation to a company which is a member of a 90 per cent. group, "distribution" includes anything distributed out of assets of the company (whether in cash or otherwise) in respect of shares in or securities of another company in the group.

( c ) Nothing in this subsection shall require a company to be treated as making a distribution to any other company which is in the same group and is resident in the State.

( d ) For the purposes of this subsection a principal company and all its 90 per cent. subsidiaries form a "90 per cent. group" and "principal company" means a company of which another company is a subsidiary.

(5) A distribution shall be treated under this Part as made, or consideration as provided, out of assets of a company if the cost falls on the company.

(6) In this Part "share" includes stock, and any other interest of a member in a company.

(7) References in this Part to issuing share capital as paid up apply also to the paying up of any issued share capital.

(8) For purposes of this Part "security" includes securities not creating or evidencing a charge on assets, and interest paid by a company on money advanced without the issue of a security for the advance, or other consideration given by a company for the use of money so advanced, shall be treated as if paid or given in respect of a security issued for the advance by the company.

(9) Where securities are issued at a price less than the amount repayable on them, and are not quoted on a recognised stock exchange, the principal secured shall not be taken for the purposes of this Part to exceed the issue price, unless the securities are issued on terms reasonably comparable with the terms of issue of securities so quoted.

(10) For the purposes of this Part a thing is to be regarded as done in respect of a share if it is done to a person as being the holder of the share, or as having at a particular time been the holder, or is done in pursuance of a right granted or offer made in respect of a share, and anything done in respect of shares by reference to share holdings at a particular time is to be regarded as done to the then holder of the shares or the personal representatives of any share holder then dead.

This subsection shall apply in relation to securities as it applies in relation to shares.

Tax credit for certain recipients of distributions.

88.—(1) Where a company resident in the State makes a distribution on or after the 6th day of April, 1976, and the person receiving the distribution is another such company or a person resident in the State, not being a company, the recipient of the distribution shall, subject to the provisions of this Act, be entitled to a tax credit under this section (in this Act referred to as a "tax credit").

(2) The tax credit in respect of a distribution shall be available for the purposes specified in the Tax Acts and shall, subject to any express provision to the contrary, be an amount determined by the formula

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where—

A is the standard rate per cent. for the year of assessment in which the distribution is made, and

D is the amount or value of the distribution.

(3) A company resident in the State which is entitled to a tax credit in respect of a distribution may claim to have the amount of the tax credit paid to it if—

( a ) the company is wholly exempt from corporation tax or is only not exempt in respect of trading income; or

( b ) the distribution is one in relation to which express exemption (otherwise than by section 2 (resident company distributions not chargeable to corporation tax)) is given, whether specifically or by virtue of a more general exemption from tax, under any provision of the Tax Acts.

(4) A person, not being a company resident in the State, who is entitled to a tax credit in respect of a distribution may claim to have the credit set against the income tax chargeable on his income for the year of assessment in which the distribution is made and, where the credit exceeds that income tax, to have the excess paid to him.

(5) ( a ) Where a distribution mentioned in subsection (1) is, or falls to be treated as, or under any provision of the Tax Acts is deemed to be, income of a person other than the recipient, that person shall be treated for the purposes of this section as receiving the distribution (and accordingly the question whether he is entitled to a tax credit in respect of it shall be determined by reference to where he, and not the actual recipient, is resident); and where any such distribution is income of a trust resident in the State the trustees shall be entitled to a tax credit in respect of it if no other person falls to be treated for the purposes of this section as receiving the distribution.

( b ) In this subsection "trust resident in the State" means a trust administered under the law of the State, not being a trust the general administration of which is ordinarily carried on outside the State and the trustees, or a majority of the trustees, of which are resident or ordinarily resident outside the State.

Disallowance of reliefs in respect of bonus issues.

89.—(1) This section has effect where any person (in this section referred to as "the recipient") receives an amount treated as a distribution by virtue of—

( a ) section 84 (2) (c) (d),

( b ) section 85, or

( c ) section 86 (1),

and in the following provisions of this section a distribution falling within paragraph (a), (b) or (c) is referred to as a "bonus issue" and "relevant tax credit", in relation to a bonus issue, means the tax credit to which the recipient of the bonus issue becomes entitled under section 88 in respect of the bonus issue.

(2) Subject to subsection (5), if the recipient is entitled by reason of—

( a ) any exemption from tax, or

( b ) the setting-off of losses against profits or income, or

( c ) the payment of interest,

to recover tax in respect of any distribution received by him, no account shall be taken, for the purposes of any such exemption or set-off or payment of interest, of any bonus issue or relevant tax credit received by him.

(3) Subject to subsection (5), a bonus issue and the relevant tax credit shall be treated as not being franked investment income within the meaning of section 24 (franked investment income and franked payment).

(4) Subject to subsection (5), the relevant tax credit relating to a bonus issue shall not be available to set against any income tax which the recipient is entitled to deduct under section 433, or with which he is chargeable by virtue of section 434, of the Income Tax Act, 1967 .

(5) Nothing in subsections (2) to (4) shall affect the proportion (if any) of any bonus issue made in respect of any shares or securities which, if it were declared as a dividend, would represent a normal return to the recipient on the consideration provided by him for the relevant shares or securities, that is to say, those in respect of which the bonus issue was made and, if those securities are derived from shares or securities previously acquired by the recipient, the shares or securities which were previously acquired; nor shall anything in those subsections affect the like proportion of the relevant tax credit relating to that bonus issue.

(6) For the purposes of subsection (5)—

( a ) if the consideration provided by the recipient for any of the relevant shares or securities was in excess of their market value at the time he acquired them, or if no consideration was provided by him for any of the relevant shares or securities, the recipient shall be taken to have provided for those shares or securities consideration equal to their market value at the time he acquired them; and

( b ) in determining whether an amount received by way of dividend exceeds a normal return, regard shall be had to the length of time previous to the receipt of that amount that the recipient first acquired any of the relevant shares or securities and to any dividends and other distributions made in respect of them during that time.

Distributions made out of capital profits of companies.

90.—(1) Where on or after the 6th day of April, 1976, a company resident in the State makes a distribution partly out of capital profits of the company and partly out of other profits, the distribution shall be treated as if it consisted of two distributions respectively made out of capital profits and out of other profits.

(2) Notwithstanding section 1 (2) (introduction for companies of corporation tax), where a company on or after the 6th day of April, 1976, makes a distribution (including part of a distribution treated under subsection (1) as a distribution) and the distribution is made, or is deemed under subsection (5) to have been made, out of capital profits of the company, the company shall, for the year of assessment in which the distribution is made, be assessed to income tax at the standard rate under Case IV of Schedule D on an amount the income tax on which at the standard rate for that year is equal to the amount of the tax credit which would apply in respect of the distribution if the person receiving it were an individual resident in the State.

(3) Where a distribution (including part of a distribution treated under subsection (1) as a distribution) to which subsection (2) applies is made partly out of capital profits which have been charged to capital gains tax or, after the reduction provided for by section 13 (computation of chargeable gains), to corporation tax and partly out of other capital profits, the distribution shall be treated as if it consisted of two distributions respectively made out of capital profits which have been so charged and out of other capital profits.

(4) Where on or after the 6th day of April, 1976, a company makes a distribution out of capital profits which have been charged to capital gains tax or, after the reduction provided for by section 13, to corporation tax, the tax charged under subsection (2) shall be reduced by an amount equal to the amount of capital gains tax which would be chargeable under section 3 of the Capital Gains Tax Act, 1975 , for the year of assessment in which the distribution is made on an amount equal to the aggregate of the distribution and the tax credit which would apply in respect of the distribution if the person receiving it were an individual resident in the State.

(5) Where a distribution (being a distribution by virtue of section 96 (payments to participators or associates) or section 97 (interest paid to directors and their associates)) is made by a company, the distribution shall be deemed to be made out of the profits of the company to the extent of those profits, and where the distribution exceeds the profits of the company the amount of the excess shall be deemed to have been made out of capital profits of the company which have not been charged to capital gains tax or to corporation tax.

Distributions by newly resident companies out of profits arising before residence begins.

91.—(1) Where, on or after the date on which it begins to be resident in the State, but not earlier than the 6th day of April, 1976 a company makes a distribution partly out of profits which arose to it before the date on which it begins to be so resident and partly out of other profits, the distribution shall be treated as if it consisted of two distributions respectively made out of profits which arose to the company before the date on which it begins to be resident in the State and out of other profits.

(2) Notwithstanding section 1 (2), a company which, on or after the date on which it begins to be resident in the State but not earlier than the 6th day of April, 1976, makes a distribution, including part of a distribution treated under subsection (1) as a distribution, out of profits which arose to it before the date on which it begins to be so resident shall, for the year of assessment in which the distribution is made, be assessed to income tax at the standard rate under Case IV of Schedule D on an amount the income tax on which at the standard rate for the said year of assessment is equal to the amount of the tax credit which would apply in respect of the distribution if the Person receiving it were an individual resident in the State.

(3) Any person who by virtue of any exemption or relief from tax claims payment of the tax credit in respect of a distribution to which subsection (2) refers shall not be entitled to payment of the said credit if the company by which the distribution is made is a close company (as defined in section 94) which has not paid the total amount of the income tax which is assessed on it under subsection (2).

(4) Any amount on which by virtue of this section income tax is charged on a company by an assessment under Case IV of Schedule D shall not be regarded as income of the company for any purpose of the Tax Acts.

Distributions made before 6th April, 1976.

92.—(1) Where on or after the 27th day of November, 1975, and before the 6th day of April, 1976, a distribution is made by a company which is resident in the State, such distribution, for the purposes of sections 83, 88 and 90, shall be deemed to have been made on the 6th day of April, 1976:

Provided that "distribution" in this section shall be deemed not to include a dividend from which income tax was deducted or a dividend from which income tax was not deducted by virtue of section 387 or 410 of the Income Tax Act, 1967 .

(2) This section shall not apply to a distribution made on or after the 27th day of November, 1975, and before the 6th day of April, 1976, if—

( a ) it was declared by the company in general meeting before the first-mentioned date; or

( b ) it was declared in general meeting after the first-mentioned date but in accordance with a recommendation of the directors and the directors' decision to make that recommendation was, with the authority of the directors, publicly announced before that date; or

( c ) it was made in accordance with a decision of the directors, and that decision was, with their authority, publicly announced before the first-mentioned date.

Distributions out of certain exempt profits.

93.—(1) In this section "exempt profits" means profits or gains which by virtue of—

( a ) section 18 of the Finance Act, 1969 (profits from the occupation of certain lands), or

( b ) that section as applied by section 11 (6) (continuation of exemptions)

were not charged to tax.

(2) Where a distribution for an accounting period is made by a company in part out of exempt profits and in part out of other profits, the distribution shall be treated as if it consisted of two distributions respectively made out of exempt profits and out of other profits.

(3) ( a ) So much of any distribution as has been made out of exempt profits—

(i) shall, where the recipient of such distribution is a company, be deemed for the purposes of this Act to be exempt profits of the company, and

(ii) shall not be regarded as income for any purpose of the Income Tax Acts.

( b ) Notwithstanding the provisions of section 88, the recipient of any distribution, including part of a distribution treated under subsection (2) as a distribution, made out of exempt profits shall not be entitled to a tax credit in respect of that distribution.

(4) ( a ) Where a company makes a distribution, including part of a distribution treated under subsection (2) as a distribution, in respect of any right or obligation to which section 178 (dividends at gross rate or of gross amount) relates and the distribution is made out of exempt profits the company shall make a supplementary distribution of an amount equal to the amount of the tax credit which would have applied in respect of the distribution if subsection (3) (b) had not been enacted.

( b ) Subsection (2) shall apply to a supplementary distribution under this subsection as if that supplementary distribution were a distribution made wholly out of exempt profits.

(5) In relation to any distribution (not being a supplementary distribution under this section), including part of a distribution treated under subsection (2) as a distribution, made by a company out of exempt profits, sections 5 (dividend warrants) and 83 (5) shall apply to the company so that the statements provided for by these sections shall show as respects each such distribution, in addition to the particulars required to be given apart from this section, that the distribution is made out of exempt profits.

(6) In relation to any supplementary distribution under subsection (4), section 5 shall apply to the company so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

(7) Where a company makes a distribution for an accounting period, the distribution shall be regarded for the purposes of this section as having been made out of the distributable income (as defined in section 64 (4)) of that period to the extent of that income, and in relation to the excess of the distribution over that income, out of the most recently accumulated income.

(8) Subsections (5) and (6) of section 64 shall apply for the purposes of this section as they apply for the purposes of that section.

(9) In this section "other profits" includes a dividend or other distribution of a company which is resident in the State but does not include a distribution to which subsection (3) (a) (i) applies.

PART X CLOSE COMPANIES

Meaning of close company.

94.—(1) For the purposes of this Act, a "close company" is one which is under the control of five or fewer participators, or of participators who are directors, except that the expression does not apply—

( a ) to a company not resident in the State, or

( b ) to a registered industrial and provident society within the meaning of section 30 (industrial and provident societies), or to a building society within the meaning of section 31 (building societies), or

( c ) to a company controlled by or on behalf of the State, and not otherwise a close company, or

( d ) to a company falling within subsection (4) or section 95.

(2) For the purposes of this section—

( a ) a company is to be treated as controlled by or on behalf of the State if, but only if, it is under the control of the State or of persons acting on behalf of the State, independently of any other person, and

( b ) where a company is so controlled, it shall not be treated as being otherwise a close company unless it can be treated as a close company as being under the control of persons acting independently of the State.

(3) A company resident in the State (but not falling within sub-section (1) (b) ) is also a close company if, on a full distribution of its distributable income, more than half of it would fall to be paid, directly or indirectly, to five or fewer participators, or to participators who are directors.

(4) A company is not to be treated as a close company—

( a ) if—

(i) it is controlled by a company which is not a close company, or by two or more companies none of which is a close company, and

(ii) it cannot be treated as a close company except by taking as one of the five or fewer participators requisite for its being so treated a company which is not a close company;

( b ) if it cannot be treated as a close company except by virtue of paragraph (c) of section 102 (2) and it would not be a close company if the reference in that paragraph to participators did not include loan creditors who are companies other than close companies.

(5) References in subsection (4) to a close company shall be treated as applying to any company which, if resident in the State, would be a close company.

(6) If shares in any company (in this subsection referred to as the "first company") are at any time after the 5th day of April, 1976, held on trust for a fund or scheme approved under section 222 or 229 of the Income Tax Act, 1967 , or for an exempt approved scheme as defined in Chapter II of Part I of the Finance Act, 1972 , then, unless the fund or scheme is established wholly or mainly for the benefit of persons who are, or are dependants of, employees or directors or past employees or directors of—

( a ) the first company; or

( b ) an associated company of the first company; or

( c ) a company which is under the control of any director or associate of a director of the first company or of two or more persons each of whom is such a director or associate; or

( d ) a close company;

the persons holding the shares shall, for the purposes of subsection (4), be deemed to be the beneficial owners of the shares and, in that capacity, to be a company which is not a close company.

Certain companies with quoted shares not to be close companies.

95.—(1) Subject to the provisions of this section, a company is not to be treated as being at any time a close company if—

( a ) shares in the company carrying not less than 35 per cent. of the voting power in the company (and not being shares entitled to a fixed rate of dividend, whether with or without a further right to participate in profits) have been allotted unconditionally to, or acquired unconditionally by, and are at that time beneficially held by, the public, and

( b ) any such shares have within the preceding twelve months been the subject of dealings on a recognised stock exchange, and the shares have within those twelve months been quoted in the official list of a recognised stock exchange.

(2) Subsection (1) shall not apply to a company at any time when the total percentage of the voting power in the company possessed by all of the company's principal members exceeds 85 per cent.

(3) For the purposes of subsection (1), shares in a company shall be deemed to be beneficially held by the public if, and only if, they—

( a ) fall within subsection (4), and

( b ) are not within the exceptions in subsection (5),

and a corresponding construction shall be given to the reference to shares which have been allotted unconditionally to, or acquired unconditionally by, the public.

(4) Shares fall within this subsection (as being beneficially held by the public)—

( a ) if beneficially held by a company resident in the State which is not a close company, or by a company not so resident which would not be a close company if it were so resident, or

( b ) if held on trust for a fund or scheme approved under section 222 or 229 of the Income Tax Act, 1967 , or for an exempt approved scheme as defined in Chapter II of Part I of the Finance Act, 1972 , or

( c ) if they are not comprised in a principal member's holding.

(5) Shares shall not be deemed to be held by the public if they are held—

( a ) by any director or associate of a director of the company, or

( b ) by any company which is under the control of any such director or associate, or of two or more persons each of whom is such a director or associate, or

( c ) by any associated company of the company, or

( d ) as part of any fund the capital or income of which is applicable or applied wholly or mainly for the benefit of, or of the dependants of, the employees or directors, or past employees or directors, of the company, or of any company within paragraph (b) or (c).

References in this subsection to shares held by any person include references to any shares the rights or powers attached to which could, for the purposes of section 102, be attributed to that person under subsection (5) of that section.

(6) For the purposes of this section—

( a ) a person is a principal member of a company if the possesses a percentage of the voting power in the company of more than 5 per cent. and, where there are more than five such persons, if he is one of the five persons who possess the greatest percentages or if, because two or more persons possess equal percentages of the voting power in the company, there are no such five persons, he is one of the six or more persons (so as to include those two or more who possess equal percentages) who possess the greatest percentages, and

( b ) a principal member's holding consists of the shares which carry the voting power possessed by him.

(7) In arriving at the voting power which a person possesses, there shall be attributed to him any voting power which, for the purposes of section 102, would be attributed to him under subsection (5) or (6) of that section.

(8) In this section "share" includes "stock".

Certain expenses for participators and associates.

96.—(1) Subject to such exceptions as are mentioned in section 84 (matters to be treated as distributions) "distribution", in relation to a close company, includes unless otherwise stated any such amount as is required to be treated as a distribution by subsection (2).

(2) Where a close company incurs expense in or in connection with the provision for any participator of living or other accommodation, of entertainment, of domestic or other services, or of other benefits or facilities of whatever nature, the company shall be treated as making a distribution to him of an amount equal to so much of that expense as is not made good to the company by the participator:

Provided that this subsection shall not apply to expense incurred in or in connection with the provision of benefits or facilities for a person to whom section 117 of the Income Tax Act, 1967 (benefits in kind), applies as a director or employee of the company, or the provision for the spouse, children or dependants of any such person of any pension, annuity, lump sum, gratuity or other like benefit to be given on his death or retirement.

(3) Any reference in subsection (2) to expense incurred in or in connection with any matter includes a reference to a proper proportion of any expense incurred partly in or in connection with that matter; and section 118 of the Income Tax Act, 1967 (valuation of benefits in kind), shall apply for the purposes of that subsection as it applies for the purposes of section 117 of the Income Tax Act, 1967 , references to that subsection being substituted for references to section 117 (1).

(4) Subsection (2) shall not apply if the company and the participator are both resident in the State and—

( a ) one is a subsidiary of the other or both are subsidiaries of a third company also so resident, and

( b ) the benefit to the participator arises on or in connection with the transfer of assets or liabilities by the company to him, or to the company by him.

(5) The question whether one company is a subsidiary of another for the purpose of subsection (4) shall be determined as a question whether it is a 51 per cent. subsidiary of that other, except that that other shall be treated as not being the owner—

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

( b ) of 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; or

( c ) of any share capital which it owns directly or indirectly in a company not resident in the State.

(6) Where each of two or more close companies makes a payment to a person who is not a participator in that company, but is a participator in another of those companies, and the companies are acting in concert or under arrangements made by any person, then each of those companies and any participator in it shall bc treated as if the payment made to him had been made by that company.

This subsection shall apply, with any necessary adaptations, in relation to the giving, of any consideration, and to the provision of any facilities, as it applies in relation to the making of a payment.

(7) For the purposes of this section any reference to a participator includes an associate of a participator, and any participator in a company which controls another company shall be treated as being also a participator in that other company.

Interest paid to directors and director's associates.

97.—(1) Subject to such exceptions as are mentioned in section 84 (1), this section has effect where in any accounting period, but not before the 6th day of April, 1976, any interest is paid by a close company to, or to an associate of, a person—

( a ) who is a director of the close company, or of any company which controls, or is controlled by the close company, and

( b ) who has a material interest—

(i) in the close company, or

(ii) where the close company is controlled by another company, in that other company.

(2) If the total amount so paid to any person in the accounting period exceeds the limit imposed in his case, the excess shall be a distribution made by the close company to that person.

(3) The limit shall be calculated in the first instance as an overall limit applying to the aggregate of all interest which is within subsection (1) and which was paid by the close company in the accounting period, and, where there are two or more different recipients, that overall limit shall be apportioned between them according to the amounts of interest paid to them respectively.

(4) The overall limit shall be a sum equal to interest at 13 per cent. per annum or such other rate of interest as the Minister for Finance may from time to time prescribe on whichever is the smaller of—

( a ) the total of the loans, advances and credits on which the interest within subsection (1) was paid by the close company in the accounting period, or if that total was different at different times in the accounting period, the average total over the accounting period, and

( b ) the nominal amount of the issued share capital of the close company plus the amount of any share premium account (or other comparable account by whatever name called) of the company, taking both amounts as at the beginning of the accounting period.

(5) In this section "interest" includes any other consideration paid or given by the close company for the use of money advanced, or credit given by any person, and references to interest "paid" shall be construed accordingly.

(6) This section has effect subject to section 96 (6), and for the purposes of this section a person has a material interest in a company if he, either on his own or with any one or more of his associates, or if any associate of his with or without any such other associates, is the beneficial owner of, or is able, directly or through Lie medium of other companies or by any other indirect means, to control, more than 5 per cent. of the ordinary share capital of the company.

Loans to participators, etc.

98.—(1) Subject to the following provisions of this section, where after the 5th day of April, 1976, a close company, otherwise than in the ordinary course of a business carried on by it which includes the lending of money, makes any loan or advances any money to an individual who is a participator in the company or an associate of a participator, the company shall be deemed, for the purposes of this section, to have paid in the year of assessment in which the loan or advance is made, an annual payment of an amount which, after deduction of income tax at the standard rate for the year of assessment in which the loan or advance is made, is equal to the amount of the loan or advance, and section 151 (income tax on payments) shall apply for the purposes of the charge, assessment and recovery of such tax:

Provided that the annual payment referred to in this subsection shall not be a charge on the company's income within the meaning of section 10 (allowance of charges on income).

(2) For the purposes of this section the cases in which a close company is to be regarded as making a loan to any person include a case where—

( a ) that person incurs a debt to the close company, or

( b ) a debt due from that person to a third party is assigned to the close company,

and then the close company shall be regarded as making a loan of an amount equal to the debt:

Provided that paragraph (a) shall not apply to a debt incurred for the supply by the close company of goods or services in the ordinary course of its trade or business unless the credit given exceeds six months or is longer than that normally given to the company's customers.

(3) Subsection (1) shall not apply to a loan made to a director or employee of a close company, or of an associated company of the close company, if—

( a ) the amount of the loan, or that amount when taken together with any other outstanding loans which were made by the close company or any of its associated companies to the borrower, or to the wife or husband of the borrower, does not exceed £15,000,

( b ) the borrower works full-time for the close company, or any of its associated companies, and

( c ) the borrower does not have a material interest in the close company or in any associated company of the close company but if the borrower acquires such a material interest at a time when the whole or part of any such loan remains outstanding the close company shall be regarded as making to him at that time a loan of an amount equal to the sum outstanding.

(4) Where, after a company has been assessed to tax under this section in respect of any loan or advance, the loan or advance or any part of it is repaid to the company, relief shall be given from that tax, or a proportionate part of it, by discharge or repayment.

Relief under this subsection shall be given on a claim, which must be made within ten years from the end of the year of assessment in which the repayment is made.

(5) Where, under arrangements made by any person otherwise than in the ordinary course of a business carried on by him—

( a ) a close company makes a loan or advance which, apart from this subsection, does not give rise to any charge on the company under subsection (1), and

( b ) same person other than the close company makes a payment or transfers property to or releases or satisfies (in whole or in part) a liability of, an individual who is a participator in the company or an associate of a participator,

then, unless in respect of the matter referred to in paragraph (b) there falls to be included in the total income of the participator or associate an amount not less than the loan or advance, this section shall apply as if the loan or advance had been made to him.

(6) In subsections (1) and (5) (b), the references to an individual shall apply also to a company receiving the loan or advance in a fiduciary or representative capacity, and to a company not resident in the State.

(7) For the purposes of this section any participator in a company which controls another company shall be treated as being also a participator in that other company; and section 97 (6) shall apply for the purpose of determining whether a person has, for the purpose of subsection (3), a material interest in a company.

(8) Where on or after the 27th day of November, 1975, but not later than the 5th day of April, 1976, a close company makes any loan or advances any money to an individual who is a participator in the company or an associate of a participator, the company shall be deemed for the purposes of this section to have made the loan or advanced the money on the 6th day of April, 1976:

Provided that this subsection shall not apply to any loan or advance or any part of it which is repaid to the company before the 6th day of April, 1976.

Effect of release, etc., of debt in respect of loan under section 98.

99.—(1) Subject to the following provisions of this section, where a company is assessed or liable to be assessed under section 98 in respect of a loan or advance and releases or writes off the whole or part of the debt in respect of it, then—

( a ) for the purpose of computing the total income of the person to whom the loan or advance was made a sum equal to the amount so released or written off shall be treated as income received by him after deduction of income tax by virtue of section 434 of the Income Tax Act, 1967 (at the standard rate for the year of assessment in which the whole or part of the debt was released or written off) from a corresponding gross amount;

( b ) no repayment of income tax shall be made in respect of that income;

( c ) notwithstanding paragraph (a), the income included by virtue of that paragraph in the total income of that person shall be treated for the purposes of sections 433 (yearly interest, etc., payable wholly out of taxed profits) and 434 (interest, etc., not payable out of taxed profits) of the Income Tax Act, 1967 , as not brought into charge to income tax;

( d ) for the purposes of section 4 (e) of the Finance Act, 1974 (charge to tax of income from which tax has been deducted), but not for any other purpose, any amount which is to be treated as income by virtue of paragraph (a) shall be treated as if tax had been deducted therefrom at the standard rate for the year of assessment in which the whole or part of the debt was released or written off, provided that where such amount or the aggregate of such amounts, if more than one, exceeds the amount of the individual's taxable income charged at the standard rate or a higher rate the amount of the credit under the said section 4 (e) in respect of the excess shall not, notwithstanding anything in the said section 4, exceed the amount of the tax, if any, charged on that excess.

(2) If the loan or advance referred to in subsection (1) was made to a person who has since died, or to trustees of a trust which has come to an end, this section, instead of applying to the person to whom it was made, shall apply to the person from whom the debt is due at the time of release or writing off (and if it is due from him as personal representative within the meaning of Part XXIX of the Income Tax Act, 1967 (Income in relation to Administration of Estates), the amount treated as received by him shall accordingly be, as regards the higher rates of tax, included for the purposes of that Part in the aggregate income of the estate) and subsection (1) shall apply accordingly with the necessary modifications.

(3) Where under section 98 (8) a loan or advance is deemed to have been made on the 6th day of April, 1976, and before that date the company which made the loan or advance releases or writes off the whole or part of the debt in respect of it, then for the purposes of this section the amount released or written off shall be deemed to have been so released or written off on the 6th day of April, 1976.

(4) This section shall be construed together with section 98.

Distributions to be taken into account and meaning of "distributable income", "investment income", "estate income", etc.

100.—(1) For the purposes of section 101 the distributions of a company for an accounting period shall be taken to be the aggregate of—

( a ) any dividends which are declared for or in respect of the accounting period and are paid or payable during the accounting period or within eighteen months after the end of the accounting period, and

( b ) all distributions, other than dividends, made in the accounting period.

(2) Where—

( a ) a period of account for or in respect of which a company declares a dividend is not an accounting period,

( b ) the dividend is paid or payable during the period of account or within eighteen months after the end of the period of account, and

( c ) part of the period of account falls within an accounting period,

then, the proportion of the amount of the dividend to be treated for the purposes of subsection (1) as being for or in respect of the accounting period shall be the same as the proportion which the said part of the period of account bears to the whole of that period.

(3) For the purposes of subsection (4) the income of a company for an accounting period shall be the income for the accounting period, computed in accordance with the provisions of this Act, exclusive of franked investment income, before deducting—

( a ) any loss incurred in any trade or profession carried on by the company which is carried forward from an earlier, or carried back from a later, accounting period,

( b ) any excess of deficiencies over surpluses which if such excess were an excess of surpluses over deficiencies would be chargeable to corporation tax on the company under Case V of Schedule D and which is carried forward from an earlier, or carried back from a later, accounting period, and

( c ) any loss which if it were a profit would be chargeable to corporation tax on the company under Case III or IV of Schedule D and which is carried forward from an earlier accounting period or any expenses of management or any charges on income which are so carried forward,

and after deducting—

( d ) any loss incurred in the accounting period in any trade or profession carried on by the company.

( e ) any loss incurred in the accounting period which if it were a profit would be chargeable to corporation tax on the company under Case III or IV of Schedule D,

( f ) any excess of deficiencies over surpluses which if such excess were an excess of surpluses would be chargeable to corporation tax on the company for the accounting period under Case V of Schedule D,

( g ) any amount which is an allowable deduction—

(i) against the total profits for the accounting period in respect of charges by virtue of section 10 (1), or

(ii) in computing the total profits for the accounting period in respect of expenses of management by virtue of section 15 (1), and

( h ) the amount of the corporation tax which would be payable by the company for the accounting period if the tax were computed on the basis of the income arrived at in accordance with the preceding provisions of this subsection.

(4) In this section—

"distributable income" of a company for an accounting period means the income as computed in accordance with subsection (3) increased by—

( a ) the amount of the company's franked investment income for the accounting period reduced by the tax credit comprised in that income, and

( b ) any reduction in the income arising in the accounting period made under section 176 (transitional relief for existing companies on cessation of trade, etc.) in respect of any source of income:

Provided that, where the aggregate of the amounts specified in paragraphs (d) to (g) of subsection (3) exceeds the income as computed in accordance with that subsection apart from the said paragraphs, the amount of the excess shall, in computing the amount of the distributable income, be deducted from the aggregate of the amounts specified in paragraphs (a) and (b);

"investment income" of a company means income other than estate income which, if the company were an individual, would not be earned income within the meaning of section 2 of the Income Tax Act, 1967 , but does not include any interest or dividends on investments which would, having regard to the nature of the company's trade, fall to be taken into account as trading receipts in computing trading income but for the fact that they have been subjected to tax otherwise than as trading receipts, or but for the fact that, by virtue of section 2 (Irish resident company distributions not chargeable to corporation tax), they are not to be taken into account in computing income for corporation tax;

"estate income" means income (other than yearly or other interest) which is chargeable to tax under Case III, IV or V of Schedule D, and which arises from the ownership or land (including any interest in or right over land) or from the letting furnished of any building or part of a building;

"trading income" means income arising from a trade (including farming) or profession in respect of which a company is chargeable to corporation tax under Case I or II of Schedule D;

"trading company" means any company which exists wholly or mainly for the purpose of carrying on a trade and any other company whose income does not consist wholly or mainly of investment or estate income.

(5) For the purposes of section 101—

"distributable investment income" of a company for an accounting period means, in a case where the proviso to subsection (4) applies, the amount arrived at in accordance with the said proviso, and, in any other case, the sum of the following two amounts—

( a ) the amount arrived at by applying to the amount of the distributable income exclusive of franked investment income (as reduced by the tax credit comprised in that

income) the fraction [image not available: a7y1976pxs100-1.bmp]

where—

A is the amount of the investment income taken into account in computing the tax mentioned in subsection (3) (h), and

B is the total amount of income so taken into account,

and

( b ) the amount of the franked investment income (as reduced by the tax credit comprised in that income):

Provided that in the case of a trading company the distributable investment income shall be the amount arrived at in accordance with the foregoing provisions of this paragraph reduced by 5 per cent.;

"distributable estate income" of a company for an accounting period means the amount arrived at by applying to the amount of the distributable income exclusive of franked investment income (as, reduced

by the tax credit comprised in that income) the fraction [image not available: a7y1976pxs100-2.bmp]

where—

C is the amount of the estate income taken into account in computing the tax mentioned in subsection (3) (h), and

D is the total amount of income so taken into account:

Provided that in the case of a trading company the distributable estate income shall be the amount arrived at in accordance with the foregoing provisions of this paragraph reduced by 7.5 per cent.

(6) The amount for part of an accounting period of any description of income referred to in this section shall be a proportionate part of the amount for the whole period.

(7) Where a company is subject to any restriction imposed by law as regards the making of distributions, then regard shall be had to this restriction in determining the amount of income on which a surcharge shall be imposed under section 101.

Surcharge on close company's undistributed investment and estate income.

101.—(1) Where for an accounting period of a close company, the aggregate of the distributable investment income and the distributable estate income exceeds the distributions of the company for the accounting period, there shall be charged on the company for the accounting period an additional duty of corporation tax (referred to hereafter in this section as a surcharge) amounting to 20 per cent. of the excess:

Provided that—

( a ) a surcharge shall not be made on the company where the excess is equal to or less than the smaller of the following amounts—

(i) £500, or, if the accounting period is less than twelve months, £500 proportionately reduced, and

(ii) where the company has one or more associated companies, £500 divided by one plus the number of those associated companies, or, if the accounting period is less than twelve months, £500 proportionately reduced divided by one plus the number of those associated companies;

( b ) where the excess is greater than the smaller amount on which by virtue of paragraph (a) a surcharge would not be made, the amount of the surcharge shall not be greater than a sum equal to four-fifths of the amount by which the excess is greater than that smaller amount.

(2) Where the aggregate of—

( a ) the accumulated undistributed income of the company at the end of the accounting period, and

( b ) any amount which, on or after the 27th day of November, 1975, was transferred to capital reserves or was used to issue shares, stock or securities as paid up otherwise than for new consideration (as defined in Part IX) or was otherwise used so as to reduce the amount referred to in paragraph (a),

is less than the excess referred to in subsection (1), that subsection shall apply as if the amount of that aggregate were substituted for the said excess.

(3) The provisions of section 28 (4) (5) (reduction of corporation tax liability of small companies) shall apply for the purposes of subsection (1) as they apply for the purposes of section 28 (3).

(4) If any amount on which a surcharge is made on a company under this section is distributed, the tax credit in respect of the distribution shall, except where otherwise provided, be that provided for by section 88 (tax credit for certain recipients of distributions).

(5) A surcharge made under this section on a company for an accounting period shall be paid in one instalment within two months from the making of the assessment.

(6) The provisions of section 6 (5) (general scheme of corporation tax) and of Part XIV (Administration) shall apply in relation to a surcharge made under this section as they apply to corporation tax charged otherwise than under this section.

Meaning of "associated company" and "control".

102.—(1) For the purposes of this Part a company is to be treated as another's "associated company" at a given time if, at that time or at any time within one year previously, one of the two has control of the other, or both are under the control of the same person or persons.

(2) For the purposes of this Part a person shall be taken to have control of a company if he exercises, or is able to exercise or is entitled to acquire, control, whether direct or indirect, over the company's affairs, and in particular, but without prejudice to the generality of the preceding words, if he possesses or is entitled to acquire—

( a ) the greater part of the share capital or issued share capital of the company or of the voting power in the company; or

( b ) such part of the issued share capital of the company as would, if the whole of the income of the company were in fact distributed among the participators (without regard to any rights which he or any other person has as a loan creditor), entitle him to receive the greater part of the amount so distributed; or

( c ) such rights as would, in the event of the winding up of the company or in any other circumstances, entitle him to receive the greater part of the assets of the company which would then be available for distribution among the participators.

(3) Where two or more persons together satisfy any of the conditions of subsection (2), they shall be taken to have control of the company.

(4) For the purposes of subsection (2) a person shall be treated as entitled to acquire anything which he is entitled to acquire at a future date, or will at a future date be entitled to acquire.

(5) For the purposes of subsections (2) and (3), there shall be attributed to any person any rights or powers of a nominee for him, that is to say, any rights or powers which another person possesses on his behalf or may be required to exercise on his direction or behalf.

(6) For the purposes of subsections (2) and (3), there may also be attributed to any person all the rights and powers of any company of which he has, or he and associates of his have, control or any two or more such companies, or of any associate of his or of any two or more associates of his, including those attributed to a company or associate under subsection (5), but not those attributed to an associate under this subsection; and such attributions shall be made under this subsection as will result in the company being treated as under the control of five or fewer participators if it can be so treated.

Meaning of "participator", "associate", "director" and "loan creditor".

103.—(1) For the purposes of this Part, a "participator" is, in relation to any company, a person having a share or interest in the capital or income of the company, and, without prejudice to the generality of the preceding words, includes—

( a ) any person who possesses, or is entitled to acquire, share capital or voting rights in the company,

( b ) any loan creditor of the company,

( c ) any person who possesses, or is entitled to acquire, a right to receive or participate in distributions of the company (construing "distributions" without regard to section 96 or 97) or any amounts payable by the company (in cash or in kind) to loan creditors by way of premium on redemption, and

( d ) any person who is entitled to secure that income or assets (whether present or future) of the company will be applied directly or indirectly for his benefit.

In this subsection references to being entitled to do anything apply where a person is entitled to do it at a future date or will at a future date be entitled to do it.

(2) The provisions of subsection (1) are without prejudice to any particular provision of this Part requiring a participator in one company to be treated as being also a participator in another company.

(3) For the purposes of this Part "associate" means, in relation to a participator—

( a ) any relative or partner of the participator,

( b ) the trustee or trustees of any settlement in relation to which the participator is, or any relative of his living or dead) is or was, a settlor ("settlement" and "settlor" having here the same meaning as in section 96 (3) (h) of the Income Tax Act, 1967 ), and

( c ) where the participator is interested in any shares or obligations of the company which are subject to any trust or are part of the estate of a deceased person, any other person interested therein,

and has a corresponding meaning in relation to a person other than a participator:

Provided that paragraph (c) shall not apply so as to make an individual an associate as being entitled or eligible to benefit under a trust—

(i) if the trust relates exclusively to a fund or scheme approved under section 222 (exemption of superannuation funds) or 229 (approval of retire-ment benefits schemes) of the Income Tax Act, 1967 , or to an exempt approved scheme as defined in Chapter II of Part I of the Finance Act, 1972 (Occupational Pension Schemes), or

(ii) if the trust is exclusively for the benefit of the employees, or the employees and directors, of the company or their dependants (and not wholly or mainly for the benefit of directors or their relatives) and the individual in question is not (and could not as a result of the operation of the trust become) either on his own or with his relatives the beneficial owner of more than 5 per cent. of the ordinary share capital of the company,

and in applying paragraph (ii) of this proviso, any charitable trusts which may arise on the failure or determination of other trusts shall be disregarded.

(4) In subsection (3) "relative" means husband, wife, ancestor, lineal descendant, brother or sister.

(5) For the purposes of this Part "director" includes any person occupying the position of director by whatever name called, any person in accordance with whose directions or instructions the directors are accustomed to act, and any person who—

( a ) is a manager of the company or otherwise concerned in the management of the company's trade or business, and

( b ) is, either on his own or with one or more associates, the beneficial owner of, or able, directly or through the medium of other companies or by any other indirect means, to control 20 per cent. or more of the ordinary share capital of the company.

(6) In subsection (5) (b), the expression "either on his own or with one or more associates " requires a person to be treated as owning or, as the case may be, controlling what any associate owns or controls, even if he does not own or control share capital on his own, and in paragraph (ii) of the proviso to subsection (3) the expression "either on his own or with his relatives" has a corresponding meaning.

(7) For the purposes of this Part "loan creditor", in relation to a company, means a creditor in respect of any debt incurred by the company—

( a ) for any money borrowed or capital assets acquired by the company, or

( b ) for any right to receive income created in favour of the company, or

( c ) for consideration the value of which to the company was (at the time when the debt was incurred) substantially less than the amount of the debt (including any premium thereon),

or in respect of any redeemable loan capital issued by the company:

Provided that a person carrying on a business of banking shall not be deemed to be a loan creditor in respect of any loan capital or debt issued or incurred by the company for money lent by him to the company in the ordinary course of that business.

(8) A person who is not the creditor in respect of any debt or loan capital to which subsection (7) applies but nevertheless has a beneficial interest therein shall, to the extent of that interest, be treated for the purposes of this Part as a loan creditor in respect of that debt or loan capital.

Information.

104.—(1) The inspector may, by notice in writing, require any company which is, or appears to him to be, a close company to furnish him within such time (not being less than thirty days) as may be specified in the notice with such particulars as he thinks necessary for the purposes of this Part.

(2) If for the purposes of this Part any person in whose name any shares are registered is so required by notice in writing by the inspector, he shall state whether or not he is the beneficial owner of the shares and, if not the beneficial owner of the shares or any of them, shall furnish the name and address of the person or persons on whose behalf the shares are registered in his name.

(3) Subsection (2) shall apply in relation to loan capital as it applies in relation to shares.

(4) The inspector may, for the purposes of this Part, by notice in writing require—

( a ) any company which appears to him to be a close company to furnish him with particulars of any bearer securities issued by the company and the names and addresses of the persons to whom the securities were issued and the respective amounts issued to each person; and

( b ) any person to whom securities were issued as aforesaid, or to or through whom such securities were subsequently sold or transferred, to furnish him with such further information as he may require with a view to enabling him to ascertain the names and addresses of the persons beneficially interested in the securities.

In this subsection "securities" includes shares, stocks, bonds, debentures and debenture stock and also any promissory note or other instrument evidencing indebtedness issued to a loan creditor of the company.

PART XI GROUP RELIEF

Group payments.

105.—(1) Where on or after the 6th day of April, 1976, a company receives from another company (both being companies resident in the State) any such payments as are referred to in this subsection, and either—

( a ) the company making the payment is—

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

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

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

then, subject to the following provisions of this section, the company receiving the payments and the company paying them may jointly elect that this subsection shall apply to any such payments received from the latter by the former, and so long as the election is in force those payments may be made without deduction of income tax and neither section 434 of the Income Tax Act, 1967 (payments not payable out of taxed profits), nor section 31 of the Finance Act, 1974 (interest payments by companies), shall apply thereto.

The payments for which an election may be made under this subsection are any payments which are for corporation tax charges on income of the company making them or would be for that tax charges on income of the company making them if they were not deductible in computing profits or any description of profits or if section 10 (6) (restriction of allowance of charges on income) did not apply to them.

(2) Subsection (1) shall not apply to payments received by a company on any investments, if a profit on the sale of those investments would be treated as a trading receipt of that company.

(3) Where a company purports by virtue of an election under subsection (1) to make any payment without deduction of income tax and income tax ought to have been deducted, the inspector may make such assessments, adjustments or set-offs as may be required for securing that the resulting liabilities to tax (including interest on unpaid tax) of the company making and the company receiving the payment are, so far as possible, the same as they would have been if the income tax had been duly deducted.

(4) Where tax assessed under subsection (3) on the company which made the payment is not paid by that company before the expiry of three months from the date on which that tax is payable, that tax shall, without prejudice to the right to recover it from that company, be recoverable from the company which received the payment.

(5) In determining for the purposes of this section whether one company is a 51 per cent. subsidiary of another, that other shall be treated as not being the owner—

( a ) of any share capital which it owns directly or indirectly in a company not resident in the State, or

( b ) of 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.

(6) For the purposes of this section—

( a ) "trading or holding company" means a trading company or a company whose business consists wholly or mainly in the holding of shares or securities of trading companies which are its 90 per cent. subsidiaries,

( b ) "trading company" means a company whose business consists wholly or mainly of the carrying on of a trade or trades,

( c ) a company is owned by a consortium if three-fourths or more of the ordinary share capital of the company is beneficially owned between them by five or fewer companies resident in the State of which none beneficially owns less than one-twentieth of that capital, and those companies are called the members of the consortium.

(7) References in this section to payments received by a company apply to any received by another person on behalf of or in trust for the company but not to any received by the company on behalf of or in trust for another person.

Election: group payments.

106.—(1) An election under section 105 (in this section referred to as an "election") shall be made by notice in writing to the inspector, and the notice shall set out the facts necessary to show that the companies are entitled to make the election.

(2) An election shall not have effect in relation to payments made less than three months after the giving of the notice and before the inspector is satisfied that the election is validly made, and has so notified the companies concerned; but shall be of no effect if within those three months the inspector notifies the companies concerned that the validity of the election is not established to his satisfaction:

Provided that the companies shall have the like right of appeal against any decision that the validity of the election is not established as the company making the payments would have if it were an assessment made on that company, and Part XXVI of the Income Tax Act, 1967 , shall apply accordingly.

(3) An election shall cease to be in force if at any time the companies cease to be entitled to make the election, and on that happening each company shall forthwith notify the inspector.

(4) Either of the companies making an election may at any time give the inspector notice in writing revoking the election, and any such notice shall have effect from the time it is given.

Group relief.

107.—(1) Relief for trading losses and other amounts eligible for relief from corporation tax may in accordance with the following provisions of this Part be surrendered by a company (called the "surrendering company") which is a member of a group of companies and, on the making of a claim by another company (called the "claimant company") which is a member of the same group, may be allowed to the claimant company by way of a relief from corporation tax called "group relief ".

(2) Group relief shall also be available in accordance with the said provisions—

( a ) where the surrendering company is a trading company which is owned by a consortium and which is not a 75 per cent. subsidiary of any company, and the claimant company is a member of the consortium, or

( b ) where the surrendering company is a trading company—

(i) which is a 90 per cent. subsidiary of a holding company which is owned by a consortium, and

(ii) which is not a 75 per cent. subsidiary of a company other than the holding company,

and the claimant company is a member of the consortium, or

( c ) where the surrendering company is a holding company which is owned by a consortium and which is not a 75 per cent. subsidiary of any company, and the claimant company is a member of the consortium:

Provided that no claim may be made by a member of a consortium if a profit on a sale of the share capital of the surrendering or holding company which that member owns would be treated as a trading receipt of that member nor if the member's share in the consortium in the relevant accounting period of the surrendering company or holding company is nil.

(3) Subject to the following sections of this Part, two or more claimant companies may make claims relating to the same surrendering company, and to the same accounting period of that surrendering company.

(4) A payment for group relief—

( a ) shall not be taken into account in computing profits or losses of either company for corporation tax purposes, and

( b ) shall not for any of the purposes of the Corporation Tax Acts be regarded as a distribution or a charge on income,

and in this subsection "payment for group relief" means a payment made by the claimant company to the surrendering company in pursuance of an agreement between them as respects an amount surrendered by way of group relief, being a payment not exceeding that amount.

(5) For the purposes of this section and the following sections of this Part—

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

( b ) "holding company" means a company whose business consists wholly or mainly in the holding of shares or securities of companies which are its 90 per cent. subsidiaries, and which are trading companies,

( c ) "trading company" means a company whose business consists wholly or mainly of the carrying on of a trade or trades.

(6) In applying for the said purposes the definition of "75 per cent. subsidiary" in section 156 (subsidiaries) any share capital of a registered industrial and provident society shall be treated as ordinary share capital.

(7) References in this and the following sections of this Part to a company apply only to companies resident in the State: and in determining for the purposes of this and the following sections of this Part whether one company is a 75 per cent. subsidiary of another, the other company shall be treated as not being the owner—

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

( b ) of 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, or

( c ) of any share capital which it owns directly or indirectly in a company not resident in the State.

(8) For the said purposes a company is owned by a consortium if all of the ordinary share capital of that company is directly and beneficially owned between them by five or fewer companies and those companies are called the members of the consortium.

Group relief: qualifications for entitlement.

108.—(1) Notwithstanding that at any time a company (in this subsection referred to as "the subsidiary company") is a 75 per cent. subsidiary or a 90 per cent. subsidiary, within the meaning of section 156, of another company (in this section referred to as "the parent company") it shall not be treated at that time as such a subsidiary for the purposes of group relief unless, additionally, at that time—

( a ) the parent company is beneficially entitled to not less than 75 per cent. or, as the case may be, 90 per cent. of any profits available for distribution to equity holders of the subsidiary company; and

( b ) the parent company would be beneficially entitled to not less than 75 per cent. or, as the case may be, 90 per cent. of any assets of the subsidiary company available for distribution to its equity holders on a winding up.

(2) Subject to subsection (3), for the purposes of group relief a member's share in a consortium, in relation to an accounting period of the surrendering company, shall be whichever is the lowest in that period of the following percentages, namely—

( a ) the percentage of the ordinary share capital of the surrendering company which is beneficially owned by that member;

( b ) the percentage to which that member is beneficially entitled of any profits available for distribution to equity holders of the surrendering company; and

( c ) the percentage to which that member would be beneficially entitled of any assets of the surrendering company available for distribution to its equity holders on a winding up;

and if any of those percentages have fluctuated in that accounting period, the average percentage over the period shall be taken for the purposes of this subsection.

(3) In any case where the surrendering company is a subsidiary of a holding company which is owned by a consortium, for references in subsection (2) to the surrendering company there shall be substituted references to the holding company.

Group relief: profits or assets available for distribution.

109.—(1) For the purposes of this Part, an equity holder of a company is any person who—

( a ) holds ordinary shares in the company, or

( b ) is a loan creditor of the company in respect of a loan which is not a normal commercial loan,

and any reference in that section to profits or assets available for distribution to a company's equity holders does not include a reference to any profits or assets available for distribution to any equity holder otherwise than as an equity holder.

(2) For the purposes of subsection (1) (a) "ordinary shares" means all shares other than fixed-rate preference shares.

(3) In this Part "fixed-rate preference shares" means shares which—

( a ) are issued for consideration which is or includes new consideration; and

( b ) do not carry any right either to conversion into shares or securities of any other description or to the acquisition of any additional shares or securities; and

( c ) do not carry any right to dividends other than dividends which—

(i) are of a fixed amount or at a fixed rate per cent. of the nominal value of the shares, and

(ii) represent no more than a reasonable commercial return on the new consideration received by the, company in respect of the issue of the shares; and

( d ) on repayment do not carry any rights to an amount exceeding that new consideration except in so far as those rights are reasonably comparable with those general for fixed dividend shares quoted on a stock exchange in the State.

(4) Section 103 (7) (definition of "loan creditor" for purposes of provisions relating to close companies) shall apply for the purposes of subsection (1) (b) as it applies for the purposes of Part X, except that the proviso shall be omitted.

(5) In subsection (1) (b) "normal commercial loan" means a loan of or including new consideration and—

( a ) which does not carry any right either to conversion into shares or securities of any other description or to the acquisition of additional shares or securities; and

( b ) which does not entitle the loan creditor to any amount by way of interest which depends to any extent on the results of the company's business or any part of it or on the value of any of the company's assets or which exceeds a reasonable commercial return on the new consideration lent; and

( c ) in respect of which the loan creditor is entitled, on repayment, to an amount which either does not exceed the new consideration lent or is reasonably comparable with the amount generally repayable (in respect of an equal amount of new consideration) under the terms of issue of securities quoted on a stock exchange in the State.

(6) Notwithstanding anything in subsections (1) to (5) but subject to subsection (7), where—

( a ) any person has, directly or indirectly, provided new consideration for any shares or securities in the company, and

( b ) that person, or any person connected with him, uses for the purposes of his trade assets which belong to the company and in respect of which there is made to the company any of the allowances specified in Part XIII or XIV, Chapter I of Part XV Chapter II of Part XVI of the Income Tax Act, 1967 , section 22 of the Finance Act, 1971 , or section 2 , 3 , 6 or 8 of the Finance (Taxation of Profits of Certain Mines) Act, 1974 ,

then, for the purposes of this Part, that person, and no other, shall be treated as being an equity holder in respect of those shares or securities and as being beneficially entitled to any distribution of profits or assets attributable to those shares or securities.

(7) In any case where subsection (6) applies in relation to a bank in such circumstances that—

( a ) the only new consideration provided by the bank as mentioned in subsection (6) (a) is provided in the normal course of its banking business by way of a normal commercial loan as defined in subsection (5); and

( b ) the cost to the company concerned of the assets falling within subsection (6) (b) which are used as mentioned in that subsection by the bank or a person connected with the bank is less than the amount of that new consideration,

references in subsection (6), other than the reference in paragraph (a) thereof, to shares or securities in the company shall be construed as a reference to so much only of the loan referred to in paragraph (a) of this subsection as is equal to the cost referred to in paragraph (b) of this subsection.

(8) In this section "new consideration" has the same meaning as in Part IX and any question whether one person is connected with another shall be determined in accordance with section 157 (connected persons).

Group relief: "the profit distribution".

110.—(1) Subject to the following provisions of this Part, for the purposes of section 108, the percentage to which one company is beneficially entitled of any profits available for distribution to the equity holders of another company means the percentage to which the first company would be so entitled in the relevant accounting period on a distribution in money to those equity holders of—

( a ) an amount of profits equal to the total profits of the other company which arise in that accounting period (whether or not any of those profits are in fact distributed), or

( b ) if there are no profits of the other company in that accounting period, profits of £100,

and in the following provisions of this Part, that distribution is referred to as "the profit distribution".

(2) For the purposes of the profit distribution, it shall be assumed that no payment is made by way of repayment of share capital or of the principal secured by any loan unless that payment is a distribution.

(3) Subject to subsection (2), where an equity holder is entitled as such to a payment of any description which, apart from this subsection, would not be treated as a distribution, it shall nevertheless be treated as an amount to which he is entitled on the profit distribution.

Group relief: "the notional winding up".

111.—(1) Subject to the following provisions of this Part, for the purposes of section 108 the percentage to which one company would be beneficially entitled of any assets of another company available for distribution to its equity holders on a winding up means the percentage to which the first company would be so entitled if the other company were to be wound up and on that winding up the value of the assets available for distribution to its equity holders (that is to say, after deducting any liabilities to other persons) were equal to—

( a ) the excess, if any, of the total amount of the assets of the company, as shown in the balance sheet relating to its affairs as at the end of the relevant accounting period, over the total amount of those of its liabilities as so shown which are not liabilities to equity holders as such, or

( b ) if there is no such excess or if the company's balance sheet is prepared to a date other than the end of the relevant accounting period, £100.

(2) In the following provisions of this Part, a winding up on the basis specified in subsection (1) is referred to as "the notional winding up".

(3) If, on the notional winding up, an equity holder would be entitled as such to an amount of assets of any description which, apart from this subsection, would not be treated as a distribution of assets, it shall nevertheless be treated, subject to subsection (4), as an amount to which the equity holder is entitled on the distribution of assets on the notional winding up.

(4) If an amount (in this subsection referred to as "the returned amount") which corresponds to the whole or any part of the new consideration provided by an equity holder of a company for any shares or securities in respect of which he is an equity holder is applied by the company, directly or indirectly, in the making of a loan to, or in the acquisition of any shares or securities in, the equity holder or any person connected with him, then, for the purposes of this Part,—

( a ) the total amount of the assets referred to in subsection (1) (a) shall be taken to be reduced by a sum equal to the returned amount; and

( b ) the amount of assets to which the equity holder is beneficially entitled on the notional winding up shall be taken to be reduced by a sum equal to the returned amount.

(5) In subsection (4) "new consideration" has the same meaning as in Part IX and any question whether one person is connected with another shall be determined in accordance with section 157.

Group relief: limited rights to profits or assets.

112.—(1) This section applies if any of the equity holders—

( a ) to whom the profit distribution is made, or

( b ) who is entitled to participate in the notional winding up,

holds, as such an equity holder, any shares or securities which carry rights in respect of dividend or interest or assets on a winding up which are wholly or partly limited by reference to a specified amount or amounts (whether the limitation takes the form of the capital by reference to which a distribution is calculated or operates by reference to an amount of profits or assets or otherwise).

(2) Where this section applies, there shall be determined—

( a ) the percentage of profits to which, on the profit distribution, the first company referred to in section 110 (1) would be entitled, and

( b ) the percentage of assets to which, on the notional winding up, the first company referred to in section 111 (1) would be entitled,

if, to the extent that they are limited as mentioned in subsection (1), the rights of every equity holder falling within that subsection (including the first company concerned if it is such an equity holder) had been waived.

(3) If, on the profit distribution, the percentage of profits determined as mentioned in subsection (2) (a) is less than the percentage of profits determined under section 110 (1) without regard to that subsection, the lesser percentage shall be taken for the purposes of section 108 to be the percentage of profits to which, on the profit distribution, the first company referred to in section 110 (1) would be entitled as mentioned in that section.

(4) If, on the notional winding up, the percentage of assets determined as mentioned in subsection (2) (b) is less than the percentage of assets determined under section 111 (1) without regard to that subsection, the lesser percentage shall be taken for the purposes of section 108 to be the percentage to which, on the notional winding up, the first company referred to in section 111 (1) would be entitled of any assets of the other company available for distribution to its equity holders on a winding up.

Group relief: diminishing share of profits or assets.

113.—(1) This section applies if, at any time in the relevant accounting period, any of the equity holders—

( a ) to whom the profit distribution is made, or

( b ) who is entitled to participate in the notional winding up,

holds, as such an equity holder, any shares or securities which carry rights in respect of dividend or interest or assets on a winding up which are of such a nature (as, for example, if any shares will cease to carry a right to a dividend at a future time) that if the profit distribution or the notional winding up were to take place in a different accounting period the percentage to which, in accordance with the preceding provisions of this Part, that equity holder would be entitled of profits on the profit distribution or of assets on the notional winding up would be different from the percentage determined in the relevant accounting period.

(2) Where this section applies, there shall be determined—

( a ) the percentage of profits to which, on the profit distribution, the first company referred to in section 110 (1) would be entitled, and

( b ) the percentage of assets to which, on the notional winding up, the first company referred to in section 111 (1) would be entitled.

if the rights of the equity holders in the relevant accounting period were the same as they would be in the different accounting period referred to in subsection (1).

(3) If in the relevant accounting period an equity holder holds, as such, any shares or securities in respect of which arrangements exist by virtue of which, in that or any subsequent accounting period, the equity holder's entitlement to profits on the profit distribution or to assets on the notional winding up could be different as compared with his entitlement if effect were not given to the arrangements, then for the purposes of this section—

( a ) it shall be assumed that effect would be given to those arrangements in a later accounting period, and

( b ) those shares or securities shall be treated as though any variation in the equity holder's entitlement to profits or assets resulting from giving effect to the arrangements were the result of the operation of such rights attaching to the shares or securities as are referred to in subsection (1).

(4) Section 112 (3) (4) shall apply for the purposes of this section as they apply for the purposes of that section and, accordingly, references therein to subsection (2) (a) (b) of that section shall be construed as references to subsection (2) (a) (b) of this section.

(5) In any case where section 112 applies as well as this section, section 112 shall be applied separately (in relation to the profit distribution and the notional winding up)—

( a ) on the basis specified in subsection (2), and

( b ) without regard to that subsection,

and section 112 (3) (4) shall apply accordingly in relation to the percentages so determined as if for the word "lesser" there were substituted the word "lowest".

Group relief: beneficial percentage.

114.—For the purposes of sections 108 and 110 to 113—

( a ) the percentage to which one company is beneficially entitled of any profits available for distribution to the equity holders of another company, and

( b ) the percentage to which one company would be beneficially entitled of any assets of another company on a winding up,

means the percentage to which the first company is, or would be, so entitled either directly or through another company or other companies or partly directly and partly through another company or other companies.

Group relief: "the relevant accounting period", etc.

115.—(1) In this Part "the relevant accounting period" means—

( a ) in a case falling within section 108 (1), the accounting period current at the time in question; and

( b ) in a case falling within section 108 (2), the accounting period in relation to which the share in the consortium falls to be determined.

(2) For the purposes of sections 109 to 114 a loan to a company shall be treated as a security, whether or not it is a secured loan, and, if it is a secured loan, regardless of the nature of the security.

Kinds of group relief.

116.—(1) If in any accounting period the surrendering company has incurred a loss, computed as for the purposes of section 16 (2) (relief for trading losses other than terminal losses), in carrying on a trade, the amount of the loss may be set off for the purposes of corporation tax against the total profits of the claimant company for its corresponding accounting period:

Provided that this subsection shall not apply to so much of a loss as is excluded from section 16 (2) by section 16 (4) or section 17 (restriction of relief for losses in farming or market gardening).

(2) If for any accounting period any capital allowances fall to be made to the surrendering company which are to be given by discharge or repayment of tax or in charging its income under Case V of Schedule D and are to be available primarily against a specified class of income, so much of the amount of those capital allowances (exclusive of any carried forward from an earlier period) as exceeds its income of the relevant class arising in that accounting period (before deduction of any losses of any other period or of any capital allowances) may be set off for the purposes of corporation tax against the total profits of the claimant company for its corresponding accounting period.

(3) If for any accounting period the surrendering company (being an investment company) may under section 15 (1) deduct any amount as expenses of management disbursed for that accounting period, so much of that amount (exclusive of any amount deductible only by virtue of section 15 (2)) as exceeds the company's profits of that accounting period may be set off for purposes of corporation tax against the total profits of the claimant company (whether an investment company or not) for its corresponding accounting period.

(4) The surrendering company's profits of the period shall be determined for the purposes of subsection (3) without any deduction under section 15 and without regard to any deduction falling to be made in respect of losses or allowances of any other period.

(5) References in subsections (3) and (4) to section 15 do not include references to that section as applied by section 33 to companies carrying on life business.

(6) If in any accounting period the surrendering company has paid any amount by way of charges on income, so much of that amount as exceeds its profits of the period may be set off for purposes of corporation tax against the total profits of the claimant company for its corresponding accounting period.

(7) The surrendering company's profits of the period shall be determined for the purposes of subsection (6) without regard to any deduction falling to be made in respect of losses or allowances of any other period, or to expenses of management deductible only by virtue of section 15 (2).

(8) In applying any of the preceding subsections in the case of a claim made by a company as a member of a consortium only a fraction of the loss referred to in subsection (1), or of the excess referred to in subsection (2) or (3) or (6), as the case may be, may be set off under the subsection in question, and that fraction shall be equal to that member's share in the consortium, subject to any further reduction under section 118 (2).

(9) This section shall apply to any accounting period beginning on or after the 6th day of April, 1976.

Relation of group relief to other relief.

117.—(1) Group relief for an accounting period shall be allowed as a deduction against the claimant company's total profits for the period before reduction by any relief derived from a subsequent accounting period, but as reduced by any other relief from tax (including relief in respect of charges on income under section 10 (1)).

(2) The said other relief shall be determined on the assumption that the company makes all relevant claims under section 16 (2) or 14 (6).

(3) For the purposes of this section "relief derived from a subsequent accounting period" means—

( a ) relief under section 16 (2) in respect of a loss incurred in an accounting period after the accounting period the profits of which are being computed, and

( b ) relief under section 14 (6) in respect of capital allowances falling to be made for an accounting period after the accounting period the profits of which are being computed, and

( c ) relief under section 176 (transitional relief on cessation of trade, etc.) where the company ceases to possess the source of income in question at a time after the end of the accounting period the profits of which are being computed, and

( d ) relief under section 18 (terminal loss in trade) in respect of a loss incurred in an accounting period after the end of the accounting period the profits of which are being computed.

(4) The reductions to be made in total profits of an accounting period against which any relief derived from a subsequent accounting period is to be set off shall include any group relief for that first-mentioned accounting period, and this subsection shall have effect notwithstanding that under section 176 (3) relief under that section is to be given in priority to any other relief.

Corresponding accounting periods.

118.—(1) For the purposes of group relief any accounting period of the claimant company which falls wholly or partly within an accounting period of the surrendering company corresponds to that accounting period.

(2) If an accounting period of the surrendering company and a corresponding accounting period of the claimant company do not coincide—

( a ) the amount which may be sat off against the total profits of the claimant company for the corresponding accounting

period shall be reduced by applying the fraction [image not available: a7y1976pxs100-1.bmp](if that fraction is less than unity), and

( b ) the said profits against which the amount mentioned in paragraph (a) (as reduced where so required) may be set

off shall be reduced by applying the fraction [image not available: a7y1976pxis118-1.bmp]if that fraction is less than unity),

where—

A is the length of the period common to the two accounting periods,

B is the length of the accounting period of the surrendering company, and

C is the length of the corresponding accounting period of the claimant company.

Companies joining or leaving group or consortium.

119.—(1) Subject to the following provisions of this section, group relief shall be given if, and only if, the surrendering company and the claimant company are members of the same group, or fulfil the conditions for relief for a consortium, throughout the whole of the surrendering company's accounting period to which the claim relates, and throughout the whole of the corresponding accounting period of the claimant company.

(2) Where on any occasion two companies become or cease to be members of the same group, then for the purposes specified in subsection (3) it shall be assumed as respects each company that on that occasion (unless a true accounting period of the company begins or ends then) an accounting period of the company ends, and a new one begins, the new accounting period to end with the end of the true accounting period (unless before then there is a further break under this subsection) and—

( a ) that the losses or other amounts of the true accounting period are apportioned to the component accounting periods on a time basis according to their lengths, and

( b ) that the amount of total profits for the true accounting period of the company against which group relief may be allowed in accordance with section 117 (1) is also so apportioned to the component accounting periods.

(3) Where the one company is the surrendering company and the other company is the claimant company—

( a ) references to accounting periods, to profits, and to losses, allowances, expenses of management or charges on income of the surrendering company, in section 116 shall be construed in accordance with subsection (2),

( b ) references to accounting periods in section 118 and subsection (1) of this section shall be so construed (so that if the two companies are members of the same group in the surrendering company's accounting period they must under section 118 also be members of the same group in any corresponding accounting period of the claimant company),

( c ) references to profits, and amounts to be set off against the profits, in section 118 shall be so construed (so that an amount apportioned under subsection (2) to a component accounting period may fall to be reduced under section 118 (2)).

(4) Subsections (2) and (3) shall apply with the necessary modifications where a company begins or ceases to fulfil the conditions for relief for a consortium, either as a surrendering company or as a claimant company, as it applies where two companies become or cease to be members of the same group.

Group relief: effect of arrangements for transfer of company to another group, etc.

120.—(1) If, apart from this section, two companies (in this subsection referred to as "the first company" and "the second company") would be treated as members of the same group of companies and—

( a ) in an accounting period which begins on or after the 6th day of April, 1976, one of the two companies has trading losses or other amounts eligible for relief from corporation tax which it would, apart from this section, be entitled to surrender as mentioned in section 107 (1), and

( b ) arrangements are in existence by virtue of which, at some time during or after the expiry of that accounting period,—

(i) the first company or any successor of it t could cease to be a member of the same group of companies as the second company and could become a member of the same group of companies as a third company, or

(ii) any person has or could obtain, or any persons together have or could obtain, control of the first company but not of the second, or

(iii) a third company could begin to carry on the whole or any part of a trade which, at any time in that accounting period, is carried on by the first company and could do so either as a successor of the first company or as a successor of another company which is not a third company but which, at some time during or after the expiry of that accounting period, has begun to carry on the whole or any part of that trade,

then, for the purposes of this Part, the first company shall be treated as not being a member of the same group of companies as the second company.

(2) If a trading company is owned by a consortium or is a 90 per cent. subsidiary of a holding company which is owned by a consortium and—

( a ) in any accounting period which begins on or after the 6th day of April, 1976, the trading company has trading losses or other amounts eligible for relief from corporation tax which it would, apart from this section, be entitled to surrender as mentioned in section 107 (1), and

( b ) arrangements are in existence by virtue of which—

(i) the trading company or any successor of it could, at some time during or after the expiry of that accounting period, become a 75 per cent. subsidiary of a third company, or

(ii) any person who owns, or any persons who together own, less than 50 per cent. of the ordinary share capital of the trading company has or together have, or could at some time during or after the expiry of that accounting period obtain, control of the trading company, or

(iii) any person, other than a holding company of which the trading company is a 90 per cent. subsidiary, either alone or together with connected persons, holds or could obtain, or controls or could control the exercise of not less than 75 per cent. of the votes which may be cast on a poll taken at a general meeting of the trading company in that accounting period or in any subsequent accounting period, or

(iv) a third company could begin to carry on, at some time during or after the expiry of that accounting period, the whole or any part of a trade which, at any time in that accounting period, is carried on by the trading company and could do so either as a successor of the trading company or as a successor of another company which is not a third company but which, at some time during or after the expiry of that accounting period, has begun to carry on the whole or any part of that trade,

then, for the purposes of this Part, the trading company shall be treated as though it did not (as the surrendering company) fall within section 107 (2) (a) (b) (c).

(3) In any case where a trading company is a 90 per cent. subsidiary of a holding company which is owned by a consortium, any reference in subsection (2) to the trading company, other than a reference in paragraph (b) (iv) thereof, shall be construed as including a reference to the holding company.

(4) In this section "third company" means a company which, apart from any provision made by or under any such arrangements as are specified in either subsection (1) (b) or (2), is not a member of the same group of companies as the first company, within the meaning of subsection (1), or, as the case may be, the trading company or holding company to which subsection (2) applies.

(5) In subsections (1) and (2)—

"connected persons" shall be construed in accordance with section 157, and "control" has the meaning assigned to it by section 158.

(6) For the purposes of subsections (1) and (2) a company is a successor of another if it carries on a trade which, in whole or in part, the other company has ceased to carry on and the circumstances are such that—

( a ) section 20 (company reconstructions without change of ownership) applies in relation to the two companies as the predecessor and the successor within the meaning of that section, or

( b ) the two companies are connected with each other within the terms of section 157.

Leasing contracts: effect on claims for losses of company reconstructions.

121.—(1) Subject to the provisions of this section, if—

( a ) under a contract entered into after the 27th day of November, 1975, a company (in this section referred to as "the first company") incurs capital expenditure on the provision of machinery or plant which the first company lets to another person by another contract (in this section referred to as a "leasing contract"), and

( b ) apart from this subsection, the first company would be entitled to claim relief under section 16 (1) or (2) (relief for trading losses other than terminal losses) in respect of losses incurred on the leasing contract, and

( c ) in the accounting period for which an allowance under section 251 of the Income Tax Act, 1967 (machinery and plant: initial allowance), section 11 of the Finance Act, 1967 (wear and tear allowances for certain machinery and plant in undeveloped areas), or section 22 (investment allowance for machinery and plant in designated areas) of the Finance Act, 1971 , in respect of the expenditure referred to in paragraph (a) is made to the first company, arrangements are in existence by virtue of which, at some time during or after the expiry of that accounting period, a successor company will be able to carry on any part of the first company's trade which consists of or includes the performance of all or any of the obligations which, apart from the arrangements, would be the first company's obligations under the leasing contract,

then, in the accounting period specified in paragraph (c) and in any subsequent accounting period, the first company shall not be entitled to claim relief as mentioned in paragraph (b) except in computing its profits (if any) arising under the leasing contract.

(2) For the purposes of this section a company is a successor of the first company if the circumstances are such that—

( a ) section 20 applies in relation to the first company and the other company as the predecessor and the successor within the meaning of that section, or

( b ) the two companies am connected with each other within the terms of section 157.

(3) For the purposes of this section losses incurred on a leasing contract and profits arising under such a contract shall be computed as if the performance of the leasing contract were a trade begun to be carried on by the first company, separately from any other trade which it may carry on, at the commencement of the letting under the leasing contract.

(4) In determining whether the first company would be entitled to claim relief as mentioned in subsection (1) (b), any losses incurred on the leasing contract shall be treated as incurred in a trade carried on by that company separately from any other trade which it may carry on.

Partnerships involving companies: effect of arrangements for transferring relief.

122.—(1) The provisions of subsection (2) shall apply in relation to a company (in this section referred to as "the partner company") which is a member of a partnership carrying on a trade if arrangements are in existence (whether as part of the terms of the partnership or otherwise) whereby—

( a ) in respect of the whole or any part of the value of, or of any portion of, the partner company's share in the profits or loss of any accounting period of the partnership, another member of the partnership or any person connected with another member of the partnership receives any payment or acquires or enjoys, directly or indirectly, any other benefit in money's worth; or

( b ) in respect of the whole or any part of the cost of, or of any portion of, the partner company's share in the loss of any accounting period of the partnership, the partner company, or any person connected with that company, receives any payment or acquires or enjoys, directly or indirectly, any other benefit in money's worth, other than a payment in respect of group relief to the partner company by a company which is a member of the same group as the partner company for the purposes of group relief.

(2) In any case where the provisions of this subsection apply in relation to the partner company—

( a ) the company's share in the loss of the relevant accounting period of the partnership and its share in any charges on income, within the meaning of section 10, paid by the partnership in that accounting period shall not be available for set-off for the purposes of corporation tax except against its profits of the several trade; and

( b ) except in accordance with paragraph (a), no trading losses shall be available for set-off for the purposes of corporation tax against the profits of the company's several trade for the relevant accounting period of the partnership; and

( c ) except in accordance with paragraphs (a) and (b), no amount which, apart from this subsection, would be available for relief against profits shall be available for set-off for the purposes of corporation tax against so much of the company's total profits as consists of profits of its several trade for the relevant accounting period of the partnership.

(3) In subsection (2) "relevant accounting period of the partnership" means any accounting period of the partnership beginning on or after the 6th day of April, 1976, in which any such arrangements as are specified in subsection (1) are in existence or to which any such arrangements apply.

(4) If a company is a member of a partnership and tax in respect of any profits of the partnership is chargeable under Case IV or V of Schedule D, this section shall apply in relation to the company's share in the profits or loss of the partnership as if—

( a ) the profits or loss to which the company's share is attributable were the profits of, or the loss incurred in, a several trade carried on by the company, and

( b ) any allowance which falls to be made by discharge or repayment of tax or in charging income under Case V were an allowance made in taxing that trade.

(5) For the purposes of this section, the amount of a company's share in the profits or loss of any accounting period of a partnership shall be such amount as is determined in accordance with the provisions of section 32 (partnerships involving companies).

(6) In this section "group relief" has the same meaning as in section 107 and any question whether one person is connected with another shall be determined in accordance with section 157.

Information as to arrangements for transferring relief, etc.

123.—(1) If a company—

( a ) makes a claim for group relief, or

( b ) being a party to a leasing contract, as defined in section 121, claims relief as mentioned in subsection (1) (b) of that section, or

( c ) being a member of a partnership, claims any relief which, if section 122 (2) applied in relation to it, it would not be entitled to claim.

and the inspector has reason to believe that any relevant arrangements may exist, or may have existed at any time material to the claim, then at any time after the claim is made he may serve notice in writing on the company requiring it to furnish him, within such time being not less than thirty days from the giving of the notice as he may direct, with—

(i) a declaration in writing stating whether or not any such arrangements exist or existed at any material time, or

(ii) such information as he may reasonably require for the purpose of satisfying himself whether or not any such arrangements exist or existed at any material time, or

(iii) both such a declaration and such information.

(2) In this section "relevant arrangements" in relation to a claim falling within any of paragraphs (a) to (c) of subsection (1), means such arrangements as are referred to in the enactment which is specified in the corresponding paragraph below, that is to say—

( a ) section 120 (1) or (2) or section 113 (3),

( b ) section 121 (1) (c), or

( c ) section 122 (1).

(3) In a case falling within paragraph (a) of subsection (1), a notice under that subsection may be served on the surrendering company, within the meaning of section 107, instead of or as well as on the company claiming relief.

(4) In a case falling within paragraph (c) of subsection (1), a notice under that subsection may be served on the partners instead of or as well as on the company, and accordingly may require them, instead of or as well as the company, to furnish the declaration, information or declaration and information concerned.

(5) In this section, section 113 (3) and sections 120 to 122 "arrangements" means arrangements of any kind, whether in writing or not.

Exclusion of double allowances, etc.

124.—(1) Relief shall not be given more than once in respect of the same amount, whether by giving group relief and by giving some other relief (in any accounting period) to the surrendering company or by giving group relief more than once.

(2) In accordance with subsection (1), two or more claimant companies cannot, in respect of any one loss or other amount for which group relief may be given, and whatever their accounting periods corresponding to that of the surrendering company, obtain in all more relief than could be obtained by a single claimant company whose corresponding accounting period coincided with the accounting period of the surrendering company.

(3) If claims for group relief are made by mote than one claimant company which relate to the same accounting period of the same surrendering company, and—

( a ) all the claims so made are admissible only by virtue of section 119 (2) (3), and

( b ) there is a part of the surrendering company's accounting period during which none of those claimant companies is a member of the same group as the surrendering company,

those claimant companies shall not obtain in all more relief than could be obtained by a single claimant company which was not a member of the same group as the surrendering company during that part of the surrendering company's accounting period (but was a member during the remainder of that accounting period).

(4) If claims for group relief are made by a claimant company as respects more than one surrendering company for group relief to he set off against its total profits for any one accounting period, and—

( a ) all the claims so made are admissible only by virtue of section 119 (29) (3), and

( b ) there is a part of the claimant company's accounting period during which none of the surrendering companies by reference to which the claims are made is a member of the same group as the claimant company,

the claimant company shall not obtain in all more relief to be set off against its profits for the accounting period than it could obtain on a claim as respects a single surrendering company (with unlimited losses and other amounts eligible for relief) which was not a member of the same group as the claimant company during that part of the claimant company's accounting period (but was a member during the remainder of that accounting period).

(5) The provisions of this subsection have effect as respects a claim for group relief made by a company as a member of a consortium, in this subsection referred to as a "consortium claim"—

( a ) a consortium claim, and a claim other than a consortium claim, shall not both have effect as respects the loss or other amount of the same accounting period of the same surrendering company, unless each of the two claims is as respects a loss or other amount apportioned under section 119 (2) (a) to a component of that accounting period, and the two components do not overlap,

( b ) in subsections (3) and (4) consortium claims shall be disregarded,

and paragraph (a) shall take effect according to the order in which claims are made.

(6) Without prejudice to the provisions of section 304 (6) of the Income Tax Act, 1967 (interpretation), any reference in Part XVI (Annual Allowances for Certain Capital Expenditure) of that Act to an allowance made includes a reference to an allowance which would be made but for the granting of group relief or but for that and but for an insufficiency of profits or other income against which to make it.

Claims and adjustments.

125.—(1) A claim for group relief—

( a ) need not be for the full amount available,

( b ) shall require the consent of the surrendering company notified to the inspector in such form as the Revenue Commissioners may require, and

( c ) must be made within two years from the end of the surrendering company's accounting period to which the claim relates.

(2) A claim for group relief by a company as a member of a consortium shall require the consent of each other member of the consortium, notified to the inspector in such form as the Revenue Commissioners may require, in addition to the consent of the surrendering company.

(3) If the inspector discovers that any group relief which has been given is or has become excessive he may make an assessment to corporation tax under Case IV of Schedule D in the amount which ought in his opinion to be charged.

(4) Subsection (3) is without prejudice to the making of an assessment under section 144 (5) (a) (iii) (additional assessments) and to the making of all such other adjustments by way of discharge or repayment of tax or otherwise as may be required where a claimant company has obtained too much relief, or a surrendering company has foregone relief in respect of a corresponding amount.

PART XII COMPANIES' CAPITAL GAINS

Corporation tax attributable to chargeable gains: recovery from shareholder.

126.—(1) This section applies where a person who is connected with a company resident in the State, on or after the 6th day of April, 1976, receives or becomes entitled to receive in respect of shares in the company any capital distribution from the company, other than a capital distribution representing a reduction of capital, and—

( a ) the capital so distributed derives from the disposal after the 5th day of April, 1976, of assets in respect of which a chargeable gain accrues to the company; or

( b ) the distribution constitutes such a disposal of assets.

(2) If the corporation tax assessed on the company for the accounting period in which the chargeable gain accrues included any amount in respect of chargeable gains, and any of the tax assessed on the company for that period is not paid within six months from the date when it becomes payable by the company, the said person may by an assessment made within two years from that date be assessed and charged (in the name of the company) to an amount of that corporation tax—

( a ) not exceeding the amount or value of the capital distribution which that person has received or became entitled to receive; and

( b ) not exceeding a proportion equal to that person's share of the capital distribution made by the company of corporation tax on the amount and at the rate charged in respect of that gain in the assessment in which the said tax was charged.

(3) A person paying any amount of tax under this section shall be entitled to recover a sum equal to that amount from the company.

(4) The provisions of this section are without prejudice to any liability of the person receiving or becoming entitled to receive the capital distribution in respect of a chargeable gain accruing to him by reference to the capital distribution as constituting a disposal of an interest in shares in the company.

(5) In this section "capital distribution" has the same meaning as in paragraph 1 (2) of Schedule 2 to the Capital Gains Tax Act, 1975 , and "connected with" shall be construed in accordance with section 157 (connected persons).

Company reconstruction or amalgamation: transfer of assets.

127.—(1) Subject to the Provisions of this section, where—

( a ) any scheme of reconstruction or amalgamation involves the transfer of the whole or part of a company's business to another company, and

( b ) at the time of the transfer both companies are resident in the State, and

( c ) the first-mentioned company receives no part of the consideration for the transfer (otherwise than by the other company taking over the whole or part of the liabilities of the business),

then so far as relates to corporation tax on chargeable gains the two companies shall be treated as if any assets included in the transfer were acquired by the one company from the other company for a consideration of such amount as would secure that on the disposal by way of transfer neither a gain nor a loss would accrue to the company making the disposal, and for the purposes of Part II of Schedule 1 to the Capital Gains Tax Act, 1975 (assets held on the 6th day of April, 1974), the acquiring company shall be treated as if the respective acquisitions of the assets by the other company had been the acquiring company's acquisition of them.

(2) This section does not apply in relation to an asset which, until the transfer, formed part of trading stock of a trade carried on by the company making the disposal, or in relation to an asset which is acquired as trading stock for the purposes of a trade carried on by the company acquiring the asset.

(3) In this section—

"scheme of reconstruction or amalgamation" means a scheme for the reconstruction of any company or companies or the amalgamation of any two or more companies,

"trading stock" has the meaning given by section 62 (2) of the Income Tax Act, 1967 .

Interest charged to capital.

128.—Where—

( a ) a company incurs expenditure on the construction of any building, structure or works, being expenditure allowable as a deduction under paragraph 3 of Schedule 1 to the Capital Gains Tax Act, 1975 (expenditure: general provisions), in computing a gain accruing to the company on the disposal of the building, structure or work, or of any asset comprising it, and

( b ) that expenditure was defrayed out of borrowed money, and

( c ) the company charged to capital all or any of the interest on that borrowed money referable to a period or part of a period ending on or before the disposal,

the sums so allowable shall, notwithstanding subparagraph (3) (b) of the said paragraph 3, include the amount of that interest charged to capital.

Groups of companies: definitions.

129.—(1) For the purposes of this section and the following sections of this Part—

( a ) references to a company, subject to section 138 (7), apply only to a company, as that expression is limited by subsection (2), which is resident in the State;

( b ) a principal company, and all its 75 per cent. subsidiaries form a group, and where a principal company is a member of a group as being itself a 75 per cent. subsidiary that group shall comprise all its 75 per cent. subsidiaries;

( c ) "principal company" means a company of which another company is a 75 per cent. subsidiary;

( d ) in applying the definition of "75 per cent. subsidiary" in section 156 (subsidiaries) any share capital of a registered industrial and provident society shall be treated as ordinary share capital; and

( e ) "group" and "subsidiary" shall be construed with any necessary modifications where applied to a company incorporated under the law of a country outside the State.

(2) For the purposes referred to in subsection (1) references to a company apply only to—

( a ) a company within the meaning of the Companies Act, 1963 , and

( b ) a company which is constituted under any other Act or a charter or letters patent or (although resident in the State) is formed under the law of a country or territory outside the State, and

( c ) a registered industrial and provident society within the meaning of section 218 of the Income Tax Act, 1967 .

(3) For the purposes referred to in subsection (1) a group remains the same group so long as the same company remains the principal company of the group, and if at any time the principal company of a group becomes a 75 per cent. subsidiary of another company the group of which it was the principal company before that time shall be regarded as the same as the group of which that other company, or one of which it is a 75 per cent. subsidiary, is the principal company, and the question whether or not a company has ceased to be a member of a group shall be determined accordingly.

(4) For the purposes referred to in subsection (1) the passing of a resolution or the making of an order, or any other act, for the winding up of a company shall not be regarded as the occasion of that company, or of any 75 per cent. subsidiary of that company, ceasing to be a member of a group of companies.

(5) The following sections of this Part, except in so far as they relate to recovery of tax, shall also have effect in relation to bodies from time to time established by or under any enactment for the carrying on of any industry or part of an industry, or of any undertaking, under national ownership or control as if they were companies within the meaning of those sections, and as if any such bodies charged with related functions and subsidiaries of any of them formed a group, and as if also any two or more such bodies charged at different times with the same or related functions were members of a group:

Provided that this subsection shall have effect subject to any enactment by virtue of which property, rights, liabilities or activities of one such body fall to be treated for corporation tax as those of another.

(6) For the purposes of this Part—

( a ) section 35 of the Capital Gains Tax Act, 1975 (close company transferring assets at undervalue), shall not apply where the transfer is a disposal to which section 130 (1) applies;

( b ) paragraph 6 of Schedule 1 to the Capital Gains Tax Act, 1975 (part disposals), and all other provisions for apportioning on a part disposal expenditure which is deductible in computing a gain, shall be operated before the operation of, and without regard to,-

(i) section 130 (1),

(ii) any other enactment making an adjustment to secure that neither a gain nor a loss occurs on a disposal;

( c ) a "non-resident group" of companies—

(i) in the case of a group, none of the members of which is resident in the State, means that group, and

(ii) in the case of a group, two or more members of which are not resident in the State, means the members which are not resident in the State,

and for the purposes of this paragraph "group" shall be construed in accordance with subsections (1) (without paragraph (a) ), (3) and (4).

(7) For the purposes of section 36 of the Capital Gains Tax Act, 1975 (non-resident company)—

( a ) sections 130 to 133 shall apply in relation to non-resident companies which are members of a non-resident group of companies, as they apply in relation to companies resident in the State which are members of a group of companies,

( b ) sections 135 and 137 shall apply as if for any reference therein to a group of companies there were substituted a reference to a non-resident group of companies, and as if references to companies were references to companies not resident in the State.

Transfer within a group.

130.—(1) Notwithstanding any provision in the Capital Gains Tax Act, 1975 , fixing the amount of the consideration deemed to be received on a disposal or given on an acquisition, where a member of a group of companies disposes of an asset to another member of the group, both members shall, except as provided by subsections (2) and (3), be treated, so far as relates to corporation tax on chargeable gains, as if the asset acquired by the member to whom the disposal is made were acquired for a consideration of such amount as would secure that on the other's disposal neither a gain nor a loss would accrue to that other; but where it is assumed for any purpose that a member of a group of companies has sold or acquired an asset, it shall be assumed also that it was not a sale to or acquisition from another member of the group.

(2) Subsection (1) shall not apply where the disposal is—

( a ) a disposal of a debt from a member of a group of companies effected by satisfying the debt or part of it; or

( b ) a disposal of redeemable shares in a company on the occasion of their redemption;

and the reference in that subsection to a member of a group of companies disposing of an asset shall not apply to anything which under Schedule 2 to the Capital Gains Tax Act, 1975 , is to be treated as a disposal of an interest in shares in a company in consideration for a capital distribution (as defined in paragraph 1 of the said Schedule) from that company, whether or not involving a reduction of capital.

(3) For the purposes of subsection (1), so far as the consideration for the disposal consists of money or money's worth by way of compensation for any kind of damage or injury to assets, or for the destruction or dissipation of assets or for anything which depreciates or might depreciate an asset, the disposal shall be treated as being to the person who, whether as an insurer or otherwise, ultimately bears the burden of furnishing that consideration.

Transfers within a group: trading stock.

131.—(1) Where a member of a group of companies acquires an asset as trading stock from another member of the group, and the asset did not form part of the trading stock of any trade carried on by the other member, the member acquiring it shall be treated for purposes of paragraph 15 of Schedule 1 to the Capital Gains Tax Act, 1975 (appropriations to and from stock in trade), as having acquired the asset otherwise than as trading stock and immediately appropriated it for the purposes of the trade as trading stock.

(2) Where a member of a group of companies disposes of an asset to another member of the group and the asset formed part of the trading stock of a trade carried on by the member disposing of it but is acquired by the other member otherwise than as trading stock of a trade carried on by it, the member disposing of the asset shall be treated for purposes of the said paragraph 15 as having immediately before the disposal appropriated the asset for some purpose other than the purpose of use as trading stock.

Disposal or acquisition outside a group.

132.—(1) Where a company which is or has been a member of a group of companies disposes of an asset which it acquired from another member of the group at a time when both were members of the group, paragraph 5 of Schedule 1 to the Capital Gains Tax Act, 1975 (restriction of losses by reference to capital allowances), shall apply in relation to any capital allowances made to the other member (so far as not taken into account in relation to a disposal of the asset by that other member), and so on as respects previous transfers of the asset between members of the group (but this shall not be taken as affecting the consideration for which an asset is deemed under section 130 (1) to be acquired).

(2) Part II of Schedule 1 to the Capital Gains Tax Act, 1975 , shall apply in relation to a disposal of an asset by a company which is or has been a member of a group of companies, and which acquired the asset from another member of the group at a time when both were members of the group, as if all members of the group for the time being were the same person, and as if the acquisition or provision of the asset by the group, so taken as a single person, had been the acquisition or provision of it by the member disposing of it.

Replacement of business assets by members of a group.

133.—For the purposes of section 28 of the Capital Gains Tax Act, 1975 (replacement of business assets), all the trades carried on by members of a group of companies shall be treated as a single trade (unless it is a case of one member of the group acquiring, or acquiring the interest in, the new assets from another or disposing of, or of the interest in, the old assets to another).

Tax on company recoverable from other members of a group.

134.—(1) If at any time a chargeable gain accrues to a company which at that time is a member of a group of companies and any of the corporation tax assessed on the company for the accounting period in which the chargeable gain accrues is not paid within six months from the date when it becomes payable by the company, then, if the tax so assessed included any amount in respect of chargeable gains—

( a ) a company which was at the time when the gain accrued the principal company of the group; and

( b ) any other company which in any part of the period of two years ending with that time was a member of the said group of companies and owned the asset disposed of or any part of it, or where that asset is an interest or right in or over another asset, owned either asset or any part of either asset;

may at any time within two years from the time when the tax became payable be assessed and charged (in the name of the company to whom the chargeable gain accrued) to an amount of that corporation tax not exceeding corporation tax on the amount and at the rate charged in respect of that gain in the assessment on the company to which the chargeable gain accrued.

(2) A company paying any amount of tax under subsection (1) shall be entitled to recover a sum of that amount—

( a ) from the company to which the chargeable gain accrued, or

( b ) if that company is not the company which was the principal company of the group at the time when the chargeable gain accrued, from that principal company,

and a company paying any amount under paragraph (b) shall be entitled to recover a sum of that amount from the company to which the chargeable gain accrued, and so far as it is not so recovered, to recover from any company which is for the time being a member of the group and which has while a member of the group owned the asset disposed of or any part of it (or where that asset is an interest or right in or over another asset, owned either asset or any part of it) such proportion of the amount unrecovered as is just having regard to the value of the asset at the time when the asset, or an interest or right in or over it, was disposed of by that company.

Company ceasing to be member of a group.

135.—(1) If a company (in this section called "the chargeable company") ceases to be a member of a group of companies, this section shall have effect as respects any asset which the chargeable company acquired from another company which was at the time of acquisition a member of that group of companies, but only if the time of acquisition fell—

( a ) on or after the 6th day of April, 1974, and

( b ) within the period of ten years ending with the tune when the company ceases to be a member of the group;

and references in this section to a company ceasing to be a member of a group of companies do not apply to cases where a company ceases to be a member of a group by being wound up or dissolved or in consequence of another member of the group being wound up or dissolved.

(2) Where two or more associated companies cease to be members of the group at the same time, subsection (1) shall not have effect as respects an acquisition by one from another of those associated companies.

(3) If, when the chargeable company ceases to be a member of the group, the chargeable company, or an associated company also leaving the group, owns, otherwise than as trading stock—

( a ) the asset, or

( b ) property on the acquisition of which a chargeable gain in relation to the asset has been deferred on a replacement of business assets.

the chargeable company shall be treated for all the purposes of the Capital Gains Tax Act, 1975 , as if immediately after its acquisition of the asset it had sold, and immediately reacquired, the asset at market value at that time.

(4) For the purposes of this section—

( a ) two or more companies are associated companies if, by themselves, they would form a group of companies,

( b ) a chargeable gain is deferred on a replacement of business assets if, by one or more claims under section 28 of the Capital Gains Tax Act, 1975 , a chargeable gain on the disposal of those assets is treated as not accruing until the new assets, within the meaning of that section, cease to be used for the purposes of a trade carried on by the company making the claim,

( c ) an asset acquired by the chargeable company shall be treated as the same as an asset owned at a later time by that company or an associated company if the value of the second asset is derived in whole or in part from the first asset, and in particular where the second asset is a freehold, and the first asset was a leasehold and the lessee has acquired the reversion.

(5) If any of the corporation tax assessed on a company in consequence of this section is not paid within six months from the date when it becomes payable then—

( a ) a company which on the said date, or immediately after the chargeable company ceased to be a member of the group, was the principal company of the group, and

( b ) a company which owned the asset on the said date, or when the chargeable company ceased to be a member of the group,

may at any time within two years from the time when the tax became payable, be assessed and charged (in the name of the chargeable company) to all or any part of that tax; and a company paying any amount of tax under this subsection shall be entitled to recover a sum of that amount from the chargeable company.

(6) Notwithstanding any limitation on the time for making assessments, an assessment to corporation tax chargeable in consequence of this section may be made at any time within ten years from the time when the chargeable company ceased to be a member of the group, and where under this section the chargeable company is to be treated as having disposed of and reacquired, an asset, an such recomputations of liability in respect of other disposals, and all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the provisions of this section shall be carried out.

Exemption from charge under section 135 in the case of certain mergers.

136.—(1) Subject to the following provisions of this section, section 135 shall not apply in a case where—

( a ) as part of a merger, a company (in this section referred to as "company A") ceases to be a member of a group of companies (in this section referred to as "the A group"); and

( b ) it is shown that the merger was carried out for bona fide commercial reasons and that the avoidance of liability to tax was not the main or one of the main purposes of the merger.

(2) In this section "merger" means an arrangement (which in this section includes a series of arrangements)—

( a ) whereby one or more companies (in this section referred to as "the acquiring company" or, as the case may be, "the acquiring companies") none of which is a member of the A group acquires or acquire, otherwise than with a view to their disposal, one or more interests in the whole or part of the business which before the arrangement took effect, was carried on by company A; and

( b ) whereby one or more members of the A group acquires or acquire, otherwise than with a view to their disposal, one or more interests in the whole or part of the business or each of the businesses which, before the arrangement took effect, was carried on either by the acquiring company or acquiring companies or by a company at least 90 per cent. of the ordinary share capital of which was then beneficially owned by two or more of the acquiring companies; and

( c ) in respect of which the conditions in subsection (4) are fulfilled.

(3) For the purposes of subsection (2), a member of a group of companies shall be treated as carrying on as one business the activities of that group.

(4) The conditions referred to in subsection (2) (c) are—

( a ) that not less than 25 per cent. by value of each of the interests acquired as mentioned in paragraphs (a) and (b) of subsection (2) consists of a holding of ordinary share capital, and the remainder of the interest, or as the case may be of each of the interests, acquired as mentioned in the said paragraph (b) consists of a holding of share capital (of any description) or debentures or both; and

( b ) that the value or, as the case may be, the aggregate value of the interest or interests acquired as mentioned in subsection (2) (a) is substantially the same as the value or, as the case may be, the aggregate value of the interest or interests acquired as mentioned in subsection (2) (b); and

( c ) that the consideration for the acquisition of the interest or interests acquired by the acquiring company or acquiring companies as mentioned in subsection (2) (a), disregarding any part of that consideration which is small by comparison with the total, either consists of, or is applied in the acquisition of, or consists partly of and as to the balance is applied in the acquisition of, the interest or interests acquired by members of the A group as mentioned in subsection (2) (b);

and for the purposes of this subsection the value of an interest shall be determined as at the date of its acquisition.

(5) Notwithstanding the provisions of section 129 (1) (a), references in this section to a company include references to a company resident outside the State.

Shares in subsidiary member of a group.

137.—(1) This section has effect if a company (in this section called "the subsidiary") ceases to be a member of a group of companies, and on an earlier occasion shares in the subsidiary were disposed of by another company (in this section called "the chargeable company") which was then a member of that group in the course of an amalgamation or reconstruction in the group, but only if that earlier occasion fell—

( a ) on or after the 27th day of November, 1975, and

( b ) within the period of ten years ending with the date on which the subsidiary ceases to be a member of the group;

(2) The chargeable company shall be treated, for all the purposes of the Capital Gains Tax Act, 1975 , as if immediately before the earlier occasion it had sold, and immediately reacquired, the said shares at market value at that time, and for the purposes of this subsection if the earlier occasion fell on or before the 5th day of April, 1976, it shall be deemed to have fallen on the 6th day of April, 1976.

(3) If, before the subsidiary ceases to be a member of the group, the chargeable company has ceased to exist, or a resolution has been passed, or an order made, for the winding up of the company, or any other act has been done for the like purpose, any corporation tax to which, if the chargeable company had continued in existence, it would have been chargeable in consequence of this section may be assessed and charged (in the name of the chargeable company) on the company which is, at the time when the subsidiary ceases to be a member of the group, the principal company of the group.

(4) If any of the corporation tax assessed on a company in consequence of this section, or in pursuance of subsection (3), is not paid within six months from the date when it becomes payable, then—

( a ) a company which is on the said date, or was on the earlier occasion, the principal company of the group, and

( b ) any company taking an interest in the subsidiary as part of the amalgamation or reconstruction in the group,

(5) Notwithstanding any limitation on the time for making assessments, an assessment to corporation tax chargeable in consequence of this section may be made at any time within ten years from the time when the subsidiary ceased to be a member of the group and, in relation to any disposal of the property after the earlier occasion, there shall be made all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the provisions of this section.

(6) For the purposes of this section there is a disposal of shares in the course of an amalgamation or reconstruction in a group of companies if paragraph 4 or 5 of Schedule 2 to the Capital Gains Tax Act, 1975 (company amalgamations), applies to shares in a company so as to equate them with shares in or debentures of another company, and the companies are members of the same group, or become members of the same group as a result of the amalgamation or reconstruction.

(7) Where by virtue of paragraph 5 of the said Schedule 2 shares are to be treated as cancelled and replaced by a new issue, references in this section to a disposal of shares include references to the occasion of their being so treated.

Depreciatory transactions in a group.

138.—(1) This section has effect as respects a disposal of shares in, or securities of, a company (in this section referred to as an "ultimate disposal") if the value of the shares or securities has been materially reduced by a depreciatory transaction effected on or after the 6th day of April, 1974; and for this purpose "depreciatory transaction" means—

( a ) any disposal of assets at other than market value by one member of a group of companies to another or

( b ) any other transaction satisfying the conditions of subsection (2):

Provided that a transaction shall not be treated as a depreciatory transaction to the extent that it consists of a payment which is required to be or has been brought into account, for the purposes of corporation tax on chargeable gains, in computing a chargeable gain or allowable loss accruing to the person making the ultimate disposal.

(2) The conditions referred to in subsection (1) (b) are—

( a ) that the company, the shares in which, or securities of which, are the subject of the ultimate disposal, or any 75 per cent. subsidiary of that company, was a party to the transaction, and

( b ) that the parties to the transaction were or included two or more companies which at the time of the transaction were members of the same group of companies.

(3) Without prejudice to the generality of subsection (1), the cancellation of any shares in or securities of one member of a group of companies under section 72 of the Companies Act, 1963 , shall, to the extent that immediately before the cancellation those shares or securities were the property of another member of the group, be taken to be a transaction fulfilling the conditions in subsection (2).

(4) If the person making the ultimate disposal is, or has at any time been, a member of the group of companies referred to in subsection (1) or (2), any allowable loss accruing on the disposal shall be reduced to such extent as appears to the inspector, or on appeal the Appeal Commissioners, or on a rehearing by a judge of the Circuit Court, that judge, to be just and reasonable having regard to the depreciatory transaction:

Provided that if the person making the ultimate disposal is not a member of the said group when he disposes of the shares or securities, no reduction of the loss shall be made by reference to a depreciatory transaction which took place when that person was not a member of the said group.

(5) The inspector or the Appeal Commissioners or the judge of the Circuit Court shall make the decision under subsection (4) on the footing that the allowable loss ought not to reflect any diminution in the value of the company's assets which was attributable to a depreciatory transaction, but allowance may be made for any other transaction on or after the 6th day of April, 1974, which has enhanced the value of the company's assets and depreciated the value of the assets of any other member of the group.

(6) If, under subsection (4), a reduction is made in an allowable loss, any chargeable gain accruing on a disposal of the shares or securities of any other company which was a party to the depreciatory transaction by reference to which the reduction was made, being a disposal not later than ten years after the depreciatory transaction, shall be reduced to such extent as appears to the inspector, or on appeal to the Appeal Commissioners, or on a rehearing by a judge of the Circuit Court, that judge, to be just and reasonable having regard to the effect of the depreciatory transaction on the value of those shares or securities at the time of their disposal:

Provided that the total amount of any one or more reductions in chargeable gains made by reference to a depreciatory transaction shall not exceed the amount of the reductions in allowable losses made by reference to that depreciatory transaction.

All such adjustments, whether by way of discharge or repayment of tax, or otherwise, as are required to give effect to the provisions of this subsection may be made at any time.

(7) For the purposes of this section—

"securities" includes any loan stock or similar security whether secured or unsecured;

references to the disposal of assets include references to any method by which one company which is a member of a group appropriates the goodwill of another member of the group;

a "group of companies" may consist of companies some or all of which are not resident in the State.

(8) References in this section to the disposal of shares or securities include references to the occasion of the making of a claim under section 12 (4) of the Capital Gains Tax Act, 1975 , that the value of shares or securities has become negligible, and references to a person making a disposal shall be construed accordingly.

Dividend stripping.

139.—(1) The provisions of this section apply where one company (in this section referred to as "the first company") has a holding in another company (in this section referred to as "the second company") and the following conditions are fulfilled—

( a ) that the holding amounts to, or is an ingredient in a holding amounting to, 10 per cent. of all holdings of the same class in the second company,

( b ) that the first company is not a dealing company in relation to the holding,

( c ) that a distribution is or has been made on or after the 6th day of April, 1974, to the first company in respect of the holding, and

( d ) that the effect of the distribution is that the value of the holding is or has been materially reduced.

(2) Where this section applies in relation to a holding section 138 shall apply in relation to any disposal of any shares or securities comprised in the holding, whether the disposal is by the first company or by any other company to which the holding is transferred by a transfer to which section 130 applies, as if the distribution were a depreciatory transaction and, if the companies concerned are not members of a group of companies, as if they were:

Provided that the distribution shall not be treated as a depreciatory transaction to the extent that it consists of a payment which is required to be or has been brought into account, for the purposes of corporation tax on chargeable gains, in computing a chargeable gain or allowable loss accruing to the person making the ultimate disposal.

(3) This section shall be construed together with section 138.

(4) For the purposes of this section a company is "a dealing company" in relation to a holding if a profit on the sale of the holding would be taken into account in computing the company's trading profits.

(5) References in this section to a holding in a company refer to a holding of shares or securities by virtue of which the holder may receive distributions made by the company, but so that—

( a ) a company's holdings of different classes in another company shall be treated as separate holdings, and

( b ) holdings of shares or securities which differ in the entitlements or obligations they confer or impose shall be regarded as holdings of different classes.

(6) For the purposes of subsection (1)—

( a ) all a company's holdings of the same class in another company are to be treated as ingredients constituting a single holding, and

( b ) a company's holding of a particular class shall be treated as an ingredient in a holding amounting to 10 per cent. of all holdings of that class if the aggregate of that holding and other holdings of that class held by connected persons amounts to 10 per cent. of all holdings of that class,

and section 157 shall have effect in relation to paragraph (b) as if in subsection (7) of that section after the words "or exercise control of" in each place where they occur there were inserted the words " or to acquire a holding in".

PART XIII APPLICATION AND ADAPTATION OF ENACTMENTS

Application and adaptation of Income Tax Acts and Capital Gains Tax Act, 1975 .

140.—(1) Without prejudice to the general application to corporation tax of the provisions of the Income Tax Acts relating to the computation of income, Part I of the Second Schedule shall have effect for the purpose of applying to corporation tax or otherwise adapting the provisions of those Acts there mentioned.

(2) Without prejudice to the general application to corporation tax of the provisions of the Capital Gains Tax Act, 1975 , relating to the computation of chargeable gains, Part II of the Second Schedule shall have effect for the purpose of applying to corporation tax or otherwise adapting the provisions of that Act there mentioned.

(3) The amendments in each Part of the Second Schedule are subject to the provisions of this Act and, in particular, to the provisions of the final paragraph of that Part.

PART XIV ADMINISTRATION

Particulars to be supplied by new companies, etc.

141.—(1) Every company which, on or after the 6th day of April, 1976, commences to carry on a trade, profession or business shall, within thirty days from the date of such commencement, deliver to the Revenue Commissioners a statement in writing containing the following particulars—

( a ) the name of the company;

( b ) the address of its registered office in the State or, in the case of a company which is not resident in the State, the address of its principal place of business in the State;

( c ) the name of the secretary or, in the case of a company which is not resident in the State, the name and address of the agent, manager, factor or other representative of the company;

( d ) the date of commencement of the trade, profession or business or, in the case of a company which is not resident in the State, the date of commencement of its trade or profession in the State;

( e ) the nature of the trade, profession or business; and

( f ) the date to which the first accounts relating to such trade, profession or business will be made up:

Provided that this subsection shall not apply to a company which is neither resident nor incorporated in the State unless it commences to carry on a trade or profession in the State.

(2) Where a company fails to deliver a statement which it is required to deliver under this section—

( a ) the company shall be liable to a penalty of £500 and, if the failure continues after judgement has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £50 for each day on which the failure so continues, and

( b ) the secretary of the company shall be liable to a separate penalty of £100.

Notice of liability to corporation tax.

142.—(1) Every company which is chargeable to corporation tax for any accounting period and which has not made a return of its profits for that accounting period shall, not later than one year after the end of that accounting period, give notice to the inspector that it is so chargeable:

Provided that this subsection shall not impose a duty to give any notice before the 6th day of April, 1976.

(2) Where a company fails to give a notice which it is required to give under this section—

( b ) the secretary of the company shall be liable to a separate penalty of £100.

Return of profits.

143.—(1) A company may be required by a notice served on it by an inspector or other officer of the Revenue Commissioners to deliver to the officer within the time limited by the notice a return of the profits of the company computed in accordance with this Act—

( a ) specifying the income taken into account in computing those profits, with the amount from each source,

( b ) giving particulars of all disposals giving rise to chargeable gains or allowable losses under the provisions of the Capital Gains Tax Act, 1975 , and this Act and particulars of those chargeable gains or allowable losses, and

( c ) giving particulars of all charges on income to be deducted against those profits for the purpose of the assessment to corporation tax.

(2) A notice under this section may require a return of profits arising in any period during which the company was within the charge to corporation tax.

(3) Every return under this section shall include a declaration to the effect that the return is correct and complete.

(4) A return under this section which includes profits which are payments on which the company has borne income tax by deduction shall specify the amount of income tax so borne.

(5) A notice under this section may require the inclusion in the return of particulars of management expenses, capital allowances and balancing charges which have been taken into account in arriving at the profits included in the return.

(6) Paragraph 3 (3) (4) of Schedule 4 to the Capital Gains Tax Act, 1975 (power to demand information about the acquisition of assets), shall apply in relation to a notice under this section as they apply in relation to a notice under any of the provisions of the Income Tax Acts, as applied in relation to capital gains tax by the said paragraph 3.

(7) Section 174 of the Income Tax Act, 1967 (production of accounts and books), shall apply where a company is required to make, or makes, a return under this section relating to profits which consist of or comprise those arising from a trade as it applies where a person is required to make, or makes, a return for the purposes of income tax of the profits or gains arising to him from any trade.

(8) ( a ) If any company has been required by notice served under the foregoing provisions of this section to deliver a return and the company fails to comply with the notice—

(i) the company shall be liable to a penalty of £500 except in the case mentioned in paragraph (b) and, if the failure continues after judgement has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £50 for each day on which the failure so continues, and

(ii) the secretary of the company shall be liable to a separate penalty of £100 except in the case mentioned in paragraph (b).

( b ) Where any such failure as is mentioned in paragraph (a) continues after the expiration of one year beginning with the date on which the notice was served the first of the penalties mentioned in the said paragraph for which the company is liable shall be £1,000, and the secretary of the company shall be liable to a separate penalty of £200.

(9) Where a company fraudulently or negligently—

( a ) delivers an incorrect return under the provisions of this section, or

( b ) makes any incorrect return, statement or declaration in connection with any claim for any allowance, deduction or relief in respect of corporation tax, or

( c ) submits to an inspector, the Revenue Commissioners or the Appeal Commissioners any incorrect accounts in connection with the ascertainment of the company's liability to corporation tax,

the company shall be liable to a penalty of—

(i) £500, or, in the case of fraud, £1,000, and

(ii) the amount, or, in the case of fraud, twice the amount, of the difference specified in subsection (10), and

the secretary of the company shall be liable to a separate penalty of £100, or, in the case of fraud, £200.

(10) The difference referred to in subsection (9) is the difference between—

( a ) the amount of corporation tax payable by the said company for the accounting period or accounting periods comprising the period to which the return, statement, declaration or accounts relate, and

( b ) the amount which would have been the amount so payable if the return, statement declaration or accounts had been correct.

(11) The provisions of section 501 (3) of the Income Tax Act, 1967 (failure to correct an error not made fraudulently or negligently), shall apply for the purposes of this section as they apply for the purposes of the said section 501.

(12) ( a ) Section 191 of the Income Tax Act, 1967 (error or mistake), shall apply in relation to corporation tax as it applies in relation to income tax under Schedule D.

( b ) Any return under this Act shall be in such form as the Revenue Commissioners prescribe.

( c ) In this section "return" includes any statement, declaration or list

Assessment of corporation tax.

144.—(1) Assessments to corporation tax shall be made by an inspector.

(2) Where a company on whose profits the tax is to be assessed is resident in the State the tax shall be assessed on the company, and where a company on whose profits the tax is to be assessed is not resident in the State the tax shall be assessed on the company in the name of any agent, manager, factor or other representative of the company.

(3) The inspector shall give notice to the company assessed, or, in the case of a company which is not resident in the State, to the agent, manager, factor or other representative of the company assessed, of every assessment made by him.

(4) If—

( a ) a company makes default in the delivery of a statement in respect of corporation tax, or

( b ) the inspector is not satisfied with a statement which has been delivered, or has received any information as to its insufficiency,

the inspector shall make an assessment on the company concerned in such sum as, according to the best of the inspector's judgement. ought to be charged on that company.

(5) ( a ) If an inspector discovers—

(i) that any profits which ought to have been assessed to corporation tax have not been assessed, or

(ii) that an assessment to corporation tax is or has become insufficient, or

(iii) that any relief which has been given is or has become excessive,

the inspector shall make an assessment in the amount, or the further amount, which ought in his opinion to be charged.

( b ) Subject to any provision allowing a longer period in any class of case, no assessment to corporation tax shall be made more than ten years after the end of the accounting period to which it relates:

Provided that in a case in which any form of fraud or neglect has been committed by or on behalf of any company in connection with or in relation to corporation tax, an assessment may be made on that company at any time for any accounting period for which, by reason of the fraud or neglect, corporation tax would otherwise be lost to the Exchequer.

( c ) An objection to the making of any assessment on the ground that the time limited for the making thereof has expired shall only be made on appeal from the assessment.

( d ) In this subsection "neglect" means negligence or a failure to give any notice, to make any return, statement or declaration, or to produce or furnish any list, document or other information required by or under the enactments relating to corporation tax:

Provided that a company shall be deemed not to have failed to do anything required to be done within a limited time if it did it within such further time, if any, as the Revenue Commissioners or officer concerned may have allowed; and where a company had a reasonable excuse for not doing anything required to be done, it shall be deemed not to have failed to do it if it did it without unreasonable delay after the excuse had ceased.

Collection of corporation tax.

145.—(1) The Collector-General shall collect and levy the tax from time to time charged on all assessments to corporation tax of which particulars have been transmitted to him under section 187 (1) of the Income Tax Act, 1967 , as applied for the purposes of corporation tax by section 147.

(2) All such powers as are exercisable with respect to the collecting and levying of sums of income tax under Schedule D of the Income Tax Act, 1967 , of which particulars are transmitted under section 187 (1) of that Act shall extend with respect to sums of corporation tax of which particulars are transmitted under that section as applied by section 147.

(3) Section 550 of the Income Tax Act, 1967 (interest on overdue tax), shall apply for the purposes of corporation tax as it applies for the purposes of income tax subject to the inclusion in subsection (1) thereof of a reference to section 6 (general scheme of corporation tax) of this Act for the reference to section 477 of the Income Tax Act, 1967 (time for payment of tax), and section 28 of the Finance Act, 1975 (interest on unpaid taxes), shall apply to interest which, under the said section 550 as applied by this section, is chargeable in respect of corporation tax.

(4) ( a ) In this subsection "neglect" has the same meaning as in section 144 (5) (d).

( b ) Where, for any accounting period, an assessment is made for the purpose of recovering an undercharge to corporation tax which is attributable to the fraud or neglect of any person, the amount of tax undercharged shall carry interest at the rate of 1·5 per cent. for each month or part of a month from the date or dates on which the tax undercharged for that accounting period would have been payable, if it had been included in an assessment made on the expiration of six months from the end of that accounting period, to the date of payment of the tax undercharged.

( c ) Subject to paragraph (e), section 550 (1) (2) of the Income Tax Act, 1967 , shall not apply to tax carrying interest under this subsection.

( d ) Subsections (3), (4) and (5) of section 550 of the Income Tax Act, 1967 , shall apply to interest chargeable under this subsection as they apply to interest chargeable under the said section 550.

( e ) Where an assessment of the kind referred to in paragraph (b) is made—

(i) the inspector concerned shall give notice to the person assessed that the tax charged by the assessment will carry interest under this subsection,

(ii) the person assessed may appeal against the assessment on the ground that interest should not be charged under this subsection, and the provisions of this Act relating to appeals against assessments shall apply and have effect in relation to the appeal as they apply in relation to those appeals with any necessary modifications, and

(iii) if, on the appeal, it is determined that the tax charged by the assessment should not carry interest under this subsection, section 550 (1) (2) of the Income Tax Act, 1967 , shall apply to that tax as it applies to tax charged by an assessment to income tax.

(5) The priority attaching to assessed taxes under sections 98 and 285 of the Companies Act, 1963 , shall apply to corporation tax.

Appeals.

146.—(1) The provisions of Part XXVI of the Income Tax Act, 1967 (Appeals), shall apply for the purposes of corporation tax as they apply for the purposes of income tax and accordingly, in those provisions, any reference to income tax shall be taken as including a reference to corporation tax and any reference to the Income Tax Act, 1967 , shall be taken as including a reference to the Corporation Tax Acts.

(2) Where an Appeal Commissioner is interested in his own right or in the right of any other person in any matter under appeal, he shall not take part in, or be present at, the hearing or determination of the appeal.

Application of income tax administrative provisions to corporation tax.

147.—(1) The provisions of the Income Tax Acts specified in subsection (2) shall apply in relation to corporation tax as they apply in relation to income tax and accordingly in those provisions—

( a ) any reference to income tax shall be taken as including a reference to corporation tax,

( b ) any reference to the Income Tax Acts shall be taken as including a reference to the Corporation Tax Acts, and

( c ) any reference to a year of assessment shall be taken as including a reference to an accounting period.

(2) The provisions of the Income Tax Acts referred to in subsection (1) are sections 164, 165, 166 (2), 187 (1) (3), 188 (1), 190, 212, 339, 491, 498, 505, 506, 507, 514, 515, 516, 518, 519, 521, 536, 537, 538, 539, 541, 542, 543, 547, 549 and 551 (1) of the Income Tax Act, 1967 , section 6 of the Finance Act, 1968 , section 73 of the Finance Act, 1974 , and section 21 of the Finance Act, 1975 .

(3) The provisions of the Income Tax Acts specified in subsection (4) shall apply in relation to the recovery of a penalty under the provisions of the Corporation Tax Acts as they apply in relation to the recovery of a penalty under the provisions of Part XXXV of the Income Tax Act, 1967 .

(4) The provisions of the Income Tax Acts referred to in subsection (3) are sections 172 (5), 504 , 508 , 510 , 511 , 512 and 513 of the Income Tax Act, 1967 .

(5) All Commissioners and other persons employed for any purpose in connection with the assessment or collection of corporation tax shall be subject to the same obligations as to secrecy with respect to corporation tax as those persons are subject to with respect to income tax, and any declaration made by any such person as to secrecy with respect to income tax shall be deemed to extend also to secrecy with respect to corporation tax.

Time for certain summary proceedings.

148.—Notwithstanding section 10 (4) of the Petty Sessions (Ireland) Act, 1851, summary proceedings under section 516 of the Income Tax Act, 1967 (false statements), as applied in relation to corporation tax or under section 63 (production of books and documents: export sales relief) may be instituted within three years from the date of the offence or incurring of the penalty (as the case may be).

Penalties for failure to furnish information and for incorrect information.

149.—(1) Where any person has been required by notice given under or for the purposes of section 27 (change in ownership of company: disallowance of trading losses), section 73 (Shannon relief: delivery of statements), section 123 (information as to arrangements for transferring relief) or Part X (Close Companies), to furnish any information or particulars and he fails to comply with the notice he shall be liable, subject to subsection (3), to a penalty of £100 and, if the failure continues after judgement has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £10 for each day on which the failure so continues.

(2) Where a person fraudulently or negligently furnishes any incorrect information or particulars of a kind mentioned in Part X, section 27, 73, 123 or 151, he shall be liable, subject to subsection (4), to a penalty of £100, or, in the case of fraud, £250.

(3) Where the person mentioned in subsection (1) is a company, it shall be liable to—

( a ) a penalty of £500, and, if the failure continues after judgement has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £50 for each day on which the failure so continues, and

( b ) the secretary of the company shall be liable to a separate penalty of £100.

(4) Where the person mentioned in subsection (2) is a company, it shall be liable to—

( a ) a penalty of £500, or, in the case of fraud, £1,000, and

( b ) the secretary of the company shall be liable to a separate penalty of £100, or, in the case of fraud, £200.

(5) The provisions of section 501 (3) of the Income Tax Act, 1967 , shall apply for the purposes of this section as they apply for the purposes of the said section 501.

Postponement of payment of tax to be permitted in certain cases.

150.—(1) Where—

( a ) for any accounting period the profits of a company consist of or include income from a trade of dealing in or developing land in the course of which the company disposes of the full interest acquired by it in any land, and

( b ) in relation to that disposal the conditions specified in paragraphs (b) to (e) of section 23 (1) of the Finance (Miscellaneous Provisions) Act, 1968 (postponement of payment of tax to be permitted in certain cases), are satisfied, and

( c ) at the time when any amount of corporation tax charged by an assessment for that accounting period would, but for this section, become due and payable (otherwise than by virtue of section 419 of the Income Tax Act, 1967 (agreement as to amount of tax not in dispute on an appeal against an assessment), as applied for the purposes of corporation tax)—

(i) the company retains the leasehold interest acquired by it from the person to whom the disposition is made, and.

(ii) has not disposed, as regards the whole or any part of the land, of an interest derived from that leasehold interest,

a part of the said amount of corporation tax equal to nine-tenths of so much thereof as would not have been chargeable if no sum had fallen to be taken into account as mentioned in section 23 (1) (d) of the Finance (Miscellaneous Provisions) Act, 1968 , shall be payable in nine equal instalments at yearly intervals the first of which is payable on the expiration of twelve months from the date on which, but for this section, the said amount of corporation tax would have been payable.

(2) Where, in a case in which the postponement of payment of any amount of corporation tax has been authorised by subsection (1)—

( a ) the company ceases to retain the leasehold interest acquired by it,

( b ) the company disposes, as regards the whole or any part of the land, of an interest derived from the said leasehold interest, or

( c ) the company commences to be wound up,

the said amount of corporation tax, or, as the case may be, so much of it as has not already become due and payable, shall become due and payable forthwith.

Income tax on payments.

151.—(1) In this section "relevant Payment" means—

( a ) any payment made on or after the 6th day of April, 1976, from which income tax is deductible and to which the provisions of subsections (2) to (5) of section 434 of the Income Tax Act, 1967 (payments not payable out of taxed profits), apply, and

( b ) any amount which under section 98 (loans to participators, etc.) is deemed to be an annual payment.

(2) This section shall have effect for the purpose of regulating the time and manner in which companies resident in the State—

( a ) are to account for and pay income tax in respect of relevant payments, and

( b ) are to be repaid income tax in respect of payments received by them on or after the 6th day of April, 1976.

(3) A company shall for each of its accounting periods make, in accordance with this section, a return to the Collector-General of the relevant payments made by it in that period and of the income tax for which the company is accountable in respect of those payments.

(4) A return for any period for which a return is required to be made under this section shall be made within six months from the end of that period.

(5) Income tax in respect of any payment required to be included in a return under this section shall be due at the time by which the return is to be made, and income tax so due shall be payable by the company without the making of any assessment; but income tax which has become due as aforesaid may be assessed on the company (whether or not it has been paid when the assessment is made) if that tax, or any part of it, is not paid on or before the due date.

(6) If it appears to the inspector that there is a relevant payment which ought to have been and has not been included in a return, or if the inspector is dissatisfied with any return, he may make an assessment on the company to the best of his judgement; and any income tax due under an assessment made by virtue of this subsection shall be treated for the purposes of interest on unpaid tax as having been payable at the time when it would have been payable if a correct return had been made.

(7) Where in any accounting period a company receives any payment on which it bears income tax by deduction the company may claim to have the income tax thereon set against any income tax which it is liable to pay under this section in respect of payments made by it in that period, and any such claim shall be included in the return made under subsection (4) for the accounting period in question and (where necessary) income tax paid by the company under this section for that accounting period and before the claim is allowed shall be repaid accordingly.

(8) ( a ) Where a claim has been made under subsection (7) no proceedings for collecting tax which would fall to be discharged if the claim were allowed shall be instituted pending the final determination of the claim, but this subsection shall not affect the date when the tax is due and when the claim is finally determined any tax underpaid in consequence of this subsection shall be paid.

( b ) Where proceedings are instituted for collecting tax assessed, or interest on tax assessed, under any provision of subsection (5) or (6), effect shall not be given to any claim made after the institution of the proceedings so as to affect or delay the collection or recovery of the tax charged by the assessment or of interest thereon.

( c ) References in this subsection to proceedings for the collection of tax include references to proceedings by way of distraint for tax.

(9) Income tax set against other tax under subsection (7) shall be treated as paid or repaid, as the case may be, and the same tax shall not be taken into account both under this subsection and under section 3 (2) (income tax on payments made or received by a company resident in the State).

(10) Where a company makes a relevant payment on a date which does not fall within an accounting period the company shall make a return of that payment within six months from that date, and the income tax for which the company is accountable in respect of that payment shall be due at the time by which the return is to be made.

(11) ( a ) All the provisions of the Income Tax Acts as to the time within which an assessment may be made, so far as they refer or relate to the year of assessment for which an assessment is made, or the year to which an assessment relates, shall apply in relation to any assessment under this section notwithstanding that, under this section, the assessment may be said to relate to a period which is not a year of assessment, and the provisions of section 186 of the Income Tax Act, 1967 (additional assessments), as to the circumstances in which an assessment may be made at any time shall apply accordingly on the footing that any such assessment relates to the year of assessment in which the period ends.

( b ) Income tax assessed on a company under this section shall, notwithstanding the provisions of section 477 of the Income Tax Act, 1967 , be due within one month after the issue of the notice of assessment (unless due earlier under subsection (5) or (10)) subject to any appeal against the assessment, but no such appeal shall affect the date when tax is due under subsection (5) or (10).

( c ) On the determination of an appeal against an assessment under this section any tax overpaid shall be repaid.

( d ) Any tax assessable under any one or more of the provisions of this section may be included in one assessment if the tax so included is all due on the same date.

(12) Nothing in the foregoing provisions of this section shall be taken to prejudice any powers conferred by the Income Tax Acts for the recovery of income tax by means of an assessment or otherwise; and any assessment in respect of tax payable under subsection (10) shall be treated for the purposes of the provisions mentioned in subsection (11) (a) as relating to the year of assessment in which the payment is made.

(13) ( a ) The Revenue Commissioners may, by regulations made for the purposes mentioned in subsection (2), modify, supplement or replace any of the provisions of this section; and references in this Act and in any other enactment to this section shall be construed as including references to any such regulations, and without prejudice to the generality of the foregoing, the regulations may in relation to income tax charged by this section modify any provision of the Income Tax Acts relating to returns, assessments claims or appeals or may apply any such provision with or without modification.

( b ) Regulations under this subsection may—

(i) make different provision for different descriptions of companies, and for different circumstances, and may authorise the Revenue Commissioners, where in their opinion there are special circumstances justifying it, to make special arrangements as respects income tax for which a company is liable to account or the repayment of income tax borne by a company;

(ii) include such transitional and other supplemental provisions as appear to the Revenue Commissioners to be expedient or necessary.

( c ) Every regulation made under this subsection shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next twenty-one days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

(14) Section 434 of the Income Tax Act, 1967 , is hereby amended by the insertion of the following subsection after subsection (5)—

"(5A) Subsections (2), (3) and (5) have effect subject to the provisions of section 151 of the Corporation Tax Act, 1976 , with respect to the time and manner in which companies resident in the State are to account for and pay income tax in respect of

(i) payments from which tax is deductible, and

(ii) any amount which is deemed to be an annual payment".

Provisions as to tax under section 151.

152.—(1) All the provisions of the Income Tax Acts relating to—

( a ) persons who are to be chargeable with income tax;

( b ) income tax assessments;

( c ) appeals against such assessments (including the rehearing of appeals and the statement of a case for the opinion of the High Court); and

( d ) the collection and very of income tax,

shall, so far as they are applicable, apply to the charge, assessment, collection and recovery of income tax under section 151.

(2) ( a ) Any tax payable in accordance with section 151 without the making of an assessment shall carry interest at the rate of 1.5 per cent. for each month or part of a month from the date when the tax becomes due and payable until payment.

( b ) The provisions of section 550 (3) (4) (5) of the Income Tax Act, 1967 , shall apply in relation to interest payable under this subsection as they apply in relation to interest payable under the said section 550.

(3) In its application to any tax charged by any assessment to income tax in accordance with section 151, section 550 of the Income Tax Act, 1967 , shall have effect with the omission of the proviso to subsection (1) and subsections (2) and (2A).

Information.

153.—The inspector may, for any purpose in connection with the assessment and collection of corporation tax, make use of, or produce in evidence, any returns, correspondence, schedules, accounts, statements or other documents or information to which he or the Revenue Commissioners has had or have had or may have lawful access for the purposes of the Acts relating to any tax or duty under the care and management of the Revenue Commissioners.

Meaning of "secretary".

154.—In this Part "secretary" includes such persons as are mentioned in section 207 (2) of the Income Tax Act, 1967 , and, in the case of a company which is not resident in the State, the agent, manager, factor or other representative of the company.

PART XV INTERPRETATION AND SUPPLEMENTAL

Interpretation.

155.—(1) In this Act and in any Act passed after this Act "the Corporation Tax Acts", except in so far as the context otherwise requires, means this Act (including provisions relating to income tax), together with the Income Tax Acts so far as those Acts apply for purposes of corporation tax and any other enactments relating to corporation tax.

(2) In this Act and in any Act passed after this Act "the Tax Acts", except in so far as the context otherwise requires, means the Income Tax Acts (as defined in section 3 of the Income Tax Act, 1967 ) and the Corporation Tax Acts.

(3) Except in so far as the context otherwise requires, in this Act, and in any enactment passed after this Act which by any express provision is to be construed as one with the Tax Acts, "tax", where neither income tax nor corporation tax is specified, means either of those taxes.

(4) Subsection (3) is without prejudice to the provisions of section 11 which apply income tax law for certain purposes of corporation tax, and accordingly the employment of "income tax" rather than "tax" in any provision of the Income Tax Acts is not a conclusive indication that that provision is not applied to corporation tax by the said section 11.

(5) For the purposes of the Corporation Tax Acts, except in so far as the context otherwise requires—

"accounting date" means the date to which a company makes up its accounts and "period of account" means the period for which it does so;

"allowable loss" does not include, for the purposes of corporation tax in respect of chargeable gains, a loss accruing to a company in such circumstances that if a gain accrued the company would be exempt from corporation tax in respect of it;

"branch or agency" means any factorship, agency, receivership, branch or management;

"chargeable gains" has the meaning given by section 1 (5) (c);

"charges on income" has the meaning given by section 10 (2);

"close company" has the meaning given by sections 94 and 95;

"company" has the meaning given by section 1 (5) (a);

"distribution" has the meaning given by Part IX with sections 96 and 97;

"the financial year 1974 " has the meaning given by section 1 (5) (b),

"the financial year" followed by a reference to the year 1975 of any later year means the year beginning on the 1st day of January of such year;

"franked investment income" and "franked payment" shall be construed in accordance with section 24;

"group relief" has the meaning given by section 107;

"interest" means both annual or yearly interest and interest other than annual or yearly interest;

"ordinary share capital" in relation to a company, means all the issued share capital (by whatever name called) of the company, other than capital the holders whereof have a right to a dividend at a fixed rate, but have no other right to share in the profits of the company;

"preference dividend" means a dividend payable on a preferred share or preferred stock at a fixed rate per cent. or, where a dividend is payable on a preferred share or preferred stock partly at a fixed rate per cent. and partly at a variable rate, such part of that dividend as is payable at a fixed rate per cent.;

"standard rate per cent." for a year of assessment means 35 where the standard rate for that year is 35 per cent. and similarly as regards any reference to the standard rate per cent. for a year of assessment for which the standard rate is other than 35 per cent.;

"tax credit" means a credit under section 88;

a source of income is "within the charge to" corporation tax or income tax if that tax is chargeable on the income arising from it, or would be so chargeable if there were any such income, and references to a person, or to income, being within the charge to tax, shall be similarly construed.

(6) Any reference in this Act to any other enactment shall, unless the context otherwise requires, be construed as a reference to that enactment as amended or extended by any other enactment, including this Act

(7) In the Corporation Tax Acts—

( a ) a reference to a Part, section or schedule is to a Part or section of, or schedule to, the Act in which the reference occurs, and

( b ) a reference to a subsection, paragraph or subparagraph is to the subsection, paragraph or subparagraph of the provision (including a schedule) in which the reference occurs,

unless it is indicated that reference to some other enactment or provision is intended.

(8) In the Corporation Tax Acts, words descriptive of any enactment are intended for convenience of reference only and shall not be used as an aid to the construction of the enactment to which they refer.

(9) References in the Corporation Tax Acts to distributions or payments received by a company apply to any received by another person on behalf of or in trust for the company but not to any received by the company on behalf of or in trust for another person.

(10) References in the Corporation Tax Acts to an amount of profits on which corporation tax falls finally to be borne are references to the amount of those profits after making all deductions and giving all reliefs that for the purposes of corporation tax are made or given from or against those profits, including deductions and reliefs which under any provision are treated as reducing them for those purposes.

(11) Except as otherwise provided by the Corporation Tax Acts and except in so far as the context otherwise requires, words and expressions used in the Income Tax Acts have the same meaning in the Corporation Tax Acts as in those Acts; but no provision of the Corporation Tax Acts as to the interpretation of any word or expression, other than a provision expressed to extend to the use of that word or expression in the Income Tax Acts, shall be taken to affect its meaning in those Acts as they apply for the purposes of corporation tax.

(12) For the purposes of the Corporation Tax Acts dividends shall, except as otherwise provided, be treated as paid on the date when they become due and payable.

(13) Except as otherwise provided by the Corporation Tax Acts, any apportionment to different periods which falls to be made under the Corporation Tax Acts shall be made on a time basis according to the respective lengths of those periods.

Subsidiaries.

156.—(1) For the purposes of the Corporation Tax Acts a company shall be deemed to be—

( a ) a "51 per cent. subsidiary" of another company if and so long as more than 50 per cent. of its ordinary share capital is owned directly or indirectly by that other company,

( b ) a "75 per cent. subsidiary" of another company if and so long as not less than 75 per cent. of its ordinary share capital is owned directly or indirectly by that other company,

( c ) a "90 per cent. subsidiary" of another company if and so long as not less than 90 per cent. of its ordinary share capital is directly owned by that other company.

(2) In subsection (1) (a) (b) "owned directly or indirectly" by a company means owned, whether directly or through another company or other companies or partly directly and partly through another company or other companies.

(3) In this section references to ownership shall be construed as references to beneficial ownership.

(4) For the purposes of this section the amount of ordinary share capital of one company owned by a second company through another company or other companies, or partly directly and partly through another company or other companies, shall be determined in accordance with the following provisions of this section.

(5) Where, in the case of a number of companies, the first directly owns ordinary share capital of the second and the second directly owns ordinary share capital of the third, then, for the purposes of this section, the first shall be deemed to own ordinary share capital of the third through the second, and, if the third directly owns ordinary share capital of a fourth, the first shall be deemed to own ordinary share capital of the fourth through the second and third, and the second shall be deemed to own ordinary share capital of the fourth through the third, and so on.

(6) In this section—

( a ) any number of companies of which the first directly owns ordinary share capital of the next and the next directly owns ordinary share capital of the next but one and so on, and, if they are more than three, any three or more of them, are referred to as "a series";

( b ) in any series—

(i) that company which owns ordinary share capital of another through the remainder is referred to as "the first owner";

(ii) that other company the ordinary share capital of which is so owned is referred to as " the last owned company ";

(iii) the remainder, if one only, is referred to as an "intermediary" and, if more than one, are referred to as "a chain of intermediaries";

( c ) a company in a series which directly owns ordinary share capital of another company in the series is referred to as an "owner";

( d ) any two companies in a series of which one owns ordinary share capital of the other directly, and not through one or more of the other companies in the series, are referred to as being directly related to one another.

(7) Where every owner in a series owns the whole of the ordinary share capital of the company to which it is directly related, the first owner shall be deemed to own through the intermediary or chain of intermediaries the whole of the ordinary share capital of the last owned company.

(8) Where one of the owners in a series owns a fraction of the ordinary share capital of the company to which it is directly related, and every other owner in the series owns the whole of the ordinary share capital of the company to which it is directly related, the first owner shall be deemed to own that fraction of the ordinary share capital of the last owned company through the intermediary or chain of intermediaries.

(9) Where—

( a ) each of two or more of the owners in a series owns a fraction, and every other owner in the series owns the whole, of the ordinary share capital of the company to which it is directly related; or

( b ) every owner in a series owns a fraction of the ordinary share capital of the company to which it is directly related; the first owner shall be deemed to own through the intermediary or chain of intermediaries such fraction of the ordinary share capital of the last owned company as results from the multiplication of those fractions.

(10) Where the first owner in any series owns a fraction of the ordinary share capital of the last owned company in that series through the intermediary or chain of intermediaries in that series, and also owns another fraction or other fractions of the ordinary share capital of the last owned company, either—

( a ) directly, or

( b ) through an intermediary or intermediaries which is not a member or are not members of that series, or

( c ) through a chain or chains of intermediaries of which one or some or all are not members of that series, or

( d ) in a case where the series consists of more than three companies, through an intermediary or intermediaries which is a member or are members of the series, or through a chain or chains of intermediaries consisting of some but not all of the companies of which the chain of intermediaries in the series consists,

then, for the purpose of ascertaining the amount of the ordinary share capital of the last owned company owned by the first owner, all those fractions shall be aggregated and the first owner shall be deemed to own the sum of those fractions.

Connected persons.

157.—(1) For the purposes of, and subject to, the provisions of the Corporation Tax Acts which apply this section, any question whether a person is connected with another shall be determined in accordance with the following provisions of this section (any provision that one person is connected with another being taken to mean that they are connected with one another).

(2) A person is connected with an individual if that person is the individual's husband or wife, or is a relative, or the husband or wife of a relative, of the individual or of the individual's husband or wife.

(3) A person, in his capacity as trustee of a settlement, is connected with any individual who in relation to the settlement is a settlor, with any person who is connected with such an individual and with a company which, in accordance with subsection (10), is deemed to be connected with that settlement ("settlement" and "settlor" having for the purposes of this subsection the meanings assigned to them by subsection (9)).

(4) Except in relation to acquisitions or disposals of partnership assets pursuant to bona fide commercial arrangements, a person is connected with any person with whom he is in partnership, and with the husband or wife or a relative of any individual with whom he is in partnership.

(5) A company is connected with another company—

( a ) if the same person has control of both, or a person has control of one and persons connected with him, or he and persons connected with him, have control of the other, or

( b ) if a group of two or more persons has control of each company, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person with whom he is connected.

(6) A company is connected with another person if that person has control of it or if that person and persons connected with him together have control of it.

(7) Any two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with one another and with any person acting on the directions of any of them to secure or exercise control of the company.

(8) In this section—

"control" shall be construed in accordance with section 102 (meaning of "associated company" and "control"),

"relative" means brother, sister, ancestor or lineal descendant.

(9) In this section, "settlement" includes any disposition, trust, covenant, agreement or arrangement, and "settlor", in relation to a settlement, means any person by whom the settlement was made; and a person shall be deemed for the purposes of this section to have made a settlement if he has made or entered into the settlement directly or indirectly and in particular (but without prejudice to the generality of the preceding words) if he has provided or undertaken to provide funds directly or indirectly for the purpose of the settlement, or has made with any other person a reciprocal arrangement for that other person to make or enter into the settlement.

(10) For the purposes of this section, a company shall be deemed to be connected with a settlement in any accounting period if it is at any time in the period a close company (or only not a close company because it is not resident in the State) and the participators then include the trustees of or a beneficiary under the settlement.

Meaning of "control".

158.—For the purposes of, and subject to, the provisions of the Corporation Tax Acts which apply this section, "control", in relation to a 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 or any other company, or by virtue of any powers conferred by the articles of association or other document regulating that or any other company, that the affairs of the first-mentioned 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.

Chargeable gains accruing to non-resident companies.

159.—If any tax payable by any company by virtue of section 36 (2) of the Capital Gains Tax Act, 1975 (under which shareholders in a non-resident company may be taxed in respect of a chargeable gain accruing to the company), is paid by the company to which the chargeable gain accrues, or in a case under subsection (8) of the said section is paid by any such other company, the amount so paid shall not for the purposes of corporation tax be regarded as a payment to the company by which the tax was originally payable.

Individuals resident abroad: tax credit.

160.—An individual who, having made a claim in that behalf, is entitled to relief under Part VI of the Income Tax Act, 1967 , by virtue of section 153 (2) of that Act (personal reliefs for certain non-residents) in respect of any year of assessment shall be entitled to a tax credit in respect of any distribution received by him in that year to the same extent as if he were resident in the State and section 67 (distributions to non-resident individuals out of profits from exports) and section 83 (4) (Schedule F) shall not have effect in relation to such an individual.

Rectification of excessive set-off etc. of tax credit.

161.—(1) If an inspector discovers that any set-off or payment of tax credit ought not to have been made, or is or has become excessive, the inspector may make any such assessments as may in his judgment be required for recovering any tax that ought to have been paid or any payment of tax credit that ought not to have been made and generally for securing that the resulting liabilities to tax of the persons concerned are what they would have been if only such set-offs or payments had been made as ought to have been made.

(2) Part XIV (Administration) shall apply to any assessment under this section for recovering a payment of tax credit as if it were an assessment to income tax for the year of assessment, or, in the case of a company, corporation tax for the accounting period, in respect of which the payment was claimed and as if that payment represented a loss of tax to the Exchequer; and any sum charged by any such assessment shall, subject to any appeal against the assessment, be due within fourteen days after the issue of the notice of assessment.

Surcharge on undistributed income of service companies.

162.—(1) Subject to subsection (2), in this section "service company" means—

( a ) a close company whose business consists of or includes the carrying on of a profession or the provision of professional services,

( b ) a close company having or exercising an office or employment, or

( c ) a close company whose business consists of or includes the provision of services or facilities of whatsoever nature to or for—

(i) a company within either of the categories referred to in paragraphs (a) and (b),

(ii) an individual who carries on a profession,

(iii) a partnership which carries on a profession,

(iv) a person who has or exercises an office or employment, or

(v) a person or partnership connected with any person or partnership referred to in subparagraphs (i) to (iv) :

Provided that the provision by a close company of services or facilities to or for a person or partnership not connected with the company shall be disregarded for the purposes of this paragraph.

(2) Where the principal part of a company's income which is chargeable to corporation tax under Cases I and II of Schedule D and Schedule E is not derived from—

( a ) carrying on a profession,

( b ) providing professional services,

( c ) having or exercising an office or employment.

( d ) providing services or facilities (other than services or facilities referred to in the proviso to subsection (1) (c)) to or for any person or partnership referred to in subsection (1) (c) (i) to (v), or

( e ) any two or more of the activities specified in paragraphs (a) to (d),

the company shall be deemed not to be a service company.

(3) For the purposes of this section—

( a ) a partnership shall be treated as connected with a company or individual (and a company or individual shall be treated as connected with a partnership) if any one of the partners in the partnership is connected with the company or individual,

( b ) a partnership shall be treated as connected with another partnership if any one of the partners in the partnership is connected with any one of the partners in the other partnership.

(4) Where for an accounting period of a service company, the aggregate of—

( a ) four-fifths of the distributable income, and

( b ) one-fifth of the aggregate of the distributable investment income and the distributable estate income

exceeds the distributions of the company for the accounting period, there shall be charged on the company for the accounting period an additional duty of corporation tax (in this section referred to as a surcharge) amounting to 20 per cent. of the excess:

Provided that—

(i) a surcharge shall not be made on the company where the excess is equal to or less than the smaller of the following amounts—

(I) £500, or, if the accounting period is less than twelve months, £500 proportionately reduced, and

(II) where the company has one or more associated companies, £500 divided by one plus the number of those associated companies, or, if the accounting period is less than twelve months, £500 proportionately reduced divided by one plus the number of those associated companies;

(ii) where the excess is greater than the smaller amount on which by virtue of paragraph (i) a surcharge would not be made, the amount of the surcharge shall not be greater than a sum equal to four-fifths of the amount by which the excess is greater than that smaller amount.

(5) The provisions of section 101 (1) shall not apply in relation to a service company but the provisions of section 101 (2) (3) (4) (5) (6) shall apply in relation to a surcharge made under this section as they apply in relation to a surcharge made under the said section 101 with the substitution in section 101 (2) of a reference to subsection (4) of this section for the reference to subsection (1) of that section.

(6) ( a ) The provisions of section 100 (1) (2) (6) (7) (meaning of distributable income, etc.) shall apply for the purposes of this section as they apply for the purposes of the said section 100 or section 101 as the case may be.

( b ) For the purposes of this section—

(i) the income of a company for an accounting period is its income computed for that period as defined in section 100 (3);

(ii) distributable income, distributable investment income and distributable estate income of a company for an accounting period have the meanings assigned to them by section 100 (4) (5) with the substitution for the reference to a trading company in each place where it occurs in section 100 (5) of a reference to a service company.

(7) The provisions of section 157 shall apply for the purposes of this section.

Relief to certain companies liable to foreign tax.

163.—(1) In this section—

"accounting period" includes a part of an accounting period;

"external tax" means a tax which is chargeable and payable under the law of the territory in which the paying company is resident, being a territory to which this section applies, and which corresponds to Irish corporation tax or income tax or both of those taxes :

Provided that a tax which is payable under the law of a province, state or other part of a country, or which is levied by or on behalf of a municipality or other local body shall, for the purposes of this subsection, be deemed not to correspond to those taxes.

(2) This section applies to every territory other than—

( a ) Northern Ireland and Great Britain,

( b ) the United States of America, and

( c ) a territory with the Government of which arrangements are for the time being in force by virtue of section 361 of the Income Tax Act, 1967 (agreements for relief from double taxation of income).

(3) Where a company (in this section referred to as the investing company) has paid, by deduction or otherwise, or is liable to pay, by reference to any part of its income arising in a territory to which this section applies, tax for any accounting period and it is shown to the satisfaction of the Revenue Commissioners—

( a ) that the said part of the investing company's income consists of a dividend, or interest, paid to it by a company resident in the territory (in this section referred to as the paying company) not less than one-half of the voting power in which is controlled, directly or indirectly, by the investing company,

( b ) that the said dividend, or interest, arose from the investment in the paying company by the investing company, whether by way of loan or otherwise, of a sum or sums representing—

(i) profits the Irish tax referable to which has been reduced to nil under Chapter IV of Part XXV of the Income Tax Act, 1967 (Profits from Export of Certain Goods), or under Part III of the Finance (Miscellaneous Provisions) Act, 1956 (Profits from Exports), or under Part IV of this Act (Profits from Exports), or

(ii) such proportion of profits the Irish tax referable to which has been reduced otherwise than to nil under the said provisions as is equal to the proportion by which the said Irish tax has been so reduced, or

(iii) profits arising from exempted trading operations which by virtue of Chapter I of Part XXV of the Income Tax Act, 1967 (Profits from Trading within Shannon Airport), or Parts I and II of the Finance (Miscellaneous Provisions) Act, 1958 (Trading within Shannon Airport), or Part V of this Act (Trading within Shannon Airport) have not, in relation to the company by which such operations are carried on, been taken into account for any purpose of the Income Tax Acts or for any purpose of Part V of the Finance Act, 1920 (Corporation Profits Tax), and the enactments amending or extending the said Part, or for any purpose of this Act, and

( c ) that the investing company has paid external tax in the said territory in respect of the said part of its income,

the Revenue Commissioners may grant to the investing company in respect of the said accounting period such relief as is just with a view to affording relief in respect of the double taxation of the said part of the investing company's income, but not exceeding whichever of the following is the less, that is to say, one-half of the total of the corporation tax that would, but for this section, be payable by the investing company in respect of the said part of its income or the amount of the external tax paid or payable in the said territory in respect of the said part of its income after deduction of any relief to which the company may be entitled in that territory.

(4) ( a ) External tax paid by the paying company in respect of its profits shall be taken into account in considering whether any, and if so, what relief ought to be allowed in respect of a dividend paid by the paying company to the investing company, and for the purposes of this section, other than this subsection, such tax, or the appropriate part thereof, shall be regarded as external tax paid by the investing company.

( b ) The provisions of paragraph 9 of Schedule 10 to the Income Tax Act, 1967 (relief in respect of foreign tax), shall apply for the purpose of ascertaining the amount of the external tax paid by the paying company which is to be taken into account in relation to any dividend paid by the paying company to the investing company as they apply to the computation of foreign tax to be taken into account for the purposes of the said paragraph 9.

(5) ( a ) Nothing in this section shall authorise the granting of relief under this section to any company in respect of any accounting period to such an extent as would reduce the aggregate amount (computed after deduction of any relief to which the company may be entitled in the said territory) of the corporation tax and external tax payable by such company in respect of any part of its income of the kind described in subsection (3) (a) arising in a territory to which this section applies below the amount of corporation tax which would be payable by the company in respect of the said part of its income if that part of its income had arisen in the State and had been liable in the hands of the investing company to corporation tax.

( b ) In computing for the purposes of paragraph (a) the amount of corporation tax which would be so payable by the company in respect of the said part of its income if that part had arisen in the State—

(i) no deduction for external tax shall be made from the said part of its income, and

(ii) where pursuant to subsection (4) external tax paid by the paying company is regarded as external tax paid by the investing company, the said part of the investing company's income shall be treated as increased by the amount of the external tax which is so regarded.

(6) Relief under this section shall be given as a credit against corporation tax chargeable by reference to the part of the investing company's income referred to in subsection (3) (a).

(7) ( a ) Any claim for relief under this section shall be made in writing to the inspector not later than six years from the end of the accounting period to which it relates.

( b ) An appeal to the Appeal Commissioners shall lie on any question arising under this section in like manner as an appeal would lie against an assessment to corporation tax, and the provisions of the Tax Acts relating to appeals shall apply and have effect accordingly.

Income tax and corporation profits tax repeals.

164.—Each enactment mentioned in the Third Schedule is hereby repealed to the extent specified in column (3) of that Schedule, subject to the provisions of this Act and, in particular, to the provision made at the end of each Part of that Schedule.

Section 38 of Finance Act, 1924 , not to apply to corporation tax.

165.— Section 38 of the Finance Act, 1924 (recovery of moneys due), shall not have effect in relation to corporation tax.

Amendments and repeals concerning double taxation relief.

166.—(1)Each enactment mentioned in column (2) of Part I of the Fourth Schedule shall be amended as specified in column (3) of that Schedule and shall, as so amended, have effect in relation to corporation tax.

(2) Each enactment mentioned in Part II of the Fourth Schedule is hereby repealed to the extent specified in column (3) of that Schedule.

(3) The amendments and repeals in each Part of the Fourth Schedule are subject to the provisions of this Act and, in particular, to the provision made at the end of that Part.

Computation of payable tax credits where double taxation relief is allowed.

167.—(1) In this section—

"the company" means a company making a distribution:

"distribution" means a distribution in respect of which the recipient is entitled to a tax credit under section 88;

"distributable income" has the meaning given by section 64 (4) (distributions : export sales relief);

"double taxation relief" means any credit for tax payable in any territory outside the State which is allowable against Irish corporation tax by virtue of any international agreement having the force of law, including any such credit which under section 363 of the Income Tax Act, 1967 (treatment of dividends for double taxation relief in certain cases), or this section has been taken into account in relation to any distribution receivable by the company;

"foreign tax" means tax payable in any territory outside the State and in respect of which double taxation relief is allowable;

"foreign income" means income in respect of which foreign tax is payable;

"the reduced Irish tax credit" means the sum calculated under subsection (3).

(2) ( a ) For the purposes of subsection (3) the amount of relevant tax in respect of any income is an amount determined by the formula

[image not available: a7y1976pxvs167.bmp]

where—

A is the amount of corporation tax which is chargeable in respect of the income,

B is an amount equal to income tax at the standard rate on the amount of the income, such standard rate being the rate for the year of assessment in which the appropriate accounting period ends, and

C is the standard rate per cent. for the year of assessment in which the appropriate accounting period ends.

( b ) For the purposes of paragraph (a) the appropriate accounting period means the accounting period for which corporation tax is chargeable in respect of the income.

( c ) Notwithstanding paragraph (a) the amount of relevant tax in respect of any amount of franked investment income which by virtue of subsection (4) is deemed to be foreign income shall be taken to be nil.

(3) Where a distribution (being a distribution which is made, or by virtue of subsection (6) is deemed to have been made, for an accounting period) is made wholly or partly out of foreign income, and the foreign tax paid in respect of the income exceeds the amount of relevant tax in respect of that income, any payment of the tax credit in respect of the distribution shall be made as if the said tax credit were a sum calculated by deducting from the amount of the tax credit which apart from this section would apply in respect of the distribution—

( a ) where the distribution is equal in amount to the whole of the distributable income—an amount equal to the excess of the foreign tax over the relevant tax in respect of the foreign income, and

( b ) where the distribution is less in amount than the whole of the distributable income—an amount which bears to the deduction which would be made if the distribution were equal in amount to the whole of the distributable income the same proportion as the distribution bears to the whole of the distributable income.

(4) Where a distribution is received by the company and the amount of any payment of the tax credit to the company in respect of that distribution would, if a proper claim in that behalf were made, be determined in accordance with this section, then for the purposes of subsection (3)—

( a ) the amount of franked investment income which the distribution represents shall be deemed to be foreign income of the accounting period in which the distribution is received, and

( b ) the amount by which the tax credit in respect of the distribution exceeds the tax credit which would, if a proper claim in that behalf were made, be payable to the company shall be deemed to be foreign tax paid by the company in respect of that income.

(5) ( a ) Where, for an accounting period, the company has paid, or, under subsection (4), is deemed for the purposes of subsection (3) to have paid, foreign tax in respect of income from more than one source, the deduction referred to in subsection (3) shall be computed separately in respect of income from each source and the separate amounts as so computed shall be aggregated for the purpose of computing the total amount of the deduction which should be made.

( b ) For the purposes of this subsection—

(i) the amount of franked investment income which is represented by each distribution which is received by the company shall be deemed to be income from a separate source, and

(ii) where a company has paid foreign tax in respect of income (not being franked investment income which is deemed under subsection (4) to be foreign income) arising in two or more territories outside the State, the income arising in each such territory shall be deemed to be income from a separate source.

(6) The provisions of subsections (3), (5) and (6) of section 64 (distributions: tax credit and export sales relief) shall apply for the purposes of this section as they apply for the purposes of that section.

(7) Where the income out of which a distribution is made, or is deemed by virtue of subsection (6) to have been made, includes income the income tax on which was reduced by the allowance of double taxation relief or includes dividends to which the provisions of section 363 (2) (a) of the Income Tax Act, 1967 , applied, the tax credit in respect of that distribution shall for the purposes of payment thereof be subject to such adjustment as may be appropriate.

(8) For the purposes of this section all such apportionments as may be necessary shall be made.

(9) Where the reduced Irish tax credit falls to be computed in relation to a distribution, the particulars to be given by the company in the statement required by section 5 (dividend warrants) shall, in addition to the particulars required to be given apart from this section, include particulars of the reduced Irish tax credit.

(10) Where a distribution has been made before the making by the Government of an order to which section 361 (1) of the Income Tax Act, 1967 , relates, and any double taxation relief would have fallen to be taken into account in relation to that distribution if this section had applied thereto, that relief shall be taken into account as far as possible in determining the reduced Irish tax credit in relation to the first distribution made by the company after the making of the order, and any part of that relief which cannot be so taken into account shall as far as possible be taken into account in relation to the next succeeding distribution, and so on.

(11) Where—

( a ) the whole or part of an annual payment is made out of income represented by a distribution, and

( b ) that distribution is made wholly or partly out of foreign income,

the tax credit in respect of that distribution shall, notwithstanding the provisions of section 88, be an amount equal to the amount which, by virtue of subsection (3) of this section, would be payable in respect of the said tax credit:

Provided that nothing in this subsection shall affect the amount of income which a distribution is treated as representing for the purposes of Schedule F.

Supplemental provisions concerning the determination of reduced Irish tax credit for section 167.

168.—In this section "the reduced Irish tax credit", "double taxation relief", "the company", "distributable income" and "distribution " have the same meanings as in section 167.

(2) Where any matter affecting the calculation of double taxation relief has not been fully determined at the time when the reduced Irish tax credit falls to be determined in relation to any distribution, the double taxation relief shall be estimated according to the best of the information available at the time, and, if it is subsequently found that the relief so estimated was excessive or deficient, the appropriate adjustment shall be made in determining the reduced Irish tax credit applicable to the next subsequent distribution on the occasion of which it is practicable to make the adjustment, and shall be made by reducing or, as the case may be, increasing the double taxation relief, as calculated for the purposes of that subsequent distribution, by the amount of the excess or the deficiency.

(3) For the purposes of this section, a distribution which is not expressed to be made for any specified period shall be deemed to be made for the last period of account of the company which ended before the distribution was made.

(4) Where a company makes, or is deemed under subsection (3) to have made, a distribution for an accounting period, the distribution shall be regarded for the purposes of this section and of section 167 as having been made out of the distributable income of that period to the extent of that income and in relation to the excess of the distributions over that income, out of the most recently accumulated income.

(5) This section and section 167 shall have effect as if references therein to double taxation relief included references to relief granted under section 163.

Limitations on deductions in respect of interest.

169.—Where, apart from this section, a company would be entitled to deductions in respect of—

( a ) interest under the provisions of paragraph 1 (2) of Part III of Schedule 6 to the Income Tax Act, 1967 (provisions for giving effect to agreements for avoidance of double taxation in the case of the United Kingdom), and

( b ) charges on income which are payments of interest to which the provisions of section 10 (6) apply,

the aggregate amount of the deductions which may be made under those provisions shall not exceed the amount specified in section 10 (6).

Patent royalties: provisions supplemental to section 34 of Finance Act, 1973 .

170.—(1) In this section—

"disregarded income" means—

( a ) income which by virtue of section 34 (2) of the Finance Act, 1973 (income from patent royalties), has been disregarded for purposes of income tax, and

( b ) income which by virtue of section 34 (2) of the Finance Act, 1973 , and section 11 (6) has been disregarded for purposes of corporation tax;

"other profits" includes a dividend or other distribution of a company which is resident in the State but does not include a distribution to which subsection (3) (a) (ii) applies.

(2) Where a distribution for an accounting period is made by a company in part out of disregarded income and in part out of other profits, the distribution shall be treated as if it consisted of two distributions respectively made out of disregarded income and out of other profits.

(3) ( a ) So much of any distribution as has been made out of disregarded income—

(i) shall not be regarded as income for any purpose of the Income Tax Acts; and

(ii) shall, where the recipient of such distribution is a company, be deemed for the purposes of this section to be disregarded income.

( b ) The recipient of any distribution, including part of a distribution treated under subsection (2) as a distribution, made out of disregarded income shall not be entitled to a tax credit in respect of that distribution.

(4) ( a ) Where a company makes a distribution, including part of a distribution treated under subsection (2) as a distribution, in respect of any right or obligation to which section 178 (dividends at gross rate or of gross amount) relates and the distribution is made out of disregarded income, the company shall make a supplementary distribution of an amount equal to the amount of the tax credit which would have applied in respect of the distribution if subsection (3) (b) had not been enacted.

( b ) Subsection (3) shall apply to a supplementary distribution under this subsection as if that supplementary distribution were a distribution made wholly out of disregarded income.

(5) In relation to any distribution (not being a supplementary distribution under this section), including part of a distribution treated under subsection (2) as a distribution, made by a company out of disregarded income, sections 5 and 83 (5) (Schedule F) shall apply to the company so that the statements provided for by those sections shall show, as respects each such distribution, in addition to the particulars required to be given apart from this section, that the distribution is made out of disregarded income.

(7) Where a company makes a distribution for an accounting period, the distribution shall be regarded for the purposes of this section as having been made out of the distributable income (as defined in section 64 (4)) of that period to the extent of that income and in relation to the excess of the distributions over that income, out of the most recently accumulated income.

(8) The provisions of subsections (5) and (6) of section 64 shall apply for the purposes of this section as they apply for the purposes of that section.

Construction of references to income tax paid by deduction and to repayment.

171.—In the Tax Acts, unless the context otherwise requires, references to—

( a ) income tax paid by a person by deduction shall be construed as including references to a tax credit to which he is entitled, and

( b ) repayment of income tax shall be construed as including references to payment of a tax credit.

Continuation of elections.

172.—(1) Where before the year 1976-77 a company has for purposes of income tax made any election or done any other act of a description which—

( a ) would have had continuing effect for income tax for that year;

( b ) may also be made for corporation tax;

then that election or act shall for corporation tax be valid and effectual as if duly made or done for that tax, and have effect from the beginning of the first accounting period for which the company is within the charge to corporation tax in respect of the matter in question.

(2) Accordingly where any such election or act is required to be made or done if at all, at a particular time no provision of this Act amending the enactment under which it is made or done so as to specify a different time in relation to corporation tax (whether by substituting a reference to the first accounting period for a reference to the first year of assessment in which anything takes place or otherwise) shall be taken. unless the contrary intention appears, to invalidate any election or act duly made or done nor, where the time has passed for making or doing it for income tax, to extend the time in relation to corporation tax; but nothing in this section shall take away any right of revocation or variation.

PART XVI SAVINGS, TRANSITIONS, ETC.

Commencement of corporation tax for existing companies, and transition from income tax.

173.—(1) A company not within the charge to income tax for the year 1975-76 in respect of a source of income shall not come within the charge to corporation tax in respect of that source for any period before the end of that year, and for this purpose a company shall be regarded as not having been within the charge to income W for the year 1975-76 if it was entitled for that year under agreements between the Government and the United Kingdom Government in respect of double income tax, to exemption from income tax in respect of profits or income arising in the State.

(2) Where a company is within the charge to income tax for the year 1975-76 in respect of a source of income, the company shall not come within the charge to corporation tax in respect of that source for any period before the end of that year, unless the charge to income tax for that year falls to be ascertained by reference to a period ending before the end of that year and the company possesses the source at the end of that year, but shall in that case be within the charge to corporation tax in respect of the source from the end of the basis period for income tax for that year or, if it is later the end of the basis period for the year 1974-75.

(3) In this section any reference to the basis period for the year 1974-75 or 1975-76 is, in relation to any source of income, a reference to the period on the income of which the income tax (if any) chargeable for that year falls to be finally computed in respect of the source or, where by virtue of any provision of the Income Tax Acts the income of any other period is to be taken to be the income of the said period, that other period.

(4) Where a company is within the charge to income tax in respect of a trade on the 5th day of April, 1976, and continues to carry on the trade after that date, section 12 (2) (miscellaneous special rules for computation of income) shall not apply to treat the trade as permanently discontinued and a new trade as set up and commenced on the company first coming within the charge to corporation tax in respect of that trade.

(5) Where, in the case of a trade carried on by a company, the year 1974-75 or the year 1975-76 is the year next but one after the year of assessment in which the trade is set up and commenced and the company makes a claim under section 58 (4) of the Income Tax Act, 1967 (basis of assessment), the end of the basis period for income tax for the purpose of subsection (2) shall, if the year of claim is 1974-75 be taken to be the 5th day of April, 1975, and shall, if the year of claim is 1975-76, be taken to be the 5th day of April, 1976.

(6) Section 58 (5) (a) (ii) of the Income Tax Act, 1967 , as amended by section 3 of the Finance Act, 1971 (period of computation of profits on discontinuance of trade), shall not apply in relation to income tax for any year of assessment on the discontinuance after the 5th day of April, 1976, of a trade carried on by a company; nor shall either section 77 (3) of the Income Tax Act, 1967 (basis of assessment under Case III of Schedule D), or section 81 (3) (b) of the Income Tax Act, 1967 , as substituted by section 22 of the Finance Act, 1969 (basis of assessment under Case V of Schedule D), apply in the case of a company in relation to income tax for the year 1975-76, unless that year is the last year in which the company possesses the source.

Winding up of corporation profits tax.

174.—(1) There shall be disregarded for the purposes of corporation profits tax for any accounting period profits in respect of which a company is within the charge to corporation tax, and all amounts which would be deductible in computing any such profits for corporation profits tax purposes (in so far as they are also deductible in computing other profits for those purposes) and which are deductible for corporation tax, except that if that company is within the charge to corporation tax in respect of the profits for part only of the accounting period, this subsection shall apply in relation to that part, and there shall be made the like apportionments between that part and the remainder, as if the two parts were separate accounting periods.

(2) Section 69 (6) of the Finance Act, 1959 (which provides for capital allowances and charges to be made in the case of businesses not chargeable to income tax), shall not have effect for the making of deductions or additions by reference to the period after the year 1975-76.

(3) Where, apart from this provision, corporation profits tax would be chargeable in accordance with this section on profits of any trade or business, the company chargeable may, by notice in writing given to the Revenue Commissioners before the 6th day of April, 1978, or within such longer time as the Revenue Commissioners may in any case allow, elect that this section, except subsection (2), shall not have effect in relation to that company:

Provided that where for any accounting period an election is made under this subsection, all amounts which under section 25 of the Finance Act, 1964 (relief in respect of certain losses), could be deducted from or set off against profits of the company's trade or business for that accounting period, computed without regard to this subsection, shall be deemed to have been so deducted or set off and shall not be included in the computation of any relevant deficiency for the purposes of section 184.

Capital gains tax losses accruing before 6th April, 1976.

175.—Any losses of a company which are allowable against chargeable gains for the purposes of capital gains tax in respect of the year of assessment 1974-75 or 1975-76, in so far as they cannot be allowed against chargeable gains for the purposes of that tax, shall be treated for the purposes of corporation tax as if they were allowable losses accruing to the company while within the charge to corporation tax.

Transitional relief for existing companies on cessation of trade, etc.

176.—(1) Where a company is, in respect of any source of income, within the charge to corporation tax under any relevant Case of Schedule D during the year 1975-76 and ceases to possess that source at any time between that year and the year 1981-82, then subject to the provisions of this section the company shall be entitled to relief from tax in respect of any amount by which, if the company had ceased to possess the source on the 5th day of April, 1976, the taxed income from the source during the cessation period would have been less than the actual taxed income during that period.

(2) Relief under this section shall be an allowance equal to whichever is the less of—

( a ) the amount referred to in subsection (1); and

( b ) an amount equal to the appropriate fraction of the taxed income from the source during a period equal in length to the cessation period but ending when the company ceases to possess the source:

Provided that if the company ceases to possess the source in the year 1978-79 the allowance shall be reduced by one-fourth, if in the year 1979-80 by one-half, and if in the year 1980-81 by three-fourths.

(3) Where a company is entitled to an allowance under this Section in respect of any source of income, then for the purpose of any liability of the company to corporation tax or income tax (but not for any other purpose) the amount of the income arising to the company from the source shall be treated as reduced by the amount of the allowance (the reduction being made, as far as may be, in the income arising in accounting periods for which the company is chargeable to corporation tax in respect of the source and, subject to that, in the income chargeable to income-tax before the year 1976-77, and being made, as far as may be, in the income of a later rather than in that of an earlier period or year) and relief under this section shall be given in priority to any other relief.

(4) For purposes of this section "taxed income" means, in relation to any source, the amount of the income falling to be included in assessments for the purpose of charging the company to income tax or corporation tax in respect of the source.

(5) For purposes of this section, the relevant Cases of Schedule D are Cases I, II, III and V; and in relation to any source of income—

( a ) "the cessation period" means the period over which assessments to income tax might have been revised on the company ceasing to possess the source on the 5th day of April, 1976 (and accordingly is three years for Cases I and II and two years for Cases III and V); and

( b ) "the appropriate fraction" is such fraction of the cessation period as falls after the time when the company is first within the charge to corporation tax in respect of the source (and accordingly is, for Cases III and V, one-half).

(6) ( a ) (i) Except in so far as the context otherwise requires, references in this section to a company ceasing to possess a source of income shall, in relation to a trade, include the company ceasing in respect of the trade to be within the charge to corporation tax under Case I or II of Schedule D; and references to a company carrying on a trade or any part or activities of a trade are references to its doing so in such circumstances as to be within that charge to tax.

(ii) For purposes of this section the cessation period in relation to a trade shall be taken to be three years, notwithstanding that the trade has been carried on for less than three years before the year 1976-77; but where the appropriate fraction (that is to say the appropriate fraction under subsection (2) (b)) is to be applied to income from a trade which has been carried on by the company for a period less than three years, the appropriate fraction shall be increased in the proportion which a period of three years bears to that less period.

(iii) For purposes of this section, section 173 (7) shall apply in relation to the whole period after the trade was set up and commenced as, for other purposes of corporation tax, it applies from the end of the basis period for the year 1975-76, but (notwithstanding anything in section 173 (7)) any allowance to the company in respect of the trade, in so far as it cannot be given to the company, shall be given to the company's predecessors.

( b ) (i) The following subparagraphs shall apply to the computation of a company's income from a trade for the purposes of this section.

(ii) No regard shall be had to any allowance or charge falling to be made in taxing the trade.

(iii) In determining what the taxed income from the trade would have been if the company had ceased to possess the trade as a source of income at the end of the year 1975-76, the computation shall be made, if need be, by division and apportionment or aggregation of income for accounting periods, including any period extending beyond the end of that year, and without regard to the operation of any enactment which would affect the computation on an actual discontinuance of the trade except section 58 (5) (a) of the Income Tax Act, 1967 , and section 3 of the Finance Act, 1971 .

(iv) Where the taxed income referred to in subsection (1) (whether the actual income or the income as on a cessation) falls to be ascertained partly by reference to a period in which the company incurred a loss in the trade, that income shall be ascertained as it there had been no such loss (nor any income) in that period; but in ascertaining for purposes of subsection (2) (b) the taxed income for any period losses incurred in that period and any part of a loss apportionable to that period shall be deducted from income.

( c ) (i) If a company on ceasing at any time to possess a trade as a source of income continues to carry on any of the activities of the trade as activities of another trade, the company shall be disentitled as at that time to such part of the allowance in respect of the first-mentioned trade as is referable to those activities.

(ii) Where within two years after the time when a company ceases to possess a trade as a source of income—

(I) the trade or any part of it is carried on by the company or by an associated company; or

(II) the activities of the trade or part of them are carried on by an associated company as activities of another trade;

the company shall be disentitled as from that time to the allowance in respect of the first-mentioned trade:

Provided that where this subparagraph applies by reason only of part of the trade or part of its activities being carried on by an associated company the company shall be so disentitled only to such part of the allowance as is referable to that part of the trade or activities.

(iii) Where a company ceases at any time to carry on part of a trade, and within two years after that time that part of the trade or the activities of it are carried on by an associated company as its trade or part of its trade, the company shall be treated as having been, as from that time, disentitled to such part of any allowance in respect of the trade as is referable to that part of the trade or those activities.

(iv) Where by reason of a company carrying on a trade or part of a trade, or carrying on any activities in the course of a trade, that company or another company becomes disentitled to an allowance or part of an allowance, the allowance shall attach or remain attached to that trade (whether or not in the year 1975-76 that trade was being carried on by that company or at all).

(v) Where under subparagraph (iv) an allowance or part of an allowance in respect of a trade attaches to another trade, the allowance or that part of it shall, except as regards amount, be treated for all purposes as an allowance in respect of the trade, but the amount shall not be affected except as follows—

(I) the appropriate fraction shall be applied to the taxed income from that other trade, and the proviso to subsection (2) shall apply to that other trade; and

(II) the aggregate amount of the allowances to be given in respect of the trade on a company ceasing to possess it as a source of income, if there are more than one such allowance, shall not exceed the amount specified by subsection (2) (b) for that one of the allowances having the highest appropriate fraction.

(vi) For purposes of this paragraph the part of an allowance referable to any part of a trade or to any activities of a trade shall be determined, in relation to an event occurring at any time, by taking the amount of the allowance (as if on the company ceasing at that time to possess the trade as a source of income) and by apportioning that amount between that part or those activities of the trade and the remainder, according to the proportion in which the taxed income of the company from the trade is attributable thereto during the period of, three years ending with that event (or any shorter period during which the company has carried on the trade), or, if there is no such taxed income, then by apportioning it in such other manner as may in the circumstances be just; but for determining the part of the allowance which is attached to a trade after that event the amount of the allowance shall be taken without regard to paragraph (b) of or the proviso to subsection (2).

(vii) Where under this paragraph a company becomes disentitled to an allowance or part of an allowance after the allowance or that part of it has been given to it or to another company, the allowance or part so given shall be withdrawn to the extent necessary to give effect to this paragraph.

(viii) For purposes of this paragraph a company is to be treated as another's "associated company" at a given time if at that time, or at any time within one year before or two years afterwards, one of the two has control of the other or both are under the control of the same person or persons ("control" having for this purpose the same meaning as in section 102).

(7) There shall be made any such adjustments of any person's liability to corporation tax or income tax, whether by way of repayment of tax, assessment or otherwise, as may be necessary to give effect to this section, and any such adjustment may be made at any time not later than ten years after the event giving rise to the adjustment.

Relief from corporation tax on interest on certain loans.

177.—(1) Where, for purposes of corporation tax, the income of a company for an accounting period includes interest payable on or after the 6th day of April, 1976, in respect of a permanent loan the company shall be entitled, on due claim, to have its liability to corporation tax for the accounting period reduced as provided by subsection (3).

(2) For the purposes of this section "permanent loan" means a loan of a permanent character made under an agreement entered into before the 27th day of November, 1975, and which under the agreement is—

( a ) secured by mortgage or debenture or otherwise on the assets or income of a company, and

( b ) if subject to repayment is subject to repayment at not less than three months' notice:

Provided that a loan shall not be regarded as a permanent loan for the purposes of this section if under the terms of the loan agreement the rate of interest or other conditions of the loan could be altered during the currency of the loan.

(3) The reduction referred to in subsection (1) shall be determined in accordance with section 184 (3), apart from the proviso, as if the interest were a relevant deficiency within the meaning of subsection (1) of that section.

(4) Where, in computing the reduction provided for by subsection (3), the appropriate amount as determined in accordance with section 184 (3) (a) (ii), is the company's income for the accounting period the excess of such interest as is mentioned in subsection (1) for the accounting period over that income shall, for the purposes of this section, be aggregated with the amount of any such interest for the next succeeding accounting period and relief shall be allowed for the said period in respect of the aggregated amount: and if that aggregated amount exceeds the income for the said period the excess shall be carried forward to the accounting period next succeeding the said period and so on.

(5) A claim under this section shall be made to the inspector within two years from the end of the accounting period.

Dividends and other distributions at gross rate or of gross amount.

178.—(1) Where any right or obligation created before the 6th day of April, 1976, is expressed by reference to a dividend at a gross rate or of a gross amount, that right or obligation shall, in relation to a dividend payable on or after that date, take effect as if the reference were to a dividend of an amount determined by the formula

[image not available: a7y1976pxvis178.bmp]

where—

A is the standard rate per cent. for the year 1976-77, and

D is an amount equal to a dividend at that gross rate or of that gross amount

(2) Subsection (1) shall apply with the necessary modifications to a dividend partly at a gross rate or of a gross amount and shall apply to any distribution other than a dividend as it applies to a dividend.

Set-off of losses against franked investment income.

179.—(1) In this section "straddling period" means an accounting period of a company for which it is within the charge to corporation tax in respect of a source of income and which begins before the 6th day of April, 1976, and ends after the 5th day of April, 1976.

(2) Where for an accounting period which is—

( a ) an accounting period for which the company is within the charge to corporation tax in respect of a source of income and which ends before the 6th day of April, 1976, or

( b ) a straddling period,

and in that accounting period, and before the 6th day of April, 1976, the company receives a distribution from a company which is resident in the State (other than a distribution which is deemed under Part IX to have been made on the 6th day of April, 1976), the company may make a claim for that accounting period under section 25 (set-off of losses etc. against franked investment income) or 26 (set-off of loss brought forward or terminal loss against franked investment income in the case of financial concerns) as if references in those sections to franked investment income and payment of a tax credit were, respectively, references to dividends received under deduction of income tax and repayment of income tax:

Provided that any income tax repayable by virtue of this section shall be in substitution for, and not in addition to, any amount of income tax repayable by virtue of some other provision of the Income Tax Acts in respect of the same income.

(3) Section 25 (5) shall, with the necessary modifications, apply to any repayment of income tax made to a company under this section as it applies to the recovery of a tax credit.

Commencement of surcharge on close companies.

180.—(1) Sections 101 and 162 (surcharges on close companies) shall not have effect as regards any accounting period or part of an accounting period falling before the 6th day of April, 1976.

(2) As regards income arising to a company on or before the 5th day of April, 1976, Chapter II of Part XXXVI of the Income Tax Act, 1967 , shall continue to have effect, and the income of a company to be taken into account under that Chapter shall include income chargeable to corporation tax.

(3) Where a period of account or an accounting period of a company falls partly in the year 1975-76 and partly in the year 1976-77 the two parts shall for the purposes of the said Chapter II or, as the case may be, sections 101 and 162 be dealt with as separate accounting periods and any dividends for any such period of account or accounting period shall be apportioned according to the proportion which the income of the part falling in the year 1975-76, computed as for the said Chapter II (but less income tax at the standard rate or that rate as reduced by reference to any relief granted to the company) bears to the distributable income for the part failing in the year 1976-77.

Income tax relief for losses incurred in 1974-75 and 1975-76.

181.—(1) Where a company claims relief under section 307 of the Income Tax Act, 1967 (right to repayment of tax by reference to losses), for the year 1974-75 or the year 1975-76 the question whether the company has sustained a loss in a trade in that year, and any question as to the amount of a loss so sustained, shall not be affected by the company being within the charge to corporation tax in respect of the trade for the whole or part of that year, but the amount of loss incurred in the trade in an accounting period falling wholly or partly within that year shall, for the purposes of corporation tax, be reduced by an amount equal to the amount of loss which, in respect of the said accounting period, was taken into account in determining the amount of loss in respect of which relief was allowed under the said section 307.

(2) Section 318 of the Income Tax Act 1967 (option to treat capital allowances as creating or augmenting loss), shall apply in relation to a claim by a company under section 307 of that Act for the year 1975-76 and for the purposes of the said section 318, as applied by this subsection, the company shall be treated, in a case where the year 1975-76 is not the basis year for the year itself, on the footing that—

( a ) section 1 (2) (introduction for companies of corporation tax) did not apply in relation to the trade in question, and

( b ) the period on the profits or gains of which income tax for the year 1976-77 would tall to be finally computed were the twelve months starting at the time at which the company came within the charge to corporation tax in respect of the trade,

and relief under the said section 318 may be given accordingly by reference to what, on that footing, would have been the company's capital allowances for the year 1976-77 for income tax purposes.

(3) The total amount of allowances in respect of capital expenditure which under section 14 (deductions and additions for capital allowances and charges) fall to be treated as trading expenses of a trade for the appropriate accounting periods for which the company is within the charge to corporation tax in respect of the trade shall be reduced by an amount equal to the amount of capital allowances which by virtue of subsection (2) of this section is deducted in determining the amount of loss in respect of which relief is allowed under section 307 of the Income Tax Act, 1967 ; and the appropriate accounting periods shall be accounting periods falling wholly or partly within the year 1975-76, the reduction being made in an earlier, rather than a later, accounting period.

(4) For purposes of this section "trade" includes profession or employment, the occupation of lands for the purposes of husbandry only and the occupation of woodlands managed on a commercial basis and with a view to the realisation of profits.

Relief in respect of unrelieved losses and capital allowances carried forward from the year 1975-76.

182.—(1) In this section—

"relevant amount" means, in relation to a company, the aggregate of the following amounts—

( a ) such part of any loss, including any amount to be treated as a loss under section 316 of the Income Tax Act, 1967 (amount of assessment under section 434 of the Income Tax Act, 1967 , to be allowed as a loss for certain purposes), incurred by the company in a trade before the date on which the company comes within the charge to corporation tax in respect of the trade and which, but for this Act, could be carried forward to the year 1976-77 under section 309 of the Income Tax Act, 1967 (right to carry forward losses to future years), and

( b ) such part of any capital allowance to which the company which carries on the trade was entitled in charging the profits or gains of the trade for years prior to the year 1976-77 and to which effect has not been given by way of relief before that year;

"relevant corporation tax" for an accounting period means the corporation tax which, apart from sections 58 (basis of relief from corporation tax for export profits), 184 and this section, is chargeable for the accounting period exclusive of the corporation tax charged on the company's chargeable gains for the accounting period.

(2) Relief, as provided in subsection (3), shall be allowed in respect of a relevant amount against corporation tax payable by the company and such relief shall be given as far as possible from the tax payable for the first accounting period for which the company is within the charge to corporation tax in respect of the trade and, in so far as it cannot be so given, from the tax payable for the next accounting period and so on.

(3) The relief for an accounting period shall be an amount calculated by applying to that part of the relevant amount in respect of which relief from tax has not been allowed a rate equal to the standard rate for the year of assessment in which the accounting period ends:

Provided that—

( a ) the amount to which the said rate is applied shall not exceed the amount of income from the trade which is included in chargeable profits for the accounting period reduced by the amount, if any, which is included in charges on income paid by the company in the accounting period in respect of payments made wholly and exclusively for the purposes of the trade;

( b ) where the corporation tax payable by the company for an accounting period is reduced by virtue of a claim under Part IV (Profits from Export of Certain Goods), the relief to be given under this section for the accounting period shall be reduced in the same proportion as the corporation tax payable by the company for the accounting period so far as it is attributable to the income from the trade is so reduced; and the corporation tax attributable to the income from the trade shall be an amount equal to the same proportion of the relevant corporation tax for the accounting period as the income from the trade for the accounting period bears to the total income brought into charge to corporation tax;

( c ) the amount of a reduction made for an accounting period under paragraph (b) of this proviso shall, for the purposes of section 64 (distributions out of export profits), be deemed to be a reduction of the amount of relief allowed under section 58.

(4) Relief under this section shall not be allowed against corporation tax payable by a company which by virtue of agreements between the Government and the United Kingdom Government in respect of double income tax was entitled to exemption from income tax for the year 1975-76 in respect of income arising in the State.

Relief in respect of losses or deficiencies within Case IV or V of Schedule D.

183.—Where a company is entitled to relief under section 89 (relief under Case V for losses) of the Income Tax Act, 1967 , or would be entitled to relief under the said section 310 if section 237 (5) of the Income Tax Act, 1967 , had not been enacted, for the year 1975-76 or an earlier year of assessment in respect of a loss within Case IV of Schedule D or a deficiency or an excess of deficiencies within Case V of Schedule D, with the addition of any associated capital allowances in each case, and because of an insufficiency of income of the description concerned relief could not be fully granted to the company under those sections for any of those years of assessment, the unrelieved amount of loss, deficiency or excess of deficiencies (with the addition of any unrelieved associated capital allowances), as the case may be, shall be treated as if it were a loss in a trade carried on by the company and, if the company so requires, may be relieved under section 182 against income of the same description of the company within the charge to corporation tax as if that income were income of the same trade and section 182 shall apply accordingly, with any necessary modifications:

Provided that—

( a ) a loss within Case IV of Schedule D, with the addition of any associated capital allowances, shall be relieved under this section only against income of the company chargeable to corporation tax under Case IV of Schedule D, and similarly a deficiency or an excess of deficiencies within Case V of Schedule D, with the addition of any associated capital allowances, shall be relieved only against income of the company chargeable to corporation tax under Case V of Schedule D; and

( b ) so much of any deficiency or so much of any amount treated as a loss as under section 62 of the Finance Act, 1974 (taxation of rents : restriction in respect of certain rent and interest), could not be carried forward or set against profits or gains for income tax purposes if that tax had continued, shall be treated as not being a deficiency or loss for the purposes of this section.

Relief in respect of corporation profits tax losses.

184.—(1) In this section, subject to the proviso to section 174 (3), "relevant deficiency" means, in relation to a company, the aggregate of the following amounts—

( a ) the total of the amounts which, under section 25 of the Finance Act, 1964 , could (on the footing that for corporation profits tax purposes an accounting period of the company ended on the 5th day of April, 1976, and a new accounting period commenced on the 6th day of April, 1976, and the enactments in relation to corporation profits tax mentioned in the Third Schedule had not been repealed) be deducted from or set off against profits of the company's business in an accounting period commencing on the 6th day of April, 1976; and

( b ) the total of the amounts by which, under section 181 (1) (3), losses and allowances in respect of capital expenditure are reduced for the purposes of corporation tax:

Provided that any loss or any excess of deficiencies over surpluses which if such loss or excess were a profit or an excess of surpluses over deficiencies would be chargeable to corporation tax on the company for the accounting period shall not be taken into account for the purposes of paragraph (a).

(2) Relief, as provided in subsection (3), shall be allowed in respect of a relevant deficiency against corporation tax payable by the company and such relief shall be given as far as possible from the tax payable for the first accounting period for which the company is within the charge to corporation tax and, in so far as it cannot be so given, from the tax payable for the next accounting period and so on:

Provided that relief shall not be allowed against corporation tax payable for any accounting period against the profits of which (if this Act had not been enacted and if the enactments in relation to corporation profits tax referred to in the Third Schedule had not been repealed) a loss incurred prior to the 6th day of April, 1976, could not be set off under section 25 of the Finance Act, 1964 .

(3) ( a ) For the purposes of this subsection—

(i) the income of a company for an accounting period is its income charged to corporation tax for that period as defined in section 28 (8) (reduction of corporation tax liability of small companies),

(ii) the appropriate amount is the smaller of the amount of the relevant deficiency in respect of which relief has not been allowed and the amount of the company's income for the accounting period.

( b ) The relief for an accounting period shall be an amount determined by the formula [image not available: a39y1997s164-1a8y1995s62.bmp]

where—

A is the excess of the amount of corporation tax which, apart from this section, section 58 (basis of relief from corporation tax for export profits) and section 182, is chargeable for the accounting period over an amount calculated by applying a rate equal to the standard rate for the year of assessment in which the accounting period ends to the amount of the company's income for the accounting period, and

B is the excess of the amount of corporation tax which, apart from sections 58, 182 and this section, would be chargeable for the accounting period if the amount of the company's income for the accounting period were reduced by the appropriate amount over an amount calculated by applying a rate equal to the standard rate for the year of assessment in which the accounting period ends to the amount of the company's income for the accounting period as reduced by the appropriate amount:

Provided that—

(i) where the corporation tax payable by a company for an accounting period is reduced by virtue of a claim under section 58 (1) the amount of relief to be allowed under the foregoing provisions of this section shall be reduced in the proportion which the corporation tax referable to the income attributable to the excess referred to in section 58 (1) (c) bears to the relevant corporation tax;

(ii) where the corporation tax payable by a company for an accounting period is reduced by virtue of a claim under section 58 (3) the amount of relief to be allowed under the foregoing provisions of this section shall be reduced in the proportion which the corporation tax referable to the income from the sale of goods exported bears to the relevant corporation tax; and

(iii) the amount of a reduction made for an accounting period under paragraph (i) or (ii) of this proviso shall, for the purposes of section 64, be deemed to be a reduction of the amount of relief allowed under section 58.

For the purposes of this proviso "corporation tax referable to the income attributable to the excess", corporation tax referable to the income from the sale of goods exported" and "relevant corporation tax" have the meanings assigned to them in section 58.

(4) Subsections (2) and (3) shall not apply to a company which by virtue of agreements between the Government and the United Kingdom Government in respect of double income tax was entitled to exemption from income tax for the year 1975-76 in respect of income arising in the State but in such case the relevant deficiency shall be set off against income coming within the charge to corporation tax for the accounting period commencing on the 6th day of April, 1976, and in so far as the relevant deficiency cannot be so set off it shall be set off against income coming within the charge to corporation tax for the next succeeding accounting period and so on :

Provided that a relevant deficiency shall not be set off against income arising in any accounting period against the profits of which (if this Act had not been enacted and if the enactments in relation to corporation profits tax mentioned in the Third Schedule had not been repealed) a loss incurred prior to the 6th day of April, 1976, could not be set off under section 25 of the Finance Act, 1964 .

Terminal losses.

185.—Where a company carrying on a trade on the 6th day of April, 1976, ceases to do so within four years of coming within the charge to corporation tax in respect of it, section 18 (relief for terminal loss in trade) shall apply, with any necessary modifications, so as to enable relief to be given under that section against income tax for years of assessment before 1976-77 in so far as relief cannot be given against corporation tax, but so that—

( a ) where relief is given against income tax, section 313 of the Income Tax Act, 1967 (amount of profits or gains for terminal loss relief), shall apply as it applies in relation to the corresponding relief under section 311 (terminal loss relief) of that Act; and

( b ) where section 18 has effect by virtue of this section to reduce the profits of any period and income tax for more than one year of assessment has been computed wholly or partly by reference to those profits, such adjustments shall be made as may be necessary to prevent relief being given more than once.

Transitional relief in respect of certain payments and management expenses.

186.—The provisions of the Fifth Schedule shall have effect for the purpose of granting transitional relief in respect of certain payments and expenses of management.

Repayment of corporation profits tax.

187.—Where after the 5th day of April, 1976, any company has received repayment of any amount previously paid by it by way of corporation profits tax and in respect of which or part of which a deduction was made in computing profits or gains for purposes of income tax, the amount repaid shall, to the extent that it was so deducted, be treated as income of the accounting period in which the repayment is received and shall, notwithstanding the provisions of section 1 (introduction for companies of corporation tax), be charged to corporation tax at a rate equal to the standard rate for the year of assessment in which the accounting period ends.

Short title and construction.

188.—(1) This Act may he cited as the Corporation Tax Act, 1976 .

(2) This Act, so far as it relates to income tax, shall be construed together with the Income Tax Acts, and, so far as it relates to capital gains tax, shall be construed together with the Capital Gains Tax Act, 1975 .

Section 21

FIRST SCHEDULE

ADAPTATION OF SYSTEM OF CAPITAL ALLOWANCES

1. (1) The provisions of this paragraph shall have effect for the interpretation of this Schedule, the Parts and sections amended in accordance therewith and any other provisions of the Income Tax Acts relating to the making of allowances or charges under or in accordance with those Parts or sections.

(2) "Chargeable period" means an accounting period of a company or a year of assessment; and

( a ) a reference to a "chargeable period or its basis period" is a reference to the chargeable period if it is an accounting period and to the basis period for it if it is a year of assessment;

( b ) a reference to a "chargeable period related to" expenditure, or a sale or other event, is a reference to the chargeable period in which, or to that in the basis period for which, the expenditure is incurred or the sale or other event takes place, and means the latter if, but only if, the chargeable period is a year of assessment.

(3) "Tax", notwithstanding the definition in section 1 of the Income Tax Act, 1967 , where neither corporation tax nor income tax is specified, means either of those taxes, and references to tax for a chargeable period shall be construed, in relation to corporation tax, as referring to the tax for any financial year which is chargeable in respect of that period.

(4) A reference to allowances or charges being made in taxing a trade is a reference to their being made in computing the trading income for corporation tax or in charging the profits or gains of the trade to income tax.

(5) Where it is provided that writing-down allowances shall be made in respect of any expenditure during a writing-down period of a specified length, there shall for any chargeable period wholly or partly comprised in the writing-down period be made an allowance equal to the appropriate fraction of the expenditure; and, subject to any provision to the contrary, the appropriate fraction is such fraction of the writing-down period as falls within the chargeable period :

Provided that the aggregate amount of the allowances made whether to the same or to different persons, together with the amount of any initial allowance (but not any investment allowance), shall not exceed the amount of the expenditure.

(6) Where the reference is partly to years of assessment before the year 1976-77—

( a ) "writing-down allowance" includes an annual allowance, and

( b ) an allowance on account of wear and tear of machinery or plant includes a deduction on account of wear and tear of machinery or plant,

in the sense which in the context those expressions had immediately before the commencement of this Act.

(7) Where any enactment which is referred to in subparagraph (1) provides for the amount of a writing-down allowance or an allowance on account of wear and tear of machinery or plant to be determined by a fraction or percentage, specified numerically, of any expenditure or other sum, or by reference to a percentage determined or deemed to be determined for a chargeable period of one year, then for a chargeable period of less than a year the fraction or percentage shall be proportionately reduced.

2. Except in so far as the context otherwise requires, in any provision of the Income Tax Acts which is not referred to in paragraph 1 (1) any reference to an allowance or charge for a year of assessment under a provision which is referred to in paragraph 1 (1) shall include the like allowance or charge for an accounting period of a company, and any reference to the making of an allowance or charge in charging profits or gains of a trade shall be construed as a reference to making it in taxing a trade.

3. Any provisions of the Income Tax Acts whereby, for the purposes of Parts XIII, XIV, XV, XVI, XVII and XVIII of the Income Tax Act, 1967 , or any other provision of the Income Tax Acts relating to the making of allowances or charges under or in accordance with the said Parts, a trade is, or is not, to be treated as permanently discontinued or a new trade as set up and commenced shall apply in like manner in the case of a trade so treated by virtue of any provision of this Act.

4. The amendments made by this Schedule shall not have effect in relation to income tax for the year 1975-76 or any earlier year of assessment, except in so far as it is affected by their operation in relation to corporation tax; but any computation falling to be made for the purposes of income tax for any such year of assessment shall, where necessary, proceed from a computation made in accordance with those amendments.

5. (1) In connection with the transition for companies from income tax to corporation tax the enactments amended by this Schedule and any other provision of the Income Tax Acts relevant thereto shall have effect with such modifications as are necessary to preserve the continuity of the system of allowances and charges thereunder, so that in particular—

( a ) references to a previous chargeable period or to a subsequent chargeable period, or to a time before, or a time after, a chargeable period, shall have effect in relation to a company as if the year 1975-76 or any earlier year of assessment preceded that company's first accounting period for corporation tax;

( b ) in a case where an event gives rise to any allowance or charge as taking place in a chargeable period, an event taking place in the year 1974-75 or 1975-76 at a time falling also in a company's accounting period for corporation tax shall be taken into account as happening in that year and shall not be again taken into account, so as to duplicate the allowance or charge, as happening in the accounting period.

(2) Where it is provided that writing-down allowances are to be made for a specified period, allowances may be made for accounting periods of a company falling wholly or partly within the year 1974-75 or 1975-76, notwithstanding that allowances are also made for that year and, in reckoning the period for which allowances are to be made, the periods for which allowances are so made shall be added together, notwithstanding that the same time is (according to the calendar) counted twice.

(3) Subject to subparagraph (2), this paragraph shall not be taken to require any time to be counted twice in reckoning duration.

6. For section 241 of the Income Tax Act, 1967 , there shall be substituted—

"241.—(1) Subject to the provisions of this Act, where a person carrying on a trade in, any chargeable period has incurred capital expenditure on the provision of machinery or plant for the purposes of the trade, an allowance shall be made to him for that chargeable period on account of the wear and tear of any of the machinery or plant which belongs to him and is in use for the purposes of the trade at the end of that chargeable period or its basis period and the amount of the allowance shall be a sum equal to five-fourths of the amount considered by the Appeal Commissioners to be just and reasonable, as representing the diminished value by reason of wear and tear of the said machinery or plant during the chargeable period, and such allowance shall be made in taxing the trade:

Provided that where a person is carrying on a trade which consists of or includes the working of a mine or quarry or the smelting of ore, the allowance to be made under this subsection in respect of machinery or plant belonging to him and used in connection with the working of the mine or quarry or the smelting of the ore shall, if the person so elects, be such sum as is considered just and reasonable having regard to the period at the expiration of which the mine or quarry is likely to cease to be worked or the smelting of ore is likely to be discontinued and the probable value of the machinery or plant at the expiration of that period to the person carrying on the trade:

Provided also that the allowance to be made under this subsection—

( a ) in respect of a vehicle suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles, or

( b ) by virtue of an election under the first proviso to this subsection,

shall be computed as if 'five-fourths' in this subsection were deleted.

(2) Where machinery or plant is let to the person by whom the trade is carried on, on the terms of his being bound to maintain the same and deliver it over in good condition at the end of the lease, and provided that the burden of the wear and tear of the machinery or plant will in fact fall directly on him, then, for the purposes of this section, the capital expenditure on the provision of the machinery or plant shall be deemed to have been incurred by that person and the machinery or plant shall be deemed to belong to him.

(3) Where full effect cannot be given to any such allowance in any year owing to there being no profits or gains chargeable for that year, or owing to the profits or gains chargeable being less than the allowance, the allowance or part of the allowance to which effect has not been given, as the case may be, shall, for the purpose of making the assessment for the following year, be added to the amount of the allowance for wear and tear for that year, and deemed to be part of that allowance, or, if there is no such allowance for that year, be deemed to be the allowance for that year, and so on for succeeding years.

(4) Any claim in respect of the aforesaid allowance shall be included in the annual statement required to be delivered under this Act of the profits or gains of the trade for which the machinery or plant is used.

(5) Where machinery or plant is let upon such terms that the burden of the wear and tear thereof falls directly on the lessor, he shall be entitled, on making a claim to the inspector within twelve months after the end of the chargeable period, to an allowance on account of the wear and tear of the machinery or plant equal to the amount which might have been allowed if, during the period of the letting, the machinery or plant were in use for the purposes of a trade carried on by him.

(6) No allowance for wear and tear, or repayment on account of any such allowance, shall be made for any chargeable period if the allowance, when added to—

( a ) the allowances on that account, and

( b ) any initial allowances in relation to the machinery or plant under Chapter I of Part XV,

made for any previous chargeable periods to the person by whom the trade is carried on, will make the aggregate amount of the allowances exceed the actual cost to that person of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by way of renewal, improvement or reinstatement.

(7) Where an allowance is to be made to any person as representing the diminished value by reason of wear and tear during the chargeable period of any machinery or plant, the value at the commencement of that chargeable period of such machinery or plant shall be taken to be the actual cost to that person of such machinery or plant reduced by the total of any allowances made on account of wear and tear and any initial allowances made under Chapter I of Part XV for previous chargeable periods.

(8) Where an application is made to the Revenue Commissioners for the alteration of the amount of any allowance for wear and tear, the Revenue Commissioners, unless they are of opinion that the application is frivolous or vexatious, shall refer the case to the Board of Referees, and that Board shall, if they are satisfied that the application is made by or on behalf of any considerable number of persons engaged in any class of trade or business, take the application into their consideration and determine the allowance to be made.

In this subsection the expression 'Board of Referees' means a Board of Referees to be appointed for the purpose of this subsection by the Minister for Finance.

(9) ( a ) In the case of a person to whom under this section an allowance falls to be made in taxing his trade, his basis period for any year of assessment shall be the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D in respect of the trade in question or, where, by virtue of any provision of this Act, the profits or gains of any other period are to he taken to be the profits or gains of the said period, that other period.

( b ) In the case of a person to whom an allowance under this section falls to be made by discharge or repayment of tax, his basis period for any year of assessment shall be the year of assessment itself.

(10) The preceding provisions of this section shall, with any necessary modifications, apply in relation to professions, employments and offices as they apply in relation to trades.".

7. For section 242 of the Income Tax Act, 1967 . there shall be substituted—

"242.—The provisions of this Act relating to the allowance to be made in respect of diminished value by reason of wear and tear shall have effect as if the references therein to diminished value by reason of wear and tear during the chargeable period of any machinery or plant included references to diminished value by reason of any machinery or plant having been temporarily out of use at any time during the chargeable period through circumstances attributable directly or indirectly, to the national emergency to which the resolution passed by each House of the Oireachtas on the 2nd day of September, 1939, related (including circumstances continuing after the termination of that emergency).".

8. For section 243 of the Income Tax Act, there shall be substituted—

"241.—(1) In estimating the profits or gains of any trade, profession, employment or office there shall, if the person carrying on or holding the same so elects by notice in writing to the inspector, be allowed to be deducted as expenses incurred in any chargeable period so much of any amount expended in that chargeable period in replacing any machinery or plant provided before the 15th day of April, 1959, which has become obsolete as is equivalent to the cost of the machinery or plant replaced after deducting from that cost the total amount of any allowances which have at any time been made in taxing the trade or in charging the profits or gains of the profession, employment or office on account of the wear and tear of that machinery and plant, any initial allowances made in respect of that machinery and plant under Chapter I of Part XV and any sum realised by the sale of that machinery or plant.

(2) The provisions of sections 279 and 280 shall apply for the purpose of determining the amount which, under subsection (1), is to be allowed to be deducted as expenses in estimating the profits or gains of the trade, profession, employment or office as they apply for the purpose of determining the amount of a balancing allowance under Chapter II of Part XVI.".

9. For section 244 of the Income Tax Act, 1967 , there shall be substituted—

"244.—(1) In this section—

the expression 'scientific research' means any activities in the fields of natural or applied science for the extension of knowledge;

the word 'asset' includes a part of an asset;

the expression 'expenditure on scientific research' does not include any expenditure incurred in the acquisition of rights in, or arising out of, scientific research.

(2) Where a person carrying on a trade either—

( a ) incurs, on or after the 6th day of April, 1946, non-capital expenditure on scientific research relating to the trade, or

( b ) pays, on or after that date, any sum to a body carrying on scientific research and approved for the purposes of this section by the Minister for Finance or to an Irish university, in order that such body or university may undertake scientific research relating to the trade,

then, the expenditure so incurred or the sums so paid shall be deducted as an expense in computing the profits or gains of the trade.

(2A) Where, on or after the 6th day of April, 1968, a person carrying on a trade—

( a ) incurs non-capital expenditure on scientific research or pays any sum to a body or university referred to in subsection (2) (b) in order that the body or university may undertake scientific research, and

( b ) the expenditure so incurred or the sum so paid is not deductible as an expense under subsection (2) because the scientific research is not related to any trade being carried on by the person,

then, the expenditure so incurred or the sums so paid shall be deducted as an expense in computing the profits or gains of the person's trade.

(3) Where—

( a ) on or after the 6th day of April, 1946, a person incurs capital expenditure on scientific research, and

( b ) either—

(i) he is then carrying on a trade to which such expenditure relates, or

(ii) he subsequently sets up and commences a trade which is related to such research, and

( c ) he applies to the inspector for an allowance under this subsection in respect of the said expenditure, and

( d ) he so applies—

(i) in case the expenditure was incurred by him while carrying on the trade, within twelve months after the end of the chargeable period in which it was incurred, or

(ii) in case the expenditure was incurred by him before the setting up and commencement of the trade, within twelve months after the end of the chargeable period in which the trade was set up and commenced,

then, subject to the provisions of this section, there shall be made in taxing the trade for the chargeable period mentioned in whichever of subparagraphs (i) and (ii) of paragraph (d) is applicable, and for each of the following chargeable periods, an allowance equal to the same fraction of the expenditure as the chargeable period is of five years but so that the aggregate of the allowances made shall not exceed the amount of the expenditure:

Provided that, where, on or after the 6th day of April, 1968, a person carrying on a trade incurs capital expenditure on scientific research in respect of which an allowance cannot be made under the foregoing provisions of this subsection because the scientific research is not related to any trade being carried on by that person, there shall be made in taxing that person's trade for the chargeable period in which the expenditure was incurred an allowance equal to the amount of the expenditure.

(4) Where an asset, representing capital expenditure on scientific research, ceases at any time from any cause whatever to be used for such research, relating to the trade carried on by the person who incurred the expenditure, then—

( a ) no allowance under this section in respect of that expenditure shall be made for any chargeable period after that in which the cessation takes place;

( b ) if the total of the following, namely, the allowances already made under this section in respect of that expenditure and the value of the asset immediately before the cessation, is less than the said expenditure, there shall be made in taxing the trade for the chargeable period in which the cessation takes place an additional allowance equal to the amount of the deficiency;

( c ) if the said total exceeds the said expenditure, the amount of the excess or the total of the allowances so made, whichever is the less, shall be treated as a trading receipt of the trade accruing immediately before the cessation;

( d ) in the application of section 241 to an allowance made in respect of the asset for any chargeable period after that in which the cessation takes place, the actual cost of the asset shall be treated as being reduced by the total of the allowances made in respect of the asset under this section; and

( e ) in the application of section 243 to any such allowance, the cost of the asset shall be treated as being reduced by the said total.

(5) In relation to capital expenditure on scientific research incurred on or after the 6th day of April, 1965, this section shall have effect—

( a ) as if in subsection (3) the words 'an allowance equal to the amount of the expenditure' were substituted for the words 'and for each of the following chargeable periods, an allowance equal to the same fraction of the expenditure as the chargeable period is of five years but so that the aggregate of the allowances made shall not exceed the amount of the expenditure',

( b ) as if paragraphs (a), (b) and (e) of subsection (4) were omitted and the following paragraph were substituted for paragraph (c)—

'(c) an amount equal to the allowance made under this section in respect of that expenditure, or, if the value of the asset immediately before the cessation is less than that allowance, equal to that value, shall be treated as a trading receipt of the trade accruing immediately before the cessation;',

( c ) as if 'the amount of the allowance effectively made' were substituted for 'the total of the allowances made' in subsection (4)(d).

(6) Where an allowance under this section is made to a person for any chargeable period in respect of expenditure represented wholly or partly by assets, then, for that chargeable period no allowance in respect of those assets shall be made to that person under section 67, 241, 243 or 306.

(7) Section 241 (3) shall apply in relation to an allowance under subsection (3) of this section as it applies in relation to allowances in respect of wear and tear of machinery and plant.

(8) For the purposes of this section expenditure shall not be regarded as incurred by a person in so far as it is, or is to be, met directly or indirectly out of moneys provided by the Oireachtas or by any person other than the first-mentioned person.

(9) The same expenditure shall not be taken into account for any of the purposes of this section in relation to more than one trade.".

10. For section 245 of the Income Tax Act, 1967 , there shall be substituted—

"245.—(1) In this section—

'mine' means an underground excavation made for the purpose of getting minerals:

Provided that in relation to capital expenditure within the meaning of the section incurred on or after the 6th day of April, 1960, 'mine' means a mine which is operated for the purpose of obtaining, whether by underground or surface working, any scheduled mineral, mineral compound or mineral substance as defined in section 2 of the Minerals Development Act, 1940 ;

references to capital expenditure incurred in connection with a mine shall be construed as references to capital expenditure incurred—

( a ) in the development of the wine on searching for or on discovering and testing mineral deposits or winning access thereto, or

( b ) on the construction of any works which are of such a nature that when the mine has ceased to be operated they are likely to have so diminished in value that their value will be little or nothing,

but as excluding references to—

( c ) any expenditure on the acquisition of the site of the mine or of the site of any such works or of rights in or over any such site, or

( d ) any expenditure on the acquisition of, or of rights over, the deposits, or

( e ) any expenditure on works constructed wholly or mainly for subjecting the raw product of the mine to any process except a process designed for preparing the raw product for use as such;

references to assets representing capital expenditure incurred in connection with a mine shall—

( a ) be construed as including, in relation to expenditure on searching for, discovering and testing deposits, references to any information or other results obtained from any search, exploration or enquiry upon which the expenditure was incurred, and

( b ) be construed as also including references to any part of such assets, and

( c ) be construed as also including, in the case of any such assets destroyed or damaged, references to any insurance moneys or other compensation moneys in respect of such destruction or damage.

(2) Expenditure shall not, for the purposes of this section, be regarded as having been incurred by a person carrying an the trade of working a mine in so far as it has been or is to be met directly or indirectly out of moneys provided by the Oireachtas or by any other person (not being a person who has carried on the trade of working that mine).

(3) Any person, who carries on the trade of working a mine and who has, on or after the 6th day of April, 1946, incurred any capital expenditure in connection with the said mine, may apply for an allowance (in this section referred to as a mine development allowance) in respect of such capital expenditure.

(4) Application for a mine development allowance for any chargeable period may be made to the inspector not later than twelve months after the end of such period.

(5) The following provisions shall have effect in relation to the amount of a mine development allowance for any chargeable period in respect of any capital expenditure incurred in connection with a mine—

( a ) the inspector shall estimate to the best of his judgment the life (in this subsection referred to as the estimated life) of the deposits, but shall not estimate such life at more than twenty years,

( b ) the inspector shall then estimate the amount of the difference (in this subsection referred to as the estimated difference) between the said capital expenditure and the amount which, in his opinion, the assets representing the said capital expenditure are likely to be worth at the end of the estimated life,

( c ) the inspector shall, subject to the provisions of this section, allow, as the mine development allowance for the said chargeable period, an amount equal to a sum which bears to the estimated difference the same proportion as the length of the said chargeable period bears to the length of the estimated life,

( d ) if the said capital expenditure was incurred during the said chargeable period, then the said chargeable period shall, for the purposes of paragraph (c), be taken to comprise so much only of the said chargeable period as is subsequent to the date on which the said capital expenditure was incurred:

Provided that the total of the allowances shall not exceed the estimated difference.

(6) A mine development allowance to any person carrying on the trade of working a mine shall be made in taxing that trade and section 241 (3) shall apply in relation to the allowance as it applies in relation to allowances for wear and tear of machinery and plant.

(7) A mine development allowance shall not be made in respect of any capital expenditure incurred in connection with a mine in any case where the asset representing such capital expenditure is an asset in respect of which an allowance could be made under section 241, 243 or 306.

(8) Where a mine development allowance for any chargeable period has been made in respect of capital expenditure incurred in connection with a mine, then, for that chargeable period section 67 shall not apply as respects any such asset.

(9) Any capital expenditure incurred, on or after the 6th day of April, 1946, in connection with a mine by a person about to carry on the trade of working the said mine but before commencing such trade shall for the purposes of this section, be treated as if it had been incurred on the first day of the commencement of such trade.

(10) Where mine development allowances in respect of capital expenditure incurred in connection with a mine have been made and the mine has finally ceased to be operated—

( a ) the inspector shall review the said mine development allowances,

( b ) if, on such review, it appears that the amount of the difference (in this subsection referred to as the said difference) between the said capital expenditure and the amount which the assets, representing the said capital expenditure at such cessation, were worth at such cessation exceeds the total of the said mine development allowances, then further mine development allowances totalling in amount the excess may be made for any chargeable period (being the chargeable period in which the said mine has finally ceased to be operated or any previous chargeable period) so however that the total of such further mine development allowances shall not amount to more than the said excess, and if necessary effect may be given to this paragraph by way of repayment,

( c ) if, on such review, it appears that the said difference is less than the total of the said mine development allowances, then, the deficiency or the total of the said mine development allowances, whichever is the less, shall be treated as a trading receipt of the trade of working the said mine accruing immediately before such cessation.

(11) Where the person (in this subsection referred to as the vendor) carrying on the trade of working a mine sells to any other person (not being a person who succeeds the vendor in the said trade) any asset representing capital expenditure incurred in connection with the said mine and by reference to which mine development allowances have been made, the following provisions shall have effect—

( a ) if the total of the said mine development allowances when added to the sum realised on the sale of the said asset is less than the said capital expenditure, by any amount (in this subsection referred to as the unexhausted allowance), then, further mine development allowances may be granted to the vendor in respect of any chargeable period (being the chargeable period of such sale or any previous chargeable period), so however that the total of such further mine development allowances shall not exceed the unexhausted allowance,

( b ) if the total of the said mine development allowances when added to the sum realised on the sale of the said asset exceeds the said capital expenditure, then, the amount of such excess or the said total of the mine development allowances, whichever is the less, shall be treated as a trade receipt of the said trade accruing immediately before the said sale.

(12) Where—

( a ) mine development allowances in respect of capital expenditure incurred in connection with a mine have been made to a person (in this subsection referred to as the original trader) carrying on the trade of working the mine, and

( b ) another person (in this subsection referred to as the successor) succeeds to the said trade,

mine development allowances may continue to be made in respect of the said capital expenditure to the successor, but in no case shall the amount of such allowances exceed the amount to which the original trader would have been entitled if he had continued to carry on the said trade.

(13) Where for any chargeable period a company is entitled to relief from tax by virtue of Chapter II or Chapter III of Part XXV then, for the purposes of subsections (5), (10), (11) and (12), there shall be deemed to have been made, for that chargeable period in respect of any expenditure, the full mine development allowance which on due claim, could have been made for that chargeable period in respect of that expenditure, unless that allowance has in fact been made.

(14) An appeal to the Appeal Commissioners shall lie on any question arising under this section in like manner as an appeal would lie against an assessment and the provisions of this Act relating to appeals shall apply and have effect accordingly.".

11. For section 246 of the Income Tax Act, 1967 , there shall be substituted—

"246.—(1) Where a person carrying on a trade incurs capital expenditure on the purchase of a new ship for the purposes of the trade, there shall be made to him, for the chargeable period related to the expenditure, an allowance (in this Chapter referred to as a shipping investment allowance) equal to two-fifths of the expenditure, and such allowance shall be made in taxing the trade and shall be in substitution for and not in addition to an initial allowance under Chapter I of Part XV other than an initial allowance made by virtue of section 251 (4) of this Act.

( 1A ) ( a ) A shipping investment allowance shall not be made under subsection (1) in respect of any capital expenditure which is taken into account for the purposes of any grant made towards that expenditure by the Minister for Transport and Power under the Shipping investment Grants Act, 1969 .

( b ) Where a shipping in vestment allowance has been made under subsection (1) in respect of capital expenditure which is taken into account for the purposes of such a grant as is mentioned in paragraph (a), the shipping investment allowance shall be withdrawn and all such additional assessments and adjustments of assessments shall be made as may be necessary as a consequence of the withdrawal of a shipping investment allowance or the substitution therefor of an initial allowance under Chapter I of Part XV.

(2) For the purposes of this Chapter, the day on which any expenditure is incurred shall be taken to be the day when the sum in question becomes payable.

(3) Any claim by a person for an allowance under this section in taxing his trade shall be included in the annual statement required to be delivered under this Act of the profits or gains thereof and shall be accompanied by a certificate signed by the claimant, which shall be deemed to form part of the claim, stating that the expenditure was incurred on the purchase of a new ship and giving such particulars as show that the allowance falls to be made.

(4) In this section and the subsequent sections of this Chapter 'new' means unused and not secondhand.".

12. For section 247 of the Income Tax Act, 1967 , there shall be substituted—

"247.—(1) For the purposes of ascertaining the amount of any allowance to be made to any person under section 241 (1) as representing the diminished value by reason of wear and tear during the chargeable period of any ship, no account shall be taken of a shipping investment allowance in determining the value of the ship at the commencement of the chargeable period.

(2) In section 241 (6) 'the allowances on that account, and', and the expression 'the allowances' where that expression occurs before 'exceed the actual cost', shall each be construed as not including a reference to any shipping investment allowance made to the person by whom the trade is carried on.

(3) Section 243 shall be taken as not requiring a deduction of any shipping investment allowance from the cost of any ship for the purposes of that section.".

13. For section 248 of the Income Tax Act, 1967 , there shall he substituted—

"248.—Section 241 (3) shall apply in relation to a shipping investment allowance as it applies in relation to an allowance in respect of wear and tear of machinery or plant.".

14. For section 249 of the Income Tax Act, 1967 , there shall he substituted—

"249.—(1) In this Chapter, as it applies for income tax purposes, 'basis period' has the meaning assigned to it by the following provisions of this section.

(2) In the case of a person to whom an allowance falls to be made under this Chapter, his basis period for any year of assessment shall be the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D in respect of the trade in question or, where, by virtue of any provision of this Act the profits or gains of any other period are to be, taken to be the profits or gains of the said period, that other period:

Provided that, in the case of any trade—

( a ) where two basis periods overlap, the period common to both shall be deemed for the purposes of this subsection to fall in the first basis period only;

( b ) where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment, then, unless the second-mentioned year of assessment is the year of the permanent discontinuance of the trade, the interval shall be deemed to be part of the second basis period; and

( c ) where there is an interval between the end of the basis period for the year of assessment preceding that in which the trade is permanently discontinued and the basis period for the year in which it is permanently discontinued, the interval shall be deemed to form part of the first basis period.

(3) ( a ) Any reference in the proviso to subsection (2) to the permanent discontinuance of a trade shall be construed as including a reference to the occurring of any event which, under any of the provisions of this Act, is to be treated as equivalent to the permanent discontinuance of a trade.

( b ) Any reference in the said proviso to the overlapping of two Periods shall be construed as including a reference to the coincidence of two periods or to the inclusion of one period in another, and references to the period common to both of two periods shall be construed accordingly.".

15. For section 251 of the Income Tax Act, 1967 , there shall be substituted—

"251.—(1) Subject to the provisions of this Act, where a person carrying on a trade the profits or gains of which are chargeable under Case I of Schedule D, incurs capital expenditure on the provision, for the purposes of the trade, of new machinery or new plant, other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles, there shall be made to him, for the chargeable period related to the expenditure, an allowance (in this Chapter referred to as an initial allowance) equal to one-fifth of the expenditure, and such allowance shall be made in taxing the trade.

(2) Any expenditure incurred for the purposes of a trade by a person about to carry it on shall be treated for the purposes of subsection (1) as if it had been incurred by that person on the first day on which he does carry it on.

(3) Subsections (1) and (2) shall not apply to any expenditure incurred before the 6th day of April, 1956.

(4) Notwithstanding anything in the preceding provisions of this section, this Chapter shall have effect—

( a ) in relation to capital expenditure incurred on or after the 14th day of December, 1961, and before the 1st day of April, 1967, as if 'two-fifths' were substituted for 'one-fifth' in subsection (1),

( b ) in relation to capital expenditure incurred on or after the 1st day of April, 1967, and before the 1st day of April, 1968, as if 'one-half' were substituted for 1 one-fifth 'in subsection (1),

( c ) in relation to capital expenditure incurred on or after the 1st day of April, 1968, and before the 1st day of April, 1971, as if 'three-fifths' were substituted for ' one-fifth ' in subsection (1), and.

( d ) in relation to capital expenditure incurred on or after the 1st day of April, 1971, and before the 1st day of April, 1977, as if 'five-fifths' were substituted for 'one-fifth' in subsection (1).

(5) Any claim by a person for an allowance under this section in taxing his trade shall be included in the annual statement required to be delivered under this Act of the profits or gains thereof and shall be accompanied by a certificate signed by the claimant, which shall be deemed to form part of the claim, stating that the expenditure was incurred on new machinery or new plant and giving such particulars as show that the allowance falls to be made.

(6) In this section 'new' means unused and not secondhand, provided that a ship shall be deemed to be new even if it has been used or is secondhand.".

16. For section 252 of the Income Tax Act, 1967 , there shall be substituted—

"252.—Section 241 (2) (3) (5) shall apply in relation to an initial allowance as those subsections apply in relation to allowances in respect of wear and tear of machinery or plant.".

17. For section 254 of the Income Tax Act, 1967 , there shall be substituted—

"254.—(1) (a) Subject to the provisions of this Act, where a person incurs capital expenditure on the construction of a building or structure which is to be an industrial building or structure occupied for the purposes of a trade carried on either by him or by such a lessee as is mentioned in paragraph (b) there shall be made to the person who incurred the expenditure, for the appropriate chargeable period, an allowance (in this Chapter referred to as an industrial building allowance) equal to one-tenth thereof.

( b ) The lessee referred to in paragraph (a) is a lessee occupying the building or structure on the construction of which the expenditure was incurred under a lease to which the relevant interest is reversionary.

( c ) In this subsection—

'appropriate chargeable period' means, in relation to any person who has incurred expenditure on the construction of a building or structure, the chargeable period related to the expenditure or, if it is later, the chargeable period related to the event (which shall be regarded as an event within the meaning of paragraph 1 (2) (b) of the First Schedule to the Corporation Tax Act, 1976 ), such event being the commencement of the tenancy in a case in which the first use to which the building or structure is put is a use by a person occupying it by virtue of a tenancy to which the relevant interest is reversionary;.

'lease' and 'lessee' have the same meanings as in Part XVI;

'the relevant interest' has the same meaning as in Chapter I of Part XVI.

( d ) (i) Except in the case mentioned in subparagraph (ii), any industrial building allowance made to a person shall be made to him in taxing his trade or in charging his income under Case V of Schedule D as the case may require.

(ii) An industrial building allowance shall be made to a person by discharge or repayment of tax if his interest in the building or structure is subject to any lease when the expenditure is incurred or becomes subject to any lease before the building or structure is first used for any purpose and, where it is so made, subsection (5) shall not apply:

Provided that this subparagraph shall not apply as respects income chargeable under Case V of Schedule D.

( e ) Section 267 (5) and section 296 shall have effect in relation to an industrial building allowance which is to be made in charging income under Case V of Schedule D or by discharge or repayment of tax as they have effect in relation to an allowance under Chapter I of Part XVI which is to be so made.

(2) Notwithstanding anything in subsection (1), in relation to capital expenditure incurred on or after the 14th day of December, '1961, and before the 1st day of April, 1975, this Chapter shall have effect as if 'one-fifth' were substituted for 'one-tenth' in subsection (1) :

Provided that this subsection shall not have effect in relation to capital expenditure incurred on or after the 1st day of January, 1960, on the construction of a building or structure which falls to be regarded as an industrial building or structure by reason of its use for the purposes of the trade of hotel-keeping or in relation to capital expenditure incurred on the construction of a building or structure in respect of which an allowance under this Chapter falls to be made by virtue of section 255 (1) (c).

(2A) Notwithstanding anything contained in subsections (1) and (2), this Chapter shall have effect—

( a ) in relation to capital expenditure incurred on or after the 16th day of January, 1975, and before the 1st day of April, 1977, on the construction of a building or structure in respect of which an allowance under this Chapter falls to be made by reason of its use for a purpose specified in paragraph (a) or (b) of section 255 (1), as if 'one-half' were substituted for 'one-tenth' and

( b ) in relation to capital expenditure incurred on or after the 6th day of April, 1974, on the construction of a building or structure in respect of which an allowance under this Chapter falls to be made by reason of its use for a purpose specified in paragraph (c) of section 255 (1), as if 'one-fifth' were substituted for 'one-tenth'.

(3) Notwithstanding any other provision of this section, no industrial building allowance shall be made in respect of any expenditure on a building or structure if the building or structure, when it comes to be used, is not an industrial building or structure, and where an industrial building allowance has been granted in respect of any expenditure on any such building or structure, any necessary additional assessments may be made to give effect to this subsection.

(4) For the purposes of this section—

( a ) any expenditure incurred for the purposes of a trade by a person about to carry it on shall be treated as if it had been incurred by that person on the first day on which he does carry it on, and.

( b ) expenditure shall not be regarded as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State, by any board established by statute or by any public or local authority.

(5) Section 241 (3) shall apply in relation to an allowance under this section as it applies in relation to an allowance in respect of wear and tear of machinery or plant.

(6) Any claim by a person for an allowance under this section in charging profits or gains of any description shall be included in the annual statement required to be delivered under this Act of those profits or gains and shall be accompanied by a certificate signed by the claimant, which shall be deemed to form part of the claim, stating that the expenditure was incurred on the construction of an industrial building or structure and giving such particulars as show that the allowance falls to be made.".

18. For section 256 of the Income Tax Act, 1967 , there shall be substituted—

"256.—A reference in this Chapter to expenditure incurred on the construction of a building or structure does not include—

( a ) any expenditure incurred on the acquisition of, or of rights in or over, any land, or

( b ) any expenditure on the provision of machinery or plant or on any asset which is treated for any chargeable period as machinery or plant, or

( c ) any expenditure in respect of which an allowance is or may be made, for the same or for any other chargeable period under section 244 (3) or under section 245.".

19. For section 258 of the Income Tax Act, 1967 , there shall be substituted—

"258.—In relation to industrial budding allowances for chargeable periods beginning on or after the 6th day of April, 1959, other than amounts carried forward from any year of assessment ended before that date the following provisions of this Chapter shall have effect as from the commencement of the Finance (Miscellaneous Provisions) Act, 1956 —

( a ) section 255 (1) (b) section 255 (2),

( b ) section 256 (b) (c), and

( c ) section 257.".

20. For section 259 of the Income Tax Act, 1967 , there shall be substituted—

"259.—An appeal to the Appeal Commissioners shall lie on any question arising under this Chapter in like manner as an appeal would lie against an assessment to tax, and the provisions of this Act relating to appeals shall apply and have effect accordingly.".

21. For section 260 of the Income Tax Act, 1967 , there shall be substituted—

"260.—For the purposes of sections 251 and 254, capital expenditure shall not include any expenditure which is allowed to be deducted in computing, for the purposes of tax, the profits or gains of a trade or profession carried on by the person incurring the expenditure.".

22. For section 262 of the Income Tax Act, 1967 , there shall be substituted—

"262.—(1) In this Part, as it applies for income tax purposes, 'basis period' has the meaning assigned to, it by the following provisions of this section.

(2) In the case of a person to whom an allowance falls to be made under this Part, his basis period for any year of assessment shall be the period on the profits or gains of which income tax for that year falls to be finally computed under Case I or Case II of Schedule D in respect of the trade or profession in question or under Case V of Schedule 15 in respect of income arising from rents or receipts in respect of premises or easements or, where, by virtue of any provision of this Act, the profits or gains or income of any other period are to be taken to be the profits or gains or income of the said period, that other period:

Provided that—

( a ) where two basis periods overlap, the period common to both shall be deemed for the purposes of this subsection to fall in the first basis period only;

( b ) where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment, then, unless the second-mentioned year of assessment is the year of the permanent discontinuance of the trade or profession or of the cessation of the single source of profits or gains mentioned in section 81 (2), the interval shall be deemed to be part of the second basis period; and

( c ) where there is an interval between the end of the basis period for the year of assessment preceding that in which the trade or profession is permanently discontinued or the said single source ceases and the basis period for the year in which the permanent discontinuance or the cessation occurs, the interval shall be deemed to form part of the first basis period.

(3) ( a ) Any reference in the proviso to subsection (2) to the permanent discontinuance of a trade or profession shall be construed as including a reference to the occurring of any event which, under any of the provisions of this Act, is to be treated as equivalent to the permanent discontinuance of a trade or profession.

( b ) Any reference in the said proviso to the overlapping of two periods shall be construed as including a reference to the coincidence of two periods or to the inclusion of one period in another, and references to the period common to both of two periods shall be construed accordingly.

(4) Nothing in subsection (2) or (3) applies in relation to an allowance under Chapter II falling to be made to a person by discharge or repayment of tax and, in relation to that allowance, his basis period for any year of assessment shall be the year of assessment itself.".

23. For section 264 of the Income Tax Act, 1967 , there shall be substituted—

"264.—(1) Subject to the provisions of this Part, where—

( a ) any person is, at the end of a chargeable period or its basis period, entitled to an interest in a building or structure to which this section applies,

( b ) at the end of the said chargeable period or its basis period, the building or structure is an industrial building or structure, and

( c ) that interest is the relevant interest in relation to the capital expenditure incurred on the construction of that building or structure,

an allowance (in this Chapter referred to as a writing-down allowance) equal to one-fiftieth of that expenditure shall be made to him for that chargeable period:

Provided that—

(i) in relation to a building or structure the capital expenditure on the construction of which has been incurred on or after the 1st day of January, 1960, and which falls to be regarded as an industrial building or structure by reason of its use for the purposes of the trade of hotel keeping and in relation to a building or structure which falls to be regarded as an industrial building or structure by reason of its use for the purposes of growing fruit, vegetables or other produce- in -the course of a trade of market gardening within the meaning of section 54, this Part shall have effect as if 'one-tenth' were substituted for 'one-fiftieth' in the foregoing provisions of this subsection, and

(ii) in relation to capital expenditure incurred on or after the 16th day of January, 1975, and before the 1st day of April, 1977, this Part shall have effect as if 'one-twenty-fifth' were substituted for 'one-fiftieth' in the foregoing provisions of this subsection.

(2) A building or structure is one to which this section applies, if, and only if, the capital expenditure incurred on the construction of it has been incurred on or after the 30th day of September, 1956.

(3) Where, at any time on or after the 15th day of April, 1959, the interest in a building or structure which is the relevant interest in relation to any expenditure is sold while the building or structure is an industrial building or structure, then (subject to any further adjustment under this subsection on a later sale) the writing-down allowance for any chargeable period, if that chargeable period or its basis period ends after the time of the sale, shall be the residue (as defined in the provisions of this Chapter relating to the writing off of expenditure) of that expenditure immediately after the sale, reduced in the proportion (if it is less than one) which the length of the chargeable period bears to the part unexpired at the date of the sale of the period of fifty years beginning with the time when the building or structure was first used:

Provided that—

(i) in relation to a building or structure the, capital expenditure on the construction of which has been incurred on or after the 1st day of January, 1960, and which falls to be regarded as an industrial building or structure within the meaning of section 255 (1) by reason of its use for a purpose specified in paragraph (c) or (d) of that subsection, this Part shall have effect as if 'ten years' were substituted for 'fifty years' in the foregoing provisions of this subsection, and

(ii) in relation to a building or structure the capital expenditure on the construction of which has been incurred on or after the 16th day of January, 1975, and before the 1st day of April, 1977, and which falls to be regarded as an industrial building or structure within the meaning of section 255 (1) by reason of its use for a purpose specified in paragraph (a) or (b) of that subsection, this Part shall have effect as if 'twenty-five years' were substituted for 'fifty years' in the foregoing provisions of this subsection.

(4) Notwithstanding anything in the preceding provisions of this section, in no case shall the amount of a writing-down allowance made to a person for any chargeable period in respect of any expenditure exceed what, apart from the writing off falling to be made by reason of the making of that allowance, would be the residue of that expenditure at the end of that chargeable period or its basis period.".

24. For section 265 of the Income Tax Act, 1967 , there shall be substituted—

"265.—(1) Where any capital expenditure has been incurred, on or after the 30th day of September, 1956, on the construction of a building or structure, and any of the following events occurs while the building or structure is an industrial building or structure:

( a ) the relevant interest in the building or structure is sold,

( b ) that interest, being a leasehold interest, comes to an end otherwise than on the person entitled thereto acquiring the interest which is reversionary thereon,

( c ) the building or structure is demolished or destroyed, or, without being demolished or destroyed, ceases altogether to be used,

an allowance or charge (in this Chapter referred to as a balancing allowance or a balancing charge) shall, in the circumstances mentioned in this section, be made to, or as the case may be, on, the person entitled to the relevant interest immediately before that event occurs, for the chargeable period related to that event:

Provided that—

(i) no balancing allowance or balancing charge shall be made by reason of any event occurring more than fifty years after the building or structure was first used,

(ii) in relation to a building or structure, the capital expenditure on the construction of which has been incurred on or after the 1st day of January, 1960, and which falls to be regarded as an industrial building or structure by reason of its use for the purposes of the trade of hotel-keeping and in relation to a building-or structure which falls to be regarded as an industrial building or structure by reason of its use for the purposes of growing fruit, vegetables or other produce in the course of a trade of market gardening within the meaning of section 54, this Part shall have effect as if 'ten years' were substituted for 'fifty years' in the foregoing provisions of this subsection, and

(iii) in relation to a building or structure the , capital expenditure 'on the construction of which has been incurred on or after the 16th day of January, 1975, and before the 1st day of April, 1977, and which falls to be regarded as an industrial building 'or structure within the meaning of section 255 (1) by reason of its use for a purpose specified in paragraph (a) or (b) of that subsection, this Part shall have effect as if 'twenty-five years' were substituted for 'fifty years' in the foregoing provisions of this subsection.

(2) Where there are no sale, insurance, salvage or compensation moneys, or where the residue of the expenditure immediately before the event exceeds those moneys, a balancing allowance shall be made and the amount thereof shall, be the amount of the said residue or, as the case may be, of the excess thereof over the said moneys.

(3) If the sale, insurance, salvage or compensation moneys exceed the residue, if any, of the expenditure immediately before the event, a balancing charge shall be made and the amount on which it is made shall be an amount equal to the excess, or where the residue is nil, to the said moneys.

(4) Where a balancing allowance or a balancing charge fans to be made to, or on a person, and any part of the relevant period (as defined for purposes of this subsection) is not comprised in a chargeable period for which a writing-down allowance has been made to him or its basis period, the amount of the balancing allowance, or, as the case may be, the amount on which the balancing charge is to be made, shall be reduced in the proportion which the part or parts that are so comprised bear to the whole of the relevant period.

In this subsection 'the relevant period' means the period beginning when the building or structure was first used for any purpose and ending—

( a ) if the event giving rise to the balancing allowance or balancing charge occurs on the last day of a chargeable period or its basis period, with that day, or

( b ) if not, with the latest date before that event which is the last day of a chargeable period or its basis period:

Provided that where, before the said event but on or after the 15th day of April, 1959, the building or structure has been sold while an industrial building or structure, the relevant period shall begin with the day following that sale or, if there has been more than one such sale, the last such sale.

(5) Notwithstanding anything in the preceding provisions of this section, in no case shall the amount on which a balancing charge is made on a person in respect of any expenditure on the construction of a building or structure exceed the amount of the industrial building allowance, if any, made to him in respect of that expenditure together with the amount of any writing down allowances made to him in respect of that expenditure for chargeable periods which end on or before the date of the event giving rise to the charge or of which the basis periods end on or before that date.".

25. For section 266 of the Income Tax Act, 1967 , there shall be substituted—

"266.—(1) Any expenditure incurred on the construction of any building or structure shall be treated for the purposes of this Chapter to be written off to the extent and as at the times hereafter specified in this section, and references in this Chapter to the residue of any such expenditure shall be construed accordingly.

(2) If an industrial building allowance is made in respect of the expenditure, the amount of that allowance shall be written off as at the time when the building or structure is first used.

(3) If, by reason of the building or structure being at any time an industrial building or structure, a writing-down allowance is made for any chargeable period in respect of the expenditure the amount of that allowance shall be written off as at the said time:

Provided that where at the said time an event occurs which gives rise or may give rise to a balancing allowance or balancing charge the amount directed to be written off by this subsection as at the said time shall be taken into account in computing the residue of that expenditure immediately before that event for the purpose of determining whether any and if so what balancing allowance or balancing charge is to be made.

(4) ( a ) If, for any period or periods between the time when the building or structure was first used for any purpose and the time at which the residue of the expenditure falls to be ascertained, the building or structure has not been in use as an industrial building or structure, then, there shall in ascertaining that residue be treated as having been previously written off in respect of the said period or periods amounts equal to writing-down allowances made for chargeable periods of a total length equal thereto at such rate or rates as would have been appropriate having regard to any sale on which section 264 (3) of this Act operated.

( b ) If the building or structure was in use as an industrial building or structure at the end of the basis period for any year of assessment falling before the year 1960-61, an amount equal to one-fiftieth of the expenditure shall be treated as written off as at the end of the previous year of assessment.

(5) If, on the occasion of a sale, a balancing allowance is made in respect of the expenditure, there shall be written off as at the time of the sale the amount by which the residue of the expenditure before the sale exceeds the net proceeds of the sale.

(6) If, on the occasion of a sale, a balancing charge is made in respect of the expenditure, the residue of the expenditure shall be deemed for the purposes of this Chapter to be increased as at the time of the sale by the amount on which the charge is made.".

26. For section 267 of the Income Tax Act, 1967 , there shall be substituted—

"267.—(1) Except in the cases mentioned in the following provisions of this section, any allowance or charge made to or on a person under the preceding provisions of this Chapter shall be made to or on him in taxing his trade or in charging his income under Case V of Schedule D as the case may require.

(2) A writing-down allowance shall be made to a person for a chargeable period by way of discharge or repayment of tax if his interest is subject to any lease at the end of that chargeable period or its basis period:

Provided that this subsection shall not apply as respects income chargeable under Case V of Schedule D.

(3) A balancing allowance shall be made to a person by way of discharge or repayment of tax if his interest is subject to any lease immediately before the event giving rise to the allowance:

Provided that this subsection shall not apply as respects income chargeable under Case V of Schedule D.

(4) A balancing charge shall be made on a person under Case IV of Schedule D if his interest is subject to any lease immediately before the event giving rise to the charge and the corresponding income is chargeable under the said Case.

(5) Any allowance which, under the preceding provisions of this section is to be made otherwise than in taxing a trade shall be available primarily against the following income:

( a ) where the income (whether arising by way of rent or receipts in respect of premises or easements or otherwise) from the industrial building or structure in respect of the capital expenditure on which the allowance is given is chargeable under Case V of Schedule D, against income chargeable under the said Case,

( b ) where the income (whether arising by way of rent or receipts in respect of premises or casements or otherwise) from the industrial building or structure in respect of the capital expenditure on which the allowance is given is chargeable under Case IV of Schedule D, against income chargeable under the said Case, or

( c ) income chargeable under Case IV or Case V of Schedule D respectively which is the subject of a balancing charge.".

27. For section 270 of the Income Tax Act, 1967 , there shall be substituted—

"270.—(1) For the purpose of this Chapter, a building or structure shall not be deemed to cease altogether to be used by reason that it falls temporarily out of use on or after the 15th day of April, 1959, and where, immediately before any period of temporary disuse beginning on or after that day, a building or structure is an industrial building or structure it shall be deemed to continue to be an industrial building or structure during the period of temporary disuse.

(2) Notwithstanding any other provision of this Part as to the manner of making allowances and charges where by reason of the provisions of subsection (1) a building or structure is deemed to continue to be an industrial building or structure while temporarily out of use, then, if—

( a ) upon the last occasion upon which the building or structure was in use as an industrial building or structure, it was in use for the purposes of a trade which has since been permanently discontinued, or

( b ) upon the last occasion upon which the building or structure was in use as an industrial building or structure, the relevant interest therein was subject to a lease which has since come to an end, any writing-down allowance or balancing allowance falling to be made to any person in respect of the building or structure during any period for which the temporary disuse continues after the discontinuance of the trade or the coming to an end of the lease shall be made by way of discharge or repayment of tax, and any balancing charge falling to be made on any person in respect of the building or structure during that period shall be made under Case IV of Schedule D:

Provided that if for a chargeable period the person has income chargeable to tax under Case V of Schedule D and at the end of that chargeable period or its basis period the building or structure is one to which this subsection applies, any writing-down allowance or balancing allowance or balancing charge falling to be made to or on the person in respect of the building or structure shall be made in charging his income under Case V of Schedule D.

(3) The reference in this section to the permanent discontinuance of a trade does not include a reference to the happening of any event which, by virtue of any of the provisions of this Act, is to be treated as equivalent to the discontinuance of the trade.".

28. For section 271 of the Income Tax Act, 1967 , there shall be substituted—

"271.—In this Chapter—

'initial allowance' means an allowance made under Chapter I of Part XV;

'scientific research allowance' means—

( a ) in relation to any expenditure incurred prior to the 6th day of April, 1965, the total amount of any allowances made in respect of that expenditure under section 244 (3) increased by the amount of any allowance made under section 244 (4) (b) or, as the case may be, reduced by any amount treated as a trading receipt pursuant to section 244 (4) (c), and

( b ) in relation to any expenditure incurred on or after the 6th day of April, 1965, the amount of any allowance made in respect of that expenditure under section 244 (3) reduced by any amount treated as a trading receipt pursuant to section 244 (4) (c) as it applies to expenditure incurred on or after that date;

'wear and tear allowance' means an allowance made under section 24l.".

29. For section 272 of the Income Tax Act, 1967 , there shall be substituted—

"272.—(1) Subject to the provisions of this section, where any of the following events occurs in the case of any machinery or plant in respect of which an initial allowance or a wear and tear allowance has been made for any chargeable period to a person carrying on a trade:

( a ) any event occurring after the setting up and before the permanent discontinuance of the trade whereby the machinery or plant ceases to belong to the person carrying on the trade (whether on a sale of the machinery or plant or in any other circumstances of any description),

( b ) any event occurring as aforesaid whereby the machinery or plant (while continuing to belong to the person carrying on the trade) permanently ceases to be used for the purposes of a trade carried on by him,

( c ) the permanent discontinuance of the trade, the machinery or plant not having previously ceased to belong to the person carrying on the trade,

an allowance or charge (in this Chapter referred to as a balancing allowance or a balancing charge) shall, in be circumstances mentioned in this section be made to or, as the case may be, on, that person for the chargeable period related to that event.

(2) Where there are no sale, insurance, salvage or compensation moneys or where the amount of the capital expenditure of the person in question on the provision of the machinery or plant still unallowed as at the time of the event exceeds those moneys, a balancing allowance shall be made, and the amount thereof shall be the amount of the expenditure still unallowed as aforesaid, or, as the case may be, of the excess thereof over the said moneys.

(3) If the sale, insurance, salvage or compensation moneys exceed the amount, if any, of the said expenditure still unallowed as at the time A the event, a balancing charge shall be made, and the amount on which it is made shall be an amount equal to the excess or, where the said amount still unallowed is nil, to the said moneys.

(4) Notwithstanding anything in subsection (3), in no case shall the amount on which a balancing charge is made on a person exceed the aggregate of the following amounts:

( a ) the amount of the initial allowance, if any, made to him in respect of the expenditure in question,

( b ) the amount of any wear and tear allowance made to him in respect of the machinery or plant in question,

( c ) the amount of any scientific research allowance made to him in respect of the expenditure, and

( d ) the amount of any balancing allowance previously made to him in respect of the expenditure.

(5) ( a ) Subject to the provisions of paragraph (c), where the aggregate amount of initial allowances and wear and tear allowances made to any person in respect of any machinery or plant exceeds the actual amount of the expenditure incurred by him on the provision of the said machinery or plant, the amount of such excess (in this paragraph referred to as the excess amount) shall, on the occurrence of an event falling, within any of the paragraphs (a), (b) and (c) of subsection (1), be deemed to be a payment of an equal amount received by the person on account of sale insurance, salvage or compensation moneys and shall be added to any other such moneys received in respect of the said machinery or plant and a balancing charge shall be made, and the amount on which it is made shall be an amount equal to—

(i) where there are no sale, insurance, salvage or compensation moneys, the said excess amount, or

(ii) where there are sale, insurance, salvage or compensation moneys, the aggregate of such moneys and the said excess amount.

( b ) Subject to the provisions of paragraph (c), where, as respects any machinery or plant, an event falling within any of the paragraphs (a), (b) and (c) of subsection (1) is followed by another event failing within any of those paragraphs, any balancing allowance or balancing charge made to or on a person by virtue of the happening of the later event shall take account of any balancing allowance or balancing charge previously made to or on that person in respect of the expenditure incurred by him on the provision of that machinery or plant.

( c ) Where, as respects any machinery or plant, an event falling within any of the paragraphs (a), (b) and (c) of subsection (1) is followed by another event falling within any of those paragraphs and occurring before the 3rd day of July, 1973, the later event shall not be treated as an event giving rise to a balancing allowance or balancing charge in respect of that machinery or plant.".

30. For section 274 of the Income Tax Act, 1967 , there shall be substituted—

"274.—References in this Chapter to the amount still unallowed as at any time of any expenditure on the provision of machinery or plant shall be construed as references to the amount of that expenditure less—

( a ) any initial allowance made or deemed under this Chapter to have been made in respect thereof to the person who incurred it,

( b ) any wear and tear allowances made or deemed under this Chapter to have been made to him in respect of the machinery or plant on the provision of which the expenditure was incurred, being allowances made for any chargeable period such that the chargeable period or its basis period ended before the time iii question.

( c ) any scientific research allowance made to him in respect of the expenditure, and

( d ) any balancing allowance made to him in respect of the expenditure.".

31. For section 275 of the Income Tax Act, 1967 , there shall be substituted—

"275.—(1) Where, after the setting up and on or before the permanent discontinuance of a trade which at any time is carried on in partnership, any event occurs which gives rise or may give rise to a balancing allowance or balancing charge in respect of machinery or plant, any balancing allowance or balancing charge which, if the trade had at all times been carried on by one and the same person, would have fallen to be made to or on him in respect of that machinery or plant by reason of that event shall, subject to section 72, be made to or on the person or persons carrying on the trade in the chargeable period related to that event, and the amount of any such allowance or charge shall be computed as if that person or those persons had at all times been carrying on the trade and as if everything done to or by his or their predecessors in the carrying on thereof had been done to or by him or them:

Provided that in applying the provisions of section 272 (4) to any such balancing charge, the allowances made in respect of the machinery or plant for the year beginning on the 6th day of April, 1959, or for any earlier year of assessment shall not be taken to include allowances made to, or attributable to the shares of, persons who were not, either alone or in partnership with other persons, carrying on the trade at the beginning of the year beginning on the 6th day of April, 1959.

(2) ( a ) In taxing the several trade of any partner in a partnership the same allowances and charges shall be made in respect of machinery or plant used for the purposes of that trade and belonging to one or more of the partners but not being partnership property as would fall to be made if the machinery or plant had at all material times belonged to all the partners and been partnership property and everything done by or to any of the partners in relation thereto had been done by or to all the partners.

( b ) In this subsection 'several trade' has the meaning assigned to it by section 71.

(3) Notwithstanding anything in section 272, a sale or gift of machinery or plant used for the purposes of a trade carried on in partnership, being a sale or gift by one or more of the partners to one or more of the partners, shall not be treated as an event giving rise to a balancing allowance or balancing charge if the machinery or plant continues to be used after the sale or gift for the purposes of that trade.

(4) References in subsections (2) and (3) to use for the purposes of a trade do not include references to use in pursuance of a letting by the partner or partners in question to the partnership or to use in consideration of the making to the partner or partners in question of any payment which may be deducted in computing under section 71 (3) the profits or gains of the trade.".

32. For section 279 of the Income Tax Act, 1967 , there shall be substituted—

"279.—(1) In determining whether any, and if so what, balancing allowance or balancing charge falls to be made to or on any person for any chargeable period in taxing a trade, there shall be deemed to have been made to that person, for every previous chargeable period in which the machinery or plant belonged to him and which is a chargeable period to be taken into account for the purpose of this section, such wear and tear allowance or greater wear and tear allowance, if any, in respect of the machinery or plant as would have fallen to be made to him if all the conditions specified in subsection (3) had been fulfilled in relation to every such previous chargeable period.

(2) There shall be taken into account for the purposes of this section every previous chargeable period in which the machinery or plant belonged to the person and—

( a ) during which the machinery or plant was not used by the person for the purposes of the trade,

( b ) during which the trade was not carried on by him,

( c ) during which the trade was carried on by him in such circumstances that, otherwise than by virtue of Part V of the Corporation Tax Act, 1976 , or Chapter I of Part XXV the full amount of the profits or gains thereof was not liable to be charged to tax,

( d ) for which the whole or a part of the tax chargeable in respect of the profits of the trade was not payable by virtue of Chapter II of Part XXV, or

( e ) for which the tax payable in respect of the profits of the trade was reduced by virtue of Part IV of the Corporation Tax Act, 1976 , or Chapter III or IV of Part XXV

(3) The conditions referred to in subsection (1) are:

( a ) that the trade had been carried on by the person An question ever since the date on which he acquired the machinery or plant and had been so carried on by him in such circumstances that the full amount of the profits or gains thereof was liable to be charged to tax,

( b ) that the trade had at no time consisted wholly or partly of exempted trading operations within the meaning of Part V of the Corporation Tax Act, 1976 , or Chapter I of Part XXV.

( c ) that the machinery or plant had been used by him solely for the purposes of the trade ever since that date, and

( d ) that a proper claim had been duly made by him for wear and tear allowance in respect of the machinery or plant for every relevant chargeable period.

In the case of a company as defined in section 1 (5) of the Corporation Tax Act, 1976 , paragraph (a) shall not alter the periods which are to be taken as chargeable periods, but if during any time after the 5th day of April, 1976, and after the company acquired the machinery or plant, the company has not been within the charge to corporation tax, any year of assessment or part of a year of assessment falling within that time shall be taken as a chargeable period as if it had been an accounting period of the company.

(4) Nothing in this section shall affect the provisions of section 272 (4).".

33. For section 280 of the Income Tax Act, 1967 , there shall be substituted—

"280.—(1) Where—

( a ) an event occurs which gives rise or might give rise to a balancing allowance or balancing charge to or on any person in respect of any machinery or plant provided or used by him for the purposes of a trade; and

( b ) any sums (hereafter in this section referred to as the said sums) which—

(i) are in respect of, or take account of, the wear and tear to the machinery or plant occasioned by its use for the purposes of the trade, and

(ii) do not fall to be taken into account as his income or in computing the profits or gains of any trade carried on by him,

have been paid, or are to be payable, to him directly or indirectly,

then, in determining whether and, if so what, balancing allowance or balancing charge falls to be made to or on that person, there shall be deemed to have been made to him for the chargeable period related to the event a wear and tear allowance in respect of the machinery or plant of an amount equal to the total amount of the said sums.

(2) Nothing in this section shall affect the provisions of section 272 (4).".

34. For section 282 of the Income Tax Act, 1967 , there shall be substituted—

"282.—(1) Any balancing allowance or balancing charge made to or on any person under the preceding provisions of this Chapter shall, unless it is made under or by virtue of section 281, be made to or on that person in taxing his trade.

(2) Any wear and tear allowance made under or by virtue of section 241 (5) or any balancing allowance made under or by virtue of section 281 shall be made by way of discharge or repayment of tax and shall be available primarily against Se income from the letting of machinery or plant.

(3) Any balancing charge made under or by virtue of section 281 shall be made under Case 1V of Schedule D.".

35. For section 284 of the Income Tax Act, 1967 , there shall be substituted—

"284.—(1) In this Chapter—

'income from patents' means—

( a ) any royalty or other sum paid in respect of the user of a patent, and

( b ) any amount on which tax is payable for any chargeable period by virtue of any of the provisions of this Chapter;

'the commencement of the patent' means, in relation to a patent, the date as from which the patent rights become effective;

'patent rights' means the right to do or authorise the doing of anything which would, but for that right, be an infringement of a patent;

'Irish patent' means a patent granted under the laws of the State;

'the operative date' means the 6th day of April, 1960.

(2) In this Chapter, any reference to the sale of part of patent rights includes a reference to the grant of a licence in respect of the patent in question, and any reference to the purchase of patent rights includes a reference to the acquisition of a licence in respect of a patent:

Provided that if a licence granted by a person entitled to any patent rights is a licence to exercise those rights to the exclusion of the grantor and all other persons for the whole of the remainder of the term for which the rights subsist, the grantor shall be treated for the purposes of this Chapter as thereby selling the whole of the rights.

(3) Where, under section 130 of the Industrial and Commercial Property (Protection) Act, 1927 , or any corresponding provisions of the law of any country outside the State, an invention which is the subject of a patent is made, used, or exercised or vended by or for the service of the State or the government of the country concerned, the provisions of this Chapter shall have effect as if the making, user, exercise or vending of the invention had taken place in pursuance of a licence, and any sums paid in respect thereof shall be treated accordingly.".

36. For section 285 of the Income Tax Act, 1967 , there shall be substituted—

"285.—(1) Where, on or after the operative date, a person incurs capital expenditure on the purchase of patent rights, there shall, subject to and in accordance with the following provisions of this Chapter, be made to him writing-down allowances in respect of that expenditure during the writing-down period as hereinafter defined:

Provided that no writing-down allowance shall be made to a person in respect of any expenditure unless—

( a ) the allowance falls to be made to him in taxing his trade, or

( b ) any income receivable by him in respect of the rights would be liable to tax.

(2) The writing-down period shall be the seventeen years beginning with the chargeable period related to the expenditure:

Provided that—

( a ) where the rights are purchased for a specified period, the preceding provisions of this subsection shall have effect with the substitution for the reference to seventeen years of a reference to seventeen years or the number of years comprised within that period, whichever is the less,

( b ) where the rights purchased begin one complete year or more after the commencement of the patent and paragraph (a) of this proviso does not apply, the said provisions shall have effect with the substitution for the reference to seventeen years of a reference to seventeen years less the number of complete years, which, when the rights begin, have elapsed since the commencement of the patent, or, if seventeen complete years have elapsed as aforesaid, of a reference to one year, and

( c ) any expenditure incurred on or after the operative date for the purposes of a trade by a person about to carry it on shall be treated for the purposes of this subsection as if it had been incurred by that person on the first day on which he does carry it on, unless, before the said first day, he has sold all the rights on the purchase of which the expenditure was incurred.".

37. For section 286 of the Income Tax Act, 1967 , there shall be substituted—

"286.—(1) Where, on or after the operative date, a person incurs capital expenditure on the purchase of patent rights and, before the end of the writing-down period under section 285, any of the following events occurs:

( a ) the rights come to an end without being subsequently revived;

( b ) he sells all those rights or so much thereof as he still owns;

( c ) he sells part of those rights and the net proceeds of the sale (so far as they consist of capital sums) are not less than the amount of the capital expenditure remaining unallowed;

no writing-down allowance shall be made to that person for the chargeable period related to the event or for any subsequent chargeable period.

(2) Where, on or after the operative date, a person incurs capital expenditure on the purchase of patent rights and, before the end of the writing-down period under section 285, either of the following events occurs:

( a ) the rights come to an end without being subsequently revived;

( b ) he sells all those rights, or so much thereof as he still owns, and the net proceeds of the sale (so far as they consist of capital sums) are less than the amount of the capital expenditure remaining unallowed;

there shall, subject to and in accordance with the following provisions of this Chapter, be made to him for the chargeable period related to the event, an allowance (in this Chapter referred to as a balancing allowance) equal, if the event is the rights coming to an end, to the amount of the capital expenditure remaining unallowed, and, if the event is a sale, to the amount of the capital expenditure remaining unallowed less the net proceeds of the sale.

(3) Where a person who, on or after the operative date, has incurred capital expenditure on the purchase of patent rights sells all or any part of those rights and the net proceeds of the sale (so far as they consist of capital sums) exceed the amount of the capital expenditure remaining unallowed, if any, there shall, subject to and in accordance with the following provisions of this Chapter be made on him for the chargeable period related to the sale, a charge (in this Chapter referred to as a balancing charge) on an amount equal to the excess or, where the amount of the capital expenditure remaining unallowed is nil, to the said net proceeds.

(4) Where a person who, on or after the operative date, has incurred capital expenditure on the purchase of patent rights sells a part of those rights and subsection (3) does not apply, the amount of any writing-down allowance made in respect of that expenditure for the chargeable period related to the sale or any subsequent chargeable period shall be the amount arrived at by—

( a ) subtracting the net proceeds of the sale (so far as they consist of capital sums) from the amount of the expenditure remaining unallowed at the time of the sale, and

( b ) dividing the result by the number of complete years of the writing-down period which remained at the beginning of the chargeable period related to the sale,

and so on for any subsequent sales.

(5) References in the preceding provisions of this section to the amount of any capital expenditure remaining unallowed shall, in relation to any event, be construed as references to the amount of that expenditure less any writing-down allowances made in respect thereof for chargeable periods before the chargeable period related to that event, and less also the net proceeds of any previous sale by the person who incurred the expenditure of any part of the rights acquired by the expenditure, so far as those proceeds consist of capital sums.

(6) Notwithstanding anything in the preceding provisions of this section, no balancing allowance shall be made in respect of any expenditure unless a writing-down allowance has been, or, but for the happening of the event giving rise to the balancing allowance, could have been, made in respect of that expenditure, and the total amount on which a balancing charge is made in respect of any expenditure shall not exceed the total writing-down allowances actually made in respect of that expenditure, less, if a balancing charge has previously been made in respect of that expenditure, the amount on which that charge was made.".

38. For section 288 of the Income Tax Act, 1967 , there shall be substituted—

"288.—(1) Where, on or after the operative date, a person resident in the State sells any patent rights and the net proceeds of the sale consist wholly or partly of a capital sum, he shall, subject to the provisions of this Chapter, be charged to tax under Case IV of Schedule D for the chargeable period in which the sum is received by him and successive chargeable periods, being charged in each period on the same fraction of the sum as the period is of six years (or such less fraction as has not already been charged):

Provided that—

( a ) if that person, by notice in writing served on the inspector not later than twelve months after the end of the chargeable period in which that sum was received, elects that the whole of that sum shall be charged to tax for the said chargeable period, it shall be charged to tax accordingly;

( b ) if that person, by notice as aforesaid, applies to have the said fraction determined as being other than the same fraction as the chargeable period is of six years, then, if it appears to the Revenue Commissioners that hardship is likely to arise having regard to all the circumstances of the case unless a direction is given under this paragraph, they may direct that the fraction shall be the same fraction of the sum as the chargeable period is of a number of years other than six and that the charge shall be spread accordingly.

(2) Where, on or after the operative date, a person not resident in the State sells any patent rights and the net proceeds of the sale consist wholly or partly of a capital sum, and the patent is an Irish patent, then, subject to the provisions of this Chapter—

( a ) he shall be chargeable to tax in respect of that sum under Case IV of Schedule D, and

( b ) section 434 shall apply to that sum as if it were an annual payment payable otherwise than out of profits or gains brought into charge to tax:

Provided that if, not later than twelve months after the end of the year of assessment in which the sum is paid, the person to whom it is paid, by notice in writing to the Revenue Commissioners, elects that the said sum shall be treated for the purpose of income tax for that year and for each of the five succeeding years as if one-sixth thereof, and no more, were included in his income chargeable to tax for all those years respectively, it shall be so treated, and all such repayments and assessments of tax for each of those years shall be made as are necessary to give effect to the election, so, however, that—

(i) the election shall not affect the amount of tax falling to be deducted and accounted for under section 434;

(ii) where any sum is deducted under section 434, any adjustments necessary to give effect to the election shall be made by way of repayment of tax, and

(iii) the said adjustments shall be made year by year and as if one-sixth of the sum deducted had been deducted in respect of tax for each year, and no repayment of, or of any part of, that portion of the tax deducted which is to be treated as deducted in respect of tax for any year shall be made unless and until it is ascertained that the tax ultimately falling to be paid for that year is less than the amount of tax paid for that year.

(2A) In subsection (2) the word 'tax' shall mean income tax, unless the seller of the patent rights, being a company, would be within the charge to corporation tax in respect of any proceeds of the sale not consisting of a capital sum; and where the subsection applies to charge a company to corporation tax in respect of a sum paid to it, the proviso shall not apply, but the company may, by notice in writing given to the Revenue Commissioners not later than twelve months after the end of the accounting period in which the sum is paid, elect that the sum shall be treated as arising rateably in the accounting periods ending not later than six years from the beginning of that in which the sum is paid (being accounting periods during which the company remains within the charge to corporation tax as aforesaid), and there shall be made all such repayments of tax and assessments to tax as are necessary to give effect to any such election.

(3) Where the patent rights sold by a person, or the rights out of which the patent rights sold by a person were granted, were acquired by him by purchase and the price paid consisted wholly or partly of a capital sum, the preceding provisions of this section shall apply as if any capital sum received by him when he sells the rights were reduced by the amount of that sum :

Provided that—

( a ) where between the said purchase and the said sale he has sold part of the patent rights acquired by him and the net proceeds of that sale consist wholly or partly of a capital sum, the amount of the reduction falling to be made under this subsection in respect of the subsequent sale shall be itself reduced by the amount of that sum,

( b ) nothing in this subsection shall affect the amount of tax falling to be deducted and accounted for under section 434, by virtue of subsection (2) of this section, and where any sum is deducted under section 434, any adjustment necessary to give effect to the provisions of this subsection shall be made by way of repayment of tax.

(4) This section shall apply in relation to any sale of part of any patent rights as it applies in relation to sales of patent rights.".

39. For section 290 of the Income Tax Act, 1967 , there shall be substituted—

"290.—(1) Notwithstanding anything in section 61, in computing the profits or gains of any trade, there shall be allowed to be deducted as expenses any fees paid or expenses incurred in obtaining, for the purposes of the trade, the grant of a patent or an extension of the term of a patent.

(2) Where—

( a ) on or after the operative date, a person, otherwise than for the purposes of a trade carried on by him, pays any fees or incurs any expenses in connection with the grant or maintenance of a patent or the obtaining of an extension of a term of a patent, and

( b ) those fees or expenses would, if they had been paid or incurred for the purposes of a trade, have been allowable as a deduction in estimating the profits or gains thereof,

there shall be made to him, for the chargeable period in which those expenses were paid or incurred, an allowance equal to the amount thereof.

(3) Where a patent is granted in respect of any invention, an allowance equal to so much of the net amount of any expenses incurred on or after the operative date by an individual who, whether alone or in conjunction with any other person, actually devised the invention as is properly ascribable to the devising thereof (not being expenses in respect of which, or of assets representing which, an allowance falls to be made under any other provision of this Act) shall be made to that individual for the year of assessment in which the expenses were incurred.

(4) The provisions of subsection (3) shall apply in relation to expenses incurred before the operative date as if those expenses were incurred on that day, subject to the modification that, if the patent in question was granted one complete year or more before that day, the amount to be allowed shall be reduced by applying thereto the fraction the numerator of which is seventeen less the number of complete years comprised in the period beginning with the commencement of the patent and ending immediately before the operative date and the denominator of which is seventeen.".

40. For section 291 of the Income Tax Act, 1967 , there shall be substituted—

"291.—(1) Where a royalty or other sum to which section 433 or 434 applies is paid in respect of the user of a patent, and that user extended over a period of six complete years or more, the person receiving the payment may require that the tax payable by him by reason of the receipt of that sum shall be reduced so as not to exceed the total amount of tax which would have been payable by him if that royalty or sum had been paid in six equal instalments at yearly intervals, the last of which was paid on the date on which the payment was in fact made.

(2) Subsection (1) shall apply in relation to a royalty or other sum where the period of the user is two complete years or more but less than six complete years as it applies to the royalties and sums mentioned in that subsection, but with the substitution for the reference to six equal instalments of a reference to so many equal instalments as there are complete years comprised in that period.

(3) In this section, any reference to the tax payable by a person includes, in cases where the income of a wife is deemed to be the income of the husband, references to the income tax payable by his wife or her husband, as the case may be.

(4) Nothing in this section shall apply to any sum to which section 434 applies by virtue of section 288.".

41. For section 292 of the Income Tax Act, 1967 , there shall be substituted—

"292.—(1) An allowance or charge under any of the provisions of this Chapter shall be made to or on a person in taxing his trade if—

( a ) he is carrying on a trade the profits or gains of which are, or, if there were any, would be, chargeable to tax under Case 1 of Schedule D for the chargeable period for which the allowance or charge is made, and

( b ) at any time in the chargeable period or its basis period the patent rights in question, or other rights out of which they were granted, were or were to be used for the purposes of that trade:

Provided that nothing in this subsection shall affect any of the preceding provisions of this Chapter allowing a deduction as expenses in computing the profits or gains of a trade or requiring a charge to be made under Case IV of Schedule D.

(2) Save as aforesaid, an allowance under this Chapter shall be made by way of discharge or repayment of tax and shall be available against income from patents, and a charge under this Chapter shall be made under Case IV of Schedule D.".

42. For section 293 of the Income Tax Act, 1967 , there shall be substituted—

"293.—(1) Where a person on whom, by reason of the receipt of a capital sum, a charge falls or would otherwise fall to be made under section 288 dies or, being a body corporate, commences to be wound up—

( a ) no sums shall be charged under that section on that person for any chargeable period subsequent to that in which the death takes place or the winding up commences, and

( b ) the amount falling to be charged for the chargeable period in which the death occurs or the winding up commences shall be increased by the total amounts which but for the death or winding up, would have fallen to be charged for subsequent chargeable periods:

Provided that, in the case of a death, the personal representatives may, by notice in writing served on the inspector not later than twenty-one days after notice has been served on them of the charge falling to be made by virtue of this section, require that the tax payable out of the estate of the deceased by reason of the increase provided for by this section shall be reduced so as not to exceed the total amount of tax which would have been payable by him or out of his estate by reason of the operation of section 288 in relation to that sum, if, instead of the amount falling to be charged for the year in which the death occurs being increased by the whole amount of the sums charged for subsequent years, the several amounts falling to be charged for the years beginning with that in which the capital sum was received and ending with that in which the death occurred had each been increased by the said whole amount divided by the number of those years.

(2) Where, under the provisions of Chapter V of this Part as modified by Chapter III of Part IV, charges under section 288 fall to be made on two or more persons as being the persons for the time being carrying on a trade, and the relevant period, within the meaning of the said Chapter III, comes to an end, the provisions of subsection (1) shall have effect in relation to the ending of the relevant period as they have effect where a body corporate commences to be wound up:

Provided that—

( a ) the additional sums which, under subsection (1), fall to be charged for the year in which the relevant period ends shall be aggregated and apportioned among the members of the partnership immediately before the ending of the relevant period according to their respective interests in the partnership profits at that time and each partner (or, if he is dead, his personal representatives) charged for his proportion, and

( b ) each partner (or, if he is dead, his personal representatives) shall have the same right to require a reduction of the total tax payable by him or out of his estate by reason of the increase as would have been exercisable by the personal representatives under subsection (1) in the case of a death, and the proviso to that subsection shall have effect accordingly but as if references to the amount of tax which would have been payable by the deceased or out of his estate in the event therein mentioned were a reference to the amount of tax which would in that event have fallen to be paid or borne by the partner in question or out of his estate.

(3) In this section, any references to tax paid or borne or payable or falling to be paid or borne by a person include, in cases where the income of a wife is deemed to be income of the husband, references to the income tax paid or borne, or payable or falling to be paid or borne, by his wife or her husband, as the case may be.".

43. For section 294 of the Income Tax Act, 1967 , there shall be substituted—

"294.—(1) Subject to the provisions of this section, where a person for the purposes of any qualifying trade carried on by him incurs capital expenditure on dredging, and either the trade consists of the maintenance or improvement of the navigation of a harbour, estuary or waterway or the dredging is for the benefit of vessels coming to, leaving or using any dock or other premises occupied by him for the purposes of the trade, then—

( a ) an initial allowance equal to one-tenth of the expenditure shall be made for the first relevant chargeable period to the person incurring the expenditure, and

( b ) writing-down allowances shall be made in respect of that expenditure to the person for the time being carrying on the trade during a writing-down period of fifty years beginning with the first relevant chargeable period, but where a writing-down allowance falls to be made for a year of assessment to such a person, and he is within the charge to income tax in respect of the trade for part only of that year, that part shall be treated as a separate chargeable period for the purposes of computing allowances under this section:

Provided that this subsection shall not apply to any expenditure incurred before the 30th day of September, 1956.

(2) If the trade is permanently discontinued in any chargeable period, then, for that chargeable period there shall be made to the person last carrying on the trade, in addition to any other allowance made to him, an allowance equal to the amount of the expenditure less the allowances made in respect of it under subsection (1) for that and previous chargeable periods.

(3) For the purposes of this section, a trade shall not be treated by virtue of any of the provisions of this Act as discontinued on a change in the persons engaged in carrying it on.

(4) Any allowance under this section shall be made in taxing the trade.

(5) Where expenditure is incurred partly for the Purposes of a qualifying trade and partly for other purposes, subsection (1) shall apply to so much only of that expenditure as on a just apportionment ought fairly to be treated as incurred for the purposes of that trade.

(6) In this section 'qualifying trade' means any trade or undertaking which, or a part of which, complies with any of the following conditions—

( a ) the condition that it consists of the maintenance or improvement of the navigation of a harbour, estuary or waterway,

( b ) any condition set out in the provisions of section 255 (1),

but where part only of a trade or undertaking complies with those conditions, subsection (5) shall apply as if the part which does and the part which does not comply were separate trades.

(7) Where a person incurs capital expenditure for the purposes of a trade or part of a trade not yet carried on by him but with a view to carrying it on, or incurs capital expenditure in connection with a dock or other premises not yet occupied by him for the purposes of a qualifying trade but with a view to so occupying the dock or premises, the foregoing provisions of this section shall apply as if he had been carrying on the trade or part of the trade or occupying the dock or premises for the purposes of the qualifying trade, as the case may be, at the time when the expenditure was incurred.

(8) For the purposes of this section, the first relevant chargeable period, in relation to expenditure incurred by any person, is the chargeable period related to the following event or occasion, that is—

( a ) the incurring of the expenditure, or

( b ) in the case of expenditure for which allowances are to be made by virtue of subsection (7) of this section, the occasion when he first both carries on the trade or part of the trade for the purposes of which the expenditure was incurred, and occupies for the purposes of that trade or part of the trade the dock or other premises in connection with which it was incurred.

(9) Where a person contributes a capital sum to expenditure on dredging incurred by another person, he shall, for the purposes of this section, be treated as incurring capital expenditure on that dredging equal to the amount of the contribution and the capital expenditure incurred by the other person on that dredging shall, for those purposes, be deemed to be reduced by the amount of the contribution.

(10) In this section 'dredging' does not include things done otherwise than in the interests of navigation, but (subject to that) includes the removal of anything forming part of or projecting from the bed of the sea or of any inland water, by whatever means it is removed and whether or not at the time of removal it is wholly or partly above water, and this section shall apply to the widening of an inland waterway in the interests of navigation as it applies to dredging.

(11) No allowance shall be made by virtue of this section in respect of any expenditure if for the same or any other chargeable period an allowance is or can be made in respect of it under Chapter II of Part XV or Chapter I of this Part.

(12) Notwithstanding any other provision of this section, no allowance under this section shall be made for any year of assessment beginning before the 6th day of April, 1960, but, in determining the allowances to be made under this section in any particular case, there shall be deemed to have been made in that case all such allowances (other than initial allowances) as could have been made if this section had always had effect.".

44. For section 295 of the Income Tax Act, 1967 , there shall be substituted—

"295.—(1) Any claim by a person for an allowance falling to be made to him under any of the provisions of this Part in charging profits or gains of any description shall be included in the annual statement required to be delivered under this Act of those profits or gains and the allowance shall be made as a deduction in charging those profits or gains, and section 241 (3) shall apply in relation to the allowance as it applies in relation to allowances in respect of wear and tear of machinery and plant.

(2) Any charge falling to be made under any of the provisions of this Part on a person for any chargeable period in taxing his trade or in charging his income under Case V of Schedule D shall be made by means of an assessment in addition to any other assessment falling to be made thereon for that period.

(3) The preceding provisions of this section shall apply in relation to professions, employments and offices as they apply in relation to trades.".

45. For section 297 of the Income Tax Act, 1967 , there shall be substituted—

"297.—(1) In this Part, as it applies for income tax purposes, 'basis period' has the meaning assigned to it by the following provisions of this section.

(2) In the case of a person to or on whom an allowance or charge falls to be made under Case I of Schedule D in charging the profits or gains of his trade or under Case V of Schedule D in charging income arising from rents or receipts in respect of premises or easements, his basis period for any year of assessment is the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D in respect of the trade in question or, as the case may be, under Case V of Schedule D in respect of the income arising from rents or receipts in respect of premises or easements or, where, by virtue of any provision of this Act, the profits or gains or income of any other period are to be taken to be the profits or gains or income of the said period, that other period:

Provided that, in the case of any trade—

( a ) where two basis periods overlap, the period common to both shall be deemed for the purpose of this subsection to fall in the first basis period only,

( b ) where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment then, unless the second-mentioned year of assessment is the year of the permanent discontinuance of the trade or of the cessation of the single source of profits or gains mentioned in section 81 (2), the interval shall be deemed to be part of the second basis period, and

( c ) where there is an interval between the end of the basis period for the year of assessment preceding that in which the trade is permanently discontinued or the said single source ceases and the basis period for the year in which the permanent discontinuance or the cessation occurs, the interval shall be deemed to form part of the first basis period.

(3) Any reference in the proviso to subsection (2) to the overlapping of two periods shall be construed as including a reference to the coincidence of two periods or to the inclusion of one period in another, and references to the period common to both of two periods shall be construed accordingly.

(4) Where an allowance or charge falls to be made under Chapter II of this Part to or on a person carrying on or holding a profession, employment or office, the provisions of the preceding subsections of this section shall apply as if the references to a trade included references to a profession, employment or office and as if the references to Case I of Schedule D included references to Case II of Schedule D and Schedule E.

(5) In the case of any other person to or on whom an allowance or charge falls to be made under this Part, his basis period for any year of assessment is the year of assessment itself.".

46. For section 299 of the Income Tax Act, 1967 , there shall be substituted—

"299.—(1) The provisions of this section shall have effect in relation to sales of any property where either—

( a ) the buyer is a body of persons over whom the seller has control, or the seller is a body of persons over whom the buyer has control, or both the seller and the buyer are bodies of persons and some other person has control over both of them, or

( b ) it appears with respect to the sale or with respect to transactions of which the sale is one, that the sole or main benefit which, apart from the provisions of this section, might have been expected to accrue to the parties or any of them was the obtaining of an allowance under section 241 or 243, under Chapter I of Part XV or under any of the provisions of this Part.

References in this subsection this body of persons include references to a partnership.

(2) Where the property is sold at a price other than that which it would have fetched if sold in the open market, then, subject to the provisions of subsections (3) and (4), the like consequences shall ensue for the purposes of the enactments mentioned in sub-section (1), in their application to the tax of all persons concerned, as would have ensued if the property had been sold for the price which it would have fetched if sold in the open market.

(3) Where, the sale is a sale of machinery or plant—

( a ) no initial allowance shall be made to the buyer, and

( b ) subject to the provisions of subsection (4), if the price which the property would have fetched if sold in the open market is greater than the amount which, for the purpose of determining whether any, and if so, what, balancing charge should be made on the seller in respect of the property under Chapter II of this Part, would be taken to be the amount of the capital expenditure incurred by the seller on the provision of the property, subsection (2) shall have effect as if for each of the references to the price which the property would have fetched if sold in the open market there were substituted a reference to the said amount:

Provided that this subsection shall not apply in relation to a sale of machinery or plant which was never used if the business or part of the business of the seller was the manufacture or supply of machinery or plant of that class and the sale was effected in the ordinary course of the seller's business.

(4) ( a ) Subject to subsection (5), where the sale is one to which subsection (1) (a) applies and subsection (1) (b) does not apply, and the parties to the sale by notice in writing to the inspector so elect, the following provisions shall have effect:

(i) subsection (2) shall have effect as if, for each of the references to the price which the property would have fetched if sold in the open market, there were substituted a reference to that price or to the sum hereinafter mentioned, whichever is the lower,

(ii) subsection (3) (b) shall not apply, and

(iii) notwithstanding anything in the preceding provisions of this section, such balancing charge, if any, shall be made on the buyer on any event occurring after the date of the sale as would have fallen to be made on the seller if the seller had continued to own the property and had done all such things and been allowed all such allowances or deductions in connection therewith as were done by or allowed to the buyer.

( b ) The sum referred to in paragraph (a) (i) is—

(i) in the case of an industrial building or structure, the residue of the expenditure on the construction of that building or structure immediately before the sale, computed in accordance with the provisions of section 266,

(ii) in the case of machinery or plant, the amount of the expenditure on the provision thereof still unallowed immediately before the sale, computed in accordance with the provisions of section 274,

(iii) in the case of patent rights, the amount of the capital expenditure on the acquisition thereof remaining unallowed, computed in accordance with the provisions of section 286.

(5) An election under subsection (4) (a) may not be made if—

( a ) any of the parties to the sale is not resident in the State at the time of the sale, and

( b ) the circumstances are not at that time such that an allowance or charge under this Part falls or might fall to be made to or on that party in consequence of the sale, but, except as aforesaid, this section shall have effect in relation to a sale notwithstanding that it is not fully applicable by reason of the non-residence of a party to the sale or otherwise.

(6) In this section 'control' in relation to a body corporate, 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 or any other body corporate, or by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate, that the affairs of the first-mentioned body corporate 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.".

47. For section 301 of the Income Tax Act, 1967 , there shall be substituted—

"301.—(1) Where, under or by virtue of any provisions of this Part, any sum falls to be apportioned and, at the time of the apportionment, it appears that it is material as respects the liability to tax (for whatever chargeable period) of two or more persons, any question which arises as to the manner in which the sum is to be apportioned shall be determined, for the purposes of the tax of all those persons, by the Appeal Commissioners, in like manner as if it were an appeal against an assessment to income tax under Schedule D, and the provisions of this Act relating to such an appeal shall apply accordingly with any necessary modifications:

Provided that all the said persons shall be entitled to appear and be heard by the Appeal Commissioners or to make representations to them in writing.

(2) This section applies in relation to any determination for the purposes of this Part of the price which property would have fetched if sold in the open market as it applies in relation to apportionments.".

48. For section 302 of the Income Tax Act, 1967 , there shall be substituted—

"302.—(1) Where an event occurs which gives rise, or would, but for this section, give rise to a balancing allowance or balancing charge in respect of any property to or on a company in relation to which a certificate under section 70 (2) of the Corporation Tax Act, 1976 , or section 374 (2) has been given then whether the certificate is still in force or not, the following provisions of this section shall apply.

(2) If the property has been used by the company exclusively for the purposes of its exempted trading operations within the meaning of Part V of the Corporation Tax Act, 1976 , or Chapter I of Part XXV no balancing allowance or balancing charge shall be made.

(3) If the property has been used partly for the purposes of the company's exempted trading operations and partly for the purposes of its other trading operations, regard shall be had to all the relevant circumstances of the case and there shall be made to or on the company an allowance of such an amount, or, as the case may be, a charge on such an amount, as may be just and reasonable.".

49. For section 303 of the Income Tax Act, 1967 , there shall be substituted—

"303.—(1) References in this Part to capital expenditure and capital sums—

( a ) in relation to the person incurring the expenditure or paying the sums, do not include any expenditure or sum which is allowed to be deducted in computing, for the purposes of tax, the profits or gains of a trade, profession, office or employment carried on or held by him, and

( b ) in relation to the person receiving the amounts expended or the sums in question, do not include references to any amounts or sums which fall to be taken into account as receipts in computing the profits or gains of any trade, profession, office or employment carried on or held by him,

and do not include, in relation to any such person as aforesaid, any expenditure or sum in the case of which a deduction of tax falls or may fall to be made, otherwise than by virtue of the provisions of Chapter III of this Part relating to charges on capital sums received for patent rights, under section 433 or 434.

(2) Any reference in this Part to the date on which expenditure is incurred shall be construed as a reference to the date when the sums in question become payable.

(3) Expenditure shall not be regarded for any of the purposes of this Part as having been incurred by any person in so far as it has been or is to be met directly or indirectly by the State, by any board established by statute or by any public or local authority:

Provided that in considering whether any and, if so, what, balancing charge is to be made on a person under Chapter II of this Part in respect of any machinery or plant provided before the 15th day of April, 1959, this subsection shall not apply.".

50. For section 304 of the Income Tax Act, 1967 , there shall be substituted—

"304.—(1) In this Part, except where the context otherwise requires—

'income' includes any amount on which a charge to tax is authorised to be made under any of the provisions of this Part;

'lease' includes an agreement for a lease where the term to be covered by the lease has begun, and any tenancy, but does not include a mortgage, and 'lessee', 'lessor' and 'leasehold interest' shall be construed accordingly;

'sale, insurance, salvage or compensation moneys' mean, in relation to an event which gives rise or might give rise to a balancing allowance or a balancing charge to or on any person—

( a ) where the event is a sale of any property, the net proceeds to that person of the sale,

( b ) where the event is the demolition or destruction of any property, the net amount received by him for the remains of the property, together with any insurance moneys received by him in respect of the demolition or destruction and any other compensation of any description received by him in respect thereof, in so far as that compensation consists of capital sums,

( c ) as respects machinery or plant, where the event is the permanent loss thereof otherwise than in consequence of its demolition or destruction, any insurance moneys received by him in respect of the loss and any other compensation of any description received by him in respect thereof, in so far as that compensation consists of capital sums, and

( d ) where the event is that a building or structure ceases altogether to be used, any compensation of any description received by him in respect of that event, in so far as that compensation consists of capital sums.

(2) Any reference in this Part to any building, structure, machinery or plant shall be construed as including a reference to a part of any building, structure, machinery or plant.

(3) The provisions of this Part shall apply in relation to a share in machinery or plant as they apply in relation to a part of machinery or plant, and for the purposes of those provisions a share in machinery or plant shall be deemed to be used for the purposes of a trade so long as, and only so long as, the machinery or plant is used for the purposes thereof.

(4) Any reference in this Part to the time of any sale shall be construed as a reference to the time of completion or the time when possession is given, whichever is the earlier.

(5) Any reference in this Part to the setting up or permanent discontinuance of a trade includes, except where the contrary is expressly provided, a reference to the occurring of any event which, under any of the provisions of this Act, is to be treated as equivalent to the setting up or permanent discontinuance of a trade.

(6) Any reference in this Part to an allowance made includes a reference to an allowance which would be made but for an insufficiency of profits or gains, or other income, against which to make it.".

51. For section 305 of the Income Tax Act, 1967 , there shall be substituted—

"305.—(1) Where, before the day of the setting up or commencement of a trade consisting of the production for sale of manufactured goods, a person who is about to carry on the trade incurs or has incurred expenditure on the recruitment and training, with a view to their employment in the trade, of persons all or a majority of whom are Irish citizens—

( a ) there shall be made to him allowances (in this Part referred to as writing-down allowances') in respect of that expenditure during a writing-down period of three years beginning on that day and such allowances shall be made in taxing the trade,

( b ) section 241 (3) shall apply in relation to an allowance under paragraph (a) as it applies in relation to an allowance in respect of wear and tear of machinery or plant.

(2) For the purposes of this section—

( a ) expenditure shall not include any expenditure incurred by a person in respect of which no deduction would have been allowable to him, in computing the profits or gains of the trade under the provisions of this Act applicable to Case I of Schedule D, if it had been incurred on or after the day of the setting up or commencement of the trade,

(3) For the purposes of this section, the date on which any expenditure is incurred shall be taken to be the date on which the sum in question becomes payable.

(4) Any claim by a person for an allowance under this section shall be included in the annual statement required to be delivered under this Act of the profits or gains of his trade and shall be accompanied by a certificate signed by the claimant, which shall be deemed to form part of the claim, stating that the expenditure was incurred on the recruitment and training, with a view to their employment in the trade, of persons all or a majority of whom are Irish citizens and giving such particulars as show that the allowance falls to be made.".

52. For section 306 of the Income Tax Act, 1967 , there shall be substituted—

"306.—(1) This section relates only to commodities which were not produced commercially in the State in the twelve months ended on the 31st day of August, 1939, and the production of which in the State (whether for home consumption or for export) would not have been commercially profitable at any time during those twelve months, and 'commodity to which this section relates ' shall in this section be construed accordingly.

(2) In this section references to abnormal economic conditions in respect of a commodity to which this section relates shall be construed as meaning that, owing to circumstances created by or arising from the national emergency to which the resolution passed by each House of the Oireachtas on the 2nd day of September, 1939, related (including circumstances continuing after the termination of that emergency),—

( a ) the said commodity is urgently required in the State to meet an essential need of the people and either cannot be imported in sufficient quantities to meet that need or cannot be imported at all, and

( b ) the production of the said commodity in the State for home consumption is, while the said circumstances exist, commercially profitable, but will cease to be commercially profitable after the cesser of those circumstances.

(3) Where—

( a ) a person applies, in accordance with this section, to the Revenue Commissioners for a special allowance under this section in respect of any chargeable period, and

( b ) shows, to the satisfaction of the Revenue Commissioners, that during that chargeable period he used buildings erected or acquired or machinery or plant installed by him after the 31st day of August, 1939, solely for the production by way of trade or business of a commodity to which this section relates, and that such commodity was so produced solely for consumption within the State, and

( c ) also shows to the satisfaction aforesaid that during the said chargeable period abnormal economic conditions existed in respect of the said commodity,

the Revenue Commissioners may cause such special allowance as they consider just to be made in respect of the said buildings, machinery or plant for the said chargeable period and such allowance shall be made in taxing the trade of so producing the said commodity.

(4) Application to the Revenue Commissioners for a special allowance under this section in relation to any chargeable period may be made within twelve months after the end of such period.

(5) Where a special allowance is made under the foregoing provisions of this section, effect shall be given to such allowance by repayment or otherwise.

(6) Where special allowances under this section have been made to a person and the Revenue Commissioners are satisfied that abnormal economic conditions have ceased to exist in respect of the commodity in relation to the production of which the said allowances were made, the Revenue Commissioners may review the said allowances.

(7) The following provisions shall have effect in relation to or in consequence of a review under subsection (6) of the special allowances under this section made to any person, that is to say:—

( a ) for the purpose of such review the Revenue Commissioners may compare the following amounts that is to say:—

(i) the net cost (as hereinafter defined) to the said person of the buildings, machinery or plant in respect of which the said special allowances were made, and

(ii) the total allowances as hereinafter defined made to the said person;

( b ) for the purposes of the said comparison, the said net cost shall be taken to be the amount by which the actual cost to the said person of the erection or acquisition of the said buildings or the installation of the said machinery or plant exceeds the aggregate of—

(i) the sum or sums (if any) provided by way of subsidy or grant out of public funds towards the said erection, acquisition, or installation, and

(ii) the amount for which, in the opinion of the Revenue Commissioners, the said buildings, machinery or plant are worth to be sold at or within twelve months after the cesser of abnormal economic conditions in respect of the commodity for the production of which the said buildings, machinery or plant were or was used;

( c ) the said total allowances shall be taken to be the aggregate of all special allowances made to the said person under the foregoing provisions of this section and all allowances made to such person in respect of the said buildings, machinery or plant under or by reason of section 65 (4) (a), 241 or 243 for the chargeable period in which occurred the cesser of abnormal economic conditions in respect of the commodity for the production of which the said buildings, machinery or plant was or were used and for any previous chargeable period during which the said buildings, machinery or plant were or was so used;

( d ) if the said net cost exceeds the said total allowances, the Revenue Commissioners may make, by repayment or otherwise, such further special allowance as is in their opinion just;

( e ) if the said total allowances exceed the said net cost, the special allowances under this section made to the said person may be revised and such additional assessments as the Revenue Commissioners consider to be necessary may be made on the said person for any chargeable period in respect of which any such special allowance was granted to him.".

53. For section 11 of the Finance Act, 1967 , there shall be substituted—

"11.—(1) In this section—

'designated area' has the same meaning as in the Industrial Development Act, 1969 .

(2) Subject to the provisions of this section, where for any chargeable period an allowance falls to be made under section 241 of the Income Tax Act, 1967 , for wear and tear of any qualifying machinery or plant, the allowance shall, subject to subsection (6) of that section, be increased by such amount as is specified by the person to whom the allowance is to be made; and, in relation to a case in which this subsection has had effect, any reference in the Income Tax Acts to an allowance made under the said section 241 shall be construed as a reference to that allowance as increased under this subsection.

(3) Subsection (2) shall not apply to qualifying machinery or plant which is let to a person on the terms mentioned in section 241 (2) of the Income Tax Act, 1967 , unless the contract of letting provides that the person shall or may become the owner of the machinery or plant on the performance of the contract; and where the contract so provides, but without becoming the owner of the machinery or plant he ceases to be entitled (otherwise than on his death) to the benefit of the contract so far as it relates to the machinery or plant, subsection (2) shall be deemed not to have applied in relation to the machinery or plant and there shall be made accordingly all such additional assessments and adjustments of assessments as may be appropriate.

(4) Where for any chargeable period the allowance under section 241 of the Income Tax Act, 1967 , for wear and tear of any machinery or plant is increased under this section, no allowance under Chapter I of Part XV of the said Act shall be made in relation to the machinery or plant for that or any subsequent chargeable period.".

54. For section 4 of the Finance Act, 1968 , there shall be substituted—

"4.—(1) In this section—

'qualifying machinery or plant' means machinery or plant (other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles) which on or after the 1st day of April 1968, is provided for use for the purposes of a trade, profession, employment or office and which, at the time it is so provided, is unused and not secondhand, and includes any such machinery or plant notwithstanding any sale of it or other change of circumstances, but does not include ships and machinery or plant in respect of which an election has been made under the first proviso to section 241 (1) of the Income Tax Act, 1967 ;

'value at the commencement of the chargeable period of machinery or plant' has the same meaning as in section 241 (7) of the Income Tax Act, 1967 .

(2) Subject to the provisions of this subsection, where for any chargeable period of one year an allowance falls to be made under section 241 of the Income Tax Act, 1967 , on account of wear and tear of any qualifying machinery or plant, the amount considered by the Appeal Commissioners to be just and reasonable under that section as representing the diminished value by reason of wear and tear during the chargeable period of that machinery or plant shall—

( a ) where it is an amount which does not exceed 8·75 per cent. of the value at the commencement of the chargeable period of such machinery or plant, be taken to be 10 per cent. of that value;

( b ) where it is an amount which exceeds 8·75 per cent. but is less than 15 per cent. of the value at the commencement of the chargeable period of such machinery or plant, be taken to be 12·5 per cent. of that value;

( c ) where it is an amount which is 15 per cent. or more of the value at the commencement of the chargeable period of such machinery or plant, be taken to be 25 per cent. of that value.

(3) Section 241 (1) of the Income Tax Act, 1967 , is hereby amended, in respect of qualifying machinery or plant, by the substitution for 'a sum equal to five-fourths of the amount' of 'a sum equal to the amount'.

(4) In relation to a case in which subsection (2) has had effect any reference in the Income Tax Acts to an allowance made under the said section 241 shall be construed as a reference to that allowance as determined pursuant to that section, as amended by this section, and subsection (2).".

55. For section 4 of the Finance Act, 1969 , there shall be substituted—

"4.—(1) In this section—

'conversion', in relation to machinery or plant, means any conversion or adaptation of the machinery or plant which is made because of the introduction in the State of a system of decimal currency;

'decimalised machinery or plant' means machinery or plant—

( a ) which before the 6th day of April, 1971, is provided for use in any area other than a designated area for the purposes of a trade or profession and which, at the time it is so provided, is unused and not secondhand,

( b ) which is of a kind which is so provided because of the introduction in the State of a system of decimal currency, and

( c ) which is not so provided for use in the manufacture of machinery or plant;

'designated area' has the same meaning as in the Industrial Development Act, 1969 .

(2) Subject to the provisions of this section, where for any chargeable period an allowance falls to be made under section 241 of the Income Tax Act, 1967 , for wear and tear of, any decimalised machinery or plant, the allowance shall, subject to subsection (6) of that section, be increased by such amount as is specified by the person to whom the allowance is to be made; and, in relation to a case in which this subsection has had effect, any reference in the Income Tax Acts to an allowance made under the said section 241 shall be construed as a reference to that allowance as increased under this subsection.

(3) Subsection (2) shall not apply to decimalised machinery or plant which is let to a person on the terms mentioned in section 241 (2) of the Income Tax Act, 1967 , unless the contract of letting provides that the person shall or may become the owner of the machinery or plant on the performance of the contract; and where the contract so provides, if the person ceases to be entitled (otherwise than on his death) to the benefit of the contract so far as it relates to the machinery or plant, but without having become the owner of the machinery or plant, subsection (2) shall be deemed not to have applied in relation to the machinery or plant, and, accordingly, there shall be made all such additional assessments and adjustments of assessments as may be appropriate.

(5) Where before the 6th day of April, 1971, a person carrying on a trade or profession incurs expenditure on the conversion of machinery or plant which is in use for the purposes of the trade or profession and is not in use for the purpose of manufacturing machinery or plant, the amount of the said expenditure shall (if not otherwise so allowable) be allowable as a deduction in computing for the purposes of income tax the profits or gains or losses of the trade or profession, and, where it is so allowed, shall not be regarded as capital expenditure for any of the purposes of the Income Tax Acts.".

56. For section 14 of the Finance Act, 1970 , there shall be substituted—

"14.—(1) In this section—

'wear and tear allowance' means an allowance made under section 241 of the Income Tax Act, 1967 , otherwise than by virtue of section 11 of the Finance Act, 1967 , or section 4 of the Finance Act, 1969 , or section 26 of the Finance Act, 1971 ;

'normal wear and tear allowance' means such wear and tear allowance or greater wear and tear allowance, if any, as would have fallen to be made to a person in respect of any machinery or plant used by him during any chargeable period if all the conditions specified in subsection (3) had been fulfilled in relation to that chargeable period.

(2) Where for any chargeable period (including a year of assessment before the year 1970-71) during which any machinery or plant has been used by a person, no wear and tear allowance or a wear and tear allowance less than the normal wear and tear allowance is made to that person in respect of the machinery or plant, the normal wear and tear allowance shall be deemed, for the purposes of subsections (6) and (7) of the said section 241, to have been made to him in respect of the machinery or plant for that chargeable period.

(3) The conditions referred to in subsection (1) are:

( a ) that the trade had been carried on by the person in question ever since the date on which he acquired the machinery or plant and had been so carried on by him in such circumstances that the full amount of the profits or gains thereof was liable to be charged to tax,

( b ) that the trade had at no time consisted wholly or partly of exempted trading operations within the meaning of Chapter I of Part XXV of the Income Tax Act, 1967 , or Part V of the Corporation Tax Act, 1976 ,

( c ) that the machinery or plant had been used by him solely for the purposes of the trade ever since that date,

( d ) that a proper claim had been duly made by him for wear and tear allowance in respect of the machinery or plant for every relevant chargeable period, and

( e ) that no question arose in connection with any chargeable period as to there being payable to him, directly or indirectly, any sums in respect of, or taking account of, the wear and tear of the machinery or plant.

In the case of a company paragraph (a) shall not alter the periods which are to be taken as chargeable periods, but if during any time after the year 1975-76, and after the company acquired the machinery or plant, the company has not been within the charge to corporation tax, any year of assessment or part of a year of assessment falling within that time shall be taken as a chargeable period as if it had been an accounting period of the company.

(4) The preceding provisions of this section shall, with any necessary modifications, apply in relation to professions, employments and offices as they apply in relation to trades.".

57. For section 22 of the Finance Act, 1971 , there shall be substituted—

"22.—(1) In this section and in sections 24 and 25 'qualifying machinery or plant' means machinery or plant (other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles) which is provided for use in any designated area and which, at the time it is so provided, is unused and not secondhand;

'designated area' has the same meaning as in the Industrial Development Act, 1969 .

(2) Where a person carrying on a trade incurs, on or after the 1st day of April, 1971, and before the 1st day of April, 1977, capital expenditure on the provision of qualifying machinery or plant for the purposes of the trade, there shall be made to him, for the chargeable period related to the incurring of the expenditure, an allowance (in this section and in the next three following sections referred to as an investment allowance) equal to one-fifth of the expenditure, and such allowance shall be made in taxing the trade.

(3) For the purposes of this section—

( a ) the day on which any expenditure is incurred shall be taken to be the day when the sum in question becomes payable,

( c ) any expenditure incurred for the purposes of a trade by a person about to carry it on shall be treated as if it had been incurred by that person on the first day on which he does carry it on, and

( d ) capital expenditure shall not include any expenditure which is allowed to be deducted in computing, for the purposes of tax, the profits or gains of a trade carried on by the person incurring the expenditure.

(4) Any claim by a person for an allowance under this section in taxing his trade shall be included in the annual statement required to be delivered under the Income Tax Acts, of the profits or gains thereof and shall be accompanied by a certificate signed by the claimant, which shall be deemed to form part of the claim, stating that the expenditure was incurred on the provision of qualifying machinery or plant and giving such particulars as show that the allowance falls to be made.

(5) The provisions of this section shall, with any necessary modifications, apply in relation to professions as they apply in relation to trades.".

58. For section 23 of the Finance Act, 1971 , there shall be substituted—

"23.—(1) In section 22, as it applies for income tax purposes, 'basis period' has the meaning assigned to it by the following provisions of this section.

(2) In the case of a person to whom an investment allowance falls to be made under the said section 22, his basis period for any year of assessment shall be the period on the profits or gains of which income tax for that year falls to be finally computed under Case I or II of Schedule D in respect of the trade or profession in question or, where, by virtue of any provision of the Income Tax Acts, the profits or gains of any other period are to be taken to be the profits or gains of the said period, that other period:

Provided that, in the case of any trade or profession—

( a ) where two basis periods overlap, the period common to both shall be deemed for the purposes of this subsection to fall in the first basis period only,

( b ) where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment, then, unless the second-mentioned year of assessment is the year of the permanent discontinuance of the trade or profession, the interval shall be deemed to be part of the second basis period, and

( c ) where there is an interval between the end of the basis period for the year of assessment preceding that in which the trade or profession is permanently discontinued and the basis period for the year in which it is permanently discontinued, the interval shall be deemed to form part of the first basis period.

(3) ( a ) Any reference in the proviso to subsection (2) to the permanent discontinuance of a trade or profession shall be construed as including a reference to the occurring of any event which, under any of the provisions of the Income Tax Acts, is to be treated as equivalent to the permanent discontinuance of a trade or profession.

59. For section 24 of the Finance Act, 1971 , there shall be substituted—

"24.—(1) For the purposes of ascertaining the amount of any allowance to be made to any person under section 241 (1) of the Income Tax Act, 1967 , as representing the diminished value by reason of wear and tear during the chargeable period of any qualifying machinery or plant, no account shall be taken of an investment allowance in determining the value of the qualifying machinery or plant at the commencement of the chargeable period.

(2) In section 241 (6) of the Income Tax Act, 1967 , 'the allowances on that account, and', and the expression the allowances' where that expression occurs before 'exceed', shall each be construed as not including a reference to any investment allowance made to the person by whom the trade or profession is carried on.

(3) Section 241 (3) of the Income Tax Act, 1967 , shall apply in relation to an investment allowance as it applies in relation to allowances in respect of wear and tear of machinery or plant.".

60. For section 26 of the Finance Act, 1971 , there shall be substituted—

"26.—(1) In this section—

'qualifying machinery or plant' means machinery or plant (other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles) which is provided for use on or after the 1st day of April, 1971, and before the 1st day of April, 1977, in any area other than a designated area for the purposes of a trade or profession and which, at the time it is so provided, is unused and not secondhand;

'designated area' has the same meaning as in the Industrial Development Act, 1969 .

(2) Subject to the provisions of this section, where for any chargeable period an allowance falls to be made under section 241 of the Income Tax Act, 1967 , for wear and tear of any qualifying machinery or plant, the allowance shall, subject to subsection (6) of that section, be increased by such amount as is specified by the person to whom the allowance is to be made and, in relation to a case in which this subsection has had effect any reference in the Income Tax Acts to an allowance made under the said section 241 shall be construed as a reference to that allowance as increased under this subsection.

(3) Subsection (2) shall not apply to qualifying machinery or plant which is let to a person on the terms mentioned in section 241 (2) of the Income Tax Act, 1967 , unless the contract of letting provides that the person shall or may become the owner of the machinery or plant on the performance of the contract; and where the contract so provides, but without becoming the owner of the machinery or plant, he ceases to be entitled (otherwise than on his death) to the benefit of the contract so far as it relates to the machinery or plant, subsection (2) shall be deemed not to have applied in relation to the machinery or plant and there shall be made accordingly all such additional assessments and adjustments of assessments as may be appropriate.

61. For section 9 (2) of the Finance Act, 1973 , there shall be substituted—

"(2) Any initial allowance under section 251 of the Income Tax Act, 1967 , made to a person for any chargeable period in respect of machinery or plant, shall not exceed such sum as will, when added to—

( a ) the amount of any allowance in respect of the machinery or plant made to the person under section 241 of the said Act for that chargeable period, and

( b ) the aggregate amount of any allowances made to the person in respect of the machinery or plant under the said sections 241 and 251 for earlier chargeable periods,

equal the actual amount of the expenditure incurred by him on the provision of the said machinery or plant:

Provided that this subsection shall not apply to an initial allowance in respect of which a claim is made before the 3rd day of July, 1973.".

62. For section 25 of the Finance Act, 1973 , there shall be substituted—

"25.—(1) In relation to a vehicle to which this section applies, section 241 of the Income Tax Act, 1967 , shall have effect as if, for the purposes of subsection (7) of that section, the actual cost of the vehicle were taken to be £2,500 where the expenditure incurred on the provision of the vehicle exceeded that amount and, where an allowance which, apart from this subsection, would be made under the said section 241 falls to be reduced by virtue of this subsection, any reference in the Income Tax Acts to an allowance made under the said section 241 shall be construed as a reference to that allowance as reduced under this subsection.

(2) In relation to a vehicle to which this section applies, the allowances under the said section 241 to be taken into account for the purposes of Chapters II and V of Part XVI of the Income Tax Act, 1967 , in computing the amount of expenditure still unallowed at any time, shall be limited to those computed in accordance with the provisions of subsection (1) and the expenditure incurred on the provision of the vehicle to be taken into account for the said purposes shall be limited to £2,500.

(3) Where the expenditure incurred on the provision of a vehicle to which this section applies exceeds £2,500, any balancing allowance or balancing charge shall be computed, in a case where there are sale, insurance, salvage or compensation moneys, as if the amount of those moneys (or, where in consequence of any provision of the Income Tax Acts other than this subsection some other amount is to be treated as the amount of those moneys, that other amount) were reduced in the proportion which £2,500 boars to the actual amount of the said expenditure.

(4) If, where the expenditure incurred on the provision of a vehicle to which this section applies exceeds £2,500—

( a ) the person providing the vehicle (hereinafter referred to as the prior owner) sells the vehicle and the sale is a sale to which section 299 of the Income Tax Act, 1967 , applies, or

( b ) the prior owner sells the vehicle or gives it away so that subsection (4) of section 277 of the Income Tax Act, 1967 , or that subsection as applied by subsection (5) of that section, has effect in relation to the purchaser or donee, or

( c ) in consequence of a succession to the trade or profession of the prior owner, section 300 (1) of the Income Tax Act, 1967 , has effect,

then, in relation to the purchaser, donee or successor, the price which the vehicle would have fetched if sold in the open market or the expenditure incurred by the prior owner on the provision of the vehicle shall be treated for the purposes of the said section 277, 299 or 300 as reduced in the proportion which £2,500 bears to the actual amount of the said expenditure; and, in the application of subsection (3) to the purchaser, donee or successor, references to the expenditure incurred on the provision of the vehicle shall be construed as references to the expenditure so incurred by the prior owner:

Provided that where this subsection has had effect on any occasion in relation to the vehicle, and no sale or gift of the vehicle has since occurred other than one to which either of the said sections 277 and 299 applies, then, in relation to all persons concerned, the like consequences under this subsection shall ensue as respects a sale, gift or succession falling within paragraphs (a) to (c) which occurs on any subsequent occasion as if the person who in relation to that sale, gift or succession s A is the prior owner had incurred expenditure on the provision of the vehicle of an amount equal to the expenditure so incurred by the person who was the prior owner on the first-mentioned occasion.

(5) In the application of section 273 (1) of the Income Tax Act, 1967 , to a case where the vehicle is the new plant referred to in that subsection, the expenditure shall be disregarded in so far as it exceeds £2,500, but this provision is without prejudice to the application of the foregoing subsections to the vehicle.

(6) Where the expenditure incurred on the provision of a vehicle exceeds £2,500 but under section 303 (3) of the Income Tax Act, 1967 , any part of it is to be treated as not having been incurred by a person, the amount which (subject to the foregoing provisions of this section) is to be treated for the purposes of Part XVI of the Income Tax Act, 1967 , as having been incurred by that person, shall be reduced in the proportion which £2,500 bears to the said capital expenditure incurred on the provision of the vehicle.".

63. For section 1 of the Finance (Taxation of Profits of Certain Mines) Act, 1974 , there shall be substituted—

"1.—(1) In this Act, except so far as is otherwise provided or the context otherwise requires—

'development expenditure' means capital expenditure—

( a ) on the development of a qualifying mine, or

( b ) on the construction of any works in connection with a qualifying mine which are of such a nature that, when the mine ceases to be operated, they are likely to have so diminished in value that their value will be little or nothing,

and includes interest on money borrowed to meet such capital expenditure, but does not include—

( c ) expenditure on the acquisition of the site of the mine or the site of any such works or of rights in or over any such site, or

( d ) expenditure on the acquisition of a scheduled mineral asset, or

( e ) expenditure on works constructed wholly or mainly for subjecting the raw product of the mine to any process except a process designed for preparing the raw product for use as such;

'exploration expenditure' means capital expenditure on searching in the State for deposits of scheduled minerals or on testing such deposits or winning access thereto and includes capital expenditure on systematic searching for areas containing scheduled minerals and searching by drilling or other means for scheduled minerals within those areas, but does not include expenditure on operations in the course of working a qualifying mine or expenditure which is development expenditure;

'mine development allowance' has the same meaning as in section 245 of the Income Tax Act, 1967 ;

'qualifying mine' means a mine that is being worked for the purpose of obtaining scheduled minerals;

'scheduled mineral asset' means a deposit of scheduled minerals or land comprising such a deposit or an interest in or right over such deposit or land;

'scheduled minerals' has the same meaning as in section 1 of the Finance (Profits of Certain Mines) (Temporary Relief from Taxation) Act, 1956 ;

'tax' means income tax or corporation tax, as may be appropriate.

(2) Save as provided for in sections 3, 4 and 5, expenditure shall not be regarded, for the purposes of this Act, as having been incurred by a person carrying on the trade of working a qualifying mine in so far as it has been or is to be met directly or indirectly out of moneys provided by the Oireachtas or by any other person (not being a person who has carried on the trade of working that mine).

(3) References in this Act to any enactment shall, unless the context otherwise requires, be construed as references to that enactment as amended or extended by any subsequent enactment.

(4) In this Act a reference to a section is to a section of this Act unless it is indicated that reference to some other enactment is intended.

(5) In this Act a reference to a subsection or paragraph is to the subsection or paragraph of the provision in which the reference occurs unless it is indicated that reference to some other provision is intended.".

64. For section 2 of the Finance (Taxation of Profits of Certain Mines) Act, 1974 , there shall be substituted—

"2.—(1) Where a person who is carrying on the trade of working a qualifying mine incurs, on or after the 6th day of April, 1974, any development expenditure or exploration expenditure and makes application under section 245 of the Income Tax Act, 1967 , for a mine development allowance for a chargeable period in respect of such expenditure—

( a ) that expenditure shall be deemed to be expenditure in respect of which that allowance may be granted, whether or not, in the case of exploration expenditure, a deposit of scheduled minerals is found as a result of the expenditure,

( b ) the amount of such allowance for that chargeable period shall be equal to the total amount of—

(i) the exploration expenditure, and

(ii) in the case of development expenditure the amount of the difference between that expenditure and the amount which, in the opinion of the inspector, the assets representing that expenditure are likely to be worth at the end of the estimated life of the aforesaid mine, and

( c ) in relation to a case in which this section has had effect, any reference in the Income Tax Acts to an allowance made under the said section 245 shall be construed as including a reference to an allowance made under that section by virtue of this section:

Provided that no account shall be taken, for the purposes of this section, of exploration expenditure as a result of which a deposit of scheduled minerals is not found if the expenditure was incurred more than ten years prior to the date on which the person aforesaid commences to carry on the trade of working a qualifying mine.

(2) Where a person who is carrying on the trade of working a qualifying mine incurred before the 6th day of April, 1974, capital expenditure in respect of which he was entitled under section 245 of the Income Tax Act, 1967 , to apply for a mine development allowance and there is an amount of that expenditure still unallowed on the said date, the person may elect to have the amount of mine development allowance for the year of assessment 1974-75 in respect of that expenditure increased to an amount equal to the amount of the expenditure so unallowed.

(3) In this section the amount of expenditure still unallowed on the 6th day of April, 1974, shall be taken to be the amount of the estimated difference, within the meaning of section 245 (5) (b) of the Income Tax Act, 1967 , less any mine development allowance granted, or deemed under section 245 (13) of the said Act to have been granted, for any year of assessment before the year of assessment 1974-75.

(4) No allowance shall be made under subsection (1) in respect of expenditure incurred before the 6th day of April, 1974, whether or not such expenditure is, by virtue of any provision of this Act, the Finance Act, 1946 , or the Income Tax Act, 1967 , deemed to have been incurred on or after the said date.".

65. For section 3 of the Finance (Taxation of Profits of Certain Mines) Act, 1974 , there shall be substituted—

"3.—(1) Where a person who is, on the 6th day of April, 1974, carrying on the trade of working a qualifying mine incurred exploration expenditure, on or after the 6th day of April, 1967, but before the said 6th day of April, 1974, and that expenditure was not incurred in connection with the said qualifying mine, then, in charging to tax the profits or gains of the said trade for the year of assessment 1974-75, there shall be allowed a deduction of an amount equal to the amount of that expenditure.

(2) Where a person who commences to carry on the trade of working a qualifying mine after the 6th day of April, 1974, incurred exploration expenditure on or after the 6th day of April, 1967, and that expenditure was not incurred in connection with the said qualifying mine but was incurred within a period of ten years prior to the date on which he commences to carry on the said trade, then in taxing the said trade for the chargeable period in which he commenced to carry on the said trade, there shall be made an allowance of an amount equal to the amount of that expenditure.

(3) Where in a case referred to in subsection (1) or (2) the person concerned is a body corporate and 'there was or is, after all or part of the expenditure referred to therein had been incurred by it, a change in ownership, within the meaning of the Fifth Schedule to the Finance Act, 1973 , of the body corporate or of a body corporate that is a parent body or a wholly-owned subsidiary, within the meaning of section 4, of the first-mentioned body corporate, no allowance shall be made or deduction allowed under this section in respect of any part of the said expenditure incurred prior to the date of the change in ownership:

Provided that in any case where part of the ordinary share capital of any body corporate is acquired by a Minister of State, such acquisition shall be disregarded in determining whether or not there was or is such a change in ownership as aforesaid.

(4) Where, on or after the 6th day of April, 1974, a person commences to carry on the trade of working a qualifying mine but has not incurred the exploration expenditure incurred in connection with that mine, no allowance shall be made or deduction allowed under this section or by virtue of section 2 in respect of exploration expenditure incurred by that person prior to the date on which he commences to carry on the said trade.

(5) Subject to sections 182 (relief in respect of unrelieved losses and capital allowances carried forward from the year 1975-76) and 184 (relief in respect of corporation profits tax losses) of the Corporation Tax Act, 1976 , a person shall not be entitled to a deduction or allowance in respect of the same expenditure both under this section and under some other provision of the Income Tax Acts or the Corporation Tax Acts.".

66. For section 4 of the Finance "(Taxation of Profits of Certain Mines) Act, 1974, there shall be substituted—

"4.—(1) Where exploration expenditure, in respect of which an allowance may be claimed by virtue of section 2 or 3, is or has been incurred by a body corporate (hereinafter in this section referred to as the exploration company) and—

( a ) another body corporate is, or is deemed to be, a wholly-owned subsidiary of the exploration company, or

( b ) the exploration company is, or is deemed to be, a wholly-owned subsidiary of another body corporate,

the expenditure or so much of it as the exploration company specifies—

(i) in the case referred to in paragraph (a) may, at the election of the exploration company, be deemed to have been incurred by such other body corporate (being a body corporate which is, or is deemed to be, a wholly-owned subsidiary of the exploration company) as the exploration company specifies.

(ii) in the case referred to in paragraph (b) may, at the election of the exploration company, be deemed to have been incurred by the body corporate (hereinafter referred to as the parent body) of which the exploration company was, at the time the expenditure was incurred, a wholly-owned subsidiary or by such other body corporate (being a body corporate which is, or is deemed to be, a wholly-owned subsidiary of the parent body) as the exploration company specifies.

and in a case where the said expenditure was incurred on a date prior to the incorporation of the body corporate so specified, the provisions of this Act shall apply, in relation to the granting of any allowance in respect of such expenditure, as if the said body corporate had been in existence at the time the expenditure was incurred and had incurred the expenditure at that time:

Provided that—

(i) the same expenditure shall not be taken into account in relation to more than one trade by virtue of this section, and

(ii) subject to sections 182 and 184 of the Corporation Tax Act, 1976 , a deduction or allowance shall not be granted in respect of the same expenditure both by virtue of this section and under some other provision of the Income Tax Acts or the Corporation Tax Acts.

(2) A body corporate shall, for the purposes of subsection (1), be deemed to be a wholly-owned subsidiary of another body corporate if and so long as all of its ordinary share capital is owned by that other body corporate whether directly or through another body corporate or other bodies corporate, or partly directly and partly through another body corporate or other bodies corporate:

Provided that where part of the ordinary share capital of any body corporate is held by a Minister of State and the remainder of the ordinary share capital of that body corporate is held by another body corporate, the first-mentioned body corporate shall be deemed, for purposes of subsection (1), to be a wholly-owned subsidiary of the last-mentioned body corporate.

(3) Notwithstanding the repeal by this Act of section 39 of the Finance Act, 1973 , the provisions of Part II of the Fifth Schedule to that Act shall have effect, as if enacted in this Act, for the purpose of determining the amount of ordinary share capital held in a body corporate through other bodies corporate.".

67. For section 5 of the Finance (Taxation of Profits of Certain Mines) Act, 1974 , there shall be substituted—

"5.—(1) Where, whether before, on or after the 6th day of April, 1974, a person incurs or incurred exploration expenditure which resulted in the finding of a deposit of scheduled minerals and, without having carried on any trade which consists of or includes the working of that deposit and without any allowance or deduction under or by virtue of this Act having been made to him in respect of that expenditure, he sells any assets representing that expenditure to another person, then, if that other person carries on such a trade as aforesaid in connection with that deposit, that other person shall, for the purposes of this Act, be deemed to have incurred for the purposes of the trade and in connection with the deposit, exploration expenditure equal to the amount of the exploration expenditure which is represented by the assets or the price paid by him for the assets whichever is the smaller, and that expenditure shall be deemed to have been incurred by him on the date on which he commences to carry on the trade aforesaid.

(2) A person who by virtue of subsection (1) is deemed to have incurred an amount of exploration expenditure shall be deemed not to have incurred that amount of expenditure unless the working of the aforesaid deposit results in the production of scheduled minerals in reasonable commercial quantities.

(3) Subject to sections 182 and 184 of the Corporation Tax Act, 1976 , a deduction or allowance in respect of the same expenditure shall not be made both under this section and under some other provision of the Income Tax Acts or the Corporation Tax Acts.

(4) Section 6 shall not apply to expenditure in respect of which an allowance is made by virtue of this section.".

68. For section 6 of the Finance (Taxation of Profits of Certain Mines) Act, 1974 , there shall be substituted—

"6.—(1) Where a person who is carrying on the trade of working a qualifying mine incurs, on or after the 6th day of April, 1974, exploration expenditure in relation to which section 2 has effect, there shall, in addition to any mine development allowance made in respect of such expenditure, be made to him in taxing the trade, for the chargeable period for which such mine development allowance is made an allowance (which shall be known as an exploration investment allowance) equal to one-fifth of such expenditure and section 245 (6) of the Income Tax Act, 1967 , shall apply to an exploration investment allowance as it applies to a mine development allowance.

(2) No allowance shall be made under this section in respect of exploration expenditure—

( a ) incurred before the 6th day of April, 1974, whether or not such expenditure is, by virtue of any provision of this Act, the Finance Act, 1946 , or the Income Tax Act, 1967 , deemed to have been incurred on or after the said date, or

( b ) which is deemed to be incurred by a person other than the person who incurred the expenditure:

Provided that this paragraph shall not apply in respect of expenditure deemed, under section 4, to have been incurred by a body corporate other than the body corporate which incurred the expenditure!'.

69. For section 7 of the Finance (Taxation of Profits of Certain Mines) Act, 1974 , there shall be substituted—

"7.—(1) Where, on or after the 6th day of April, 1974, new machinery or new plant (other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles) is provided for use for the purposes of the trade of working a qualifying mine, the said machinery or plant shall, if it is not qualifying machinery or plant, be deemed, for the purpose of section 11 of the Finance Act, 1967 , to be qualifying machinery or plant.

(2) Where a person who is carrying on the trade of working a qualifying mine incurred before the 6th day of April, 1974, capital expenditure on the provision of machinery or plant for the purposes of that trade, the amount of that expenditure still unallowed on the said date, within the meaning of section 274 of the Income Tax Act, 1967 , may, at the election of the person, be allowed as a deduction in charging the profits of the said trade to tax for the year of assessment 1974-75.

(3) Where, on or after the 6th day of April, 1974, a person carrying on the trade of working a qualifying mine incurs capital expenditure on the provision of new machinery or new plant (other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles) for the purposes of that trade, there shall be made to him, for the chargeable period related to the expenditure an allowance equal to one-fifth of the expenditure, and such allowance shall be made in taxing the said trade and shall be in lieu of any allowance in respect of such machinery or plant under section 22 (2) of the Finance Act, 1971 .

(4) Subsections (3), (4) and (5) of section 22 and sections 23 , 24 and 25 of the Finance Act, 1971 , shall apply as if for subsections (1) and (2) of the said section 22, insofar as they apply to a person carrying on the trade of working a qualifying mine, there were substituted subsection (3) of this section.".

70. For section 22 of the Finance Act, 1974 , there shall be substituted—

"22.—(1) This section applies to any person carrying on farming, the profits or gains of which are chargeable to tax in accordance with the provisions of section 15 (1).

(2) Where a person to whom this section applies incurs, for the purpose of a trade of farming land occupied by him, any capital expenditure on the construction of farmhouses, farm buildings, cottages, fences or other works, there shall be made to him—

( a ) for the chargeable period related to the expenditure, an initial allowance equal to one-fifth of that expenditure, and such allowance shall be made in taxing the trade, and

( b ) during a writing-down period of ten years beginning with the chargeable period related to that expenditure, writing-down allowances (in this section referred to as farm buildings allowances) in respect of that expenditure and such allowances shall be made in taxing the trade:

Provided that paragraph (a) shall not apply in respect of expenditure incurred before the 6th day of April, 1974, and paragraph (b) shall not apply in respect of expenditure incurred before the 6th day of April, 1971.

( 2A ) ( a ) Where any capital expenditure as aforesaid was incurred by a person on or after the 6th day of April, 1971, and before the 6th day of April, 1974, a farm buildings allowance shall, for the purposes of this section, be deemed—

(i) to have been made to that person, and

(ii) to have been made in charging the profits or gains of the trade for the first relevant year of assessment and for each subsequent year of assessment prior to the year 1974-75:

Provided that where the said expenditure was incurred in the year 1973-74, a farm buildings allowance shall, for the purposes of this section, be deemed to have been made in charging the profits or gains of the trade for that year of assessment.

( b ) For the purposes of this subsection the first relevant year of assessment in relation to expenditure incurred by any person is—

(i) the year of assessment in his basis period for which he incurs the expenditure, or

(ii) the year of assessment in his basis period for which (if his profits or gains from farming for that year of assessment had been chargeable to tax under Case I of Schedule D) he incurred the expenditure.

( c ) For the purpose of this subsection 'basis period' has the meaning assigned to it by section 297 of the Income Tax Act, 1967 .

(2B) Where, for any year of assessment, an individual—

( a ) elects to be charged to tax, in respect of his profits or gains from farming, by reference to the provisions of section 21, or

( b ) is not, by virtue of section 15 (3), chargeable to tax in respect of such profits or gains,

and that year is a year of assessment in respect of which he could, otherwise, have claimed farm buildings allowance under this section, that allowance shall, for the purposes of this section, be deemed to have been made for that year of assessment and shall not be carried forward and set off against profits or gains chargeable for any subsequent year of assessment.

(3) Any capital expenditure as aforesaid incurred on or after the 6th day of April, 1971, by a person about to carry on farming but before commencing farming shall, for the purposes of this section, be treated as if it had been incurred on the first day on which he commences fanning.

(4) Where capital expenditure as aforesaid is incurred on a farmhouse, one-third only of that expenditure shall be taken into account, or, if the accommodation and amenities of the farmhouse are out of due relation to the nature and extent of the farm, such proportion thereof not greater than one-third as may be just.

(5) Any claim by a person for an allowance falling to be made to him under the provisions of this section shall be included in the annual statement required to be delivered under the Income Tax Acts of the profits or gains from farming, and section 241 (3) of the Income Tax Act, 1967 , shall apply in relation to the allowance as it applies in relation to allowances in respect of wear and tear of machinery or plant.

(6) Any claim for an allowance under the provisions of this section shall be made to and determined by the inspector, but any person aggrieved by any decision of the inspector on any such claim may, on giving notice in writing to the inspector within twenty-one days after the notification to him of the decision, appeal to the Appeal Commissioners.

(7) The Appeal Commissioners shall hear and determine an appeal to them made under subsection (6) as if it were an appeal against an assessment to tax and the provisions of the Income Tax Acts relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

(8) Where a person who is entitled to an allowance under subsection (2) in respect of capital expenditure incurred for the purpose of farming farm land transfers his interest in that farm land or any part of that farm land to another person, that other person shall, to the exclusion of the first-mentioned person be entitled to the allowances under this section for the chargeable periods following the chargeable period in which the transfer of interest took place:

Provided that where the transfer of interest took place in relation to part only of the farm land, this subsection shall apply to so much of the allowance as is properly referable to that part of the land as if it were a separate allowance.

(9) Where expenditure is incurred partly for the purposes of farming and partly for other purposes, subsection (2) shall apply to so much only of that expenditure as on a just apportionment ought fairly to be treated as incurred for the purposes of farming.

(10) No allowance shall be made by virtue of this section in respect of any expenditure if for the same or any other chargeable period an allowance is or has been made in respect of it under Chapter II of Part XV or Chapter I of Part XVI of the Income Tax Act, 1967 .

(11) Expenditure shall not be regarded for any of the purposes of this section as having been incurred by any person in so far as it has been met directly or indirectly by the State, by any board established by statute, or by any public or local authority.".

71. For section 25 of the Finance Act, 1974 , there shall be substituted—

"25.—(1) In determining whether any, and if so what, wear and tear allowance, balancing allowance or balancing charge in respect of machinery or plant falls to be made to or on any person for any chargeable period in taxing a trade of farming there shall be deemed to have been made to that person, for every previous chargeable period in which the machinery or plant belonged to him and which is a chargeable period to be taken into account for the purpose of this section, such wear and tear allowance or greater wear and tear allowance, if any, in respect of the machinery or plant as would have fallen to be made to him if, in relation to every such previous chargeable period—

( a ) the profits or gains from farming had been chargeable to tax under Case I of Schedule D,

( b ) farming had been carried on by him ever since the date on which he acquired the machinery or plant,

( c ) the machinery or plant had been used by him solely for the purposes of farming ever since that date, and

( d ) a proper claim had been duly made by him for wear and tear allowance in respect of the machinery or plant for every relevant chargeable period.

In the case of a company as defined in section 1 (5) of the Corporation Tax Act, 1976 , subparagraph (b) shall not alter the periods which are to be taken as chargeable periods, but if during any time after the 5th day of April, 1976, and after the company acquired the machinery or plant, the company has not been within the charge to corporation tax, any year of assessment or part of a year of assessment falling within that time shall be taken as a chargeable period as if it had been an accounting period of the company.

(2) There shall be taken into account for the purposes of this section every previous chargeable period in which the machinery or plant concerned belonged to the person and—

( a ) during which the machinery or plant was not used by the person for the purposes of farming,

( b ) during which farming was not carried on by him, or

( c ) during which farming was carried on by him in such circumstances that the full amount of the profits or gains thereof was not liable to be charged to tax under Case I of Schedule D.

(3) Nothing in this section shall affect the provisions of section 272 (4) of the Income Tax Act, 1967 .

(4) In this section—

'balancing allowance' and 'balancing charge' have the same meanings as in Chapter II of Part XVI of the Income Tax Act, 1967 ;

'wear and tear allowance' means an allowance made under section 241 of the Income Tax Act, 1967 ".

72. For section 34 of the Finance Act, 1975 , there shall be substituted—

"34.—(1) Section 255 (1) of the Income Tax Act, 1967 , is hereby amended by the insertion of the following paragraph after paragraph (c)—

'( cc ) for the intensive production of cattle, sheep, pigs, poultry or eggs in the course of a trade other than the trade of farming within the meaning of section 13 of the Finance Act, 1974 , or'.

(2) In relation to a building or structure which falls to be regarded as an industrial building or structure by virtue of subsection (1)—

( a ) Chapter II of Part XV and Chapter I of Part XVI of the Income Tax Act, 1967 , shall have effect as if—

(i) 'one-fifth' were substituted for 'one-tenth' in section 254 (1) of the said Act,

(ii) 'one-tenth' were substituted for 'one-fiftieth' in section 264 (1) of the said Act,

(iii) 'ten years' were substituted for 'fifty years' in section 264 (3) and the proviso to section 265 (1) of the said Act,

( b ) section 266 of the Income Tax Act, 1967 , shall have effect as if the following paragraph were inserted in subsection (4) of that section—

'(c) If the building or structure was in use as an industrial building or structure at the end of the basis period for any year of assessment falling before the year 1974-75, an amount equal to one-tenth of the expenditure shall be treated as written off as at the end of the previous year of assessment.'.

(3) The foregoing provisions of this section shall have effect as respects capital expenditure incurred on or after the 6th day of April, 1971, but no allowance shall be made under the said Chapters by virtue of this section—

( a ) for any year of assessment prior to the year 1974-75, or.

( b ) under section 254 (1) of the Income Tax Act, 1967 , in respect of expenditure incurred before the 6th day of April, 1974.".

Section 140.

SECOND SCHEDULE

PART I

Application and Adaptation of Income Tax Acts

1. In section 1 of the Income Tax Act, 1967 , there shall be added the following subsection—

"(6) So much of this Act as relates to corporation tax shall be construed together with the Corporation Tax Act, 1976 , and any subsequent enactments amending or extending that Act.".

2. In section 8 of the Income Tax Act, 1967 —

(1) for subsection (1) there shall be substituted the following subsection—

"(1) Where in any year of assessment any payments have been made, previously to the passing of an Act increasing the rate of tax for that year, on account of any interest, dividends or other annual profits or gains from which under the provisions of the Income Tax Acts or the Corporation Tax Acts as defined in section 155 (1) of the Corporation Tax Act, 1976 , income tax is required to be deducted and tax has not been charged thereon or deducted therefrom, or has not been charged thereon or deducted therefrom at the increased rate of tax for the said year, the amount not so charged or deducted shall be charged under Case IV of Schedule 1) in respect of those payments, as profits or gains not charged by virtue of any other Schedule, and the agents entrusted with the payment of the interest, dividends or annual profits or gains shall furnish to the Revenue Commissioners a list containing the names and addresses of the persons to whom payments have been made and the amount of those payments, upon a requisition made by the Commissioners in that behalf."; and.

(2) the following subsection shall be added—

"(3) This section shall not apply to a payment which is a distribution within the meaning of Part IX of the Corporation Tax Act, 1976 .".

3. Section 83 (6) of the Income Tax Act, 1967 , shall have effect for corporation tax as for income tax, and references to income tax shall have effect accordingly as if they were or included references to corporation tax.

4. In section 169 of the Income Tax Act, 1967 , after subsection (1), there shall be inserted the following subsection—

"(1A) Where a persons income of which particulars are required to be included in a statement under this section comprises a distribution chargeable under Schedule F there shall be separately shown in the statement the amount or value of the distribution and the amount of any tax credit under section 88 of the Corporation Tax Act, 1976 , to which the person is entitled in respect of that distribution.".

5. In section 181 (1) of the Income Tax Act, 1967 , for "and E" there shall be substituted ", E and F" and the said section 181 (1), as so amended, is set out in the Table to this paragraph.

TABLE.

(1) Assessments under Schedules D, E and F, except—

( a ) such assessments as the Revenue Commissioners are empowered to make under Part XXXI, and

( b ) assessments to which section 157 applies, and

( c ) such assessments as officers or persons appointed by the Revenue Commissioners are empowered to make under section 158,

shall be made by the inspectors or such other officers as the Revenue Commissioners shall appoint in that behalf.

6. In section 183 (1) of the Income Tax Act, 1967 , for "or E or under both" there shall be substituted ", E or F or under two or more", and the said section 183 (1), as so amended is set out in the Table to this paragraph.

TABLE.

(1) Where two or more assessments fall to be made on a person under Schedule D, E or F or under two or more of those Schedules, the tax in the assessments may be stated in one sum, and the notice of assessment may be stated correspondingly.

7. In section 184 (2) (a) of the Income Tax Act, 1967 , for "D" there shall be substituted "D or F" and the said section 184 (2) (a), as so amended, is set out in the Table to this paragraph.

TABLE.

( a ) a person makes default in the delivery of a statement in respect of any tax under Schedule D or F, or

8. In section 186 (1) of the Income Tax Act, 1967 , for "or E" there shall be substituted ", E or F" and the said section 186 (1), as so amended, is set out in the Table to this paragraph.

TABLE.

(1) If the inspector discovers—

( a ) that any properties or profits chargeable to tax have been omitted from the first assessments, or

( b ) that a person chargeable has not delivered any statement, or has not delivered a full and proper statement, or has not been assessed to tax, or has been under charged in the first assessments, or

( c ) that a person chargeable has been allowed, or has obtained from and in the first assessments, any allowance, deduction, exemption, abatement, or relief not authorised by this Act.

then, where the tax is chargeable under Schedule D, E or F, the inspector shall make an additional first assessment:

Provided that any such additional first assessment shall be subject to appeal and other proceedings as in the case of a first assessment.

9. In section 239 (6) of the Income Tax Act, 1967 , after "person" there shall be inserted ",other than a company which is within the charge to corporation tax," and the said section 239 (6), as so amended, is set out in the Table to this paragraph.

TABLE.

(6) Any person, other than a company which is within the charge to corporation tax, carrying on a business of granting annuities on human life shall be entitled to repayment of any tax borne by him by deduction or otherwise for any year of assessment up to the amount of tax which, if this section had not been passed, he would have been entitled to deduct and retain on making payments due in that year of assessment on account of life annuities and which in accordance with this section he has not deducted.

10. In section 329 of the Income Tax Act, 1967 —

(1) in subsection (1), there shall be deleted in paragraphs (a) and (b) in each place where they occur, the expressions "dividend or" and "stock, shares, or"; for "applicable to" in paragraph (a) there shall be substituted "deducted from"; for "interest" in paragraph (a) there shall be substituted "payment of interest"; and after paragraph (b) there shall be inserted the following paragraph—

"(c) the amount of any distribution received by such individual in respect of such stock, shares or security shall, for all the purposes of the Income Tax Acts, be deemed to be diminished by 20 per cent. and the amount of any tax credit to which he is entitled in respect of such distribution shall also be deemed to be diminished by 20 per cent.:

Provided that, notwithstanding the provisions of this section, an individual who is in receipt of a distribution in respect of any stock, shares or security to which this section applies shall be entitled to payment of an amount equal to 20 per cent. of the tax credit to which he would have been entitled in respect of that distribution if this section had not been enacted."; and

(2) for subsection (3) there shall be substituted the following subsection—

"(3) In relation to every distribution or payment of interest made by a company in respect of any stock, share or security to which this section applies, the provisions of sections 5 (dividend warrants) and 83 (5) (Schedule F) of the Corporation Tax Act, 1976 , shall apply to the company so that the statements provided for by those sections shall show, in addition to the particulars required to be given apart from this section, either (as the case may require)—

( a ) that the whole of the distribution or payment of interest is made in respect of such stock, share or security, or

( b ) that a part (the amount or value of which is separately stated) of the distribution or payment of interest is made in respect of such stock, share or security.",

and the said subsection (1), as so amended, is set out in the Table to this paragraph.

TABLE.

(1) Where an individual who is resident in the State and is not resident elsewhere claims and proves that he is entitled to the beneficial ownership of any stock, shares or security to which this section applies, the following provisions shall have effect, that is to say—

( a ) such individual shall be entitled to repayment of 20 per cent. of the income tax deducted from any payment of interest received by him in respect of such security, save in so far as relief or repayment in respect of such tax has been or is granted under any other provision of this Act;

( b ) in estimating the total income from all sources of such individual for the purposes of income tax the amount of any interest in respect of such security shall be deemed to be diminished by 20 per cent.;

( c ) the amount of any distribution received by such individual in respect of such stock, shares or security shall, for all the purposes of the Income Tax Acts, be deemed to be diminished by 20 per cent. and the amount of any tax credit to which he is entitled in respect of such distribution shall also be deemed to be diminished by 20 per cent.:

Provided that, notwithstanding the provisions of this section, an-individual who is in receipt of a distribution in respect of any stock, shares or security to which this section applies shall be entitled to payment of an amount equal to 20 per cent. of the tax credit to which he would have been entitled in respect of that distribution if this section had not been enacted.

11. In section 331 of the Income Tax Act, 1967 , for subsection (3) there shall be substituted the following subsection—

"(3) Where a certificate is given under section 329 (2) in respect of any stocks, shares, or securities section 329 (1) shall not apply to any distribution or payment of interest which was made in respect of the stocks, shares or securities before the date of the certificate:

Provided that the said section 329 (1) shall apply to any such distribution or payment of interest where—

( a ) the distribution or payment of interest was made within the period of two years prior to the date of the said certificate, and

( b ) the distribution or payment of interest was made in respect of stocks, shares or securities in relation to which the conditions specified in paragraphs (a) to (c) of section 329 (2) and in section 330 (2) were complied with either—

(i) throughout the mid period of two years, or

(ii) if the stocks, shares or securities were issued during the said period, throughout the period from the date of such issue to the date of the said certificate.".

12. In section 332 of the Income Tax Act, 1967 —

(2) for subsection (3) there shall be substituted the following subsection—

( a ) that the whole of the distribution or payment of interest is made in respect of such stock, share or security, or

( b ) that a part (the amount or value of which is separately stated) of the distribution or payment of interest is made in respect of such stock, share or security."; and

(3) for subsection (8) there shall be substituted the following subsection—

"(8) Where a certificate is given under subsection (2) in respect of any stocks, shares or securities subsection (1) shall not apply to any distribution or payment of interest which was made in respect of the stocks, shares or securities before the date of the certificate:

Provided that the said subsection (1) shall apply to any such distribution or payment of interest where—

( a ) the distribution or payment of interest was made within the period of two years prior to the date of the said certificate, and

( b ) the distribution or payment of interest was made in respect of stocks, shares or securities in relation to which the conditions specified in paragraphs (a) and (b) of subsection (2) were complied with either—

(i) throughout the said period of two years, or

(ii) if the stocks, shares or securities were issued during the said period, throughout the period from the date of such issue to the date of the said certificate.",

and the said subsection (1), as so amended, is set out in the Table to this paragraph.

TABLE.

13. In section 333 (1) (b) of the Income Tax Act, 1967 —

(1) after "shares of annuities," "and" shall be deleted; and

(2) after "other annual payment" there shall be inserted ",and from income tax chargeable under Schedule F in respect of any distribution".

14. In section 335 (1) of the Income Tax Act, 1967 , "Schedules C and D" shall be deleted, and there shall be inserted "Schedules C, D and F".

15. In section 336 of the Income Tax Act, 1967 , "Schedules C and D" shall be deleted, and there shall be inserted "Schedules C, D and F".

16. In section 337 (2) of the Income Tax Act, 1967 , "Schedules C and D" shall be deleted and there shall be inserted "Schedules C, D and F".

17. In section 367 (7) of the Income Tax Act, 1967 —

(1) after "of this Part" there shall be inserted "and Schedule 11",

(2) in paragraph (a) for "dividend" there shall be substituted the following—

"distribution made on or after the 6th day of April, 1976 and any dividend which is not such a distribution, and in applying references to interest in relation to such a distribution 'gross interest' or 'gross amount' means the distribution together with the tax credit to which the recipient of the distribution is entitled in respect of it and 'net interest' means the distribution exclusive of any such tax credit"; and

(3) for paragraph (d) there shall be substituted the following—

"(d) securities shall be deemed to be similar if they entitle their holders to the same rights against the same persons as to capital and interest and the same remedies for the enforcement of those rights, notwithstanding any difference in the total nominal amounts of the respective securities or in the form in which they are held or the manner in which they can be transferred;

and in paragraph (a) 'distribution' and 'tax credit' have the same meanings as in Part IX of the Corporation Tax Act, 1976 ",

and the said section 367 (7), as so amended, is set out in the Table to this paragraph.

TABLE

(7) For the purposes of this Part and Schedule 11—

( a ) "interest" includes a distribution made on or after the 6th day of April, 1976, and any dividend which is not such a distribution, and in applying references to interest in relation to such a distribution "gross interest" or "gross amount" means the distribution together with the tax credit to which the recipient of the distribution is entitled in respect of it and "net interest" means the distribution exclusive of any such tax credit;

( b ) "person" includes any body of persons, and references to a person entitled to any exemption from income tax include, in a case of an exemption expressed to apply to income of a trust or fund, references to the persons entitled to make claims for the granting of that exemption;

( c ) "securities" includes stocks and shares;

( d ) securities shall be deemed to be similar if they entitle their holders to the same fights against the same persons as to capital and interest and the same remedies for the enforcement of those rights, notwithstanding any difference in the total nominal amounts of the respective securities or in the form in which they are held or the manner in which they can be transferred;

and in paragraph (a) "distribution" and "tax credit" have the same meanings as in Part IX of the Corporation Tax Act, 1976 .

18. Section 369 (1) of the Income Tax Act, 1967 . shall have effect for purposes of corporation tax as if after "Schedule 11" there were inserted "and if the first buyer is entitled as aforesaid and any annual payment is payable by him out of the interest, the annual payment shall be deemed as to the whole thereof not to be a payment which is a charge on income".

19. Section 370 of the Income Tax Act, 1967 , shall apply for the purposes of corporation tax and

(1) subsection (1) shall apply accordingly as if for "whether any" to the end of the subsection there were substituted "the income or profits against which the loss may be set-off under section 16 (relief for trading losses other than terminal losses) or section 25 (set-off of losses etc. against franked investment income) of the Corporation Tax Act, 1976 , there shall be left out of account the appropriate amount in respect of the interest, as determined in accordance with Schedule 11"; and

(2) subsection (2) shall apply accordingly as if for "to be payable" to the end of the subsection there were substituted "to be a payment which is a charge on income".

20. Section 371 of the Income Tax Act, 1967 —

(1) shall have effect for purposes of corporation tax as if after "apply to the dividend" in subsection (2) there were inserted ",and if any annual payment is payable by that person out of the distribution, that annual payment shall be deemed as to the whole thereof not to be a payment which is a charge on income", and

(2) shall be amended by the insertion after subsection (8) of the following subsection—

"(9) For the purposes of this Part and Schedule 12—

( a ) references to a dividend shall except where the context otherwise requires, be construed as including references to a distribution and to an amount which under any enactment is to be treated as a distribution, made on or after the 6th day of April, 1976,

( b ) in relation to such a distribution, including an amount to be so treated as a distribution, references to a dividend being paid or becoming payable or being received or becoming receivable on shares shall be construed as references to a distribution or an amount to be so treated as a distribution being made or received in respect of shares or securities, and

( c ) in applying references to a dividend in relation to a distribution 'gross amount' or 'gross dividend' means the distribution together with the tax credit to which the recipient of the distribution is entitled in respect of it and 'net amount' or 'net dividend' means the distribution exclusive of any such tax credit,

and in this subsection 'distribution' and 'tax credit' have the same meanings as, in Part IX of the Corporation Tax Act, 1976 .".

21. Section 372 of the Income Tax Act, 1967 —

(1) shall apply for corporation tax, and subsection (1) shall apply accordingly as if—

( a ) the reference to a year of assessment where that reference first occurs were a reference to an accounting period, and

( b ) for "whether any" to the end of the subsection there were substituted " the income or profits against which the loss may be set-off under section 16 (relief for trading losses other than terminal losses) or section 25 (set-off of losses etc. against franked investment income) of the Corporation Tax Act, 1976 , there shall be left out of account the gross amount corresponding to so much of the said net amount as would have been required to be brought into account as aforesaid ",and

(2) shall be amended by the substitution in subsection (1) for "tax paid on" of "tax credit in respect of", and the said subsection (1), as so amended, is set out in the Table to this paragraph.

TABLE

(1) Where a person carries on a trade other than such a trade as is mentioned in section 371 (1) and his income for any year of assessment includes a dividend the net amount of which would, if the trade were such a trade as is mentioned in section 371 (1), be required to any extent to be brought into account as a trading receipt which has not borne tax, then, in ascertaining whether any or what repayment of tax is to be made to that person under section 307 by reference to any loss sustained in the trade for the said year of assessment, there shall be left out of account—

( a ) the gross amount corresponding to so much of the said net amount as would have been required to be brought into account as aforesaid, and

( b ) any tax credit in respect of the amount required to be left out of account under paragraph (a).

22. (1) In section 449 (1) of the Income Tax Act, 1967 , for paragraph (c) there shall be substituted the following paragraph—

"(c) where the said securities are of such character that the interest payable in respect thereof may be paid without deduction of tax, the owner or beneficiary (as the case may be) unless he shows that the proceeds of any sale or other realisation of the right to receive the interest which is deemed to be his income by virtue of this section have been charged to tax under Schedule C or under Part XXXI, shall be chargeable to tax under Case IV of Schedule D in respect of that interest, but shall be entitled to credit for any tax which that interest is shown to have borne;".

(2) In relation to corporation tax—

( a ) paragraph (c) of the said section 449 (1) shall apply (subject to the provisions of this Act about distributions) to any interest within the meaning of the said section 449, whether or not the securities are of such character that the interest may be paid without deduction of tax, and with the omission of the words "but shall be entitled to credit for any tax which that interest is shown to have borne", and

( b ) paragraph (d) of the said section 449 (1) shall not apply.

23. In section 450 (2) (d) of the Income Tax Act, 1967 , after "construed" there shall be inserted the following ",subject to section 99 (2) of the Corporation Tax Act, 1976 ," and the said section 450 (2) (d), as so amended, is set out in the Table to this paragraph.

TABLE

( d ) references to the "aggregate income of the estate" of a deceased person for any year of assessment shall be construed, subject to section 99 (2) of the Corporation Tax Act 1976 , as references to the aggregate income from all sources for that year of the personal representatives of the deceased as such, treated as consisting of—

(i) any such income which is chargeable to Irish income tax by deduction or otherwise, such income being computed at the amount on which that tax falls to be borne for that year, and

(ii) any such income which would have been so chargeable if it had arisen in the State to a person resident and ordinarily resident therein, such income being computed at the full amount thereof actually arising during that year, less such deductions as would have been allowable if it had been charged to Irish income tax, but excluding any income from property devolving on the personal representatives otherwise than as assets for payment of the debts of the deceased;

24. For the purposes of any charge to corporation tax to which section 452 of the Income Tax Act, 1967 (estates of deceased persons: absolute interests in residue), is applied the residuary income of a company shall be computed in the first instance by reference to years of assessment, and the residuary income for any such year shall be apportioned between the accounting periods (if more than one) comprising that year.

25. In section 458 (1) of the Income Tax Act, 1967 , for "or dividend distributed" there shall be substituted "which is not a distribution within the meaning of the Corporation Tax Act, 1976 ," and for "such interest or dividend" there shall be substituted "such interest", and the said section 458 (1), as so amended, is set out in the Table to this paragraph.

TABLE

(1) Every warrant, cheque, or other order sent or delivered for the purpose of paying any interest which is not a distribution within the meaning of the Corporation Tax Act, 1976 , by a company which is entitled to deduct income tax from such interest shall have annexed thereto or be accompanied by a statement in writing showing—

( a ) the gross amount which, after deduction of the income tax appropriate thereto, corresponds to the net amount actually paid, and

( b ) the rate and amount of income tax appropriate to such gross amount, and

( c ) the net amount actually paid.

26. Section 475 of the Income Tax Act, 1967 , shall have effect for purposes of corporation tax.

27. Where a gift to which section 547 of the Income Tax Act, 1967 , applies is made by a company, the amount thereof shall for purposes of corporation tax be deemed to be a loss incurred by the company in a separate trade in the accounting period in which the gift is made.

28. Schedule 12 to the Income Tax Act, 1967 , shall be amended—

(1) by the substitution for paragraph 4 (2) of the following subparagraph—

"(2) The said profits shall be the income of the company for the period diminished by—

( a ) the income tax actually borne by the company for any year of assessment (not being a year of assessment after the year 1975-76) in the said period (including any sur-tax borne by the company under section 530 and Schedule 16), and

( b ) the corporation profits tax payable by the company for any accounting period in the said period, and

( c ) the corporation tax (including corporation tax charged by virtue of sections 101 and 162 of the Corporation Tax Act, 1976 ) payable by the company for any accounting period in the said period, and for this purpose the tax credit comprised in any franked investment income shall be treated as corporation tax payable by the company for the accounting period in which the distribution was received, and

( d ) the capital gains tax payable by the company for any year of assessment (not being a year of assessment after the year 1975-76) in the said period:

Provided that where relief has been afforded to the company under section 358, 360 or 361, references in this subparagraph to tax actually borne or to tax payable shall be construed as references to the tax which would have been borne or payable if that relief had not been given.";

(2) by the substitution for paragraph 4 (3) of the following subparagraph—

"(3) In ascertaining for the purposes of this paragraph the amount of income tax, corporation profits tax and corporation tax by which the income of the company for the period is to be diminished, any tax on the amount to be deducted under clause (d) or (e) of paragraph 5 (3) shall be left out of account.";

(3) by the substitution for paragraph 5 (2) of the following subparagraph—

"(2) There shall be computed the aggregate amount—

( a ) of any profits or gains arising in the period from any trade carried on by the company computed in accordance with the provisions applicable to Case I of Schedule D, and

( b ) of any income (including any franked investment income) arising in the period (computed in accordance with the provisions of this Act or in the case of franked investment income, in accordance with the provisions of the Corporation Tax Act, 1976 ), other than profits or gains arising from any such trade, and

( c ) of any capital profits arising in the period (whether or not chargeable to capital gains tax or corporation tax).";

(4) by the substitution for paragraph 5 (3) of the following subparagraph—

"(3) There shall be deducted from the said aggregate amount the sum of the following amounts that is to say—

( a ) any loss sustained by the company in the period in any such trade (computed in the same manner as profits or gains under the provisions applicable to Case I of Schedule D),

( b ) any allowances in respect of any such trade under sections 241, 244 (3) or 245, Chapter III of Part XIV, Part XV or XVI—

(i) for any year of assessment (not being a year of assessment after the year 1975-76) in the period,

(ii) which under section 14 of the Corporation Tax Act, 1976 , fall to be made in taxing the trade for the purpose of corporation tax for any accounting period in the period,

( c ) (i) any payments made by the company in the period to which section 433 or 434 applies, other than payments which are deductible in computing the profits or gains or losses of a trade carried on by it,

(ii) any amount in respect of which repayment was made under section 496 for any year of assessment in the period,

(iii) any charges on income which under section 10 (1) of the Corporation Tax Act, 1976 , fall to be allowed as deductions against the total profits for any accounting period in the period,

( d ) if the company is not engaged in carrying on such a trade as is mentioned in section 371 (1) and has received in the period—

(i) on or before the 5th day of April, 1976, a dividend which, if the company had been engaged in such a trade, would have been required by section 371 (1) to be brought into account to any extent as mentioned therein, such amount as would, after deduction of income tax at the rate authorised by section 456, be equal to the amount which would have been so required to be brought into account,

(ii) after the 5th day of April, 1976, a distribution within the meaning of Part IX of the Corporation Tax Act, 1976 , which if the company had been engaged in such a trade would have been so required to be so brought into account to any extent, an amount equal to so much of the distribution as would be so required to be brought into account increased by so much of the tax credit in respect of that distribution as bears to the amount of such tax credit the same proportion as the part of the distribution which would be so required to be brought into account bears to the distribution, and

( e ) if the company is not engaged as aforesaid but were it so engaged any reduction under section 368 would, or would but for section 368 (3), fall to be made as respects the price paid by the company for securities (within the meaning of that section) bought by it in the period—

(i) on or before the 5th day of April, 1976, such amount as would, after deduction of income tax at the rate applicable to the payment be equal to the amount of the reduction,

(ii) after the 5th day of April, 1976, such amount as would be equal to an amount of gross interest corresponding to an amount of net interest equal to the amount of the reduction,

so however that where the securities are of the description specified in paragraph 4 of Schedule 11, the amount shall be the amount of the reduction,

and the balance shall be the income of the company for the period."; and

(5) by the substitution for paragraph 6 of the following paragraph—

"6. Any reference in paragraph 4 or 5 to an amount for a year of assessment in the period in question shall be taken as a reference to the full amount for any year of assessment falling wholly within the period and a proportionate part of the amount (on a time basis) for any year of assessment falling partly within that period and the reference therein to corporation profits tax or corporation tax payable for any accounting period in the said period shall be construed in a corresponding manner.".

29. In Part 1V of the Finance (Miscellaneous Provisions) Act, 1968 , as it applies for the purposes of corporation tax—

(1) any question whether a person is connected with another, and

(2) the meaning of "control"

shall, notwithstanding the provisions of section 16 of that Act, be determined in accordance with the provisions of section 157.

30. Section 37 of the Finance Act, 1968 , shall have effect for corporation tax as for income tax, and references to income tax shall have effect accordingly as if they were or included references to corporation tax, and in subsection (4) of the said section 37 for " section 214 of the Income Tax Act, 1967 ," there shall be substituted " section 15 or 33 (2) of the Corporation Tax Act, 1976 ,", and the said subsection (4), as so amended, is set out in the Table to this paragraph.

TABLE

(4) Where a lump sum is paid by an employer in respect of employment wholly in a business carried on by the employer, and expenses of management of the business are eligible for relief under section 15 or 33 (2)of the Corporation Tax Act, 1976 , the amount by which the lump sum exceeds the amount of the rebate recoverable shall (if not otherwise so allowable) be allowable as expenses of management eligible for relief under that section; and, if the lump sum was paid after the discontinuance of the business, the net amount so allowable shall be treated as if it were expenses of management incurred on the last day on which the business was carried on.

31. Section 16 of the Finance Act, 1972 , shall have effect for corporation tax as if for subsection (4) there were substituted the following subsection—

"(4) Any sum paid by an employer by way of contribution under the scheme shall, for the purposes of Case I or II of Schedule D and of the provisions of section 15 or 33 (2) of the Corporation Tax Act, 1976 , relating to expenses of management, be allowed to be deducted as an expense or expense of management incurred in the accounting period in which the sum is paid:

Provided that—

( a ) the amount of an employer's contributions which may be so deducted shall not exceed the amount contributed by him under the scheme in respect of employees in a trade or undertaking in respect of the profits of which the employer is assessable to corporation tax,

( b ) a sum not paid by way of an ordinary annual contribution shall for the purposes of this subsection be treated, as the Commissioners may direct, either as an expense incurred in the accounting period in which the sum is paid, or as an expense to be spread over such period of years as the Commissioners think proper.".

32. Section 24 of the Finance Act, 1973 , shall apply for corporation tax as if the following subsection were inserted after subsection (8)—

"(9) Expenses incurred in providing business entertainment shall not, except to the extent that they are wholly, exclusively and necessarily laid out or expended for the purposes of a business, be included in computing any expenses of management in respect of which a deduction may be claimed under section 15 or 33 (2) of the Corporation Tax Act, 1976 .".

33. Section 26 of the Finance Act, 1973 , shall have effect for corporation tax as if after "Schedule E," there were inserted—

"or

( c ) to be taken into account for the purposes of a management expenses claim under section 15 or 33 (2) of the Corporation Tax Act, 1976 ,".

34. The provisions of section 33 of the Finance Act, 1973 , shall have effect for purposes of corporation tax as they have effect for purposes of income tax.

35. In section 34 (2) of the Finance Act, 1973 , the reference to a return of total income from all sources as estimated in accordance with the provisions of the Income Tax Acts shall have effect for corporation tax as if it were or included a reference to a return under section 143.

36. (1) The references in paragraphs 1 and 3 of the Third Schedule to the Finance Act, 1973 , to section 33 of the said Act, and to section 550 of the Income Tax Act, 1967 , shall have effect for corporation tax as if they were or included references to those sections as they apply for purposes of corporation tax.

(2) The reference in paragraph 6 of the Third Schedule to the Finance Act, 1973 , to section 16 of the Finance (Miscellaneous Provisions) Act, 1968 , shall have effect for corporation tax as if it were a reference to section 157 of the Corporation Tax Act, 1976 .

(3) The reference in paragraph 7 of the Third Schedule to the Finance Act, 1973 , to the Income Tax Acts shall have effect for corporation tax as if it were or included a reference to the Corporation Tax Act, 1976 .

37. Section 8 (1) of the Finance (Taxation of Profits of Certain Mines) Act, 1974 , shall be amended by the substitution for "Act of 1967" of " Income Tax Act, 1967 ," and the said section 8 (1), as so amended, is set out in the Table to this paragraph.

TABLE

(1) Where a person carrying on the trade of working a qualifying mine incurs after the 31st day of March, 1974, capital expenditure on the acquisition of a scheduled mineral asset entitling him to work deposits of scheduled minerals and in connection with that trade he commences to work those deposits, he shall be entitled to mine development allowance under section 245 of the Income Tax Act, 1967 , in respect of such capital expenditure to the extent that he would have been entitled to such allowance if the said capital expenditure had been capital expenditure incurred in the development of the mine, but section 2 shall not apply in respect of any such expenditure.

38. Section 10 of the Finance (Taxation of Profits of Certain Mines) Act, 1974 , shall have effect for corporation tax as it has effect for income tax, and the references to the Income Tax Acts, to a year of assessment and to charging the profits of the said trade to income tax shall have effect accordingly as if they were references to the Corporation Tax Acts, to an accounting period and to computing the profits of the said trade for purposes of corporation tax.

39. For section 11 of the Finance (Taxation of Profits of Certain Mines) Act, 1974 , there shall be substituted the following section—

"11.—(1) Where, after the 31st day of March, 1974, a person resident in the State sells any scheduled mineral asset and the net proceeds of the sale consist wholly or partly of a capital sum, he shall, subject to the provisions of this section, be charged to tax under Case IV of Schedule D for the chargeable period in which the sum is received by him on an amount equal to that sum:

Provided that where that person is an individual and, not later than twelve months after the end of the year of assessment in which the sum is paid, by notice in writing to the inspector, he elects to be charged to tax for the said year of assessment and for each of the five succeeding years of assessment, on an amount equal to one-sixth of that sum, he shall be so charged.

(2) Where, after the 31st day of March, 1974, a person not resident in the State sells any scheduled mineral asset and the net proceeds of the sale consist wholly or partly of a capital sum, then—

( a ) he shall be charged to tax in respect of that sum under Case IV of Schedule D for the chargeable period in which the sum is received by him, and

( b ) section 434 of the Income Tax Act, 1967 , shall apply to that sum as if it were an annual payment payable otherwise than out of profits or gains brought into charge to tax:

Provided that where that person is an individual and, not later than twelve months after the end of the year of assessment in which the sum is paid, by notice in writing to the Revenue Commissioners, he elects that the said sum shall be treated for the purpose of tax for that year and for each of the five succeeding years as if one-sixth thereof, and no more were included in his income chargeable to tax for each of those years respectively, it shall be so treated, and all such repayments and assessments of tax for each of those years shall be made as are necessary to give effect to the election, so, however, that—

(i) the election shall not affect the amount of tax falling to be deducted and accounted for under the said section 434,

(ii) where any sum is deducted under the said section 434, any adjustments necessary to give effect to the election shall be made by way of repayment of tax, and

(2A) In subsection (2) the word 'tax' shall mean income tax, unless the seller of the scheduled mineral asset, being a company, would be within the charge to corporation tax in respect of any proceeds of the sale not consisting of a capital sum.

(3) Where the scheduled mineral asset sold by a person was acquired by him by purchase and the price paid consisted wholly or partly of a capital sum, subsections (1) and (2) shall apply as if any capital sum received by him when he sells the asset were reduced by the amount of that sum:

Provided that nothing in this subsection shall affect the amount of tax falling to be deducted and accounted for under section 434 of the Income Tax Act, 1967 , by virtue of subsection (2), and where any sum is deducted under the said section 434, any adjustment necessary to give effect to the provisions of this subsection shall be made by way of repayment of tax.

(4) Where by virtue of an order made by the Minister for industry and Commerce under section 14 of the Minerals Development Act, 1940 , scheduled minerals or rights to work such minerals are acquired and the said Minister pays compensation to any person in respect of such acquisition that person shall be deemed, for the purposes of this section to have sold a scheduled mineral asset for a capital sum equal to the amount of compensation paid to him and the preceding provisions of this section shall apply to the said compensation as they apply to a capital sum received in respect of a sale of a scheduled mineral asset.

(5) In this section any reference to the sale of a right to a scheduled mineral asset includes a reference to the grant of a licence to work scheduled minerals.

(6) In this section 'chargeable period' means an accounting period of a company or a year of assessment.".

40. In section 18 (2) of the Finance (Taxation of Profits of Certain Mines) Act, 1974 , for "relates to corporation profits tax" to the end of the subsection there shall be substituted "has effect for purposes of corporation tax, be read and construed together with the Corporation Tax Acts", and the said section 18 (2), as so amended, is set out in the Table to this paragraph.

TABLE

(2) This Act shall, so far as it relates to income tax, be read and construed together with the Income Tax Acts and shall, so far as it has effect for purposes of corporation tax, be read and construed together with the Corporation Tax Acts.

41. In section 4 (b) of the Finance Act, 1974 , for "433, 434 c 456" there shall be substituted "433 or 434", and the said section 4 (b), as so amended, is set out in the Table to this paragraph.

TABLE

( b ) from which tax is deductible by virtue of section 433 434 of the Income Tax Act, 1967 , or

42. For section 31 (3) (f) of the Finance Act, 1974 , there shaft be substituted—

"(f) interest paid without deduction of tax by virtue of section 30 of the Corporation Tax Act, 1976 , or

( g ) interest which under section 97 of the Corporation Tax Act, 1976 , is a distribution".

43. Section 33 (1) of the Finance Act, 1974 , shall be amended—

(1) by the substitution for " section 323 of the Income Tax Act, 1967 " of " section 155 (5) of the Corporation Tax Act, 1976 :, and

(2) by the substitution for " section 16 of the Finance (Miscellaneous Provisions) Act, 1968 " in each place where it occurs of " section 157 of the Corporation Tax Act, 1976 ",

and the said section 33 (1), as so amended, is set out in the Table to this paragraph.

TABLE

(1) ( a ) In this section and sections 34 and 35—

"ordinary share capital" has the meaning assigned to it by section 155 (5) of the Corporation Tax Act, 1976 ;

"control" has the meaning assigned to it by section 157 of the Corporation Tax Act, 1976 ;

"material interest", in relation to a company, means the beneficial ownership of, or the ability to control, directly or through the medium of a connected company or connected companies or by any other indirect means more than 5 per cent. of the ordinary share capital of the company.

( b ) For the purposes of this section and sections 34 and 35 a company shall be regarded as connected with another company if it would be so regarded for the purposes of section 157 of the Corporation Tax Act, 1976 , and if it is such a company as is referred to in subsection (2) (a).

44. The reference in section 38 (2) of the Finance Act, 1974 , to section 16 of the Finance (Miscellaneous Provisions) Act, 1968 , shall have effect for corporation tax as if it were a reference to section 157.

45. (1) Section 41 of the Finance Act, 1974 , shall have effect for corporation tax as for income tax and the references in subsection (2) of the said section to the Income Tax Acts and in subsection (7) of the said section to section 16 (3) of the Finance (Miscellaneous Provisions) Act, 1968 , shall have effect accordingly as if they were references to the Corporation Tax Acts and to section 157.

46. (1) Section 54 (1) of the Finance Act, 1974 , shall be amended by the insertion after "Part XXV of the Income Tax Act, 1967 " of ", or Part IV or V of the Corporation Tax Act, 1976 ", and the said section 54 (1), as so amended, is set out in the Table to this subparagraph.

TABLE

(1) In this section—

"director" has the same meaning as in section 119 of the Income Tax Act, 1967 ;

"emoluments" has the same meaning as in section 111 (4) of the Income Tax Act, 1967 ;

"employee" means a person employed by any body of persons;

"tax-relieved company" means a body corporate which has claimed and is entitled to relief from tax under Part XXV of the Income Tax Act, 1967 , or Part IV or V of the Corporation Tax Act, 1976 .

(2) For section 54 (3) of the Finance Act, 1974 , there shall be substituted the following—

"(3) Where, for any year of assessment, a person—

( a ) who is a director or employee of a tax-relieved company or of a body corporate connected with that company, or

( b ) who is employed by a person connected with that company,

receives no emoluments in respect of services rendered by him to or for the benefit of the said company or to or for the benefit of any person connected with that company or receives emoluments in respect of such services which, in the opinion of the Revenue Commissioners, are not adequate as consideration for the services so rendered, and receives a distribution in respect of shares held by him in the said company, so much of that distribution (in this section referred to as the relevant part of the distribution) as is, in the opinion of the Revenue Commissioners in consideration of the services so rendered shall be deemed not to be a distribution for the purposes of Schedule F and shall be deemed to be emoluments of that person and shall be chargeable to tax under Schedule E as emoluments paid to him on the date on which the said distribution was made, and the amount of the emoluments to he so charged shall be the amount which is equal to the aggregate of the amount of the relevant part of the distribution and the amount of the tax credit appropriate thereto and for this purpose the amount of the tax credit appropriate to the relevant part of the distribution shall be the amount of the tax credit to which the person would have been entitled in respect of the relevant distribution if the relevant distribution were a separate distribution made by the tax-relieved company".

(3) Section 54 (5) of the Finance Act, 1974 , shall be amended by the substitution in paragraph (b) for "dividend is paid" of "distribution is made", and the said section 54 (5), as so amended, is set out in the Table to this subparagraph.

TABLE

(5) In considering for the purpose of this section whether emoluments paid to any person by a company are or are not adequate as consideration for services rendered, the Revenue Commissioners shall have regard to—

( a ) the nature of the services rendered by that person,

( b ) the emoluments received by that person from the company for services so rendered at a time when he did not hold shares in the company or did not hold the shares in respect of which the distribution is made which is the subject of their consideration by virtue of this section,

( c ) the amount of emoluments which it would be reasonable to expect to be paid for such services, and

( d ) any evidence tendered by or on behalf of the said person as to the adequacy of the emoluments in question.

(4) In section 54 (6) of the Finance Act, 1974 , for "dividend" in each place where it occurs there shall be substituted distribution for "paid" there shall be substituted "made" and for "payable" there shall be substituted "made" and the said section 54 (6), as so amended, is set out in the Table to this subparagraph.

TABLE

(6) Where shares in respect of which a distribution is made are held in a tax-relieved company by a person who is connected with another person (that other person being a person who if he held the shares and received the distribution would be a person to whom subsection (3) applies), then, for the purposes of the said subsection (3), the shares shall be regarded as being held by the second-mentioned person and the distribution shall be regarded as having been received by him in respect of the shares on the date on which the distribution was made.

(5) In section 54 (7) of the Finance Act, 1974 , for "dividend" in each place where it occurs other than in paragraph (c) there shall be substituted "distribution" and the said section 54 (7), as so amended, is set out in the Table to this subparagraph.

TABLE

(7) In considering for the purpose of this section whether a distribution or part of a distribution is in consideration of services rendered, the Revenue Commissioners shall have regard to—

( a ) all the classes of shares issued by the company concerned,

( b ) the class or classes of shares in the said company held by the person aforesaid, the number of shares so held, the nominal value of, and the amount subscribed by him in respect of, such shares,

( c ) the rate of dividend paid on the shares of each class,

( d ) whether shares of the class held by the person aforesaid are held by any other person and, if so, the number of shares so held, and

( e ) any other matter which appears to them relevant for the purpose of forming an opinion under this subsection.

47. (1) Section 55 (3) of the Finance Act, 1974 , shall have effect for purposes of corporation tax, and the reference to section 310 of the Income Tax Act, 1967 , shall have effect accordingly as if it were or included a reference to section 19.

(2) In section 55 (4) of the Finance Act, 1974 , for " section 214 of the Income Tax Act, 1967 ," there shall be substituted " section 15 or 33 (2) of the Corporation Tax Act, 1976 ," and the said section 55 (4), as so amended, is set out in the Table to this subparagraph.

TABLE

(4) For the purposes of this section, profits or gains shall not be treated as falling to be taken into account as a trading receipt by reason only that they are included in the computation required by section 15 or 33 (2) of the Corporation Tax Act, 1976 .

48. Section 74 of the Finance Act, 1974 , shall have effect for corporation tax as for income tax, and references to the Income Tax Acts, to years of assessment and to a deduction in charging the profits of a trade shall have effect accordingly as if they were or included references to the Corporation Tax Acts, to accounting periods and to a deduction made in computing the trading income for corporation tax.

49. Part I of the Second Schedule to the Finance Act, 1975 , shall have effect for corporation tax as for income tax and shall have effect accordingly as if—

(1) references to years of assessment and to tax were or included references to accounting periods and to corporation tax, and

(2) the following paragraph were substituted for paragraph 2—

"2. So far as relates to relief under subsection (5) or (6) of section 81 of the Income Tax Act, 1967 , or section 16 or 19 of the Corporation Tax Act, 1976 , or to the computation of profits or gains or losses of a trade or profession for a company's accounting period ending after the 5th day of April, 1975, section 19, paragraphs (b) and (c) of section 20 and sections 21 and 22 shall be deemed to have had effect as from the passing of the Finance Act, 1963 , and as respects leases granted at any time.".

50. The amendments in this Part of this Schedule shall not affect the liability to income tax for years of assessment ending on or before the 5th day of April, 1976, or the liability to corporation profits tax for accounting periods ending on or before that date, or the assessment, collection or recovery of either of those taxes or of interest thereon or other proceedings relating to those taxes or that interest.

PART II

Application and Adaptation of Capital Gains Tax Act, 1975

1. In section 2 (1), for the definitions of "controlled company" and "control" there shall be substituted—

"'close company' has the meaning assigned to it by section 94 of the Corporation Tax Act, 1976 , and 'control' has the meaning assigned to it by section 102 of that Act".

2. In section 33 (7) (b), for "controlled", in each place where it occurs, there shall be substituted "close" and the said section 33 (7) (b), as so amended, is set out in the Table to this paragraph.

TABLE

( b ) a person, in his capacity as trustee of a settlement, is connected with any individual who in relation to the settlement is a settlor, with any person who is connected with such an individual and with a body corporate which is deemed to be connected with that settlement, and a body corporate shall be deemed to be connected with a settlement in any year if at any time in the year it is a close company (or only not a close company because it is not resident in the State) and the shareholders then include the trustees of or a beneficiary under the settlement;

3. In section 35—

(1) in subsections (1), (3) and (5), for controlled in each place where it occurs, there shall be substituted "close" and the said subsections (1), (3) and (5), as so amended, are set out in the Table to this paragraph, and

(2) subsection (4) shall be deleted.

TABLE

(1) If on or after the 6th day of April, 1974, a company which is a close company transfers an asset to any person otherwise than by way of a bargain made at arm's length and for a consideration of an amount or value less than the market value of the asset, an amount equal to the difference shall be apportioned among the issued shares of the company, and the holders of those shares shall be treated in accordance with the following provisions of this section.

(3) If the person owning any of the said shares at the date of transfer is itself a close company, an amount equal to the amount apportioned to the shares so owned under subsection (1) to that close company shall be apportioned among the issued shares of that close company, and the holders of those shares shall be treated in accordance with subsection (2), and so on through any number of close companies.

(5) This section shall apply to a company falling within section 36 as it applies to a close company.

4. In section 36 (1) (8), for "controlled", in each place where it occurs, there shall be substituted "close" and the said section 36 (1) (8), as so amended, is set out in the Table to this paragraph.

TABLE

(1) This section applies as respects chargeable gains accruing to a company—

( a ) which is not resident in the State, and

( b ) which would be a close company if it were resident in the State.

(8) If the person owning any of the shares in the company at the time when the chargeable gain accrues to the company is itself a company which is not resident in the State but which would be a close company if it were resident in the State, an amount equal to the amount apportioned under subsection (3) out of the chargeable gain to the shares so owned shall be apportioned among the issued shares of the second-mentioned company, and the holders of those shares shall be treated in accordance with subsection (2), and so on through any number of companies.

5. For section 36 (4) (d) there shall be substituted—

"(d) a chargeable gain in respect of which the company is chargeable to tax by virtue of subsection (2) or (7) of section 4 (charge to tax on non-residents) or to corporation tax by virtue of section 8 (2) (b) of the Corporation Tax Act, 1976 (companies not resident in the State).".

6. Section 44 shall have effect for purposes of corporation tax as it has effect for purposes of capital gains tax.

7. Section 49 (6) shall have effect for purposes of corporation tax as it has effect for purposes of capital gains tax.

8. In paragraph 2 (1) of Schedule 1, for " section 214 of the Income Tax Act, 1967 " there shall be substituted " section 33 of the Corporation Tax Act, 1976 " and the said paragraph 2 (1), as so amended, is set out in the Table to this paragraph.

TABLE

(1) There shall be excluded from the consideration for a disposal of assets taken into account in the computation under this Schedule of the gain accruing on that disposal any money or money's worth charged to income tax as income of, or taken into account as a receipt in computing income, profits, gains ox losses for the purposes of the Income Tax Acts of, the person making the disposal:

Provided that the exclusion from consideration under this subparagraph shall not be taken as applying to a computation in accordance with the provisions of Case I of Schedule D for the purpose of restricting relief in respect of expenses of management under section 33 of the Corporation Tax Act, 1976 .

9. For paragraph 3 (3) (a) (ii) (iii) of Schedule 1 there shall be substituted—

"(ii) that expenditure was defrayed out of borrowed money,

(iii) the company charged to capital an or any part of the interest on that borrowed money referable to a period ending on or before the disposal, and

(iv) the company is chargeable to capital gains tax in respect of the gain,".

10. In paragraph 22 (1) (a) of Schedule 1, for "controlled", in each place where it occurs, there shall be substituted "close" and the said paragraph 22 (1) (a), as so amended, is set out in the Table to this paragraph.

TABLE

( a ) at any time, including a time before the 6th day of April, 1974, any of the persons having control of a close company, or any person who (in the terms of section 33) is connected with a person having control of a close company, has transferred assets to the company, and

11. Paragraph 3 (4) of Schedule 3 shall have effect for purposes of corporation tax as it has effect for purposes of capital gains tax.

12. Paragraph 11 (6) of Schedule 4 shall have effect for corporation tax as for capital gains tax and references to capital gains tax shall have effect accordingly as if they were or included references to corporation tax,

13. The amendments in this Part of this Schedule shall not affect the liability to capital gains tax for years of assessment ending on or before the 5th day of April, 1976, or the assessment, collection or recovery of that tax or of interest thereon or other proceedings relating to that tax or interest.

THIRD SCHEDULE

ENACTMENTS REPEALED

PART I

Income Tax

Number and Year	Short Title	Extent of Repeal
(1)	(2)	(3)
No. 6 of 1967	Income Tax Act, 1967 .	In section 1 (1), the definitions of "annuity fund", "foreign life assurance fund" and "life assurance business". Section 64. In section 75 (2), the words "(i)income or profit chargeable under section 215,". In section 76 (2), the word "or" at the end of paragraph (a); paragraph (b). Section 76 (7) and (8). Section 108. Part X. Section 219 (2). Section 220 (6). Section 221. Section 237. In section 316 (2), the words "221 (2) (b)," and "363, or 435". Chapter III of Part XIX. Section 347. In section 371 (7) (c), the words "or fluctuates only in accordance with the rate of income tax". Part XXV. In section 432 (3) (a), the words "or paragraph 2 of Schedule 16. Section 435. Chapter I of Part XXX. Chapter II of Part XXXVI. In section 543, the words " (a) the assessment, charge, collection and recovery of tax under section 530 or (b)". Schedule 16.
No. 21 of 1969	Finance Act, 1969 .	Section 20.
No. 19 of 1972	Finance Act, 1972 .	In section 16 (4), the words "and of the provisions of section 214 of the Income Tax Act, 1967 , relating to expenses of management" and the words "or expense of management".
No. 19 of 1973	Finance Act, 1973 .	Section 11. Section 24 (2). In section 24 (8), the words "and (2)". In Section 26, the words "or (c) to be taken into account for the purposes of a management expenses claim under section 214 of the Income Tax Act, 1967 ,".
No. 17 of 1974	Finance (Taxation of Profits of Certain Mines) Act, 1974 .	Section 13, 14, 15 and 16
No. 27 of 1974	Finance Act, 1974 .	The proviso to section 4. In Section 5 (1), the words", or that there may be deducted from any dividend the tax appropriate thereto". The proviso to section 5 (1). Section 23. Section 54 (4).
No. 6 of 1975	Finance Act, 1975 .	Section 5, 18 and 30.

The repeals in this Part of this Schedule shall not affect the liability to income tax for years of assessment ending on or before the 5th day of April, 1976, or the assessment, collection or recovery of that tax or of interest thereon or other proceedings relating to that tax or interest.

PART II

Corporation Profits Tax

Number and Year	Short Title	Extent of Repeal
(1)	(2)	(3)
10 and 11 Geo. V c. 18	Finance Act, 1920.	Part V.
11 and 12 Geo. V c. 32	Finance Act, 1921.	Section 55 and 57.
12 and 13 Geo. V c. 17	Finance Act, 1922.	Section 43
No. 20 of 1932	Finance Act, 1932 .	Section 47.
No. 14 of 1941	Finance Act, 1941 .	Section 34, 36 (4) and 45 (2).
No. 18 of 1944	Finance Act, 1944 .	Section 11, 12 and 15.
No. 15 of 1946	Finance Act, 1946 .	Section 24.
No. 13 of 1949	Finance Act, 1949 .	Paragraph 3 of Part II of the Fifth Schedule.
No. 21 of 1953	Finance Act, 1953 .	Part IV so far as it is unrepealed.
No. 8 of 1956	Finance (Profits of Certain Mines)(Temporary Relief from Taxation) Act, 1956 .	Section 11 an 12 so far as they are unrepealed.
No. 47 of 1956	Finance (Miscellaneous Provisions) Act, 1956 .	Section 2. Parts II and III so far as they are unrepealed. Section 20.
No. 20 of 1957	Finance Act, 1957 .	Section 22.
No. 25 of 1958	Finance Act, 1958 .	Section 45. Parts VII and IX and the Third Schedule so far as they are unrepealed.
No. 28 of 1958	Finance (Miscellaneous Provisions) Act, 1958 .	Part II so far as it is unrepealed.
No. 18 of 1959	Finance Act, 1959 .	Part V and VI so far as they are unrepealed.
No. 19 of 1960	Finance Act, 1960 .	Part IV so far as it is unrepealed.
No. 15 of 1962	Finance Act, 1962 .	Section 12, 13 and 14 so far as they are unrepealed.
No. 23 of 1963	Finance Act, 1963 .	Section 38. Parts VII and VIII and section 98 so far as they are unrepealed. Fourth Schedule.
No. 15 of 1964	Finance Act, 1964 .	Part V. Section 30 and 31 so far as they are unrepealed.
No. 22 of 1965	Finance Act, 1965 .	Section 33 and 35. Section 64 and 65 so far as they are unrepealed.
No. 6 of 1967	Income Tax, 1967.	Section 1(5). In section 555 (1) (e), the words "or, in relation to corporation profits tax, accounting periods ending before the 6th day of April, 1967," and the words "or accounting period". In section 556, the words "or corporation profits tax". In section 559 (1), the wards "and corporation profits tax".
No. 17 of 1967	Finance Act, 1967 .	Section 21.
No. 7 of 1968	Finance (Miscellaneous Provisions) Act, 1968	Section 13 and 15.
No. 33 of 1968.	Finance Act, 1968 .	Part IV. Section 48 (4)
No. 21 of 1969	Finance Act, 1969 .	Part VI. In section 63, the words "and corporation profits tax".
No. 14 of 1970	Finance Act, 1970 .	In section 21 (5), the words" or of Part V of the Finance Act, 1920, as amended or extended by subsequent enactments". In section 21 (6), the words "or accounting period" in each place where they occur. Section 24 (2) (b).
No. 23 of 1971	Finance Act, 1971 .	Section 46, 49 and 50.
No. 19 of 1972	Finance Act, 1972 .	Section 43 so far as it relates to corporation profits tax.
No. 19 of 1973	Finance Act, 1973 .	In section 30 (4) (a), the words "(including assessments and adjustments of assessments to corporation profits tax)". In section 33 (1) (d), the words "or corporation profits tax, as appropriate, and 'for tax purposes' means for purposes of any of the said taxes". In section 33 (6), the words "and for the purposes of corporation profits tax as respects any profits arising on or after the 1st day of April, 1973". In section 34 (2), the words ", and of the enactments relating to corporation profits tax". In section 35, the words "or of the enactments relating to corporation profits tax". Section 37. In section 98 (2), the words "and (so far as relating to corporation profits tax) shall be construed together with Part V of the Finance Act, 1920, and the enactments amending or extending that Part". In paragraph 7 of the Third Schedule, the words "or the enactments relating to corporation profits tax".
No. 17 of 1974	Finance (Taxation of Profits of Certain Mines) Act, 1974 .	In section 10 (1), the words "and the Acts relating to corporation profits tax". In section 10 (2), the words "or any Particular accounting period". In section 10 (3), the words "or accounting period" and the words "and as a deduction in computing the profits of the said trade for purposes of corporation profits tax for that accounting period". Sections 12 and 17.
No. 27 of 1974	Finance Act, 1974 .	Section 27 (7). In section 41 (2), the words "and of the enactments relating to corporation profits tax". Section 53. Section 56 (3) (a). In section 74 (1), the words "'the Acts relating to corporation profits tax' means Part V of the Finance Act, 1920, and the enactments amending or extending that Part;" and the words "and the Acts relating to corporation profits tax". In section 74 (2), the words "or any particular accounting period". In section 74 (3), the words "or accounting period", the words "and as a deduction in computing the profits of the said trade for purposes of corporation profits tax for that accounting period" and the words" or amounts".
No. 6 of 1975	Finance Act, 1975 .	Section 21 (8). In section 28 (1), the words "(a) section 14 of the Finance Act, 1962 " and the words "and 50(2)". In section 28 (3), the words ", corporation profits tax". In paragraph 2 of the Second Schedule, the words "or section 25 of the Finance Act, 1964 ," and the words "or (b) for a company's accounting period ending after the 5th day of April, 1975, for the purposes of corporation profits tax,". In paragraph 3 of the Second Schedule, the words "and accounting periods" and the words "or a company's accounting period ending on or before the 5th day of April, 1975"

The repeals in this Part of this Schedule shall not affect the liability to corporation profits tax for accounting periods ending on or before the 5th day of April, 1976, or the assessment, collection or recovery of that tax or of interest thereon or other proceedings relating to that tax or interest.

PART III

Income Tax and Corporation Profits Tax

Number and Year	Short Title	Extent of Repeal
(1)	(2)	(3)
No. 33 of 1968	Finance Act, 1968 .	Section 34 and 36.
No. 19 of 1973	Finance Act, 1973 .	Section 39.
No. 27 of 1974	Finance Act, 1974 .	Section 68.

The repeals in this Part of this Schedule shall not affect the liability to income tax for years of assessment ending on or before the 5th day of April, 1976, or the liability to corporation profits tax for accounting periods ending on or before that date, or the assessment, collection or recovery of either of those taxes or of interest thereon or other proceedings relating to those taxes or that interest.

Section 166

FOURTH SCHEDULE

PART I

Amendment of Enactments concerning Double Taxation Relief

Number and Year	Short Title	Extent of Repeal
(1)	(2)	(3)
No. 6 of 1967.	Income Tax Act, 1967 .	In section 355, there shall be added the following subsection— "(5) Nothing in this section or in Schedule 6, Part II, applies for the purposes of corporation tax.". In section 361 (1), for "corporation profits tax" there shall be substituted "corporation tax", and the said section 361 (1), as so amended, is set out in the following Table. TABLE (1) If the Government by order declare that arrangements specified in the order have been made with the government of any territory outside the State in relation to affording relief from double taxation in respect of income tax or corporation tax and any taxes of a similar character, imposed by the laws of the State or by the laws of that territory, and that it is expedient that those arrangements should have the force of law, then, subject to the provisions of this Part, the arrangements shall, notwithstanding anything in any enactment, have the force of law. In paragraph 1 (1) of Schedule 10, the definition of "income" shall be deleted and in the definition of "the Irish taxes" for "corporation profits tax- there shall be substituted "corporation tax", and the said paragraph 1 (1), as so amended, is set out in the following Table. TABLE (1) In this Schedule, except where the context otherwise requires— "arrangements" means arrangements for the time being in the force by virtue of section 361, or of section 12 of the Finance Act, 1950 , or of section 14 of the Finance Act, 1955 ; "the Irish taxes" means income tax and corporation tax; "foreign tax" means, in relation to any territory in regard to which arrangements have the force of law, any tax chargeable under the laws of that territory for which credit may be allowed under the arrangements. In paragraph 2 of Schedule 10, the following subparagraph shall be substituted for subparagraph (2)— "(2) In the case of any income within the charge to corporation tax, the credit shall be applied in reducing the corporation tax chargeable in respect thereof.". In paragraph 3 (2) of Schedule 10, after income tax for any year of assessment", there shall be inserted "or corporation tax for any accounting period', and after "that year" there shall be inserted "or accounting period", and the said paragraph 3 (2)as so amended, is set out in the following Table. TABLE (2) Credit shall not be allowed against income tax for any year of assessment or corporation tax for any accounting period unless the person in respect of whose income the tax is chargeable is resident in the State for that year or accounting period. In paragraph 4 of Schedule 10, for "corporation profits tax" there shall be substituted "corporation tax", and the said paragraph 4, as so amended, is set out in the following Table. TABLE 4. The amount of the credit to be allowed against corporation tax for foreign tax in respect of any income shall not exceed the corporation tax attributable to that income. In paragraph 5 (3) of Schedule 10, for "or section 35 of the Finance Act 1968 " there shall be substituted "or section 163 of the Corporation Tax Act, 1976 ", and the said paragraph 5 (3), as so amended, is set out in the following Table. TABLE (3) Where credit for foreign tax falls to be allowed in respect of any income and any relief would, but for the provisions of this subparagraph, fall to be allowed in respect of that income under section 365 or section 163 of the Corporation Tax Act, 1976 , the said relief shall not be allowed. In paragraph 8 (1) of Schedule 10, after "purposes of income tax", there shall be inserted "or corporation tax", and the said paragraph 8 (1), as so amended, is set out in the following Table. TABLE (1) Where credit for foreign tax falls to be allowed against any of the Irish taxes in respect of any income, the following provisions of this paragraph shall have effect as respects the computation, for the purposes of income tax or corporation tax, of the amount of that income. In paragraph 8 (2) of Schedule 10, after "where the income tax", there shall be inserted "or corporation tax" and after "against income tax" there shall be inserted "or corporation tax, as the case may be", and the said paragraph 8 (2), as so amended, is set out in the following Table. TABLE (2) Where the income tax or corporation tax payable depends on the amount received in the State, the said amount shall be treated as increased by the amount of the credit allowable against income tax or corporation tax, as the case may be. In paragraph 12 of Schedule 10, for "corporation profits tax- there shall be substituted "corporation tax", and the said paragraph 12, as so amended, is set out in the following Table TABLE 12. Where, under the arrangements, relief may be given either in the State or in the territory in regard to which the arrangements are made in respect of any income and it appears that the assessment to income tax or to corporation tax made in respect of the income is not made in respect of the full amount thereof or is incorrect having regard to the credit, if any, which falls to be given under the arrangements, any such additional assessments may be made as are necessary to ensure that the total amount of the income is assessed and the proper credit, if any, is given in respect thereof, and where the income is entrusted to any person in the State for payment, any such additional assessment to income tax may be made on the recipient of the income under Case IV of Schedule D. In paragraph 13 (1) of Schedule 10, after "relevant year of assessment there shall be inserted" or the relevant accounting period", and the said paragraph 13 (1), as so amended, is set out in the following Table. TABLE (1) Subject to paragraph 14, any claim for an allowance by way of credit for foreign tax in respect of any income shall be made in writing to the inspector not later than six years from the end of the relevant year of assessment or the relevant accounting period, and, if the inspector objects to any such claim, it shall be heard and determined by the Appeal Commissioners as if it were an appeal to them against an assessment to income tax and the provisions of this Act relating to the rehearing of an appeal or the statement of a case for the opinion of the High Court on a point of law, shall, with the necessary modifications, apply accordingly. In paragraph 13 (2) of Schedule 10, "the relevant year of assessment' means" shall be deleted; after "foreign tax in respect of any income", there shall be inserted " 'the relevant year of assessment' means"; and after "in respect thereof", there shall be inserted "and 'the relevant accounting period' means the accounting period for which that income falls to be charged to corporation tax or would fall so to be charged if any corporation tax were chargeable in respect thereof", and the said paragraph 13 (2), as so amended, is set out in the following Table. TABLE (2) In this paragraph, in relation to credit for foreign tax in respect of any income, "the relevant year of assessment" means the year of assessment for which that income falls to be charged to income tax or would fall so to be charged if any income tax were chargeable in respect thereof and "the relevant accounting period means the accounting period for which that income falls to be charged to corporation tax or would fall so to be charged if any corporation tax were chargeable in respect thereof. In paragraph 14 of Schedule 10, for "corporation profits tax" there shall be substituted "corporation tax", and the said paragraph 14, as so amended, is set out in the following Table. TABLE 14. Where the amount of any credit given under the arrangements is rendered excessive or insufficient by reason of any adjustment of the amount of any tax payable either in the State or in the territory in regard to which the arrangements are made, nothing in this Act or in the enactments relating to corporation tax limiting the time for the making of assessments or claims for relief shall apply to any assessment or claim to which the adjustment gives rise, being an assessment or claim made not later than six years from the time when all such assessments, adjustments and other determinations have been made, as are material in determining whether any, and if so what, credit falls to be given.
No. 14 of 1970	Finance Act, 1970 .	The following subsection shall be substituted for section 57 (1)— "(1) In this section 'Corporation Tax Acts' has the meaning given by section 155 (1) of the Corporation Tax Act, 1976 .". In section 57 (2), for "section 363 of the said Act,", there shall be substituted " section 167 of the Corporation Tax Act, 1976 ", and the said section 57 (2), as so amended, is set out in the following Table. TABLE (2) For the purposes of section 361 of and Schedule 10 to the Income Tax Act, 1967 , and of the definition of "double taxation relief" in section 167 of the Corporation Tax Act, 1976 , any amount of tax under the law of a territory outside the State which would have been payable but for a relief to which this section applies given under the said law (being a relief with respect to which provision is made in arrangements for double taxation relief which are the subject of an order under the said section 361) shall be treated as having been payable; and references in the said sections and Schedule to double taxation, tax payable or chargeable or tax not chargeable directly or by deduction shall be construed accordingly. In section 57 (3), for "the Corporation Profits Tax Acts", in each place where it occurs, there shall be substituted "the Corporation Tax Acts", and the said section 57 (3), as so amended, is set out in the following Table. TABLE (3) The Revenue Commissioners may make regulations generally for carrying out the provisions of this section or any arrangements having the force of law under the said section 361 and may, in particular, but without prejudice to the generality of the foregoing, provide in the regulations— ( a ) for the purposes of this section or of the regulations, for the application (with or without modifications) of any provision of the Income Tax Acts or any regulations made thereunder or the Corporation Tax Acts or any regulations made thereunder, including the provisions relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law, and ( b ) that the whole or any part of a dividend paid out of profits or gains which consist of or include profits or gains in relation to which double taxation relief is given by virtue of this section is not to be regarded as income or profits for any purpose of the Income Tax Acts or of the Corporation Tax Acts.

The amendments in this Part of this Schedule shall not affect the liability to income tax for years of assessment ending on or before the 5th day of April, 1976, or the liability to corporation profits tax for accounting periods ending on or before that date, or the assessment, collection or recovery of either of those taxes or of interest thereon or other proceedings relating to those taxes or that interest.

PART II

Repeal of Enactments concerning Double Taxation Relief

Number and Year	Short Title	Extent of Repeal
(1)	(2)	(3)
No. 6 of 1967.	Income Tax Act, 1967 .	Sections 363 and 364. Paragraph 3 (1) of Schedule 10. Paragraph 7 of Schedule 10. In paragraph 8 (3) (c) of Schedule 10, the words "for the purposes of income tax"
No. 33 of 1968.	Finance Act, 1968 .	Section 35.

Section 186

FIFTH SCHEDULE

TRANSITIONAL RELIEF IN RESPECT OF CERTAIN PAYMENTS AND MANAGEMENT EXPENSES

1. (1) This paragraph applies to a company which comes within the charge to corporation tax in respect of a source of income as from a date before the 7th day of April, 1975.

(2) In this paragraph—

( a ) the relevant period of a company means the period commencing on the earliest date on which the company comes within the charge to corporation tax in respect of any source of income and ending on the 5th day of April, 1976;

( b ) the relevant amount payable by a company means the aggregate of the amounts specified in subparagraph (3) which become due for payment by the company in the year 1974-75 or, if it is smaller, the aggregate of the amounts specified in the said subparagraph which become due for payment by the company in the year 1975-76.

(3) The amounts referred to in subparagraph (2) (b) are payments of—

( a ) any yearly interest, annuity or other annual payment and any such other payments as are mentioned in section 93 of the Income Tax Act, 1967 ;

( b ) any other interest payable in the State on an advance from a bank carrying on a bona fide banking business in the State, or from a person who in the opinion of the Revenue Commissioners is bona fide carrying on business as a member of a stock exchange in the State or bona fide carrying on the business of a discount house in the State and for the purposes of this subparagraph any such interest payable by a company shall be treated as paid on its being debited to the company's account in the books of the person to whom it is payable; and

( c ) any royalty or other sum which is paid in respect of the user of a patent wholly out of income brought within the charge to income tax or corporation tax:

Provided that the following amounts shall be treated as not being amounts which are specified in this subparagraph—

(i) any amount of interest which, if it is paid before the 6th day of April, 1976, is treated by virtue of Chapter III of Part I of the Finance Act, 1974 , as not qualifying for relief by repayment or otherwise;

(ii) any amount which, if it is paid on or after the 6th day of April, 1976, is treated as not being a charge on income within the meaning of section 10 (allowance of charges on income);

(iii) any amount which is deductible in computing any income of the company; and

(iv) any amount which is a dividend or other distribution of the company.

(4) For the purposes of this paragraph the income of a company charged to corporation tax for any period shall be determined in accordance with the provisions of section 28 (8) (small companies).

(5) Subject to subparagraph (6), the corporation tax payable by a company to which this paragraph applies, for any accounting period of the company which falls wholly or partly within the relevant period of the company, shall be reduced by an amount determined by the formula—

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where—

A is the relevant amount payable by the company,

B is the income of the company charged to corporation tax for the accounting period, with the addition of any amount which has been allowed in respect of charges on income or expenses of management in respect of that part, if any, of the accounting period falling after the 5th day of April, 1976,

C is the total amount of the income of the company in the accounting period (including franked investment income, dividends paid by any body corporate and income which under any provision of the Tax Acts is exempt from any tax or is disregarded for the purposes of any tax or is deemed not to be income) before any deduction for charges on income or expenses of management,

D is the number of months or fractions of months comprised in that part of the accounting period which falls before the 6th day of April, 1976.

E is the number of months or fractions of months comprised in the relevant period of the company, and

F is the standard rate per cent. for the year 1976-77.

(6) Where the amount of corporation tax which is payable by a company for any accounting period which falls wholly or partly within the relevant period of the company is reduced in accordance with the provisions of Part IV (Profits from Export of Certain Goods) the amount of the reduction to be made under this section shall be an amount which bears the same proportion to the amount determined in accordance with the provisions of subparagraph (5) as the amount of corporation tax which would be payable by the company for the accounting period if this paragraph had not been enacted bears to the amount of corporation tax which would be payable by the company for the accounting period if neither Part IV nor this paragraph had been enacted.

2. (1) This paragraph applies to an investment company (as defined in section 15 (6)) which comes within the charge to corporation tax in respect of a source of income as from a date before the 7th day of April, 1975, and which is entitled under section 214 of the Income Tax Act, 1967 , to relief for expenses of management for the year 1975-76.

(2) The corporation tax payable by a company to which this paragraph applies, for any accounting period which falls wholly or partly within the year 1975-76, shall be reduced by an amount determined by the formula—

[image not available: a7y1976pxvisch5-2.bmp]

where—

A is the amount of management expenses disbursed by the company for the year 1975-76 and in respect of which the company is entitled to relief under section 214 of the Income Tax Act, 1967 , or, if it is smaller, an amount which bears the same proportion to the amount of management expenses disbursed by the company for the year 1974-75 and in respect of which the company is entitled to relief under the said section as the amount of the total income (including franked investment income, dividends paid by any body corporate and income which under any provision of the Tax Acts is exempt from any tax or is disregarded for the purposes of any tax or is deemed not to be income) of the company for the year 1975-76 bears to the amount of the total income (computed in like manner) of the company for the year 1974-75,

B is the income of the company charged to corporation tax for the accounting period with the addition of any amount which has been allowed in respect of charges on income or expenses of management in respect of that part, if any, of the accounting period falling after the 5th day of April, 1976,

D is the number of months or fractions of months comprised in that part of the accounting period which falls within the year 1975-76, and

F is the standard rate per cent. for the year 1976-77.

(3) Paragraph 1 (4) shall apply for the purposes of this paragraph as it applies for the purposes of paragraph 1.

3. (1) This paragraph applies to a company (whether or not the company is resident in the State) which

( a ) carries on life business whether mutual or proprietary, and

( b ) is not charged to corporation tax under Case I of Schedule D in respect of that business for any accounting period falling wholly or partly within the year 1975-76, and

( c ) comes within the charge to corporation tax in respect of a source of income as from a date before the 7th day of April, 1975.

[image not available: a7y1976pxvisch5-2.bmp]

where—

A is the amount of management expenses disbursed by the company for the year 1975-76 and in respect of which the company is entitled to relief under section 214 of the Income Tax Act, 1967 , (or would have been so entitled, if the company had not been charged to income tax for the year 1975-76 in accordance with the provisions of the Income Tax Act, 1967 , applicable to Case I of Schedule D) reduced by an amount, income tax on which at the standard rate for the year 1975-76 is equal to the amount by which relief for those expenses would fall to be restricted by reason of subparagraph (a) of the proviso to section 214 (1), and for this purpose the year ending on the 5th day of April, 1976, shall be the period for which the computation in accordance with the provisions of the Income Tax Act, 1967 , applicable to Case I of Schedule D is made,

D is the number of months or fractions of months comprised in that part of the accounting period which falls within the year 1975-76, and

F is the standard rate per cent. for the year 1976-77.

(3) Paragraph 1 (4) shall apply for the purposes of this paragraph as it applies for the purposes of paragraph 1.

ACTS REFERRED TO

Agriculture Act, 1931	1931, No. 8
Assurance Companies Act, 1909	1909, c. 49
Building Societies Acts, 1874 to 1974
Capital Gains Tax Act, 1975	1975, No. 20
Companies Act, 1963	1963, No. 33
Customs-free Airport Act, 1947	1947, No. 5
Finance Act, 1920	1920, c. 18
Finance Act, 1922	1922, c. 17
Finance Act, 1924	1924, No. 27
Finance Act, 1959	1959, No. 18
Finance Act, 1960	1960, No. 19
Finance Act, 1964	1964, No. 15
Finance Act, 1966	1966, No. 17
Finance Act, 1967	1967, No. 17
Finance Act, 1968	1968, No. 33
Finance Act, 1969	1969, No. 21
Finance Act, 1970	1970, No. 14
Finance Act, 1971	1971, No. 23
Finance Act, 1972	1972, No. 19
Finance Act, 1973	1973, No. 19
Finance Act, 1974	1974, No. 27
Finance Act, 1975	1975, No. 6
Finance (Miscellaneous Provisions) Act, 1956	1956, No. 47
Finance (Miscellaneous Provisions) Act, 1958	1958, No. 28
Finance (Miscellaneous Provisions) Act, 1968	1968, No. 7
Finance (Profits of Certain Mines) (Temporary Relief from Taxation) Act, 1956	1956, No. 8
Finance (Taxation of Profits of Certain Mines) Act, 1974	1974, No. 17
Income Tax Act, 1967	1967, No. 6
Industrial and Commercial Property (Protection) Act, 1927	1927, No. 16
Industrial Development Act, 1969	1969, No. 32
Hand Revenue Regulation Act, 1890	1890, c. 21
Insurance Act, 1936	1936, No. 45
Insurance Acts, 1909 to 1969
Interpretation Act 1937	1937, No. 38
Local Government Act 1941	1941, No. 23
Local Government Services (Corporate Bodies) Act, 1971	1971, No. 6
Minerals Development Act, 1940	1940, No. 31
Petty Sessions (Ireland) Act, 1851	1851, c. 93
Provisional Collection of Taxes Act, 1927	1927, No. 7
Shipping Investment Grants Act, 1969	1969, No. 11
Vocational Education Act, 1930	1930, No. 29
Voluntary Health Insurance Act, 1957	1957, No. 1

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	Irish Legislation
You are here: BAILII >> Databases >> Irish Legislation >> Corporation Tax Act, Number 7/1976 URL: http://www.bailii.org/ie/legis/num_act/1976/0007.html

Irish Legislation

Corporation Tax Act, 1976