First Previous (PART I Income Tax, Sur-Tax, Corporation Profits Tax, Corporation Tax and Capital Gains Tax) Next (Chapter III Taxation of Farming Profits)

16 1976

FINANCE ACT, 1976

Chapter II

Income Tax in Respect of Certain Emoluments

Extension of Chapter IV (income tax in respect of certain emoluments) of Part V of Income Tax Act, 1967.

15. —With effect as on and from the 6th day of April, 1976, Chapter IV of Part V of the Income Tax Act, 1967 , shall apply to all emoluments assessable to income tax under Schedule E other than the emoluments specified in paragraphs (b) and (c) of section 125 of the said Act.

Transitional provisions.

16. —(1) (a) In this section—

capital allowance” has the same meaning as in section 33 of the Finance Act, 1975 ;

deduction in respect of contributions” means any deduction allowed by virtue of section 222 , 224 or 233 of the Income Tax Act, 1967 , or Chapter II of Part I of the Finance Act, 1972 ;

deduction in respect of expenses” means a deduction allowed under Rule 3 or Rule 4 of the Rules (hereinafter referred to as the Rules of Schedule E) applicable to Schedule E contained in Schedule 2 to the Income Tax Act, 1967 ;

emoluments” means—

(i) in relation to the year 1975-76, emoluments assessable to tax under Schedule E for the year 1975-76 from which tax was deductible under any of the Rules of Schedule E, and

(ii) in relation to each of the relevant years, emoluments assessable to tax under Schedule E for that year from which, but for the provisions of section 15, tax would be deductible under the Rules of Schedule E;

relevant years” means the three years 1976-77, 1977-78 and 1978-79;

tax” means income tax;

tax appropriate to the emoluments” means, in relation to any individual, the amount of tax determined by the formula—

A

___ × C

A+B

where—

A is the amount of the individual's emoluments (hereinafter referred to as “net emoluments”) for a particular year of assessment (including, in the case of a married person, any emoluments of his wife which are deemed to be his income in accordance with the provisions of section 192 of the Income Tax Act, 1967 ) after deducting therefrom the aggregate of—

(a) so much of each of the following as is to be taken into account in charging the emoluments to tax:

(i) any deduction in respect of expenses;

(ii) any deduction in respect of contributions; and

(iii) any capital allowance;

and

(b) so much of any loss as is, under the provisions of section 307 (4) (b) of the Income Tax Act, 1967 , regarded as a deduction from those emoluments,

B is the aggregate of the individual's income, other than emoluments, for that year of assessment from all sources (including in the case of a married person, any income, other than emoluments, of his wife which is deemed to be his income in accordance with the provisions of section 192 of the Income Tax Act, 1967 ) after deducting from the income from each several source so much of any of the following amounts as is directly referable to that source:

(i) any deduction in respect of expenses;

(ii) any deduction in respect of contributions;

(iii) any capital allowance; and

(iv) any loss within the meaning of section 89 or Chapter I of Part XIX of the Income Tax Act, 1967 ,

C is the tax payable on the individual's total income for that year before taking account of any relief provided for by this section.

(b) Where, in relation to any individual, the emoluments included in A in the formula in paragraph (a) arise from more than one source the tax appropriate to the emoluments from each source shall be determined separately and shall be an amount which bears the same proportion to the tax appropriate to the emoluments as the net amount of the emoluments from each source bears to A aforesaid.

(2) (a) Where an individual is in receipt of emoluments for any period consisting of the whole or any part of the relevant years, he shall be entitled, in accordance with the provisions of subsection (4), to relief for that period in an amount (hereinafter referred to as “a remission”) equal to one-half of the tax appropriate to the emoluments for the year 1975-76:

Provided that the remission shall not exceed the aggregate of the tax appropriate to the emoluments for the relevant years.

(b) Where the remission is in respect of emoluments arising from more than one source, the remission in respect of the emoluments from each source shall be an amount which bears the same proportion to the remission as the net amount of the emoluments from that source bears to A in the formula in subsection (1) (a):

Provided that the remission in respect of the emoluments from any one source shall not exceed the aggregate of the tax appropriate to the emoluments from that source for the relevant years.

(3) (a) A woman who is in receipt of emoluments for any period consisting of the whole or any part of the relevant years shall be entitled to the remission in respect of tax on emoluments arising to her in the year 1975-76, if any, as an unmarried or widowed woman:

Provided that the aggregate of the remission due in respect of the emoluments arising to her as an unmarried or widowed woman and in respect of emoluments, if any, arising to her which are deemed to be her husband's income in accordance with the provisions of section 192 of the Income Tax Act, 1967 , shall not exceed the aggregate of the tax appropriate to the emoluments arising to her for the relevant years (including any emoluments deemed to be her husband's emoluments in accordance with the provisions of section 192 of the Income Tax Act, 1967 ).

(b) The remission due to a married woman in respect of emoluments arising to her in the year 1975-76 as an unmarried or widowed woman shall be given in priority to any remission due in respect of emoluments, if any, arising to her which are deemed to be her husband's income in accordance with the provisions of section 192 of the Income Tax Act, 1967 .

(c) Subject to the provisions of subsections (2) and (4), a widow shall be entitled to the remission, in whole or in part, in respect of any emoluments arising to her which were deemed to be her husband's income in accordance with section 192 of the Income Tax Act, 1967 , to which her husband would have been entitled if he had not died.

(4) The remission granted by virtue of the provisions of this section shall be allowed as to one-third of the amount thereof in each of the consecutive relevant years, commencing with the first, subject to the Revenue Commissioners being satisfied that tax appropriate to the emoluments arising in each of the said years amounting to not less than the said one-third of the remission has been paid by deduction or otherwise:

Provided that where one-third of the remission exceeds the tax appropriate to the emoluments for any of the said years the excess may be allowed as far as possible against tax payable for any one or more of the other relevant years after deducting that part of the remission allowable for that year by virtue of the provisions of this section.

(5) Where any person receives, for any period consisting of the whole or any part of the relevant years, a pension or other superannuation allowance (hereinafter referred to as “a pension”) in respect of services for which an individual who has died was in receipt of emoluments for the year 1975-76, that person shall be entitled to any remission or any balance of any remission to which the individual, if he had not died and had been in receipt of emoluments for the whole or any part of the relevant years, would have been entitled in respect of emoluments other than emoluments of a wife deemed to be her husband's emoluments in accordance with the provisions of section 192 of the Income Tax Act, 1967 :

Provided that the aggregate of the remission to which that person is entitled by virtue of this subsection and of any remission to which he is entitled by virtue of subsection (2) in respect of the said pension shall not exceed the tax appropriate to the pension for the relevant years.

(6) For the purposes of this section, a pension in respect of services for which an individual was in receipt of emoluments for the year 1975-76 shall be deemed to arise from the same source as the said emoluments.

(7) All such adjustments or repayments of tax shall be made as may be necessary to give effect to the provisions of this section.

(8) Section 193 of the Income Tax Act, 1967 , is hereby amended by the insertion after paragraph (d) in subsection (2) of the following paragraph:

“(dd) so far as it flows from relief under section 16 of the Finance Act, 1976, in proportion to the net emoluments included in A in the formula in subsection (1) (a) of that section.”.

Treatment for tax purposes of certain unpaid remuneration.

17. —(1) In this section—

accounting period”, in relation to a trade or profession, means a period of 12 months ending on the date up to which the accounts of the trade or profession are usually made up, and where accounts of the trade or profession have not been made up, such period not exceeding 12 months as the Revenue Commissioners may determine;

date of cessation”, in relation to an office or employment, means the date on which a person ceases to hold the office or employment;

date of commencement”, in relation to an office or employment, means the date on which a person commences to hold the office or employment;

period of account”, in relation to a trade or profession, means any period, other than an accounting period, for which the accounts of the trade or profession have been made up;

period of accrual”, in relation to remuneration in respect of an office or employment in a trade or profession, means the period beginning on—

(a) the first day of an accounting period, or period of account, of the trade or profession, or

(b) the date of commencement of the office or employment,

whichever is the later, and ending on—

(c) the last day of an accounting period, or period or account, or

(d) the date of cessation of the office or employment,

whichever is the earlier;

relevant date” means—

(a) in relation to an accounting period, the last day of the period,

(b) in relation to a period of account—

(i) where the period of account is less than 12 months, the last day of the period;

(ii) where the period of account is more than 12 months, each 5th day of April within the period and the last day of the period;

remuneration” includes all salaries, fees, wages, perquisites or profits whatsoever from an office or employment.

(2) Where remuneration (hereinafter referred to as “unpaid remuneration”) which is deductible as an expense in computing the profits or income of a trade or profession for an accounting period or period of account for the purposes of Schedule D is unpaid at a relevant date—

(a) the unpaid remuneration shall be deemed to be emoluments to which Chapter IV of Part V of the Income Tax Act, 1967 , applies and shall be deemed to have been paid in accordance with the provisions of subsection (3), and

(b) all the provisions of the said Chapter IV and of the regulations made thereunder and of sections 7 , 8 and 9 of the Finance Act, 1968 , shall, with any necessary modifications, apply to the unpaid remuneration as if it had been so paid.

(3) (a) Unpaid remuneration shall be deemed to have accrued from day to day throughout the period of accrual and there shall be deemed to have been paid on each relevant date so much thereof as accrued up to that date or, if it is earlier, the date of cessation of the office or employment in respect of which the unpaid remuneration is payable—

(i) where there was no preceding relevant date, from the beginning of the period of accrual or, if it is later, the date of commencement of the office or employment in respect of which the unpaid remuneration is payable, and

(ii) where there was a preceding relevant date, from the day following that date or, if it is later, the said date of commencement.

(b) Where, by virtue of the provisions of paragraph (a), unpaid remuneration would be deemed to have been paid on a date earlier than the 5th day of April, 1976, that remuneration shall be deemed to have been paid on the 5th day of April, 1976.

(4) The provisions of this section shall not apply to:

(a) emoluments to which section 125 (c) of the Income Tax Act, 1967 , applies; or

(b) unpaid remuneration which is paid before—

(i) the date of expiry of 6 months after the date (hereinafter referred to as “the deemed date”) on which that remuneration is, by virtue of subsection (3), deemed to have been paid, or

(ii) in case the period of account is one of more than 12 months, the date of expiry of 18 months from the first day of that period of account if the date of expiry is later than the deemed date.