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12 1988

FINANCE ACT, 1988

PART I

Income Tax, Corporation Tax, Capital Gains Tax and Pension Fund Levy

Chapter I

Income Tax

Amendment of provisions relating to exemption from income tax.

1. —As respects the year 1988-89 and subsequent years of assessment, the Finance Act, 1980 , is hereby amended—

(a) in subsection (2) of section 1, by the substitution of “£5,500” for “£5,300” (inserted by the Finance Act, 1985 ), and of “£2,750” for “£2,650” (inserted by the Finance Act, 1985 ), and

(b) in subsection (6) of section 2, by the substitution of “£6,500” for “£6,300” (inserted by the Finance Act, 1986 ), of “£7,600” for “£7,350” (inserted by the Finance Act, 1986 ), of “£3,250” for “£3,150” (inserted by the Finance Act, 1986 ), and of “£3,800” for “£3,675” (inserted by the Finance Act, 1986 ),

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

TABLE

(2) In this section “the specified amount” means—

(a) in a case where the individual would, apart from this section, be entitled to a deduction specified in section 138 (a) of the Income Tax Act, 1967 , £5,500, and

(b) in any other case, £2,750.

(6) In this section “the specified amount” means—

(a) in a case where the individual would, apart from this section, be entitled to a deduction specified in paragraph (a) of the said section 138, £6,500:

Provided that, if at any time during the year of assessment either the individual or his spouse was of the age of seventy-five years or upwards, “the specified amount” means £7,600;

(b) in any other case, £3,250:

Provided that, if at any time during the year of assessment the individual was of the age of seventy-five years or upwards, “the specified amount” means £3,800.

Alteration of rates of income tax.

2. Section 2 of the Finance Act, 1986 , is hereby amended, as respects the year 1988-89 and subsequent years of assessment, by the substitution of the following Table for the Table to the said section:

“TABLE

PART I

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first £5,700

35 per cent.

the standard rate

The next £2,900

48 per cent.

}

the higher rates

The remainder

58 per cent.

PART II

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first £11,400

35 per cent.

the standard rate

The next £5,800

48 per cent.

}

the higher rates

The remainder

58 per cent.

”.

Personal reliefs.

3. —(1) Where a deduction falls to be made from the total income of an individual for the year 1988-89 or any subsequent year of assessment in respect of relief to which the individual is entitled under a provision mentioned in column (1) of the Table to this subsection and the amount of the deduction would, but for this section, be an amount specified in column (2) of the said Table, the amount of the deduction shall, in lieu of being the amount specified in the said column (2), be the amount specified in column (3) of the said Table opposite the mention of the amount in the said column (2).

TABLE

Statutory provision

Amount to be deducted from total income for 1987-88

Amount to be deducted from total income for 1988-89 and subsequent years

(1)

(2)

(3)

Income Tax Act, 1967 :

£

£

section 138

(married man)

4,000

4,100

(widowed person)

2,500

2,550

(widow bereaved in the year of assessment)

4,000

4,100

(widower bereaved in the year of assessment)

2,500

4,100

(single person)

2,000

2,050

section 138A

(additional allowance for widows and others in respect of children)

(widowed person)

1,500

1,550

(others)

2,000

2,050

section 138B

(employee allowance)

   700

   800

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

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

Amendment of section 6 (special allowance in respect of P.R.S.I. for 1982-83) of Finance Act, 1982.

4. Section 6 of the Finance Act, 1982 , shall have effect for the purpose of ascertaining the amount of income on which an individual referred to therein is to be charged to income tax for the year 1988-89, as if in subsection (2)—

(a) “1988-89” were substituted for “1982-83”, and

(b) “£286” were substituted for “£312” in each place where it occurs.

Application of section 16 (credit for farm tax) of Finance Act, 1986 .

5. —(1) Where, but for an insufficiency of profits or gains, a reduction of income tax would have been granted to an individual under the provisions of section 16 of the Finance Act, 1986 , in respect of the full amount of farm tax paid by him on or before 31st December, 1986, he may claim to have his income tax in respect of profits or gains from farming for the years 1985-86 and 1987-88 reduced by the amount by which the farm tax so paid by him exceeds the tax appropriate to the profits or gains from farming in relation to that individual for the year 1986-87:

Provided that—

(a) the reduction to be granted under this subsection shall be set off, so far as possible, against the individual's liability for the year 1985-86, and

(b) no reduction under this subsection shall be allowed more than once in respect of the same amount of farm tax paid by the individual.

(2) This section shall be construed together with section 16 of the Finance Act, 1986 .

Amendment of Second Schedule to Finance Act, 1986.

6. —As respects any right obtained on or after the 6th day of April, 1988, by an individual to acquire shares in a body corporate, the Second Schedule to the Finance Act, 1986 , is hereby amended as follows:

(a) in subparagraph (1) of paragraph 1, by the deletion of the definitions of “full-time director” and “qualifying employee”, and

(b) in subparagraphs (1) (a) and (2) of paragraph 5, by the deletion of “full-time” and by the substitution of “an” for “a qualifying”,

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

TABLE

(a) unless he is a director or an employee of the grantor or, in the case of a group scheme, of a participating company;

(2) Notwithstanding subparagraph (1) (a) the scheme may provide that a person may exercise rights obtained under it despite having ceased to be a director or an employee.

Amendment of section 16 (qualifying trades) of Finance Act, 1984.

7. Section 16 of the Finance Act, 1984 , is hereby amended, in paragraph (a) (inserted by the Finance Act, 1987 ) of subsection (2), by the insertion after subparagraph (iii) of the following subparagraph:

“(iiia) in respect of a subscription for eligible shares made on or after the 6th day of April, 1988, such cultivation of plants as is referred to in subsection (1CC3) (inserted by the Finance Act, 1987 ) of section 39 of the Finance Act, 1980 ,”.

Amendment of Chapter III (Payments in Respect of Professional Services by Certain Persons) of Part I of Finance Act, 1987.

8. Chapter III of Part I of the Finance Act, 1987 , is hereby amended—

(a) in section 13 (1), by—

(i) the insertion of the following definitions:

“‘authorised insurer’ has the same meaning as in section 145 of the Income Tax Act, 1967 ;

contract of insurance’ means a contract between an authorised insurer and a subscriber in respect of such insurance as is referred to in section 145 (2) of the Income Tax Act, 1967 ;

member’ means, in relation to a contract of insurance, a person who is named in the relevant policy of insurance and who has been accepted for insurance by an authorised insurer;

practitioner’ has the same meaning as in section 12 of the Finance Act, 1967 ;

relevant medical expenses’ means expenses incurred in respect of professional services provided by a practitioner, being expenses that are or may become the subject of a claim for their reimbursement or discharge in whole or in part under a contract of insurance but not including any such expenses that—

(a) under the terms of the contract of insurance, may (except in the case of certain expenses that, in the opinion of the authorised insurer concerned, are unusually large) be the subject of a claim for their discharge or reimbursement only—

(i) after the expiry of a stated period of 12 months in which the expenses are incurred, and

(ii) to the extent that the aggregate of the expenses and any other expenses incurred in the said period exceeds a stated amount,

or

(b) are incurred in respect of professional services provided by a practitioner outside the State;

subscriber’ means, in relation to a contract of insurance, a person (other than an authorised insurer) who is a party to the contract and in whose name the relevant policy of insurance is registered;”,

(ii) the substitution in paragraph (f) of the definition of “professional services” of “An Foras Áiseanna Saothair” for “An Chomhairle Oiliúna”, and

(iii) the substitution of the following definition for the definition of “relevant payment”:

“‘relevant payment’ means—

(a) a payment made on or after the 6th day of June, 1987, in respect of professional services whether or not such services are provided to the accountable person making the payment, and

(b) a payment made on or after the 6th day of June, 1988—

(i) by an accountable person mentioned in paragraph (u), (v), (w) or (x) (inserted by the Finance Act, 1988) of section 14 (1) of the Finance Act, 1987 , in respect of professional services whether or not such services are provided to the accountable person, or

(ii) by an authorised insurer to a practitioner in accordance with the provisions of section 14A (inserted by the Finance Act, 1988), or otherwise, in the discharge of a claim in respect of relevant medical expenses under a contract of insurance,

but excludes—

(I) emoluments within the scope of Chapter IV of Part V of the Income Tax Act, 1967 , to which that Chapter applies, and

(II) payments under a construction contract within the meaning of section 17 of the Finance Act, 1970 , from which tax has been deducted in accordance with the provisions of subsection (2) of that section, or would have been so deducted but for the provisions of subsection (8) of that section;”,

(b) in section 14 (1), by—

(i) the substitution of the following paragraph for paragraph (m):

“(m) An Foras Áiseanna Saothair,”, and

(ii) the deletion of “or” in paragraph (s) and the insertion of the following paragraphs after paragraph (t):

“(u) CERT,

(v) Eolas — The Irish Science and Technology Agency,

(w) An Bord Fuinnimh Núicléigh,

(x) a voluntary public or joint board hospital to which grants are paid by the Minister for Health in the year 1988-89 or any subsequent year of assessment, or

(y) an authorised insurer.”,

(c) by the insertion of the following section after section 14:

“14A.—Subject to section 15 (1) (inserted by the Finance Act, 1988), where under a contract of insurance a claim is made to an authorised insurer in respect of relevant medical expenses, the insurer shall discharge the claim by making payment to the extent of the amount of the benefit, if any, due under the contract, to the practitioner who provided the professional services to the subscriber or member concerned to which the relevant medical expenses relate and the subscriber or member, as the case may be, shall be acquitted and discharged of such amount as is represented by the payment as if the subscriber or member had made such payment.”, and

(d) in section 15 by the substitution of the following subsections for subsection (1):

“(1) An accountable person making a relevant payment shall deduct from the amount of the payment the appropriate tax in relation to the payment. The specified person to whom the amount is payable shall allow such deduction upon receipt of the residue of the payment, and

(a) the accountable person making the deduction, and

(b) if the accountable person is an authorised insurer, any subscriber or member on whose behalf the accountable person is making the relevant payment,

shall be acquitted and discharged of such amount as is represented by the deduction, as if that amount had actually been paid.

(1A) Where—

(a) in accordance with the provisions of section 14A (inserted by the Finance Act, 1988), a relevant payment has been made to a practitioner by an authorised insurer, and

(b) in accordance with the provisions of subsection (1), the practitioner has allowed a deduction of appropriate tax in respect of that payment and a subscriber or member has been acquitted and discharged of so much money as is represented by the deduction,

the practitioner shall, if any amount in respect of the relevant medical expenses to which the relevant payment relates has been paid by the subscriber or member, pay to the subscriber or member, as the case may be, an amount equal to the amount by which the aggregate of the amount paid by the subscriber or member and the amount of the relevant payment exceeds the relevant medical expenses.

(1B) (a) The Minister for Finance may make such regulations as he considers necessary or expedient for the purpose of giving full effect to this Chapter in so far as it relates to amendments made thereto by the Finance Act, 1988, and, in particular, but without prejudice to the generality of the foregoing, regulations under this subsection may—

(i) specify the circumstances and the manner in which a payment (other than a relevant payment) may be made or claimed in respect of relevant medical expenses, and

(ii) provide for the indemnification of an individual against claims in respect of relevant medical expenses, or any other claims arising out of acts done or omitted to be done by the individual in pursuance of this Chapter or regulations made under this subsection in so far as it relates or they relate to the amendments aforesaid.

(b) 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 21 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.”.