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13 1991

FINANCE ACT, 1991

Chapter II

Income Tax: Relief for Investment in Corporate Trades

Extension of relief.

14. —Chapter III of Part I of the Finance Act, 1984 , is hereby amended—

(a) in section 12, by the substitution of the following subsection for subsection (11):

“(11) This section applies only where the shares concerned are issued in the year 1984-85 or any of the 8 years of assessment immediately following.”,

and

(b) in section 13, by the substitution, in the provisos to subsections (2A) and (2B) (inserted by the Finance Act, 1987 ), of “the year 1992-93” for “the year 1990-91”,

and the said provisos, as so amended, are set out respectively in the Table to this section.

TABLE

Provided that this subsection shall not apply or have effect for any year of assessment subsequent to the year 1992-93.

Provided that this subsection shall not apply or have effect for any year of assessment subsequent to the year 1992-93.

Restriction of relief as respects eligible shares issued on or after 30th January, 1991.

15. —(1) Subject to section 16 , Chapter III of Part I of the Finance Act, 1984 , is hereby further amended, as respects eligible shares issued on or after the 30th day of January, 1991—

(a) in section 12, by the deletion of the first proviso (inserted by the Finance Act, 1989 ) to paragraph (c) of subsection (1),

(b) in section 13, by the insertion after subsection (2) of the following proviso:

“Provided that, notwithstanding the provisions of subsection (2A), relief shall not be given to the extent to which the relief in respect of the amount, or the total of the amounts, subscribed by an individual for eligible shares issued to him (whether or not by the same company) in all years of assessment (being the year 1984-85 and subsequent years) exceeds £75,000.”,

(c) in section 13A (inserted by the Finance Act, 1989 ), by the substitution of the following subsection for subsection (1)—

“(1) Subject to the following provisions of this section, where a company raises any amount through the issue of eligible shares (hereafter in this section referred to as the ‘relevant issue’) on any day falling on or after the 30th day of January, 1991, relief shall not be given in respect of the excess of the amount over the amount determined by the formula—

£500,000 − A

where A is—

(a) £500,000, or

(b) an amount equal to the aggregate of all amounts raised by the company through the issue of eligible shares at any time before the relevant issue,

whichever is the lesser amount.”,

(d) in section 15, by the deletion of subsection (13) (inserted by the Finance Act, 1987 ),

(e) in section 16—

(i) by the deletion, in subsection (2), of subparagraph (iii) of paragraph (a) (inserted by the Finance Act, 1987 ),

(ii) by the deletion, in paragraph (I) of the second proviso (inserted by the Finance Act, 1989 ) to subsection (2), of the words “except where it forms part of the carrying on of qualifying shipping activities within the meaning of section 28 of the Finance Act, 1987 ,”, and

(iii) by the substitution, in subsection (2A) (inserted by the Finance Act, 1987 )—

(I) of the following paragraph for paragraph (a) (inserted by the Finance Act, 1989 ):

“(a) the operation of tourist accommodation facilities, for which the Bord maintains a register in accordance with the Tourist Traffic Acts, 1939 to 1987, other than hotels, guest houses and self-catering accommodation,”,

and

(II) of the following paragraph for paragraph (c):

“(c) the promotion outside the State of—

(i) one or more tourist accommodation facilities for which the Bord maintains a register in accordance with the Tourist Traffic Acts, 1939 to 1987, or

(ii) any of the facilities mentioned in paragraph (b).”,

and

(f) in section 26, by the deletion of subsection (1A) (inserted by the Finance Act, 1987 ).

(2) The Second Schedule to the Finance Act, 1984 , is hereby amended, as respects eligible shares issued on or after the 30th day of January, 1991, by the deletion, in paragraph 1 (inserted by the Finance Act, 1987 ), of “(other than a subsidiary which is a qualifying subsidiary by virtue of section 26 (1A) (inserted by the Finance Act, 1987 ))”.

Transitional arrangements in relation to section 15 .

16. —(1) In this section—

auditor”, in relation to a company, or its qualifying subsidiary, means the person or persons appointed as auditor of the company, or its qualifying subsidiary, as appropriate, for all the purposes of the Companies Acts, 1963 to 1990;

prospectus”, in relation to a company, means any prospectus, notice, circular, advertisement or other invitation, offering to the public for subscription or purchase any eligible shares (within the meaning of section 12 (2) of the Finance Act, 1984 ) of the company, and in this definition the term “the public” includes any section of the public, whether selected as members of the company or as clients of the person issuing the prospectus or in any other manner;

qualifying subsidiary”, in relation to a company, has the same meaning as it has for the purposes of section 15 of the Finance Act, 1984 ;

the specified period” means the period beginning on the 1st day of January, 1990, and ending on the 30th day of January, 1991.

(2) As respects eligible shares issued on or after the 30th day of January, 1991, but on or before the 31st day of August, 1991, by a company to which this section applies—

(a) subject to paragraph (b) of this subsection, section 15 , other than paragraphs (b) and (c) of subsection (1), shall not apply or have effect, and

(b) subsection (1) (as amended by section 15 (1) (c)) of section 13A (inserted by the Finance Act, 1989 ) of the Finance Act, 1984 , shall apply and have effect as if “£1,000,000” were substituted for “£500,000” in both places where it occurs.

(3) Subject to the conditions set out in subsection (4), this section applies to a company which, or whose qualifying subsidiary, either carries on or intends to carry on one or more of the qualifying trading operations mentioned in subparagraph (i) (as amended by the Finance Act, 1990 ), (ii) (inserted by the Finance Act, 1990 ), (iii) or (iv) of paragraph (a) (inserted by the Finance Act, 1987 ) of subsection (2) of section 16 of the Finance Act, 1984 .

(4) The following are the conditions referred to in subsection (3), that is to say:

(a) in the case of a company which, or whose qualifying subsidiary, either carries on or intends to carry on a qualifying trading operation as is mentioned in subparagraph (i) or (ii) of paragraph (a) of subsection (2) of section 16 of the Finance Act, 1984 , that—

(i) in the specified period the company or its qualifying subsidiary, as the case may be, had entered into a binding contract in writing—

(I) to purchase or lease land or a building,

(II) to purchase or lease plant or machinery, or

(III) for the construction or refurbishment of a building,

to be used in the carrying on of its qualifying trading operation, and

(ii) the company proves to the satisfaction of the Revenue Commissioners that—

(I) on or before the 30th day of January, 1991, it had an intention to raise money under the provisions of Chapter III of Part I of the Finance Act, 1984 , and

(II) the contract which it or its qualifying subsidiary, as the case may be, had entered into was integral to, or consistent with, the purpose for which it had intended to raise money as aforesaid:

Provided that, in determining whether they are satisfied that the company has complied with the requirements specified in subparagraph (ii) of this paragraph, the Revenue Commissioners shall have regard to either or both of the following—

(A) an application in writing made by the company to the Revenue Commissioners in the specified period for the opinion of the Revenue Commissioners as to whether the company would be a qualifying company for the purposes of Chapter III of Part I of the Finance Act, 1984 , and

(B) the publication in the specified period of a prospectus by, or on behalf of, the company;

(b) in the case of a company which, or whose qualifying subsidiary, either carries on or intends to carry on a qualifying trading operation as is mentioned in subparagraph (iii) of paragraph (a) of subsection (2) of section 16 of the Finance Act, 1984 , that—

(i) in the specified period the company or its qualifying subsidiary, as the case may be, had entered into a binding contract in writing for the purchase of a ship to be used in the carrying on of its qualifying trading operation, and

(ii) on or before the 30th day of January, 1991, the company or its qualifying subsidiary, as the case may be, had received a certificate from the Minister for the Marine certifying that the purchase of the ship was, is or would be eligible to be grant-aided under a statutory scheme of assistance for the purchase of ships administered by the Department of the Marine;

and

(c) in the case of a company which, or whose qualifying subsidiary, either carries on or intends to carry on a qualifying trading operation as is mentioned in subparagraph (iv) of paragraph (a) of subsection (2) of section 16 of the Finance Act, 1984 , that—

(i) on or before the 30th day of January, 1991, the company or its qualifying subsidiary, as the case may be, had submitted to, and had approved of by, Bord Fáilte Éireann a three-year marketing and development plan as is mentioned in paragraph (a) of subsection (3A) (inserted by the Finance Act, 1987 ) of section 15 of the Finance Act, 1984 , in respect of its qualifying trading operation,

(ii) in the specified period the company or its qualifying subsidiary, as the case may be, had entered into a binding contract in writing—

(I) to purchase or lease land or a building,

(II) to purchase or lease plant or machinery, or

(III) for the construction or refurbishment of a building,

to be used in the carrying on of its qualifying trading operation, and

(iii) the company proves to the satisfaction of the Revenue Commissioners that the contract which it, or its qualifying subsidiary, as the case may be, had entered into was integral to, or consistent with, the three-year marketing and development plan approved of by Bord Fáilte Éireann.

(5) For the purposes of subsection (4)

(a) the date on which a contract was entered into by a company or, as the case may be, its qualifying subsidiary, and

(b) the date on which a prospectus was published by, or on behalf of, a company,

shall be confirmed in a certificate by the auditor of the company, or its qualifying subsidiary, as appropriate.

Amounts raised by companies acting in concert, or for trade of subsidiary.

17. —(1) Subject to subsection (3), section 13A (inserted by the Finance Act, 1989 ) of the Finance Act, 1984 , is hereby amended—

(a) by the insertion, after subsection (1) (as amended by section 15 (1) (c)), of the following subsections:

“(1A) Where a company raises any amount through a relevant issue on any day falling on or after the 12th day of March, 1991, and—

(a) any agreement, arrangement or understanding exists whereby—

(i) a qualifying trading operation or qualifying trading operations is or are carried on, or is or are to be carried on, by that company, or its qualifying subsidiary, and one or more other companies, or

(ii) different parts of what was formerly a single qualifying trading operation or a single set of qualifying trading operations are, or are to be, carried on by that company, or its qualifying subsidiary, and one or more other companies, or

(iii) separate qualifying trading operations—

(I) which together produce a single product or provide a single service, or

(II) which separately produce products or provide services that closely resemble, or are similar to, or are of the same kind or nature as, each other,

are, or are to be, carried on by that company, or its qualifying subsidiary, and one or more other companies, or

(iv) separate qualifying trading operations are, or are to be, carried on by that company, or its qualifying subsidiary, and one or more other companies acting together in pursuit of a common purpose or, either directly or indirectly, in accordance with the wishes or directions of, or under the control of, any person or any group of persons or groups of persons having a reasonable commonality of identity and who have or had the means or power, either directly or indirectly, to determine the trading operations to be carried on by each company,

and

(b) it could reasonably be considered that the purpose of, or one of the purposes of, the aforesaid agreement, arrangement or understanding is to circumvent the limitation imposed by subsection (1),

then, as respects that company, relief shall not be given in respect of the excess of the amount so raised over the amount determined by the formula—

£500,000 − B

___________

1 + C

where—

B  is an amount equal to so much, as does not exceed £500,000, of the aggregate of all amounts raised through the issue of eligible shares at any time before the relevant issue by all of the companies (including that company) which are party to the aforesaid agreement, arrangement or understanding, and

C  is the total number of companies, apart from that company or any of its qualifying subsidiaries, which are party to the aforesaid agreement, arrangement or understanding.

(1B) In subsection (1A), ‘qualifying subsidiary’, in relation to a company, has the same meaning as it has for the purposes of section 15.”,

(b) by the substitution of the following subsection for subsection (2):

“(2) In determining, for the purposes of the formula in subsection (1) or, as the case may be, the formula in subsection (1A), the amount to which paragraph (b) in subsection (1) or, as the case may be, the amount to which B in subsection (1A), relates, account shall not be taken of any amount—

(a) which is subscribed by a person other than an individual who qualifies for relief, or

(b) in respect of which relief is precluded by virtue of section 13.”,

and

(c) by the insertion, in subsection (3), of “or subsection (1A)” after “subsection (1)”,

and the said subsection (3), as so amended, is set out in the Table to this subsection.

TABLE

(3) Where, as a consequence of subsection (1) or subsection (1A), the giving of relief would be precluded on claims in respect of shares issued to two or more individuals, the available relief shall be divided between them respectively in proportion to the amounts which have been subscribed by them for the shares to which their claims relate and which would, apart from this section, be eligible for relief.

(2) Subject to subsection (3), section 15 of the Finance Act, 1984 , is hereby amended, in subsection (2), by the insertion after paragraph (b) of the following proviso to that paragraph:

“Provided that where a company raises any amount through the issue of eligible shares on any day falling on or after the 12th day of March, 1991, for the purposes of raising money for a qualifying trade which is being carried on by a qualifying subsidiary or which such a qualifying subsidiary intends to carry on the amount so raised shall be used for the purpose of acquiring eligible shares in the qualifying subsidiary and for no other purpose.”.

(3) Subsections (1) and (2) shall not apply or have effect in relation to—

(a) eligible shares issued on or before the 31st day of August, 1991, by a company to which section 16 applies, or

(b) eligible shares issued by a company, other than a company referred to in paragraph (a), which, on or before the 11th day of March, 1991—

(i) had made an application in writing to the Revenue Commissioners for the opinion of the Revenue Commissioners as to whether the company would be a qualifying company for the purposes of Chapter III of Part I of the Finance Act, 1984 , or

(ii) had published, or had published on its behalf, a prospectus:

Provided that the date on which the prospectus was published shall be confirmed in a certificate by the auditor of the company.

(4) In subsection (3)auditor”, in relation to a company, and “prospectus”, in relation to a company, have the same meanings, respectively, as they have in section 16 .