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13 1991

FINANCE ACT, 1991

Chapter III

Income Tax, Corporation Tax and Capital Gains Tax

Farming: amendment of provisions relating to relief in respect of increase in stock values.

18. —(1) Section 31A (inserted by the Finance Act, 1976 ) of the Finance Act, 1975 , is hereby amended by the substitution of “1992” for “1990” (inserted by the Finance Act, 1989 )—

(a) in paragraph (iv) (inserted by the Finance Act, 1979 ) of the proviso to subsection (4) (a), and

(b) in each place where it occurs in subsections (7) and (9) (inserted by the Finance Act, 1984 ),

and the said paragraph (iv), the said subsection (7) (apart from the proviso) and the said subsection (9) (apart from the proviso), as so amended, are set out in the Table to this subsection.

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(iv) a deduction shall not be allowed under the provisions of this section in computing a company's trading income for any accounting period which ends on or after the 6th day of April, 1992.

(7) Where in relation to an accounting period a company's opening stock value exceeds its closing stock value, the amount of the excess (in this section referred to as the company's “decrease in stock value”) shall, if the accounting period ends on a date before the 6th day of April, 1992, be treated in the computation of the company's trading income for the purposes of corporation tax, as a trading receipt of the company's trade for that accounting period:

(9) In the computation of a company's trading income for the purposes of corporation tax for any accounting period which ends on or after the 6th day of April, 1992, in which there is a decrease in stock value, there shall be treated as a trading receipt of the company's trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C

where—

A  is the aggregate amount of the company's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1992,

B  is the aggregate amount of the company's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1992, and

C  is the aggregate of the amounts which under this subsection are treated as trading receipts of the company's trade for preceding accounting periods:

(2) Section 12 of the Finance Act, 1976 , is hereby amended—

(a) by the substitution in subsection (3) of “1992-93” for “1990-91” (inserted by the Finance Act, 1989 ), and

(b) by the substitution of “1992” for “1990” (inserted by the Finance Act, 1989 ) in each place where it occurs in subsections (5) and (6) (inserted by the Finance Act, 1984 ),

and the said subsection (3), the said subsection (5) (apart from the proviso) and the said subsection (6) (apart from the proviso), as so amended, are set out in the Table to this subsection.

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(3) Any deduction allowed by virtue of this section in computing a person's trading profits for an accounting period shall not have effect for any purpose of the Income Tax Acts for any year of assessment prior to the year 1974-75 or later than the year 1992-93.

(5) In the computation of a person's trading profits for an accounting period in which there is a decrease in stock value and which ends on a date in the period from the 6th day of April, 1976, to the 5th day of April, 1992, the amount of that decrease shall be treated as a trading receipt of the trade for that accounting period:

(6) In the computation of a person's trading profits for any accounting period in which there is a decrease in stock value and which ends on or after the 6th day of April, 1992, there shall be treated as a trading receipt of the trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C

where—

A  is the aggregate amount of the person's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1992,

B  is the aggregate amount of the person's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1992, and

C  is the aggregate of the amounts which are treated as trading receipts of the person's trade for preceding accounting periods which ended on or after the 6th day of April, 1992:

(3) As respects disposals made on or after the 6th day of April, 1990, section 28 of the Finance Act, 1980 , is hereby amended in paragraph (b) of subsection (3) by the substitution in subparagraph (ii) of the following clause for clause (II) (inserted by the Finance Act, 1990 ):

“(II) the value of the said trading stock at the beginning of the immediately succeeding accounting period or, where appropriate, at the beginning of the immediately succeeding accounting period and at the beginning of the accounting period next after that period,”.

(4) This section shall have effect only as respects a trade of farming.

Amendment of section 18 (taxation of collective investment undertakings) of Finance Act, 1989.

19. —(1) Section 18 of the Finance Act, 1989 , is hereby amended in subsection (1)—

(a) by the substitution for the definition of “collective investment undertaking” of the following:

“‘collective investment undertaking’ means—

(a) a unit trust scheme which is, or is deemed to be, an authorised unit trust scheme within the meaning of the Unit Trusts Act, 1990 , and which has not had its authorisation under that Act revoked,

(b) any other undertaking which is an undertaking for collective investment in transferable securities within the meaning of the relevant Regulations, being an undertaking which holds an authorisation issued pursuant to the relevant Regulations and that authorisation has not been revoked, and

(c) any authorised investment company within the meaning of Part XIII of the Companies Act, 1990 , which—

(i) has not had its authorisation under that Part of the said Act revoked, and

(ii) has been designated in that authorisation as an investment company which may raise capital by promoting the sale of its shares to the public and has not ceased to be so designated;”,

and

(b) by the addition to the definition of “specified collective investment undertaking”, after paragraph (b) of that definition, of the following:

“and shall include any company limited by shares or guarantee which—

(c) is wholly owned by such a collective investment undertaking or its trustees, if any, for the benefit of the holders of units in that undertaking,

(d) is so owned solely for the purpose of limiting the liability of that undertaking or its trustees, as the case may be, in respect of futures contracts, options contracts or other financial instruments with similar risk characteristics, by enabling it or its trustees, as the case may be, to invest or deal in such instruments through the said company, and

(e) would, if references to an undertaking in paragraph (a) were to be construed as including references to a company limited by shares or guarantee, satisfy the condition set out in paragraph (a);”,

and the said definition, as so amended, is set out in the Table to this section.

(2) References to a collective investment undertaking in section 18 (as amended by this section) of the Finance Act, 1989 , apart from such references in the definition of a specified collective investment undertaking in subsection (1) of that section (as so amended), shall include references to a company limited by shares or guarantee which is a specified collective investment undertaking within the meaning of that section (as so amended).

(3) (a) Subject to paragraph (b), subsection (1) (a) shall be deemed to have effect as on and from the 26th day of December, 1990.

(b) The definition of “collective investment undertaking”, as inserted by this section, in section 18 of the Finance Act, 1989 , shall be construed as if until the 1st day of February, 1991, that definition did not include paragraph (c) thereof and, accordingly, that paragraph shall be deemed to have effect as on and from that day.

(c) Subsections (1) (b) and (2) shall be deemed to have effect as on and from the 1st day of April, 1991.

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specified collective investment undertaking” means a collective investment undertaking—

(a) most of the business of which, to the extent that it is carried on in the State—

(i) (I) is carried on in the Area by the undertaking or by a qualifying management company of the undertaking or by the undertaking and the qualifying management company of the undertaking, or

(II) is not so carried on in the Area but—

(A) is so carried on in the State,

(B) would be so carried on in the Area but for circumstances outside the control of the person or persons carrying on the business, and

(C) is so carried on in the Area when the aforementioned circumstances cease to exist,

or

(ii) is carried on in the airport by the undertaking or by a qualifying management company of the undertaking or by the undertaking and the qualifying management company of the undertaking,

and

(b) save to the extent that such units are held by the undertaking itself or by the qualifying management company of the undertaking, all the holders of units in the undertaking are persons resident outside the State;

and shall include any company limited by shares or guarantee which—

(c) is wholly owned by such a collective investment undertaking or its trustees, if any, for the benefit of the holders of units in that undertaking,

(d) is so owned solely for the purposes of limiting the liability of that undertaking or its trustees, as the case may be, in respect of futures contracts, options contracts or other financial instruments with similar risk characteristics, by enabling it or its trustees, as the case may be, to invest or deal in such instruments through the said company, and

(e) would, if references to an undertaking in paragraph (a) were to be construed as including references to a company limited by shares or guarantee, satisfy the condition set out in paragraph (a);

Exemption of National Treasury Management Agency from certain tax provisions.

20. —(1) Notwithstanding any provision of the Corporation Tax Acts, profits arising to the National Treasury Management Agency (hereafter in this section referred to as “the Agency”) in any accounting period ending on or after the 3rd day of December, 1990, shall be exempt from corporation tax.

(2) Section 23 of the Capital Gains Tax Act, 1975 , shall apply to a gain accruing to the Agency as it does to a gain accruing to a body specified in that section.

(3) Notwithstanding any provision of the Tax Acts, any interest, annuity or other annual payment paid by the Agency shall be paid without deduction of income tax.

Amendment of section 45 (double rent allowance as a deduction in computing trading income) of Finance Act, 1986.

21. —(1) Section 45 (as amended by section 32 of the Finance Act, 1990 ) of the Finance Act, 1986 , is hereby amended—

(a) in subsection (1)—

(i) by the substitution, in subparagraph (II) of paragraph (i) of the definition of “qualifying premises”, of “falls, or will by virtue of section 23 of the Finance Act, 1991 fall” for “falls”,

(ii) by the deletion of the definition of “relevant rental period”, and

(iii) by the addition of the following paragraph after paragraph (b):

“(c) For the purposes of this section, so much of a period, being a period when rent is payable by a person in relation to a qualifying premises under a qualifying lease, shall be a relevant rental period as does not exceed—

(i) 10 years, or

(ii) the period by which 10 years exceeds—

(I) any preceding period, or

(II) if there is more than one preceding period, the aggregate of preceding periods,

for which rent was payable by that person or any person connected with that person in relation to that premises under a qualifying lease.”,

and

(b) in subsection (2), by the substitution of “for a relevant rental period” for “in the relevant rental period” and the said subsection (2), other than the proviso, as so amended, is set out in the Table to this section.

(2) This section shall take effect as respects rent payable in relation to any qualifying premises under a qualifying lease entered into on or after the 18th day of April, 1991.

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(2) Where, in the computation of the amount of the profits or gains of a trade or profession, a person is, apart from this section, entitled to any deduction (hereafter in this subsection referred to as “the first-mentioned deduction”) on account of rent in respect of a qualifying premises occupied by him for the purposes of that trade or profession which is payable by him for a relevant rental period in relation to that qualifying premises under a qualifying lease, he shall be entitled in that computation to a further deduction equal to the amount of the first-mentioned deduction.

Continuation of certain allowances, etc.

22. —(1) The provisions (inserted by the Corporation Tax Act, 1976 , and amended by section 50 of the Finance Act, 1988 ) of the Income Tax Act, 1967 , specified in the Table to this section shall have effect as if the references to the 1st day of April, 1991 (as provided for in section 50 of the Finance Act, 1988 ) were references to the 1st day of April, 1996:

Provided that subsection (2A) (a) of section 254 of the Income Tax Act, 1967 , shall have such effect for the purposes only of section 51 (as amended by section 80 of the Finance Act, 1990 ) of the Finance Act, 1988 , section 81 of the Finance Act, 1990 , and Chapter VII of the Finance Act, 1991.

(2) (a) Subsection (3) of section 42 of the Finance Act, 1986 , is hereby repealed.

(b) This subsection shall be deemed to have come into effect on the 1st day of June, 1989.

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Subsection (2A) (a) of section 254 (industrial building allowance),

Paragraph (ii) of the proviso to subsection (1) and paragraph (ii) of the proviso to subsection (3) of section 264 (annual allowances),

Paragraph (iii) of the proviso to subsection (1) of section 265 (balancing allowances and balancing charges).

Amendment of section 19 (industrial building allowance in relation to buildings and structures bought unused) of Finance Act, 1970.

23. Section 19 (as amended by section 75 of the Finance Act, 1990 ) of the Finance Act, 1970 , is hereby amended—

(a) in subsection (1), by the substitution for “the relevant interest therein is sold” of “or within a period of one year after it commences to be used, the relevant interest therein is sold, then, provided that an allowance has not been claimed by any other person in respect of the said building or structure under Chapter II of Part XV or Chapter I of Part XVI of the Income Tax Act, 1967 ,”,

(b) in the proviso to subsection (1), by the substitution for “is used” of “is used or within the said period”, and

(c) in subsection (2)—

(i) by the substitution for “used, he” of “used, or within a period of one year after it commences to be used, he”,

(ii) by the deletion of “paragraph (b) of”,

(iii) by the substitution for paragraph (a) of the following:

“(a) if that sale is the only sale of the relevant interest before the building or structure is used or within the said period, the said subsection (1) shall have effect as if, in paragraph (b), ‘the said expenditure or to’ and ‘whichever is the less’ were omitted, and”,

and

(iv) in paragraph (b), by the substitution for “used” of “used or within the said period” and the substitution for “paragraph (b)” of “subsection (1)”,

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

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(1) Where expenditure is incurred on the construction of a building or structure and, before that building or structure is used, or within a period of one year after it commences to be used, the relevant interest therein is sold, then, provided an allowance has not been claimed by any other person in respect of the said building or structure under either Chapter II of Part XV or Chapter I of Part XVI of the Income Tax Act, 1967

(a) the expenditure actually incurred on the construction thereof shall be left out of account for the purposes of sections 254 , 264 , 265 and 266 of the Income Tax Act, 1967 ; but

(b) the person who buys that interest shall be deemed for those purposes to have incurred, on the date when the purchase price becomes payable, expenditure on the construction thereof equal to the said expenditure or to the net price paid by him for the said interest, whichever is the less:

Provided that, where the relevant interest in the building or structure is sold more than once before the building or structure is used or within the said period, the provisions of paragraph (b) shall have effect only in relation to the last of those sales.

(2) Where the expenditure incurred on the construction of a building or structure was incurred by a person carrying on a trade which consists, as to the whole or any part thereof, in the construction of buildings or structures with a view to their sale, and, before the building or structure is used, or within a period of one year after it commences to be used, he sells the relevant interest therein in the course of that trade, or, as the case may be, of that part of that trade, subsection (1) shall have effect subject to the following modifications—

(a) if that sale is the only sale of the relevant interest before the building or structure is used or within the said period, the said subsection (1) shall have effect as if, in paragraph (b), “the said expenditure or to” and “whichever is the less” were omitted, and

(b) if there is more than one sale of the relevant interest before the building or structure is used or within the said period, the said subsection (1) shall have effect as if the reference to the expenditure actually incurred on the construction of the building or structure were a reference to the price paid on the said sale.

Restriction of tax incentives on property investment.

24. —(1) In this section—

property investment scheme” means any scheme or arrangement made for the purpose, or having the effect, of providing facilities, whether promoted by way of public advertisement or otherwise, for the public or a section of the public to share, either directly or indirectly and whether as beneficiaries under a trust or by any other means, in income or gains arising or deriving from the acquisition, holding or disposal of, or of an interest in, a building or structure or a part thereof, but does not include a scheme or arrangement as respects which the Revenue Commissioners or, on appeal, the Appeal Commissioners, having regard to such information as may be produced to them, are of the opinion that—

(a) the manner in which persons share in the said income or gains, and

(b) the number of persons who so share,

are in accordance with a practice which commonly prevailed in the State during the period of 5 years ending immediately before the 30th day of January, 1991, for the sharing of such income or gains by persons resident in the State and such that the persons so sharing qualified for relief under—

(i) the proviso to subsection (1) of section 296 of the Income Tax Act, 1967 , or

(ii) subsection (6) of section 14 of the Corporation Tax Act, 1976 ;

specified interest” means an interest in or deriving from a building or structure held by a person pursuant to a property investment scheme.

(2) Where a person holds a specified interest then, as respects expenditure incurred or deemed to be incurred on or after the 30th day of January, 1991, the proviso to subsection (1) of section 296 of the Income Tax Act, 1967 , and subsection (6) of section 14 of the Corporation Tax Act, 1976 , shall not have effect as respects an allowance under section 254 (as amended by section 74 of the Finance Act, 1990 ) or section 264 (as amended by section 50 of the Finance Act, 1988 ) of the said Act of 1967, which falls to be made to the person by reason of the holding by him of the specified interest.

(3) The Appeal Commissioners shall hear and determine an appeal made to them under this section as if it were an appeal against an assessment to income tax and all the provisions of the Income Tax Act, 1967 , 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.

Amendment of section 22 (farming: allowances for capital expenditure on construction of buildings and other works) of Finance Act, 1974.

25. Section 22 of the Finance Act, 1974 , is hereby amended—

(a) by the insertion, in the proviso to subsection (2) (inserted by section 16 of the Finance Act, 1982 ), of the following paragraph after paragraph (b) (as amended by section 77 of the Finance Act, 1990 ):

“(c) notwithstanding subparagraph (iii) of paragraph (b), the maximum farm buildings allowances to be made under this section by means of an allowance increased under paragraph (a) in relation to capital expenditure incurred—

(i) on or after the 1st day of April, 1991, and before the 1st day of April, 1993,

(ii) for the purposes of the control of farmyard pollution, and

(iii) on works in respect of which grant-aid has been paid under—

(I) the programme, as amended, known as “the Farm Improvement Programme” which was implemented by the Minister for Agriculture and Food pursuant to Council Regulation (EEC) No. 797/85 of 12 March 1985 (1) , or

(II) the scheme known as “the Scheme of Investment Aid for the Control of Farmyard Pollution” which was implemented by the Minister for Agriculture and Food pursuant to an operational programme under Council Regulation (EEC) No. 2052/88 of 24 June 1988 (2) ,

whether claimed in one chargeable period or more than one such period, shall not, in the aggregate, exceed one-half of that capital expenditure.”,

and

(b) by the substitution, for subsection (2C) (inserted by section 77 of the Finance Act, 1990 ) of the following subsection:

“(2C) Notwithstanding any other provision of this section other than paragraph (c) of the proviso to subsection (2), no farm buildings allowance made in relation to capital expenditure incurred on or after the 1st day of April, 1992, shall be increased under this section.”.

Application of sections 264 and 265 of Income Tax Act, 1967, in relation to capital expenditure on refurbishment.

26. —(1) Notwithstanding any other provision of the Tax Acts, where, on or after the 6th day of April, 1991, any capital expenditure has been incurred on the refurbishment of a building or structure in respect of which an allowance falls to be made for the purposes of income tax or corporation tax, as the case may be, under Chapter II of Part XV or under Chapter I of Part XVI of the Income Tax Act, 1967 , sections 264 and 265 of the Income Tax Act, 1967 , shall have effect as if—

(a) in subsection (3) of the said section 264, and

(b) in paragraph (i) of the proviso to subsection (1) of the said section 265,

there were substituted “the capital expenditure on refurbishment of the building or structure was incurred” for “the building or structure was first used”.

(2) (a) In this section “refurbishment” means any work of construction, reconstruction, repair or renewal, including the provision or improvement of water, sewerage or heating facilities, carried out in the course of repair or restoration, or maintenance in the nature of repair or restoration, of a building or structure.

(b) For the purposes of giving effect to the provisions of this section insofar as the computation of a balancing allowance or balancing charge (within the meaning of Chapter I of Part XVI of the Income Tax Act, 1967 ), as the case may be, is concerned, there shall be made all such apportionments as are, in the circumstances, just and reasonable.

Amendment of section 29 (taxation of income deemed to arise on certain sales of securities) of Finance Act, 1984.

27. Section 29 of the Finance Act, 1984 , is hereby amended as respects any sale or transfer of securities (within the meaning of that section) made on or after the 18th day of May, 1991, by the substitution of the following subsections for subsections (2) and (3):

“(2) Subject to subsection (2A), where the owner of a security sells or transfers, or causes or authorises to be sold or transferred, the security and where any interest payable in respect of the security is receivable otherwise than by that owner, then, for the purposes of this section, interest payable in respect of the security shall be deemed to have accrued on a day to day basis from the date on which that owner acquired the security and that owner shall be chargeable under Case IV of Schedule D on interest so deemed to have accrued from that date up to the date of the contract for sale or transfer of the security or the date of payment of the consideration in respect of the sale or transfer, whichever is the later:

Provided that, if during his period of ownership of the security that owner has received interest in respect of the security in respect of which he is chargeable to tax under any other provision of the Tax Acts, then the amount of interest on which he is chargeable under this section shall be reduced by the amount in respect of which he is so chargeable under that other provision:

Provided also that—

(a) if under the terms of the said sale or transfer or an associated agreement, arrangement, understanding, promise or undertaking, whether express or implied, that owner—

(i) agrees to buy back or reacquire the security, or

(ii) acquires an option, which he subsequently exercises, to buy back or reacquire the security,

then the charge to tax imposed under this section shall be based on the interest deemed to have accrued up to the next date after the aforesaid sale or transfer on which interest is payable in respect of the security, and

(b) if that owner subsequently resells or retransfers, or causes or authorises to be resold or retransferred, the security, then any further charge to tax under this section in respect of that subsequent resale or retransfer shall be based on interest deemed to have accrued from a date not earlier than the aforesaid next payment date.

(2A) This section shall not apply—

(a) if the security has been held by the same owner for a continuous period of at least two years immediately before the date of such contract for sale or transfer or the date of such payment of consideration, whichever is the later, as is referred to in subsection (2), the personal representatives of a deceased person whose estate is in the course of administration and the deceased person being regarded, for the purposes of this paragraph, as being the same owner, or

(b) if the owner is a person carrying on a trade which consists wholly or partly of dealing in securities the profits of which are chargeable to income tax or corporation tax under Case I of Schedule D for the year of assessment or, as the case may be, the accounting period in respect of which the consideration for the sale is taken into account in computing for the purposes of assessment to income tax or corporation tax for that year or accounting period the profits of the trade unless the trade consists wholly or partly of a life business the profits of which are not assessed to corporation tax under Case I of Schedule D for that accounting period, or

(c) if the sale or transfer is a sale or transfer by a wife to her husband at a time when she is treated as living with him for income tax purposes as provided in section 192 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , or a sale or transfer by a husband to a wife at such a time as aforesaid, the husband and the wife being regarded, for the purposes of paragraph (a), in the case of a transaction such as aforesaid or in the case of a sale or transfer by the husband or the wife to any other person after a transaction or transactions such as aforesaid, as being the same owner, or

(d) if the security is a security the interest on which is treated as a distribution for the purposes of the Corporation Tax Acts.

(3) (a) The reference in subsection (2) to buying back or reacquiring the security shall be deemed to include references to buying or acquiring a similar security, and securities shall be so 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.

(b) In paragraph (b) of subsection (2A), ‘life business’ shall have the meaning assigned to it by section 50 (2) of the Corporation Tax Act, 1976 .”.

(1)O.J. No. L 93 of 30.3.1985, p.1.

(2)O.J. No. L 185 of 15.7.1988, p.9.