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13 1994

FINANCE ACT, 1994

Chapter V

Corporation Tax

Amendment of section 39 (meaning of “goods”) of Finance Act, 1980.

48. —(1) Section 39 (as amended by the Finance Act, 1992 ) of the Finance Act, 1980 , is hereby amended in subsection (1A)—

(a) by the deletion of “and” in paragraph (a) and by the deletion of paragraph (b), and

(b) by the deletion of “and” in paragraph (i) and by the deletion of paragraph (ii).

(2) This section shall have effect as respects relevant accounting periods beginning on or after the 1st day of June, 1994.

(3) Subsections (2), (3), (4) and (5) of section 41 of the Finance Act, 1990 , shall apply for the purposes of this section as they would apply for the purposes of that section if “11th day of April, 1994” were substituted for “20th day of April, 1990”.

Amendment of section 37 (application of section 84 (matters to be treated as distributions) of Corporation Tax Act, 1976) of Finance Act, 1988.

49. Section 37 of the Finance Act, 1988 , is hereby amended—

(a) by the insertion in subsection (1) (b), in the definition of “qualified company” and “relevant trading operations”, before “ section 39B ” of “ section 39A (inserted by the Finance Act, 1981 ) and”, and

(b) by the insertion, after that definition, of the following proviso thereto:

“Provided that trading operations shall not be treated as relevant trading operations within the meaning of the said section 39A if they are not trading operations which could be certified by the Minister for Finance as relevant trading operations for the purposes of section 39B if they were carried out in the Area (within the meaning of the said section 39B) rather than in the airport (within the meaning of the said section 39A).”.

Amendment of section 84A (limitation on meaning of “distribution”) of Corporation Tax Act, 1976.

50. —(1) Section 84A (as amended by section 45 of the Finance Act, 1993 ) of the Corporation Tax Act, 1976 , is hereby amended—

(a) in subsection (3A)—

(i) by the substitution in paragraph (b)—

(I) for “in the period from the 31st day of January, 1990, to the 31st day of December, 1991” of “on or after the 31st day of January, 1990”, and

(II) for “as is paid in respect of relevant principal specified in the list” of “as is paid for a specified period in respect of relevant principal advanced and which was, at the time the relevant principal was advanced, specified in the list”,

(ii) by the addition, after subparagraph (ii) of paragraph (c), of the following subparagraph:

“(iii) where, at any time after an amount of relevant principal is specified in a list in accordance with subparagraph (iv) of paragraph (b) of subsection (3A) or subparagraph (ii) of paragraph (b) of subsection (3B), a company advances, or is treated as advancing, to a borrower relevant principal the interest in respect of which is treated, by virtue only of paragraph (b) of subsection (3A) or paragraph (b) of subsection (3B), as a distribution, the amount of relevant principal specified in the list shall be treated as reduced by the amount of relevant principal so advanced, or treated as advanced, and the amount so reduced shall be treated as the amount specified in the said list.”,

(iii) by the addition, after paragraph (d), of the following paragraph:

“(e) In this subsection and in subsection (3B), ‘specified period’, in relation to relevant principal, means the period commencing on the date on which the relevant principal was advanced and ending on the date on which the relevant principal falls to be repaid under the terms of the agreement to advance the said relevant principal or, if earlier—

(i) in the case of relevant principal advanced before the 11th day of April, 1994, the 11th day of April, 2001, and

(ii) in any other case, a date which is 7 years after the date on which the said relevant principal was advanced.”,

and

(b) in subsection (3B), by the substitution in paragraph (b) for “as is paid in respect of relevant principal specified in the list” of “as is paid for a specified period in respect of relevant principal advanced and which was, at the time the relevant principal was advanced, specified in the list”.

(2) (a) Where, at any time before the 7th day of December, 1993—

(i) relevant principal (hereafter referred to as the “first-mentioned relevant principal”), the interest in respect of which was treated, by virtue only of subsection (3A) (b) or (3B) (b) of section 84A of the Corporation Tax Act, 1976 , as a distribution, advanced by a company to a borrower was repaid by the borrower before the scheduled repayment date, and

(ii) a further amount, or further amounts, of relevant principal, the interest in respect of which falls to be treated, by virtue only of the said subsection (3A) (b) or (3B) (b), as a distribution, was or were advanced to that borrower,

subparagraph (iii) (inserted by this section) of subsection (3A) (c) of section 84A of the Corporation Tax Act, 1976 , shall not apply in relation to so much of—

(I) the further amount of relevant principal advanced as does not exceed the amount of relevant principal repaid, or

(II) where there are more further amounts advanced than one, the aggregate of the further amounts of relevant principal advanced as does not exceed the relevant principal repaid.

(b) Where, by virtue of paragraph (a), the said subparagraph (iii) does not apply in relation to any amount of relevant principal advanced by a company, the company shall be treated as having—

(i) received a repayment of that amount of relevant principal, and

(ii) advanced a corresponding amount of relevant principal,

on the scheduled repayment date of the first-mentioned relevant principal.

(c) For the purposes of this subsection, where there are more further advances of relevant principal than one, the amount to which subparagraph (iii) of subsection (3A) (c) of section 84A of the Corporation Tax Act, 1976 , does not apply shall be referable as far as possible to an earlier rather than a later such further advance

(d) In this subsection “scheduled repayment date”, in relation to any relevant principal, means the date on which the relevant principal falls to be repaid under the terms of the agreement to advance the said relevant principal.

(3) This section shall—

(a) apply for the purposes of determining whether interest paid in respect of relevant principal advanced, or treated as advanced, on or after the 7th day of December, 1993, is to be treated as a distribution,

(b) take account of relevant principal advanced before the 7th day of December, 1993, and

(c) be construed together with sections 84 and 84A of the Corporation Tax Act, 1976 :

Provided that interest which, but for this proviso, would not be treated as a distribution by virtue only of—

(i) subparagraph (iii) (inserted by this section) of subsection (3A) (c) of section 84A of the Corporation Tax Act, 1976 , may be treated as a distribution if it is paid in respect of relevant principal advanced before the 7th day of December, 1993, and

(ii) paragraph (e) (inserted by this section) of subsection (3A) of the said section 84A may be treated as a distribution if it is paid before the 11th day of April, 1994.

Amendment of section 56 (relief for gifts to The Enterprise Trust Ltd.) of Finance Act, 1992.

51. Section 56 of the Finance Act, 1992 , is hereby amended by the substitution in paragraph (a) of subsection (2) of “31st day of December, 1996,” for “31st day of March, 1994,”.

Relief for payments to National Co-operative Farm Relief Services Ltd. and grants made to its members.

52. —(1) In this section—

the agreement” means the agreement in writing dated the 4th day of July, 1991, between the Minister for Agriculture, Food and Forestry and the National Co-operative for the provision of financial support for farm relief services together with every amendment of the agreement in accordance with Article 9.1 thereof;

a member co-operative” means a society engaged in the provision of farm relief services which has been admitted to membership of the National Co-operative;

the Minister” means the Minister for Agriculture, Food and Forestry;

the National Co-operative” means the society registered on the 13th day of August, 1980, as National Co-operative Farm Relief Services Limited;

society” means a society registered under the Industrial and Provident Societies Acts, 1893 to 1978.

(2) Notwithstanding any provision of the Corporation Tax Acts—

(a) a grant made under Article 3.1 of the agreement by the Minister on or after the 1st day of April, 1993, to the National Co-operative, and

(b) a transfer of monies under Article 3.6 of the agreement by the National Co-operative on or after the 1st day of April, 1993, to a member co-operative,

shall be disregarded for all the purposes of those Acts.

Amendment of section 39B (relief in relation to income from certain trading operations carried on in Custom House Docks Area) of Finance Act, 1980.

53. Section 39B of the Finance Act, 1980 , is hereby amended in subparagraph (ii) of paragraph (c) of subsection (6) by the deletion from clause (III) after “currencies,” of “and” and by the substitution for clause (IV) of the following clauses:

“(IV) insurance and related activities, or

(V) the management of the whole or part of the investments and other activities of a specified collective investment undertaking within the meaning of section 18 (1) of the Finance Act, 1989 ,”.

Amendment of Chapter VI (Corporation tax: relief in relation to certain income of manufacturing companies) of Finance Act, 1980.

54. Chapter VI of Part I of the Finance Act, 1980 , is hereby amended, as respects accounting periods ending on or after the 1st day of May, 1994—

(a) by the insertion after section 39B (inserted by the Finance Act, 1987 ) of the following section—

“Credit for foreign tax.

39C.—(1) (a) In this section—

an amount receivable from the sale of goods’ means an amount which—

(i) being an amount receivable from the sale of computer software, or

(ii) by virtue of subsection (1CC) (b) (ii) of section 39, subsection (7) (b) of section 39A or subsection (8) (b) of section 39B,

is regarded as receivable from the sale of goods for the purposes of relief under this Chapter;

relevant foreign tax’, where borne by a company in respect of an amount receivable from the sale of goods, means tax—

(i) which, under the laws of any foreign territory, has been deducted from that amount,

(ii) which has not been repaid to the company, and

(iii) for which credit is not allowable under arrangements within the meaning of Schedule 10 to the Income Tax Act, 1967 ;

the total amount receivable from the sale of goods’, in relation to a company in the course of a trade in a relevant accounting period, means the aggregate of amounts, receivable by the company in the course of the trade in the relevant accounting period, which are regarded by virtue of any provision of this Chapter as receivable from the sale of goods for the purposes of relief under this Chapter.

(b) For the purposes of this section—

(i) so much of the corporation tax which would, apart from this section, be payable by a company for a relevant accounting period shall be treated as attributable to an amount receivable from the sale of goods in the course of a trade as would not be so payable if that amount receivable, and the income referable to it, were to be disregarded for the purposes of the Corporation Tax Acts;

(ii) the amount of any income of a company referable to an amount receivable from the sale of goods in the course of a trade in a relevant accounting period shall be taken to be such sum as bears to the total amount of the income of the company from the sale of goods in the course of the trade for the relevant accounting period the same proportion as the

said amount receivable from the sale of goods bears to the total amount receivable by the company from the sale of goods in the course of the trade in the relevant accounting period;

(iii) the total amount of income of a company from the sale of goods in the course of a trade in a relevant accounting period shall be taken to be the sum referred to in subsection (3) of section 41 which is to be taken to be the income of the trade for the relevant accounting period referred to in the expression ‘the income from the sale of those goods’ in subsection (2) of the said section.

(2) The amount of corporation tax which would, apart from this subsection, be payable by a company for a relevant accounting period shall be reduced by nine-tenths of so much of any relevant foreign tax borne by the company in respect of an amount receivable from the sale of goods in that period in the course of a trade as does not exceed the corporation tax which would be so payable and which is attributable to the amount receivable from the sale of goods.”,

and

(b) in subsection (1) of section 41 (as amended by the Finance Act, 1992 ) by the insertion in paragraph (a) after “section” of “and section 39C”.

Amendment of section 44 (group dividends) of Finance Act, 1983.

55. —Section 44 of the Finance Act, 1983 , is hereby amended as respects distributions made in an accounting period ending on or after the 31st day of December, 1993, by the addition after subsection (7) of the following subsection:

“(8) References in this section to dividends shall be construed as including references to distributions on the redemption, repayment or purchase by a company of its own shares or on the acquisition of those shares by another company which is a subsidiary (within the meaning of section 155 of the Companies Act, 1963 ) of the company, and references to the receipt of dividends or to the payment of dividends shall be construed accordingly.”.

Amendment of Part II (Corporation Tax) of Corporation Tax Act, 1976.

56. Part II of the Corporation Tax Act, 1976 , is hereby amended as follows—

(a) as respects accounting periods beginning on or after the 1st day of January, 1995, by the insertion after section 12 of the following section:

“Foreign currency: computation of income and chargeable gains.

12A.—(1) (a) In this section—

profit and loss account’ means—

(i) in the case of a company (hereafter in this definition referred to as the ‘resident company’) resident in the State, the account of that company, and

(ii) in the case of a company (hereafter in this definition referred to as the ‘non-resident company’) which is not resident in the State but which is carrying on a trade in the State through a branch or agency, the account of the business of the company carried on through or from such branch or agency,

which in the opinion of the auditor appointed under section 160 of the Companies Act, 1963 , or under the law of the State in which the resident company or non-resident company, as the case may be, is incorporated and which corresponds to that section, presents a true and fair view of the profit or loss of the resident company or the said business of the non-resident company, as the case may be;

rate of exchange’ means a rate at which two currencies might reasonably be expected to be exchanged for each other by persons dealing at arm's length or, where the context so requires, an average of such rates;

relevant contract’, in relation to a company, means any contract entered into by the company for the purpose of eliminating or reducing the risk of loss being incurred by the company due to a change in the value of a relevant monetary item, being a change resulting directly from a change in a rate of exchange;

relevant monetary item’, in relation to a company, means money held or payable by the company for the purposes of a trade carried on by it.

(b) The treatment of a contract entered into by a company as a relevant contract for the purposes of this section shall be ignored for any other purposes of the Tax Acts.

(2) Notwithstanding section 11, for the purposes of corporation tax the amount of any gain or loss, whether realised or unrealised, which—

(a) is attributable to any relevant monetary item or relevant contract of a company,

(b) results directly from a change in a rate of exchange, and

(c) is properly credited or debited, as the case may be, to the profit and loss account of the company,

shall be brought into account in computing the trading income of the company.

(3) Notwithstanding section 13, for the purposes of corporation tax, where any gain or loss arises to a company in respect of—

(a) a relevant contract of the company, or

(b) money held by the company for the purposes of a trade carried on by it,

so much of that gain or loss as results directly from a change in a rate of exchange shall not be a chargeable gain or an allowable loss, as the case may be, of the company:

Provided that this subsection shall not have effect as respects any gain or loss arising to a company carrying on life business within the meaning of section 50 (2), being a company which is not charged to corporation tax in respect of that business under Case I of Schedule D.”,

and

(b) as respects accounting periods beginning on or after the 1st day of January, 1994, by the insertion after section 14 of the following section:

“Foreign currency: capital allowances and trading losses.

14A.—(1) (a) In this section—

functional currency’ means—

(i) in relation to a company which is resident in the State, the currency of the primary economic environment in which the company operates, and

(ii) in relation to a company which is not resident in the State, the currency of the primary economic environment in which the company carries on trading activities in the State:

Provided that where the profit and loss account of a company for any period of account has been prepared in terms of the currency of the State, that currency shall be the functional currency of the company for that period;

profit and loss account’ and ‘rate of exchange’ have the meanings assigned to them, respectively, in section 12A;

representative rate of exchange’ means a rate of exchange of a currency for another currency equal to the mid-market rate at close of business recorded by the Central Bank of Ireland, or by a similar institution of another State, for those two currencies.

(b) For the purposes of this section the currency of the primary economic environment of a company shall be determined—

(i) in the case of a company which is resident in the State, with reference to the currency in which—

(I) revenues and expenses of the company are primarily generated, and

(II) the company primarily borrows and lends, and

(ii) in the case of a company which is not so resident and which carries on trading activities in the State, with reference to the currency in which—

(I) revenues and expenses of those activities are primarily generated, and

(II) the company primarily borrows and lends for the purposes of those activities.

(c) For the purposes of this section the day on which any expenditure is incurred shall be taken to be the day on which the sum in question becomes payable.

(2) The amount, which may be nil, of any allowance or charge which falls to be made for any accounting period—

(a) in taxing a trade of a company, and

(b) by reference to capital expenditure incurred by the company on or after the 1st day of January, 1994,

shall be—

(i) computed in terms of the functional currency of the company by reference to amounts expressed in that currency, and

(ii) given effect, in accordance with section 14 (2) (a), by being treated as a trading expense or receipt, as the case may be, of the trade in computing the trading income or loss, expressed in that functional currency, of the trade for that accounting period:

Provided that—

(I) for the purposes of the computation of an allowance or charge which falls to be made for an accounting period (hereafter in this proviso referred to as the ‘first-mentioned period’) by reference to capital expenditure incurred by a company on or after the 1st day of January, 1994, and

(II) without prejudice to any allowance made by reference to that expenditure for an accounting period earlier than the first-mentioned period,

where the said expenditure was incurred, or an allowance referable to it was computed, in terms of a currency other than the functional currency of the company for the first-mentioned period, then that expenditure or allowance, as the case may be, shall be expressed in terms of that functional currency by reference to a representative rate of exchange of the said functional currency for the other currency for the day on which the said expenditure was incurred.

(3) For the purposes of sections 16 and 18, the amount, which may be nil, of any set-off due to a company against income or profits of an accounting period in respect of a loss from a trade incurred by the company in an accounting period beginning on or after the 1st day of January, 1994, shall—

(a) be computed in terms of the company's functional currency by reference to amounts expressed in that currency, and

(b) then be expressed in terms of the currency of the State by reference to the rate of exchange which—

(i) is used to express in terms of the currency of the State the amount of the income from the trade for the accounting period in which the loss is to be set off, or

(ii) would be so used if there were such income:

Provided that—

(I) for the purposes of the computation of any set-off due to a company against income or profits of an accounting period (hereafter in this proviso referred to as the ‘first-mentioned period’) in respect of a loss from a trade incurred by the company in an accounting period beginning on or after the 1st day of January, 1994, and

(II) without prejudice to any set-off made against the income or profits of an accounting period earlier than the first-mentioned period by reference to that loss,

where that loss, or any set-off referable to that loss, was computed in terms of a currency other than the functional currency of the company for the first-mentioned period in this proviso, then that loss or set-off, as the case may be, shall be expressed in terms of that functional currency by reference to a rate of exchange of the said functional currency for the other currency, being an average of representative rates of exchange of that functional currency for the other currency during the accounting period in which the loss was incurred.”.

Corporate unitholders in undertakings for collective investment.

57. Chapter IV of Part I of the Finance Act, 1993 , is hereby amended—

(a) in subsection (7) of section 17, by the insertion after “Capital Gains Tax Acts” of “other than section 18 (as amended by the Finance Act, 1994) of this Act”, and

(b) in section 18—

(i) by the substitution for subsection (1) of the following subsections:

“(1) Subject to the provisions of this section, as respects a payment made on or after the 6th day of April, 1994, in money or money's worth, to a unitholder by reason of rights conferred on the holder as a result of holding units in an undertaking for collective investment—

(a) where the holder is not a company, the payment shall not be reckoned in computing the total income of the holder for the purposes of the Income Tax Acts, and

(b) where, apart from this paragraph, the said payment would be brought into account for the purposes of computing income chargeable to corporation tax, such payment shall be treated as if it were the net amount of an annual payment, chargeable to tax under Case IV of Schedule D, from the gross amount of which income tax has been deducted at the standard rate.

(1A) (a) This subsection applies to a payment which—

(i) is made on or after the 6th day of April, 1994, in money or money's worth, by reason of rights conferred on a unitholder as a result of holding units in an undertaking for collective investment, and

(ii) apart from subsection (1), would be charged to corporation tax under Case I of Schedule D.

(b) Subsection (1) shall not apply to a payment to which this subsection applies.

(c) For the purposes of the Tax Acts other than paragraphs (d) and (e) of this subsection—

(i) the income, for a chargeable period, attributable to a payment to which this subsection applies shall be increased by an amount determined by reference to paragraph (d), and

(ii) the amount so determined shall be deemed to be an amount of income tax which shall—

(I) be set off against corporation tax assessable on the unitholder for the chargeable period, or

(II) in so far as it cannot be set off in accordance with clause (I), be repaid to the unitholder.

(d) The amount referred to in paragraph (c), by which the income attributable to a payment to which this subsection applies is to be increased, shall be determined by the formula—

I ×

A

_______

100 − A

where—

I is the said income, and

A is the standard rate per cent. for the year of assessment in which the payment is made.

(e) For the purposes of this subsection, in computing income attributable to a payment—

(i) an amount shall be deducted from the payment if the payment arises on a sale or other transfer of ownership, or on a cancellation, redemption or repurchase by the undertaking for collective investment, of units or an interest in units, and an amount shall not be deducted otherwise,

(ii) subject to the following provisions of this paragraph, the amount of the consideration in money or money's worth given by, or on behalf of, the unitholder for the acquisition of units, or an interest in units, for which the payment is made, and not any other amount, shall be deducted from the payment,

(iii) where units are acquired by the unitholder before the 6th day of April, 1994, in an undertaking for collective investment which was carrying on business on the 25th day of May, 1993, the consideration for the acquisition of the units shall be deemed to be the amount of their market value (within the meaning of section 49 of the Capital Gains Tax Act, 1975 ) on the 6th day of April, 1994, if that amount is greater than the consideration given, or deemed by virtue of subparagraph (iv) to be given, by the unitholder for their acquisition,

(iv) where units are acquired by a unitholder for a consideration which is less than the market value (within the meaning of section 49 of the said Act) of the units on the day the unitholder acquired them, the consideration given by the unit holder for those units shall be deemed to be that market value, and

(v) the amount of consideration given for units shall be determined in accordance with paragraph 4 of Schedule 1 to the Capital Gains Tax (Amendment) Act, 1978 .”,

(ii) by the insertion in subsection (2)—

(I) after “collective investment” of “by a person other than a company”,

(II) after “ Capital Gains Tax (Amendment) Act, 1978 )” in subparagraph (ii) of “and applying subsection (5) of section 31 of the Capital Gains Tax Act, 1975 ”, and

(III) after “for the purposes of this subsection” of “and subsection (2A)”,

(iii) by the substitution in subsection (2) for “the provisions of the subsection” of “the provisions of this subsection and subsection (2A)”,

(iv) by the insertion after subsection (2) of the following subsection:

“(2A) Subject to subsections (3) and (4), as respects a disposal by a company on or after the 6th day of April, 1994, of units in an undertaking for collective investment, for the purposes of the Corporation Tax Acts—

(a) any chargeable gain accruing on the disposal shall, notwithstanding subsection (3) of section 1 of the Corporation Tax Act, 1976 , be treated as if it were the net amount of a gain from the gross amount of which capital gains tax has been deducted at the standard rate of income tax,

(b) the amount to be brought into account in respect of the chargeable gain in computing, in accordance with section 13 of the Corporation Tax Act, 1976 , the company's chargeable gains, for the accounting period in which the company disposes of the units, shall be the said gross amount, and

(c) the capital gains tax treated as deducted from the gross amount of the chargeable gain shall—

(i) be set off against the corporation tax assessable on the company for the said accounting period, or

(ii) in so far as it cannot be set off in accordance with subparagraph (i), be repaid to the company:

Provided that—

(I) as respects a disposal by a company of units, which it acquired before the 6th day of April, 1994, in an undertaking for collective investment which was carrying on business on the 25th day of May, 1993, this subsection shall only apply to so much of the chargeable gain accruing to the company on that disposal of units as does not exceed the chargeable gain which would have accrued on the said disposal had the company sold and immediately reacquired those units on the 5th day of April, 1994, at their market value on that day, and

(II) this subsection shall be ignored for the purposes of section 12 (1) of the Capital Gains Tax Act, 1975 .”,

and

(v) in subsection (4) by the substitution in paragraph (a) for “(1) and (2)” of “(1), (1A), (2) and (2A)”.

Life assurance and companies.

58. Part IV of the Capital Gains Tax Act, 1975 , is hereby amended by the insertion after section 20A (inserted by section 24 of the Finance Act, 1993 ) of the following section:

“20B.—(1) (a) In this section—

relevant policy’ means a policy of life assurance, or contract for a deferred annuity on the life of any person, entered into or acquired by a company on or after the 11th day of April, 1994, which is not a policy to which subsection (2) of section 20A (as inserted by section 24 of the Finance Act, 1993 ) applies;

relevant disposal’ means a disposal of, or an interest in, the rights under any relevant policy, other than—

(i) a disposal by a person who is not the original beneficial owner of those rights and who acquired them, or an interest in them, for a consideration in money or money's worth, or

(ii) a disposal resulting directly from the death, disablement or disease of a person, or one of a class of persons, specified in the terms of the policy;

relevant gain’ means a chargeable gain arising on a relevant disposal.

(b) (i) For the purposes of this section, a policy of assurance, or contract for a deferred annuity on the life of any person, entered into by a company before the 11th day of April, 1994, shall be treated as a policy or contract, as the case may be, entered into on or after that date if there is a variation of the policy or contract on or after that date which directly or indirectly increases the benefits secured by, or extends the term of, the policy or contract, as the case may be.

(ii) For the purposes of subparagraph (i), if a policy or contract entered into by a company before the 11th day of April, 1994, provides an option to have another policy or contract substituted for it or to have any of its terms changed, then any change in the terms of the policy or contract which is made in pursuance of the option shall be deemed to be a variation of the policy or contract, as the case may be.

(c) Subject to subsection (2), this section shall be construed together with subsections (3) and (4) of section 20, as if the said subsection (3) were not subject to subsection (2) of section 20.

(2) Section 20 (2) shall not have effect in respect of any relevant disposal.

(3) (a) For the purposes of the Corporation Tax Acts (within the meaning of section 155 of the Corporation Tax Act, 1976 )—

(i) any relevant gain arising to a company shall be treated as if it were the net amount of a gain from the gross amount of which corporation tax has been deducted at the standard rate (within the meaning of section 1 of the Income Tax Act, 1967 ) of income tax,

(ii) the amount to be brought into account in respect of the relevant gain in computing, in accordance with section 13 of the Corporation Tax Act, 1976 , the company's chargeable gains, for the accounting period in which the relevant gain arises, shall be the said gross amount, and

(iii) the corporation tax treated as deducted from that gross amount shall—

(I) be set off against the corporation tax assessable on the company for the said accounting period, or

(II) in so far as it cannot be set off in accordance with clause (I), be repaid to the company:

Provided that this paragraph shall be ignored for the purposes of section 12 (1) of this Act.

(b) This subsection shall be construed together with the Corporation Tax Act, 1976 .

(4) For the purposes of this section, a contract, being a policy of life assurance or a contract for a deferred annuity on the life of any person, shall be treated as having been entered into by a company before the 11th day of April, 1994, if—

(a) (i) a document referable to the contract was served on the company in pursuance of section 52 of the Insurance Act, 1989 , before the 11th day of April, 1994, and

(ii) the company entered into the contract on or before the 22nd day of April, 1994,

or

(b) (i) the contract was entered into before the 30th day of June, 1994, by the company,

(ii) before the 11th day of April, 1994—

(I) there was in existence a binding agreement in writing under which the company was obliged to acquire land, and

(II) preliminary commitments or agreements had been entered into by the company—

(A) to obtain a loan, which was to be secured on the land, to defray money applied in acquiring the land, and

(B) to enter into the contract primarily for the purpose of repaying the loan, and

(iii) the agreement under which the loan was advanced obliges the company to apply any payment made to it under the contract to the repayment of the loan before any other application by it of such payment.”.

Amendment of section 25 (attribution of distributions to accounting periods) of Finance Act, 1989.

59. —As respects distributions made on or after the 1st day of June, 1994, section 25 (as amended by section 37 of the Finance Act, 1992 ) of the Finance Act, 1989 , is hereby amended by the substitution for subsection (1) of the following subsection:

“(1) (a) Notwithstanding sections 64 , 76 , 93 and 170 of the Corporation Tax Act, 1976 , and subsection (1A) of section 45 (as amended by this Act) of the Finance Act, 1980 , but subject to subsections (2) and (3) of this section, where a company which makes a distribution on or after the 6th day of April, 1989, specifies, by notice in writing given to the inspector within 6 months of the end of the accounting period in which the distribution is made, the extent to which the distribution is to be treated, for the purposes of the said sections 64, 76, 93, 170 and the said section 45, as made for any accounting period or periods, the distribution shall be so treated for those purposes, irrespective of the period of account for which it was made.

(b) A part of a distribution treated under the provisions of paragraph (a) as made for an accounting period shall be treated for the purposes of sections 64 , 76 , 93 and 170 of the Corporation Tax Act, 1976 , and subsections (1), (1A) and (2) of the said section 45 as a separate distribution.”.

Amendment of section 35 (profits of life business) of Corporation Tax Act, 1976.

60. Section 35 of the Corporation Tax Act, 1976 , is hereby amended by the insertion of the following proviso to subsection (1A):

“Provided that, in applying the definition of foreign life assurance business in section 36 of the Finance Act, 1988 , for the purposes of this subsection, section 39B (inserted by the Finance Act, 1987 ) of the Finance Act, 1980 , shall apply as if there were deleted from subsection (2) ‘and any certificate so given shall, unless it is revoked under subsection (4), (5) or (5A), remain in force until the 31st day of December, 2005’.”.

Amendment of section 40 (capital allowances for certain leased assets) of Finance Act, 1984.

61. —(1) Section 40 of the Finance Act, 1984 , is hereby amended—

(a) in the definition of “the specified capital allowances” (as amended by section 53 of the Finance Act, 1986 ) in subsection (1), by the substitution of “subsection (6), (7), (7A) or (8)” for “subsection (6), (7) or (8)”, and

(b) by the insertion of the following subsection after subsection (7) (inserted by section 53 of the Finance Act, 1986 ):

“(7A) The reference in the definition of ‘the specified capital allowances’ in subsection (1) to machinery or plant to which this subsection applies is a reference to machinery or plant provided for leasing by a lessor to a lessee in the course of the carrying on by the lessor of relevant trading operations within the meaning of section 39A (inserted by the Finance Act, 1981 ), or section 39B (inserted by the Finance Act, 1988 ), of the Finance Act, 1980 , and—

(a) in respect of the expenditure on which no allowance has been, or will be, made under Chapter I of Part XV of the Income Tax Act, 1967 , or

(b) in respect of which no allowance on account of wear and tear falling to be made under section 241 of the Income Tax Act, 1967 , has been, or will be, increased under section 11 of the Finance Act, 1967 , or under section 26 of the Finance Act, 1971 .”.

(2) Subsection (1) shall apply and have effect as respects accounting periods ending on or after the 31st day of December, 1993.

Amendment of section 28 (relief in relation to income from shipping trade) of Finance Act, 1987.

62. —Subsection (1) of section 28 of the Finance Act, 1987 , is hereby amended by the insertion after “tug” in subparagraph (ii) of the definition of “qualifying ship” of “other than a tug in respect of which a certificate has been given by the Minister for the Marine certifying that, in the opinion of the Minister, the tug is capable of operating in seas outside the portion of the seas which are, for the purposes of the Maritime Jurisdiction Act, 1959 (as amended by the Maritime Jurisdiction (Amendment) Act, 1988 ), the territorial seas of the State”.