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6 1967

INCOME TAX ACT, 1967

Chapter II

Cases I and II

Extent of charge.

57. —The tax under Cases I and II of Schedule D shall be charged without any other deduction than is by this Act allowed.

Basis of assessment.

58. —(1) Subject to the provisions of this section and sections 59 and 60, tax shall be charged under Case I or Case II of Schedule D on the full amount of the profits or gains of the year preceding the year of assessment.

(2) Where the trade or profession has been set up and commenced within the year of assessment, the computation of the profits or gains chargeable under Case I or Case II of Schedule D shall be made either on the full amount of the profits or gains arising in the year of assessment or according to the average of such period, not being greater than one year, as the case may require and as may be directed by the inspector.

(3) Any person chargeable with income tax in respect of the profits or gains of any trade or profession which has been set up and commenced within the year preceding the year of assessment shall be charged on the full amount of the profits or gains for one year from the time of such setting up and commencement, but shall be entitled, on giving notice in writing to the inspector within twelve months after the end of the year of assessment, to be charged to income tax on the amount of the profits or gains of the year of assessment.

(4) Any person chargeable with income tax in respect of the profits or gains of any trade or profession which has been set up and commenced within the year next before the year preceding the year of assessment shall be entitled, on giving notice in writing to the inspector within twelve months after the end of the year of assessment, to have the assessment reduced by the amount (if any) by which the aggregate amount of the respective assessments for the year of assessment and the year preceding that year exceed the total amount of the profits or gains of those two years.

(5) (a) Where in any year of assessment a trade or profession is permanently discontinued then, notwithstanding anything contained in this Act—

(i) the person charged or chargeable with tax in respect thereof shall be charged for that year on the amount of the profits or gains of the period beginning on the 6th day of April in that year and ending on the date of the discontinuance, subject to any deduction or set-off to which he may be entitled under section 308 or 309, and, if he has been charged otherwise than in accordance with this paragraph, any tax overpaid shall be repaid, or an additional assessment may be made upon him, as the case may require;

(ii) if the profits or gains of the year ending on the 5th day of April in the year preceding the year of assessment in which the discontinuance occurs exceed the amount on which the person has been charged for that preceding year, or would have been charged if no such deduction or set-off as aforesaid had been allowed, an additional assessment may be made upon him, so that he shall be charged for that preceding year on the amount of the profits or gains of the said year ending on the 5th day of April, subject to any such deduction or set-off as aforesaid to which he may be entitled.

(b) In the case of the death of a person who, if he had not died, would, under this subsection, have become chargeable to income tax for any year, the tax which would have been so chargeable shall be assessed and charged upon his executors or administrators, and shall be a debt due from and payable out of his estate.

(6) The reference in subsection (5) to the discontinuance of a trade or profession shall be construed as referring to a discontinuance occurring by reason of the death while carrying on such trade or profession of the person carrying on the same as well as to a discontinuance occurring in the lifetime of such person, and for the purposes of subsection (5) such death shall be deemed to cause a discontinuance and such discontinuance shall be deemed to take place on the day of such death.

Changes of proprietorship.

59. —(1) If at any time after the 5th day of April, 1965, a trade or profession which immediately before that time was carried on by an individual person (hereafter in this subsection referred to as the predecessor) becomes carried on by another individual person or by a partnership of persons (including a partnership in which the predecessor is a partner), the tax payable for all years of assessment by the predecessor shall be computed as if the trade or profession had been permanently discontinued at that time.

(2) If at any time after the 5th day of April, 1965, an individual person (hereafter in this subsection referred to as the successor) succeeds to a trade or profession which immediately before that time was carried on by another individual person or by a partnership of persons (including a partnership in which the successor was a partner), the tax payable for all years of assessment by the successor shall be computed as if he had set up or commenced the trade or profession at that time.

(3) In the case of the death of a person who, if he had not died, would, under the provision of this section, have become chargeable to income tax for any year, the tax which would have been so chargeable shall be assessed and charged upon his executors or administrators, and shall be a debt due from and payable out of his estate.

Period of computation of profits.

60. —(1) Where, in the case of any trade or profession or of the occupation of any land occupied solely or mainly for the purpose of husbandry or of the occupation of any woodlands, it has been customary to make up accounts:—

(a) if only one account was made up to a date within the year preceding the year of assessment, and that account was for a period of one year, the profits or gains of the year ending on that date shall be taken to be the profits or gains of the year preceding the year of assessment;

(b) if no account for a period of one year was made up to a date within the year preceding the year of assessment, or if more accounts than one were made up to dates within that year, the Revenue Commissioners shall decide what period of twelve months shall be deemed to be the year the profits or gains of which are to be taken to be the profits or gains of the year preceding the year of assessment.

(2) Where the Revenue Commissioners have given a decision under subsection (1) (b) and it appears to them that in consequence thereof the tax for the last preceding year of assessment in respect of the profits or gains from the same source should be computed on the profits or gains of a corresponding period, they may give directions to that effect and an assessment or additional assessment or repayment of tax shall be made accordingly.

(3) An appeal shall lie against any assessment or additional assessment or in respect of any repayment of tax under subsection (2), and any such appeal shall be made to the Special Commissioners who shall consider the circumstances and grant such relief, if any, as is just, and their determination shall be final and conclusive, unless the person assessed requires that his appeal shall be reheard under section 429, or unless under this Act a case is required to be stated for the opinion of the High Court.

(4) In the case of the death of a person who, if he had not died, would, under the provisions of this section, have become chargeable to income tax for any year, the tax which would have been so chargeable shall be assessed and charged upon his executors or administrators and shall be a debt due from and payable out of his estate.

General Rule as to deductions.

61. —Subject to the provisions of this Act, in computing the amount of the profits or gains to be charged, no sum shall be deducted in respect of—

(a) any disbursements or expenses, not being money wholly and exclusively laid out or expended for the purposes of the trade or profession;

(b) any disbursements or expenses of maintenance of the parties, their families or establishments or any sums expended for any other domestic or private purposes distinct from the purposes of such trade or profession;

(c) the rent or annual value of any dwelling-house or domestic offices or any part thereof, except such part thereof as is used for the purposes of the trade or profession:

Provided that where any such part is so used, the sum so deducted shall be such as may be determined by the inspector and shall not, unless in any particular case the inspector is of opinion that, having regard to all the circumstances, some greater sum ought to be deducted, exceed two thirds of the annual value or of the rent bona fide paid for the said dwelling-house or offices;

(d) any sum expended for repairs of premises occupied, or for the supply, repairs, or alterations of any implements, utensils, or articles employed for the purposes of the trade or profession, beyond the sum actually expended for those purposes;

(e) any loss not connected with or arising out of the trade or profession;

(f) any capital withdrawn from, or any sum employed or intended to be employed as capital in such trade or profession;

(g) any capital employed in improvements of premises occupied for the purposes of the trade or profession;

(h) any interest which might have been made if any such sums as aforesaid had been laid out at interest;

(i) any debts, except bad debts proved to be such to the satisfaction of the inspector and doubtful debts to the extent that they are respectively estimated to be bad. In the case of the bankruptcy or insolvency of a debtor, the amount which may reasonably be expected to be received on any such debt shall be deemed to be the value thereof;

(j) any average loss beyond the actual amount of loss after adjustment;

(k) any sum recoverable under an insurance or contract of indemnity;

(l) any annual interest, or any annuity, or other annual payment payable out of the profits or gains;

(m) any royalty or other sum paid in respect of the user of a patent.

Trading stock of discontinued trade.

62. —(1) In computing the profits or gains of a trade which has been discontinued, any trading stock belonging to the trade at the discontinuance thereof shall be valued in accordance with the following provisions:

(a) in the case of any such trading stock—

(i) which is sold, or is transferred for valuable consideration, to a person who carries on or intends to carry on a trade in the State, and

(ii) the cost of which to such person on such sale or transfer may be deducted by him as an expense in computing for any purpose of this Act the profits or gains of the said trade carried on or intended to be carried on by him,

the value of such trading stock shall be taken to be the price paid therefor on such sale or the value of the consideration given therefor on such transfer, as the case may be;

(b) in the case of any other such trading stock, the value thereof shall be taken to be the amount which it would have realised if it had been sold in the open market at the discontinuance of the trade.

(2) In this section—

trading stock” means property of any description, whether real or personal, which is either—

(a) property such as is sold in the ordinary course of the trade in relation to which the expression is used or would be so sold if it were mature or if its manufacture, preparation, or construction were complete, or

(b) materials such as are used in the manufacture, preparation, or construction of property such as is sold in the ordinary course of the said trade,

references to a trade having been discontinued or to the discontinuance of a trade shall be construed as not referring to or including any case where such trade was carried on by a single individual and is discontinued by reason of his death (whether such trade is or is not continued by another person after such death) but shall be construed as referring to and including every other case where a trade has been discontinued or is, by virtue of any of the provisions of this Act, treated as having been discontinued for the purpose of computing tax.

Deductions in relation to the establishment or alteration of superannuation schemes.

63. —Where a superannuation scheme is established in connection with a trade or undertaking or a superannuation scheme so established is altered and the person by whom the trade or undertaking is carried on makes a payment in respect of expenses (including a payment in respect of professional fees, but not including a payment by way of contribution towards the cost of providing the benefits payable under the scheme) in connection with such establishment or alteration, then, if the scheme or, as the case may be, the altered scheme is—

(a) operated through a fund approved, whether in whole or in part, by the Revenue Commissioners for the purposes of section 222,

(b) approved, whether in whole or in part, by the Revenue Commissioners under section 229, or

(c) an excepted scheme within the meaning of section 228 (2),

the amount of the payment shall be allowed to be deducted in the computation, for the purposes of assessment to income tax, of the profits or gains of the trade or undertaking as an expense incurred when the payment is made:

Provided that where, in a case falling within paragraph (a) or (b), a part only of the relevant fund or scheme is approved as therein mentioned, the deduction shall be restricted to so much of the payment as is referable to that part.

Deduction for corporation, profits tax.

64. —(1) Where any company has paid corporation profits tax in respect of any accounting period ending on or after the 1st day of April, 1966, the amount so paid shall, in computing for purposes of income tax the profits or gains of the company, be allowed to be deducted as an expense incurred in that accounting period:

Provided that there shall be disregarded for the purposes of this subsection so much of the corporation profits tax paid in respect of any such accounting period which began before the 1st day of April, 1966, as is referable to profits apportioned under section 21 (2) of the Finance Act, 1966 , to the part of the accounting period before that day.

(2) Where any company has received repayment of any amount previously paid by it by way of corporation profits tax, the amount repaid shall be treated as profit for the year in which the repayment is received but this subsection shall not apply save where there has been an allowance of the deduction of an amount as an expense in computing profits or gains for purposes of income tax.

(3) Where in any year of assessment the profits or gains from which a deduction may be made under this section come into computation, but owing to the time at which the amount of the corporation profits tax became ascertained it was impracticable to give effect to the deduction when assessing income tax, the amount by which that tax would have been reduced if effect had been given to the deduction shall be deducted from the amount payable for corporation profits tax or, if there is no corporation profits tax, shall be repaid to the company.

Exclusion of annual value of property.

65. —(1) The computation of tax shall be made exclusive of the annual value of property occupied for the purpose of the trade or profession and separately assessed and charged under Schedule A.

(2) Where any lands, tenements, hereditaments or other premises of whatsoever description used for the purpose of any trade or profession are situate outside the State, no deduction or set-off shall, in estimating the amount of annual profits or gains arising or accruing from that trade or profession, in any manner be allowed on account or in respect of the annual value of those premises.

(3) Where, in estimating the amount of annual profits or gains arising or accruing from any trade or profession and chargeable to tax under this Schedule, any sum is deducted on account of the annual value of the lands, tenements and hereditaments used for the purpose of such trade or profession, the sum so deducted shall not exceed the amount of the assessment of the lands, tenements and hereditaments for the purpose of tax under Schedule A as reduced for the purpose of collection.

(4) (a) Subsection (3) shall not apply in the case of an industrial building or structure within the meaning of section 255 which is not a building or structure to which section 264 applies.

(b) Where, in the case of premises valued under the Valuation Acts as a unit, a part is, and a part is not, a building or structure to which section 264 applies, the annual value of each part shall be arrived at by apportionment of the rateable valuation of the premises, and section 54 (3) (c) and section 54 (4) shall apply to any such apportionment as they apply to an apportionment required by section 54 (3).

Power to omit Schedule A assessments in certain cases.

66. —(1) In this section—

basis period” means, in relation to a year of assessment, the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D in respect of the trade in question or, where, by virtue of this Act, the profits or gains of any other period are to be taken to be the profits or gains of the said period, that other period;

company” means any body corporate;

short lease” has the same meaning as in Chapter VI of Part IV;

trade” means a trade within Case I of Schedule D;

unit of valuation” means any lands, tenements or hereditaments valued under the Valuation Acts as a unit.

(2) (a) Subject as hereafter provided, this section applies to any unit of valuation in respect of which a company is assessable under Schedule A being a unit of valuation of which no part fails, at any time during the year of assessment, to satisfy one or other of the following conditions, that is to say:

(i) that it is wholly occupied by the company assessable as aforesaid for the purposes of a trade, or

(ii) that it, with or without other premises, is subject to a short lease granted by the company not being such a lease as is referred to in section 86.

(b) This section does not apply to a unit of valuation—

(i) of which the whole or a part is occupied for the purposes of a trade which consists wholly or partly of exempted trading operations within the meaning of Chapter I of Part XXV, or

(ii) in respect of which any rent is payable under a short lease by the company assessable under Schedule A in respect thereof.

(c) For the purposes of paragraph (a) (ii), the currency of a lease shall be determined as it would be determined for the purposes of section 81 (4).

(3) Notwithstanding anything in this Act, no assessment under Schedule A need be made for any year of assessment in respect of a unit of valuation to which this section applies; and where, for any year of assessment, an assessment under Schedule A is not made, the annual value of the unit of valuation shall not, save as is hereafter provided, be taken into account for any purpose of this Act in relation to the company assessable under Schedule A in respect thereof.

(4) Where—

(a) the whole or a part of a unit of valuation to which this section applies (hereafter in this subsection referred to as the unit) is occupied at any time during a year of assessment (hereafter in this subsection referred to as the relevant year) for the purposes of a trade carried on by the company concerned, and

(b) an assessment under Schedule A is not made for the relevant year in respect of the unit,

the following provisions shall apply to the computation for the purpose of assessment of the amount of the profits or gains of the trade for the basis period for the relevant year but not to the computation for the purpose of relief of the amount of a loss sustained in the trade in that period:

(i) the profits or gains of the basis period shall first be computed as if an assessment under Schedule A in respect of the unit had been made for every year of assessment falling wholly or partly within the basis period for which such an assessment was not made;

(ii) the amount computed in accordance with paragraph (i) shall then be adjusted as if, in addition to the trading receipts taken into account in arriving at it, the company had received in the basis period an amount of trading receipts equal to the sum specified in the next following paragraph and the amount computed in accordance with paragraph, (i) as so adjusted shall for all purposes of this Act be taken to be the amount of the profits or gains of the basis period;

(iii) the sum referred to in paragraph (ii) is a sum equal to the amount of the assessment under Schedule A which might have been made in respect of the unit for the relevant year or, in a case in which section 23 would have applied, the net amount, as reduced for the purposes of collection, of the assessment which might have been made as aforesaid, provided that in a case in which the whole of the unit is not occupied for the purposes of the trade throughout the relevant year, the sum hereinbefore specified shall be appropriately reduced.

(5) (a) Where—

(i) the assessment under Schedule A for any year of assessment (hereafter in this subsection referred to as the relevant year) in respect of a unit of valuation to which this section applies (hereafter in this subsection referred to as the unit) would, if made, fall to be reduced for the purposes of collection under section 23,

(ii) an assessment under Schedule A is not made for that year in respect of the unit,

(iii) a period (hereafter in this subsection referred to as the unassessed period) being the whole or a part of that year falls within a period (hereafter in this subsection referred to as the accounting period) for which the accounts of the company concerned are made up, and

(iv) the whole or a part of the unit is occupied at any time during the unassessed period for the purposes of a trade carried on by the company,

there shall be allowed in the computation of the amount of a loss sustained in the trade in the accounting period such deduction, if any, as is authorised by paragraph (b).

(b) (i) In a case in which the unassessed period coincides with the relevant year and the whole of the unit was throughout that period occupied for the purposes of the trade, the deduction under paragraph (a) shall be equal to the amount, if any, by which the net amount of the assessment under Schedule A which might have been made for the relevant year in respect of the unit falls short of the sum which, if the said assessment had been made, would have fallen to be deducted, under section 65 in respect of the unassessed period on account of the annual value of the unit.

(ii) In any other case, the deduction under paragraph (a) shall be the same proportion of the deduction which would have been allowable thereunder, if sub-paragraph (i) of this paragraph applied, as the proportion which the sum which in the circumstances of the case would, if an assessment under Schedule A in respect of the unit had been made for the relevant year, have fallen to be deducted, under section 65, in respect of the unassessed period on account of the annual value of the unit bears to the sum which would have fallen to be deducted under that section if the circumstances were as stated in the said subparagraph (i).

(6) Where in consequence of the operation of the foregoing provisions of this section the amount of the profits or gains of a trade on which a company is chargeable to tax under Case I of Schedule D is, for any year of assessment, greater than it would otherwise have been, only so much of the profits or gains on which the company is so chargeable as does not exceed the amount on which it would have been so chargeable if this section had not been enacted and only so much of the tax payable by the company as is attributable to that part of the profits or gains shall be taken into account in determining the amount of any relief to which the company is entitled for the year of assessment under section 220 or Chapter II, III or IV of Part XXV.

(7) The circumstance that in accordance with this section an assessment under Schedule A is not made in respect of any unit of valuation shall not have the effect that a sum, which would otherwise be treated in accordance with Chapter III of Part V, as a perquisite of an office or employment, is not so treated.

(8) (a) A company may by notice in writing delivered to the inspector within the time limited by paragraph (b) elect that this section shall not have effect in relation to it and, where a company has so elected, no unit of valuation in respect of which it is assessable under Schedule A shall be a unit of valuation to which this section applies.

(b) A notice under paragraph (a) shall be delivered—

(i) in the case of a company in existence at the commencement of this Act (other than a company incorporated on a date more than six months before such commencement) within six months from the date on which the company was incorporated,

(ii) in the case of a company not in existence at the commencement of this Act, within six months from the date on which the company is incorporated.

(c) A company may at any time withdraw a notice given by it under paragraph (a) or under section 10 (8) of the Finance Act, 1964 , and thereupon the notice shall cease to have effect as from the beginning of the next following year of assessment.

Allowance for industrial premises.

67. —(1) In this section “premises” means an industrial building or structure within the meaning of section 255 which is not a building or structure to which section 264 applies.

(2) In estimating the amount of annual profits or gains arising or accruing from any trade the profits of which are chargeable to tax under Case I of Schedule D, there shall, notwithstanding anything in section 65, be allowed to be deducted, as expenses incurred in any year, on account of any premises owned by the person carrying on such trade and occupied by him for the purposes of the said trade, and situate outside the State, a deduction equal to one-third of the annual value of those premises.

(3) In estimating the profits for any year of any of the concerns which, by virtue of section 53, are charged under Case I (b) of Schedule D, there shall be allowed to be deducted, as expenses incurred in any year, on account of any premises owned by the person carrying on the concern and occupied by him for the purposes of such concern, a deduction equal to one-third of the annual value of those premises.

(4) Annual value for the purposes of this section shall be estimated according to the principles governing the estimation of the annual value for the purposes of Schedule A.

Statement of profits.

68. —(1) Every statement of profits to be charged under Schedule D which is made by any person—

(i) on his own account; or

(ii) on account of some other person for whom he is chargeable, or who is chargeable in his name,

shall include every source of income so chargeable.

(2) Where a person delivers a statement of profits as aforesaid on behalf of some other person, or of a body of persons, the statement shall be delivered in the assessment district where the person delivering the statement or the body of persons respectively would be assessable and chargeable if acting on his or their own behalf.