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39 1997

TAXES CONSOLIDATION ACT, 1997

PART 7

Income Tax and Corporation Tax Exemptions

CHAPTER 1

Income tax

Exemption from income tax and associated marginal relief.

[FA80 s1; FA81 s1(a)(i); FA89 s1(a); FA91 s1(a)(iii); FA94 s1(a); FA97 s1(a)]

187. —(1) In this section, “the specified amount” means, subject to subsection (2)

(a) in a case where the individual would apart from this section be entitled to a deduction specified in section 461 (a), £8,000, and

(b) in any other case, £4,000.

(2) (a) For the purposes of this section and section 188 , where a claimant proves that he or she has living at any time during the year of assessment any qualifying child, then, subject to subsection (3), the specified amount (within the meaning of this section or section 188 , as the case may be) shall be increased for that year of assessment by—

(i) £450 in respect of the first such child,

(ii) £450 in respect of the second such child, and

(iii) £650 in respect of each such child in excess of 2.

(b) Any question as to whether a child is a qualifying child for the purposes of this section or section 188 shall be determined on the same basis as it would be for the purposes of section 462 , but without regard to subsections (1)(b), (2), (3) and (5) of that section.

(3) Where for any year of assessment 2 or more individuals are, or but for this subsection would be, entitled under subsection (2) to an increase in the specified amount (within the meaning of this section or section 188 , as the case may be) in respect of the same child, the following provisions shall apply:

(a) only one such increase under subsection (2) shall be allowed in respect of each child;

(b) where such child is maintained by one individual only, that individual only shall be entitled to claim the increase;

(c) where such child is maintained by more than one individual, each individual shall be entitled to claim such part of the increase as is proportionate to the amount expended on the child by that individual in relation to the total amount paid by all individuals towards the maintenance of the child;

(d) in ascertaining for the purposes of this subsection whether an individual maintains a child and, if so, to what extent, any payment made by the individual for or towards the maintenance of the child which that individual is entitled to deduct in computing his or her total income for the purposes of the Income Tax Acts shall be deemed not to be a payment for or towards the maintenance of the child.

(4) Where for any year of assessment—

(a) an individual makes a claim for the purpose, makes a return in the prescribed form of his or her total income for that year and proves that such total income does not exceed the specified amount, the individual shall be entitled to exemption from income tax, or

(b) an individual makes a claim for the purpose, makes a return in the prescribed form of his or her total income for that year and proves that such total income does not exceed a sum equal to twice the specified amount, the individual shall be entitled to have the amount of income tax payable in respect of his or her total income for that year, if that amount would but for this subsection exceed a sum equal to 40 per cent of the amount by which his or her total income exceeds the specified amount, reduced to that sum.

Age exemption and associated marginal relief.

[FA80 s2(1) to (4) and (6) and (7); FA81 s1(b)(i); FA89 s1(b); FA94 s1(b); FA96 s132 and Sch5 PtI par12; FA97 s1(b)]

188. —(1) In this section and in section 187 , “total income” has the same meaning as in section 3 , but includes income arising outside the State which is not chargeable to tax.

(2) In this section, “the specified amount” means, subject to section 187 (2)

(a) in a case where the individual would apart from this section be entitled to a deduction specified in section 461 (a), £9,200; but, if at any time during the year of assessment either the individual or the spouse of the individual was of the age of 75 years or over, “the specified amount” means £10,400, and

(b) in any other case, £4,600; but, if at any time during the year of assessment the individual was of the age of 75 years or over, “the specified amount” means £5,200.

(3) This section shall apply for any year of assessment to an individual who makes a claim for the purpose, makes a return in the prescribed form of his or her total income for that year and proves that, at some time during the year of assessment, either the individual, or, in a case where the individual would apart from this section be entitled to a deduction specified in section 461 (a), the spouse of the individual, was of the age of 65 years or over.

(4) Where an individual to whom this section applies proves that his or her total income for a year of assessment for which this section applies does not exceed the specified amount, the individual shall be entitled to exemption from income tax for that year.

(5) Where an individual to whom this section applies proves that his or her total income for a year of assessment for which this section applies does not exceed a sum equal to twice the specified amount, the individual shall be entitled to have the amount of income tax payable in respect of his or her total income for that year, if that amount would but for this subsection exceed a sum equal to 40 per cent of the amount by which his or her total income exceeds the specified amount, reduced to that sum.

(6) (a) Subsections (1) and (2) of section 459 and section 460 shall apply in relation to exemption from tax or any reduction of tax under this section or under section 187 as they apply to any allowance, deduction, relief or reduction under the provisions specified in the Table to section 458 .

(b) Subsections (3) and (4) of section 459 and paragraph 8 of Schedule 28 shall, with any necessary modifications, apply in relation to exemption from tax or any reduction of tax under this section or under section 187 .

Payments in respect of personal injuries.

[FA90 s5(1) and (2)]

189. —(1) This section shall apply to any payment made—

(a) to or in respect of an individual who is permanently and totally incapacitated by reason of mental or physical infirmity from maintaining himself or herself, and

(b) following the institution by or on behalf of the individual of a civil action for damages in respect of personal injury giving rise to that mental or physical infirmity.

(2) Income (in this subsection referred to as “the relevant income”) which arises to an individual, to or in respect of whom payments to which this section applies are made, from the investment in whole or in part of such payments or of income from such payments, being income consisting of dividends or other income which but for this section would be chargeable to tax under Schedule C or under Case III, IV (by virtue of section 59 ) or V of Schedule D or under Schedule F, shall be exempt from income tax and shall not be reckoned in computing total income for the purposes of the Income Tax Acts; but—

(a) the provisions of those Acts relating to the making of returns of total income shall apply as if this section had not been enacted, and

(b) this section shall not apply in a case unless the relevant income is the sole or main income of the individual to or in respect of whom the relevant income arises.

Certain payments made by the Haemophilia HIV Trust.

[FA90 s7]

190. —(1) In this section, “the Trust” means the trust established by deed dated the 22nd day of November, 1989, between the Minister for Health and certain other persons, and referred to in that deed as “the Haemophilia H.I.V. Trust” or “the HHT”.

(2) This section shall apply to income consisting of payments made by the trustees of the Trust to or in respect of a beneficiary under the Trust.

(3) Notwithstanding any provision of the Income Tax Acts, income to which this section applies shall be disregarded for the purposes of those Acts.

Taxation treatment of Hepatitis C compensation payments.

[FA96 s9]

191. —(1) In this section—

the Scheme” means the Scheme of Compensation for certain persons who have contracted Hepatitis C from the use of Human Immunoglobulin-Anti-D, whole blood or other blood products, which was approved by Dáil Éireann on the 13th day of December, 1995;

the Tribunal” means the Tribunal established by the Minister for Health on the 15th day of December, 1995, to administer the Scheme pursuant to Clause 22 of the Scheme.

(2) This section shall apply to any payment in respect of compensation—

(a) by the Tribunal, or

(b) following the institution by or on behalf of an individual of a civil action for damages in respect of personal injury,

to a person in respect of a right of action in relation to which the person may make a claim to the Tribunal under Clause 4 of the Scheme.

(3) For the purposes of the Income Tax Acts and notwithstanding any provision of those Acts to the contrary—

(a) income consisting of payments to which this section applies shall be disregarded, and

(b) any payment by the Tribunal to which this section applies shall be treated in all respects as if it were a payment made following the institution, by or on behalf of the person to or in respect of whom the payment is made, of a civil action for damages in respect of personal injury.

Payments in respect of thalidomide children.

[FA73 s19(1) and (2); FA78 s7]

192. —(1) This section shall apply to any payment made by the Minister for Health and Children or by the foundation known as Hilfswerk für behinderte Kinder to or in respect of any individual handicapped by reason of infirmity which can be linked with the taking by the individual's mother during her pregnancy of preparations containing thalidomide.

(2) Income which—

(a) consists of a payment to which this section applies, or

(b) arises to a person to or in respect of whom payments to which this section applies are made, from the investment in whole or in part of such payments or of the income derived from such payments, being income consisting of dividends or other income which but for this section would be chargeable to tax under Schedule C or under Case III, IV (by virtue of section 59 ) or V of Schedule D or under Schedule F,

shall be exempt from income tax and shall not be reckoned in computing total income for the purposes of the Income Tax Acts; but the provisions of those Acts relating to the making of returns of total income shall apply as if this section had not been enacted.

Income from scholarships.

[ITA67 s353; FA97 s11(1) and (2)]

193. —(1) (a) In this section—

relevant body” means a body corporate, unincorporated body, partnership, individual or other body;

relevant scholarship” means a scholarship provision for which is made, either directly or indirectly, by a relevant body or a person connected with the relevant body and where payments are made, either directly or indirectly, in respect of such a scholarship to—

(i) an employee or, where the relevant body is a body corporate, a director of the relevant body, or

(ii) the spouse, family, dependants or servants of such employee or director;

scholarship” includes an exhibition, bursary or other similar educational endowment.

(b) A person shall be regarded as connected with a relevant body for the purposes of this subsection if that person is—

(i) a trustee of a settlement, within the meaning of section 10 , made by the relevant body, or

(ii) a relevant body,

and that person would be regarded as connected with the relevant body for the purposes of that section.

(2) Income arising from a scholarship held by a person receiving full-time instruction at a university, college, school or other educational establishment shall be exempt from income tax, and no account shall be taken of any such income in computing the amount of income for the purposes of the Income Tax Acts.

(3) Nothing in subsection (2) shall be construed as conferring on any person other than the person holding the scholarship in question any exemption from a charge to income tax.

(4) Notwithstanding subsection (3), a payment of income arising from a relevant scholarship which is—

(a) provided from a trust fund or under a scheme, and

(b) held by a person receiving full-time instruction at a university, college, school or other educational establishment,

shall be exempt from income tax if, in the year of assessment in which the payment is made, not more than 25 per cent of the total amount of the payments made from that fund, or under that scheme, in respect of scholarships held as mentioned in paragraph (b) is attributable to relevant scholarships.

(5) If any question arises whether any income is income arising from a scholarship held by a person receiving full-time instruction at a university, college, school or other educational establishment, the Revenue Commissioners may consult the Minister for Education and Science.

(6) Where a payment is made before the 6th day of April, 1998, in respect of a scholarship awarded before the 26th day of March, 1997, this section shall apply subject to paragraph 2 of Schedule 32 .

Child benefit.

[ITA67 s354; FA97 s146(1) and Sch9 PtI par1(26)]

194. —Child benefit payable under Part IV of the Social Welfare (Consolidation) Act, 1993 , or any subsequent Act together with which that Act may be cited, shall be exempt from income tax and shall not be reckoned in computing income for the purposes of the Income Tax Acts.

Exemption of certain earnings of writers, composers and artists.

[FA69 s2; FA89 s5; FA94 s14; FA95 s173(2); FA96 s14; FA97 s146(1) and Sch9 PtI par18(1)]

195. —(1) In this section, “work” means an original and creative work which is within one of the following categories—

(a) a book or other writing;

(b) a play;

(c) a musical composition;

(d) a painting or other like picture;

(e) a sculpture.

(2) (a) This section shall apply to an individual—

(i) who is—

(I) resident in the State and not resident elsewhere, or

(II) ordinarily resident and domiciled in the State and not resident elsewhere, and

(ii) (I) who is determined by the Revenue Commissioners, after consideration of any evidence in relation to the matter which the individual submits to them and after such consultation (if any) as may seem to them to be necessary with such person or body of persons as in their opinion may be of assistance to them, to have written, composed or executed, as the case may be, either solely or jointly with another individual, a work or works generally recognised as having cultural or artistic merit, or

(II) who has written, composed or executed, as the case may be, either solely or jointly with another individual, a particular work which the Revenue Commissioners, after consideration of the work and of any evidence in relation to the matter which the individual submits to them and after such consultation (if any) as may seem to them to be necessary with such person or body of persons as in their opinion may be of assistance to them, determine to be a work having cultural or artistic merit.

(b) The Revenue Commissioners shall not make a determination under this subsection unless—

(i) the individual concerned duly makes a claim to the Revenue Commissioners for the determination, being (where the determination is sought under paragraph (a)(ii)(II)) a claim made after the publication, production or sale, as the case may be, of the work in relation to which the determination is sought, and

(ii) the individual complies with any request to him or her under subsection (4).

(3) (a) An individual to whom this section applies and who duly makes a claim to the Revenue Commissioners in that behalf shall, subject to paragraph (b), be entitled to have the profits or gains arising to him or her from the publication, production or sale, as the case may be, of a work or works in relation to which the Revenue Commissioners have made a determination under clause (I) or (II) of subsection (2)(a)(ii), or of a work of the individual in the same category as that work, and which apart from this section would be included in an assessment made on him or her under Case II of Schedule D, disregarded for the purposes of the Income Tax Acts.

(b) The exemption authorised by this section shall not apply for any year of assessment before the year of assessment in which the individual concerned makes a claim under clause (I) or (II) of subsection (2)(a)(ii) in respect of which the Revenue Commissioners make a determination referred to in clause (I) or (II) of subsection (2)(a)(ii), as the case may be.

(c) The relief provided by this section may be given by repayment or otherwise.

(4) (a) Where an individual makes a claim to which subsection (2)(a)(ii)(I) relates, the Revenue Commissioners may serve on the individual a notice or notices in writing requesting the individual to furnish to them within such period as may be specified in the notice or notices such information, books, documents or other evidence as may appear to them to be necessary for the purposes of a determination under subsection (2)(a)(ii)(I).

(b) Where an individual makes a claim to which subsection (2)(a)(ii)(II) relates, the individual shall—

(i) in the case of a book or other writing or a play or musical composition, if the Revenue Commissioners so request, furnish to them 3 copies, and

(ii) in the case of a painting or other like picture or a sculpture, if the Revenue Commissioners so request, provide, or arrange for the provision of, such facilities as the Revenue Commissioners may consider necessary for the purposes of a determination under subsection (2)(a)(ii)(II) (including any requisite permissions or consents of the person who owns or possesses the painting, picture or sculpture).

(5) The Revenue Commissioners may serve on an individual who makes a claim under subsection (3) a notice or notices in writing requiring the individual to make available within such time as may be specified in the notice all such books, accounts and documents in the individual's possession or power as may be requested, being books, accounts and documents relating to the publication, production or sale, as the case may be, of the work in respect of the profits or gains of which exemption is claimed.

(6) (a) In this subsection, “relevant period” means, as respects a claim in relation to a work or works or a particular work, the period of 6 months commencing on the date on which a claim is first made in respect of that work or those works or the particular work, as the case may be.

(b) Where—

(i) an individual—

(I) has made due claim (in this subsection referred to as a “claim”) to the Revenue Commissioners for a determination under clause (I) or (II) of subsection (2)(a)(ii) in relation to a work or works or a particular work, as the case may be, that the individual has written, composed or executed, as the case may be, solely or jointly with another individual, and

(II) as respects the claim, has complied with any request made to the individual under subsection (4) or (5) in the relevant period,

and

(ii) the Revenue Commissioners fail to make a determination under clause (I) or (II) of subsection (2)(a)(ii) in relation to the claim in the relevant period,

the individual may, by notice in writing given to the Revenue Commissioners within 30 days after the end of the relevant period, appeal to the Appeal Commissioners on the grounds that—

(A) the work or works is or are generally recognised as having cultural or artistic merit, or

(B) the particular work has cultural or artistic merit,

as the case may be.

(7) The Appeal Commissioners shall hear and determine an appeal made to them under subsection (6) as if it were an appeal against an assessment to income tax and, subject to subsection (8), the provisions of the Income Tax Acts relating to such appeals and to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

(8) (a) On the hearing of an appeal made under subsection (6), the Appeal Commissioners may—

(i) after consideration of—

(I) any evidence in relation to the matter submitted to them by or on behalf or the individual concerned and by or on behalf of the Revenue Commissioners, and

(II) in relation to a work or works or a particular work, the work or works or the particular work,

and

(ii) after such consultation (if any) as may seem to them to be necessary with such person or body of persons as in their opinion may be of assistance to them,

determine that the individual concerned has written, composed or executed, as the case may be, either solely or jointly with another individual—

(A) a work or works generally recognised as having cultural or artistic merit, or

(B) a particular work which has cultural or artistic merit,

and, where the Appeal Commissioners so determine, the individual shall be entitled to relief under subsection (3)(a) as if the determination had been made by the Revenue Commissioners under clause (I) or (II) of subsection (2)(a)(ii), as the case may be.

(b) This subsection shall, subject to any necessary modifications, apply to the rehearing of an appeal by a judge of the Circuit Court and, to the extent necessary, to the determination by the High Court of any question or questions of law arising on the statement of a case for the opinion of the High Court.

(9) For the purposes of the hearing or rehearing of an appeal made under subsection (6), the Revenue Commissioners may nominate any of their officers to act on their behalf.

(10) For the purposes of determining the amount of the profits or gains to be disregarded under this section for the purposes of the Income Tax Acts, the Revenue Commissioners may make such apportionment of receipts and expenses as may be necessary.

(11) Notwithstanding any exemption provided by this section, the provisions of the Income Tax Acts regarding the making by the individual of a return of his or her total income shall apply as if the exemption had not been authorised.

(12) (a) An Comhairle Ealaíon and the Minister for Arts, Heritage, Gaeltacht and the Islands shall, with the consent of the Minister for Finance, draw up guidelines for determining for the purposes of this section whether a work within a category specified in subsection (1) is an original and creative work and whether it has, or is generally recognised as having, cultural or artistic merit.

(b) Without prejudice to the generality of paragraph (a), a guideline under that paragraph may—

(i) consist of a specification of types or kinds of works that are not original and creative or that have not, or are not generally recognised as having, cultural or artistic merit, including a specification of works that are published, produced or sold for a specified purpose, and

(ii) specify criteria by reference to which the questions whether works are original or creative and whether they have, or are generally recognised as having, cultural or artistic merit are to be determined.

(13) (a) Where a claim for a determination under subsection (2) is made to the Revenue Commissioners, the Revenue Commissioners shall not determine that the work concerned is original and creative or has, or is generally recognised as having, cultural or artistic merit unless it complies with the guidelines under subsection (12) for the time being in force.

(b) Paragraph (a) shall, with any necessary modifications, apply to—

(i) a determination by the Appeal Commissioners under subsection (8) on an appeal to them under subsection (6) in relation to a claim mentioned in paragraph (a), and

(ii) a rehearing by a judge of the Circuit Court of an appeal mentioned in subparagraph (i) and, to the extent necessary, to the determination by the High Court of any question of law arising on such an appeal or rehearing and specified in the statement of a case for the opinion of the High Court, by the Appeal Commissioners or, as the case may be, a judge of the Circuit Court.

(14) Where a determination has been or is made under clause (I) or (II) of subsection (2)(a)(ii) in relation to a work or works of a person, subsection (3)(a) shall not apply to any other work of that person that is in the same category as such work or works and is or was first published, produced or sold on or after the 3rd day of May, 1994, unless that other work is one that complies with the guidelines under subsection (12) for the time being in force and would qualify to be determined by the Revenue Commissioners as an original or creative work and as having, or being generally recognised as having, cultural or artistic merit.

(15) On application to the Revenue Commissioners in that behalf by any person, the Revenue Commissioners shall supply the person free of charge with a copy of any guidelines under subsection (12) for the time being in force.

Expenses of members of judiciary.

[FA94 s164]

196. —(1) In this section, “a member of the Judiciary” means—

(a) a judge of the Supreme Court,

(b) a judge of the High Court,

(c) a judge of the Circuit Court, or

(d) a judge of the District Court.

(2) An allowance payable by means of an annual sum to a member of the Judiciary in accordance with section 5 of the Courts of Justice Act, 1953 , and which has been determined, in accordance with subsection (2)(c) of that section, by the Minister for Justice, Equality and Law Reform in consultation with the Minister for Finance to be in full settlement of the expenses which such a person is obliged to incur in the performance of his or her duties as a member of the Judiciary, and which are not otherwise reimbursed either directly or indirectly out of moneys provided by the Oireachtas, shall be exempt from income tax and shall not be reckoned in computing income for the purposes of the Income Tax Acts.

(3) Sections 114 and 115 shall not apply in relation to expenses in full settlement of which an allowance referred to in subsection (2) is payable, and no claim shall lie under those sections in respect of those expenses.

Bonus or interest paid under instalment savings schemes.

[FA70 s18]

197. —Any bonus or interest payable to an individual under an instalment savings scheme (within the meaning of section 53 of the Finance Act, 1970 ) shall be disregarded for the purposes of the Income Tax Acts if, or in so far as, the bonus or interest is payable in respect of an amount not exceeding the amount permitted under the scheme to be paid by the individual.

Certain interest not to be chargeable.

[FA95 s40]

198. —Notwithstanding any other provision of the Income Tax Acts but without prejudice to any charge under the Corporation Tax Acts on the profits of such person, a person not ordinarily resident in the State shall not be chargeable to income tax in respect of interest paid by a company in the course of carrying on relevant trading operations within the meaning of section 445 or 446 .

Interest on certain securities.

[ITA67 s345; FA74 s86 and Sch 2 PtI]

199. —Income tax shall not be chargeable in respect of the interest on securities issued by the Minister for Finance for the purpose of being used in payment of income tax, and such interest shall not be reckoned in computing income for the purposes of the Income Tax Acts.

Certain foreign pensions.

[F(MP)A68 s9; FA97 s146(1) and Sch9 PtI par3]

200. —(1) In this section, “tax”, in relation to any country, means a tax which is chargeable and payable under the law of that country and which corresponds to income tax in the State.

(2) This section shall apply to any pension, benefit or allowance which—

(a) is given in respect of past services in an office or employment or is payable under the provisions of the law of the country in which it arises which correspond to the provisions of Chapter 12, 16 or 17 of Part II of, or Chapter 4 or 6 of Part III of, the Social Welfare (Consolidation) Act, 1993, or any subsequent Act together with which that Act may be cited, and

(b) if it were received by a person who, for the purposes of tax of the country in which it arises, is resident in that country and is not resident elsewhere, would not be regarded as income for those purposes.

(3) In section 18 (2), the reference in paragraph (f) of Case III to income arising from possessions outside the State shall be deemed not to include a reference to any pension, benefit or allowance to which this section applies.

Exemptions and reliefs in respect of tax under section 123 .

[ITA67 s115 and Sch3 pars 12 and 13; FA72 s13(4) and Sch1 PtIII par2; FA80 s10(1)(a) and (c); FA92 s18(2); FA93 s7(1) and s8(a); FA97 s12]

201. —(1) (a) In this section and in Schedule 3

the basic exemption” means £6,000 together with £500 for each complete year of the service, up to the relevant date, of the holder in the office or employment in respect of which the payment is made;

foreign service”, in relation to an office or employment, means service such that—

(i) tax was not chargeable in respect of the emoluments of the office or employment,

(ii) the office or employment being an office or employment within Schedule E, tax under that Schedule was not chargeable in respect of the whole of the emoluments of that office or employment, or

(iii) the office or employment being regarded as a possession in a place outside the State within the meaning of Case III of Schedule D, tax in respect of the income arising from that office or employment did not fall to be computed in accordance with section 71 (1);

the relevant date”, in relation to a payment not being a payment in commutation of annual or other periodical payments, means the date of the termination or change in respect of which it is made and, in relation to a payment in commutation of annual or other periodical payments, means the date of the termination or change in respect of which those payments would have been made.

(b) In this section—

control”, in relation to a body corporate, means the power of a person to secure—

(i) by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or

(ii) by virtue of any power conferred by the articles of association or other document regulating that or any other body corporate,

that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person and, in relation to a partnership, means the right to a share of more than 50 per cent of the assets, or of more than 50 per cent of the income, of the partnership;

references to an employer or to a person controlling or controlled by an employer include references to such employer's or such person's successors.

(c) For the purposes of this section and of Schedule 3 , offices or employments in respect of which payments to which section 123 applies are made shall be treated as held under associated employers if, on the date which is the relevant date in relation to any of those payments, one of those employers is under the control of the other or of a third person who controls or is under the control of the other on that or any other such date.

(2) Income tax shall not be charged by virtue of section 123 in respect of the following payments—

(a) any payment made in connection with the termination of the holding of an office or employment by the death of the holder, or made on account of injury to or disability of the holder of an office or employment;

(b) any sum chargeable to tax under section 127 ;

(c) a benefit provided in pursuance of any retirement benefits scheme where under section 777 the employee (within the meaning of that section) was chargeable to tax in respect of sums paid, or treated as paid, with a view to the provision of the benefit;

(d) a benefit paid in pursuance of any scheme or fund described in section 778 (1).

(3) Subsection (2)(d) shall not apply to the following payments—

(a) a termination allowance payable in accordance with section 5 of the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992 , and any regulations made under that section,

(b) a severance allowance or a special allowance payable in accordance with Part V (inserted by the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992 ) of the Ministerial and Parliamentary Offices Act, 1938 ,

(c) a special severance gratuity payable under section 7 of the Superannuation and Pensions Act, 1963 , or any analogous payment payable under or by virtue of any other enactment, or

(d) a benefit paid in pursuance of any statutory scheme (within the meaning of Chapter 1 of Part 30 ) established or amended after the 10th day of May, 1997, other than a payment representing normal retirement benefits, which is made in consideration or in consequence of, or otherwise in connection with, the termination of the holding of an office or employment in circumstances—

(I) of redundancy or abolition of office, or

(II) for the purposes of facilitating improvements in the organisation of the employing company, organisation, Department or other body by which greater efficiency or economy can be effected,

and, for the purposes of this paragraph, “normal retirement benefits” means recognised superannuation benefits customarily payable to an individual on retirement at normal retirement date under the relevant statutory scheme, notwithstanding that, in relation to the termination of an office or employment in the circumstances described in this paragraph, such benefits may be paid earlier than the designated retirement date or may be calculated by reference to a period greater than the individual's actual period of service in the office or employment, and includes benefits described as short service gratuities which are calculated on a basis approved by the Minister for Finance.

(4) Income tax shall not be charged by virtue of section 123 in respect of a payment in respect of an office or employment in which the holder's service included foreign service where the foreign service comprised—

(a) in any case, three-quarters of the whole period of service down to the relevant date,

(b) where the period of service down to the relevant date exceeded 10 years, the whole of the last 10 years, or

(c) where the period of service down to the relevant date exceeded 20 years, one-half of that period, including any 10 of the last 20 years.

(5) (a) Income tax shall not be charged by virtue of section 123 in respect of a payment of an amount not exceeding the basic exemption and, in the case of a payment which exceeds that amount, shall be charged only in respect of the excess.

(b) Notwithstanding paragraph (a), where 2 or more payments in respect of which tax is chargeable by virtue of section 123 , or would be so chargeable apart from paragraph (a), are made to or in respect of the same person in respect of the same office or employment, or in respect of different offices or employments held under the same employer or under associated employers, that paragraph shall apply as if those payments were a single payment of an amount equal to that aggregate amount, and the amount of any one payment chargeable to tax shall be ascertained as follows:

(i) where the payments are treated as income of different years of assessment, the amount of the basic exemption shall be deducted from a payment treated as income of an earlier year before any payment treated as income of a later year, and

(ii) subject to subparagraph (i), the amount of the basic exemption shall be deducted rateably from the payments according to their respective amounts.

(6) The person chargeable to income tax by virtue of section 123 in respect of any payment may, before the expiration of 6 years after the end of the year of assessment of which that payment is treated as income, by notice in writing to the inspector claim any such relief in respect of the payment as is applicable to the payment under Schedule 3 and, where such a claim is duly made and allowed, all such repayments and assessments of income tax shall be made as are necessary to give effect to such a claim.

(7) For the purposes of any provision of the Income Tax Acts requiring income of any description to be treated as the highest part of a person's income, that income shall be calculated without regard to any payment chargeable to tax by virtue of section 123 .

Relief for agreed pay restructuring.

[FA97 s14]

202. —(1) (a) In this section—

basic pay”, in relation to a participating employee of a qualifying company, means the employee's emoluments (other than non-pecuniary emoluments) from the company in respect of an employment held with the company;

collective agreement” means an agreement entered into by a company with, or on behalf of, one or more than one body representative of employees of the company where each such body is either the holder of a negotiation licence under the Trade Union Act, 1941 , or is an excepted body within the meaning of section 6 of that Act as amended by the Trade Union Act, 1942 ;

control”, in relation to a qualifying company, means the power of a person to secure—

(i) by means of the holding of shares or the possession of voting power in or in relation to the qualifying company or any other qualifying company, or

(ii) by virtue of any power conferred by the articles of association or any other document regulating the qualifying company or any other qualifying company,

that the affairs of the first-mentioned qualifying company are conducted in accordance with the wishes of such person and, in relation to a partnership, means the right to a share of more than 50 per cent of the assets, or of more than 50 per cent of the income, of the partnership;

emoluments” has the same meaning as in section 472 ;

employment” means an office or employment of profit such that any emoluments of the office or employment of profit are to be charged to tax under Schedule E;

the Minister” means the Minister for Enterprise, Trade and Employment;

participating employee”, in relation to a qualifying company, means a qualifying employee who is a participant in a relevant agreement with the company;

qualifying company” means a company to which the Minister has issued a certificate under subsection (2) which has not been withdrawn under that subsection;

qualifying employee”, in relation to a qualifying company, means an employee of the company in receipt of emoluments from the company;

reduced basic pay”, in relation to a participating employee, means the basic pay of the employee as reduced by the substantial reduction provided for in the relevant agreement concerned;

relevant agreement”, in relation to a qualifying company, means a collective agreement covering all or substantially all of the qualifying employees of the company—

(a) which provides amongst other things for—

(i) a substantial reduction in the basic pay of the participating employees,

(ii) the payment of the reduced basic pay to the participating employees for the duration of the relevant period, and

(iii) the payment to the participating employees of a lump sum to compensate for that reduction,

and

(b) which is registered with the Labour Relations Commission;

relevant date”, in relation to a relevant agreement, means the date the relevant agreement was registered with the Labour Relations Commission;

relevant period”, in relation to a relevant agreement, means the period of 5 years commencing on the relevant date in relation to that agreement;

specified amount”, in relation to a participating employee, means £6,000 together with £200 for each complete year of service (subject to a maximum of 20 years), up to the relevant date, of the employee in the service of the qualifying company.

(b) For the purposes of this section—

(i) a reduction in the basic pay of a participating employee shall not be regarded as substantial unless it amounts to at least 10 per cent of the average for one year of the employee's basic pay ascertained by reference to such pay for the 2 year period ending on the relevant date, and

(ii) employments in respect of which payments to which this section applies are made shall be treated as held with associated qualifying companies if, on the date of any of those payments, one of those companies is under the control of the other company or of a third person who controls or is under the control of the other company on that or any other such date.

(2) (a) The Minister, on the making of an application in that behalf by a company, may, in accordance with guidelines laid down for the purpose by the Minister with the agreement of the Minister for Finance, give a certificate to a company stating that for the purposes of this section it may be treated as a qualifying company.

(b) The Minister may not grant a certificate to a company under this subsection unless the Minister is satisfied, on advice from the Labour Relations Commission, that—

(i) the company is faced with an actual or imminent substantial adverse change to its competitive environment which will determine its survival,

(ii) to meet that change and achieve its survival, it is necessary for the company to enter into a relevant agreement with its qualifying employees, and

(iii) the relevant agreement into which it is proposed to enter is designed for the sole purpose of addressing, and can be reasonably expected to address, that change.

(c) An application under paragraph (a) shall be in such form as the Minister may direct and shall contain such information in relation to the company, its trade or business and the terms of the relevant agreement into which it proposes to enter with its qualifying employees as may be specified in the guidelines referred to in that paragraph.

(d) A certificate issued by the Minister under paragraph (a) shall contain such conditions as the Minister considers appropriate and specifies in the certificate.

(e) Any cost incurred by the Labour Relations Commission in providing advice to the Minister in accordance with paragraph (b) shall be reimbursed by the company concerned to the Commission.

(f) Where during the relevant period a qualifying company fails to comply with any of the conditions to which a certificate given to it under paragraph (a) is subject, the Minister may, by notice in writing to the company, revoke the certificate.

(g) The Minister may not give a certificate under paragraph (a) at any time on or after the 6th day of April, 2000.

(3) (a) An agreement shall not be a relevant agreement for the purposes of this section unless and until it has been registered with the Labour Relations Commission.

(b) A qualifying company shall, within the period of one month from the date of each of the first 5 anniversaries of the relevant date or such longer period as the Labour Relations Commission may in writing allow, confirm to the Commission, in such form as the Commission shall direct, that all the terms of the relevant agreement, to the extent that they are still relevant, continue to be in force.

(4) Nothing in this section shall be construed as preventing a participating employee from receiving during the relevant period an increase in basic pay—

(a) which is—

(i) provided for under the terms of the agreement known as Partnership 2000 for Inclusion, Employment and Competitiveness entered into by the Government and the Social Partners in December, 1996, or any similar increase under an agreement, whether negotiated on a national basis or otherwise, which succeeds that agreement or which succeeds an agreement which succeeds the first-mentioned agreement, or

(ii) part of an incremental scale under the terms of the employee's contract of employment and which was in place 12 months before the relevant date,

and

(b) which is determined by reference to the employee's reduced basic pay or that pay as subsequently increased as provided for in paragraph (a).

(5) (a) This section shall apply to a payment made to a participating employee by a qualifying company under a relevant agreement.

(b) A payment to which this section applies shall, to the extent that the payment does not exceed the specified amount, be exempt from any charge to income tax.

(c) Where 2 or more payments to which this section applies are made to or in respect of the same person in respect of the same employment or in respect of different employments held with the same qualifying company or an associated qualifying company, this subsection shall apply as if those payments were a single payment of an amount equal to the aggregate of those payments, and the amount of any payment chargeable to income tax shall be ascertained as follows:

(i) where the payments are treated as income of different years of assessment, the specified amount shall be deducted from a payment treated as income of an earlier year before any payment treated as income of a later year, and

(ii) subject to subparagraph (i), the specified amount shall be deducted from a payment made earlier in a year of assessment before any payment made later in that year.

(6) Where during the relevant period—

(a) the Minister revokes, in accordance with paragraph (f) of subsection (2), a certificate given to a company under paragraph (a) of that subsection,

(b) a qualifying company fails to meet the requirements of subsection (3)(b), or

(c) a participating employee receives an increase in reduced basic pay other than as provided for in subsection (4),

then, any relief granted under this section, where paragraph (a) or (b) applies, to all the participating employees of the company or, where paragraph (c) applies, to the participating employee concerned, shall be withdrawn by the making of an assessment to income tax under Case IV of Schedule D for the year of assessment for which the relief was granted.

(7) Where during the relevant period a participating employee receives a payment from a qualifying company, other than a payment to which this section applies, which is chargeable to tax by virtue of section 123 , any relief from tax in respect of that payment under section 201 (5) or Schedule 3 shall be reduced by the amount of any relief given under this section in respect of a payment to which this section applies made in the relevant period.

(8) Section 201 and Schedule 3 and section 480 shall not apply in relation to a payment to which this section applies.

Payments in respect of redundancy.

[FA 68 s37(1) and (2)]

203. —(1) In this section, “lump sum” and “weekly payment” have the same meanings respectively as in the Redundancy Payments Act, 1967 .

(2) Any lump sum or weekly payment and any payment to or on behalf of an employed or unemployed person in accordance with regulations under section 46 of the Redundancy Payments Act, 1967 , shall be exempt from income tax under Schedule E.

Military and other pensions, gratuities and allowances.

[ITA67 s340(1), (2)(a), (b) and (c)]

204. —(1) This section shall apply to—

(a) all wound and disability pensions, and all increases in such pensions, granted under the Army Pensions Acts, 1923 to 1980, or those Acts and any subsequent Act together with which those Acts may be cited; but, where the amount of any pension to which this paragraph applies is not solely attributable to disability, the relief conferred by this section shall extend only to such part as is certified by the Minister for Defence to be attributable to disability;

(b) all gratuities in respect of wounds or disabilities similarly granted under any enactment referred to in paragraph (a);

(c) military gratuities and demobilisation pay granted to officers of the National Forces or the Defence Forces of Ireland on demobilisation;

(d) deferred pay within the meaning of any regulations under the Defence Act, 1954 , which is credited to the pay account of a member of the Defence Forces;

(e) gratuities granted in respect of service with the Defence Forces.

(2) Income to which this section applies shall be exempt from income tax and shall not be reckoned in computing income for the purposes of the Income Tax Acts.

Veterans of War of Independence.

[FA82 s9(1) and (2)]

205. —(1) In this section—

military service” means the performance of duty as a member of an organisation to which Part II of the Army Pensions Act, 1932 , applies, but includes military service within the meaning of that Part of that Act, military service within the meaning of the Military Service Pensions Act, 1924 , and service in the Forces within the meaning of the Military Service Pensions Act, 1934 ;

relevant legislation” means the Army Pensions Acts, 1923 to 1980, the Military Service Pensions Acts, 1924 to 1964, the Connaught Rangers (Pensions) Acts, 1936 to 1964, any Act amending any of those Acts and any regulation (in so far as it affects a pension, allowance, benefit or gratuity under any of those Acts or any other Act amending any of those Acts) made under the Pensions (Increase) Act, 1964 , or under any of those Acts or any other Act amending any of those Acts;

relevant military service” means military service during any part of a period referred to in section 5 (2) of the Army Pensions Act, 1932 , or, in the case of a qualified person within the meaning of the Connaught Rangers (Pensions) Act, 1936 , the circumstances referred to in paragraphs (a), (b) and (c) of section 2 of that Act;

veteran of the War of Independence” means a person who was—

(a) a member of an organisation to which Part II of the Army Pensions Act, 1932 , applies, or a qualified person within the meaning of the Connaught Rangers (Pensions) Act, 1936 , and

(b) engaged in relevant military service.

(2) A pension, allowance, benefit or gratuity, in so far as it is related to the relevant military service of a veteran of the War of Independence, or to an event which happened during or in consequence of such relevant military service, which is paid under the relevant legislation to—

(a) such veteran, or

(b) the wife, widow, child or other dependant or partial dependant of such veteran,

shall be exempt from income tax and shall not be reckoned in computing income for the purposes of the Income Tax Acts.

Income from investments under Social Welfare (Consolidation) Act, 1993.

[ITA67 s338]

206. —The Minister for Finance shall be entitled to exemption from tax in respect of the income derived from investments made under section 7 of the Social Welfare (Consolidation) Act, 1993 .

Rents of properties belonging to hospitals and other charities.

[ITA67 s333 and s339(2) and (4); F(MP)A68 s3(4) and Sch PtIII; FA69 s65(1) and Sch5 PtI; CTA76 s140(1) and Sch2 PtI par13]

207. —(1) Exemption shall be granted—

(a) from income tax chargeable under Schedule D in respect of the rents and profits of any property belonging to any hospital, public school or almshouse, or vested in trustees for charitable purposes, in so far as those rents and profits are applied to charitable purposes only;

(b) from income tax chargeable—

(i) under Schedule C in respect of any interest, annuities, dividends or shares of annuities,

(ii) under Schedule D in respect of any yearly interest or other annual payment, and

(iii) under Schedule F in respect of any distribution,

forming part of the income of any body of persons or trust established for charitable purposes only, or which, according to the rules or regulations established by statute, charter, decree, deed of trust or will, are applicable to charitable purposes only, and in so far as the same are applied to charitable purposes only;

(c) from income tax chargeable under Schedule C in respect of any interest, annuities, dividends or shares of annuities in the names of trustees applicable solely towards the repairs of any cathedral, college, church or chapel, or any building used solely for the purposes of divine worship, and in so far as the same are applied to those purposes.

(2) (a) This subsection shall apply to every gift (within the meaning of the Charities Act, 1961 ) made before the 1st day of July, 1961, which, if it had been made on or after that day, would by virtue of section 50 of that Act (which relates to gifts for graves and memorials) have been, to the extent provided in that section, a gift for charitable purposes.

(b) Subsection (1) shall apply in relation to a gift to which this subsection applies as if the gift had been made on or after the 1st day of July, 1961.

(3) Every claim under this section shall be verified by affidavit, and proof of the claim may be given by the treasurer, trustee or any duly authorised agent.

(4) A person who makes a false or fraudulent claim for exemption under this section in respect of any interest, annuities, dividends or shares of annuities charged or chargeable under Schedule C shall forfeit the sum of £100.

Lands owned and occupied, and trades carried on by, charities.

[ITA67 s334(1)(a) and (c), (2A) and (3); FA69 s33(1) and Sch4 PtI and s65(1) and Sch5 PtI; FA81 s11]

208. —(1) In this section, “charity” means any body of persons or trust established for charitable purposes only.

(2) Exemption shall be granted—

(a) from income tax chargeable under Case I (b) of Schedule D by virtue of section 18 (2) where the profits or gains so chargeable arise out of lands, tenements or hereditaments which are owned and occupied by a charity;

(b) from income tax chargeable under Schedule D in respect of the profits of a trade carried on by any charity, if the profits are applied solely to the purposes of the charity and either—

(i) the trade is exercised in the course of the actual carrying out of a primary purpose of the charity, or

(ii) the work in connection with the trade is mainly carried on by beneficiaries of the charity.

(3) Subsection (2)(b) shall apply in respect of the profits of a trade of farming carried on by a charity as if the words after “solely to the purposes of the charity” were deleted.

Bodies for the promotion of Universal Declaration of Human Rights and the implementation of European Convention for the Protection of Human Rights and Fundamental Freedoms.

[FA73 s20]

209. —Where any body of persons having consultative status with the United Nations Organisation or the Council of Europe—

(a) has as its sole or main object the promotion of observance of the Universal Declaration of Human Rights or the implementation of the European Convention for the Protection of Human Rights and Fundamental Freedoms or both the promotion of observance of that Declaration and the implementation of that Convention, and

(b) is precluded by its rules or constitution from the direct or indirect payment or transfer, otherwise than for valuable and sufficient consideration, to any of its members of any of its income or property by means of dividend, gift, division, bonus or otherwise however by means of profit,

there shall, on a claim in that behalf being made to the Revenue Commissioners, be allowed, in the case of the body, such exemption from income tax as is to be allowed under section 207 in the case of a body of persons established for charitable purposes only the whole income of which is applied to charitable purposes only.

The Great Book of Ireland Trust.

[FA91 s13]

210. —(1) In this section, “the Trust” means “The Great Book of Ireland Trust” established by trust deed dated the 12th day of December, 1990, for the purposes of—

(a) making and carrying to completion and selling a unique manuscript volume (in this section referred to as “The Great Book of Ireland”), and

(b) using the proceeds of the sale of The Great Book of Ireland for the benefit of—

(i) a company incorporated on the 5th day of August, 1986, as Clashganna Mills Trust Limited, and

(ii) a company incorporated on the 1st day of March, 1991, as Poetry Ireland Limited.

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

(a) income arising to the trustees of the Trust in respect of the sale by it of The Great Book of Ireland, and

(b) payments made to the companies referred to in subsection (1)(b) under the Trust by the trustees of the Trust,

shall be disregarded for the purposes of those Acts.

Friendly societies.

[ITA67 s335 and s339(2) and (4); FA67 s7; F(MP)A68 s3(4) and Sch PtIII; FA73 s44; CTA76 s140(1) and Sch2 PtI par14]

211. —(1) An unregistered friendly society whose income does not exceed £160 shall be entitled to exemption from income tax, and a registered friendly society which is precluded by statute or by its rules from assuring to any person a sum exceeding £1,000 by means of gross sum, or £52 a year by means of annuity, shall be entitled to exemption from income tax under Schedules C, D and F.

(2) A registered friendly society shall not be entitled to exemption from tax under this section in relation to any year of assessment if the Revenue Commissioners determine, for the purposes of entitlement to exemption for that year, that the society does not satisfy the following conditions—

(a) that it was established solely for any or all of the purposes set out in section 8(1) of the Friendly Societies Act, 1896, and not for the purpose of securing a tax advantage, and

(b) that since its establishment it has engaged solely in activities directed to achieving the purposes for which it was so established and has not engaged in trading activities, other than by means of insurance in respect of members, with a view to the realisation of profits.

(3) In making a determination under this section in relation to a registered friendly society, the Revenue Commissioners shall consider any evidence in relation to the matter submitted to them by the society.

(4) In any case where a friendly society is aggrieved by a determination of the Revenue Commissioners under this section in relation to the society, the society shall be entitled to appeal to the Appeal Commissioners against the determination of the Revenue Commissioners and the Appeal Commissioners shall hear and determine the appeal as if it were an appeal against an assessment to income tax, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

(5) Every claim under this section shall be verified by affidavit, and proof of the claim may be given by the treasurer, trustee or any duly authorised agent.

(6) A person who makes a false or fraudulent claim for exemption under this section in respect of any interest, annuities, dividends or shares of annuities charged or chargeable under Schedule C shall forfeit the sum of £100.

Credit unions.

[FA72 s43; CTA76 s164 and Sch 3 PtII]

212. —With effect from the date of its registration under the Industrial and Provident Societies Acts, 1893 to 1978, a credit union shall be entitled to exemption from income tax.

Trade unions.

[ITA67 s336 and s339(2) and (4); F(MP)A68 s3(4) and Sch PtIII; CTA76 s140 and Sch2 PtI par15; FA80 s11]

213. —(1) In this section, “provident benefits” includes any payment expressly authorised by the registered rules of the trade union and made to a member during sickness or incapacity from personal injury or while out of work, or to an aged member by means of superannuation, or to a member who has met with an accident, or has lost his or her tools by fire or theft, and includes a payment in discharge or aid of funeral expenses on the death of a member, or the wife of a member, or as provision for the children of a deceased member.

(2) A registered trade union which is precluded by statute or by its rules from assuring to any person a sum exceeding £2,000 by means of gross sum or £750 a year by means of annuity shall be entitled to exemption from income tax under Schedules C, D and F in respect of its interest and dividends which are applicable and applied solely for the purpose of provident benefits.

(3) Every claim under this section shall be verified by affidavit, and proof of the claim may be given by the treasurer, trustee or any duly authorised agent.

(4) A person who makes a false or fraudulent claim for exemption under this section in respect of any interest, annuities, dividends or shares of annuities charged or chargeable under Schedule C shall forfeit the sum of £100.

Local authorities, etc.

[FA90 s13]

214. —(1) In this section, “local authority” has the meaning assigned to it by section 2 (2) of the Local Government Act, 1941 , and includes a body established under the Local Government Services (Corporate Bodies) Act, 1971 .

(2) This section shall apply to each of the following bodies—

(a) a local authority;

(b) a health board;

(c) a vocational education committee established under the Vocational Education Acts, 1930 to 1993;

(d) a committee of agriculture established under the Agriculture Acts, 1931 to 1980.

(3) Notwithstanding any provision of the Income Tax Acts, other than Chapter 4 of Part 8 , income arising to a body to which this section applies shall be exempt from income tax.

Certain profits of agricultural societies.

[ITA67 s348]

215. —(1) In this section, “agricultural society” means any society or institution established for the purpose of promoting the interests of agriculture, horticulture, livestock breeding or forestry.

(2) Any profits or gains arising to an agricultural society from an exhibition or show held for the purposes of the society shall, if they are applied solely to the purposes of the society, be exempt from income tax.

Profits from lotteries.

[ITA67 s350]

216. —Exemption from income tax shall be granted in respect of profits from a lottery to which a licence under Part IV of the Gaming and Lotteries Act, 1956, applies.