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7 1976

CORPORATION TAX ACT, 1976

PART XV

Interpretation and Supplemental

Interpretation.

155. —(1) In this Act and in any Act passed after this Act “the Corporation Tax Acts”, except in so far as the context otherwise requires, means this Act (including provisions relating to income tax), together with the Income Tax Acts so far as those Acts apply for purposes of corporation tax and any other enactments relating to corporation tax.

(2) In this Act and in any Act passed after this Act “the Tax Acts”, except in so far as the context otherwise requires, means the Income Tax Acts (as defined in section 3 of the Income Tax Act, 1967 ) and the Corporation Tax Acts.

(3) Except in so far as the context otherwise requires, in this Act, and in any enactment passed after this Act which by any express provision is to be construed as one with the Tax Acts, “tax”, where neither income tax nor corporation tax is specified, means either of those taxes.

(4) Subsection (3) is without prejudice to the provisions of section 11 which apply income tax law for certain purposes of corporation tax, and accordingly the employment of “income tax” rather than “tax” in any provision of the Income Tax Acts is not a conclusive indication that that provision is not applied to corporation tax by the said section 11.

(5) For the purposes of the Corporation Tax Acts, except in so far as the context otherwise requires—

accounting date” means the date to which a company makes up its accounts and “period of account” means the period for which it does so;

allowable loss” does not include, for the purposes of corporation tax in respect of chargeable gains, a loss accruing to a company in such circumstances that if a gain accrued the company would be exempt from corporation tax in respect of it;

branch or agency” means any factorship, agency, receivership, branch or management;

chargeable gains” has the meaning given by section 1 (5) (c);

charges on income” has the meaning given by section 10 (2);

close company” has the meaning given by sections 94 and 95;

company” has the meaning given by section 1 (5) (a);

distribution” has the meaning given by Part IX with sections 96 and 97;

the financial year 1974” has the meaning given by section 1 (5) (b);

the financial year” followed by a reference to the year 1975 or any later year means the year beginning on the 1st day of January of such year;

franked investment income” and “franked payment” shall be construed in accordance with section 24;

group relief” has the meaning given by section 107;

interest” means both annual or yearly interest and interest other than annual or yearly interest;

ordinary share capital”, in relation to a company, means all the issued share capital (by whatever name called) of the company, other than capital the holders whereof have a right to a dividend at a fixed rate, but have no other right to share in the profits of the company;

preference dividend” means a dividend payable on a preferred share or preferred stock at a fixed rate per cent. or, where a dividend is payable on a preferred share or preferred stock partly at a fixed rate per cent. and partly at a variable rate, such part of that dividend as is payable at a fixed rate per cent.;

standard rate per cent.” for a year of assessment means 35 where the standard rate for that year is 35 per cent. and similarly as regards any reference to the standard rate per cent. for a year of assessment for which the standard rate is other than 35 per cent.;

tax credit” means a credit under section 88;

a source of income is “within the charge to” corporation tax or income tax if that tax is chargeable on the income arising from it, or would be so chargeable if there were any such income, and references to a person, or to income, being within the charge to tax, shall be similarly construed.

(6) Any reference in this Act to any other enactment shall, unless the context otherwise requires, be construed as a reference to that enactment as amended or extended by any other enactment, including this Act.

(7) In the Corporation Tax Acts—

(a) a reference to a Part, section or schedule is to a Part or section of, or schedule to, the Act in which the reference occurs, and

(b) a reference to a subsection, paragraph or subparagraph is to the subsection, paragraph or subparagraph of the provision (including a schedule) in which the reference occurs,

unless it is indicated that reference to some other enactment or provision is intended.

(8) In the Corporation Tax Acts, words descriptive of any enactment are intended for convenience of reference only and shall not be used as an aid to the construction of the enactment to which they refer.

(9) References in the Corporation Tax Acts to distributions or payments received by a company apply to any received by another person on behalf of or in trust for the company but not to any received by the company on behalf of or in trust for another person.

(10) References in the Corporation Tax Acts to an amount of profits on which corporation tax falls finally to be borne are references to the amount of those profits after making all deductions and giving all reliefs that for the purposes of corporation tax are made or given from or against those profits, including deductions and reliefs which under any provision are treated as reducing them for those purposes.

(11) Except as otherwise provided by the Corporation Tax Acts and except in so far as the context otherwise requires, words and expressions used in the Income Tax Acts have the same meaning in the Corporation Tax Acts as in those Acts; but no provision of the Corporation Tax Acts as to the interpretation of any word or expression, other than a provision expressed to extend to the use of that word or expression in the Income Tax Acts, shall be taken to affect its meaning in those Acts as they apply for the purposes of corporation tax.

(12) For the purposes of the Corporation Tax Acts dividends shall, except as otherwise provided, be treated as paid on the date when they become due and payable.

(13) Except as otherwise provided by the Corporation Tax Acts, any apportionment to different periods which falls to be made under the Corporation Tax Acts shall be made on a time basis according to the respective lengths of those periods.

Subsidiaries.

156. —(1) For the purposes of the Corporation Tax Acts a company shall be deemed to be—

(a) a “51 per cent. subsidiary” of another company if and so long as more than 50 per cent. of its ordinary share capital is owned directly or indirectly by that other company,

(b) a “75 per cent. subsidiary” of another company if and so long as not less than 75 per cent. of its ordinary share capital is owned directly or indirectly by that other company,

(c) a “90 per cent. subsidiary” of another company if and so long as not less than 90 per cent. of its ordinary share capital is directly owned by that other company.

(2) In subsection (1) (a) (b) “owned directly or indirectly” by a company means owned, whether directly or through another company or other companies or partly directly and partly through another company or other companies.

(3) In this section references to ownership shall be construed as references to beneficial ownership.

(4) For the purposes of this section the amount of ordinary share capital of one company owned by a second company through another company or other companies, or partly directly and partly through another company or other companies, shall be determined in accordance with the following provisions of this section.

(5) Where, in the case of a number of companies, the first directly owns ordinary share capital of the second and the second directly owns ordinary share capital of the third, then, for the purposes of this section, the first shall be deemed to own ordinary share capital of the third through the second, and, if the third directly owns ordinary share capital of a fourth, the first shall be deemed to own ordinary share capital of the fourth through the second and third, and the second shall be deemed to own ordinary share capital of the fourth through the third, and so on.

(6) In this section—

(a) any number of companies of which the first directly owns ordinary share capital of the next and the next directly owns ordinary share capital of the next but one and so on, and, if they are more than three, any three or more of them, are referred to as “a series”;

(b) in any series—

(i) that company which owns ordinary share capital of another through the remainder is referred to as “the first owner”;

(ii) that other company the ordinary share capital of which is so owned is referred to as “the last owned company”;

(iii) the remainder, if one only, is referred to as an “intermediary” and, if more than one, are referred to as “a chain of intermediaries”;

(c) a company in a series which directly owns ordinary share capital of another company in the series is referred to as an “owner”;

(d) any two companies in a series of which one owns ordinary share capital of the other directly, and not through one or more of the other companies in the series, are referred to as being directly related to one another.

(7) Where every owner in a series owns the whole of the ordinary share capital of the company to which it is directly related, the first owner shall be deemed to own through the intermediary or chain of intermediaries the whole of the ordinary share capital of the last owned company.

(8) Where one of the owners in a series owns a fraction of the ordinary share capital of the company to which it is directly related, and every other owner in the series owns the whole of the ordinary share capital of the company to which it is directly related, the first owner shall be deemed to own that fraction of the ordinary share capital of the last owned company through the intermediary or chain of intermediaries.

(9) Where—

(a) each of two or more of the owners in a series owns a fraction, and every other owner in the series owns the whole, of the ordinary share capital of the company to which it is directly related; or

(b) every owner in a series owns a fraction of the ordinary share capital of the company to which it is directly related;

the first owner shall be deemed to own through the intermediary or chain of intermediaries such fraction of the ordinary share capital of the last owned company as results from the multiplication of those fractions.

(10) Where the first owner in any series owns a fraction of the ordinary share capital of the last owned company in that series through the intermediary or chain of intermediaries in that series, and also owns another fraction or other fractions of the ordinary share capital of the last owned company, either—

(a) directly, or

(b) through an intermediary or intermediaries which is not a member or are not members of that series, or

(c) through a chain or chains of intermediaries of which one or some or all are not members of that series, or

(d) in a case where the series consists of more than three companies, through an intermediary or intermediaries which is a member or are members of the series, or through a chain or chains of intermediaries consisting of some but not all of the companies of which the chain of intermediaries in the series consists,

then, for the purpose of ascertaining the amount of the ordinary share capital of the last owned company owned by the first owner, all those fractions shall be aggregated and the first owner shall be deemed to own the sum of those fractions.

Connected persons.

157. —(1) For the purposes of, and subject to, the provisions of the Corporation Tax Acts which apply this section, any question whether a person is connected with another shall be determined in accordance with the following provisions of this section (any provision that one person is connected with another being taken to mean that they are connected with one another).

(2) A person is connected with an individual if that person is the individual's husband or wife, or is a relative, or the husband or wife of a relative, of the individual or of the individual's husband or wife.

(3) A person, in his capacity as trustee of a settlement, is connected with any individual who in relation to the settlement is a settlor, with any person who is connected with such an individual and with a company which, in accordance with subsection (10), is deemed to be connected with that settlement (“settlement” and “settlor” having for the purposes of this subsection the meanings assigned to them by subsection (9)).

(4) Except in relation to acquisitions or disposals of partnership assets pursuant to bona fide commercial arrangements, a person is connected with any person with whom he is in partnership, and with the husband or wife or a relative of any individual with whom he is in partnership.

(5) A company is connected with another company—

(a) if the same person has control of both, or a person has control of one and persons connected with him, or he and persons connected with him, have control of the other, or

(b) if a group of two or more persons has control of each company, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person with whom he is connected.

(6) A company is connected with another person if that person has control of it or if that person and persons connected with him together have control of it.

(7) Any two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with one another and with any person acting on the directions of any of them to secure or exercise control of the company.

(8) In this section—

control” shall be construed in accordance with section 102 (meaning of “associated company” and “control”),

relative” means brother, sister, ancestor or lineal descendant.

(9) In this section, “settlement” includes any disposition, trust, covenant, agreement or arrangement, and “settlor”, in relation to a settlement, means any person by whom the settlement was made; and a person shall be deemed for the purposes of this section to have made a settlement if he has made or entered into the settlement directly or indirectly and in particular (but without prejudice to the generality of the preceding words) if he has provided or undertaken to provide funds directly or indirectly for the purpose of the settlement, or has made with any other person a reciprocal arrangement for that other person to make or enter into the settlement.

(10) For the purposes of this section, a company shall be deemed to be connected with a settlement in any accounting period if it is at any time in the period a close company (or only not a close company because it is not resident in the State) and the participators then include the trustees of or a beneficiary under the settlement.

Meaning of “control”.

158. —For the purposes of, and subject to, the provisions of the Corporation Tax Acts which apply this section, “control”, in relation to a company, means the power of a person to secure, by means of the holding of shares or the possession of voting power in or in relation to that or any other company, or by virtue of any powers conferred by the articles of association or other document regulating that or any other company, that the affairs of the first-mentioned company 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 one-half of the assets, or of more than one-half of the income, of the partnership.

Chargeable gains accruing to non-resident companies.

159. —If any tax payable by any company by virtue of section 36 (2) of the Capital Gains Tax Act, 1975 (under which shareholders in a non-resident company may be taxed in respect of a chargeable gain accruing to the company), is paid by the company to which the chargeable gain accrues, or in a case under subsection (8) of the said section is paid by any such other company, the amount so paid shall not for the purposes of corporation tax be regarded as a payment to the company by which the tax was originally payable.

Individuals resident abroad: tax credit.

160. —An individual who, having made a claim in that behalf, is entitled to relief under Part VI of the Income Tax Act, 1967 , by virtue of section 153 (2) of that Act (personal reliefs for certain non-residents) in respect of any year of assessment shall be entitled to a tax credit in respect of any distribution received by him in that year to the same extent as if he were resident in the State and section 67 (distributions to non-resident individuals out of profits from exports) and section 83 (4) (Schedule F) shall not have effect in relation to such an individual.

Rectification of excessive set-off etc. of tax credit.

161. —(1) If an inspector discovers that any set-off or payment of tax credit ought not to have been made, or is or has become excessive, the inspector may make any such assessments as may in his judgment be required for recovering any tax that ought to have been paid or any payment of tax credit that ought not to have been made and generally for securing that the resulting liabilities to tax of the persons concerned are what they would have been if only such set-offs or payments had been made as ought to have been made.

(2) Part XIV (Administration) shall apply to any assessment under this section for recovering a payment of tax credit as if it were an assessment to income tax for the year of assessment, or, in the case of a company, corporation tax for the accounting period, in respect of which the payment was claimed and as if that payment represented a loss of tax to the Exchequer; and any sum charged by any such assessment shall, subject to any appeal against the assessment, be due within fourteen days after the issue of the notice of assessment.

Surcharge on undistributed income of service companies.

162. —(1) Subject to subsection (2), in this section “service company” means—

(a) a close company whose business consists of or includes the carrying on of a profession or the provision of professional services,

(b) a close company having or exercising an office or employment, or

(c) a close company whose business consists of or includes the provision of services or facilities of whatsoever nature to or for—

(i) a company within either of the categories referred to in paragraphs (a) and (b),

(ii) an individual who carries on a profession,

(iii) a partnership which carries on a profession,

(iv) a person who has or exercises an office or employment, or

(v) a person or partnership connected with any person or partnership referred to in subparagraphs (i) to (iv):

Provided that the provision by a close company of services or facilities to or for a person or partnership not connected with the company shall be disregarded for the purposes of this paragraph.

(2) Where the principal part of a company's income which is chargeable to corporation tax under Cases I and II of Schedule D and Schedule E is not derived from—

(a) carrying on a profession,

(b) providing professional services,

(c) having or exercising an office or employment,

(d) providing services or facilities (other than services or facilities referred to in the proviso to subsection (1) (c)) to or for any person or partnership referred to in subsection (1) (c) (i) to (v), or

(e) any two or more of the activities specified in paragraphs (a) to (d),

the company shall be deemed not to be a service company.

(3) For the purposes of this section—

(a) a partnership shall be treated as connected with a company or individual (and a company or individual shall be treated as connected with a partnership) if any one of the partners in the partnership is connected with the company or individual,

(b) a partnership shall be treated as connected with another partnership if any one of the partners in the partnership is connected with any one of the partners in the other partnership.

(4) Where for an accounting period of a service company, the aggregate of—

(a) four-fifths of the distributable income, and

(b) one-fifth of the aggregate of the distributable investment income and the distributable estate income

exceeds the distributions of the company for the accounting period, there shall be charged on the company for the accounting period an additional duty of corporation tax (in this section referred to as a surcharge) amounting to 20 per cent. of the excess:

Provided that—

(i) a surcharge shall not be made on the company where the excess is equal to or less than the smaller of the following amounts—

(I) £500, or, if the accounting period is less than twelve months, £500 proportionately reduced, and

(II) where the company has one or more associated companies, £500 divided by one plus the number of those associated companies, or, if the accounting period is less than twelve months, £500 proportionately reduced divided by one plus the number of those associated companies;

(ii) where the excess is greater than the smaller amount on which by virtue of paragraph (i) a surcharge would not be made, the amount of the surcharge shall not be greater than a sum equal to four-fifths of the amount by which the excess is greater than that smaller amount.

(5) The provisions of section 101 (1) shall not apply in relation to a service company but the provisions of section 101 (2) (3) (4) (5) (6) shall apply in relation to a surcharge made under this section as they apply in relation to a surcharge made under the said section 101 with the substitution in section 101 (2) of a reference to subsection (4) of this section for the reference to subsection (1) of that section.

(6) (a) The provisions of section 100 (1) (2) (6) (7) (meaning of distributable income, etc.) shall apply for the purposes of this section as they apply for the purposes of the said section 100 or section 101 as the case may be.

(b) For the purposes of this section—

(i) the income of a company for an accounting period is its income computed for that period as defined in section 100 (3);

(ii) distributable income, distributable investment income and distributable estate income of a company for an accounting period have the meanings assigned to them by section 100 (4) (5) with the substitution for the reference to a trading company in each place where it occurs in section 100 (5) of a reference to a service company.

(7) The provisions of section 157 shall apply for the purposes of this section.

Relief to certain companies liable to foreign tax.

163. —(1) In this section—

accounting period” includes a part of an accounting period;

external tax” means a tax which is chargeable and payable under the law of the territory in which the paying company is resident, being a territory to which this section applies, and which corresponds to Irish corporation tax or income tax or both of those taxes:

Provided that a tax which is payable under the law of a province, state or other part of a country, or which is levied by or on behalf of a municipality or other local body shall, for the purposes of this subsection, be deemed not to correspond to those taxes.

(2) This section applies to every territory other than—

(a) Northern Ireland and Great Britain,

(b) the United States of America, and

(c) a territory with the Government of which arrangements are for the time being in force by virtue of section 361 of the Income Tax Act, 1967 (agreements for relief from double taxation of income).

(3) Where a company (in this section referred to as the investing company) has paid, by deduction or otherwise, or is liable to pay, by reference to any part of its income arising in a territory to which this section applies, tax for any accounting period and it is shown to the satisfaction of the Revenue Commissioners—

(a) that the said part of the investing company's income consists of a dividend, or interest, paid to it by a company resident in the territory (in this section referred to as the paying company) not less than one-half of the voting power in which is controlled, directly or indirectly, by the investing company,

(b) that the said dividend, or interest, arose from the investment in the paying company by the investing company, whether by way of loan or otherwise, of a sum or sums representing—

(i) profits the Irish tax referable to which has been reduced to nil under Chapter IV of Part XXV of the Income Tax Act, 1967 (Profits from Export of Certain Goods), or under Part III of the Finance (Miscellaneous Provisions) Act, 1956 (Profits from Exports), or under Part IV of this Act (Profits from Exports), or

(ii) such proportion of profits the Irish tax referable to which has been reduced otherwise than to nil under the said provisions as is equal to the proportion by which the said Irish tax has been so reduced, or

(iii) profits arising from exempted trading operations which by virtue of Chapter I of Part XXV of the Income Tax Act, 1967 (Profits from Trading within Shannon Airport), or Parts I and II of the Finance (Miscellaneous Provisions) Act, 1958 (Trading within Shannon Airport), or Part V of this Act (Trading within Shannon Airport) have not, in relation to the company by which such operations are carried on, been taken into account for any purpose of the Income Tax Acts or for any purpose of Part V of the Finance Act, 1920 (Corporation Profits Tax), and the enactments amending or extending the said Part, or for any purpose of this Act, and

(c) that the investing company has paid external tax in the said territory in respect of the said part of its income,

the Revenue Commissioners may grant to the investing company in respect of the said accounting period such relief as is just with a view to affording relief in respect of the double taxation of the said part of the investing company's income, but not exceeding whichever of the following is the less, that is to say, one-half of the total of the corporation tax that would, but for this section, be payable by the investing company in respect of the said part of its income or the amount of the external tax paid or payable in the said territory in respect of the said part of its income after deduction of any relief to which the company may be entitled in that territory.

(4) (a) External tax paid by the paying company in respect of its profits shall be taken into account in considering whether any, and if so, what relief ought to be allowed in respect of a dividend paid by the paying company to the investing company, and for the purposes of this section, other than this subsection, such tax, or the appropriate part thereof, shall be regarded as external tax paid by the investing company.

(b) The provisions of paragraph 9 of Schedule 10 to the Income Tax Act, 1967 (relief in respect of foreign tax), shall apply for the purpose of ascertaining the amount of the external tax paid by the paying company which is to be taken into account in relation to any dividend paid by the paying company to the investing company as they apply to the computation of foreign tax to be taken into account for the purposes of the said paragraph 9.

(5) (a) Nothing in this section shall authorise the granting of relief under this section to any company in respect of any accounting period to such an extent as would reduce the aggregate amount (computed after deduction of any relief to which the company may be entitled in the said territory) of the corporation tax and external tax payable by such company in respect of any part of its income of the kind described in subsection (3) (a) arising in a territory to which this section applies below the amount of corporation tax which would be payable by the company in respect of the said part of its income if that part of its income had arisen in the State and had been liable in the hands of the investing company to corporation tax.

(b) In computing for the purposes of paragraph (a) the amount of corporation tax which would be so payable by the company in respect of the said part of its income if that part had arisen in the State—

(i) no deduction for external tax shall be made from the said part of its income, and

(ii) where pursuant to subsection (4) external tax paid by the paying company is regarded as external tax paid by the investing company, the said part of the investing company's income shall be treated as increased by the amount of the external tax which is so regarded.

(6) Relief under this section shall be given as a credit against corporation tax chargeable by reference to the part of the investing company's income referred to in subsection (3) (a).

(7) (a) Any claim for relief under this section shall be made in writing to the inspector not later than six years from the end of the accounting period to which it relates.

(b) An appeal to the Appeal Commissioners shall lie on any question arising under this section in like manner as an appeal would lie against an assessment to corporation tax, and the provisions of the Tax Acts relating to appeals shall apply and have effect accordingly.

Income tax and corporation profits tax repeals.

164. —Each enactment mentioned in the Third Schedule is hereby repealed to the extent specified in column (3) of that Schedule, subject to the provisions of this Act and, in particular, to the provision made at the end of each Part of that Schedule.

Section 38 of Finance Act, 1924, not to apply to corporation tax.

165. Section 38 of the Finance Act, 1924 (recovery of moneys due), shall not have effect in relation to corporation tax.

Amendments and repeals concerning double taxation relief.

166. —(1) Each enactment mentioned in column (2) of Part I of the Fourth Schedule shall be amended as specified in column (3) of that Schedule and shall, as so amended, have effect in relation to corporation tax.

(2) Each enactment mentioned in Part II of the Fourth Schedule is hereby repealed to the extent specified in column (3) of that Schedule.

(3) The amendments and repeals in each Part of the Fourth Schedule are subject to the provisions of this Act and, in particular, to the provision made at the end of that Part.

Computation of payable tax credits where double taxation relief is allowed.

167. —(1) In this section—

the company” means a company making a distribution;

distribution” means a distribution in respect of which the recipient is entitled to a tax credit under section 88;

distributable income” has the meaning given by section 64 (4) (distributions: export sales relief);

double taxation relief” means any credit for tax payable in any territory outside the State which is allowable against Irish corporation tax by virtue of any international agreement having the force of law, including any such credit which under section 363 of the Income Tax Act, 1967 (treatment of dividends for double taxation relief in certain cases), or this section has been taken into account in relation to any distribution receivable by the company;

foreign tax” means tax payable in any territory outside the State and in respect of which double taxation relief is allowable;

foreign income” means income in respect of which foreign tax is payable;

the reduced Irish tax credit” means the sum calculated under subsection (3).

(2) (a) For the purposes of subsection (3) the amount of relevant tax in respect of any income is an amount determined by the formula

100

(A − B) ×________

100 − C

where—

A is the amount of corporation tax which is chargeable in respect of the income,

B is an amount equal to income tax at the standard rate on the amount of the income, such standard rate being the rate for the year of assessment in which the appropriate accounting period ends, and

C is the standard rate per cent. for the year of assessment in which the appropriate accounting period ends.

(b) For the purposes of paragraph (a) the appropriate accounting period means the accounting period for which corporation tax is chargeable in respect of the income.

(c) Notwithstanding paragraph (a) the amount of relevant tax in respect of any amount of franked investment income which by virtue of subsection (4) is deemed to be foreign income shall be taken to be nil.

(3) Where a distribution (being a distribution which is made, or by virtue of subsection (6) is deemed to have been made, for an accounting period) is made wholly or partly out of foreign income, and the foreign tax paid in respect of the income exceeds the amount of relevant tax in respect of that income, any payment of the tax credit in respect of the distribution shall be made as if the said tax credit were a sum calculated by deducting from the amount of the tax credit which apart from this section would apply in respect of the distribution—

(a) where the distribution is equal in amount to the whole of the distributable income—an amount equal to the excess of the foreign tax over the relevant tax in respect of the foreign income, and

(b) where the distribution is less in amount than the whole of the distributable income—an amount which bears to the deduction which would be made if the distribution were equal in amount to the whole of the distributable income the same proportion as the distribution bears to the whole of the distributable income.

(4) Where a distribution is received by the company and the amount of any payment of the tax credit to the company in respect of that distribution would, if a proper claim in that behalf were made, be determined in accordance with this section, then for the purposes of subsection (3)—

(a) the amount of franked investment income which the distribution represents shall be deemed to be foreign income of the accounting period in which the distribution is received, and

(b) the amount by which the tax credit in respect of the distribution exceeds the tax credit which would, if a proper claim in that behalf were made, be payable to the company shall be deemed to be foreign tax paid by the company in respect of that income.

(5) (a) Where, for an accounting period, the company has paid, or, under subsection (4), is deemed for the purposes of subsection (3) to have paid, foreign tax in respect of income from more than one source, the deduction referred to in subsection (3) shall be computed separately in respect of income from each source and the separate amounts as so computed shall be aggregated for the purpose of computing the total amount of the deduction which should be made.

(b) For the purposes of this subsection—

(i) the amount of franked investment income which is represented by each distribution which is received by the company shall be deemed to be income from a separate source, and

(ii) where a company has paid foreign tax in respect of income (not being franked investment income which is deemed under subsection (4) to be foreign income) arising in two or more territories outside the State, the income arising in each such territory shall be deemed to be income from a separate source.

(6) The provisions of subsections (3), (5) and (6) of section 64 (distributions: tax credit and export sales relief) shall apply for the purposes of this section as they apply for the purposes of that section.

(7) Where the income out of which a distribution is made, or is deemed by virtue of subsection (6) to have been made, includes income the income tax on which was reduced by the allowance of double taxation relief or includes dividends to which the provisions of section 363 (2) (a) of the Income Tax Act, 1967 , applied, the tax credit in respect of that distribution shall for the purposes of payment thereof be subject to such adjustment as may be appropriate.

(8) For the purposes of this section all such apportionments as may be necessary shall be made.

(9) Where the reduced Irish tax credit falls to be computed in relation to a distribution, the particulars to be given by the company in the statement required by section 5 (dividend warrants) shall, in addition to the particulars required to be given apart from this section, include particulars of the reduced Irish tax credit.

(10) Where a distribution has been made before the making by the Government of an order to which section 361 (1) of the Income Tax Act, 1967 , relates, and any double taxation relief would have fallen to be taken into account in relation to that distribution if this section had applied thereto, that relief shall be taken into account as far as possible in determining the reduced Irish tax credit in relation to the first distribution made by the company after the making of the order, and any part of that relief which cannot be so taken into account shall as far as possible be taken into account in relation to the next succeeding distribution, and so on.

(11) Where—

(a) the whole or part of an annual payment is made out of income represented by a distribution, and

(b) that distribution is made wholly or partly out of foreign income,

the tax credit in respect of that distribution shall, notwithstanding the provisions of section 88, be an amount equal to the amount which, by virtue of subsection (3) of this section, would be payable in respect of the said tax credit:

Provided that nothing in this subsection shall affect the amount of income which a distribution is treated as representing for the purposes of Schedule F.

Supplemental provisions concerning the determination of reduced Irish tax credit for section 167.

168. —(1) In this section “the reduced Irish tax credit”, “double taxation relief”, “the company”, “distributable income” and “distribution” have the same meanings as in section 167.

(2) Where any matter affecting the calculation of double taxation relief has not been fully determined at the time when the reduced Irish tax credit falls to be determined in relation to any distribution, the double taxation relief shall be estimated according to the best of the information available at the time, and, if it is subsequently found that the relief so estimated was excessive or deficient, the appropriate adjustment shall be made in determining the reduced Irish tax credit applicable to the next subsequent distribution on the occasion of which it is practicable to make the adjustment, and shall be made by reducing or, as the case may be, increasing the double taxation relief, as calculated for the purposes of that subsequent distribution, by the amount of the excess or the deficiency.

(3) For the purposes of this section, a distribution which is not expressed to be made for any specified period shall be deemed to be made for the last period of account of the company which ended before the distribution was made.

(4) Where a company makes, or is deemed under subsection (3) to have made, a distribution for an accounting period, the distribution shall be regarded for the purposes of this section and of section 167 as having been made out of the distributable income of that period to the extent of that income and in relation to the excess of the distributions over that income, out of the most recently accumulated income.

(5) This section and section 167 shall have effect as if references therein to double taxation relief included references to relief granted under section 163.

Limitations on deductions in respect of interest.

169. —Where, apart from this section, a company would be entitled to deductions in respect of—

(a) interest under the provisions of paragraph 1 (2) of Part III of Schedule 6 to the Income Tax Act, 1967 (provisions for giving effect to agreements for avoidance of double taxation in the case of the United Kingdom), and

(b) charges on income which are payments of interest to which the provisions of section 10 (6) apply,

the aggregate amount of the deductions which may be made under those provisions shall not exceed the amount specified in section 10 (6).

Patent royalties: provisions supplemental to section 34 of Finance Act, 1973.

170. —(1) In this section—

disregarded income” means—

(a) income which by virtue of section 34 (2) of the Finance Act, 1973 (income from patent royalties), has been disregarded for purposes of income tax, and

(b) income which by virtue of section 34 (2) of the Finance Act, 1973 , and section 11 (6) has been disregarded for purposes of corporation tax;

other profits” includes a dividend or other distribution of a company which is resident in the State but does not include a distribution to which subsection (3) (a) (ii) applies.

(2) Where a distribution for an accounting period is made by a company in part out of disregarded income and in part out of other profits, the distribution shall be treated as if it consisted of two distributions respectively made out of disregarded income and out of other profits.

(3) (a) So much of any distribution as has been made out of disregarded income—

(i) shall not be regarded as income for any purpose of the Income Tax Acts; and

(ii) shall, where the recipient of such distribution is a company, be deemed for the purposes of this section to be disregarded income.

(b) The recipient of any distribution, including part of a distribution treated under subsection (2) as a distribution, made out of disregarded income shall not be entitled to a tax credit in respect of that distribution.

(4) (a) Where a company makes a distribution, including part of a distribution treated under subsection (2) as a distribution, in respect of any right or obligation to which section 178 (dividends at gross rate or of gross amount) relates and the distribution is made out of disregarded income, the company shall make a supplementary distribution of an amount equal to the amount of the tax credit which would have applied in respect of the distribution if subsection (3) (b) had not been enacted.

(b) Subsection (3) shall apply to a supplementary distribution under this subsection as if that supplementary distribution were a distribution made wholly out of disregarded income.

(5) In relation to any distribution (not being a supplementary distribution under this section), including part of a distribution treated under subsection (2) as a distribution, made by a company out of disregarded income, sections 5 and 83 (5) (Schedule F) shall apply to the company so that the statements provided for by those sections shall show, as respects each such distribution, in addition to the particulars required to be given apart from this section, that the distribution is made out of disregarded income.

(6) In relation to any supplementary distribution under subsection (4), section 5 shall apply to the company so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

(7) Where a company makes a distribution for an accounting period, the distribution shall be regarded for the purposes of this section as having been made out of the distributable income (as defined in section 64 (4)) of that period to the extent of that income and in relation to the excess of the distributions over that income, out of the most recently accumulated income.

(8) The provisions of subsections (5) and (6) of section 64 shall apply for the purposes of this section as they apply for the purposes of that section.

Construction of references to income tax paid by deduction and to repayment.

171. —In the Tax Acts, unless the context otherwise requires, references to—

(a) income tax paid by a person by deduction shall be construed as including references to a tax credit to which he is entitled, and

(b) repayment of income tax shall be construed as including references to payment of a tax credit.

Continuation of elections.

172. —(1) Where before the year 1976-77 a company has for purposes of income tax made any election or done any other act of a description which—

(a) would have had continuing effect for income tax for that year;

(b) may also be made for corporation tax;

then that election or act shall for corporation tax be valid and effectual as if duly made or done for that tax, and have effect from the beginning of the first accounting period for which the company is within the charge to corporation tax in respect of the matter in question.

(2) Accordingly where any such election or act is required to be made or done, if at all, at a particular time, no provision of this Act amending the enactment under which it is made or done so as to specify a different time in relation to corporation tax (whether by substituting a reference to the first accounting period for a reference to the first year of assessment in which anything takes place, or otherwise) shall be taken, unless the contrary intention appears, to invalidate any election or act duly made or done nor, where the time has passed for making or doing it for income tax, to extend the time in relation to corporation tax; but nothing in this section shall take away any right of revocation or variation.