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11 1979

FINANCE ACT, 1979

PART I

Income Tax, Corporation Tax and Capital Gains Tax

Chapter I

Income Tax

Amendment of section 142 (dependent relatives) of Income Tax Act, 1967.

1. Section 142 of the Income Tax Act, 1967 , is hereby amended, as respects the year 1979-80 and subsequent years of assessment, by the substitution for subsection (1A) (inserted by the Finance Act, 1978 ) of the following subsection :

“(1A) For the purposes of this section ‘specified amount’ means the aggregate of the payments to which a person is entitled in that year of assessment in respect of an old age (contributory) pension at the maximum rate under the Social Welfare Acts, 1952 to 1979, if throughout that year of assessment, he is entitled to such a pension and—

(a) he has no adult dependant or qualified children (within the meaning, in each case, of those Acts),

(b) he is over the age of 80 years (or such other age as may stand specified in those Acts for the time being in lieu of the said age of 80 years), and

(c) he is living alone.”.

Amendment of section 5 (charge of income tax) of Finance Act, 1977.

2. —(1) Section 5 of the Finance Act, 1977 , is hereby amended, as respects the year 1979–80 and subsequent years of assessment—

(a) by the substitution of “the first two rates” for “the first three rates” in subsection (1), and

(b) by the substitution of the following Table for the Table to subsection (1) of the said section :

“TABLE

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first £1,100

25 per cent.

the reduced rate

the next £3,000

35 per cent.

the standard rate

the next £1,500

45 per cent.

}

the higher rates

the next £1,000

50 per cent.

the remainder

60 per cent.

(2) Part I of the First Schedule shall have effect for the purpose of supplementing subsection (1).

Personal reliefs.

3. —(1) Where a deduction falls to be made from the total income of an individual for the year 1979-80 or any subsequent year of assessment in respect of relief to which the individual is entitled under a provision mentioned in column (1) of the Table to this subsection and the amount of the deduction would, but for this section, be an amount specified in column (2) of the said Table, the amount of the deduction shall, in lieu of being the amount specified in the said column (2), be the amount specified in column (3) of the said Table opposite the mention of the amount in the said column (2).

TABLE

Statutory provision

Amount to be deducted for 1978-79

Amount to be deducted for 1979–80 and subsequent years

(1)

(2)

(3)

Income Tax Act, 1967 :

£

£

section 138

(married man)

1,730

2,230

(single person)

865

1,115

(widowed person)

935

1,185

section 141

(child)

240

218

(2) Section 10 of the Finance Act, 1976 , and section 6 of the Finance Act, 1978 , shall have effect subject to the provisions of this section.

(3) Part II of the First Schedule shall have effect for the purpose of supplementing subsection (1).

Additional relief for widows and others in respect of children.

4. Part VI of the Income Tax Act, 1967 , is hereby amended by the insertion, after section 138, of the following section :

“138A.—(1) This section applies to a person who—

(a) is—

(i) a widow,

(ii) a widower, or

(iii) a person who is not entitled to the deduction first-mentioned in subsection (1) of section 138,

and

(b) is entitled, for the year of assessment, to a deduction under section 141 in respect of a child resident with him.

(2) A person to whom this section applies, shall be entitled to a deduction of £250.”.

Special deduction for 1979-80.

5. —(1) For the purposes of ascertaining the amount of the income on which an individual is to be charged to income tax for the year 1979-80 in a case where the total income of the individual for the said year consists of or includes emoluments—

(a) a deduction of £175 shall be made from so much, if any, of the emoluments (but not including any emoluments deemed to be his income by virtue of section 192 of the Income Tax Act, 1967 ) as arise to the individual, and

(b) a deduction of £175 shall be made from so much, if any, of the emoluments as arise to the wife of the individual and as are in excess of the amount, if any, by which the deduction to which the individual is entitled for that year under section 138 of the Income Tax Act, 1967 , is increased by virtue of subsection (3) of the said section 138.

(2) In determining cumulative tax-free allowances in relation to the year 1979-80 for the purposes of the Income Tax (Employments) Regulations, 1960 (S.I. No. 28 of 1960), deductions under this section shall be deemed to have accumulated in full on such date in the year 1979-80 as the Minister for Finance shall by order direct.

(3) In this section—

emoluments” means emoluments to which Chapter IV of Part V of the Income Tax Act, 1967 , applies save that it does not include—

(a) emoluments paid, directly or indirectly, by a body corporate, or any person who would be regarded as connected with the body corporate for the purposes of Part IV of the Finance (Miscellaneous Provisions) Act, 1968 , to a proprietary director of the body corporate or to the spouse of such a proprietary director, and

(b) emoluments paid, directly or indirectly, by an individual, or by a partnership in which the individual is a partner, to the spouse of the individual;

proprietary director” has the meaning assigned to it by section 226 of the Income Tax Act, 1967 .

(4) This section shall come into operation on such day (if any) as the Minister for Finance may appoint by order.

Withdrawal of income tax relief in respect of contributions under Social Welfare Acts, 1952 to 1979.

6. —In relation to the year 1979-80 or any subsequent year of assessment—

(a) subsections (3), (5) and (6) of section 224 of the Income Tax Act, 1967 , shall not apply or have effect, and

(b) no relief or deduction under any provision of the Income Tax Acts shall be given or allowed in respect of any contribution paid under the Social Welfare Acts, 1952 to 1979, by a person as an employed contributor or as a voluntary contributor.

Relief for certain expenditure on residential premises.

7. —(1) Subject to the provisions of the Second Schedule, where an individual, having made a claim in that behalf, and having made a return in the prescribed form of his total income, proves that he incurred expenditure in respect of the labour cost of qualifying work carried out by a registered person in the qualifying period on a residence of the individual, he shall be entitled, for the purpose of ascertaining the amount of the income on which he is to be charged to income tax for the year 1979-80, to have a deduction made from his total income of the amount by which the aggregate of the expenditure in respect of the labour cost of qualifying work carried out in the qualifying period exceeds £50 :

Provided that no such deduction shall exceed £450.

(2) For the purposes of this section—

(a) qualifying work carried out by an employee of a registered person on behalf of the said registered person shall be deemed to be carried out by the registered person,

(b) section 193 of the Income Tax Act, 1967 , shall apply as if the following paragraph were inserted after paragraph (bb) in subsection (2)—

“(bbb) so far as it flows from relief under section 7 of the Finance Act, 1979, in the proportions in which they incurred the expenditure giving rise to the relief,”, and

(c) expenditure shall not be regarded as having been incurred in so far as any sum in respect of, or by reference to, the qualifying work to which it relates has been or is to be received directly or indirectly by the individual from the State, from any public or local authority, from any other person or under any contract of insurance or by way of compensation or otherwise and, where any such sum is so received or is to be received, the labour cost of the qualifying work concerned shall be deemed, for the purposes of this section, to have been reduced by such sum as bears to the first-mentioned sum the same proportion as the labour cost bears to the total expenditure on the qualifying work.

(3) No deduction shall be allowed under this section for expenditure in respect of which a deduction may be claimed under any other provision of the Tax Acts.

(4) The Second Schedule shall have effect for the purpose of supplementing this section.

Permanent health benefit schemes.

8. —(1) In this section—

benefit” means a payment made to a person in the event of loss or diminution of income, in consequence of ill-health, under a permanent health benefit scheme;

a permanent health benefit scheme” means any scheme, contract, policy, or other arrangement, approved by the Revenue Commissioners for the purposes of this section, which provides for periodic payments to an individual in the event of loss or diminution of income in consequence of ill-health;

contribution”, in relation to a permanent health benefit scheme, means any premium paid or other periodic payment made to the scheme in consideration of the right to benefit under it, being a premium or payment which bears a reasonable relationship to the benefits secured by it.

(2) (a) Subject to the provisions of this section, if an individual makes a claim in that behalf in the manner prescribed by the Income Tax Acts, makes a return in the prescribed form of his total income for a year of assessment and proves that in that year of assessment he made a contribution or contributions to a bona fide permanent health benefit scheme or schemes, he shall be entitled, for the purpose of ascertaining the amount of the income on which he is to be charged to income tax, to have a deduction of so much of the contributions as does not exceed 10 per cent. of his total income for that year of assessment made from his total income.

(b) All such provisions of the Income Tax Acts as apply in relation to every deduction specified in sections 138 to 143 of the Income Tax Act, 1967 , shall apply in relation to a deduction under this subsection.

(3) In a case where the amount of a contribution made by an employer to a permanent health benefit scheme is charged to income tax under Chapter III of Part V of the Income Tax Act, 1967 , as a perquisite of the office or employment of a director or employee, that amount shall be deemed, for the purposes of subsection (2), to be a contribution made by the director or employee to the scheme in the year in respect of which it is so charged to income tax.

(4) (a) Any benefit received by a person under a permanent health benefit scheme, whether as of right or not, shall be deemed to be—

(i) profits or gains arising or accruing from an employment, and—

(ii) emoluments within the meaning of Chapter IV of Part V of the Income Tax Act, 1967 .

(b) Tax under Schedule E shall be charged on every person, to whom any benefit referred to in paragraph (a) is paid, in respect of all such benefits paid to him and the tax so chargeable shall be computed under section 110 (1) of the said Income Tax Act, 1967 .

(5) This section shall have effect in relation to income tax for the year 1980-81 and subsequent years of assessment.

Amendment of provisions relating to relief in respect of certain interest.

9. —As respects the year 1979-80 and subsequent years of assessment, the provisions specified in the Table to this section shall have effect as if “£2,400” were substituted for “£2,000” in each place where it occurs.

TABLE

(a) Subsection (2) (b) of section 496 (restriction on repayment of tax on interest in certain cases) (inserted by the Finance Act, 1974 ) of the Income Tax Act, 1967 .

(b) Subsection (1) of section 38 (aggregation of interest paid by connected persons) of the Finance Act, 1974 .

(c) Section 44 (amendment of section 76 of Income Tax Act, 1967 ) of the Finance Act, 1974 .

(d) Paragraph (b) of section 52 (restriction of Schedule 6 to Income Tax Act, 1967 ) of the Finance Act, 1974 .

(e) Subsection (2) of section 8 (relief to individuals on loans applied in acquiring interest in companies) of the Finance Act, 1978 .

Restriction of relief in respect of interest paid on certain loans at a reduced rate.

10. —(1) (a) In this section—

employee”, in relation to an employer, means a person employed by the said employer including, in a case where the employer is a body corporate, a director, within the meaning of Chapter III of Part V of the Income Tax Act, 1967 , of the body corporate;

employer”, in relation to an individual, means—

(i) a person of whom the individual or his spouse is an employee,

(ii) a person of whom the individual becomes an employee subsequent to the making of a loan by the person to the individual and while any part of the loan, or of another loan replacing it, is outstanding, and

(iii) a person connected with a person referred to in paragraph (i) or (ii);

loan” includes any form of credit, and references to a loan include references to any other loan applied directly towards the replacement of another loan; “preferential loan” means a loan made to an individual or his spouse by a person who in relation to the individual is an employer save that a loan shall not be a preferential loan if it was made before the 6th day of April, 1979, and at the time the loan was made, the making of loans to persons, other than employees, for a stated term of years at a rate of interest which does not vary for the duration of the loans, formed part of the trade of the said employer and interest is payable in respect of it at the rate of interest at which the employer in the course of his trade, at the time the loan was made, made loans at arm's length to persons other than employees for the purpose of purchasing dwelling-houses for occupation by the borrowers as residences;

the specified rate” means the rate of 12 per cent. per annum.

(b) For the purposes of this section, a person shall be regarded as connected with another if that person would be so regarded for the purposes of section 8 of the Finance Act, 1978 .

(c) In this section a reference to a loan being made by a person includes a reference to a person assuming the rights and liabilities of the person who originally made the loan and to a person arranging, guaranteeing or in any way facilitating a loan or the continuation of a loan already in existence.

(2) Where, for any year of assessment, being the year 1979-80 or any subsequent year of assessment, relief is claimed by an individual by virtue of one or more of the following provisions, that is to say, section 496 of the Income Tax Act, 1967 , section 76 (1) (c) of the said Act or paragraph 1 (2) of Part III of Schedule 6 to that Act, relief shall not be given for that year of assessment in respect of the part, if any, of the aggregate amount of interest in respect of which relief is so claimed on a preferential loan or loans that exceeds the amount determined by the formula—

(A − B)

×

C

_____

D + E

where—

A is £2,400,

B is the aggregate amount of interest, other than interest on a preferential loan or loans, in respect of which the individual is entitled to relief for the year of assessment under any one or more of the aforementioned provisions,

C is the aggregate amount of interest on a preferential loan or loans in respect of which relief is claimed by the individual for the year of assessment under any one or more of the aforementioned provisions,

D is the amount of the interest which would have been payable on the preferential loan or loans for the period or periods for which the interest included in C was paid or payable, as the case may be, if for any rate or rates at which interest was paid or payable as the case may be for the said period or periods there were substituted the specified rate, and

E is the amount of interest which would have been payable for the year of assessment on any preferential loan or loans in respect of which no interest is payable if interest were payable on the said loan or loans at the specified rate.

(3) Section 178 (1) of the Income Tax Act, 1967 , is hereby amended by the insertion after paragraph (a) of the following paragraph :

“(aa) particulars of any preferential loan, within the meaning of section 10 of the Finance Act, 1979, made by him;”.

Treatment for tax purposes of certain benefits payable under Social Welfare Acts, 1952 to 1979, and under Insurance (Intermittent Unemployment) Acts, 1942 to 1978.

11. —(1) The following provisions shall have effect for the year 1980-81 and subsequent years of assessment.

(2) Amounts falling to be paid on foot of the benefits mentioned in Part I of the Table to this section shall be deemed to be profits or gains arising or accruing from an employment and, accordingly—

(a) tax under Schedule E shall be charged on every person, to whom any such benefit is payable, in respect of all amounts falling to be paid on foot of such benefits, and

(b) the tax so chargeable shall be computed under section 110 (1) of the Income Tax Act, 1967 .

(3) All amounts falling to be paid on foot of the benefits mentioned in Parts I and II of the Table to this section shall be deemed to be emoluments to which the provisions of Chapter IV of Part V of the Income Tax Act, 1967 , are applied by section 125 of that Act.

(4) (a) The Revenue Commissioners may make regulations modifying the Income Tax (Employment) Regulations, 1960 (S.I. No. 28 of 1960), in their application to the benefits mentioned in Parts I and II of the Table to this section and the benefits mentioned in section 224 (2) of the Income Tax Act, 1967 .

(b) Every regulation made under this section shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next twenty-one days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

TABLE

Part I

Benefits referred to in subsection (2)

(a) the following benefits under the Social Welfare Acts, 1952 to 1979 :

(i) disability benefit,

(ii) unemployment benefit,

(iii) maternity allowance comprised in maternity benefit,

(iv) pay-related benefit,

(v) deserted wife's benefit, and

(vi) injury benefit, and disablement benefit, which are comprised in occupational injuries benefit;

(b) intermittent unemployment benefit under the Insurance (Intermittent Unemployment) Acts, 1942 to 1978.

Part II

The following benefits under the Social Welfare Acts, 1952 to 1979 :

(i) invalidity pension, or

(ii) death benefit which is comprised in occupational injuries benefit, insofar as consisting of a pension payable to a widow, a widower, an orphan or a parent under section 17 , 18 , 19 , 20 or 21 of the Social Welfare (Occupational Injuries) Act, 1966 .

Amendment of section 488 of Income Tax Act, 1967 (High Court proceedings).

12. Section 488 of the Income Tax Act, 1967 , is hereby amended by the substitution, in subsection (5), of the following paragraph for paragraph (a) :

“(a) a certificate signed by an inspector certifying the fact that, before the institution of the proceedings, a stated sum for income tax became due and payable by the defendant—

(i) under an assessment which had become final and conclusive, or

(ii) under the provisions relating to the specified amount of tax within the meaning of section 30 of the Finance Act, 1976 , and”.