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14 1982

FINANCE ACT, 1982

Chapter IV

Income Tax and Corporation Tax

Exemption of employment payments and grants.

18. —(1) A payment or grant to which this section applies shall be disregarded for all the purposes of the Tax Acts.

(2) This section applies to any payment or grant made, whether before or after the passing of this Act, being—

(a) a payment to an employer under the Employers' Employment Contribution Scheme in respect of a person employed by him, or

(b) an employment grant under section 2 of the Industrial Development (No. 2) Act, 1981 .

Relief for expenditure on significant buildings.

19. —(1) (a) In this section—

approved building” means a building to which subsection (4) applies;

authorised person” means:—

(a) an inspector or other officer of the Revenue Commissioners authorised by them in writing for the purposes of this section, or

(b) a person nominated by the Commissioners of Public Works in Ireland, authorised by them in writing for the purposes of this section;

chargeable period” has the meaning assigned to it by paragraph 1(2) of the First Schedule to the Corporation Tax Act, 1976 ;

qualifying expenditure” means expenditure incurred on the repair, maintenance or restoration of an approved building or on the maintenance or restoration of any land occupied or enjoyed with an approved building as part of its garden or grounds of an ornamental nature.

(b) For the purposes of this section expenditure shall not be regarded as having been incurred in so far as any sum in respect of, or by reference to, the work to which it relates has been or is to be received directly or indirectly by the person making a claim in respect thereof under subsection (2) 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.

(2) Subject to the provisions of this section, where a person, having made a claim in that behalf, proves that he has incurred, on or after the 6th day of April, 1982, in a chargeable period, qualifying expenditure in respect of an approved building owned or occupied by him, all the provisions of the Tax Acts shall apply as if the amount of the qualifying expenditure were a loss sustained in the chargeable period in a trade carried on by the person separate from any trade actually carried on by that person.

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

(4) (a) This subsection applies to a building in the State which, on application to them in that behalf by a person who owns or occupies the building, is determined—

(i) by the Commissioners of Public Works in Ireland, to be a building which is intrinsically of significant scientific, historical, architectural or aesthetic interest, and

(ii) by the Revenue Commissioners, to be a building to which reasonable access is afforded to the public.

(b) Without prejudice to the generality of the requirement that reasonable access be afforded to the public, access to a building shall not be regarded as being reasonable access afforded to the public unless—

(i) access to the whole or a substantial part of the building is afforded at the same time, and

(ii) subject to temporary closure necessary for the purposes of the repair, maintenance or restoration of the building, access is so afforded for not less than thirty days in any year and on each such day access is afforded in a reasonable manner and at reasonable times for a period, or periods in the aggregate, of not less than four hours, and

(iii) the price, if any, paid by the public in return for that access is, in the opinion of the Revenue Commissioners, reasonable in amount and does not operate to preclude the public from seeking access to the building.

(c) Where under paragraph (a) the Commissioners of Public Works in Ireland make a determination in relation to a building and, by reason of any alteration made to the building, or any deterioration of the building, subsequent to the determination being made, the Commissioners of Public Works in Ireland consider that the building is no longer a building which is intrinsically of significant scientific, historical, architectural or aesthetic interest, the Commissioners of Public Works in Ireland may, by notice in writing given to the owner or occupier of the building, revoke the determination with effect from the date on which they consider that the building ceased to be a building which is intrinsically of significant scientific, historical, architectural or aesthetic interest, and this subsection shall cease to apply to the building from that date.

(d) Where under paragraph (a) the Revenue Commissioners make a determination in relation to a building, and reasonable access to the building ceases to be afforded to the public, the Revenue Commissioners may, by notice in writing given to the owner or occupier of the building, revoke the determination with effect from the date on which they consider that such access so ceased, and

(i) this subsection shall cease to apply to the building from that date, and

(ii) if relief has been given under this section in respect of qualifying expenditure incurred in relation to that building in the period of five years ending on the date from which the revocation has effect, that relief shall be withdrawn and there shall be made all such assessments or additional assessments as are necessary to give effect to the provisions of this subsection.

(5) (a) Where a person makes a claim under subsection (2), an authorised person may, at any reasonable time, enter the building in respect of which the qualifying expenditure has been incurred for the purpose of inspecting the building, or of examining the work in respect-of which the expenditure to which the claim relates was incurred.

(b) Whenever an authorised person exercises any power conferred on him by this subsection, he shall, on request, produce his authorisation for the purposes of this section to any person concerned.

(c) Any person who obstructs or interferes with an authorised person in the course of exercising a power conferred on him by this subsection shall be guilty of an offence and shall be liable, on summary conviction, to a fine not exceeding £500.

(6) Any claim for relief under this section—

(a) shall be made in such form as the Revenue Commissioners may from time to time prescribe, and

(b) shall be accompanied by such statements in writing as regards the expenditure for which relief is claimed, including statements by persons to whom payments were made, as may be indicated by the prescribed form.

Business entertainment expenses.

20. —(1) In respect of any expenses incurred on or after the 26th day of March, 1982, in providing business entertainment, no sum shall be—

(a) deducted in computing the amount of profits or gains chargeable to tax under Schedule D, or

(b) included in computing any expenses of management in respect of which a deduction may be claimed under section 15 or 33 of the Corporation Tax Act, 1976 , or

(c) allowed under Rule 3 of Schedule 2 to the Income Tax Act, 1967 .

(2) (a) Where any asset is used or is provided for use, wholly or partly, for the purpose of providing business entertainment, no allowance under any of the specified provisions shall be made for the year 1982-83 or any subsequent year of assessment or for any accounting period of a company which ends on or after the 6th day of April, 1982, in respect of the use of the asset or the expenditure incurred in the provision of the asset to the extent that it is used or is to be used for the said business entertainment.

(b) In this subsection “the specified provisions” means section 241 , Chapter III of Part XIV, Chapters I and III of Part XV and Chapters II and V of Part XVI of the Income Tax Act, 1967 , and section 22 of the Finance Act, 1971 .

(3) The expenses to which subsection (1) applies include, in the case of any person, any sum paid by him to, or on behalf of, or placed by him at the disposal of, a member of his staff for the purpose of defraying expenses incurred or to be incurred by him in providing business entertainment.

(4) For the purposes of this section “business entertainment” means entertainment (including the provision of accommodation, food and drink or any other form of hospitality in any circumstances whatsoever) provided directly or indirectly, by—

(a) any person (hereinafter referred to as “the first-mentioned person”), or

(b) any person who is a member of the first-mentioned person's staff, or

(c) any person providing or performing any service for the first-mentioned person, the entertainment being entertainment that is provided in the course of, or is incidental to, the provision or performance of the service,

in connection with a trade, carried on by the first-mentioned person but does not include anything provided by him for bona fide members of his staff unless its provision for them is incidental to its provision also for others.

(5) This section shall apply in relation to the provision of a gift as it applies in relation to the provision of entertainment.

(6) In this section—

a reference to expenses incurred in, or to the use of an asset for, providing entertainment includes a reference to expenses incurred in, or to the use of an asset for, providing anything incidental thereto;

a reference to a trade includes a reference to a business, profession or employment;

a reference to the members of a person's staff is a reference to persons employed by that person, directors of a company or persons engaged in the management thereof being for this purpose deemed to be persons employed by it.

(7) (a) The provisions of section 24 (1A) of the Finance Act, 1973 , shall not apply or have effect in respect of any expenses incurred on or after the 26th day of March, 1982.

(b) The provisions of section 24 of the Finance Act, 1973 (apart from the provisions of subsection (1A)) shall not apply or have effect for the year 1982-83 or any subsequent year of assessment or for any accounting period of a company which ends on or after the 6th day of April, 1982.

(8) (a) Where, by reason of the provision or performance of a service, an amount is paid or payable to a person referred to in subsection (4) (c), so much of the amount as is equal to the cost of any business entertainment that is provided in the course of, or is incidental to the provision or performance of, the service shall be deemed to be incurred in providing business entertainment.

(b) The cost of any business entertainment shall be determined by the inspector according to the best of his knowledge and judgment.

(c) A determination made under paragraph (b) may be amended by the Appeal Commissioners or by the Circuit Court on the hearing, or the rehearing, of an appeal against any deduction (including a case where no deduction is granted) granted on the basis of the determination.

Restriction of relief for interest.

21. —(1) In this section and in sections 22 and 23

dependent relative” means, in relation to an individual, any of the persons mentioned in paragraphs (a) or (b) of section 142 (1) of the Income Tax Act, 1967 , in respect of whom the individual is entitled to a deduction under that section;

loan” means any loan or advance or any other arrangement whatsoever by virtue of which interest is paid or payable;

the operative date” means the 25th day of March, 1982;

the principal sections” means sections 76 (1) and 496 of, and paragraph 1 (2) of Part III of Schedule 6 to, the Income Tax Act, 1967 ;

qualifying loan” means, in relation to an individual, a loan which without having been used for any other purpose, is used by the individual solely for the purpose of defraying money employed in the purchase, repair, development or improvement of a qualifying residence or in paying off another loan used for such purpose;

qualifying residence” means, in relation to an individual, a residential premises situated in the State, or in Northern Ireland or Great Britain, which is used—

(a) as the sole or main residence of the individual, or

(b) as the sole or main residence of a former or separated spouse of his, or

(c) as the sole or main residence of a person who in relation to the individual is a dependent relative and is, where the residential premises is provided by the individual, provided rent-free and without any other consideration;

residential premises” means—

(a) a building or part of a building used, or suitable for use, as a dwelling, and

(b) land which the occupier of a building or part of a building used as a dwelling has for his own occupation and enjoyment with the said building or part as its garden or grounds of an ornamental nature;

separated” means separated under an order of a court of competent jurisdiction or by deed of separation or in such circumstances that the separation is likely to be permanent.

(2) Subject, as regards paragraph (a), to the provisions of subsection (9), the principal sections shall not apply to—

(a) any interest paid or payable on a loan made after the operative date, or

(b) interest paid or payable on or after the 6th day of April, 1985, on a loan made on or before the operative date:

Provided that this subsection shall not apply to interest paid or payable by an individual on a loan which, in relation to the individual, is a qualifying loan.

(3) (a) Notwithstanding the provisions of subsection (2), the principal sections shall apply—

(i) as respects the year of assessment 1982-83, 1983-84 or 1984-85, to the amount or the aggregate amount of any interest paid or payable on a loan or loans made after the operative date, and

(ii) as respects the year of assessment 1985-86 or any subsequent year of assessment, to the amount or the aggregate amount of any interest paid or payable on a loan or loans made at any time,

to the extent that the amount of the loan or the aggregate amount of the loans on which such interest is paid or payable in a year of assessment does not exceed the specified limit for the year of assessment and, if the said amount or the said aggregate amount on which interest is paid or payable on the loan or loans exceeds the specified limit for the year of assessment, the principal sections shall apply only to so much of that interest as bears to the whole of that interest the same proportion as that part of the said amount or the said aggregate amount which does not exceed the specified limit bears to the whole of the said amount or the said aggregate amount.

(b) In this subsection “specified limit”, in relation to a year of assessment, means—

(i) in the case of a husband who is assessed to tax for the year of assessment in accordance with the provisions of section 194 of the Income Tax Act, 1967 , £5,000,

(ii) in the case of a widowed person, £3,600, or

(iii) in any other case, £2,500.

(4) A loan shall be deemed, for the purposes of this section and sections 22 and 23 , to have been made on the date on which a binding contract for the making of the loan was entered into:

Provided that—

(a) a loan which, without being used for any other purpose, is used solely for the purpose of paying off another loan shall be deemed to have been made on the date that the other loan was deemed to have been made, and

(b) a loan which is a qualifying loan shall be deemed to have been made on the date on which a written commitment was given by the person making the loan to advance the loan in a specified amount in respect of a specified qualifying residence if the loan is used for a purpose specified in the definition of “qualifying loan” in subsection (1) within six months from that date or within such longer period as the Revenue Commissioners may allow as being appropriate to the circumstances of the case, and

(c) where an alteration is made in the terms under which a loan is made (other than an alteration in the rate of interest or the period over which the loan is repayable made in the ordinary course of business in relation to all loans of the same class) or the amount of the loan is increased or any amount of the loan which has been repaid is re-advanced under the same contract as that under which the original advance was made—

(i) in relation to any interest or additional interest paid or payable, by virtue of the alteration, increase or re-advancement, in the period of twelve months commencing with the date of such alteration, increase or re-advancement, the loan shall be deemed to have been made on that date, and

(ii) in relation to any interest whatsoever, paid or payable on the loan after the end of that period of twelve months, including interest on the original amount of the loan, the increased amount or the amount readvanced, the loan shall be deemed to have been made on the date mentioned in subparagraph (i).

(5) Notwithstanding anything in this section, a loan shall not be a qualifying loan in relation to an individual if it is used for the purpose of defraying money applied in the—

(a) purchase of a residential premises or any interest therein from a person who is the spouse of the purchaser, or

(b) purchase of a residential premises or any interest therein if, at any time after the operative date, that premises or interest was disposed of by the purchaser or by his spouse or if any interest which is reversionary to the interest purchased was so disposed of after that date, or

(c) purchase, repair, development or improvement of a residential premises and the person who, directly or indirectly, received the money is connected with the individual and it appears that the purchase price of the premises substantially exceeds the value of what is acquired or, as the case may be, the cost of the repair, development or improvement substantially exceeds the value of the work done:

Provided that the provisions of paragraphs (a) and (b) of this subsection shall not apply in the case of a husband and wife who are separated.

(6) Where an individual acquires a new sole or main residence but does not dispose of his previous sole or main residence and he shows to the satisfaction of the inspector that it was his intention, at the time of acquisition of the new sole or main residence, to dispose of his previous sole or main residence and that he has taken and continues to take all reasonable steps necessary to dispose of it, the previous sole or main residence shall be treated as a qualifying residence, in relation to the individual, for the period of twelve months commencing with the date of the acquisition of the new sole or main residence.

(7) (a) Where any interest paid on a loan used for a purpose mentioned in the definition of “qualifying loan” by persons as the personal representatives of a deceased person or as trustees of a settlement made by the will of a deceased person would, on the assumptions stated in paragraph (b), be eligible for relief under the principal sections and, in a case where the condition stated in that paragraph applies, that condition is satisfied, that interest shall be so eligible notwithstanding the preceding provisions of this section.

(b) For the purposes of paragraph (a) it shall be assumed that the deceased would have survived and been the borrower; and if, at his death, the residential premises was used as his sole or main residence, it shall be further assumed that he would have continued so to use it and the following condition shall then apply, namely, that the residential premises was, at the time the interest was paid, used as the sole or main residence of the deceased's widow or widower or of any dependent relative of the deceased.

(c) In this subsection “personal representatives” has the meaning assigned to it by section 450 of the Income Tax Act, 1967 .

(8) The provisions of this section shall not apply to interest on money borrowed to pay death duties.

(9) For the purposes of giving relief under the principal sections in respect of interest paid before the 6th day of April, 1985, on a loan made before the 6th day of April, 1982, this section shall apply as if—

(a) the definition of “qualifying residence” were deleted and

(b) the reference in the definition of “qualifying loan” to a qualifying residence were a reference to a residential premises.

(10) For the purposes of this section, a person shall be regarded as connected with another person if he would be so regarded under section 16 (3) of the Finance (Miscellaneous Provisions) Act, 1968 , for the purposes of Part IV of that Act.

Restriction of relief for interest on overdrafts.

22. —(1) Notwithstanding anything in section 21 (2) (b), no relief shall be given under the principal sections in respect of interest—

(a) paid or payable after the operative date on an overdraft which was not in existence on that date, or

(b) paid or payable on or after the 6th day of April, 1983, on an overdraft which was in existence on the operative date.

(2) A loan made on or before the 5th day of April, 1983, replacing an overdraft referred to in subsection (1) (b) shall, for the purposes of sections 21 and 23 , be deemed—

(a) to the extent to which it does not exceed the amount of the overdraft on the operative date, to be a separate loan made on the operative date, and

(b) to the extent of the excess, to be a separate loan made after the operative date.

(3) For the year 1982-83 the amount of interest on an overdraft eligible for relief under the principal sections shall not exceed the amount of interest which would have been payable for that year on the amount of the overdraft on the operative date at the rate at which interest on that amount was chargeable on that date.

(4) For the purposes of sections 21 and 23 , any amount paid in repayment of a loan made on or before the 5th day of April, 1983, shall be deemed to be made in repayment of any amount of the separate loan to which subsection (2) (b) refers in priority to any amount of the separate loan to which subsection (2) (a) refers.

(5) (a) For the purposes of this section and section 23 a loan shall be regarded as replacing an overdraft if it is used solely for the purpose of discharging that overdraft or an overdraft or loan replacing or discharging that overdraft.

(b) In this section and in section 23 overdraft” means a debt incurred by overdrawing an account or by debiting the account of any person as the holder of a credit card or under similar arrangements.

Restriction of relief for interest paid by companies.

23. —(1) In this section “relevant interest” means the excess of the amount of interest paid by a company on a loan over so much of that interest as bears to the full amount thereof the same proportion as £2,500 (or, if it is smaller, the amount of the loan) bears to the amount of the loan:

Provided that in the case of a company that has one or more associated companies within the meaning of section 102 of the Corporation Tax Act, 1976 , the reference to £2,500 shall be deemed to be a reference to £2,500 divided by one plus the number of those associated companies.

(2) References in subsection (1) to the amount of a loan, shall, if there are more loans than one, be deemed to be references to the aggregate amount of the loans.

(3) In relation to—

(a) relevant interest paid on all loans made after the operative date,

(b) all relevant interest paid on or after the 6th day of April, 1985,

(c) interest—

(i) paid after the operative date on an overdraft which was not in existence on that date,

(ii) paid on or after the 6th day of April, 1983, on an overdraft which was in existence on the operative date, and

(d) interest on an overdraft referred to in paragraph (c) (ii) where that interest is paid in the year ending on the 5th day of April, 1983, in so far as the amount of the interest exceeds the amount of the interest which would have been payable for that year on the amount of the overdraft on the operative date at the rate at which interest on that amount was chargeable on the operative date,

section 10 of the Corporation Tax Act, 1976 , shall have effect as if the following subsection were substituted for subsection (6)—

“(6) Subject to subsection (7), interest shall not be treated as a charge on income.”.

Amendment of provisions relating to relief in respect of increase in stock values.

24. —(1) Section 31A (inserted by the Finance Act, 1976 ) of the Finance Act, 1975 , is hereby amended by the substitution of “1982” for “1981”—

(a) in paragraph (iv) (inserted by the Finance Act, 1979 ) of the proviso (inserted by the Finance Act, 1977 ) to subsection (4) (a),

(b) in subsection (7) (inserted by the Finance Act, 1977 ), and

(c) in subsection (9) (inserted by the Finance Act, 1977 ) in each place where it occurs,

and the said paragraph, the said subsection (7) (other than the proviso) and the said subsection (9) (other than the proviso), as so amended, are set out in the Table to this subsection.

TABLE

(iv) a deduction shall not be allowed under the provisions of this section in computing a company's trading income for any accounting period which ends on or after the 6th day of April, 1982.

(7) Where in relation to an accounting period a company's opening stock value exceeds its closing stock value, the amount of the excess (in this section referred to as the company's “decrease in stock value”) shall, if the accounting period ends on a date before the 6th day of April, 1982, be treated in the computation of the company's trading income for the purposes of corporation tax, as a trading receipt of the company's trade for that accounting period:

(9) In the computation of a company's trading income for the purposes of corporation tax for any accounting period which ends on or after the 6th day of April, 1982, in which there is a decrease in stock value, there shall be treated as a trading receipt of the company's trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C where—

A is the aggregate amount of the company's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1982,

B is the aggregate amount of the company's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1982, and

C is the aggregate of the amounts which under this subsection are treated as trading receipts of the company's trade for preceding accounting periods:

(2) Section 12 of the Finance Act, 1976 , is hereby amended—

(a) by the substitution of “or any subsequent year of assessment” for “, 1980-81 or 1981-82” (inserted by the Finance Act, 1981 ) in paragraph (c) (inserted by the Finance Act, 1979 ) of subsection (2),

(b) by the substitution in subsection (3) of “1982-83” for “1981-82” (inserted by the Finance Act, 1981 ), and

(c) by the substitution of “1982” for “1981” (inserted by the Finance Act, 1981 ) in each place where it occurs in subsection (5) (inserted by the Finance Act, 1978 ) and subsection (6) (inserted by the Finance Act, 1977 ),

and the said paragraph, the said subsection (3), the said subsection (5) (other than the proviso) and the said subsection (6) (other than the proviso), as so amended, are set out in the Table to this subsection.

TABLE

(c) Where a deduction allowed by virtue of this section in computing a person's trading profits of a trade for an accounting period has effect for the year 1979-80 or any subsequent year of assessment, the amount of the deduction shall, notwithstanding any provision to the contrary, be three-fourths of the amount which, apart from this paragraph, would be the amount of the deduction for that accounting period.

(3) Any deduction allowed by virtue of this section in computing a person's trading profits for an accounting period shall not have effect for any purpose of the Income Tax Acts for any year of assessment prior to the year 1974-75 or later than the year 1982-83.

(5) In the computation of a person's trading income for an accounting period in which there is a decrease in stock value and which ends on a date in the period from the 6th day of April, 1976, to the 5th day of April, 1982, the amount of that decrease shall be treated as a trading receipt of the trade for that accounting period:

(6) In the computation of a person's trading income for any accounting period in which there is a decrease in stock value and which ends on or after the 6th day of April, 1982, there shall be treated as a trading receipt of the trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C

where—

A is the aggregate amount of the person's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1982,

B is the aggregate amount of the person's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1982, and

C is the aggregate of the amounts which are treated as trading receipts of the person's trade for preceding accounting periods which ended on or after the 6th day of April, 1982:

Application of section 31 (buildings societies) of Corporation Tax Act, 1976, for year 1982-83.

25. —(1) Save as is otherwise provided for in subsection (2), section 40 (1) of the Finance Act, 1977 (as extended by section 52 of the Finance Act, 1980 ), shall have effect in relation to the year 1982-83 as it has effect in relation to the years 1980-81 and 1981-82.

(2) The Revenue Commissioners and any building society approved of for the purposes of this section by the Minister for Finance may, as respects the year 1982-83, enter into arrangements of the kind referred to in section 31 of the Corporation Tax Act, 1976 , but modified, to such extent as shall be directed by the Minister for Finance, in so far as they relate to the sums on which tax is to be calculated in part at the standard rate and in part at a reduced rate.

(3) The Minister for Finance shall approve, for the purposes of this section, of any building society (within the meaning of section 31 of the Corporation Tax Act, 1976 ) if, in relation to that society, the Minister for the Environment gives a certificate stating that the society has, during the financial year 1982, maintained at levels and for periods agreed with him the rate or rates of interest charged by it on loans granted by it to individuals for the purposes of the purchase, construction or improvement of dwelling-houses to be used for the sole purpose of owner-occupation by those individuals.