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13 1993

FINANCE ACT, 1993

Chapter VI

Income Tax, Corporation Tax and Capital Gains Tax

Farming: amendment of provisions relating to relief in respect of increase in stock values.

28. —(1) Section 31A (inserted by the Finance Act, 1976 ) of the Finance Act, 1975 , is hereby amended by the substitution in paragraph (iv) (inserted by the Finance Act, 1979 ) of the proviso to subsection (4) (a) of “1995” for “1992” (inserted by the Finance Act, 1991 ) and the said paragraph (iv), as so amended, is 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, 1995.

(2) Section 12 of the Finance Act, 1976 , is hereby amended by the substitution in subsection (3) of “1994-95” for “1992-93” (inserted by the Finance Act, 1991 ) and the said subsection (3), as so amended, is set out in the Table to this subsection.

TABLE

(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 1994-95.

(3) (a) In the case of a company, as respects any accounting period which ends on or after the 6th day of April, 1993—

(i) subsection (2) of section 13 of the Finance Act, 1982 , is hereby amended by the substitution of “25 per cent.” for “eleven-tenths”,

(ii) the provisions of subsections (5), (7), (8), (9) and (10) of section 31A of the Finance Act, 1975 , shall cease to apply and have effect, and

(iii) a company shall not be entitled to a deduction under the said section 31A unless a written claim for such a deduction is made on or before the specified return date (within the meaning of section 9 of the Finance Act, 1988 ) for the chargeable period within the meaning of paragraph 1 of the First Schedule to the Corporation Tax Act, 1976 .

(b) In the case of a person within the meaning of section 12 of the Finance Act, 1976 , as respects the year of assessment 1993-94 and any subsequent year of assessment—

(i) subsection (1) of section 13 of the Finance Act, 1982 , is hereby amended by the substitution of “25 per cent.” for “eleven-tenths”,

(ii) the provisions of subsections (4), (5), (6) and (8) of the said section 12 shall cease to apply and have effect, and

(iii) a person shall not be entitled to a deduction under the said section 12 unless a written claim for such a deduction is made on or before the specified return date (within the meaning of section 9 of the Finance Act, 1988 ) for the chargeable period within the meaning of paragraph 1 of the First Schedule to the Corporation Tax Act, 1976 .

(4) This section shall have effect only as respects a trade of farming.

Application of section 19 (relief for expenditure on significant buildings) of Finance Act, 1982.

29. —(1) In this section, except where otherwise provided—

approved building” has the meaning assigned to it by section 19 of the Finance Act, 1982 ;

approved garden” means a garden (other than a garden being land occupied or enjoyed with an approved building as part of its garden or grounds of an ornamental nature) which, on application to them in that behalf by a person who owns or occupies the garden, is determined—

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

(b) by the Revenue Commissioners, to be a garden to which reasonable access is afforded to the public;

qualifying expenditure”, in relation to an approved garden, means expenditure on the maintenance or restoration of the garden.

(2) In respect of qualifying expenditure incurred on or after the 6th day of April, 1993, section 19 of the Finance Act, 1982 , shall, with any necessary modifications, apply and have effect in relation to an approved garden as it applies and has effect in relation to qualifying expenditure (within the meaning of the said section 19) incurred in relation to an approved building.

Amendment of Chapter V (Urban Renewal: Relief from Income Tax and Corporation Tax) of Part I of Finance Act, 1986.

30. —(1) Chapter V of Part I of the Finance Act, 1986 , is hereby amended—

(a) in section 42—

(i) in subsection (1), by the substitution in the definition of “qualifying period” (inserted by section 29 (b) (i) of the Finance Act, 1992 ) of “the 30th day of November, 1993” for “the 31st day of May, 1993”, in each place where it occurs, and of “the 31st day of July, 1994” for “the 31st day of May, 1994”, and

(ii) in subsection (2), by the insertion of the following additional proviso to that subsection:

“Provided also that, notwithstanding section 265 (1) of the Income Tax Act, 1967 , no balancing charge shall be made in relation to a qualifying premises by reason of any of the events specified in the said section 265 (1)—

(i) which occurs more than thirteen years after the qualifying premises was first used, or

(ii) in a case where section 26 of the Finance Act, 1991 , applies and has effect, which occurs more than thirteen years after the capital expenditure on refurbishment of the qualifying premises was incurred.”,

(b) in section 44 (1), by the substitution in the definition of “qualifying period” (inserted by section 29 (c) of the Finance Act, 1992 ) of “the 30th day of November, 1993” for “the 31st day of May, 1993”, in each place where it occurs, and of “the 31st day of July, 1994” for “the 31st day of May, 1994”, and

(c) in section 45—

(i) in subsection (1) (a)—

(I) by the insertion of the following definition before the definition of “qualifying lease”:

“‘market value’, in relation to a building or structure, means the price which the unencumbered fee simple of the building or structure would fetch if sold in the open market in such manner and subject to such conditions as might reasonably be calculated to obtain for the vendor the best price for the building or structure, less the part of that price which would be attributable to the acquisition of, or of rights in or over, the land on which the building or structure is constructed;”,

(II) by the substitution in the definition of “qualifying period” (inserted by section 29 (d) (i) of the Finance Act, 1992 ) of “the 30th day of November, 1993” for “the 31st day of May, 1993”, in each place where it occurs, and of “the 31st day of July, 1994” for “the 31st day of May, 1994”,

(III) by the addition of the following proviso to the definition of “qualifying premises”:

“Provided that, where capital expenditure is incurred in the qualifying period on the refurbishment of a building or structure in respect of which an allowance falls to be made for the purposes of income tax or corporation tax, as the case may be, under the said Chapter II of Part XV or under the said Chapter I of Part XVI, the building or structure shall not be regarded as a qualifying premises unless the total amount of the expenditure so incurred is not less than an amount which is equal to 10 per cent. of the market value of the building or structure immediately before the said expenditure is incurred;”,

and

(IV) by the addition of the following definition after the definition of “qualifying premises”:

“‘refurbishment’, in relation to a building or structure, means any work of construction, reconstruction, repair or renewal, including the provision or improvement of water, sewerage or heating facilities, carried out in the course of repair or restoration, or maintenance in the nature of repair or restoration, of the building or structure.”,

and

(ii) in subsection (2), by the substitution of the following paragraph for paragraph (b) of the proviso (inserted by section 32 of the Finance Act, 1990 ) to that subsection:

“(b) where a person holds an interest in a qualifying premises out of which interest a qualifying lease is created (directly or indirectly) in respect of that qualifying premises and in respect of the qualifying lease a claim for a further deduction under this section is made, and either he or a person who is connected with him—

(i) takes under a qualifying lease a qualifying premises (hereafter in this proviso referred to as ‘the second-mentioned premises’) which is occupied by him or the person who is connected with him, as the case may be, for the purposes of a trade or profession, and

(ii) is, apart from this section, entitled, in the computation of the amount of the profits or gains of that trade or profession, to a deduction on account of rent in respect of the second-mentioned premises,

then, unless he or the person who is connected with him, as the case may be, shows that the taking on lease of the second-mentioned premises was not undertaken for the sole or main benefit of obtaining a further deduction on account of rent under the provisions of this section, he or the person who is connected with him, as the case may be, shall not be entitled in the computation of the amount of the profits or gains of that trade or profession to any further deduction on account of rent in respect of the second-mentioned premises.”.

(2) (a) Paragraph (a) of subsection (1), other than subparagraph (i) of that paragraph, shall take effect as on and from the 6th day of May, 1993.

(b) Paragraph (c) of subsection (1), other than subparagraph (i) (II) of that paragraph, shall take effect as respects rent payable in relation to any qualifying premises under a qualifying lease entered into on or after the 6th day of May, 1993.

Amendment of section 4 (relief for expenditure on certain buildings in designated areas) of Finance Act, 1989.

31. Section 4 of the Finance Act, 1989 , is hereby amended, in subsection (1), by the substitution in the definition of “qualifying period” of “31st day of July, 1994” for “31st day of May, 1994” (inserted by section 31 of the Finance Act, 1992 ).

Amendment of Chapter VII (Urban Renewal: Temple Bar and Other Areas) of Part I of Finance Act, 1991.

32. —Chapter VII (as amended by section 34 of the Finance Act, 1992 ) of Part I of the Finance Act, 1991 , is hereby amended—

(a) in subsection (1) (a) of section 56, by the substitution in the definition of “qualifying period” in subparagraph (ii) of “the 30th day of November, 1993” for “the 31st day of May, 1993”, in each place where it occurs, and of “the 31st day of July, 1994” for “the 31st day of May, 1994”;

(b) in section 57, by the substitution of “the 31st day of July, 1994” for “the 31st day of May, 1994” in subsection (1) (b) (ii) and in the definition of “qualifying period” in subsection (3) (a) (ii); and

(c) in section 58, by the substitution of “the 31st day of July, 1994” for “the 31st day of May, 1994” in both subsections (1) (b) (ii) and (3) (b) (i) and in the definition of “qualifying period” in subsection (3) (b) (ii).

Amendment of section 51 (application of certain allowances in relation to certain areas and certain expenditure) of Finance Act, 1988.

33. —(1) Section 51 of the Finance Act, 1988 , is hereby amended, in subsection (1), by the substitution of the following paragraph for paragraph (a):

“(a) machinery or plant or an industrial building provided for use for the purposes of trading operations which are relevant trading operations within the meaning of section 39A (inserted by the Finance Act, 1981 ) or section 39B (inserted by the Finance Act, 1987 ) of the Finance Act, 1980 , but excluding machinery or plant or an industrial building provided by a lessor to a lessee other than in the course of the carrying on by the lessor of the said relevant trading operations;”.

(2) Subsection (1) shall apply and have effect in relation to capital expenditure which is incurred on the provision of machinery or plant or an industrial building on or after the 6th day of May, 1993.

Captial allowances: treatment of grants, etc.

34. —(1) The Income Tax Act, 1967 , is hereby amended—

(a) in section 254, by the substitution of the following paragraph for paragraph (b) of subsection (4):

“(b) expenditure shall not be regarded as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State or by any person other than the first-mentioned person.”,

(b) in section 303, by the substitution of the following subsection for subsection (3) (including the proviso thereto):

“(3) Expenditure shall not be regarded for any of the purposes of this Part as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State or by any person other than the first-mentioned person.”,

and

(c) in section 305, by the substitution of the following paragraph for paragraph (b) of subsection (2):

“(b) expenditure shall not be regarded as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State or by any person other than the first-mentioned person.”.

(2) Section 22 of the Finance Act, 1974 , is hereby amended by the substitution of the following subsection for subsection (11):

“(11) Expenditure shall not be regarded for any of the purposes of this section as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State or by any person other than the first-mentioned person.”.

(3) Section 52 of the Finance Act, 1986 , is hereby amended by the substitution, in paragraph (a) of subsection (1), of the following subparagraph for subparagraph (i):

“(i) expenditure shall not be regarded as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State or by any person other than the first-mentioned person, and”.

(4) This section shall apply and have effect as respects expenditure incurred on or after the 6th day of May, 1993.

Transfer of shares held by certain societies to members of society.

35.— (1) (a) In this section—

company” has the meaning assigned to it by section 2 (1) of the Capital Gains Tax Act, 1975 ;

consideration” means consideration in money or money's worth;

control”, in relation to a company, has the meaning assigned to it by section 102 of the Corporation Tax Act, 1976 ;

society” means a society registered under the Industrial and Provident Societies Acts, 1893 to 1978, which is an agricultural society or a fishery society within the meaning of section 18 of the Finance Act, 1978 .

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

(2) (a) Where, on or after the 6th day of April, 1993, a society, being a society which, at any time on or after that date, controls, or has had control of, a company, transfers to the members of the society shares owned by it in the company (hereafter in this section referred to as “the transfer”) and—

(i) the transfer, in so far as it relates to any member, is in respect of and in proportion to, or as nearly as may be in proportion to, that member's holding of shares in the society immediately before the transfer (hereafter in this section referred to as “the original shares”),

(ii) no consideration (apart from the consideration given by the members represented by the cancellation of the original shares referred to in subparagraph (iii)) for, or in connection with, the transfer is given to, or received from, any member (or any person who is connected with that member) by the society (or any person who is connected with the society), and

(iii) upon the transfer, or as soon as possible thereafter, the original shares (or the appropriate number of those shares) of each member are cancelled without any consideration (apart from the consideration given to the members represented by the transfer to the members of the shares in the company) for, or in connection with, such cancellation being given to, or received from, any member (or any person who is connected with that member) by the society (or any person who is connected with the society), and, where the original shares (or the appropriate number of those shares) have been issued to a member at different times, any cancellation of such shares shall involve those issued earlier rather than those issued later,

then, subject to subsection (5), subsections (3) and (4) shall apply and have effect.

(b) In paragraph (a) and subsection (4), the appropriate number, in relation to a member's original shares, means such portion (or as near as may be to such portion) of the total number of the referable shares owned by the member at the time of the transfer as bears to that number the same proportion as the total number of shares in the company which are subject to the transfer bears to the total number of shares in the company owned by the society immediately before the transfer; and the number of the referable shares owned by a member shall be an amount determined by the formula—

A × B

______

C

×

D

__

B

where—

A is the market value of the shares in the company owned by the society immediately before the transfer,

B is the total number of the shares in the society which are in issue immediately before the transfer,

C is the market value of the total assets (including the shares in the company) of the society immediately before the transfer, and

D is the number of shares in the society owned by the member immediately before the transfer.

(3) For the purposes of the Corporation Tax Acts, the transfer shall be treated—

(a) as not being a distribution within the meaning of Part IX of the Corporation Tax Act, 1976 , and

(b) as being for a consideration of such amount as would secure that, for the purposes of charging the gain on the disposal by the society of the shares owned by it in the company, neither a gain nor a loss would accrue to the society.

(4) For the purposes of the Capital Gains Tax Acts—

(a) the cancellation of the original shares (or the appropriate number of those shares) shall not be treated as involving any disposal of those shares, and

(b) each member shall be treated as if the shares transferred to him in the course of the transfer were acquired by him at the same time and for the same consideration at which the original shares (or the appropriate number of those shares) were acquired by him and, for the purposes of giving effect to this paragraph, where the original shares (or the appropriate number of those shares) have been issued to a member at different times, there shall be made all such apportionments as are, in the circumstances, just and reasonable.

(5) This section shall not apply or have effect unless it is shown that the transfer is effected for bona fide commercial reasons and does not form part of any arrangement or scheme of which the main purpose, or one of the main purposes, is avoidance of liability to corporation tax or capital gains tax.

(6) In a case where this section applies and has effect, the society concerned shall include in the return required to be made by it under section 143 of the Corporation Tax Act, 1976 , a statement of the total number of shares cancelled in accordance with subsection (2) (a) (iii).

Amendment of section 56 (taxation of shares issued in lieu of cash dividends) of Finance Act, 1974.

36. —(1) Section 56 of the Finance Act, 1974 , is hereby amended, as respects any option exercised on or after the 1st day of June, 1993—

(a) by the substitution for subsection (1) of the following subsection—

“(1) In this section—

company’ means any body corporate;

share’ means share in the share capital of a company and, other than in the definition of ‘quoted company’, includes stock and any other interest in the company;

quoted company’ means a company whose shares, or any class of whose shares—

(a) are listed in the official list of the Irish Stock Exchange or any other stock exchange, or

(b) are dealt in on the smaller companies market, the unlisted securities market or the exploration securities market of the Irish Stock Exchange or on any similar or corresponding market of any other stock exchange.”,

and

(b) in subsection (2) by the substitution for “company”, where it is first-mentioned, of “company which is not a quoted company”,

and the said subsection (2), as so amended, is set out in the Table to this section.

(2) Subsection (4) of section 56 of the said Act shall apply for the purposes of this section as it applies for the purposes of that section.

TABLE

(2) If any person, as a consequence of the exercise, whether before, on or after the declaration of a distribution of profits by a company which is not a quoted company, of an option to receive in respect of shares in the company either a sum in cash or additional share capital of the company, receives such additional share capital, he shall be deemed to have received from the company, instead of such share capital, income equal to the sum he would have received if he had received the distribution in cash instead.

Údarás na Gaeltachta and small enterprise grants.

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

(2) This section applies to a grant made on or after the 1st day of April, 1993, under section 10 (5) (a) of the Údarás na Gaeltachta Act, 1979 , or section 21 (5) (a) (as amended by the Industrial Development (Amendment) Act, 1991 ) of the Industrial Development Act, 1986 , being an employment grant—

(a) in the case of the said section 10 (5) (a), under the scheme known as “Deontais Fhostaíochta ó Údarás na Gaeltachta do Thionscnaimh Sheirbhíse Idir-Náisiúnta” or the scheme known as “Deontais Fhostaíochta ó Údarás na Gaeltachta do Thionscail Bheaga Dhéantúsaíochta”, or

(b) in the case of the said section 21 (5) (a), under the scheme known as “Scheme Governing the Making of Employment Grants to Small Industrial Undertakings”.

Market Development Fund and Employment Subsidy Scheme.

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

(2) This section applies to any payment made, whether before or after the passing of this Act, to an employer in respect of a person employed by him, being a payment made under—

(a) the Market Development Fund, being a fund established on the 6th day of October, 1992, and administered by An Bord Tráchtála—The Irish Trade Board, or

(b) the Employment Subsidy Scheme, being a scheme established on the 1st day of February, 1992, and administered by An Foras Áiseanna Saothair.