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39 1997

TAXES CONSOLIDATION ACT, 1997

PART 16

Income Tax Relief for Investment in Corporate Trades— Business Expansion Scheme and Seed Capital Scheme

Interpretation ( Part 16 ).

[FA84 s11(1), (3) and (4), s12(2) and (7) and s16(4); FA85 s13(a); FA90 s10(a); FA93 s25(a) and (b)(v); FA94 s16(1)(a)(i); FA95 s17(1)(a); FA96 s16; FA97 s9(a), s146(1) and Sch9 PtI par13(1)]

488. —(1) In this Part—

advance factory building” means a factory building the construction of which is—

(a) promoted by a local community group the objective of which, or one of the main objectives of which, is to promote the development of, and the creation of opportunities for employment in, its locality, and

(b) undertaken without any prior commitment, either direct or indirect, in writing or otherwise, by a person that either the person or any other person will enter into a lease for its use;

associate” has the same meaning in relation to a person as it has by virtue of subsection (3) of section 433 in relation to a participator, except that the reference in paragraph (b) of that subsection to any relative of a participator shall be excluded from such meaning;

certifying agency” means an industrial development agency, Bord Fáilte Éireann, An Bord Iascaigh Mhara or An Bord Tráchtála— The Irish Trade Board (as may be appropriate);

certifying Minister” means the Minister for Agriculture and Food, the Minister for Arts, Heritage, Gaeltacht and the Islands or the Minister for the Marine and Natural Resources (as may be appropriate);

control”, except in sections 493 (7) and 507 (2)(b), shall be construed in accordance with subsections (2) to (6) of section 432 ;

debenture” has the same meaning as in section 2 of the Companies Act, 1963 ;

director” shall be construed in accordance with section 433 (4);

eligible shares” means new ordinary shares which, throughout the period of 5 years beginning on the date on which they are issued, carry no present or future preferential right to dividends or to a company's assets on its winding up and no present or future preferential right to be redeemed;

factory building” has the same meaning as in section 2 of the Industrial Development Act, 1986 ;

full-time employee” and “full-time director” have the same meanings respectively as in section 250 ;

industrial development agency” means Forbairt, the Industrial Development Agency (Ireland), the Shannon Free Airport Development Company Limited or Údarás na Gaeltachta (as may be appropriate);

market value” shall be construed in accordance with section 548 ;

ordinary shares” means shares forming part of a company's ordinary share capital;

qualifying company” has the meaning assigned to it by section 495 ;

qualifying trading operations” has the meaning assigned to it by section 496 (2);

relevant employment”, in relation to a specified individual, means employment throughout the relevant period by the company in which the specified individual makes a relevant investment (being that individual's first such investment in that company) and where the specified individual is a full-time employee or full-time director of the company;

relevant investment”, in relation to a specified individual, means the amount or the aggregate of the amounts subscribed in a year of assessment by the specified individual for eligible shares in a qualifying company which carries on or intends to carry on relevant trading operations;

relevant period”, in relation to relief in respect of any eligible shares issued by a company, means—

(a) as respects sections 493 and 498 to 501 , the period beginning on the incorporation of the company (or, if the company was incorporated more than 2 years before the date on which the shares were issued, beginning 2 years before that date) and ending 5 years after the issue of the shares,

(b) as respects sections 495 , 496 , 503 and 507 , the period beginning on the date on which the shares were issued and ending either 3 years after that date or, where the company was not at that date carrying on a qualifying trade, 3 years after the date on which it subsequently began to carry on such a trade,

(c) as respects a relevant employment, the period beginning on the date on which the shares are issued or, if later, the date on which the employment commences and ending 12 months after that date, and

(d) as respects a specified individual, the period beginning on the date on which the shares are issued and ending either 2 years after that date or, where the company was not at that date carrying on relevant trading operations, 2 years after the date on which it subsequently began to carry on such operations;

relevant trading operations” has the meaning assigned to it by section 497 ;

specified individual” has the meaning assigned to it by section 494 ;

the relief” and “relief” mean relief under section 489 , and references to the amount of the relief shall be construed in accordance with subsection (6) of that section;

unquoted company” means a company none of whose shares, stocks or debentures are—

(a) listed in the official list of a stock exchange, or

(b) quoted on an unlisted securities market of a stock exchange other than on the market known as the Developing Companies Market of the Irish Stock Exchange.

(2) References in this Part to a disposal of shares include references to a disposal of an interest or right in or over the shares, and an individual shall be treated for the purposes of this Part as disposing of any shares which the individual is treated by virtue of section 587 as exchanging for other shares.

(3) References in this Part to the reduction of any amount include references to its reduction to nil.

(4) References in this Part to a trade shall be construed—

(a) without regard to so much of the definition of “trade” in section 3 as relates to adventures or concerns in the nature of trade, and

(b) as including—

(i) the construction and leasing of an advance factory building,

(ii) the research and development or other similar activity referred to in section 496 (2)(a)(x), and

(iii) the production, publication, marketing and promotion of a qualifying recording or qualifying recordings referred to in section 496 (2)(a)(xii);

but for the other purposes of the Tax Acts the question of whether a trade is being carried on shall be determined without regard to this subsection.

The relief.

[FA84 s12(1), (3) to (6A), (8) and (10) to (11); FA85 s13(b); FA87 s8(b); FA90 s10(b) and s34(1)(a) and (b)(ii), (2) and (4); FA91 s15(1)(a); FA93 s25(b)(i), (iii), (iv), (v) and (vi); FA95 s17(b); FA96 s17]

489. —(1) This Part shall apply for affording relief from income tax where, subject to subsection (2)

(a) an individual who qualifies for the relief subscribes for eligible shares in a qualifying company,

(b) those shares are issued to the individual for the purpose of raising money for a qualifying trade being carried on by the company or which the company intends to carry on, and

(c) the company provides satisfactory evidence, and it appears to the Revenue Commissioners after such consultation, if any, as may seem to them to be necessary with such person or body of persons as in their opinion may be of assistance to them, that the money was used, is being used or is intended to be used—

(i) for the purposes of—

(I) enabling the company, or enlarging its capacity, to undertake qualifying trading operations,

(II) enabling the company to engage in, or assisting the company in—

(A) research and development,

(B) the acquisition of technological information and data,

(C) the development of new or existing products or services, or

(D) the provision of new products or services,

(III) enabling the company to identify new markets, and to develop new and existing markets, for its products and services, or

(IV) enabling the company to increase its sales of products or provision of services,

and

(ii) with a view to the creation or maintenance of employment—

(I) in the company, or

(II) in the case of qualifying trading operations referred to in section 496 (2)(a)(ix), in either or both a company contracted to construct the advance factory building concerned and a company which enters into a lease for its use.

(2) Where the money raised for the purpose specified in subsection (1)(b) was used, is being used or is intended to be used—

(a) for the purposes of qualifying trading operations referred to in section 496 (2)(a)(iv) and in respect of which money is raised or intended to be raised under this Part by virtue of section 496 (2)(a)(iv)(II), the evidence referred to in subsection (1)(c) shall include the certificate referred to in section 496 (5),

(b) for the purposes of qualifying trading operations referred to in section 496 (2)(a)(vii), the evidence referred to in subsection (1)(c) shall include the certificate referred to in section 496 (7),

(c) for the purposes of qualifying trading operations referred to in section 496 (2)(a)(x) (in this paragraph referred to as “the operations”), the evidence referred to in subsection (1)(c) shall include a certificate by an industrial development agency certifying that it is satisfied that the operations—

(i) have the potential to result in the commencement of qualifying trading operations referred to in subparagraphs (i), (ii) and (viii) of section 496 (2)(a), and

(ii) have commenced,

(d) for the purposes of qualifying trading operations referred to in section 496 (2)(a)(xii), the evidence referred to in subsection (1)(c) shall include the certificate referred to in section 496 (8),

(e) for the purpose of the construction and the leasing of an advance factory building, the evidence referred to in subsection (1)(c) shall include a certificate by an industrial development agency certifying that it has satisfied itself that—

(i) the building is or will be an advance factory building, and

(ii) (I) the advance factory building is or will be situated in an area which, on the basis of guidelines agreed with the consent of the Minister for Finance between the industrial development agency and the Minister for Enterprise, Trade and Employment or the Minister for Arts, Heritage, Gaeltacht and the Islands (as may be appropriate in the circumstances), was or is in particular need of development and of the creation of opportunities for employment, and

(II) the construction of the advance factory building contributes or will contribute significantly to meeting those needs, and

(f) for the purposes of relevant trading operations, the evidence referred to in subsection (1)(c) shall include a certificate under section 497 (2).

(3) Subject to subsections (4) and (5), relief in respect of the amount subscribed by an individual for any eligible shares shall be given as a deduction of that amount from his or her total income for the year of assessment in which the shares are issued.

(4) Where—

(a) in accordance with section 508 , relief is due in respect of an amount subscribed as nominee for a qualifying individual by the managers of a designated fund, and

(b) the eligible shares in respect of which the amount is subscribed are issued in the year of assessment following the year of assessment in which that amount was subscribed to the designated fund,

the individual may elect by notice in writing to the inspector to have the relief due given as a deduction from his or her total income for the year of assessment in which the amount was subscribed to the designated fund, instead of (as provided for in subsection (3)) as a deduction from his or her total income for the year of assessment in which the shares are issued.

(5) (a) Subject to this subsection, a specified individual may, in relation to a relevant investment made by such individual (being that individual's first such investment), elect by notice in writing to the inspector to have the relief due given as a deduction from such individual's total income for any one of the 5 years of assessment immediately before the year of assessment in which the eligible shares in respect of that investment are issued which such individual nominates for the purpose, instead of (as provided for in subsection (3)) as a deduction from the specified individual's total income for the year of assessment in which the shares are issued, and accordingly, subject to section 490 and paragraphs (c) and (d), for the purpose of granting such relief (but for no other purpose of this Part) the shares shall be deemed to have been issued in the year of assessment so nominated.

(b) Where the specified individual makes a subsequent relevant investment (being that individual's second such investment)—

(i) in the same company as such individual's first such investment, and

(ii) within either the year of assessment following the end of the year of assessment in which such individual's first such investment was made or the year of assessment subsequent to that year,

then, the specified individual may, in relation to such individual's second such investment, elect by notice in writing to the inspector to have the relief due given as a deduction from such individual's total income for any one of the 5 years of assessment immediately before the year of assessment in which the eligible shares in respect of such individual's first such investment were issued which such individual nominates for the purpose, instead of (as provided for in subsection (3)) as a deduction from such individual's total income for the year of assessment in which the eligible shares in respect of such individual's second such investment are issued, and accordingly, subject to section 490 and paragraphs (c) and (d), for the purpose of granting such relief (but for no other purpose of this Part) the shares issued in respect of the second such investment shall be deemed to have been issued in the year of assessment so nominated.

(c) Where any of the years of assessment following the year of assessment nominated under paragraph (a) or (b), as the case may be, precede the year of assessment in which the eligible shares in respect of the specified individual's first relevant investment are in fact issued, subsections (3) to (5) of section 490 shall operate to give relief in such years of assessment as may be nominated by such individual for that purpose.

(d) To the extent that the amount of the relief which would be due in respect of the specified individual's first relevant investment or second relevant investment, as the case may be, has not been given in accordance with paragraphs (a) to (c) it shall, subject to subsections (3) to (5) of section 490 , be given for the year of assessment in which the eligible shares in respect of the first such investment or the second such investment, as the case may be, are in fact issued or, if appropriate, a subsequent year of assessment.

(e) This subsection shall apply in respect of not more than 2 relevant investments made by a specified individual on or after the 2nd day of June, 1995.

(6) References in this Part to the amount of the relief are references to the amount of the deduction given under subsection (3), (4) or (5) (as may be appropriate).

(7) (a) Subject to paragraphs (b) and (c), the relief shall be given on a claim and shall not be allowed—

(i) (I) in the case of a relevant investment, unless and until the company commences to carry on the relevant trading operations, and

(II) in any other case, unless and until the company has carried on the trade for 4 months, and

(ii) if the company is not carrying on that trade at the time when the shares are issued, unless the company—

(I) expends not less than 80 per cent of the money subscribed for the shares on research and development work which is connected with and undertaken with a view to the carrying on of the trade, and begins to carry on the trade within 3 years after that time,

or

(II) otherwise begins to carry on the trade within 2 years after that time.

(b) In the case of qualifying trading operations referred to in section 496 (2)(a)(ix), for the purposes of paragraph (a), the trade shall be deemed to have commenced on the date on which the construction of the advance factory building commenced.

(c) In the case of qualifying trading operations referred to in section 496 (2)(a)(x), for the purposes of paragraph (a), the trade shall be deemed to have commenced on the date on which the certificate referred to in subsection (2)(c) was issued.

(8) Subject to subsection (7)(a)(i), a claim for relief may be allowed at any time if the conditions for the relief are then satisfied.

(9) In the case of a claim allowed before the end of the relevant period, the relief shall be withdrawn if by reason of any subsequent event it appears that the claimant was not entitled to the relief allowed.

(10) In the case of a claim allowed before a specified individual commences a relevant employment with the company in which that individual has made a relevant investment (being that individual's first such investment), the relief shall be withdrawn if the specified individual fails to commence such employment—

(a) within the year of assessment in which the investment is made, or

(b) if later, within 6 months of the date of—

(i) where the investment consists of the subscription of only one amount for eligible shares, that subscription, or

(ii) where the investment consists of the subscription of more than one amount for eligible shares, the last such subscription.

(11) Where by reason of its being wound up, or dissolved without winding up, the company carries on the qualifying trade for a period shorter than 4 months, subsection (7)(a)(i) shall apply as if it referred to that shorter period but only if it is shown that the winding up or dissolution was for bona fide commercial reasons and not as part of a scheme or arrangement the main purpose or one of the main purposes of which was the avoidance of tax.

(12) Subject to section 506 , no account shall be taken of the relief, in so far as it is not withdrawn, in determining whether any sums are excluded by virtue of section 554 from the sums allowable as a deduction in the computation of gains and losses for the purposes of the Capital Gains Tax Acts.

(13) Where an individual is entitled to relief under this section in respect of a subscription by him or her for eligible shares in a company, he or she shall not be entitled to relief in respect of that subscription under section 479 .

(14) (a) In this subsection, “distribution” has the same meaning as in the Corporation Tax Acts.

(b) For the purposes of this subsection, an amount specified or implied shall include an amount specified or implied in a foreign currency.

(c) This subsection shall apply to shares in a company where any agreement, arrangement or understanding exists which could reasonably be considered to eliminate the risk that the person beneficially owning those shares—

(i) might, at or after a time specified in or implied by that agreement, arrangement or understanding, be unable to realise directly or indirectly in money or money's worth an amount so specified or implied, other than a distribution, in respect of those shares, or

(ii) might not receive an amount so specified or implied of distributions in respect of those shares.

(d) The reference in this subsection to the person beneficially owning shares shall be deemed to be a reference to both that person and any person connected with that person.

(e) Relief from income tax shall not be allowed under this Part in respect of the amount subscribed for any shares to which this subsection applies.

(15) This section shall apply only where the shares concerned are issued in the period commencing on the 6th day of April, 1984, and ending on the 5th day of April, 1999.

Limits on the relief.

[ITA67 s195B(3) and (6); FA84 s13(1) to (2C); FA87 s9; FA93 s10(1) and s25(c)(i); FA96 s18]

490.— (1) (a) Subject to section 508 and paragraph (b), the relief shall not be given in respect of any amount subscribed by an individual for eligible shares issued to the individual by any company in any year of assessment unless the amount or total amount subscribed by the individual for the eligible shares issued to the individual by the company in that year is £200 or more.

(b) In the case of an individual who is a married person assessed to tax for a year of assessment in accordance with section 1017 , any amount subscribed by the individual's spouse for eligible shares issued to that spouse in that year of assessment by the company shall be deemed to have been subscribed by the individual for eligible shares issued to the individual by the company.

(2) The relief shall not be given to the extent to which the amount or total amount subscribed by an individual for eligible shares issued to the individual in any year of assessment (whether or not by the same company) exceeds £25,000.

(3) (a) Where in any year of assessment a greater amount of relief would be given to an individual in respect of the amount or the total amount subscribed by the individual for eligible shares (in this subsection referred to as “the relevant subscription”) issued to the individual in that year or, where section 489 (4) applies, in the following year of assessment but for either or both of the following reasons—

(i) an insufficiency of total income, or

(ii) the operation of subsection (2),

the amount of the relief which would be given but for those reasons less the amount or the aggregate amount of any relief in respect of the relevant subscription which is given in that year of assessment shall be carried forward to the next year of assessment, and shall be treated for the purposes of the relief as an amount subscribed directly by the individual for eligible shares issued to the individual in that next year.

(b) This subsection shall not apply for any year of assessment subsequent to the year 1998-99.

(4) (a) If and in so far as an amount once carried forward to a year of assessment under subsection (3) (and treated as an amount subscribed directly by an individual for eligible shares issued to the individual in that year of assessment) is not deducted from his or her total income for that year of assessment, it shall be carried forward again to the next year of assessment (and treated as an amount subscribed directly by the individual for eligible shares issued to the individual in that next year), and so on for succeeding years of assessment.

(b) This subsection shall not apply for any year of assessment subsequent to the year 1998-99.

(5) The relief shall be given to an individual for any year of assessment in the following order—

(a) in the first instance, in respect of an amount carried forward from an earlier year of assessment in accordance with subsection (3) or (4) and, in respect of such an amount so carried forward, for an earlier year of assessment in priority to a later year of assessment, and

(b) only thereafter, in respect of any other amount for which relief is to be given in that year of assessment.

Restriction on relief where amounts raised exceed permitted maximum.

[FA84 s13A; FA89 s9; FA91 s15(1)(c) and s17(1)(b) and (c); FA93 s25(d)(i)(II) and FA96 s19(1) and (2); FA97 s146(1) and Sch9 par13(2)]

491. —(1) In this section, “qualifying subsidiary”, in relation to a company, means a subsidiary of that company of a kind which a company may have by virtue of section 507 .

(2) (a) Subject to this section, where a company raises any amount through the issue of eligible shares (in this section referred to as “the relevant issue”), relief shall not be given in respect of the excess of the amount over the amount determined by the formula—

£1,000,000 – A

where A is the lesser of—

(i) £1,000,000, and

(ii) an amount equal to the aggregate of all amounts raised by the company through the issue of eligible shares at any time before the relevant issue.

(b) Notwithstanding paragraph (a), in the case of a company which, or whose qualifying subsidiary, either carries on or intends to carry on qualifying trading operations referred to in section 496 (2) (a) (iv), this section shall apply, in relation to that company and money raised or intended to be raised by it under this Part by virtue of section 496 (2) (a) (iv) (II), as if in the formula in paragraph (a) and in the formula in subsection (3) “£100,000” were substituted for “£1,000,000” in each place where it occurs.

(3) Where a company raises any amount through a relevant issue and that company is associated (within the meaning of this section) with one or more other companies, then, as respects that company, relief shall not be given in respect of the excess of the amount so raised over the amount determined by the formula—

£1,000,000 – B

where B is an amount equal to so much as does not exceed £1,000,000 of the aggregate of all amounts raised through the issue of eligible shares at any time before or on the date of the relevant issue (other than the amount raised through the relevant issue) by all of the companies (including that company) which are associated within the meaning of this section.

(4) For the purposes of this section, a company shall be associated with another company where—

(a) in the case of that company, or a company which is, or was at any time, its qualifying subsidiary, and

(b) that other company, or a company which is, or was at any time, its qualifying subsidiary,

it could reasonably be considered that—

(i) both companies act in pursuit of a common purpose,

(ii) any person or any group of persons or groups of persons having a reasonable commonality of identity have or had the means or power, either directly or indirectly, to determine the trading operations carried on or to be carried on by both companies, or

(iii) both companies are under the control of any person or group of persons or groups of persons having a reasonable commonality of identity;

but for the purposes of this section a company shall not be considered as associated with another company by reason only of the fact that a subscription for eligible shares in both companies is made by a person or persons having the management of an investment fund designated under section 508 as nominee for any person or group or groups of persons.

(5) In determining for the purposes of the formula in subsection (2)(a) or, as the case may be, the formula in subsection (3) the amount to which paragraph (ii) of the definition of “A” in subsection (2)(a) or, as the case may be, the amount to which the definition of “B” in subsection (3) relates, account shall not be taken of any amount—

(a) which is subscribed by a person other than an individual who qualifies for relief, or

(b) in respect of which relief is precluded by virtue of section 490 .

(6) Where as a consequence of subsection (2) or (3) the giving of relief would be precluded on claims in respect of shares issued to 2 or more individuals, the available relief shall be divided between them respectively in proportion to the amounts which have been subscribed by them for the shares to which their claims relate and which apart from this section would be eligible for relief.

Certification in respect of an issue of eligible shares where aggregate of amounts raised by a company exceeds £250,000.

[FA84 s13B; FA96 s20; FA97 s146(1) and Sch9 par13(3)]

492. —(1) (a) In this section, “relevant certificate” means a certificate from an authority (within the meaning of this section) given to a company in relation to a relevant issue, certifying, on the basis of a business plan of the company and any other information which the company supplies to the authority or which the authority may reasonably request the company to furnish to it, that, having regard to the amount of money raised or to be raised by the relevant issue, the authority is satisfied that—

(i) the purpose or purposes specified in section 489 (1)(c)(i) for which the money raised or to be raised is intended to be used has or have the potential to create a reasonable level of additional sustainable employment in the company, or

(ii) the money raised or to be raised is necessary to secure the survival of the company and maintain a reasonable level of sustainable employment.

(b) In considering whether to give a relevant certificate to a company, an authority shall have regard only to such guidelines for that purpose as may from time to time be agreed—

(i) with the consent of the Minister for Finance, between the certifying agency and the Minister for Arts, Heritage, Gaeltacht and the Islands or the Minister for Enterprise, Trade and Employment or the Minister for the Marine and Natural Resources or the Minister for Tourism, Sport and Recreation (as may be appropriate in the circumstances), or

(ii) between the certifying Minister and the Minister for Finance,

and those guidelines may, without prejudice to the generality of the foregoing, include provision—

(I) for the submission to the authority by the company concerned, in relation to its business plan, of an annual progress report in a form to be specified by the authority,

(II) to ensure that money raised through a relevant issue is used by a company or its qualifying subsidiary only for one or more of the purposes specified in section 489 (1)(c)(i) and for no other purposes,

(III) that the issue of the certificate does not represent any form of approval by the authority of the commercial viability of the qualifying trading operations carried on or to be carried on by the company concerned, and

(IV) for regarding as null and void from its date of issue a relevant certificate where the company concerned fails to comply with its business plan or any modification of that plan which may be agreed between it and the authority.

(2) In this section, “combined certificate” means a certificate given by an authority to a company which comprises—

(a) (i) a certificate referred to in section 489 (2)(c),

(ii) an approval of a development and marketing plan referred to section 495 (6)(a),

(iii) (I) an approval of a development and marketing plan referred to in section 495 (4)(a), and

(II) a certificate referred to in section 496 (7),

or

(iv) a certificate referred to in section 496 (8),

and

(b) a relevant certificate.

(3) In this section, “authority” means—

(a) in respect of qualifying trading operations referred to in subparagraph (i), (ii), (vi) or (x) of section 496 (2)(a), Forbairt, the Industrial Development Agency (Ireland), the Shannon Free Airport Development Company Limited or Údarás na Gaeltachta (as may be appropriate); but, for the purposes of qualifying trading operations referred to in subparagraph (i) of section 496 (2)(a), “authority” shall mean Bord Iascaigh Mhara in the case of those qualifying trading operations in respect of which Bord Iascaigh Mhara administers a scheme of assistance to grant aid,

(b) in respect of qualifying trading operations referred to in subparagraph (vii), (viii) or (xi) of section 496 (2)(a), the Minister for Agriculture and Food,

(c) in respect of qualifying trading operations referred to in subparagraph (xii) of section 496 (2)(a), the Minister for Arts, Heritage, Gaeltacht and the Islands,

(d) in respect of qualifying trading operations referred to in subparagraph (xiii) of section 496 (2)(a), Bord Fáilte Éireann, and

(e) in respect of qualifying trading operations referred to in subparagraph (xiv) of section 496 (2)(a), An Bord Tráchtála.

(4) An authority shall not issue a combined certificate unless and until all necessary conditions have been satisfied for the issue of—

(a) in the first instance (as may be appropriate)—

(i) the certificate referred to in subparagraph (i) or (iv), as the case may be, of subsection (2)(a),

(ii) the approval referred to in subsection (2)(a)(ii), or

(iii) the approval and certificate referred to in subsection (2)(a)(iii),

and

(b) only thereafter, the relevant certificate.

(5) (a) Subject to this section, where on or after the 23rd day of January, 1996, a company raises any amount through the issue of eligible shares (in this section referred to as “the relevant issue”) for the purpose of qualifying trading operations other than those operations referred to in section 496 (2)(a)(ix), relief shall not be given in respect of the excess of the amount over the amount determined by the formula set out in the Table to this subsection unless the company produces to the Revenue Commissioners a relevant certificate or a combined certificate.

(b) Where the company referred to in paragraph (a) is associated with one or more other companies within the meaning of section 491 , then, A in the formula set out in the Table to this subsection shall include the aggregate of the amounts raised through the issue of eligible shares at any time before or on the date of the relevant issue (other than the amount raised through the relevant issue) by all the companies so associated (including that company).

TABLE

£250,000 – A

where A is the lesser of—

(i) £250,000, or

(ii) an amount equal to the aggregate of all amounts raised by the company through the issue of eligible shares before or on the date of the relevant issue (other than the amount raised through the relevant issue).

(6) Subsections (5) and (6) of section 491 shall, with any necessary modifications, apply for the purposes of this section as they apply for the purposes of that section.

Individuals qualifying for relief.

[FA84 s14; FA93 s25(e); FA94 s16(1)(b); FA97 s146(1) and Sch9 par13(4)]

493. —(1) (a) An individual shall qualify for relief if he or she subscribes on his or her own behalf for eligible shares in a qualifying company and is not at any time in the relevant period connected with the company.

(b) For the purposes of this section and paragraph 2 of Schedule 10 , any question whether an individual is connected with a company shall be determined in accordance with this section.

(2) An individual shall be connected with a company if the individual or an associate of the individual is—

(a) a partner of the company, or

(b) subject to subsection (3), a director or employee of the company or of another company which is a partner of that company.

(3) An individual shall not be connected with a company by reason only that the individual or an associate of the individual is a director or employee of the company or of another company which is a partner of that company unless the individual or the individual's associate (or a partnership of which the individual or the individual's associate is a member) receives a payment from either company during the period of 5 years beginning on the date on which the shares are issued or is entitled to receive such a payment in respect of that period or any part of it; but for that purpose there shall be disregarded—

(a) any payment or reimbursement of travelling or other expenses wholly, exclusively and necessarily incurred by the individual or the individual's associate in the performance of the duties of the individual or of the associate, as the case may be, as such director or employee,

(b) any interest which represents no more than a reasonable commercial return on money lent to either company,

(c) any dividend or other distribution paid or made by either company which does not exceed a normal return on the investment,

(d) any payment for the supply of goods to either company which does not exceed their market value, and

(e) any reasonable and necessary remuneration which—

(i) (I) is paid for services rendered to either company in the course of a trade or profession (not being secretarial or managerial services or services of a kind provided by the company itself), and

(II) is taken into account in computing the profits or gains of the trade or profession under Case I or II of Schedule D or would be so taken into account if it fell in a period on the basis of which those profits or gains are assessed under that Schedule,

or

(ii) in a case where the individual is a director or an employee of either company and is not otherwise connected with either company, is paid for service rendered to the company of which the individual is a director or an employee in the course of the directorship or the employment.

(4) An individual shall be connected with a company if he or she directly or indirectly possesses or is entitled to acquire more than 30 per cent of—

(a) the issued ordinary share capital of the company,

(b) the loan capital and issued share capital of the company, or

(c) the voting power in the company.

(5) For the purposes of subsection (4)(b), the loan capital of a company shall be treated as including any debt incurred by the company—

(a) for any money borrowed or capital assets acquired by the company,

(b) for any right to receive income created in favour of the company, or

(c) for consideration the value of which to the company was (at the time when the debt was incurred) substantially less than the amount of the debt (including any premium on the debt).

(6) An individual shall be connected with a company if he or she directly or indirectly possesses or is entitled to acquire such rights as would, in the event of the winding up of the company or in other circumstances, entitle the individual to receive more than 30 per cent of the assets of the company which would at that time be available for distribution to equity holders of the company, and for the purposes of this subsection—

(a) the persons who are equity holders of the company, and

(b) the percentage of the assets of the company to which the individual would be entitled,

shall be determined in accordance with sections 413 and 415 , references in section 415 to the first company being construed as references to an equity holder and references to a winding up being construed as including references to any other circumstances in which assets of the company are available for distribution to its equity holders.

(7) An individual shall be connected with a company if he or she has control of it within the meaning of section 11 .

(8) (a) An individual shall not be connected with a company by reason only of subsection (4), (6) or (7)

(i) if throughout the relevant period the aggregate of all amounts subscribed for the issued share capital and the loan capital (within the meaning of subsection (5)) of the company does not exceed £250,000, or

(ii) in the case of a specified individual, by virtue only of a relevant investment in respect of which he or she has been given relief in accordance with section 489 (5).

(b) Notwithstanding paragraph (a), relief granted to an individual in respect of a subscription for eligible shares at a time when by virtue of this subsection the individual was not connected with the company shall not be withdrawn by reason only that the individual subsequently becomes connected with the company by virtue of subsection (4), (6) or (7).

(9) For the purposes of this section, an individual shall be treated as entitled to acquire anything which he or she is entitled to acquire at a future date or will at a future date be entitled to acquire, and there shall be attributed to any person any rights or powers of any other person who is an associate of that person.

(10) In determining for the purposes of this section whether an individual is connected with a company, no debt incurred by the company by overdrawing an account with a person carrying on a business of banking shall be treated as loan capital of the company if the debt arose in the ordinary course of that business.

(11) Where an individual subscribes for shares in a company with which the individual is not connected (either within the meaning of this section or by virtue of paragraph 2(2)(b) of Schedule 10 ), he or she shall nevertheless be treated as connected with it if he or she subscribes for the shares as part of any arrangement which provides for another person to subscribe for shares in another company with which the individual or any other individual who is a party to the arrangement is connected (within the meaning of this section or by virtue of that paragraph).

Specified individuals.

[FA84 s14A; FA95 s17(1)(d); FA97 s9(b)]

494. —(1) An individual shall be a specified individual if he or she qualifies for relief in respect of a relevant investment and complies with this section.

(2) (a) Subject to paragraph (b), the individual, in each of the 3 years of assessment preceding the year of assessment which precedes the year of assessment in which that individual makes a relevant investment (being that individual's first such investment), shall not have been in receipt of income chargeable to tax otherwise than under—

(i) Schedule E, or

(ii) Case III of Schedule D in respect of profits or gains from an office or employment held or exercised outside the State,

in excess of the lesser of—

(I) the aggregate of the amounts, if any, of that individual's income chargeable to tax under Schedule E and under Case III of Schedule D in respect of the profits or gains referred to in subparagraph (ii), and

(II) £15,000.

(b) Paragraph (a) shall not apply to an individual who makes a subscription for eligible shares in a qualifying company which carries on or intends to carry on qualifying trading operations referred to in section 496 (2)(a)(iv).

(3) The individual shall throughout the relevant period possess at least 15 per cent of—

(a) as respects a subscription for eligible shares made before the 2nd day of June, 1995, the issued share capital, or

(b) as respects a subscription for eligible shares made on or after that date, the issued ordinary share capital,

of the company in which that individual makes a relevant investment.

(4) (a) For the purposes of paragraph (b) and subsections (5) and (6), “specified date”, in relation to a relevant investment in a company, means—

(i) where the investment consists of the subscription of only one amount for eligible shares, the date of that subscription, or

(ii) where that investment consists of the subscription of more than one amount for eligible shares, the date of the last such subscription.

(b) Subject to subsections (5) and (6), the individual at the specified date, in relation to that individual's first relevant investment in a company, or within the period of 12 months immediately preceding that date, either directly or indirectly, shall not possess or have possessed, or shall not be or have been entitled to acquire, more than 15 per cent of—

(i) the issued ordinary share capital,

(ii) the loan capital (within the meaning of section 493 (5)) and the issued share capital, or

(iii) the voting power,

of any company other than—

(I) the company in which that individual makes that relevant investment, or

(II) a company to which subsection (5) applies.

(5) This subsection shall apply to a company which during a period of 5 years ending on the specified date in relation to an individual's first relevant investment in a company—

(a) was not entitled to any assets, other than cash on hands or a sum of money on deposit (within the meaning of section 895 ) not exceeding £100,

(b) did not carry on a trade, profession, business or other activity including the making of investments, and

(c) did not pay charges on income within the meaning of section 243 .

(6) (a) For the purposes of paragraph (b)

(i) “accounting period” means an accounting period determined in accordance with section 27 , and

(ii) a company shall be regarded as a company which carries on wholly or mainly trading operations referred to in paragraph (b)(i) only if in each of the 3 accounting periods referred to in paragraph (b)(ii) the total amount receivable from sales made or services rendered in the course of such trading operations is not less than 75 per cent of the total amount receivable by the company from all sales made and services rendered in the course of the trade.

(b) An individual shall not be regarded as failing to satisfy the requirements of subsection (4) merely by reason of the fact that the individual does not satisfy those requirements in relation to only one company (other than the company in which the individual makes his or her first relevant investment or a company to which subsection (5) applies)—

(i) which exists wholly or mainly for the purpose of carrying on trading operations other than trading operations consisting of dealing in shares, securities, land, currencies, futures or traded options, and

(ii) where the total amount receivable by that company from sales made and services rendered in the course of that company's trading operations did not exceed £100,000 in each of that company's 3 accounting periods immediately preceding the accounting period of that company in which the specified date occurs in relation to that individual's first relevant investment.

(7) An individual shall not be regarded as ceasing to comply with subsection (3) merely by reason of the fact that the company in which the individual makes a relevant investment is wound up, or dissolved without winding up, before the end of the relevant period but only if it is shown that the winding up or dissolution is for bona fide commercial reasons and is not part of a scheme or arrangement the main purpose or one of the main purposes of which was the avoidance of tax.

Qualifying companies.

[FA84 s15(1) to (12); FA85 s13(c); FA87 s10(a); FA91 s17(2); FA93 s25(f); FA95 s17(1)(e); FA96 s22; FA97 s146(1) and Sch9 PtI par13(5)]

495. —(1) In this section, “qualifying subsidiary”, in relation to a company, means a subsidiary of that company of a kind which a company may have by virtue of section 507 .

(2) A company shall be a qualifying company if it is incorporated in the State and complies with this section.

(3) (a) The company shall throughout the relevant period be an unquoted company which is resident in the State and not resident elsewhere, and be—

(i) a company which exists wholly for the purpose of carrying on wholly or mainly in the State one or more qualifying trades, or

(ii) a company whose business consists wholly of—

(I) the holding of shares or securities of, or the making of loans to, one or more qualifying subsidiaries of the company, or

(II) both the holding of such shares or securities, or the making of such loans and the carrying on wholly or mainly in the State of one or more qualifying trades.

(b) Where a company raises any amount through the issue of eligible shares for the purposes of raising money for a qualifying trade which is being carried on by a qualifying subsidiary or which such a qualifying subsidiary intends to carry on, the amount so raised shall be used for the purpose of acquiring eligible shares in the qualifying subsidiary and for no other purpose.

(4) (a) A company whose trade consists of the cultivation of horticultural produce within the meaning of section 496 (7) shall not be a qualifying company unless and until it has shown to the satisfaction of the Revenue Commissioners that it has submitted to, and has had approved of by, the Minister for Agriculture and Food (in this subsection referred to as “the Minister”) a 3 year development and marketing plan in respect of the company's trade, being a plan primarily designed and formulated to increase the exportation of such produce or to displace the importation of such produce.

(b) In considering whether to approve of such a plan, the Minister shall have regard only to such guidelines in relation to such approval as may from time to time be agreed between the Minister and the Minister for Finance, and those guidelines may, without prejudice to the generality of the foregoing, set out—

(i) the extent to which the company's interest in land and buildings (other than greenhouses) may form part of its total assets,

(ii) specific requirements which have to be met in order to comply with either of the objectives mentioned in paragraph (a), and

(iii) the extent to which the money raised through the issue of eligible shares should be used to identify new markets and to develop new or existing markets for the company's produce.

(5) A company whose trade consists of the production, publication, marketing and promotion of a qualifying recording within the meaning of section 496 (8) shall not be a qualifying company—

(a) unless it exists solely for the purposes of the production, publication, marketing and promotion of a qualifying recording or qualifying recordings by only one new artist, and

(b) unless and until it shows to the satisfaction of the Revenue Commissioners that a certificate referred to in section 496 (8) has been given and not revoked by the Minister for Arts, Heritage, Gaeltacht and the Islands to the company in relation to such qualifying recording or qualifying recordings;

but, where a certificate referred to in section 496 (8) is revoked by the Minister for Arts, Heritage, Gaeltacht and the Islands, the company shall not be a qualifying company.

(6) (a) A company whose trade includes one or more tourist traffic undertakings within the meaning of section 496 (9) shall not be a qualifying company unless and until it has shown to the satisfaction of the Revenue Commissioners that it has submitted to, and has had approved of by, Bord Fáilte Éireann a 3 year development and marketing plan in respect of that undertaking or those undertakings, as the case may be, being a plan primarily designed and formulated to increase tourist traffic and revenue from outside the State.

(b) In considering whether to approve of such a plan, Bord Fáilte Éireann shall have regard only to such guidelines in relation to such approval as may from time to time be agreed, with the consent of the Minister for Finance, between it and the Minister for Tourism, Sport and Recreation, and those guidelines may, without prejudice to the generality of the foregoing, set out—

(i) the extent to which the company's interests in land and buildings may form part of its total assets,

(ii) specific requirements which have to be met in order to comply with the objective mentioned in paragraph (a), and

(iii) the extent to which the money raised through the issue of eligible shares should be used in promoting outside the State the undertaking or undertakings, as the case may be.

(7) Without prejudice to the generality of subsection (3) but subject to subsection (8), a company shall cease to comply with subsection (3) if before the end of the relevant period a resolution is passed, or an order is made, for the winding up of the company (or, in the case of a winding up otherwise than under the Companies Act, 1963 , any other act is done for the like purpose) or the company is dissolved without winding up.

(8) A company shall not be regarded as ceasing to comply with subsection (3) by reason only of the fact that it is wound up or dissolved without winding up if—

(a) it is shown that the winding up or dissolution is for bonafide commercial reasons and not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, and

(b) the company's net assets, if any, are distributed to its members before the end of the relevant period or, in the case of a winding up, the end (if later) of 3 years from the commencement of the winding up.

(9) The company's share capital shall not at any time in the relevant period include any issued shares not fully paid up.

(10) Subject to section 507 , the company shall not at any time in the relevant period—

(a) control (or together with any person connected with it control) another company or be under the control of another company (or of another company and any person connected with that other company), or

(b) be a 51 per cent subsidiary of another company or itself have a 51 per cent subsidiary,

and no arrangements shall be in existence at any time in that period by virtue of which the company could fall within paragraph (a) or (b).

(11) A company shall not be a qualifying company if, in the case of a company in which a relevant investment is made by a specified individual (being that individual's first such investment in that company), any transaction in the relevant period between the company and another company (being the immediate former employer of the individual), or a company which controls or is under the control of that other company, is otherwise than by means of a transaction at arm's length, or if—

(a) (i) an individual has acquired a controlling interest in the company's trade after the 5th day of April, 1984, and

(ii) at any time in the period mentioned in subsection (14) the individual has or has had a controlling interest in another trade,

and

(b) the trade carried on by the company or a substantial part of that trade—

(i) is concerned with the same or similar types of property or parts of property or provides the same or similar services or facilities as the other trade, or

(ii) serves substantially the same or similar outlets or markets as the other trade.

(12) For the purposes of this section, a person shall have a controlling interest in a trade—

(a) in the case of a trade carried on by a company, if—

(i) such person controls the company,

(ii) the company is a close company for the purposes of the Corporation Tax Acts and such person or an associate of such person is a director of the company and the beneficial owner of, or able directly or through the medium of other companies or by any other indirect means to control, more than 30 per cent of the ordinary share capital of the company, or

(iii) not less than 50 per cent of the trade could, in accordance with section 400 (2), be regarded as belonging to such person,

or

(b) in any other case, if such person is entitled to not less than 50 per cent of the assets used for, or the income arising from, the trade.

(13) For the purposes of subsection (12), there shall be attributed to any person any rights or powers of any other person who is an associate of that person.

(14) The period referred to in subsection (11)(a)(ii) shall be the period beginning 2 years before and ending 3 years after—

(a) the date on which the shares were issued, or

(b) if later, the date on which the company began to carry on the trade.

(15) In subsections (11) and (14), references to a company's trade shall include references to the trade of any of its subsidiaries.

Qualifying trades.

[FA84 s16(1) to (3); FA87 s11; FA88 s7; FA89 s9(c)(i); FA90 s10(c); FA91 s15(1)(c)(ii) and (iii); FA93 s25(g)(i); FA94 s16(1)(c); FA95 s17(1)(f); FA96 s23; FA97 s9(c)]

496. —(1) A trade shall be a qualifying trade if it complies with the requirements of this section.

(2) The trade shall throughout the relevant period—

(a) consist wholly or mainly of one or more of the following trading operations (in this Part referred to as “qualifying trading operations”)—

(i) the manufacture of goods within the meaning of Part 14 ; but—

(I) those trading operations or activities included in the definition, or regarded as the manufacture in the State, of “goods” for the purpose of Part 14 by virtue of subsections (3), (11), (12), (16), (17) and (19) of section 443 and of section 446 shall not, subject to the following provisions of this paragraph, be regarded as qualifying trading operations for the purposes of this Part, and

(II) the production of a film (within the meaning of section 481 ) shall not be regarded as qualifying trading operations for the purposes of this Part,

(ii) the rendering of services (other than relevant trading operations within the meaning of section 446 ) in the course of a service industry (within the meaning of the Industrial Development Act, 1986 ) in respect of which—

(I) (A) a grant towards the employment of persons was made by Forbairt or the Industrial Development Agency (Ireland) under section 12 (2) of the Industrial Development Act, 1993 , or

(B) shares in the qualifying company concerned were purchased or taken by Forbairt or the Industrial Development Agency (Ireland) in accordance with section 31 of the Industrial Development Act, 1986 ,

(II) a grant under section 3, or financial assistance under section 4 of the Shannon Free Airport Development Company Limited (Amendment) Act, 1970 , was made available by the Shannon Free Airport Development Company Limited, or

(III) financial assistance was made available by Údarás na Gaeltachta under section 10 of the Údarás na Gaeltachta Act, 1979 ,

(iii) in respect of a relevant investment, the rendering of services referred to in subparagraph (ii) in respect of which an employment grant would have been made or a grant or financial assistance would have been made available, as the case may be, by an industrial development agency under one of the provisions referred to in that subparagraph only for the fact that the industrial development agency concerned was or is precluded from making such an employment grant or making available such a grant or financial assistance, as the case may be, by reason of the fact that a grant or financial assistance had already been made by some other person,

(iv) in respect of—

(I) a relevant investment, or

(II) a subscription for eligible shares, other than such a subscription consisting of a relevant investment, made on or before the 5th day of April, 1998, and in respect of which a certificate for the purposes of this Part has been issued in accordance with subsection (5),

and notwithstanding subparagraph (ii), the rendering of relevant trading operations (within the meaning of section 446 ) carried on for the purposes of or in connection with trading operations on an exchange facility established in the Custom House Docks Area (within the meaning of section 322 ),

(v) in respect of a relevant investment, the rendering of services referred to in subparagraph (ii) in respect of which an industrial development agency or, as respects a relevant investment made on or after the 10th day of May, 1997, a County Enterprise Board (being a board referred to in the Schedule to the Industrial Development Act, 1995) has provided financial support of not less than £2,000 towards the undertaking of a feasibility study by a person approved of by the agency or the County Enterprise Board into the potential commercial viability of the services to be rendered,

(vi) research and development activities within the meaning of subsection (6),

(vii) the cultivation of horticultural produce within the meaning of subsection (7),

(viii) the cultivation of plants referred to in section 443 (3),

(ix) the construction and the leasing of an advance factory building,

(x) the research and development or other similar activity undertaken with a view to the carrying on of trading operations referred to in subparagraphs (i), (ii) and (viii),

(xi) the cultivation of mushrooms in the State,

(xii) the production, publication, marketing and promotion of a qualifying recording, or qualifying recordings, within the meaning of subsection (8),

(xiii) the operation of one or more tourist traffic undertakings within the meaning of subsection (9), and

(xiv) the sales of export goods by a Special Trading House within the meaning of section 443 (12),

and

(b) where the trade consists wholly or partly of the manufacture of goods referred to in paragraph (a)(i), be a trade in respect of which the company which carries it on has claimed and is entitled, or but for an insufficiency of profits would have claimed and been entitled, to relief from corporation tax under Part 14 .

(3) Notwithstanding subsection (2), a trade which during the relevant period consists partly of qualifying trading operations and partly of other trading operations shall be regarded for the purposes of that subsection as a trade which consists wholly or mainly of qualifying trading operations only if the total amount receivable in the relevant period from sales made and services rendered in the course of qualifying trading operations is not less than 75 per cent of the total amount receivable by the company from all sales made and services rendered in the course of the trade in the relevant period.

(4) (a) In this subsection—

financial activities” means the provision of, and all matters relating to the provision of, financing or refinancing facilities by any means which involves, or has an effect equivalent to, the extension of credit;

financing or refinancing facilities” includes—

(i) loans, mortgages, leasing, lease rental and hire-purchase, and all similar arrangements,

(ii) equity investment,

(iii) the factoring of debts and the discounting of bills, invoices and promissory notes, and all similar instruments,

(iv) the underwriting of debt instruments and all other kinds of financial securities, and

(v) the purchase or sale of financial assets;

financial assets” includes shares, gilts, bonds, foreign currencies and all kinds of futures, options and currency and interest rate swaps, and similar instruments, including commodity futures and commodity options, invoices and all types of receivables, obligations evidencing debt (including loans and deposits), leases and loan and lease portfolios, bills of exchange, acceptance credits and all other documents of title relating to the movement of goods, commercial paper, promissory notes and all other kinds of negotiable or transferable instruments.

(b) For the purposes of this section—

(I) the leasing of machinery or plant,

(II) the leasing of land or buildings (other than the leasing of an advance factory building), or

(III) the carrying on of financial activities (other than such financial activities as are included in the activities referred to in subsection (2)(a)(iv)), shall not be regarded as qualifying trading operations.

(5) (a) In this subsection, “certification committee” means the committee consisting of a chairperson and 4 other members who from time to time may be appointed by the Minister for Finance for the purposes of this section.

(b) Subject to paragraph (c), the certification committee may, subject to such conditions as the committee considers proper and specifies in a certificate under this subsection, including a condition as to the maximum amount of money which may be raised by the company under this Part, issue a certificate for the purposes of this Part to a company which carries on or intends to carry on qualifying trading operations referred to in subsection (2)(a)(iv) and in respect of which money is raised or intended to be raised by the company under this Part by virtue of subsection (2)(a)(iv)(II), where—

(i) on the basis of such information as is supplied to the committee by the company or which the committee may reasonably request the company to furnish to it, and

(ii) such guidelines for the purpose as may be agreed from time to time between the committee and the Minister for Finance,

the committee is satisfied that—

(I) the qualifying trading operations carried on or to be carried on by the company will contribute to the development of the exchange facility on which those operations will be carried on, and

(II) the money raised or to be raised by the company under this Part has the potential to maintain or create a reasonable level of sustainable employment.

(c) The certification committee shall not give a certificate under this subsection to a company—

(i) after the 5th day of April, 1998, and

(ii) to the extent that the aggregate of all subscriptions made or to be made for eligible shares arising out of the issue of such certificates exceeds £2,000,000.

(6) (a) For the purposes of subsection (2)(a)(vi), “research and development activities” means systematic, investigative or experimental activities which—

(i) are carried on wholly or mainly in the State,

(ii) involve innovation or technical risk, and

(iii) are carried on for the purpose of—

(I) acquiring new knowledge with a view to that knowledge having a specific commercial application or

(II) creating new or improved materials, products, devices, processes or services,

and other activities that are carried on wholly or mainly in the State for a purpose directly related to the carrying on of activities of the kind referred to in subparagraph (iii).

(b) Notwithstanding paragraph (a), activities that are carried on by means of—

(i) market research, market testing, market development, sales promotion or consumer surveys,

(ii) quality control,

(iii) prospecting, exploring or drilling for minerals, petroleum or natural gas for the purpose of determining the size or quality of any deposits,

(iv) the making of cosmetic modifications or stylistic changes to products, processes or production methods,

(v) management studies or efficiency surveys, or

(vi) research in social sciences, arts or humanities,

shall not be “research and development activities” for the purposes of subsection (2)(a)(vi).

(c) For the purposes of paragraph (a), systematic, investigative or experimental activities or other activities shall be regarded as carried on wholly or mainly in the State only if not less than 75 per cent of the total amount expended in the course of such activities in the relevant period is expended in the State.

(7) For the purposes of subsection (2)(a)(vii), “the cultivation of horticultural produce” means the cultivation in a greenhouse or greenhouses in the State of plants used for food or for the production of food or ornament or of herbaceous plants, and includes the technical procedures in relation to such cultivation necessary for the production and preparation for market of flowers, decorative foliage, fruit, nursery stock, herbs and vegetable crops (including potatoes and seed potatoes), being a greenhouse or greenhouses in respect of which a certificate has been issued by the Minister for Agriculture and Food certifying that—

(a) the construction, improvement or repair of the greenhouse or greenhouses concerned, or

(b) the installation or improvement of irrigation or heating facilities in the greenhouse or greenhouses concerned,

may be eligible to be grant-aided under a scheme of assistance administered by that Minister.

(8) (a) For the purposes of subsection (2)(a)(xii), “qualifying recording” means a recording in any recording format in any musical style, including any associated video directly related to such recording, by a new artist, produced in a studio in the State, in respect of which the Minister for Arts, Heritage, Gaeltacht and the Islands (in this subsection referred to as “the Minister”) has, subject to such conditions as the Minister may consider proper and specifies in a certificate under this subsection, including a condition as to the maximum amount of money which may be raised under this Part in relation to a qualifying recording, given a certificate to the company which intends to produce the qualifying recording, stating that the recording and any such associated video may be treated as a qualifying recording for the purposes of this Part.

(b) In considering whether to give a certificate under this subsection, the Minister shall have regard only to such guidelines as the Minister may from time to time lay down with the consent of the Minister for Finance, and those guidelines may, without prejudice to the generality of the foregoing, include provision for—

(i) the circumstances in which an artist is to be, and continues to be, regarded as a new artist, and

(ii) the manner, extent and timing in which the money to be raised under this Part by a company for the production, publication, marketing and promotion of a qualifying recording is to be used.

(c) A certificate under this subsection or any condition of such certificate may be amended, revoked or added to by the Minister by giving notice in writing to the qualifying company concerned of such amendment, revocation or addition, and this section shall apply as if—

(i) a condition so amended or added to by the notice was specified in the certificate, and

(ii) a condition so revoked was not specified in the certificate.

(9) For the purposes of subsection (2)(a)(xiii), “tourist traffic undertakings” means—

(a) the operation of tourist accommodation facilities for which Bord Fáilte Éireann maintains a register in accordance with the Tourist Traffic Acts, 1939 to 1995, other than hotels, guest houses and self-catering accommodation,

(b) the operation of such other classes of facilities as may be approved of for the purposes of the relief by the Minister for Finance, in consultation with the Minister for Tourism, Sport and Recreation, on the recommendation of Bord Fáilte Éireann in accordance with specific codes of standards laid down by it, or

(c) the promotion outside the State of—

(i) one or more tourist accommodation facilities for which Bord Fáilte Éireann maintains a register in accordance with the Tourist Traffic Acts, 1939 to 1995, or

(ii) any of the facilities mentioned in paragraph (b).

(10) The trade shall during the relevant period be conducted on a commercial basis and with a view to the realisation of profits.

Relevant trading operations.

[FA84 s16A; FA95 s17(1)(g); FA96 s24; FA97 s9(d)]

497. —(1) For the purposes of this Part, “relevant trading operations” means qualifying trading operations (other than those operations referred to in section 496 (2)(a)(ix)) in respect of which a certifying agency or a certifying Minister, as the case may be (in this section referred to as “the authority”), has given a certificate under subsection (2).

(2) Subject to this section, the authority may, in respect of qualifying trading operations carried on or to be carried on by a company, give a certificate to the company certifying that the authority is satisfied, on the basis of such information as is supplied to the authority by the company or which the authority may reasonably require the company to furnish, that the carrying on of such qualifying trading operations by the company is or will be a bona fide new venture which, having regard to—

(a) the potential for the creation of additional sustainable employment, and

(b) the desirability of minimising the displacement of existing employment,

may be eligible—

(i) in the case of qualifying trading operations referred to in section 496 (2)(a)(v), based on guidelines agreed, with the consent of the Minister for Finance, between the certifying agency and the Minister for Arts, Heritage, Gaeltacht and the Islands or the Minister for Enterprise, Trade and Employment (as may be appropriate in the circumstances), for the payment of the grants or the financial assistance referred to in section 496 (2)(a)(ii) within a reasonable period after the completion of the feasibility study carried out in relation to the trading operations concerned in accordance with section 496 (2)(a)(v), and

(ii) in any other case but subject to subsection (4), based on guidelines agreed—

(I) with the consent of the Minister for Finance, between the certifying agency and the Minister for Arts, Heritage, Gaeltacht and the Islands or the Minister for Enterprise, Trade and Employment or the Minister for the Marine and Natural Resources or the Minister for Tourism, Sport and Recreation (as may be appropriate in the circumstances), or

(II) between the certifying Minister and the Minister for Finance,

to be grant aided under a scheme of assistance administered by the authority.

(3) The carrying on of qualifying trading operations referred to in subsection (2) by a company shall not be regarded as not being a bona fide new venture by reason only that they were carried on as or as part of a trade by another person at any time before the issue of the eligible shares in respect of which relief is claimed.

(4) A certificate to which subsection (2) relates may be given by—

(a) the Industrial Development Agency (Ireland) in respect of qualifying trading operations referred to in section 496 (2)(a)(iv),

(b) the Minister for Agriculture and Food in respect of qualifying trading operations referred to in section 496 (2)(a)(viii), or

(c) the Minister for Arts, Heritage, Gaeltacht and the Islands in respect of qualifying trading operations referred to in section 496 (2)(a)(xii),

without regard to whether such operations are eligible to be grant-aided but, in considering whether to give such a certificate, the agency or the Minister, as the case may be, shall have regard to such guidelines in relation to the giving of such a certificate as may be agreed—

(i) with the consent of the Minister for Finance, between the agency and the Minister for Enterprise, Trade and Employment, or

(ii) between the Minister for Agriculture and Food or the Minister for Arts, Heritage, Gaeltacht and the Islands (as may be appropriate) and the Minister for Finance.

(5) Bord Fáilte Éireann shall not give a certificate under subsection (2) in a case where the value of a company's interests in land and buildings (excluding fixtures and fittings) is or is intended to be greater than 50 per cent of the value of its assets as a whole.

(6) An authority shall not give a certificate under subsection (2) unless the company concerned undertakes in writing to furnish the authority when requested to do so with such details in relation to the carrying on of the qualifying trading operations as the authority may specify.

(7) (a) For the purposes of this Chapter, as respects a relevant investment made on or after the 10th day of May, 1997, a certificate under subsection (2) may, instead of being given by the authority, be given by a County Enterprise Board (being a board referred to in the Schedule to the Industrial Development Act, 1995) to a company carrying on or intending to carry on one or more qualifying trading operations mentioned in subparagraphs (i), (ii) and (v) of section 496 (2)(a), and subsections (2) and (6) shall, subject to the modification specified in paragraph (b) and any other necessary modification, apply accordingly.

(b) The modification referred to in paragraph (a) is that for the purposes of this subsection, the guidelines of the kind mentioned in paragraphs (i) and (ii) of subsection (2) shall be agreed between the Minister for Finance and the Minister for Arts, Heritage, Gaeltacht and the Islands or the Minister for Enterprise, Trade and Employment, as may be appropriate in the circumstances.

Disposals of shares.

[FA84 s17; FA89 s9(d)]

498. —(1) Where an individual disposes of any eligible shares before the end of the relevant period, then—

(a) in a case where the disposal is otherwise than by means of a bargain made at arm's length, the individual shall not be entitled to any relief in respect of those shares, and

(b) in any other case, the amount of relief to which the individual is entitled in respect of those shares shall be reduced by the amount or value of the consideration which the individual receives for those shares.

(2) Subsection (1) shall not apply to a disposal made by a wife to her husband at a time when she is treated as living with him for income tax purposes in accordance with section 1015 or to a disposal made at such a time by him to her; but where shares issued to one of them have been transferred to the other by a transaction inter vivos—

(a) that subsection shall apply on the disposal of the shares by the transferee to a third person, and

(b) if at any time the wife ceases to be treated as living with her husband for income tax purposes in accordance with section 1015 and any of those snares have not been disposed of by the transferee before that time, any assessment for withdrawing relief in respect of those shares shall be made on the transferee.

(3) (a) For the purposes of this subsection, references to an option or an agreement shall include references to a right or obligation to acquire or grant an option or enter into an agreement, and references to the exercise of an option shall include references to the exercise of an option which may be acquired or granted by the exercise of such a right or under such an obligation.

(b) Where in the relevant period an individual, either directly or indirectly—

(i) (I) acquires an option where the exercise of the option, either under the terms of the option or under the terms of any arrangement or undertaking subject to which or otherwise in connection with which the option is acquired, would—

(A) bind the person from whom the option was acquired or any other person, or

(B) cause that person or such other person,

to purchase or otherwise acquire any eligible shares for a price which, having regard to the terms of the option or the terms of such arrangement or undertaking and the net effect of those terms considered as a whole, is other than the market value of the eligible shares at the time the purchase or acquisition is made, or

(II) enters into an agreement where, either under the terms of the agreement or under the terms of any arrangement or understanding subject to which or otherwise in connection with which the agreement is made, it would—

(A) bind the person with whom the agreement is made or any other person, or

(B) cause that person or such other person,

to purchase or otherwise acquire any eligible shares in the manner described in clause (I),

or

(ii) (I) grants to any person an option where the exercise of the option, either under the terms of the option or under the terms of any arrangement or understanding subject to which or otherwise in connection with which the option is granted, would bind the individual to dispose, or cause the individual to dispose, of any eligible shares to the person to whom the individual granted the option or any other person for a price which, having regard to the terms of the option or the terms of such arrangement or understanding and the net effect of those terms considered as a whole, is other than the market value of the eligible shares at the time the disposal is made, or

(II) enters into an agreement where, either under the terms of the agreement or under the terms of any arrangement or understanding subject to which or otherwise in connection with which the agreement is made, it would bind the individual to dispose, or cause the individual to dispose, of any eligible shares to the person with whom the agreement is made or any other person in the manner described in clause (I),

the individual shall not be entitled to any relief in respect of the shares to which the option or the agreement relates.

(4) Where an individual holds ordinary shares of any class in a company and the relief has been given in respect of some shares of that class but not others, any disposal by the individual of ordinary shares of that class in the company shall be treated for the purposes of this section as relating to those in respect of which relief has been given under this Part rather than to others.

(5) Where the relief has been given to an individual in respect of shares of any class in a company which have been issued to the individual at different times, any disposal by the individual of shares of that class shall be treated for the purposes of this section as relating to those issued earlier rather than to those issued later.

(6) Where shares in respect of which the relief was given have by virtue of any such allotment mentioned in subsection (1) of section 584 (not being an allotment for payment) been treated under subsection (3) of that section as the same asset as a new holding—

(a) the new holding shall be treated for the purposes of subsection (4) as shares in respect of which the relief has been given, and

(b) a disposal of the whole or part of the new holding shall be treated for the purposes of this section as a disposal of the whole or a corresponding part of those shares.

(7) Shares in a company shall not be treated for the purposes of this section as being of the same class unless they would be so treated if dealt in on a stock exchange in the State.

Value received from company.

[FA84 s18]

499. —(1) In this section, “ordinary trade debt” means any debt for goods or services supplied in the ordinary course of a trade or business where the credit period given does not exceed 6 months and is not longer than that normally given to the customers of the person carrying on the trade or business.

(2) In this section—

(a) any reference to a payment or transfer to an individual includes a reference to a payment or transfer made to the individual indirectly or to his or her order or for his or her benefit, and

(b) any reference to an individual includes a reference to an associate of the individual and any reference to the company includes a reference to any person connected with the company.

(3) For the purposes of this section, an individual shall receive value from a company where the company—

(a) repays, redeems or repurchases any of its share capital or securities which belong to the individual or makes any payment to the individual for giving up his or her right to any of the company's share capital or any security on its cancellation or extinguishment,

(b) repays any debt owed to the individual other than—

(i) an ordinary trade debt incurred by the company, or

(ii) any other debt incurred by the company—

(I) on or after the earliest date on which the individual subscribed for the shares in respect of which the relief is claimed, and

(II) otherwise than in consideration of the extinguishment of a debt incurred before that date,

(c) makes to the individual any payment for giving up his or her right to any debt on its extinguishment other than—

(i) a debt in respect of a payment of the kind mentioned in paragraph (d) or (e) of section 493 (3), or

(ii) a debt of the kind mentioned in subparagraph (i) or (ii) of paragraph (b),

(d) releases or waives any liability of the individual to the company or discharges, or undertakes to discharge, any liability of the individual to a third person,

(e) makes a loan or advance to the individual,

(f) provides a benefit or facility for the individual,

(g) transfers an asset to the individual for no consideration or for consideration less than its market value or acquires an asset from the individual for consideration exceeding its market value, or

(h) makes to the individual any other payment except a payment of the kind mentioned in paragraph (a), (b), (c), (d) or (e) of section 493 (3) or a payment in discharge of an ordinary trade debt.

(4) For the purposes of this section, an individual shall also receive value from the company where the individual receives in respect of ordinary shares held by the individual any payment or asset in a winding up or in connection with a dissolution of the company, being a winding up or dissolution within section 495 (8).

(5) For the purposes of this section, an individual shall also receive value from the company where any person who for the purposes of section 493 would be treated as connected with the company—

(a) purchases any of its share capital or securities which belong to the individual, or

(b) makes any payment to the individual for giving up any right in relation to any of the company's share capital or securities.

(6) The value received by an individual shall be—

(a) in a case within paragraph (a), (b) or (c) of subsection (3), the amount receivable by the individual or, if greater, the market value of the shares, securities or debt in question,

(b) in a case within subsection (3)(d), the amount of the liability,

(c) in a case within subsection (3)(e), the amount of the loan or advance,

(d) in a case within subsection (3)(f), the cost to the company of providing the benefit or facility less any consideration given for it by the individual,

(e) in a case within subsection (3)(g), the difference between the market value of the asset and the consideration (if any) given for it,

(f) in a case within subsection (3)(h), the amount of the payment,

(g) in a case within subsection (4), the amount of the payment or, as the case may be, the market value of the asset, and

(h) in a case within subsection (5), the amount receivable by the individual or, if greater, the market value of the shares or securities in question.

(7) For the purposes of subsection (3)(d), a company shall be treated as having released or waived a liability where the liability is not discharged by payment within 12 months of the time when it ought to have been discharged by payment.

(8) For the purposes of subsection (3)(e), there shall be treated as if it were a loan made by the company to the individual—

(a) the amount of any debt (other than an ordinary trade debt) incurred by the individual to the company, and

(b) the amount of any debt due from the individual to a third person which has been assigned to the company.

(9) Where an individual who subscribes for eligible shares in a company—

(a) has, before the issue of the shares but within the relevant period, received any value from the company, or

(b) on or after their issue but before the end of the relevant period, receives any such value,

then, the amount of the relief to which the individual is entitled in respect of the shares shall be reduced by the value so received.

(10) Where by virtue of this section any relief is withheld or withdrawn in the case of an individual to whom ordinary shares in a company have been issued at different times, the relief shall be withheld or withdrawn in respect of shares issued earlier rather than in respect of shares issued later.

Replacement capital.

[FA84 s19]

500. —(1) In this section—

subsidiary” means a subsidiary of a kind which a qualifying company may have by virtue of section 507 ;

trade” includes any business, profession or vocation, and references to a trade previously carried on include references to part of such a trade.

(2) An individual to whom subsection (3) applies shall not be entitled to relief in respect of any shares in a company where at any time in the relevant period the company or any of its subsidiaries—

(a) begins to carry on, as its trade or as a part of its trade, a trade previously carried on at any time in that period otherwise than by the company or any of its subsidiaries, or

(b) acquires the whole or greater part of the assets used for the purposes of a trade previously so carried on.

(3) This subsection shall apply to an individual where—

(a) any person or group of persons to whom an interest amounting in the aggregate to more than a 50 per cent share in the trade (as previously carried on) belonged at any time in the relevant period is a person or a group of persons to whom such an interest in the trade carried on by the company, or any of its subsidiaries, belongs or has at any such time belonged, or

(b) any person or group of persons who controls or at any such time has controlled the company is a person or a group of persons who at any such time controlled another company which previously carried on the trade,

and the individual is that person or one of those persons.

(4) An individual shall not be entitled to relief in respect of any shares in a company where—

(a) the company comes to acquire all of the issued share capital of another company at any time in the relevant period, and

(b) any person or group of persons who controls or has at any such time controlled the company is a person or a group of persons who at any such time controlled that other company,

and the individual is that person or one of those persons.

(5) For the purposes of subsection (3)

(a) the person or persons to whom a trade belongs and, where a trade belongs to 2 or more persons, their respective shares in that trade shall be determined in accordance with paragraphs (a) and (b) of subsection (1), and subsections (2) and (3), of section 400 , and

(b) any interest, rights or powers of a person who is an associate of another person shall be treated as those of that other person.

Value received by persons other than claimants.

[FA84 s20]

501. —(1) The relief to which an individual is entitled in respect of any shares in a company shall be reduced in accordance with subsection (4) if at any time in the relevant period the company repays, redeems or repurchases any of its share capital which belongs to any member other than—

(a) that individual, or

(b) another individual whose relief is thereby reduced by virtue of section 499 (3),

or makes any payment to any such member for giving up such member's right to any of the company's share capital on its cancellation or extinguishment.

(2) Subsection (1) shall not apply in relation to the redemption of any share capital for which the redemption date was fixed before the 26th day of January, 1984.

(3) Where—

(a) after the 5th day of April, 1984, a company issues share capital (in this subsection referred to as “the original shares”) of nominal value equal to the authorised minimum (within the meaning of the Companies (Amendment) Act, 1983) for the purposes of complying with the requirements of section 6 of that Act, and

(b) after the registrar of companies has issued the company with a certificate under section 6 of that Act the company issues eligible shares,

subsection (1) shall not apply in relation to any redemption of any of the original shares within 12 months of the date on which those shares were issued.

(4) Where subsection (1) applies, the amount of relief to which an individual is entitled shall be reduced by the amount receivable by the member or, if greater, the nominal value of the share capital in question and, where apart from this subsection 2 or more individuals would be entitled to relief, the reduction shall be made in proportion to the amounts of relief to which those individuals would have been entitled apart from this subsection.

(5) Where at any time in the relevant period a member of a company receives or is entitled to receive any value from the company within the meaning of this subsection, then, for the purposes of section 493 (4) in its application to any subsequent time—

(a) the amount of the company's issued ordinary share capital, and

(b) the amount of the part of that capital which consists of the shares relevant to section 493 (4) and the amount of the part consisting of the remainder,

shall each be treated as reduced in accordance with subsection (6).

(6) The amount of each of the parts mentioned in subsection (5)(b) shall be treated as equal to such proportion of that amount as the amount subscribed for that part less the relevant value bears to the amount subscribed, and the amount of the issued share capital shall be treated as equal to the sum of the amounts treated under this subsection as the amount of those parts respectively.

(7) In subsection (5)(b), the reference to the part of the capital which consists of the shares relevant to section 493 (4) is a reference to the part consisting of shares which (within the meaning of that section) the individual directly or indirectly possesses or is entitled to acquire, and in subsection (6)the relevant value”, in relation to each of the parts mentioned in that subsection, means the value received by the member or members entitled to the shares of which that part consists.

(8) For the purposes of subsection (5), a member of a company receives or is entitled to receive value from the company within the meaning of that subsection in any case in which an individual would receive value from the company by virtue of paragraph (d), (e), (f), (g) or (h) of section 499 (3) (but treating as excepted from paragraph (h) all payments made for full consideration), and the value received shall be determined as for the purposes of that section.

(9) For the purposes of subsection (8), a person shall be treated as entitled to receive anything which the person is entitled to receive at a future date or will at a future date be entitled to receive.

(10) Where by virtue of this section any relief is withheld or withdrawn in the case of an individual to whom ordinary shares in the company have been issued at different times, the relief shall be withheld or withdrawn in respect of shares issued earlier rather than in respect of shares issued later.

Prevention of misuse.

[FA84 s21]

502. —An individual shall not be entitled to relief in respect of any shares unless the shares are subscribed and issued for bona fide commercial purposes and not as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.

Claims.

[FA84 s22; FA93 s25(h); FA95 s17(1)(h)(i)]

503. —(1) A claim for the relief in respect of eligible shares issued by a company in any year of assessment shall be made—

(a) not earlier than—

(i) in the case of a relevant investment, the date on which the company commences to carry on the relevant trading operations, and

(ii) in any other case, the end of the period of 4 months mentioned in section 489 (7)(a) (i) (II),

and

(b) not later than 2 years after the end of that year of assessment or, if that period of 4 months ended after the end of that year, not later than 2 years after the end of that period.

(2) A claim for relief in respect of eligible shares in a company shall not be allowed unless it is accompanied by a certificate issued by the company in such form as the Revenue Commissioners may direct and certifying that the conditions for the relief, in so far as they apply to the company and the trade, are satisfied in relation to those shares.

(3) Before issuing a certificate under subsection (2), a company shall furnish the inspector with a statement to the effect that it satisfies the conditions for the relief, in so far as they apply in relation to the company and the trade, and has done so at all times since the beginning of the relevant period.

(4) No such certificate shall be issued without the authority of the inspector or where the company or a person connected with the company has given notice to the inspector under section 505 (2).

(5) Any statement under subsection (3) shall—

(a) contain such information as the Revenue Commissioners may reasonably require,

(b) be in such form as the Revenue Commissioners may direct, and

(c) contain a declaration that it is correct to the best of the company's knowledge and belief.

(6) Where a company has issued a certificate under subsection (2) or furnished a statement under subsection (3), and—

(a) the certificate or statement is made fraudulently or negligently, or

(b) the certificate was issued in contravention of subsection (4) the company shall be liable to a penalty not exceeding £500 or, in the case of fraud, £1,000, and such penalty may, without prejudice to any other method of recovery, be proceeded for and recovered summarily in the like manner as in summary proceedings for the recovery of any fine or penalty under any Act relating to the excise.

(7) For the purpose of regulations made under section 986 , no regard shall be had to the relief unless a claim for it has been duly made and admitted.

(8) For the purposes of section 1080 , income tax charged by an assessment—

(a) shall be regarded as due and payable notwithstanding that relief from the tax (whether by discharge or repayment) is subsequently given on a claim for the relief, but

(b) shall, unless paid earlier or due and payable later, be regarded as paid, to the extent that relief from tax is due under this Part, on the date of the making of the claim on which the relief is given,

and section 1081 shall not apply in consequence of any discharge or repayment for giving effect to the relief.

Assessments for withdrawing relief.

[FA84 s23; FA93 s25(i)(i); FA95 s17(1)(i)]

504. —(1) Where any relief has been given which is subsequently found not to have been due, that relief shall be withdrawn by the making of an assessment to income tax under Case IV of Schedule D for the year of assessment for which the relief was given.

(2) Where any relief given in respect of shares for which either a married person or his or her spouse has subscribed, and which were issued while the married person was assessed in accordance with section 1017 , is to be withdrawn by virtue of a subsequent disposal of those shares by the person who subscribed for them and at the time of the disposal the married person is not so assessable, any assessment for withdrawing that relief shall be made on the person making the disposal and shall be made by reference to the reduction of tax flowing from the amount of the relief regardless of any allocation of that reduction under subsections (2) and (3) of section 1024 or of any allocation of a repayment of income tax under section 1020 .

(3) Subject to this section, any assessment for withdrawing relief which is made by reason of an event occurring after the date of the claim may be made within 10 years after the end of the year of assessment in which that event occurs.

(4) No assessment for withdrawing relief in respect of shares issued to any person shall be made by reason of any event occurring after his or her death.

(5) Where a person has, by a disposal or disposals to which section 498 (1)(b) applies, disposed of all the ordinary shares issued to the person by a company, no assessment for withdrawing relief in respect of any of those shares shall be made by reason of any subsequent event unless it occurs at a time when the person is connected with the company within the meaning of section 493 .

(6) Subsection (3) is without prejudice to section 924(2)(c).

(7) In its application to an assessment made by virtue of this section, section 1080 shall apply as if the date on which the income tax charged by the assessment becomes due and payable were—

(a) in the case of relief withdrawn by virtue of section 493 , 495 , 496 , 498 or 501 (1) in consequence of any event after the grant of the relief, the date of that event;

(b) in the case of relief withdrawn by virtue of section 498 (1) in consequence of a disposal after the grant of the relief, the date of the disposal;

(c) in the case of relief withdrawn by virtue of section 499 in consequence of a receipt of value after the grant of the relief, the date of the receipt;

(d) in the case of relief withdrawn by virtue of section 502

(i) in so far as effect has been given to the relief in accordance with regulations under section 986 , the 5th day of April in the year of assessment in which effect was so given, and

(ii) in so far as effect has not been so given, the date on which the relief was granted;

(e) in the case of relief withdrawn by virtue of—

(i) a specified individual failing or ceasing to hold a relevant employment, or

(ii) an individual ceasing to be a specified individual, the date of the failure or the cessation, as the case may be.

(8) For the purposes of subsection (7), the date on which the relief shall be granted is the date on which a repayment of tax for giving effect to the relief was made or, if there was no such repayment, the date on which the inspector issued a notice to the claimant showing the amount of tax payable after giving effect to the relief.

Information.

[FA84 s24(1) to (8)]

505. —(1) Where an event occurs by reason of which any relief given to an individual is to be withdrawn by virtue of section 493 , 498 or 499 , the individual shall within 60 days of coming to know of the event give a notice in writing to the inspector containing particulars of the event.

(2) Where an event occurs by reason of which any relief in respect of any shares in a company is to be withdrawn by virtue of section 495 , 496 , 499 , 500 , 501 or 502

(a) the company, and

(b) any person connected with the company who has knowledge of that matter,

shall within 60 days of the event or, in the case of a person within paragraph (b), of that person coming to know of it, give a notice in writing to the inspector containing particulars of the event or payment.

(3) Where the inspector has reason to believe that a person has not given a notice which the person is required to give under subsection (1) or (2) in respect of any event, the inspector may by notice in writing require that person to furnish him or her within such time (not being less than 60 days) as may be specified in the notice with such information relating to the event as the inspector may reasonably require for the purposes of this Part.

(4) Where relief is claimed in respect of shares in a company and the inspector has reason to believe that it may not be due by reason of any arrangement or scheme mentioned in section 493 (11), 495 (10) or 502 , the inspector may by notice in writing require any person concerned to furnish him or her within such time (not being less than 60 days) as may be specified in the notice with—

(a) a declaration in writing stating whether or not, according to the information which that person has or can reasonably obtain, any such arrangement or scheme exists or has existed, and

(b) such other information as the inspector may reasonably require for the purposes of the provision in question and as that person has or can reasonably obtain.

(5) References in subsection (4) to the person concerned are, in relation to sections 493 (11) and 502 , references to the claimant and, in relation to sections 495 (10) and 502 , references to the company and any person controlling the company.

(6) Where relief has been given in respect of shares in a company—

(a) any person who receives from the company any payment or asset which may constitute value received (by that person or another) for the purposes of section 499 or 501 (5), and

(b) any person on whose behalf such a payment or asset is received,

shall, if so required by the inspector, state whether the payment or asset received by that person or on that person's behalf is received on behalf of any person other than that person and if so the name and address of that other person.

(7) Where relief has been claimed in respect of shares in a company, any person who holds or has held shares in the company and any person on whose behalf any such shares are or were held shall, if so required by the inspector, state whether the shares which are or were held by that person or on that person's behalf are or were held on behalf of any person other than that person and if so the name and address of that other person.

(8) No obligation as to secrecy imposed by statute or otherwise shall preclude the inspector from disclosing to a company that relief has been given or claimed in respect of a particular number or proportion of its shares.

Capital gains tax.

[FA84 s25]

506. —(1) The sums allowable as deductions from the consideration in the computation for the purposes of capital gains tax of the gain or loss accruing to an individual on the disposal of shares in respect of which any relief has been given and not withdrawn shall be determined without regard to that relief, except that where those sums exceed the consideration they shall be reduced by an amount equal to the lesser of—

(a) the amount of that relief, and

(b) the excess;

but this subsection shall not apply to a disposal within section 1028 (5).

(2) In relation to shares in respect of which relief has been given and not withdrawn, any question—

(a) as to which of any such shares issued to a person at different times a disposal relates, or

(b) whether a disposal relates to such shares or to other shares,

shall for the purposes of capital gains tax be determined as for the purposes of section 498 .

(3) Where an individual holds ordinary shares in a company and the relief has been given in respect of some of the shares but not others, then, if there is a reorganisation (within the meaning of section 584 ) affecting those shares, section 584 (3) shall apply separately to the shares in respect of which the relief has been given and to the other shares (so that the shares of each kind shall be treated as a separate holding of original shares and identified with a separate new holding).

(4) There shall be made all such adjustments of capital gains tax, whether by means of assessment or by means of discharge or repayment of tax, as may be required in consequence of the relief being given or withdrawn.

Application to subsidiaries.

[FA84 s26; FA85 s13(d); FA91 s15(1)(f)]

507. —(1) A qualifying company may in the relevant period have one or more subsidiaries if—

(a) the conditions in subsection (2) are satisfied in respect of the subsidiary or each subsidiary and, except where provided in subsection (3), continue to be so satisfied until the end of the relevant period, and

(b) the subsidiary or each subsidiary is a company—

(i) within section 495 (3)(a)(i), or

(ii) which exists solely for the purpose of carrying on any trade which consists solely of any one or more of the following trading operations—

(I) the purchase of goods or materials for use by the qualifying company or its subsidiaries,

(II) the sale of goods or materials produced by the qualifying company or its subsidiaries, or

(III) the rendering of services to or on behalf of the qualifying company or its subsidiaries.

(2) The conditions referred to in subsection (1)(a) are—

(a) that the subsidiary is a 51 per cent subsidiary of the qualifying company,

(b) that no other person has control of the subsidiary within the meaning of section 11 , and

(c) that no arrangements are in existence by virtue of which the conditions in paragraphs (a) and (b) could cease to be satisfied.

(3) The conditions referred to in subsection (1)(a) shall not be regarded as ceasing to be satisfied by reason only of the fact that the subsidiary or the qualifying company is wound up or dissolved without winding up if—

(a) it is shown that the winding up or dissolution is for bona fide commercial reasons and not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, and

(b) the net assets, if any, of the subsidiary or, as the case may be, the qualifying company are distributed to its members before the end of the relevant period or, in the case of a winding up, the end (if later) of 3 years from the commencement of the winding up.

(4) Where a qualifying company has one or more subsidiaries in the relevant period, this Part shall apply subject to Schedule 10 .

Nominees and designated funds.

[FA84 s27 and FA85 s13(e)]

508. —(1) Shares subscribed for, issued to, held by or disposed of for an individual by a nominee shall be treated for the purposes of this Part as subscribed for, issued to, held by or disposed of by that individual.

(2) (a) Relief shall be given, and section 490 (1) (a) shall not apply, in respect of an amount subscribed as nominee for an individual by a person or persons having the management of an investment fund designated by the Revenue Commissioners for the purposes of this section (in this Part referred to as “the managers of a designated fund”) where the amount so subscribed forms part of the fund.

(b) Except where provided by paragraph (a), relief shall not be given in respect of an amount subscribed as nominee for an individual by a person or persons having the management of an investment fund where the amount so subscribed forms part of the fund.

(3) The Revenue Commissioners may, if they think fit, having regard to the facts of the particular case and after such consultation, if any, as may seem to them to be necessary with such person or body of persons as in their opinion may be of assistance to them, and subject to such conditions, if any, as they think proper to attach to the designation, designate an investment fund for the purposes of this Part.

(4) (a) The Revenue Commissioners may, by notice in writing given to the managers of a designated investment fund, withdraw the designation given for the purposes of this section to the fund in accordance with subsection (3) and, on the giving of the notice, the fund shall cease to be a designated fund as respects any subscriptions made after the date of the notice referred to in paragraph (b).

(b) Where the Revenue Commissioners withdraw the designation of any fund for the purposes of this section, notice of the withdrawal shall be published as soon as may be in Iris Oifigiúil.

(5) Where an individual claims relief in respect of eligible shares in a company which have been issued to the managers of a designated fund as nominee for the individual, section 503 (2) shall apply as if it required—

(a) the certificate referred to in that section to be issued by the company to the managers, and

(b) the claim for relief to be accompanied by a certificate issued by the managers, in such form as the Revenue Commissioners may authorise, furnishing such information as the Revenue Commissioners may require and certifying that the managers hold certificates issued to them by the companies concerned, for the purposes of section 503 (2) in respect of the holdings of eligible shares shown on the managers' certificate.

(6) The managers of a designated fund may be required by a notice given to them by an inspector or other officer of the Revenue Commissioners to deliver to the officer within the time limited by the notice a return of the holdings of eligible shares shown on certificates issued by them in accordance with subsection (5) in the year of assessment to which the return relates.

(7) Section 503 (6) shall not apply in relation to any certificate issued by the managers of a designated fund for the purposes of subsection (5).

(8) Without prejudice to the generality of subsection (3), the Revenue Commissioners shall designate a fund for the purposes of this Part only if they are satisfied that—

(a) the fund is established under irrevocable trusts for the sole purpose of enabling individuals who qualify for the relief (in this subsection referred to as “qualifying individuals”) to invest in eligible shares of a qualifying company, and

(b) under the terms of the trusts it is provided that—

(i) the entire fund is to be invested without undue delay in eligible shares,

(ii) the fund is to subscribe only for shares which, subject to the circumstances of the qualifying individuals participating in the fund (in this subsection referred to as “participants”), qualify those participants for relief,

(iii) pending investment in eligible shares, any moneys subscribed for the purchase of shares are to be placed on deposit in a separate account with a bank licensed to transact business in the State,

(iv) any amounts received by means of dividends or interest are, subject to a commission in respect of management expenses at a rate not exceeding a rate which shall be specified in the deed of trust under which the fund has been established, to be paid without undue delay to the participants,

(v) any charges to be made by means of management or other expenses in connection with the establishment, the running, the winding down or the termination of the fund shall be at a rate not exceeding a rate which shall be specified in the deed of trust under which the fund is established,

(vi) audited accounts of the fund are submitted annually to the Revenue Commissioners as soon as may be after the end of each period for which accounts of the fund are made up,

(vii) the managers, the trustees of the fund and any of their associates are not for the time being connected either directly or indirectly with any company whose shares comprise part of the fund,

(viii) any discounts on eligible shares received by the trustees or managers of the fund are accepted solely for the benefit of the participants,

(ix) the fund is a closed fund and the closing date for participation precedes the making of the first investment,

(x) if a limit is placed on the size of the fund or a minimum amount for investment is stipulated, any subscriptions not accepted are to be returned without undue delay, and

(xi) no participant is allowed to have any shares in any company in which the fund has invested transferred into his or her name until 5 years have elapsed from the date of the issue of the shares to the fund.