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15 1946

FINANCE ACT, 1946

PART I.

Income Tax.

Income tax and sur-tax for the year 1946-47.

1. —(1) Income tax shall be charged for the year beginning on the 6th day of April, 1946, at the rate of six shillings and sixpence in the pound.

(2) Sur-tax (other than excess sur-tax) for the year beginning on the 6th day of April, 1946, shall be charged in respect of the income of any individual the total of which from all sources exceeds one thousand five hundred pounds and shall be so charged at the same rates as those at which it is charged for the year beginning on the 6th day of April, 1945.

(3) Where the total income, within the meaning of section 5 of the Finance Act, 1941 (No. 14 of 1941), of any individual for the year beginning on the 6th day of April, 1946, exceeds one thousand five hundred pounds and includes any such profits as are mentioned in the said section 5 , an additional duty of sur-tax (in this section referred to as excess sur-tax) shall be charged for the said year beginning on the 6th day of April, 1946, at the rate of seven shillings and sixpence in the pound in respect of so much of the said income as is made chargeable therewith by subsection (1) of the said section 5 as modified and applied by the subsequent provisions of this section.

(4) The several statutory and other provisions which were in force on the 5th day of April, 1946, in relation to income tax and sur-tax (including excess sur-tax) shall, subject to the pro-visions of this Act, have effect in relation to the income tax and sur-tax (including excess sur-tax) to be charged as aforesaid for the year beginning on the 6th day of April, 1946.

(5) In the application (by virtue of the next preceding subsection of this section) of Part II of the Finance Act, 1941 (No. 14 of 1941), to the excess sur-tax to be charged as aforesaid for the year beginning on the 6th day of April, 1946, the said Part II shall have effect with and subject to the following modifications, that is to say:—

(a) the expression “the 6th day of April, 1946,” shall be substituted for the expression “the 6th day of April, 1941,” wherever that expression occurs in the said Part II;

(b) in paragraph (b) of subsection (3) of section 7 of the said Act, the expression “the 5th day of April, 1947,” shall be substituted for the expression “the 5th day of April, 1942,” and the word “ten” shall be substituted for the word “five” and the expression “the 5th day of April, 1946,” shall be substituted for the expression “the 5th day of April, 1941”.

Repeal of Rule 8 of Rules applicable to Schedule E of the Income Tax Act, 1918.

2. —Rule 8 of the Rules applicable to Schedule E of the Income Tax Act, 1918, is hereby repealed.

Amendment of section 3 of the Finance Act, 1925 .

3. Section 3 (which relates to exemption of certain military pensions and gratuities) of the Finance Act, 1925 (No. 28 of 1925), is hereby amended by the insertion therein of the following subsection in lieu of subsection (2) now (by virtue of section 6 of the Finance Act, 1944 (No. 18 of 1944)) contained in the said section 3 , that is to say—

“(2) The wounds and disabilities pensions to which section 16 of the Finance Act, 1919, applies shall include and be deemed always to have included all wound and disability pensions granted under the Army Pensions Acts, 1923 to 1946, and all gratuities in respect of wounds or disabilities similarly granted, and the said section 16 shall be construed and have effect accordingly.”.

Provisions as to carrying forward of losses under section 14 of the Finance Act, 1929 .

4. —(1) This section applies to any case in which—

(a) section 14 of the Finance Act, 1929 (No. 32 of 1929), authorises a loss or any portion of a loss sustained by any person in any trade, profession or vocation carried on by him to be carried forward and, as far as may be, deducted from or set-off against the amount of profits or gains on which he is assessed under Schedule D of the Income Tax Act, 1918, in respect of that trade, profession or vocation for the six following years of assessment (in this section referred to as the six years' period), and

(b) the six years' period includes any one or more of the years of assessment in the period which began on the 6th day of April, 1939, and ended on the 5th day of April, 1946.

(2) The six years' period shall, in any case to which this section applies be extended and be deemed always to have been extended by the addition thereto of such a number of years of assessment immediately following the six years' period as is equal to the number of years of assessment which—

(a) fell within the period which began on the 6th day of April, 1939, and ended on the 5th day of April, 1946, and

(b) were subsequent to the year of assessment in which the loss was sustained.

Allowance for scientific research.

5. —(1) In this section—

the expression “scientific research” means any activities in the fields of natural or applied science for the extension of knowledge;

the word “asset” includes a part of an asset;

the expression “expenditure on scientific research” does not include any expenditure incurred in the acquisition of rights in, or arising out of, scientific research.

(2) Where a person carrying on a trade either—

(a) incurs, on or after the 6th day of April, 1946, non-capital expenditure on scientific research relating to the trade, or

(b) pays, on or after that date, any sum to a body carrying on scientific research and approved for the purposes of this section by the Minister for Finance or to an Irish university, in order that such body or university may undertake scientific research relating to the trade,

then, the expenditure so incurred or the sum so paid shall be deducted as an expense in computing the profits or gains of the trade.

(3) Where—

(a) on or after the 6th day of April, 1946, a person incurs capital expenditure on scientific research, and

(b) either—

(i) he is then carrying on a trade to which such expenditure relates, or

(ii) he subsequently sets up and commences a trade which is related to such research, and

(c) he applies to the inspector of taxes for an allowance under this subsection in respect of the said expenditure, and

(d) he so applies—

(i) in case the expenditure was incurred by him while carrying on the trade, within twelve months after the end of the year of assessment in which it was incurred, or

(ii) in case the expenditure was incurred by him before the setting up and commencement of the trade, within twelve months after the end of the year of assessment in which the trade was set up and commenced,

then, subject to the provisions of this section, there shall be allowed as a deduction in charging the profits or gains of the trade for the year of assessment mentioned in whichever of subparagraphs (i) and (ii) of paragraph (d) of this subsection is applicable, and for each of the four following years of assessment, a sum equal to one-fifth of the amount of the expenditure.

(4) Where an asset, representing capital expenditure on scientific research, ceases at any time from any cause whatever to be used for such research, relating to the trade carried on by the person who incurred the expenditure, then—

(a) no allowance under this section in respect of that expenditure shall be made for any year of assessment after that in which the cessation takes place;

(b) if the total of the following, namely, the allowances already made under this section in respect of that expenditure and the value of the asset immediately before the cessation, is less than the said expenditure, there shall be allowed as a deduction in charging the profits or gains of the trade for the year of assessment in which the cessation takes place an additional allowance equal to the amount of the deficiency;

(c) if the said total exceeds the said expenditure, the amount of the excess or the total of the allowances so made, whichever is the less, shall be treated as a trading receipt of the trade accruing immediately before the cessation;

(d) in the application of Rule 6 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, to a claim in respect of the asset for any year of assessment after that in which the cessation takes place, the actual cost of the asset shall be treated as being reduced by the total of the allowances granted in respect of the asset under this section; and

(e) in the application of Rule 7 of the said Rules to any such claim, the cost of the asset shall be treated as being reduced by the said total.

(5) Where an allowance under this section is granted to a person for any year of assessment in respect of expenditure represented wholly or partly by assets, then, for that year of assessment—

(a) no deduction in respect of those assets shall be allowed to that person under Rule 6 or Rule 7 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, or under section 18 of the Finance Act, 1919, or under section 3 of the Finance Act, 1942 (No. 14 of 1942), or under section 8 of the Finance Act, 1944 (No. 18 of 1944), and

(b) paragraph (2) of Rule 5 of the said Rules shall have effect as regards those assets as if the proviso to the said paragraph were omitted therefrom.

(6) Paragraph (3) of Rule 6 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, and section 4 of the Finance Act, 1937 (No. 18 of 1937), shall apply in relation to an allowance under subsection (3) of this section as they apply in relation to deductions in respect of wear and tear of plant and machinery.

(7) For the purposes of this section expenditure shall not be regarded as incurred by a person in so far as it is, or is to be, met directly or indirectly out of moneys provided by the Oireachtas or by any person other than the first-mentioned person.

(8) The same expenditure shall not be taken into account for any of the purposes of this section in relation to more than one trade.

Allowance for mining development.

6. —(1) In this section—

the word “mine” means an underground excavation made for the purpose of getting minerals;

references to capital expenditure incurred in connection with a mine shall be construed as references to capital expenditure incurred—

(a) in the development of the mine on searching for or on discovering and testing mineral deposits or winning access thereto, or

(b) on the construction of any works which are of such a nature that when the mine has ceased to be operated they are likely to have so diminished in value that their value will be little or nothing,

but as excluding references to—

(c) any expenditure on the acquisition of the site of the mine or of the site of any such works or of rights in or over any such site, or

(d) any expenditure on the acquisition of, or of rights over, the deposits, or

(e) any expenditure on works constructed wholly or mainly for subjecting the raw product of the mine to any process except a process designed for preparing the raw product for use as such;

references to assets representing capital expenditure incurred in connection with a mine shall—

(a) be construed as including, in relation to expenditure on searching for, discovering and testing deposits, references to any information or other results obtained from any search, exploration or enquiry upon which the expenditure was incurred, and

(b) be construed as also including references to any part of such assets, and

(c) be construed as also including, in the case of any such assets destroyed or damaged, references to any insurance moneys or other compensation moneys in respect of such destruction or damage.

(2) Expenditure shall not, for the purposes of this section, be regarded as having been incurred by a person carrying on the trade of working a mine in so far as it has been or is to be met directly or indirectly out of moneys provided by the Oireachtas or by any other person (not being a person who has carried on the trade of working that mine).

(3) Any person, who carries on the trade of working a mine and who has, on or after the 6th day of April, 1946, incurred any capital expenditure in connection with the said mine, may apply for the grant of an allowance (in this section referred to as a mine development allowance) in respect of such capital expenditure.

(4) Application for a mine development allowance for any year of assessment may be made to the inspector of taxes not later than twelve months after the end of such year.

(5) The following provisions shall have effect in relation to the amount of a mine development allowance for any year of assessment in respect of any capital expenditure incurred in connection with a mine—

(a) the inspector of taxes shall estimate to the best of his judgment the life (in this subsection referred to as the estimated life) of the deposits, but shall not estimate such life at more than twenty years,

(b) the inspector of taxes shall then estimate the amount of the difference (in this subsection referred to as the estimated difference) between the said capital expenditure and the amount which, in his opinion, the assets representing the said capital expenditure are likely to be worth at the end of the estimated life,

(c) the said inspector shall, subject to the provisions of this section, allow, as the mine development allowance for the said year of assessment, an amount equal to a sum which bears to the estimated difference the same proportion as the length of the said year of assessment bears to the length of the estimated life,

(d) if the said capital expenditure was incurred during the said year of assessment, then the said year of assessment shall, for the purposes of paragraph (c) of this subsection, be taken to comprise so much only of the said year of assessment as is subsequent to the date on which the said capital expenditure was incurred.

(6) A mine development allowance to any person carrying on the trade of working a mine shall be made as a deduction in charging the profits or gains of that trade and paragraph (3) of Rule 6 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, and section 4 of the Finance Act, 1937 (No. 18 of 1937), shall apply in relation to the allowance as they apply in relation to deductions for wear and tear of plant and machinery.

(7) A mine development allowance shall not be granted in respect of any capital expenditure incurred in connection with a mine in any case where the asset representing such capital expenditure is an asset in respect of which a deduction could be claimed under Rule 6 or Rule 7 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918; or is allowable under section 3 of the Finance Act, 1942 (No. 14 of 1942), or under section 8 of the Finance Act, 1944 (No. 18 of 1944).

(8) Where a mine development allowance for any year of assessment has been granted in respect of capital expenditure incurred in connection with a mine, then, for that year of assessment—

(a) paragraph (2) of Rule 5 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, shall have effect as regards any asset which represents the said capital expenditure as if the proviso to the said paragraph (2) were omitted therefrom, and

(b) section 18 of the Finance Act, 1919, shall not apply as respects any such asset.

(9) Any capital expenditure incurred, on or after the 6th day of April, 1946, in connection with a mine by a person about to carry on the trade of working the said mine but before commencing such trade shall, for the purposes of this section, be treated as if it had been incurred on the first day of the commencement of such trade.

(10) Where mine development allowances in respect of capital expenditure incurred in connection with a mine have been granted and the mine has finally ceased to be operated—

(a) the inspector of taxes shall review the said mine development allowances,

(b) if, on such review, it appears that the amount of the difference (in this subsection referred to as the said difference) between the said capital expenditure and the amount which the assets, representing the said capital expenditure at such cessation, were worth at such cessation exceeds the total of the said mine development allowances, then further mine development allowances totalling in amount the excess may be granted for any year of assessment (being the year in which the said mine has finally ceased to be operated or any previous year) so however that the total of such further mine development allowances shall not amount to more than the said excess, and if necessary effect may be given to this paragraph by way of repayment,

(c) if, on such review, it appears that the said difference is less than the total of the said mine development allowances, then, the deficiency or the total of the said mine development allowances, whichever is the less, shall be treated as a trading receipt of the trade of working the said mine accruing immediately before such cessation.

(11) Where the person (in this subsection referred to as the vendor) carrying on the trade of working a mine sells to any other person (not being a person who succeeds the vendor in the said trade) any asset representing capital expenditure incurred in connection with the said mine and by reference to which mine development allowances have been granted, the following provisions shall have effect—

(a) if the total of the said mine development allowances when added to the sum realised on the sale of the said asset is less than the said capital expenditure, by any amount (in this subsection referred to as the unexhausted allowance), then, further mine development allowances may be granted to the vendor in respect of any year of assessment (being the year of such sale or any previous year), so however that the total of such further mine development allowances shall not exceed the unexhausted allowance,

(b) if the total of the said mine development allowances when added to the sum realised on the sale of the said asset exceeds the said capital expenditure, then, the amount of such excess or the said total of the mine development allowances, whichever is the less, shall be treated as a trade receipt of the said trade accruing immediately before the said sale.

(12) Where—

(a) mine development allowances in respect of capital expenditure incurred in connection with a mine have been granted to a person (in this subsection referred to as the original trader) carrying on the trade of working the mine, and

(b) another person (in this subsection referred to as the successor) succeeds to the said trade,

mine development allowances may continue to be granted in respect of the said capital expenditure to the successor, but in no case shall the amount of such allowances exceed the amount to which the original trader would have been entitled if he had continued to carry on the said trade.

(13) Where—

(a) deductions for wear and tear have been allowed under Rule 6 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, in respect of any plant or machinery used for the purposes of a mine in relation to which mine development allowances have been granted, and

(b) the mine has finally ceased to be operated,

the provision of subsection (10) of this section shall apply as if such plant and machinery were assets representing capital expenditure incurred in connection with the mine and as if any allowance or deduction made under the Income Tax Acts in respect of such plant or machinery were a mine development allowance.

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