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18 1977

FINANCE ACT, 1977

Chapter II

Taxation of Farming Profits

Amendment of section 15 (farming profits to be charged under Schedule D) of Finance Act, 1974.

9. Section 15 of the Finance Act, 1974 , is hereby amended by the substitution in subsection (3) of “£75” for “£100”, and the said subsection (3) (apart from the proviso), as so amended, is set out in the Table to this section.

TABLE

(3) Subsection (1) shall not apply, as respects any year of assessment, in the case of an individual who shows that the rateable valuation of all farm land occupied by him did not, at any time during that year of assessment, amount to £75 or more.

Amendment of section 16 (farming carried on by certain persons) of Finance Act, 1974.

10. Section 16 of the Finance Act, 1974 , is hereby amended by the deletion in subsection (1) of “(other than an individual who shows that the rateable valuation of all farm land occupied by him did not, at any time during the relevant year of assessment, exceed £50)” (inserted by the Finance Act, 1975 ), and the part of the subsection, as so amended, preceding paragraph (b) is set out in the Table to this section.

TABLE

16.—(1) In this Chapter “an individual to whom section 16 applies” means an individual who is carrying on farming in a year of assessment and—

(a) who at any time in that year of assessment is also carrying on either solely or in partnership another trade or profession,

Limit on amount of tax to be charged on certain farming profits.

11. —The following section shall be substituted for section 19 of the Finance Act, 1974 :

“19.—(1) Where for any year of assessment an individual, other than an individual to whom section 16 applies, is chargeable to tax in respect of profits or gains from farming, the amount of tax so chargeable for that year of assessment shall not exceed—

(a) where the rateable valuation of the farm land occupied by him for that year of assessment does not exceed £75, one-tenth of the tax appropriate to the profits or gains from farming;

(b) where the rateable valuation of the farm land occupied by him for that year of assessment exceeds £75, the amount arrived at by multiplying the tax appropriate to the profits or gains from farming by a fraction the denominator of which is ten and the numerator of which is the number equivalent to the amount by which the rateable valuation of the land so occupied exceeds £74.

(2) For the purposes of this section, the tax appropriate to the profits or gains from farming shall, in relation to an individual, be so much of the tax that would, but for the provisions of this section, be payable in respect of the individual's total income as bears to that tax the same proportion as the amount of the profits or gains from farming included in the said total income bears to that total income.

(3) This section shall not apply in any case where the rateable valuation of the farm land occupied by the individual at any time during the year of assessment exceeds £84.”.

Assessment of farming profits for 1977-78.

12. —The Finance Act, 1974 , is hereby amended—

(a) by the substitution for subsections (1), (2), (3) and (4) of section 21, of the following subsections:

“(1) Where, for the year 1977-78, an individual, other than an individual to whom section 16 applies, is, by virtue of section 15, chargeable to tax in respect of profits or gains from farming, he shall be charged to tax for that year in accordance with the provisions of this section and, subject to section 21A, not by reference to the provisions of section 58 (1) of the Income Tax Act, 1967 .

(2) Where an individual is to be charged to tax in accordance with the provisions of this section, he shall be charged under Case I of Schedule D on an amount determined by the formula—

(V×65)−R−W

where

V is the rateable valuation of the farm land occupied by him for the year 1977-78,

R is the amount of rates payable by him for that year in respect of the farm land so occupied, and

W is the total amount of emoluments payable by him for that year to persons, employed as permanent employees for the purpose of working the said land, in respect of such work.

(3) In charging profits or gains in accordance with the provisions of this section, no deduction under any of the provisions of the Income Tax Acts shall be made from the amount determined under subsection (2).

(4) For the purposes of this section—

(a) a person shall be regarded as a permanent employee of an individual if that individual—

(i) is registered as an employer under the Income Tax (Employments) Regulations, 1960 (S.I. No. 28 of 1960),

(ii) has, in relation to all emoluments paid by him during the year 1977-78 to the said person, complied with the provisions of the said Regulations, and

(iii) has, in respect of that person, paid employment contributions (within the meaning of the Social Welfare Act, 1952 ) for the period or periods during which the said person was employed by him in that year, and

(b) emoluments payable by an individual to a person connected with the said individual shall be taken into account for the purpose of the formula in subsection (2) only in so far as the emoluments are paid to that person in cash.”, and

(b) by the insertion, after section 21, of the following section:

Appeals against assessments under section 21.

“21A.—(1) An individual aggrieved by an assessment made upon him under section 21 shall be entitled to appeal against that assessment on the grounds that he elects to be charged to tax for the year 1977-78 in respect of his profits or gains from farming on an amount—

(a) determined in accordance with the provisions of section 58 (1) of the Income Tax Act, 1967 , or

(b) equal to the full amount of those profits or gains for that year:

Provided that, in the case of an individual who elects to be charged to tax in accordance with paragraph (b) and who, for the year 1976-77, has been charged to tax in respect of his profits or gains from farming, section 11 of the Finance Act, 1967, and section 26 of the Finance Act, 1971 , shall not apply for the year 1977-78, in relation to any qualifying machinery or plant (within the meaning of those sections) provided for use for the purposes of farming in the interval between the basis period (within the meaning of Part XV of the Income Tax Act, 1967 ) for the year 1976-77 and the basis period (within the meaning aforesaid) for the year 1977-78.

(2) Where an individual appeals and elects as provided for in subsection (1), all such amendments of the assessment shall be made as will ensure that he is charged to tax in accordance with such election.”.

Application of section 30 (appeals against assessments and payments on account) of Finance Act, 1976, to assessments under section 21 (notional basis of assessment) of Finance Act, 1974.

13. Section 30 of the Finance Act, 1976 , shall have effect in relation to an assessment made by virtue of section 21 of the Finance Act, 1974 , as if the following proviso were added to the definition of “the specified amount of tax”—

“Provided that, and notwithstanding the provisions of subsection (2), in the case of an assessment to tax which consists of tax, or includes any amount of tax, applicable to the profits or gains from farming, charged in accordance with the provisions of section 21 of the Finance Act, 1974 , ‘the specified amount of tax’, in relation to any instalment of tax payable on a date prior to the 1st day of January, 1978, means the tax assessed which is payable in that instalment;”.

Increase of allowances for certain capital expenditure.

14. —(1) Where, on or after the 6th day of April, 1977, a person to whom section 22 of the Finance Act, 1974 (inserted by the Corporation Tax Act, 1976 ) applies, incurs capital expenditure to which this section applies, being expenditure in respect of which he is entitled to claim an allowance under that section, the allowance to be granted for the chargeable period related to the expenditure or any subsequent chargeable period shall be increased by such amount as is specified by the person to whom the allowance is to be made in making his claim for the allowance, and in relation to a case in which this subsection has had effect, any reference in the Tax Acts to a farm buildings allowance made under the said section 22 shall be construed as a reference to that allowance as increased under this section.

(2) This section applies to expenditure incurred on the construction of fences, roadways, holding yards or drains or on land reclamation.