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13 1986

FINANCE ACT, 1986

Chapter V

Urban Renewal: Relief from Income Tax and Corporation Tax

Interpretation ( Chapter V ), etc.

41. —(1) In this Chapter—

the Custom House Docks Area” means the area described in Part II of the Fourth Schedule ;

designated area” means the Custom House Docks Area or any other area described in Part III , IV , V , VI or VII of the Fourth Schedule , and a reference to a designated area of a county borough shall, save where otherwise specifically provided, be construed as a reference to the part or parts of that county borough described in the appropriate Part or Parts of that Schedule.

(2) As respects the application of this Chapter to any expenditure incurred in relation to, or rent payable in respect of, any premises the site of which is wholly within the Custom House Docks Area—

the specified day” means the day appointed by the Minister for Finance by order to be the specified day for the purposes of this Chapter;

the specified period” means the period of five years commencing on the specified day.

(3) The Fourth Schedule shall have effect for the purposes of supplementing this Chapter.

Allowance in relation to construction of certain commercial premises.

42. —(1) In this section—

multi-storey car-park” has the meaning given to it by section 25 of the Finance Act, 1981 ;

qualifying period” means the period commencing on the 23rd day of October, 1985, and ending on the 31st day of May, 1989, or, where section 41 (2) applies, the specified period;

qualifying premises” means a building or structure the site of which is wholly within a designated area and which—

(a) apart from this section is not an industrial building or structure within the meaning of section 255 (1) of the Income Tax Act, 1967 , and

(b) (i) is in use for the purposes of a trade or profession, or

(ii) whether or not it is so used, is let on bona fide commercial terms for such consideration as might be expected to be paid in a letting of the building or structure which was negotiated on an arm's length basis,

but does not include any building or structure in use as, or as part of, a dwelling-house;

references to sections 254 , 264 and 265 of the Income Tax Act, 1967 , are references to those sections as inserted by the Corporation Tax Act, 1976 .

(2) Subject to the modifications provided for in subsections (3) to (7), all the provisions of the Tax Acts relating to the making of allowances or charges in respect of capital expenditure on the construction of an industrial building or structure shall, notwithstanding anything to the contrary therein, apply—

(a) as if a qualifying premises were, at all times at which it is a qualifying premises, a building or structure in respect of which an allowance falls to be made for the purposes of income tax or corporation tax, as the case may be, under Chapter II of Part XV or under Chapter I of Part XVI of the Income Tax Act, 1967 , by reason of its use for a purpose specified in section 255 (1) (a) of that Act, and

(b) where any activity carried on in the qualifying premises is not a trade, as if it were a trade:

Provided that an allowance shall be given by reason of this subsection in respect of any capital expenditure incurred on the construction of a qualifying premises only in so far as that expenditure is incurred in the qualifying period.

(3) For the purposes of subsection (2) the references to the 1st day of April, 1988 (as provided for by section 20 of the Finance Act, 1985 ) in the provisions of the Income Tax Act, 1967 , specified in the Table to this subsection, shall be deemed to be references to the 1st day of June, 1989, or, where section 41 (2) applies, to the day next following the end of the specified period.

TABLE

Subsection (2A) (a) of section 254 (industrial building allowance)

Paragraph (ii) of the proviso to subsection (1) and paragraph (ii) of the proviso to subsection (3) of section 264 (annual allowances)

Paragraph (iii) of the proviso to subsection (1) of section 265 (balancing allowances and balancing charges)

(4) As respects a qualifying premises the site of which is wholly within a designated area of Dublin other than the Custom House Docks Area, any allowance or charge which, apart from this subsection, would fall to be made under subsection (2) in respect of capital expenditure on the construction of the qualifying premises shall be reduced to one-half of the amount which, apart from this subsection, would be the amount of that allowance or charge; and for the purposes of this subsection the amount of an allowance or charge so falling to be reduced to one-half thereof shall be computed as if—

(a) this subsection had not been enacted, and

(b) effect had been given to all allowances taken into account in so computing that amount:

Provided that nothing in this section shall affect the operation of section 265 (5) of the Income Tax Act, 1967 .

(5) Subject to subsection (6), section 25 of the Finance Act, 1981 , shall not have effect as respects a qualifying premises which is a multi-storey car-park in relation to which any allowance in respect of expenditure incurred on its construction falls to be made under subsection (2).

(6) Subsections (2) and (4) shall not apply as respects any capital expenditure which—

(a) is incurred before the 1st day of April, 1988, on the construction of a multi-storey car-park the site of which is wholly within a designated area of Dublin other than the Custom House Docks Area, and

(b) is relevant expenditure within the meaning of section 25 of the Finance Act, 1981 .

(7) For the purposes only of determining, in relation to a claim for an allowance by virtue of subsection (2), whether and to what extent capital expenditure incurred on the construction of a qualifying premises is incurred in the qualifying period, only such an amount of that capital expenditure as is determined by the inspector, according to the best of his knowledge and judgment, to be properly attributable to work on the construction of the premises which was actually carried out during the qualifying period shall (notwithstanding any other provision of the Tax Acts as to the time when any capital expenditure is, or is to be treated as, incurred) be treated as having been incurred in that period:

Provided that any amount which, by virtue of this subsection, is determined by the inspector may be amended by the Appeal Commissioners or by the Circuit Court on the hearing, or the rehearing, of an appeal against that determination.

Deduction for certain expenditure on the provision of rented residential accommodation.

43. —(1) In this section—

construction or conversion expenditure” means expenditure in respect of which, if it were incurred in the qualifying period, relief would fall to be given under subsection (2) of the principal section otherwise than by virtue of section 21 of the Finance Act, 1985 ;

expenditure to which this section applies” means construction or conversion expenditure incurred in the specified period in relation to a qualifying premises the site of which is wholly within the Custom House Docks Area; and, for the purposes of determining whether and to what extent such expenditure was so incurred in the specified period, subsection (1) (b) of the principal section shall have effect as if the references in subparagraph (i) thereof to the qualifying period were references to the specified period and with any other necessary modifications;

the principal section” means section 23 of the Finance Act, 1981 .

(2) This section shall be construed together with the principal section.

(3) The principal section and section 24 of the Finance Act, 1981 , shall have effect as respects expenditure to which this section applies as if—

(a) the following definition were substituted for the definition of “qualifying period” in subsection (1) (a) of the principal section:

“‘qualifying period’ means the specified period within the meaning of section 41 of the Finance Act, 1986;”,

(b) for the purposes of the definition of “qualifying premises” in the said subsection (1) (a), the reference in subsection (2) of section 29 of the Finance Act, 1983 , to expenditure to which that section applies were a reference to expenditure to which this section applies,

(c) in subsections (1) and (2) of section 22 of the Finance Act, 1985 , the specified period were substituted for the period mentioned therein, and

(d) the provisions of the Tax Acts set out in the Table to this subsection had not been enacted.

TABLE

Subsections (3) and (4) of section 29 of the Finance Act, 1983

The said subsections (3) and (4) as they are applied by section 30 (1) of the Finance Act, 1983

Section 21 of the Finance Act, 1985

Allowance to owner-occupiers in respect of certain premises.

44. —(1) (a) In this section—

qualifying expenditure”, in relation to an individual, means, subject to paragraph (c), an amount equal to the amount of the expenditure incurred by the individual in the qualifying period on the construction of a qualifying premises which is a qualifying owner-occupied dwelling in relation to the individual after deducting from that amount of expenditure any sum in respect of or by reference to that expenditure, or in respect of or by reference to the qualifying premises or construction work in respect of which it was incurred, which the individual has received, or is entitled to receive, directly or indirectly, from the State, any board established by statute or any public or local authority;

qualifying owner-occupied dwelling”, in relation to an individual, means a qualifying premises, the site of which is wholly within a designated area other than the Custom House Docks Area and which is first used, after the qualifying expenditure has been incurred, by that individual as his only or main residence;

qualifying premises” shall be construed in accordance with paragraph (b);

qualifying period” means the period commencing on the 23rd day of October, 1985, and ending on the 31st day of May, 1989;

refurbishment” has the same meaning as in section 21 of the Finance Act, 1985 .

(b) A premises which would be a qualifying premises for the purposes of section 23 of the Finance Act, 1981 , as it applies to expenditure to which section 29 of the Finance Act, 1983 , applies, if—

(i) clause (iv) of the definition of “qualifying premises” in the said section 23 were deleted, and

(ii) subsection (8) of that section had not been enacted,

shall be a qualifying premises for the purposes of this section, and all the provisions of the said section 23 in so far as they apply for the purpose of determining whether a premises is a qualifying premises shall, subject to the modifications mentioned in subparagraphs (i) and (ii) and with any other necessary modifications, apply for the purposes of this section.

(c) A person shall be regarded as having incurred expenditure in the qualifying period on the construction of a qualifying premises to the extent that he would be regarded as having incurred expenditure on the construction or refurbishment of that premises for the purposes of section 23 of the Finance Act, 1981 , if for the definition of “qualifying period” in that section and in section 21 of the Finance Act, 1985 , there were substituted the definition of “qualifying period” in this section, and all the provisions of the said sections 23 and 21 in so far as they apply for the purpose of determining the amount of expenditure incurred in the qualifying period on the construction or refurbishment of a qualifying premises shall, subject to the aforesaid modification of the definition of “qualifying period” and with any other necessary modifications, apply for the purposes of this section.

(d) For the purposes of this section, other than for the purposes of determining whether and to what extent expenditure on the construction or refurbishment of a qualifying premises is incurred in the qualifying period, expenditure incurred on the construction or refurbishment of a qualifying premises shall be deemed to have been incurred on the earliest date after the expenditure was actually incurred that the premises is in use as a dwelling.

(e) (i) Where the qualifying expenditure in relation to a qualifying premises is incurred by two or more persons, each of those persons shall be treated as having incurred only such amount of the expenditure as the inspector, to the best of his knowledge and judgment, considers to be just and reasonable and the expenditure shall be apportioned accordingly.

(ii) An apportionment made under subparagraph (i) may be amended by the Appeal Commissioners or by the Circuit Court on the hearing, or the rehearing, of an appeal against any deduction granted on the basis of the apportionment.

(2) Where an individual, having made a claim in that behalf, proves that he has incurred qualifying expenditure in a year of assessment, he shall be entitled, for that year of assessment and for any of the nine immediately subsequent years of assessment in which the qualifying premises in respect of which the expenditure was incurred is the only or main residence of the individual, to have a deduction made from his total income of an amount equal to 5 per cent. of the amount of the qualifying expenditure.

(3) An appeal to the Appeal Commissioners shall lie on any question arising under this section, other than a question on which an appeal lies under section 18 of the Housing (Miscellaneous Provisions) Act, 1979 , in like manner as an appeal would lie against an assessment to income tax and the provisions of the Income Tax Acts relating to appeals shall apply and have effect accordingly.

(4) All such provisions of the Income Tax Acts as apply in relation to the deductions specified in sections 138 to 143 of the Income Tax Act, 1967 , shall, with any necessary modifications, apply in relation to deductions under this section.

(5) Section 198 (1) (a) of the Income Tax Act, 1967 , is hereby amended by the insertion of the following subparagraph after subparagraph (x) (inserted by section 19 ):

“(xi) so far as it flows from relief under section 44 of the Finance Act, 1986, in the proportions in which they incurred the expenditure giving rise to the relief,”.

Double rent allowance as a deduction in computing trading income.

45. —(1) (a) In this section—

lease”, “lessee”, “lessor” and “rent” have the meanings respectively assigned to them by Chapter VI of Part IV of the Income Tax Act, 1967 ;

qualifying lease” means a lease in respect of a qualifying premises granted in the qualifying period on bona fide commercial terms by a lessor to a lessee who is not connected with the lessor, or with any other person who is entitled to a rent in respect of the qualifying premises, whether under that lease or any other lease;

qualifying period” means the period commencing on the 23rd day of October, 1985, and ending on the 31st day of May, 1989, or, where section 41 (2) applies, the specified period;

qualifying premises” means a building or structure the site of which is wholly within a designated area and—

(i) (I) which is an industrial building or structure within the meaning of section 255 (1) of the Income Tax Act, 1967 , or

(II) in respect of which an allowance falls to be made for the purposes of income tax or corporation tax, as the case may be, under Chapter II of Part XV or under Chapter I of Part XVI of that Act, by reason of section 42 , and

(ii) which is let on such terms as are referred to in paragraph (b) (ii) of the definition of “qualifying premises” in the said section 42 ;

relevant rental period”, in relation to a qualifying premises, means the period of ten years commencing on the day on which rent in respect of that premises is first payable under any qualifying lease.

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

(2) Where, in the computation of the amount of the profits or gains of a trade or profession, a person is, apart from this section, entitled to any deduction (hereafter in this subsection referred to as “the first-mentioned deduction”) on account of rent in respect of a qualifying premises occupied by him for the purposes of that trade or profession which is payable by him in the relevant rental period in relation to that qualifying premises under a qualifying lease, he shall be entitled in that computation to a further deduction equal to the amount of the first-mentioned deduction.