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13 1993

FINANCE ACT, 1993

Chapter II

Miscellaneous Amendments, etc.

Interpretation (Chapter II).

120. —In this Chapter “the Principal Act” means the Capital Acquisitions Tax Act, 1976 .

Amendment of section 5 (gift deemed to be taken) of Principal Act.

121. —(1) Where, on or after the 24th day of February, 1993, a person becomes beneficially entitled in possession to a benefit, and the property in which the benefit is taken consists wholly or partly of shares in a private company, section 5 of the Principal Act shall have effect as if “otherwise than for full consideration in money or money's worth paid by him” were deleted in subsection (1) thereof.

(2) In subsection (1) the expression “shares in a private company” shall be construed by reference to the meanings that “share” (as amended by this Act) and “private company” have, respectively, in section 16 of the Principal Act.

Amendment of section 6 (taxable gift) of Principal Act.

122. —(1) Section 6 of the Principal Act is hereby amended by the substitution of the following subsection for subsection (1):

“(1) In this Act ‘taxable gift’ means—

(a) in the case of a gift, other than a gift taken under a discretionary trust, where the disponer is domiciled in the State at the date of the disposition under which the donee takes the gift, the whole of the gift;

(b) in the case of a gift taken under a discretionary trust where the disponer is domiciled in the State at the date of the disposition under which the donee takes the gift or at the date of the gift or was (in the case of a gift taken after his death) so domiciled at the time of his death, the whole of the gift; and

(c) in any other case, so much of the property of which the gift consists as is situate in the State at the date of the gift.”.

(2) This section shall have effect in relation to a gift taken on or after the date of the passing of this Act.

Amendment of section 11 (inheritance deemed to be taken) of Principal Act.

123. —(1) Where, on or after the 24th day of February, 1993, a person becomes beneficially entitled in possession to a benefit, and the property in which the benefit is taken consists wholly or partly of shares in a private company, section 11 of the Principal Act shall have effect as if “otherwise than for full consideration in money or money's worth paid by him” were deleted in subsection (1) thereof.

(2) In subsection (1) the expression “shares in a private company” shall be construed by reference to the meanings that “share” (as amended by this Act) and “private company” have, respectively, in section 16 of the Principal Act.

Amendment of section 12 (taxable inheritance) of Principal Act.

124. —(1) Section 12 of the Principal Act is hereby amended by the substitution of the following paragraph for paragraph (a) of subsection (1):

“(a) in the case where the disponer is domiciled in the State at the date of the disposition under which the successor takes the inheritance, the whole of the inheritance; and”.

(2) This section shall have effect in relation to an inheritance taken on or after the date of the passing of this Act.

Amendment of section 16 (market value of certain shares) of Principal Act.

125. —(1) Section 16 of the Principal Act is hereby amended—

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

“(1) (a) The market value of each share in a private company which (after the taking of the gift or of the inheritance) is, on the date of the gift or on the date of the inheritance, a company controlled by the donee or successor, shall be ascertained by the Commissioners, for the purposes of tax, as if, on the date on which the market value is to be ascertained, it formed an apportioned part of the market value of a group of shares in that company, such apportionment, as between shares of a particular class, to be by reference to nominal amount, and, as between different classes of shares, to have due regard to the rights attaching to each of the different classes.

(b) For the purpose of ascertaining the market value of a share in a private company in the manner described in paragraph (a), the benefit to any private company (in this paragraph referred to as ‘the first-mentioned company’) by virtue of its ownership of an interest in shares in another private company (in this paragraph referred to as ‘the second-mentioned company’), shall, where each of the companies so connected is a company which (after the taking of the gift or of the inheritance) is, on the date of the gift or on the date of the inheritance, a company controlled by the donee or successor, be deemed to be—

(i) such benefit as would be appropriate to the ownership of that interest if the second-mentioned company were under the control of the first-mentioned company in the same manner as (on the date on which the market value is to be ascertained) the second-mentioned company is under the control of the following, that is to say, the first-mentioned company, the donee or successor, the relatives of the donee or successor, nominees of the donee or successor, nominees of relatives of the donee or successor, and the trustees of a settlement whose objects include the donee or successor or relatives of the donee or successor, or

(ii) the actual benefit appropriate to the ownership of that interest,

whichever is the greater.”,

and

(b) in subsection (2)—

(i) by the insertion of the following definition before the definition of “nominee”:

“‘group of shares’, in relation to a private company, means the aggregate of the shares in the company of the donee or successor, the relatives of the donee or successor, nominees of the donee or successor, nominees of relatives of the donee or successor, and the trustees of a settlement whose objects include the donee or successor or relatives of the donee or successor;”,

(ii) by the deletion of the definition of “private trading company”, and

(iii) by the insertion of the following definition after the definition of “private company”:

“‘share’, in relation to a private company and in addition to the interpretation of ‘share’ in section 2 (1), includes every debenture, or loan stock, issued otherwise than as part of a transaction which is wholly and exclusively a bonafide commercial transaction.”.

(2) This section shall have effect in relation to gifts or inheritances taken on or after the 24th day of February, 1993.

Amendment of section 90 (arrangements reducing value of company shares) of Finance Act, 1989.

126. —(1) Section 90 of the Finance Act, 1989 , is hereby amended—

(a) in subsection (1), by the deletion of “or 17” in paragraph (a) of the definition of “specified amount”, and

(b) by the insertion after subsection (11) of the following subsection:

“(12) Where, immediately after and as a result of an arrangement, shares in a company have been redeemed, the redeemed shares shall, for the purpose of the references to property representing shares in subsection (1) and subsection (2), (3) or (4), except a reference in relation to which the redeemed shares are actually represented by property, be deemed, immediately after the arrangement, to be represented by property, and the market value of the property so deemed to represent the redeemed shares shall be deemed to be nil.”.

(2) This section shall apply where—

(a) as respects subsection (1) (a), the time referred to in paragraph (a) of the definition of “specified amount” is on or after the 24th day of February, 1993, and

(b) as respects subsection (1) (b), the arrangement to which the said subsection relates is made on or after the 6th day of May, 1993.

Construction of certain references in section 16 of Principal Act for purposes of “specified amount” in section 90 of Finance Act, 1989.

127. —(1) For the purpose of paragraph (a) of the definition of “specified amount” in subsection (1) of section 90 of the Finance Act, 1989 , section 16 of the Principal Act shall have effect as if—

(a) the references therein to the donee or successor were references to the person who, for the purposes of section 90 of the Finance Act, 1989 , is the disponer of the specified amount,

(b) the references therein to the time at which a company is controlled were references to the time referred to in the said paragraph, and

(c) the shares referred to in the said paragraph were, at the time referred to therein, the absolute property of the aforesaid disponer.

(2) This section shall apply where the time referred to in paragraph (a) of the definition of “specified amount” in subsection (1) of section 90 of the Finance Act, 1989 , is on or after the 6th day of May, 1993.

Amendment of section 19 (value of agricultural property) of Principal Act.

128. —Section 19 of the Principal Act shall, in so far as it relates to a gift taken on or after the passing of this Act, be construed as if—

(a) in the definition of “agricultural value” the reference to 55 per cent. (inserted by the Finance Act, 1991 ) were a reference to 75 per cent., and

(b) the references to £200,000 (inserted by the Finance Act, 1982 ) were references to £250,000.

Amendment of section 34 (disposition by or to a company) of Principal Act.

129. —(1) Section 34 of the Principal Act is hereby amended by the substitution of the following subsections for subsections (1) and (2):

“(1) For the purposes of this Act—

(a) consideration paid by, or a disposition made by, a company shall be deemed to be consideration, or a disposition (as the case may be) paid or made, and

(b) consideration, or a gift, or an inheritance taken by a company shall be deemed to be consideration, or a gift or an inheritance (as the case may be) taken,

by the beneficial owners of the shares in the company and the beneficial owners of the entitlements under any liability incurred by the company (otherwise than for the purposes of the business of the company, wholly and exclusively) in the same proportions as the specified amounts relating to their respective beneficial interests in the shares and entitlements bear to each other.

(2) In this section—

company’ means a private company within the meaning of section 16 (2);

market value’ means—

(a) in the case of a person's beneficial interest in shares and entitlements, the market value of that interest on the date of the payment, disposition, gift or inheritance, as the case may be, ascertained by reference to the market value on that date of the shares and entitlements in which the interest subsists, and

(b) in the case of a share in which a beneficial interest subsists, the market value of that share ascertained in the manner described in section 16 as if, on the date on which the market value is to be ascertained, it formed an apportioned part of the market value of a group of shares consisting of all the shares in the company issued and outstanding at that date;

share’ has the same meaning as it has in section 16 (as amended by the Finance Act, 1993);

specified amount’, in relation to a person's beneficial interest in shares and entitlements, means—

(a) in the case of consideration paid, or a disposition made, by the company, a nil amount or, if greater, the amount by which the market value of the beneficial interest was decreased as a result of the payment of the consideration or the making of the disposition, and

(b) in the case of consideration, or a gift, or an inheritance taken by the company, a nil amount or, if greater, the amount by which the market value of the beneficial interest was increased as a result of the taking of the consideration, gift or inheritance.”.

(2) This section shall apply where the date of the payment, disposition, gift, or inheritance, to which subsection (1) relates, is on or after the 24th day of February, 1993.

Amendment of Second Schedule (computation of tax) to Principal Act.

130. —As respects gifts or inheritances taken on or after the 24th day of February, 1993, paragraph 9 (inserted by the Finance Act, 1989 ) of Part I of the Second Schedule to the Principal Act is hereby amended—

(a) by the substitution of the following definition for the definition of “company”:

“‘company’ means a private company which, for the relevant period—

(a) is a private company controlled by the disponer and of which the disponer is a director, and

(b) is not a private non-trading company;”,

(b) by the deletion of the definition of “ompany controlled by the disponer”,

(c) by the insertion of the following definition after the definition of “control”:

“‘investment income’, in relation to a private company, means income which, if the company were an individual, would not be earned income within the meaning of section 2 of the Income Tax Act, 1967 ;”,

and

(d) by the insertion of the following definitions after the definition of “nominee”:

“‘private company’ has the meaning assigned to it by section 16 (2);

private company controlled by the disponer’ means a private company that is under the control of any one or more of the following, that is to say—

(a) the disponer,

(b) nominees of the disponer,

(c) the trustees of a settlement made by the disponer;

private non-trading company’ means a private company—

(a) whose income (if any) in the twelve months preceding the date at which a share therein is to be valued consisted wholly or mainly of investment income; and

(b) whose property, on the date referred to in paragraph (a), consisted wholly or mainly of property from which investment income is derived;”.

Amendment of section 107 (application of Principal Act) of Finance Act, 1984.

131. —(1) Section 107 of the Finance Act, 1984 , is hereby amended by the substitution of the following paragraph for paragraph (a):

“(a) a reference in section 16 of the Principal Act to a company controlled by the successor and the definition in that section of ‘group of shares’ shall be construed as if (for the purpose of that reference) the list of persons contained in subsection (3) of that section and (for the purpose of that definition) the list of persons contained in that definition included the following, that is to say, the trustees of the discretionary trust, the living objects of the discretionary trust, the relatives of those objects, nominees of those trustees or of those objects or of the relatives of those objects, and the trustees of a settlement whose objects include the living objects of the discretionary trust or relatives of those living objects;”.

(2) This section shall have effect in relation to an inheritance taken on or after the 24th day of February, 1993.

Amendment of section 104 (application of Principal Act) of Finance Act, 1986.

132. —(1) Section 104 of the Finance Act, 1986 , is hereby amended by the substitution of the following paragraph for paragraph (a):

“(a) a reference in section 16 of the Principal Act to a company controlled by the successor and the definition in that section of ‘group of shares’ shall be construed as if (for the purpose of that reference) the list of persons contained in subsection (3) of that section and (for the purpose of that definition) the list of persons contained in that definition included the following, that is to say, the trustees of the discretionary trust, the living objects of the discretionary trust, the relatives of those objects, nominees of those trustees or of those objects or of the relatives of those objects, and the trustees of a settlement whose objects include the living objects of the discretionary trust or relatives of those living objects;”.

(2) This section shall have effect in relation to an inheritance taken on or after the 24th day of February, 1993.

Exemption of certain policies of assurance.

133. —(1) In this section “policy” means a contract entered into by a company in the course of carrying on a foreign life assurance business within the meaning of section 36 of the Finance Act, 1988 .

(2) Where any interest in a policy is comprised in a gift or an inheritance, then any such interest—

(a) shall be exempt from tax, and

(b) shall not be taken into account in computing tax on any gift or inheritance taken by a donee or successor,

if, but only if, it is shown to the satisfaction of the Commissioners that—

(i) such interest is comprised in the gift or inheritance at the date of the gift or at the date of the inheritance;

(ii) at the date of the disposition—

(I) the disponer is neither domiciled nor ordinarily resident in the State, or

(II) the proper law of the disposition is not the law of the State;

(iii) at the date of the gift or at the date of the inheritance, the donee or successor is neither domiciled nor ordinarily resident in the State.

(3) This section shall apply to any interest in a policy issued on or after the 1st day of December, 1992.

Repeal, etc. (Chapter II).

134. —(1) Section 17 of the Principal Act is hereby repealed.

(2) This section shall have effect in relation to gifts or inheritances taken on or after the 24th day of February, 1993.