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22 1997

FINANCE ACT, 1997

Chapter II

Income Tax, Corporation Tax and Capital Gains Tax

Relief for gifts made to third level institutions.

16. —(1) In this section—

approved institution” means an institution in the State in receipt of public funding which provides courses to which a scheme approved by the Minister under the Local Authorities (Higher Education Grants) Acts, 1968 to 1992, applies or any body established in the State for the sole purpose of raising funds for such an institution;

approved project” means a project in respect of which the Minister has given a certificate under subsection (2) which certificate has not been revoked under that subsection;

project” means one or more of the following—

(a) the undertaking of research;

(b) the acquisition of equipment;

(c) infrastructural development in institutions specified in the guidelines referred to in subsection (2) (a) (i);

(d) the provision of facilities designed to increase student numbers in areas of skills needs;

Minister” means the Minister for Education;

relevant gift” means a gift of money which—

(a) on or after the 6th day of April, 1997, is made to an approved institution for the sole purpose of funding an approved project,

(b) is or will be applied by the approved institution for the said purpose, and

(c) is not, apart from this section, deductible in computing for the purposes of tax the profits or gains of a trade or profession, or is not income to which the provisions of section 439 of the Income Tax Act, 1967 , apply, or is not a gift of money to which the provisions of section 32 of the Finance Act, 1984 , apply;

tax” means income tax or corporation tax, as the case may be.

(2) (a) (i) The Minister, on the making of an application by an approved institution, may, in accordance with guidelines laid down by the Minister with the consent of the Minister for Finance, give a certificate to that institution stating that a project may be treated as an approved project for the purposes of this section.

(ii) An application under this subsection shall be in such form as the Minister may direct and shall contain such information as may be specified in the guidelines referred to in subparagraph (i).

(iii) The Minister shall consult the Higher Education Authority in relation to an application under this subsection.

(b) (i) A certificate given by the Minister under paragraph (a) shall be subject to such conditions as the Minister may consider proper and specifies therein (including a condition as to the amount, or the percentage amount, of the total cost of the approved project which shall be met by relevant gifts).

(ii) The Minister may amend or revoke any condition specified in a certificate under paragraph (a), or add to such conditions, by giving notice in writing to the approved institution of the amendment, revocation or addition and the provisions of this section shall apply as if—

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

(II) a condition as so revoked was not specified in the notice.

(c) Where an approved institution fails to comply with any of the conditions to which a certificate given to it under paragraph (a) is subject by virtue of paragraph (b), the Minister may, by notice in writing given to the institution, revoke the certificate and the project shall cease to be an approved project as respects any gifts made to the institution after the date of the Minister's notice.

(3) Where it is proved to the satisfaction of the Revenue Commissioners that a person has made a relevant gift and the person claims relief from tax by reference thereto, the provisions of subsection (6) or, as the case may be, subsection (7) shall apply.

(4) Where a relevant gift is made by a chargeable person within the meaning of Chapter II of Part I of the Finance Act, 1988 , a claim under this section shall be made with the return required to be delivered by that person under section 10 of that Act, for the chargeable period in which the gift is made.

(5) In determining the net amount of the gift for the purposes of subsection (6) or (7), the amount or value of any consideration received by the person concerned as a result of making the gift, whether received directly or indirectly from the approved institution to which the gift was made or otherwise, shall be deducted from the amount of the gift.

(6) For the purposes of income tax for the year of assessment in which a person makes a gift to which this section applies, the net amount thereof shall be deducted from or set off against any income of the person chargeable to income tax for that year and tax shall, where necessary, be discharged or repaid accordingly and the total income of the person or, where the person's spouse is assessed to income tax in accordance with the provisions of section 194 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , the total income of the spouse shall be calculated accordingly.

(7) Where a relevant gift is made by a company, the net amount thereof shall, for the purposes of corporation tax, be deemed to be a loss incurred by the company in a separate trade in the accounting period of the company in which the gift is made.

(8) Relief under this section shall not be given to a person for a year of assessment or an accounting period, as the case may be, if the net amount of the gift (or the aggregate of the net amounts of gifts) made by such person in that year or that accounting period, as the case may be, is less than £1,000.

(9) Every approved institution, when required to do so by notice from the Minister, shall, within the time limited by the notice, prepare and deliver to the Minister a return containing particulars of the aggregate amount of relevant gifts received by the institution in respect of each approved project.

(10) If any question arises as to whether—

(a) an institution is an approved institution, or

(b) a project is an approved project, or

(c) a gift is a relevant gift,

for the purposes of this section, the Revenue Commissioners may consult with the Minister.

(11) For the purposes of a claim to relief under this section, an approved institution shall, on acceptance of a relevant gift, give to the person making the relevant gift a receipt which shall—

(a) contain a statement that—

(i) it is a receipt for purposes of this section,

(ii) the institution is an approved institution for purposes of this section,

(iii) the gift in respect of which the receipt is given is a relevant gift for purposes of this section, and

(iv) the project in respect of which the relevant gift has been made is an approved project,

and

(b) show—

(i) the name and address of the person making the relevant gift,

(ii) the amount of the relevant gift in both figures and words,

(iii) the date of the relevant gift,

(iv) the full name of the approved institution,

(v) the date on which the receipt was issued, and

(vi) particulars of the approved project in respect of which the relevant gift has been made,

and

(c) be signed by a duly authorised official of the approved institution.

Amendment of provisions relating to relief for expenditure on significant buildings, etc.

17. —(1) Section 19 (as amended by the Finance Act, 1995) of the Finance Act, 1982 , is hereby amended—

(a) in subsection (1)—

(i) by the insertion of the following definition after the definition of “approved building”:

“‘approved object’, in relation to an approved building, has the meaning assigned to it by subsection (4A);”,

(ii) by the substitution of the following definition for the definition of “authorised person”:

“‘authorised person’ means—

(a) an inspector or other officer of the Revenue Commissioners authorised by them in writing for the purposes of this section, or

(b) a person authorised by the Minister in writing for the purposes of this section;”,

(iii) by the insertion of the following definition after the definition of “chargeable period”:

“‘the Minister’ means the Minister for Arts, Culture and the Gaeltacht;”,

(iv) by the insertion of the following definition after the definition of “the Minister” (inserted by subparagraph (iii)):

“‘public place’, in relation to an approved building in use as a tourist accommodation facility, means a part of the building to which all patrons of the facility have access;”,

(v) by the substitution of the following definition for the definition of “qualifying expenditure”:

“‘qualifying expenditure’, in relation to an approved building, means expenditure incurred, by the person who owns or occupies the approved building, on one or more of the following—

(a) the repair, maintenance or restoration of the approved building or the maintenance or restoration of any land occupied or enjoyed with the approved building as part of its garden or grounds of an ornamental nature, and

(b) to the extent that the aggregate expenditure in a chargeable period does not exceed £5,000—

(i) the repair, maintenance or restoration of an approved object in the approved building,

(ii) the installation, maintenance or replacement of a security alarm system in the approved building, and

(iii) public liability insurance for the approved building;”,

(vi) by the insertion of the following definition after the definition of “qualifying expenditure”:

“‘security alarm system’ means an electrical apparatus installed as a fixture in the approved building which, when activated, is designed to give notice to the effect that there is an intruder present or attempting to enter the approved building in which it is installed;”,

and

(vii) by the insertion of the following paragraph after paragraph (b):

“(c) For the purposes of this section, references to an approved building, unless the contrary intention is expressed, shall be construed as including a reference to any land occupied or enjoyed with an approved building as part of its garden or grounds of an ornamental nature.”,

(b) in subsection (2), by the substitution, in paragraph (a), of the following subparagraph for subparagraph (i):

“(i) that he has incurred in a chargeable period qualifying expenditure in relation to an approved building,”,

(c) by the insertion of the following subsection after subsection (2):

“(2A) (a) Where—

(i) by virtue of subsection (2), qualifying expenditure in a chargeable period is treated as if it were a loss sustained in the chargeable period in a trade carried on by the person separate from any trade actually carried on by that person, and

(ii) owing to an insufficiency of income, relief under the Tax Acts cannot be given for any part of the qualifying expenditure so treated (in this subsection referred to as ‘the unrelieved amount’),

then, all the provisions of the Tax Acts shall apply as if the unrelieved amount were a loss sustained in the next following chargeable period in a trade carried on by the person separate from any trade actually carried on by that person.

(b) Where owing to an insufficiency of income, relief under the Tax Acts cannot be given by virtue of paragraph (a) for any part of the unrelieved amount, then all the provisions of the Tax Acts shall apply as if that part of the unrelieved amount were a loss sustained in the chargeable period next following the period referred to in paragraph (a) in a trade carried on by the person separate from any trade actually carried on by that person.

(c) Where, in any chargeable period, relief under the Tax Acts is due by virtue of two or more of the following provisions, that is to say, subsection (2) and paragraphs (a) and (b) of this subsection, then the following provisions shall apply—

(i) any relief due under those Acts by virtue of paragraph (b) shall be given in priority to any relief due under those Acts by virtue of subsection (2) or paragraph (a), and

(ii) where relief has been given in accordance with subparagraph (i) or where no such relief is due, any relief due under those Acts by virtue of paragraph (a) shall be given in priority to relief due under those Acts by virtue of subsection (2).”,

(d) in subsection (4)—

(i) by the substitution in paragraph (a) of the following subparagraph for subparagraph (i):

“(i) by the Minister, to be a building which is intrinsically of significant scientific, historical, architectural or aesthetic interest, and”,

(ii) by the substitution of the following paragraph for paragraph (c):

“(c) Where under paragraph (a) the Minister makes a determination in relation to a building and, by reason of any alteration made to the building, or any deterioration of the building, subsequent to the determination being made, the Minister considers that the building is no longer a building which is intrinsically of significant scientific, historical, architectural or aesthetic interest, the Minister may, by notice in writing given to the owner or occupier of the building, revoke the determination with effect from the date on which the Minister considers that the building ceased to be a building which is intrinsically of significant scientific, historical, architectural or aesthetic interest, and this subsection shall cease to apply to the building from that date.”,

(e) by the insertion of the following subsection after subsection (4):

“(4A) (a) In this subsection, ‘approved object’, in relation to an approved building, means an object (including a picture, sculpture, print, book, manuscript, piece of jewellery, furniture, or other similar object) or a scientific collection which is owned by the owner or occupier of the approved building and which, on application to them in that behalf by that person, is determined—

(i) by the Minister, after consideration of any evidence in relation to the matter which such owner or occupier submits to the Minister and after such consultation (if any) as may seem to the Minister to be necessary with such person or body of persons as in the opinion of the Minister may be of assistance to the Minister, to be an object which is intrinsically of significant national, scientific, historical or aesthetic interest, and

(ii) by the Revenue Commissioners, to be an object reasonable access to which is afforded, and in respect of which reasonable facilities for viewing are provided, in the building to the public.

(b) Without prejudice to the generality of the requirement that reasonable access be afforded, and that reasonable facilities for viewing be provided, to the public, access to and facilities for the viewing of an object shall not be regarded as being reasonable access afforded, or the provision of reasonable facilities for viewing, to the public unless, subject to such temporary removal as is necessary for the purposes of the repair, maintenance or restoration of the object as is reasonable—

(i) in a case where the approved building is a tourist accommodation facility, the object is displayed in a public place in the building, or

(ii) in the case of any other approved building—

(I) access to the object is afforded and such facilities for viewing the object are provided to the public on the same days and at the same times as access is afforded to the public to the approved building in which the object is kept, and

(II) the price, if any, paid by the public in return for such access is, in the opinion of the Revenue Commissioners, reasonable in amount and does not operate to preclude the public from seeking access to the object.

(c) Where under paragraph (a) the Minister makes a determination in relation to an object and, by reason of any alteration made to the object, or any deterioration of the object, subsequent to the determination being made, the Minister considers that the object is no longer an object which is intrinsically of significant national, scientific, historical or aesthetic interest, the Minister may, by notice in writing given to the owner or occupier of the building, revoke the determination with effect from the date on which the Minister considers that the object ceased to be an object which is intrinsically of significant national, scientific, historical or aesthetic interest, and this subsection shall cease to apply to the object from that date.

(d) Where under paragraph (a) the Revenue Commissioners make a determination in relation to an object and—

(i) reasonable access to the object ceases to be afforded, or reasonable facilities for the viewing of the object cease to be provided, to the public, or

(ii) the object ceases to be owned by the person to whom relief in respect of that qualifying expenditure has been granted under this section,

the Revenue Commissioners may, by notice in writing given to the owner or occupier of the approved building in which the object is or was kept, revoke that determination with effect from the date on which they consider that such access, such facilities for viewing or such ownership, as the case may be, so ceased, and—

(i) this subsection shall cease to apply to the object from that date, and

(ii) if relief has been given under this section in respect of qualifying expenditure incurred in relation to that object in the period of two years ending on the date from which the revocation has effect, that relief shall be withdrawn and there shall be made all such assessments or additional assessments as are necessary to give effect to the provisions of this subsection.”,

and

(f) by the substitution in subsection (5) of the following paragraph for paragraph (a):

“(a) Where a person makes a claim under subsection (2), an authorised person may, at any reasonable time, enter the building in relation to which the qualifying expenditure has been incurred for the purpose of inspecting, as the case may be, the building or an object or of examining any work in respect of which the expenditure to which the claim relates was incurred.”.

(2) Section 29 of the Finance Act, 1993 , is hereby amended in subsection (1)—

(a) by the substitution of the following paragraph for paragraph (a) of the definition of “approved garden”:

“(a) by the Minister for Arts, Culture and the Gaeltacht, to be a garden which is intrinsically of significant horticultural, scientific, historical, architectural or aesthetic interest, and”,

(b) by the substitution of the following definition for the definition of “qualifying expenditure”:

“‘qualifying expenditure’, in relation to an approved garden, means expenditure incurred, by the person who owns or occupies the approved garden, on one or more of the following—

(a) the maintenance or restoration of the approved garden, and

(b) to the extent that the aggregate expenditure in a chargeable period does not exceed £5,000—

(i) the repair, maintenance or restoration of an approved object in the approved garden,

(ii) the installation, maintenance or replacement of a security alarm system in the approved garden, and

(iii) public liability insurance for the approved garden;”,

and

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

“‘security alarm system’ means an electrical apparatus installed as a fixture in the approved garden which, when activated, is designed to give notice to the effect that there is an intruder present or attempting to enter the approved garden in which it is installed.”.

(3) (a) Subparagraphs (ii) and (iii) of paragraph (a), and paragraph (d), of subsection (1) and paragraph (a) of subsection (2) shall be deemed to have come into operation and had effect as on and from the 12th day of March, 1996.

(b) Paragraph (c) of subsection (1) shall apply and have effect as respects qualifying expenditure incurred in a chargeable period being—

(i) where the chargeable period is a year of assessment, the year 1995-96 and any subsequent year of assessment, or

(ii) where the chargeable period is an accounting period of a company, an accounting period beginning on or after the 6th day of April, 1995.

(c) Subsection (1), other than subparagraphs (ii) and (iii) of paragraph (a) and paragraphs (c) and (d) thereof, and paragraphs (b) and (c) of subsection (2) shall apply and have effect as respects qualifying expenditure incurred in a chargeable period being—

(i) where the chargeable period is a year of assessment, the year 1997-98 and any subsequent year of assessment, or

(ii) where the chargeable period is an accounting period of a company, an accounting period beginning on or after the 6th day of April, 1997.

Amendment of section 134 (deduction for increase in stock values) of Finance Act, 1996.

18. —Section 134 of the Finance Act, 1996, is hereby amended in subsection (3)—

(a) by the substitution in paragraph (a) of “1999” for “1997”,

and

(b) by the substitution in paragraph (b) of “1998-99” for “1996-97”,

and the said paragraphs (a) and (b), as so amended, are set out in the Table to this section.

TABLE

(a) A deduction shall not be allowed under the provisions of this section in computing a company's trading income for any accounting period which ends on or after the 6th day of April, 1999.

(b) Any deduction allowed by virtue of this section in computing the profits or gains of the trade of farming for an accounting period of a person other than a company shall not have effect for any purpose of the Income Tax Acts for any year of assessment later than the year 1998-99.

Amendment of section 135 (special provision for qualifying farmers) of Finance Act, 1996.

19. —Section 135 of the Finance Act, 1996, is hereby amended in paragraph (b) of subsection (1)—

(a) by the substitution in subparagraph (ii) of “three immediately succeeding years of assessment, or” for “three immediately succeeding years of assessment.”, and

(b) by the insertion of the following subparagraph after subparagraph (ii):

“(iii) on or after the 6th day of April, 1997, and before the 6th day of April, 1999, for the year of assessment in which the person becomes a qualifying farmer and for the immediately succeeding year of assessment.”.

Farming: allowances for capital expenditure on the construction of farm buildings etc. for control of pollution.

20. —(1) This section applies to any person—

(a) carrying on farming, the profits or gains of which are chargeable to tax in accordance with the provisions of section 15 of the Finance Act, 1974 , and

(b) for whom, in respect of capital expenditure to which paragraph (c) refers and in respect of farm land occupied by him or her, a farm nutrient management plan has been drawn up by an agency or planner approved to draw up such plans by the Department of Agriculture, Food and Forestry, and drawn up in accordance with—

(i) the guidelines in relation to such plans entitled “Farm Nutrient Management Plan” which were issued by the Department of Agriculture, Food and Forestry on the 21st day of March, 1997, or

(ii) a plan drawn up under the scheme known as the Rural Environment Protection Scheme (REPS) or the scheme known as the Erne Catchment Nutrient Management Scheme, both being schemes administered by the Department of Agriculture, Food and Forestry,

and

(c) who incurs capital expenditure on or after the 6th day of April, 1997, and before the 6th day of April, 2000, on the construction of those farm buildings (excluding a building or part of a building used as a dwelling) or structures specified in the Fourth Schedule in the course of a trade of farming land occupied by such person where such building or structures are constructed in accordance with the said farm nutrient management plan and are certified as being necessary by the said agency or planner for the purpose of securing a reduction in or the elimination of any pollution arising from the trade of farming.

(2) Subject to the provisions of Article 6 of Council Regulation (EEC) No. 2328/91 of 15 July, 1991* on improving the efficiency of agricultural structures, as amended and subject to subsection (3), where a person to whom this section applies has delivered to the Department of Agriculture, Food and Forestry a farm nutrient management plan to which subsection (1) relates, incurs capital expenditure to which subsection (1) applies, there shall be made to such person during a writing-down period of 8 years beginning with the chargeable period related to that expenditure, writing-down allowances (in this section referred to as “farm pollution control allowances”) in respect of that expenditure and such allowances shall be made in taxing the trade.

(3) The farm pollution control allowances to be made in accordance with subsection (2) in respect of capital expenditure incurred in a chargeable period shall be—

(a) as respects the first year of the said writing-down period referred to in subsection (2)

(i) where the capital expenditure incurred has not exceeded £20,000, an amount equal to 50 per cent. of the said expenditure, or

(ii) where the capital expenditure incurred has exceeded £20,000, an amount equal to £10,000,

(b) as respects the next 6 years of the said writing-down period, an amount equal to 15 per cent. of the balance of the said expenditure after deducting the amount of any allowance made by virtue of paragraph (a), and

(c) as respects the last year of the said writing-down period, an amount equal to 10 per cent. of the balance of the said expenditure after deducting the amount of any allowance made by virtue of paragraph (a).

(4) Paragraph 1 of the First Schedule to the Corporation Tax Act, 1976 , shall have effect for the interpretation of this section and “basis period” has the meaning assigned to it by section 297 of the Income Tax Act, 1967 .

(5) Any claim by a person for a farm pollution control allowance falling to be made to such person shall be included in the annual statement required to be delivered under the Income Tax Acts of the profits or gains from farming, and section 241 (3) of the Income Tax Act, 1967 , shall apply in relation to the allowance as it applies in relation to allowances in respect of wear and tear of machinery or plant.

(6) Any claim for a farm pollution control allowance shall be made to and determined by the inspector, but any person aggrieved by any decision of the inspector on any such claim may, on giving notice in writing to the inspector within 21 days after the notification to the person of the decision, appeal to the Appeal Commissioners.

(7) The Appeal Commissioners shall hear and determine an appeal to them made under subsection (6) as if it were an appeal against an assessment to tax and the provisions of the Income Tax Acts relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

(8) Subject to subsection (9), where a person who is entitled to farm pollution control allowances in respect of farm land occupied by the person transfers his or her interest in that farm land or any part of that farm land to another person, that other person shall, to the exclusion of the first-mentioned person be entitled to the allowances under this section for the chargeable periods following the chargeable period in which the transfer of interest took place.

(9) Where the transfer of interest to which subsection (8) refers took place in relation to part of the farm land, subsection (8) shall apply to so much of the farm pollution control allowance as is properly referable to that part of the land as if it were a separate allowance.

(10) Where expenditure is incurred partly for a purpose for which a farm pollution control allowance falls to be made and partly for another purpose, subsection (2 shall apply to so much only of that expenditure as on a just apportionment ought fairly to be treated as incurred for the first-mentioned purpose.

(11) No farm pollution control allowance shall be made in respect of any expenditure if for the same or any other chargeable period an allowance is or has been made in respect of it under Chapter II of Part XV or Chapter I of Part XVI of the Income Tax Act, 1967 or section 22 of the Finance Act, 1974 .

(12) Expenditure shall not be regarded for any of the purposes of this section as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State or by any person other than the first-mentioned person.

(13) For the purposes only of determining, in relation to a claim for a farm pollution control allowance, whether and to what extent capital expenditure incurred on the construction of a building or structure to which this section applies is incurred or not incurred in the period specified in paragraph (c) of subsection (1), only such an amount of that capital expenditure as is properly attributable to work on the construction of the building or structure which was actually carried out during the said 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.

(14) Section 29 of the Finance Act, 1975 , shall have effect as if subsection (1) of that section included a reference to this section.

Capital allowances for, and deduction in respect of, vehicles.

21. —(1) (a) Subject to paragraph (b), sections 25 to 29 of the Finance Act, 1973 , shall have effect, in relation to expenditure incurred on the provision or hiring of a vehicle to which those sections apply, as if for “£2,500” (construed as a reference to £14,000 by virtue of section 23 of the Finance Act, 1995), in each place where it occurs in those sections, there were substituted “£15,000”.

(b) Paragraph (a) shall apply only to expenditure incurred on or after the 23rd day of January, 1997, on the provision or hiring of a vehicle which, on or after that date is not a used or secondhand vehicle and is first registered in the State under section 131 of the Finance Act, 1992 , without having been previously registered in any other State which duly provides for the registration of a mechanically propelled vehicle.

(2) Section 32 of the Finance Act, 1976 , shall have effect, in relation to qualifying expenditure (within the meaning of that section) incurred on or after the 23rd day of January, 1997, as if for “£3,500” (construed as a reference to £14,000 by virtue of section 23 of the Finance Act, 1995), in each place where it occurs, there were substituted “£15,000”.

Amendment of section 241 (wear and tear of machinery, plant, etc.) of Income Tax Act, 1967 .

22. Section 241 of the Income Tax Act, 1967 , is hereby amended by the substitution of the following subsections for subsection (10):

“(10) The preceding provisions of this section shall, with any necessary modifications, apply in relation to professions, employments, offices and, subject to subsection (11), the letting of any premises the profits or gains from which are chargeable under Chapter VI of Part IV as they apply in relation to trades.

(11) (a) Where, by virtue of subsection (10), the provisions of this section apply to the letting of any premises, they shall apply and have effect as respects the year of assessment 1997-98 and subsequent years of assessment in respect of capital expenditure incurred on the provision of machinery or plant within the meaning of subsection (1) (b) (i) where—

(i) such expenditure is incurred wholly and exclusively in respect of a house which is used solely as a dwelling which is or is to be let as a furnished house, and

(ii) the said furnished house is provided for renting or letting on bona fide commercial terms in the open market.

(b) Where a person incurs capital expenditure of the type to which paragraph (a) applies and an allowance falls to be made in respect of that expenditure under this section—

(i) subsection (2) of section 16 of the Corporation Tax Act, 1976 , shall not apply or have effect as respects the whole or part (as the case may be) of any loss which would not have arisen but for the making of the said allowance, and

(ii) subsection (6) of section 14 of the Corporation Tax Act, 1976 , shall not apply or have effect as respects the said allowance.”.

Amendment of Chapter I (Industrial Buildings and Structures: Annual Allowances and Balancing Allowances and Charges) of Part XVI of Income Tax Act, 1967 .

23. —(1) Chapter I of Part XVI of the Income Tax Act, 1967 , is hereby amended—

(a) in section 265 by the insertion in paragraph (d) of subsection (1) after “other than rent or an amount treated” of “or partly treated”, and

(b) in subsection 266 by the addition after subsection (6) of the following subsection:

“(7) If, on receipt of consideration of the type referred to in subsection (1) (d) of section 265, a balancing allowance is made in respect of the expenditure, there shall be written off at the time of the event giving rise to the balancing allowance or, if later, on the 26th day of March, 1997, the amount by which the residue of the expenditure before the said event exceeds the said consideration.”.

(2) Paragraph (a) of subsection (1) shall apply and have effect in relation to consideration of the type referred to in subsection (1) (d) of section 265 which is received on or after the 26th day of March, 1997.

Capital allowances: room ownership schemes.

24. —(1) In this section—

hotel investment” means capital expenditure incurred either on the construction of, or the acquisition of a relevant interest in, a building or structure which falls to be regarded as an industrial building or structure within the meaning of section 255 (1) (d) of the Income Tax Act, 1967 , other than a building or structure to which the first proviso to that provision relates;

hotel partnership” includes any syndicate, group or pool of persons, whether or not a partnership, through or by means of which, a hotel investment is made;

market value” shall be construed in accordance with section 49 of the Capital Gains Tax Act, 1975 ;

member” in relation to a hotel partnership includes every person who participates in that partnership or who has contributed capital, directly or indirectly, to that partnership;

preferential terms” in relation to the acquisition of an interest referred to in subsection (4) (a) (i), means terms under which such interest is acquired for a consideration which, at the time of the acquisition, is or may be other than its market value.

(2) This section is for the purpose of counteracting any room ownership scheme entered into in connection with a hotel investment by a hotel partnership.

(3) Subject to subsection (5), no allowance shall be made under Chapter II of Part XV or Chapter I of Part XVI of the Income Tax Act, 1967 , in respect of a hotel investment by a hotel partnership where, in connection with any such investment, there exists a room ownership scheme.

(4) For the purposes of this section—

(a) a scheme shall be a room ownership scheme in connection with a hotel investment if, at the time a hotel investment is made by a hotel partnership, there exists any agreement, arrangement, understanding, promise or undertaking (whether express or implied and whether or not enforceable or intended to be enforceable by legal proceedings), under or by virtue of which any member of that hotel partnership, or a person connected with such member, may—

(i) acquire on preferential terms an interest in, or

(ii) retain for use other than for the purposes of the trade of hotel-keeping,

any room or rooms in, or any particular part of, the building or structure which is the subject of the hotel investment,

(b) where a hotel investment is made by one or more than one member of a hotel partnership, it shall be deemed to be made by the hotel partnership, and

(c) any question whether a person is connected with another shall be determined in accordance with the provisions of section 131 of the Finance Act, 1996.

(5) (a) Except as provided for in paragraph (b), this section shall apply to a hotel investment the capital expenditure in respect of which is incurred on or after the 26th day of March, 1997.

(b) This section shall not apply to a hotel investment if, before the 26th day of March, 1997, in respect of a building or structure which is the subject of such investment—

(i) a binding contract in writing was entered into for the construction of, or the acquisition of a relevant interest in, the building or structure, or

(ii) an application for planning permission for the construction of the building or structure was received by a planning authority.

Capital allowances for buildings used for third level educational purposes.

25. —(1) In this section—

approved institution” means an institution in the State in receipt of public funding which provides courses to which a scheme approved by the Minister for Education under the Local Authorities (Higher Education Grants) Acts, 1968 to 1992, applies;

qualifying expenditure” means capital expenditure incurred on—

(a) the construction of a qualifying premises, or

(b) the provision of machinery or plant,

which, following receipt of the advice of An tÚdarás, is approved for that purpose by the Minister for Education with the consent of the Minister for Finance;

qualifying premises” means a building or structure which—

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

(b) (i) is in use for the purposes of third level education provided by an approved institution,

(ii) is let to an approved institution 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 part of a building or structure in use as, or as part of, a dwelling-house;

An tÚdarás” means the Body established by section 2 of the Higher Education Authority Act, 1971 .

(2) Subject to subsections (3) to (7), all the provisions of the Tax Acts (other than section 303(3) of the Income Tax Act, 1967 ) relating to the making of allowances or charges in respect of capital expenditure which is incurred on the construction of an industrial building or structure shall, notwithstanding anything to the contrary therein, apply in relation to qualifying expenditure on a qualifying premises—

(a) as if the 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 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.

(3) In relation to qualifying expenditure on a qualifying premises section 264 of the Income Tax Act, 1967 , shall apply as if—

(a) in subsection (1), the reference to one-fiftieth were a reference to fifteen-hundredths, and

(b) in subsection (3), the reference to fifty years were a reference to seven years.

(4) No allowance shall be made under subsection (2) unless, prior to the commencement of construction of a qualifying premises, the Minister for Finance certifies that—

(a) an approved institution has procured or otherwise secured a sum of money, none of which has been met directly or indirectly by the State, which sum is not less than one-half of the qualifying expenditure to be incurred on the qualifying premises, and

(b) such sum is to be used solely by the approved institution for the following purposes:

(i) paying interest on money borrowed for the purpose of funding the construction of the qualifying premises, and

(ii) paying any rent on the qualifying premises during such times as the qualifying premises is the subject of a letting on such terms as are referred to in paragraph (b) (ii) of the definition of qualifying premises in subsection (1), and

(iii) purchasing the qualifying premises following the termination of the letting referred to in subparagraph (ii).

(5) Notwithstanding section 265(1) of the Income Tax Act, 1967 , no balancing charge shall be made in relation to a qualifying premises by reason of any of the events specified in the said section 265(1) which occurs more than 7 years after the qualifying premises were first used.

(6) This section shall come into operation on the 1st day of July, 1997.

(7) The Minister for Finance may not give a certificate under subsection (4) at any time later than the 1st day of July, 2000.

Amendment of Chapter IV (Urban Renewal Reliefs: Introduction of New Scheme in Certain Areas) of Part I of Finance Act, 1994 .

26. —Chapter IV of Part I of the Finance Act, 1994 , is hereby amended—

(a) in section 38—

(i) by the substitution of the following definition for the definition of “enterprise area” in subsection (1):

“‘enterprise area’ means—

(a) an area or areas specified as an enterprise area by order under section 39, or

(b) an area or areas described in the Tenth Schedule to the Finance Act, 1997;”,

(ii) by the substitution of the following definition for the definition of “qualifying period” in subsection (1):

“‘qualifying period’ means—

(a) subject to subsection (3) and section 39 and other than for the purposes of section 41B, the period commencing on the 1st day of August, 1994, and ending on the 31st day of July, 1997, or

(b) in respect of an area or areas described in the Tenth Schedule to the Finance Act, 1997, the period commencing on the 1st day of July, 1997, and ending on the 30th day of June, 2000;”,

(iii) by the insertion of the following definition after the definition of “qualifying period” in subsection (1):

“‘the relevant local authority’, in relation to the construction of, conversion into, refurbishment of, or, as the case may be, construction or refurbishment of a building or structure to which paragraph (a) of subsection (3) applies, means the council of a county or the corporation of a county or other borough or, where appropriate, the urban district council, in whose functional area the qualifying premises is situated;”,

and

(iv) by the addition of the following subsections after subsection (2):

“(3) (a) Where in relation to the construction of, conversion into, refurbishment of, or, as the case may be, construction or refurbishment of a building or structure which is—

(i) to be an industrial building or structure to which section 40 applies,

(ii) a qualifying premises within the respective meanings assigned in sections 41, 42 (other than a building or structure to which paragraph (a) (iv) of that meaning in that section applies), 43, 44, 45 and 46, or

(iii) a qualifying building within the meaning assigned in section 41A,

the relevant local authority gives a certificate in writing, on or before the 30th day of September, 1997, to the person constructing, converting or refurbishing, as the case may be, such a building or structure stating that it is satisfied that not less than 15 per cent. of the total cost of the building or structure had been incurred prior to the 31st day of July, 1997, then, the reference in paragraph (a) of the definition of ‘qualifying period’ in subsection (1) to the period ending on the 31st day of July, 1997, shall, as respects such a building or structure, be construed as a reference to a period ending on the 31st day of July, 1998, and the references in paragraph (a) of subsection (2) and paragraph (a) (i) of subsection (3) of section 40 and in paragraphs (a) (i) and (b) (i) (I) of subsection (8) of section 41A to ‘before the 1st day of August, 1997’ and the reference in paragraph (a) (i) of subsection (4) of section 41 to ‘the 1st day of August, 1997’ shall be construed as references to ‘before the 1st day of August, 1998’ and ‘the 1st day of August, 1998’, respectively.

(b) In considering whether to give such a certificate as is referred to in paragraph (a), the relevant local authority shall have regard only to the guidelines in relation to the giving of such certificates entitled ‘Extension from 31 July, 1997, to 31 July, 1998, of the time limit for qualifying expenditure on developments’ which were issued by the Department of the Environment on the 28th day of January, 1997.

(4) The Tenth Schedule to the Finance Act, 1997, shall apply for the purposes of supplementing this Chapter.”,

(b) in section 39—

(i) by the addition after subsection (1) of the following subsection:

“(1A) The Minister for Finance may, after consultation with the Minister for Transport, Energy and Communications and following receipt of a proposal from or on behalf of a company intending to carry on qualifying trading operations (within the meaning of section 41A) in an area or areas immediately adjacent to any of the airports commonly known as—

(a) Cork Airport,

(b) Donegal Airport,

(c) Galway Airport,

(d) Kerry Airport,

(e) Knock International Airport,

(f) Sligo Airport, or

(g) Waterford Airport,

being a company which, if those trading operations were to be carried on in an area which apart from this subsection would be an enterprise area, would be a qualifying company (within the meaning of section 41A), by order direct that—

(i) the said area or areas described in the order shall be an enterprise area for the purposes of this Chapter, and

(ii) as respects any such area so described in the order, the reference in paragraph (a) of the definition of ‘qualifying period’ in section 38(1) to the period commencing on the 1st day of August, 1994, and ending on the 31st day of July, 1997, shall be construed as a reference to such period as shall be specified in the order in relation to that area, but no such period specified in the order shall commence before the 1st day of August, 1994, or end after the 30th day of June, 2000.”,

and

(ii) by the substitution in subsection (2) of “subsection (1) or (1A)” for “subsection (1)”.

(c) in section 42 by the substitution of the following definition for the definition of “qualifying lease” in subsection (1):

“‘qualifying lease’ means a lease in respect of a qualifying premises granted on bona fide commercial terms—

(a) in the qualifying period in the case of a qualifying premises which is a building or structure to which subsection (3) (a) of section 38 refers, or

(b) in the qualifying period, or within the period of one year from the day next after the end of the qualifying period in the case of any other qualifying premises,

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;”.

Amendment of provisions relating to double rent allowance.

27. Section 45 of the Finance Act, 1986 , section 42 of the Finance Act, 1994 , and section 49 of the Finance Act, 1995, are hereby amended—

(a) in subsection (2) of the said section 45,

(b) in subsection (3) of the said section 42, and

(c) in subsection (3) of the said section 49,

by the substitution in each case for “equal to the amount of the first-mentioned deduction” of the following:

“(in this subsection referred to as ‘the second-mentioned deduction’) equal to the amount of the first-mentioned deduction but, as respects a qualifying lease granted on or after the 21st day of April, 1997, where the first-mentioned deduction is on account of rent which is payable by such person to a connected person, such person shall not be entitled in that computation to the second-mentioned deduction”.

Amendment of section 39B (relief in relation to income from certain trading operations carried on in Custom House Docks Area) of Finance Act, 1980 .

28. —Section 39B (as amended by the Finance Act, 1995) of the Finance Act, 1980 , is hereby amended by the addition, after subsection (9), of the following subsection:

“(10) (a) For the purposes of this section, the Minister for Finance, after consultation with the Minister for the Environment, may, by order direct that the definition of ‘the Custom House Docks Area’ contained in section 41 of the Finance Act, 1986 , shall include such area or areas described in the order which, but for the order, would not be included in that definition, and where the Minister for Finance so orders, the said definition of ‘the Custom House Docks Area’ shall, for the purposes of this section, be deemed to include the said area or areas.

(b) The Minister for Finance may, for the purposes of making an order under this section and an order under section 27 of the Finance Act, 1987 , exercise the powers to make those orders by making one order for the purposes of both of those sections.

(c) The Minister for Finance may make orders for the purpose of this section and any order made under this section shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the order is passed by Dáil Éireann within the next twenty-one days on which Dáil Éireann has sat after the order is laid before it, the order shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.”.

Relief for pre-trading expenditure.

29. —(1) Subject to subsection (4), where a person incurs expenditure for the purposes of a trade or profession before the time that the trade or profession has been set up and commenced by that person, and such expenditure—

(a) is incurred not more than three years before that time, and

(b) is not allowable, apart from this section, as a deduction for the purpose of computing the profits or gains of the trade or profession for the purposes of Case I or Case II of Schedule D, but would have been so allowable if it had been incurred after that time,

then the expenditure shall be treated for that purpose as having been incurred at that time.

(2) Where—

(a) a company pays any charges on income (within the meaning of section 10 of the Corporation Tax Act, 1976 ) before the time it sets up and commences a trade, and

(b) the payment is made wholly and exclusively for the purposes of that trade,

that payment, to the extent that it is not otherwise deducted from total profits of the company, shall be treated for the purposes of corporation tax as paid at that time.

(3) Where an individual who has set up and commenced a trade or profession has been assessed to tax for any year of assessment under section 434 of the Income Tax Act, 1967 , in respect of a payment—

(a) made before the time the trade or profession has been set up and commenced, and

(b) wholly and exclusively for the purposes of the trade or profession,

then section 316 of the Income Tax Act, 1967 , shall apply in relation to the payment as it would apply if the payment were made at that time.

(4) The amount of any expenditure which is to be treated under subsection (1) as incurred at the time that a trade or profession has been set up and commenced shall not be so treated for the purposes of section 307 of the Income Tax Act, 1967 , or section 16 (2), 16A (3), 116 or 116A of the Corporation Tax Act, 1976 .

(5) An allowance or deduction shall not be made under any provision of the Tax Acts, other than this section, in respect of any expenditure or payment which is treated under this section as incurred on the day on which a trade or profession is set up and commenced.

(6) This section shall apply to expenditure incurred for the purposes of a trade or profession which is set up and commenced on or after the 22nd day of January, 1997.

Amendment of section 35 (relief for investment in films) of Finance Act, 1987 .

30. —(1) Section 35 (inserted by section 31 (1) of the Finance Act, 1996) of the Finance Act, 1987 , is hereby amended—

(a) in subsection (1)—

(i) in the definition of “film” by the substitution of “means a film of a kind which is included within the categories of films eligible for certification as set out in guidelines referred to in subsection (2) which is produced” for “means a film which is produced”, and

(ii) in the definition of “qualifying company”, to insert after paragraph (a) the following new paragraph:

“(aa) does not contain in its name registered under either or both the Companies Acts, 1963 to 1990, or the Registration of Business Names Act, 1963 , the words, ‘Ireland’, ‘Irish’, ‘Éireann’, ‘Éire’ or ‘National’, and”,

(b) in subsection (2)—

(i) in paragraph (a)(i) by the insertion of the following proviso:

“Provided that nothing in this section shall be construed as obliging the Minister to give a certificate under this paragraph, and in any case where in relation to a film, the principal photography has commenced, the first animation drawings have commenced or the first model movement has commenced, as the case may be, before application is made by a qualifying company, the Minister shall not issue a certificate under this paragraph.”, and

(ii) in paragraph (b) by the substitution for paragraph (II) of the proviso to subparagraph (ii) of the following paragraph:

“(II) (A) (a) in relation to a film (other than an animation film) in respect of which the principal photography commences at any time during the months of October, November, December and January, and the production of the film continues to completion without unreasonable delay from that time, or

(b) in relation to a film in respect of which post production work is to be carried out wholly or mainly in the State,

the references in paragraph (I) of this proviso to—

(i) 60 per cent., shall be construed as a reference to 66 per cent.,

(ii) 50 per cent., shall be construed as a reference to 55 per cent., and

(iii) £7,500,000 shall be construed as a reference to £8,250,000,

and

(B) in relation to a film in respect of which not less than one-half of the amount of the total cost of production met by relevant investments has been met by relevant investments paid by allowable investor companies, the references in this proviso, apart from this subparagraph, to—

(a) £7,500,000 shall be treated as a reference to £15,000,000, and

(b) £8,250,000 shall be treated as a reference to £16,500,000,”,

and

(c) in subsection (4)—

(i) by the substitution of “£8,000,000” for “£6,000,000”,

(ii) in paragraph (a) of the proviso by the substitution of “£3,000,000” for “£2,000,000”, and

(iii) in paragraph (b) of the proviso by the substitution of “£3,000,000” for “£2,000,000”.

(2) Subsection (1) shall apply and have effect—

(a) as respects paragraph (a) and subparagraph (i) of paragraph (b), in relation to a film in respect of which the Minister did not receive, before the 29th day of April, 1997, the application to enable the Minister to consider whether a certificate should be given under section 35(2) of the Finance Act, 1987 ,

(b) as respects subparagraph (ii) of paragraph (b), in relation to a film in respect of which the Minster has received the application on or after the 26th day of March, 1997, to enable the Minister to consider whether a certificate should be given under section 35(2) of the Finance Act, 1987 ,

(c) as respects subparagraph (i) of paragraph (c), in relation to any period of twelve months ending on an anniversary of the 22nd day of January, 1997,

(d) as respects subparagraph (ii) of paragraph (c), in relation to a relevant investment made on or after the 26th day of March, 1997, and

(e) as respects subparagraph (iii) of paragraph (c), in relation to any twelve month period commencing on or after the 23rd day of January, 1997.

Amendment of section 14 (special portfolio investment accounts) of Finance Act, 1993 .

31. —(1) Section 14 (as amended by section 37 of the Finance Act, 1996) of the Finance Act, 1993 is hereby amended—

(a) in the definition of “qualifying shares” in paragraph (a) of subsection (1) by the substitution for subparagraph (ii) of the following subparagraph:

“(ii) quoted on the market known as the Developing Companies Market, or the market known as the Exploration Securities Market, of the Irish Stock Exchange,”,

and

(b) in subsection (2) by the substitution for paragraph (b) of the following paragraph:

“(b) the amount of a specified deposit or, if there is more than one, the aggregate of such amounts in respect of assets held at the same time as part of a special portfolio investment account shall not exceed—

(i) in the case of a special portfolio investment account in respect of which—

(I) the first specified deposit was made on or before the 5th day of April, 2000, and

(II) an amount (hereafter in this paragraph referred to as the ‘particular amount’) equal to the whole or a part of the specified deposit or specified deposits, has been used to acquire shares in a company quoted on the market known as the Developing Companies Market of the Irish Stock Exchange and those shares are, at that time, held as assets of the special portfolio investment account,

£50,000 increased by the lesser of—

(A) the particular amount, and

(B) £10,000,

and

(ii) in the case of any other special portfolio investment account, £50,000;”.

(2) This section shall apply and have effect as on and from the 6th day of April, 1997.

Amendment of section 18 (taxation of collective investment undertakings) of Finance Act, 1989 .

32. —Section 18 (as amended by the Finance Act, 1996) of the Finance Act, 1989 , is hereby amended in subsection (1) by the insertion of the following proviso to the definition of “specified collective investment undertaking”:

“Provided that, for the purposes of this definition, reference to a qualifying management company shall be construed as if—

(i) in subsection (2) of section 39A (inserted by the Finance Act, 1981 ) of the Finance Act, 1980 , there were deleted ‘and any certificate so given shall, unless it is revoked under subsection (4), (4A) or (4B), remain in force until the 31st day of December, 2005’, and

(ii) in subsection (2) of section 39B (inserted by the Finance Act, 1987 ) of the Finance Act, 1980 , there were deleted ‘and any certificate so given shall, unless it is revoked under subsection (4), (5) or (5A), remain in force until the 31st day of December, 2005’.”.

Taxation of strips of securities.

33. —(1) In this section—

chargeable period” has the meaning assigned to it in paragraph 1 (2) of the First Schedule to the Corporation Tax Act, 1976 ;

market value” has the meaning assigned to it in section 49 of the Capital Gains Tax Act, 1975 ;

nominal value”, in relation to a unit of a security, means—

(a) where the interest on the unit of the security is expressed to be payable by reference to a given value, that value, and

(b) in any other case, the amount which was paid for the unit of the security on its issue;

opening value”, in relation to a unit of a security from which at any time strips of the unit have been created by a person means—

(a) in the case of a person who is carrying on a trade, which consists wholly or partly of dealing in securities of which the unit of the security is an asset in respect of which any profits or gains are chargeable to tax under Case I of Schedule D, an amount equal to the market value of the unit of the security at the time the strips were created, and

(b) in the case of any other person, an amount equal to—

(i) the market value of the unit of the security at the time the strips were created, or

(ii) the nominal value of the unit of the security,

whichever is the lesser;

relevant day”, in relation to a person who holds a strip, means—

(a) where the person is not a company within the charge to corporation tax, the 5th day of April in a year of assessment, and

(b) where the person is a company within the charge to corporation tax, the day on which an accounting period of the company ends;

securities” has the same meaning as it has in subsection (1) of section 29 of the Finance Act, 1984 , and a unit of a security shall be construed accordingly;

strip”, in relation to a unit of a security, means an obligation of the person who issued the security to make a payment, whether of interest or of principal, which has been separated from other obligations of that person to make payments in respect of the unit of the security.

(2) Where at any time a person who owns a unit of a security creates strips of that unit—

(a) the unit of the security shall be deemed to have been sold at that time by that person for an amount equal to its market value at that time,

(b) that person shall be deemed to have acquired at that time each strip for the amount which bears the same proportion to the opening value of the unit of the security as the market value of the strip at that time bears to the aggregate of the market value at that time of each of the strips of the unit of the security, and

(c) each strip shall be deemed to be a non-interest-bearing security any profits or gains arising on a disposal or redemption of which shall, subject to subsection (5), be chargeable to tax under Case III of Schedule D unless charged to tax under Case I of that Schedule.

(3) Where a person, other than a person carrying on a trade which consists wholly or partly of dealing in securities in respect of which any profits or gains are chargeable to tax under Case I of Schedule D, acquires a strip of a unit of a security in relation to which section 19 of the Capital Gains Tax Act, 1975 , applies, otherwise than in accordance with subsection (2), the person shall be deemed to have acquired the strip for an amount equal to—

(a) the amount which bears the same proportion to the nominal value of the unit of the security as the market value of the strip at the time of issue of the security would have borne to the aggregate of the market value at that time of each of the strips of the unit of the security if the strip had been created at the time of issue of the security, or

(b) the amount paid by the person for the acquisition of the strip,

whichever is the lesser.

(4) Where at any time strips of a unit of a security are reconstituted into a unit of the security by any person—

(a) each of the strips shall be deemed to have been sold at that time by that person for an amount equal to its market value at that time, and

(b) that person shall be deemed to have acquired at that time the unit of the security for an amount equal to the aggregate of the market value at that time of each of the strips.

(5) Where a person holds a strip on a relevant day, that person shall on that day be deemed to have disposed of and immediately reacquired the strip at the market value of the strip on that day.

(6) Where under subsection (5), a person is deemed to have disposed of a strip on a relevant day, the amount to be included in the profits or gains chargeable to tax under Case III of Schedule D for the chargeable period in which the relevant day falls shall be the aggregate of the amounts of any profits or gains arising on such deemed disposals in the chargeable period after deducting the aggregate of the amounts of any losses arising on such deemed disposals in that chargeable period, and, so far as they have not been allowed as a deduction from profits or gains in any previous chargeable period, any losses arising on such deemed disposals in any previous chargeable period.

Amendment of section 138 (tax treatment of securities issued at a discount) of Finance Act, 1990 .

34. Section 138 of the Finance Act, 1990 , is hereby amended in the definition of “securities” in subsection (1) by the deletion of “and” at the end of paragraph (a), the substitution of “Agriculture, and” for “Agriculture;” in paragraph (b) and the insertion of the following paragraph after paragraph (b):

“(c)strips within the meaning of section 54 (10) of the Finance Act, 1970 (inserted by section 161 of the Finance Act, 1997);”.

Amendment of section 17 (undertakings for collective investment) of Finance Act, 1993 .

35. Section 17 of the Finance Act, 1993 , is hereby amended by the substitution for paragraph (a) of subsection (4) of the following paragraph:

“(a) (i)Every asset of an undertaking for collective investment on the day on which a chargeable period of the undertaking ends shall, subject to the subsequent provisions of this subsection, be deemed to have been disposed of and immediately reacquired by the undertaking at the asset's market value on the said day.

(ii) Subparagraph (i) shall not apply to—

(I) assets to which subsection (5)(a)(ii) relates other than where such assets are held in connection with a contract or other arrangement which secures the future exchange of the assets for other assets to which the said subsection does not relate, and

(II) assets which are strips within the meaning of section 33 of the Finance Act, 1997”.

Amendment of section 31 (interest payments by companies and to non-residents) of Finance Act, 1974 .

36. —Section 31 (as amended by the Finance Act, 1996) of the Finance Act, 1974 , is hereby amended—

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

“(1) In this section—

company’ means any body corporate;

relevant security’ means a security issued by a company on or before the 31st day of December, 2005, on terms which oblige the company to redeem the security within a period of 15 years after the date on which the security was issued.”,

and

(b) by the addition, after subsection (3) of the following subsection:

“(4) In relation to interest paid in respect of a relevant security paragraph (cc) of subsection (3) shall apply—

(a) as if there were deleted from subsection (2) of section 39A (inserted by the Finance Act, 1981 ) of the Finance Act, 1980 , ‘, and any certificate so given shall, unless it is revoked under subsection (4), (4A) or (4B), remain in force until the 31st day of December, 2005’, and

(b) as if there were deleted from subsection (2) of section 39B (inserted by the Finance Act, 1987 ) of the Finance Act, 1980 , ‘, and any certificate so given shall, unless it is revoked under subsection (4), (5) or (5A), remain in force until the 31st day of December, 2005’.”.

Tax credits in respect of distributions.

37. —(1) The provisions of the Corporation Tax Act, 1976 , specified in paragraph 1 of the Second Schedule shall have effect in relation to distributions made on or after the 6th day of April, 1997, as if the standard rate for the year of assessment 1997-98 and subsequent years of assessment were 21 per cent.

(2) The Second Schedule shall have effect for the purpose of supplementing subsection (1).

Amendment of section 37 (application of section 25 (attribution of distributions to accounting periods) of Finance Act, 1989 , to interim dividends) of Finance Act, 1992 .

38. Section 37 of the Finance Act, 1992 , is hereby amended by the substitution in subsection (1) of “6th day of April, 2002” for “6th day of April, 1997”.

Amendment of Chapter VIII (taxation of acquisition by a company of its own shares) of Part I of Finance Act, 1991 .

39. —(1) Chapter VIII of Part I of the Finance Act, 1991 , is hereby amended—

(a) in section 59—

(i) in subsection (1)—

(I) by the insertion, after the meaning assigned to “control” of the following definition:

“‘group’ means a company which has one or more 51 per cent. subsidiaries together with those subsidiaries;”,

and

(II) in the definition of “trading group” by the deletion of the words after “trades”,

and

(ii) in subsection (3), by the substitution for “section 61” of “section 60A or 61”,

and

(b) by the insertion, after section 60, of the following section:

“Purchase of own shares by a quoted company.

60A.—(1) Notwithstanding any provision of Part IX of the Act of 1976, references in the Tax Acts to distributions of a company shall be construed so as not to include references to a payment made by a quoted company on the redemption, repayment or purchase of its own shares.

(2) References in subsection (1) to a quoted company shall include references to a company which is a member of a group of which a quoted company is a member.”.

(2) This section shall have effect as respects payments made on or after the 26th day of March, 1997.

Amendment of section 40 (treatment under Tax Acts of certain employment grants and recruitment subsidies) of Finance Act, 1996.

40. —(1) Section 40 of the Finance Act, 1996, is hereby amended in subsection (2) by the insertion of the following paragraphs after paragraph (c):

“(cc) the Employment Support Scheme, being a scheme established on the 1st day of January, 1993, and administered by the National Rehabilitation Board,

(ccc) the Pilot Programme for the Employment of People with Disabilities, being a programme administered by a company incorporated on the 7th day of March, 1995, as The Rehab Group,”.

(2) This section shall have effect as respects grants or subsidies paid on or after the 6th day of April, 1997.

Employers' pension contributions.

41. —(1) Chapter II of Part I of the Finance Act, 1972 , is hereby amended—

(a) in section 16, by the substitution of the following for subsection (4):

“(4) (a) Any sum paid by an employer by way of contribution under the scheme shall, for the purposes of Case I or II of Schedule D and of sections 15 and 33(2) of the Corporation Tax Act, 1976 , be allowed to be deducted as an expense, or expense of management, incurred in the chargeable period in which the sum is paid but no other sum shall for those purposes be allowed to be deducted as an expense, or expense of management, in respect of the making, or any provision for the making, of any contributions under the scheme.

(b) For the purposes of this section and of section 16A—

(i) a reference to a ‘chargeable period’ shall be construed as a reference to a ‘chargeable period or its basis period’ (within the meaning of paragraph 1 of the First Schedule to the Corporation Tax Act, 1976 ), and

(ii) in relation to an employer whose chargeable period is a year of assessment, ‘basis period’ means the period on the profits or gains of which income tax for that year of assessment falls to be finally computed for the purposes of Case I or II of Schedule D in respect of the trade, profession or vocation of the employer.

(4A) The amount of an employer's contributions which may be deducted under subsection (4) shall not exceed the amount contributed by that employer under the scheme in respect of employees in a trade or undertaking in respect of the profits of which the employer is assessable to income tax or corporation tax, as the case may be.

(4B) A sum not paid by way of an ordinary annual contribution shall for the purposes of subsection (4) be treated, as the Commissioners may direct, either as an expense incurred in the chargeable period in which the sum is paid, or as an expense to be spread over such period of years as the Commissioners think proper.”,

and

(b) by the insertion of the following section after section 16:

“Provisions supplemental to section 16(4).

16A.—(1) Where—

(a) there is, after the 21st day of April, 1997, an actual payment by an employer of a contribution under an exempt approved scheme,

(b) that payment would, apart from this section, be allowed to be deducted as an expense, or expense of management, of the employer in relation to any chargeable period, and

(c) the total of previously allowed deductions exceeds the relevant maximum,

the amount allowed to be so deducted in respect of the payment mentioned in paragraph (a) and of any other actual payments of contributions under the scheme which, having been made after the 21st day of April, 1997, fall within paragraph (b) in relation to the same chargeable period shall be reduced by whichever is the smaller of the excess and the amount which reduces the deduction to nil.

(2) In relation to any such actual payment by an employer of a contribution under an exempt approved scheme as would be allowed to be deducted as mentioned in subsection (1) in relation to any chargeable period—

(a) the reference in that subsection to the total of previously allowed deductions is a reference to the aggregate of every amount in respect of the making, or any provision for the making, of that or any other contributions under the scheme, which has been allowed to be deducted as an expense, or expense of management, of that person in relation to all previous chargeable periods, and

(b) the reference to the relevant maximum is a reference to the amount which would have been that aggregate if the restriction on deductions for sums other than actual payments imposed by virtue of subsection (4) of section 16 had been applied in relation to every previous chargeable period,

and, for the purposes of this subsection, an amount the deduction of the whole or any part of which falls to be taken into account as allowed in relation to more than one chargeable period shall be treated as if the amount allowed were a different amount in the case of each of those periods.

(3) For the purposes of this section, any payment which is treated under subsection (4B) of section 16 as spread over a period of years shall be treated as actually paid at the time when it is treated as paid in accordance with that subsection.”.

(2) The Corporation Tax Act, 1976 , is hereby amended, in Part 1 of the Second Schedule, by the deletion of paragraph 31.

(3) This section shall have effect in the case of any employer for a chargeable period (within the meaning of section 16 (as amended by this Act) of the Finance Act, 1972 ) being—

(a) where the chargeable period is an accounting period of a company, an accounting period ending with a day after the 21st day of April, 1997, and

(b) where the chargeable period is a year of assessment, any year of assessment the employer's basis period for which ends with a day after that date.

Deemed disposal of assets on company ceasing to be resident in the State.

42. —(1) (a) In this section and in section 43

designated area”, “exploration or exploitation activities” and “exploration or exploitation rights” have, respectively, the same meanings as they have in section 33 of the Finance Act, 1973 ;

exploration or exploitation assets” means assets used or intended for use in connection with exploration or exploitation activities, carried on in the State or in a designated area;

market value” shall be construed in accordance with section 49 of the Capital Gains Tax Act, 1975 ;

the new assets” and “the old assets” have, respectively, the meanings assigned to them in section 28 of the Capital Gains Tax Act, 1975 .

(b) For the purposes of this section and section 43 a company shall not be regarded as ceasing to be resident in the State by reason only that it ceases to exist.

(2) (a) Subject to paragraph (b), this section and section 43 shall apply to a company (hereafter in this section referred to as a “relevant company”) if, at any time (hereafter in this section and in section 43 referred to as “the relevant time”) on or after the 21st day of April, 1997, the company ceases to be resident in the State.

(b) This section and section 43 shall not apply to a company which is an excluded company.

(c) In this subsection—

control” shall be construed in accordance with subsections (2) to (6) of section 102 of the Corporation Tax Act, 1976 , as if in subsection (6) for “five or fewer participators” there were substituted “persons resident in a relevant territory”;

excluded company” means a company of which not less than 90 per cent. of its issued share capital is held by a foreign company or foreign companies, or by a person or persons who are directly or indirectly controlled by a foreign company or foreign companies;

foreign company” means a company which—

(i) is not resident in the State,

(ii) is under the control of a person or persons resident in a relevant territory, and

(iii) is not under the control of a person or persons resident in the State;

relevant territory” means—

(i) the United States of America, or

(ii) a territory with the government of which arrangements having the force of law by virtue of section 361 of the Income Tax Act, 1967 , have been made.

(3) A relevant company shall be deemed for all purposes of the Capital Gains Tax Acts—

(a) to have disposed of all its assets, other than assets excepted from this subsection by subsection (5), immediately before the relevant time, and

(b) immediately to have reacquired them,

at the market value of the assets at that time.

(4) Section 28 of the Capital Gains Tax Act, 1975 , shall not apply where a relevant company—

(a) has disposed of the old assets, or of its interest in those assets, before the relevant time, and

(b) acquires the new assets, or its interest in those assets, after the relevant time,

unless the new assets are excepted from this subsection by subsection (5).

(5) If at any time after the relevant time a relevant company carries on a trade in the State through a branch or agency—

(a) any assets which, immediately after the relevant time, are situated in the State and are used in or for the purposes of the trade, or are used or held for the purposes of the branch or agency, shall be excepted from subsection (3), and

(b) any new assets which, after that time, are so situated and are so used or so held shall be excepted from subsection(4),

and references in this subsection to assets situated in the State include references to exploration or exploitation assets and to exploration or exploitation rights.

Postponement of charge on deemed disposal under section 42 .

43. —(1) (a) In this section—

deemed disposal” means a disposal which, by virtue of section 42 (3), is deemed to have been made;

foreign assets” of a company means any assets of the company which, immediately after the relevant time, are situated outside the State and are used in or for the purposes of a trade carried on by the company outside the State.

(b) For the purposes of this section a company is a 75 per cent. subsidiary of another company if and so long as not less than 75 per cent. of its ordinary share capital (within the meaning of section 155 of the Corporation Tax Act, 1976 ) is owned directly by that other company.

(2) If—

(a) immediately after the relevant time, a company (hereafter in this section referred to as “the company”) to which this section applies by virtue of section 42 is a 75 per cent. subsidiary of another company (hereafter in this section referred to as the “principal company”) which is resident in the State, and

(b) the principal company and the company jointly so elect, by notice in writing given to the inspector within 2 years after the relevant time,

the Capital Gains Tax Acts shall apply subject to the following provisions of this section.

(3) Any allowable losses accruing to the company on a deemed disposal of foreign assets shall be set off against the chargeable gains so accruing and—

(a) that deemed disposal shall be treated as giving rise to a single chargeable gain equal to the aggregate of those gains after deducting the aggregate of those losses, and

(b) the whole of that single chargeable gain shall be treated as not accruing to the company on that disposal but an equivalent amount (hereafter in this section referred to as the “postponed gain”) shall be brought into account in accordance with subsections (4) and (5).

(4) (a) If at any time within 10 years after the relevant time the company disposes of any assets (hereafter in this subsection referred to as “relevant assets”) the chargeable gains on which were taken into account in arriving at the postponed gain, there shall be deemed to accrue to the principal company as a chargeable gain at that time the whole or the appropriate proportion of the postponed gain so far as not already taken into account under this subsection or subsection (5).

(b) In this subsection “the appropriate proportion” means the proportion which the chargeable gain taken into account in arriving at the postponed gain in respect of the part of the relevant assets disposed of bears to the aggregate of the chargeable gains so taken into account in respect of the relevant assets held immediately before the time of the disposal.

(5) If at any time within 10 years after the relevant time—

(a) the company ceases to be a 75 per cent. subsidiary of the principal company, or

(b) the principal company ceases to be resident in the State,

there shall be deemed to accrue to the principal company as a chargeable gain—

(i) where paragraph (a) applies, at that time, and

(ii) where paragraph (b) applies, immediately before that time,

the whole of the postponed gain so far as not already taken into account under this subsection or subsection (4).

(6) If at any time—

(a) the company has allowable losses which have not been allowed as a deduction from chargeable gains, and

(b) a chargeable gain accrues to the principal company under subsection (4) or (5),

then, if and to the extent that the principal company and the company jointly so elect by notice in writing given to the inspector within 2 years after that time, those losses shall be allowed as a deduction from that gain.

Tax on non-resident company recoverable from another member of group or from controlling director.

44. —(1) In this section—

chargeable period” means a year of assessment or an accounting period, as the case may be;

controlling director”, in relation to a company, means a director of the company who has control of it (construing control in accordance with section 102 of the Corporation Tax Act, 1976 );

director”, in relation to a company, has the meaning given by section 119(1) of the Income Tax Act, 1967 , and includes any person falling within section 103(5) of the Corporation Tax Act, 1976 ;

group” has the meaning which would be given by section 129 of the Corporation Tax Act, 1976 , if in that section references to residence in the State were omitted and for references to “75 per cent. subsidiaries” there were substituted references to “51 per cent. subsidiaries”, and references to a company being a member of a group shall be construed accordingly;

specified period”, in relation to a chargeable period, means the period beginning with the specified return date for the chargeable period (within the meaning of section 9 of the Finance Act, 1988 ) and ending 3 years after the time when a return under section 10 of the Finance Act, 1988 , for the chargeable period is delivered to the appropriate inspector (within the meaning of the said section 9);

tax” means corporation tax or capital gains tax, as the case may be.

(2) This section applies at any time on or after the 21st day of April, 1997, where tax payable (being tax which, but for section 42 or 43 , would not be payable) by a company (hereafter in this section referred to as the “taxpayer company”) for a chargeable period (hereafter in this section referred to as the “chargeable period concerned”) is not paid within 6 months after the date on or before which the tax is due and payable.

(3) The Revenue Commissioners may, at any time before the end of the specified period in relation to the chargeable period concerned, serve on any person to whom subsection (4) applies a notice—

(a) stating the amount which remains unpaid of the tax payable by the taxpayer company for the chargeable period concerned and the date on or before which the tax became due and payable, and

(b) requiring that person to pay that amount within 30 days of the service of the notice.

(4) (a) This subsection applies to any person being—

(i) a company which is, or during the period of 12 months ending with the time when the gain accrued, was a member of the same group as the taxpayer company, and

(ii) a person who is, or during that period was, a controlling director of the taxpayer company or of a company which has, or within that period had, control over the taxpayer company.

(b) This subsection shall have effect in any case where the gain accrued before the 21st day of April, 1998, with the substitution in paragraph (a) (i) of “beginning with the 21st day of April, 1997, and” for “of 12 months”.

(5) Any amount which a person is required to pay by a notice under this section may be recovered from the person as if it were tax due by the said person, and such person may recover any such amount paid on foot of a notice under this section from the taxpayer company.

(6) A payment in pursuance of a notice under this section shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes.

Amendment of section 464 (issue of securities with exemption from tax) of Income Tax Act, 1967 .

45. —(1) Section 464 (as amended by the Finance Act, 1992 ) of the Income Tax Act, 1967 , is hereby amended in the proviso by the substitution for “Case I” of “Case I or Case IV”.

(2) This section shall apply and have effect in respect of interest and other profits or gains, accruing on or after the 21st day of April, 1997, from a security.

Amendment of section 470 (securities of Irish local authorities issued abroad) of Income Tax Act, 1967 .

46. —(1) Section 470 (as amended by the Finance Act, 1992 ) of the Income Tax Act, 1967 , is hereby amended in paragraph (b) of subsection (1) by the substitution for “Case I” of “Case I or Case IV”.

(2) This section shall apply and have effect in respect of interest and other profits or gains accruing on or after the 21st day of April, 1997, from a security.

Amendment of section 474 (exemption of certain securities from tax) of Income Tax Act, 1967 .

47. —(1) Section 474 (as amended by the Finance Act, 1992 ) of the Income Tax Act, 1967 , is hereby amended in subsection (2) by the substitution in the proviso for “Case I” of “Case I or Case IV”.

(2) This section shall apply and have effect in respect of interest and other profits or gains, accruing on or after the 21st day of April, 1997, from a security.

Replacement of harbour authorities by port companies.

48. —(1) In this section and in the Fifth Schedule , “relevant port company” has the meaning assigned to it in paragraph 1 of that Schedule.

(2) The provisions of the Fifth Schedule shall apply where assets are vested in, or transferred to, a relevant port company pursuant to the Harbours Act, 1996.

(3) This section and the Fifth Schedule shall have effect from the 1st day of March, 1997.

Treatment of certain profits and gains for tax purposes.

49. —(1) In this section “the authority” means the Dublin Docklands Development Authority.

(2) Notwithstanding any provision of the Corporation Tax Acts, profits arising to the authority in any accounting period ending after the 30th day of April, 1997, shall be exempt from corporation tax.

(3) As regards disposals made after the 30th day of April, 1997, section 23 of the Capital Gains Tax Act, 1975 , shall apply to a gain accruing to the authority as it does to a body specified in that section.

(4) Section 42 of the Finance Act, 1988 , is repealed with effect from the 1st day of May, 1997.

Amendment of Chapter IX (profit sharing schemes) of Part 1 of, and Third Schedule (profit sharing schemes) to, Finance Act, 1982 .

50. —The Finance Act, 1982 , is hereby amended—

(a) in section 52, as on and from the passing of this Act, by the substitution of the following for subsections (7) and (8):

“(7) In this Chapter ‘the release date’, in relation to any of a participant's shares, means the third anniversary of the date on which the shares were appropriated to the participant.

(8) Subject to section 56(4), for the purposes of provisions of this Chapter charging an individual to income tax under Schedule E by reason of the occurrence of an event relating to any of the individual's shares, any reference to ‘the appropriate percentage’ in relation to those shares shall be determined according to the time of that event, as follows—

(a) if the event occurs before the third anniversary of the date on which the shares were appropriated to the participant and paragraph (b) does not apply, the appropriate percentage is 100 per cent., and

(b) if, in a case where at the time of the event the participant—

(i) has ceased to be an employee or director of a relevant company as mentioned in subsection (5)(a), or

(ii) has reached pensionable age, as defined in section 2 of the Social Welfare (Consolidation) Act, 1993 ,

the event occurs before the third anniversary of the date on which the shares were appropriated to him, the appropriate percentage is 50 per cent.”,

(b) as respects sums expended on or after the passing of this Act, by the insertion of the following section after section 58:

“Costs of establishing profit sharing schemes.

58A.—(1) This section applies to a sum expended by a company in establishing a profit sharing scheme which the Revenue Commissioners approve of in accordance with Part I of the Third Schedule and under which the trustees acquire no shares before such approval is given.

(2) A sum to which this section applies shall be included—

(a) in the sums to be deducted in computing for the purposes of Schedule D the profits or gains of a trade carried on by the company, or

(b) if the company is an investment company within the meaning of section 15 of the Corporation Tax Act, 1976 , or a company in the case of which that section applies by virtue of section 33 of that Act, in the sums to be deducted under section 15(1) of that Act as expenses of management in computing the profits of the company for the purposes of corporation tax.

(3) In a case where—

(a) subsection (2) applies, and

(b) the approval is given after the end of the period of nine months beginning with the day following the end of the accounting period in which the sum is expended,

then, for the purpose of subsection (2), the sum shall be treated as expended in the accounting period in which the approval is given and not the accounting period mentioned in paragraph (b).”,

and

(c) in the Third Schedule, as respects profit sharing schemes approved on or after the passing of this Act—

(i) by the substitution, in subparagraph (1) of paragraph 2, of the following for clause (a):

“(a) is then an employee or full-time director of the company concerned or, in the case of a group scheme, a participating company, and”,

and

(ii) by the substitution of the following paragraph for paragraph 7:

“7.—(1) The shares must be—

(a) fully paid up;

(b) not redeemable; and

(c) not subject to any restrictions other than restrictions which attach to all shares of the same class or a restriction authorised by subparagraph (2).

(2) Subject to subparagraphs (3) and (4), the shares may be subject to a restriction imposed by the company's articles of association—

(a) requiring all shares held by directors or employees of the company or of any other company of which it has control to be disposed of on ceasing to be so held; and

(b) requiring all shares acquired, in pursuance of rights or interests obtained by such directors or employees, by persons who are not, or have ceased to be, such directors or employees to be disposed of when they are acquired.

(3) A restriction is not authorised by subparagraph (2) unless—

(a) any disposal required by the restriction will be by way of sale for a consideration in money on terms specified in the articles of association; and

(b) the articles also contain general provisions by virtue of which any person disposing of shares of the same class (whether or not held or acquired as mentioned in subparagraph (2)) may be required to sell them on terms which are the same as those mentioned in paragraph (a).

(4) Nothing in subparagraph (2) authorises a restriction which would require a person, before the release date, to dispose of his beneficial interest in shares the ownership of which has not been transferred to him.”.

Employee share ownership trusts.

51. —(1) (a) This section applies to an employee share ownership trust which the Revenue Commissioners have approved of as a qualifying employee share ownership trust in accordance with the provisions of the Third Schedule and which approval has not been withdrawn.

(b) This section shall be construed together with the Third Schedule .

(2) Where, in an accounting period of a company, the company expends a sum—

(a) in establishing a trust to which this section applies, or

(b) (i) in making a payment by way of contribution to the trustees of a trust which at the time the sum is expended is a trust to which this section applies, and

(ii) at that time, the company or a company which it then controls has employees who are eligible to benefit under the terms of the trust deed, and

(iii) before the expiry of the expenditure period the sum is expended by the trustees for one or more of the qualifying purposes,

then, the sum shall be included—

(I) in the sums to be deducted in computing for the purposes of Schedule D the profits or gains for that accounting period of a trade carried on by that company, or

(II) if the company is an investment company within the meaning of section 15 of the Corporation Tax Act, 1976 , or a company in the case of which that section applies by virtue of section 33 of that Act, in the sums to be deducted under section 15(1) of that Act as expenses of management in computing the profits of the company for that accounting period for the purposes of corporation tax.

(3) In a case where—

(a) paragraph (a) of subsection (2) applies, and

(b) the trust is established after the end of the period of 9 months beginning with the day following the end of the accounting period in which the sum is expended by the company,

then, for the purposes of subsection (2), the sum shall be treated as expended in the accounting period in which the trust is established and not the accounting period mentioned in paragraph (b).

(4) For the purposes of paragraph (b) (ii) of subsection (2), the question whether one company is controlled by another shall be construed in accordance with section 102 of the Corporation Tax Act, 1976 .

(5) For the purposes of paragraph (b) (iii) of subsection (2)

(a) each of the following is a qualifying purpose—

(i) the acquisition of shares in the company which established the trust;

(ii) the repayment of sums borrowed;

(iii) the payment of interest on sums borrowed;

(iv) the payment of any sum to a person who is a beneficiary under the terms of the trust deed; and

(v) the meeting of expenses;

and

(b) the expenditure period is the period of 9 months beginning with the day following the end of the accounting period in which the sum is expended by the company, or such longer period as the Revenue Commissioners may allow by notice given to the company.

(6) For the purposes of this section the trustees of an employee share ownership trust shall be taken to expend sums paid to them in the order in which the sums are received by them, irrespective of the number of companies making payments.

(7) Section 13 of the Finance Act, 1976 , shall not apply to income consisting of dividends in respect of securities held by a trust to which this section applies.

(8) Where the trustees of a trust to which this section applies transfer securities to the trustees of a profit sharing scheme approved under Part I of the Third Schedule to the Finance Act, 1982 , any gain accruing to those first-mentioned trustees on that transfer shall not be a chargeable gain.

(9) Notwithstanding anything in the foregoing provisions of this section, where the Revenue Commissioners in accordance with the provisions of the Third Schedule withdraw approval of an employee share ownership trust as a qualifying employee share ownership trust, this section shall not apply or have effect, on or after the date from which that withdrawal has effect, in relation to—

(a) any sum expended by a company in making a payment to that trust,

(b) income consisting of dividends in respect of securities held by that trust, or

(c) the transfer of securities to a profit sharing scheme approved under Part I of the Third Schedule to the Finance Act, 1982 .

*OJ No. L218, 6 August 1991, page 1.