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33 1968

FINANCE ACT, 1968

PART I

Income Tax

Income tax and sur-tax for the year 1968-69.

1. —(1) Income tax shall be charged for the year beginning on the 6th day of April, 1968, at the rate of seven shillings in the pound.

(2) Sur-tax for the year beginning on the 6th day of April, 1968, shall be charged in respect of the income of any individual the total of which from all sources exceeds two thousand five hundred pounds and shall be so charged at the following rates, that is to say:

In respect of the first two thousand five hundred pounds of the income

Nil

In respect of the excess over two thousand five hundred pounds,

for every pound of the first two thousand pounds of the excess

three shillings

for every pound of the next two thousand pounds of the excess

six shillings

for every pound of the remainder of the excess

nine shillings.

Allowance for know-how.

2. —(1) In this section “know-how” means industrial information and techniques likely to assist in the manufacture or processing of goods or materials, or in the carrying out of any agricultural, forestry, fishing, mining or other extractive operations.

(2) (a) Where on or after the 6th day of April, 1968, a person incurs expenditure on know-how for use in a trade carried on by him or, having incurred expenditure on know-how, sets up and commences a trade in which it is used, there shall, subject to the provisions of this section, be allowed to be deducted as expenses, in computing for the purposes of Case I of Schedule D the profits or gains of the trade, such part of the expenditure as would, but for this section, not be allowed to be deducted.

(b) For the purposes of this subsection, a person incurring expenditure on know-how before the setting up and commencement of the trade in which it is used shall be treated as incurring it on that setting up and commencement.

(3) Where on or after the 6th day of April, 1968, a person acquires a trade or part of a trade and, together therewith, know-how used therein, no amount shall be allowed to be deducted under this section in respect of expenditure incurred on the acquisition of the know-how.

(4) (a) Subsection (2) shall not apply on any sale of know-how where the buyer is a body of persons over whom the seller has control, or the seller is a body of persons over whom the buyer has control, or both the seller and the buyer are bodies of persons and some other person has control over both of them.

(b) In this subsection—

(i) “control” has the same meaning as in section 299 (6) of the Income Tax Act, 1967 , and

(ii) references to a body of persons include references to a partnership.

Relief for certain sums chargeable under Schedule E.

3. —(1) (a) Subject to paragraph (b), this section applies to any payment which is chargeable to tax under Schedule E and which is made to the holder of an office or employment to compensate for—

(i) a reduction or a possible reduction of future remuneration arising from a reorganisation of the business of the employer under whom the office or employment is held or a change in the working procedures, working methods, duties or rates of remuneration of such office or employment, or

(ii) a change in the place where the duties of the office or employment are performed.

(b) This section does not apply to—

(i) a payment to which section 114 of the Income Tax Act, 1967 , applies, or

(ii) a payment to any of the persons specified in paragraphs (i) to (iii) of the proviso to section 228 (1) of the Income Tax Act, 1967 , or to a person who is a part-time employee by reason of not being required to devote substantially the whole of his time to the service of his employer.

(2) Where an individual has received a payment to which this section applies, he shall be entitled, on making a claim in that behalf and on proof of the relevant facts to the satisfaction of the inspector, to have the total amount of income tax and sur-tax payable by him for the year of assessment for which the payment is chargeable reduced to the total of the two following amounts:

(a) the aggregate of the amounts of income tax and sur-tax which would have been payable by him for that year if he had not received the payment, and

(b) income tax and sur-tax on the whole of the payment at rates respectively ascertained in the manner specified in subsection (3).

(3) There shall be ascertained the additional amounts of income tax and sur-tax respectively, over and above the amounts referred to in subsection (2) (a), which would have been payable by the holder of the office or employment if his total income for the year of assessment referred to in subsection (2) had included one-third only of the payment and the rates of income tax and sur-tax respectively for the purposes of subsection (2) (b) shall then be ascertained by dividing the additional amounts of income tax and sur-tax respectively computed in accordance with this subsection by an amount equal to one-third of the payment.

(4) (a) Relief from tax under this section shall, in all cases, be given by way of repayment.

(b) A claimant shall not be entitled to relief under this section in respect of any income the tax on which he is entitled to charge against any other person, or to deduct, retain, or satisfy out of any payment which he is liable to make to any other person.

Amount of diminished value of machinery and plant by reason of wear and tear.

4. —(1) In this section—

qualifying machinery or plant” means machinery or plant (other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles) which on or after the 1st day of April, 1968, is provided for use for the purposes of a trade, profession, employment or office and which, at the time it is so provided, is unused and not secondhand, and includes any such machinery or plant notwithstanding any sale of it or other change of circumstances, but does not include ships and machinery or plant in respect of which an election has been made under the first proviso to section 241 (1) of the Income Tax Act, 1967 ;

value at the commencement of the year of assessment of machinery or plant” has the same meaning as in section 241 (7) of the Income Tax Act, 1967 .

(2) Subject to the provisions of this subsection, where for any year of assessment a deduction falls to be allowed under section 241 of the Income Tax Act, 1967 , on account of wear and tear of any qualifying machinery or plant, the amount considered by the Appeal Commissioners to be just and reasonable under that section as representing the diminished value by reason of wear and tear during the year of that machinery or plant shall—

(a) where it is an amount which does not exceed 8¾ per cent. of the value at the commencement of the year of assessment of such machinery or plant, be taken to be 10 per cent. of that value;

(b) where it is an amount which exceeds 8¾ per cent. but is less than 15 per cent. of the value at the commencement of the year of assessment of such machinery or plant, be taken to be 12½ per cent. of that value;

(c) where it is an amount which is 15 per cent. or more of the value at the commencement of the year of assessment of such machinery or plant, be taken to be 25 per cent. of that value.

(3) Section 241 (1) of the Income Tax Act, 1967 , is hereby amended, in respect of qualifying machinery or plant, by the substitution for “a sum equal to five-fourths of the amount” of “a sum equal to the amount”.

(4) In relation to a case in which subsection (2) has had effect, any reference in the Income Tax Acts to a deduction allowed under the said section 241 shall be construed as a reference to that deduction as determined pursuant to that section, as amended by this section, and subsection (2).

Ownership or occupation of lands.

5. —In respect of any year of assessment commencing on or after the 6th day of April, 1969, and notwithstanding anything in the Income Tax Acts—

(a) no assessments under Schedule A or Schedule B of the Income Tax Act, 1967 , shall be made,

(b) the income arising from the ownership or occupation of lands, tenements or hereditaments shall not be taken into account for the purposes of estimating total income for the purposes of tax to the extent that such income was measured by the annual value estimated in accordance with the provisions applicable to Schedule A, or the assessable value estimated in accordance with the provisions applicable to Schedule B, of the lands, tenements or hereditaments.

Obligation to keep certain records.

6. —(1) In this section “records” includes books of account relating to—

(a) all sums of money received and expended in the course of the carrying on or exercising of a trade, profession or other activity and the matters in respect of which the receipt and expenditure takes place, and

(b) all sales and purchases of goods and services where the carrying on or exercising of a trade, profession or other activity involves the purchase or sale of goods or services.

(2) (a) Every person who, on his own behalf or on behalf of any other person, carries on or exercises any trade, profession or other activity the profits or gains of which are chargeable under Schedule D shall keep such records as will enable true returns to be made, for the purposes of income tax and sur-tax, of such profits or gains.

(b) Where any such trade, profession or other activity is carried on in partnership, the precedent partner, within the meaning of section 69 of the Income Tax Act, 1967 , shall, for the purposes of this section, be deemed to be the person carrying on that trade, profession or other activity.

(3) Subsection (2) shall—

(a) in the case of a trade, profession or other activity which is commenced after the passing of this Act, have effect on and from the date of such commencement, and

(b) in any other case, have effect on and from the 1st day of September, 1968.

(4) Records kept pursuant to the preceding provisions of this section shall be retained by the person required to keep the records for a period of six years after the completion of the transactions, acts or operations to which they relate:

Provided that this subsection shall not require the retention of records in respect of which the inspector notifies the person who is required to keep them that retention is not required, nor shall it apply to the books and papers of a company which have been disposed of in accordance with section 305 (1) of the Companies Act, 1963 .

(5) Any person who contravenes subsection (2) in respect of any records in relation to a return for any year of assessment or contravenes subsection (4) in relation to those records shall be liable to a penalty of £100:

Provided that a penalty shall not be imposed under this subsection if it is proved that no person is chargeable to tax in respect of the said profits or gains for that year of assessment.

(6) Section 508 of the Income Tax Act, 1967 , is hereby amended by the insertion in subsection (1) after “240 or 296” of “or section 6 of the Finance Act, 1968”.

Estimation of tax due for income tax months.

7. —(1) Where the Revenue Commissioners have reason to believe that a person was liable under the regulations to remit tax in relation to any income tax month, and the person has not remitted any tax in relation to that income tax month, they may estimate the amount of tax which should have been remitted by the person within the period specified in the regulations for the payment of such tax and serve notice on him of the amount estimated.

(2) Where a notice is served under subsection (1) on a person, the following provisions shall apply—

(a) the person may, if he claims that he is not liable to remit any tax for the income tax month to which the notice relates, by giving notice in writing to the Revenue Commissioners within the period of fourteen days from the service of the notice, require the claim to be referred for decision to the Appeal Commissioners and their decision shall be final and conclusive,

(b) on the expiration of the said period, if no such claim is required to be so referred, or if such claim is required to be referred, on final determination by the Appeal Commissioners against the claim, the estimated tax specified in the notice shall be recoverable in the same manner and by the like proceedings as if the person were an employer and the amount specified in the notice were the amount of tax which he was liable under the regulations to deduct from emoluments paid by him during the income tax month specified in the notice reduced by any amounts which he was liable under the regulations to repay during that income tax month,

(c) if at any time after the service of the notice the person furnishes a declaration of the amount which he is liable under the regulations to remit in respect of the income tax month specified in the notice and pays the tax in accordance with the declaration together with any interest and costs which may have been incurred in connection with the default, the notice shall, subject to paragraph (d), stand discharged and any excess of tax which may have been paid shall be repaid,

(d) where action for the recovery of tax specified in a notice under subsection (1), being action by way of the institution of proceedings in any court or the issue of a certificate under section 485 of the Income Tax Act, 1967 , has been taken, paragraph (c), shall not, unless the Revenue Commissioners otherwise direct, apply in relation to that notice until the said action has been completed.

(3) In a case in which a part of a stamp book required by the regulations to be sent to the Revenue Commissioners with the appropriate stamps affixed thereto during a particular period is not sent, the tax for which the means of payment is stamps affixed to that part of the stamp book shall be regarded for the purposes of subsection (1) as tax which a person was liable to remit by reference to the relevent income tax month or months to which the part of the stamp book relates.

(4) A notice given by the Revenue Commissioners under subsection (1) may extend to two or more consecutive income tax months.

(5) The Revenue Commissioners may nominate any of their officers to perform any acts and discharge any functions authorised by this section or section 8 to be performed or discharged by the Revenue Commissioners.

(6) In this section “emoluments” means anything assessable to income tax under Schedule E and references to payments of emoluments include references to payments on account of emoluments.

(7) In this section and in section 8 “employer” means any person paying emoluments.

(8) In this section and in sections 8 and 9—

income tax month” means a month beginning on the 6th day of any of the months of April to March in any year of assessment whether occurring before or after the commencement of this Part;

the regulations” means any regulations under section 127 of the Income Tax Act, 1967 .

Estimation of tax due for year.

8. —(1) Where the Revenue Commissioners have reason to believe that the total amount of tax which an employer was liable under the regulations to remit in respect of the respective income tax months comprised in any year of assessment was greater than the amount of tax (if any) paid by the employer in respect of the said months then, without prejudice to any other action which may be taken, they may make an estimate in one sum of the total amount of tax which in their opinion should have been paid in respect of the income tax months comprised in that year and may serve notice on the employer specifying—

(a) the total amount of tax so estimated,

(b) the total amount of tax (if any) remitted by the employer in relation to the income tax months comprised in the said year, and

(c) the balance of tax remaining unpaid.

(2) Where notice is served on an employer under subsection (1)—

(a) the employer may, if he claims that the total amount of tax or the balance of tax remaining unpaid is excessive, on giving notice in writing to the Revenue Commissioners within the period of fourteen days from the service of the notice, appeal to the Appeal Commissioners,

(b) on the expiration of the said period, if no notice of appeal is received or, if notice of appeal is received, on determination of the appeal by agreement or otherwise, the balance of tax remaining unpaid as specified in the notice or the amended tax as determined in relation to the appeal shall become due and be recoverable in the same manner and by the like proceedings as if the said balance of tax or amended tax had been charged on the employer under Schedule E.

(3) The provisions of this section shall apply to an employer authorised under the regulations to make payment of tax by means of stamps as if the tax for which the means of payment is stamps affixed to a book were tax which he was liable to remit to the Revenue Commissioners and as if the value of stamps (if any) which he affixed to books were tax paid to the Revenue Commissioners.

(4) A notice given by the Revenue Commissioners under subsection (1) may extend to two or more years of assessment.

Interest on tax recoverable under section 7 or 8.

9. —The provisions of section 129 of the Income Tax Act, 1967 , shall apply—

(a) to tax recoverable by virtue of a notice under section 7 as if the tax were tax which the person was liable under the regulations to pay for the respective income tax month or months comprised in the notice:

Provided that, where the notice relates to tax for which the means of payment is stamps affixed to a part of a stamp book which is required by the regulations to be sent to the Revenue Commissioners during a particular period, the interest shall be calculated as from the expiration of that period, and

(b) to tax recoverable by virtue of a notice under section 8 as if the tax were tax which the person was liable under the regulations to remit for the income tax month during which the period of fourteen days from the service of the notice expired or the appeal was determined by agreement or otherwise, whichever month is the later.

Appeals under section 7 or 8.

10. —The provisions of the Income Tax Acts relating to appeals shall with any necessary modifications apply to claims and appeals under section 7 (2) and section 8 (2) as if those claims or appeals were appeals against assessments to income tax, but, in relation to claims under section 7 (2) only in so far as those provisions apply to appeals to the Appeal Commissioners.

Priority in bankruptcy, etc., of sums recoveable under section 7 or 8.

11. —For the purposes of section 132 of the Income Tax Act, 1967 , and section 285 of the Companies Act, 1963 , the sums referred to in subsection (2) of the said section 132 and subsection (2) (a) (iii) of the said section 285 shall be deemed to include sums recoverable under section 7 or section 8 which relate to a period or periods falling in whole or part within that period of twelve months and, in the case of any sum recoverable for a period falling partly within and partly outside that period of twelve months, it shall be lawful to apportion the total amount of the sum according to the respective lengths of the periods falling within that period and outside that period in order to arrive at the amount of tax which relates to that period.

Amendment of section 138 of Income Tax Act, 1967.

12. Section 138 of the Income Tax Act, 1967 , is hereby amended by the addition of the following proviso to subsection (1):

“Provided that, where, but for this proviso, the claimant would be entitled to a deduction of £394 under the foregoing provisions of this subsection, he shall, if he proves that his marriage took place in the year of assessment, be entitled to a deduction of £494 in lieu of the deduction of £394.”.

Amendment of section 175 of Income Tax Act, 1967.

13. —Paragraph (a) of the proviso to subsection (1) of section 175 of the Income Tax Act, 1967 , shall have effect, where the return is of interest paid or credited during a year beginning on or after the 6th day of April, 1968, as if the reference to £50 were a reference to £70.

Amendment of section 244 of Income Tax Act, 1967.

14. Section 244 of the Income Tax Act, 1967 , is hereby amended—

(a) by the insertion, after subsection (2), of the following subsection—

“(2A) Where, on or after the 6th day of April, 1968, a person carrying on a trade—

(a) incurs non-capital expenditure on scientific research or pays any sum to a body or university referred to in subsection (2) (b) in order that the body or university may undertake scientific research, and

(b) the expenditure so incurred or the sum so paid is not deductible as an expense under subsection (2) because the scientific research is not related to any trade being carried on by the person,

then, the expenditure so incurred or the sums so paid shall be deducted as an expense in computing the profits or gains of the person's trade.”,

and

(b) by the addition to subsection (3) of the following proviso—

“Provided that, where, on or after the 6th day of April, 1968, a person carrying on a trade incurs capital expenditure on scientific research which is not allowable as a deduction under the foregoing provisions of this subsection because the scientific research is not related to any trade being carried on by that person, there shall be allowed as a deduction in charging the profits or gains of that person's trade for the year of assessment in which the expenditure was incurred a sum equal to the amount of the expenditure.”.

Amendment of section 416 of Income Tax Act, 1967.

15. Section 416 of the Income Tax Act, 1967 , is hereby amended by the insertion after subsection (8) of the following subsection:

“(8A) Where—

(a) a person who has given notice of appeal does not attend before the Appeal Commissioners at the time and place appointed for the hearing of the appeal,

(b) an application for the postponement of the hearing is made by a person who attends before the Appeal Commissioners on behalf of the appellant at the time and place aforesaid, and

(c) the application is refused by the Appeal Commissioners,

subsection (6) shall not have effect and the said Commissioners shall thereupon proceed to determine the appeal.”.

Amendment of section 421 of Income Tax Act, 1967.

16. Section 421 (3) of the Income Tax Act, 1967 , is hereby amended by the substitution of “the Commissioners shall determine the appeal by ordering that the assessment shall stand good” for “the assessment shall stand good”.

Amendment of section 523 of Income Tax Act, 1967.

17. —Subsection (1) (b) of section 523 (inserted by section 10 of the Finance Act, 1967 ) of the Income Tax Act, 1967 , is hereby amended by the substitution of “£2,000” for “£1,250” in both places where it occurs.