Chapter V

Income Tax, Corporation Tax and Capital Gains Tax.

30. — Section 30 of the Finance Act, 1976 , is hereby amended—

(a) by the insertion of the following definition in subsection (1) before “assessment to tax”:

“‘the appropriate amount’ means—

(a) in the case of an assessment to income tax (other than an assessment to an amount representing income tax for the purposes of section 31 (1) (a) of the Corporation Tax Act, 1976 ) for the year 1984-85 or a subsequent year of assessment, 85 per cent. of the amount of tax found to be chargeable by the assessment on the determination of the appeal, and

(b) in the case of any other assessment to tax, 80 per cent. of the amount of tax found to be chargeable by the assessment on the determination of the appeal;”,

and

(b) by the substitution, in subsection (5), of the following paragraph for paragraph (b):

“(b) the appropriate amount,”.

31. —Chapter IX of Part I of and the Third Schedule to the Finance Act, 1982 , are hereby amended as follows—

(a) as respects the year 1984-85 and subsequent years of assessment, by the substitution in subsections (1) and (2) of section 56 and paragraph 1 (4) of the Third Schedule of “£5,000” for “£1,000”, and

(b) as respects any accounting period ending on or after the 6th day of April, 1984, by the deletion in the proviso to section 58 (1) of “20 per cent. of”,

and the said subsections (1) and (2), the said paragraph 1(4) and so much of the said proviso as precedes paragraph (i) thereof, as so amended, are set out in the Table to this section.

TABLE

(1) If the total of the initial market values of all the shares which are appropriated to an individual in any one year of assessment (whether under a single approved scheme or under two or more such schemes) exceeds £5,000, subsections (4) to (7) shall apply to the excess shares, that is to say, any share which caused that limit to be exceeded and any share appropriated after that limit was exceeded.

(2) For the purposes of subsection (1), if a number of shares is appropriated to an individual at the same time under two or more approved schemes, the same proportion of the shares appropriated at that time under each scheme shall be regarded as being appropriated before the limit of £5,000 is exceeded.

(4) The scheme must provide that the total of the initial market values of the shares appropriated to any one participant in a year of assessment will not exceed £5,000.

Provided that no deduction shall be allowed under this section or under any other provision of the Tax Acts in respect of so much of any sum or the aggregate amount of any sums so expended in that accounting period as exceeds the company's—

32. —(1) In this section—

“approved body” means any body or institution in the State which may be approved of for the purposes of this section by the Minister for Finance and which—

(a) provides in the State any course one of the conditions of entry to which is related to the results of the Leaving Certificate Examination, a matriculation examination of a recognised university in the State or an equivalent examination held outside the State, or

(b) (i) is established on a permanent basis solely for the advancement wholly or mainly in the State of one or more of the approved subjects,

(ii) contributes to the advancement of that subject or those subjects on a national or regional basis, and

(iii) is prohibited by its constitution from distributing to its members any of its assets or profits;

“approved subject” means—

(a) the practice of architecture,

(b) the practice of art and design,

(c) the practice of music and musical composition,

(d) the practice of theatre arts,

(e) the practice of film arts, or

(f) any other subject approved of for the purposes of this section by the Minister for Finance;

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

(2) This section applies to a gift of money which—

(a) on or after the 6th day of April, 1984, is made to an approved body for the purpose of assisting that body to promote the advancement in the State of any approved subject,

(b) is applied by the approved body for the said purpose, and

(c) is not 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.

(3) Where a person proves that he has made a gift to which this section applies and claims relief from tax by reference thereto, the provisions of subsection (4) or, as the case may be, subsection (5) shall apply:

Provided that, in determining the net amount of the gift for the purposes of those subsections, the amount or value of any consideration received by the said person as a result of making the gift, whether received directly or indirectly from the approved body to which the gift was made or otherwise, shall be deducted from the amount of the gift.

(4) 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, subject to subsection (5), 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 is a wife whose husband 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 husband shall be calculated accordingly:

Provided that relief under this section shall not be given to a person for a year of assessment—

(a) if the net amount of the gift (or the aggregate of the net amounts of gifts) made by him in that year, being a gift or gifts, as the case may be, to which this section applies, does not exceed £100, or

(b) to the extent to which the net amount of the gift (or the aggregate of the net amounts of gifts) made by him in that year, being a gift or gifts, as the case may be, to which this section applies, exceeds £10,000.

(5) Where a gift to which this section applies is made by a company—

(a) 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, and

(b) the references in the proviso to subsection (4) to a year of assessment shall be construed as references to an accounting period of the company.

(6) (a) The Minister for Finance may, by notice in writing given to the body or institution, as the case may be, withdraw the approval of any body or institution for the purposes of this section and, upon the giving of the notice, the body or institution shall cease to be an approved body as respects any gifts made after the date of the notice referred to in paragraph (b).

(b) Where the Minister for Finance withdraws the approval of any body or institution for the purposes of this section, notice of its withdrawal shall be published, as soon as may be, in Iris Oifigiúil.

33. — (1) This section shall have effect only as respects a trade of farming carried on in an accounting period which ends on or after the 6th day of April, 1983.

(2) Section 31A (inserted by the Finance Act, 1976 ) of the Finance Act, 1975 , is hereby amended—

(a) by the substitution of “1984” for “1983” (inserted by the Finance Act, 1983 ) in paragraph (iv) (inserted by the Finance Act, 1979 ) of the proviso to subsection (4) (a),

(b) by the substitution of the following subsection for subsection (7) (inserted by the Finance Act, 1977 )—

“(7) Where in relation to an accounting period a company's opening stock value exceeds its closing stock value, the amount of the excess (in this section referred to as the company's ‘decrease in stock value’) shall, if the accounting period ends on a date before the 6th day of April, 1984, be treated in the computation of the company's trading income for the purposes of corporation tax, as a trading receipt of the company's trade for that accounting period:

Provided that the amount which is treated as a trading receipt of the company's trade for any accounting period (hereafter in this proviso referred to as ‘the first-mentioned period’) shall not exceed the amount determined by the formula—

A + B − C

where—

A is the aggregate amount of the deductions which, under the provisions of this section, the company was entitled to make in computing its trading income for accounting periods which end in the period (hereafter in this proviso referred to as ‘the relevant period’) beginning 10 years before the commencement of the first-mentioned period and ending on the day immediately preceding such commencement,

B is the aggregate amount of the deductions which, by virtue of section 26 (1) (a) (i) of the Finance Act, 1976 , the company was entitled to make in computing its trading profits for the purposes of income tax, for accounting periods which end in the relevant period, and

C is the aggregate of the amounts which, under this subsection, were treated as trading receipts of the company's trade for accounting periods which end in the relevant period.”, and

(c) by the substitution of the following subsection for subsection (9) (inserted by the Finance Act, 1977 )—

“(9) In the computation of a company's trading income for the purposes of corporation tax for any accounting period which ends on or after the 6th day of April, 1984, in which there is a decrease in stock value, there shall be treated as a trading receipt of the company's trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C

where—

A is the aggregate amount of the company's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1984,

B is the aggregate amount of the company's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1984, and

C is the aggregate of the amounts which under this subsection are treated as trading receipts of the company's trade for preceding accounting periods:

Provided that the amount which is treated as a trading receipt of the company's trade for any accounting period (hereafter in this proviso referred to as ‘the first-mentioned period’) shall not exceed the amount determined by the formula—

D + E − F

where—

D is the aggregate amount of the deductions which, under the provisions of this section, the company was entitled to make in computing its trading income for accounting periods which end in the period (hereafter in this proviso referred to as ‘the relevant period’) beginning 10 years before the commencement of the first-mentioned period and ending on the day immediately preceding such commencement,

E is the aggregate amount of the deductions which, by virtue of section 26 (1) (a) (i) of the Finance Act, 1976 , the company was entitled to make in computing its trading profits, for the purposes of income tax, for accounting periods which end in the relevant period, and

F is the aggregate of the amounts which, under the provisions of this section, were treated as trading receipts of the company's trade for accounting periods which end in the relevant period.”,

and the said paragraph (iv), as so amended, is set out in the Table to this subsection.

TABLE

(iv) 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, 1984.

(3) Section 12 of the Finance Act, 1976 , is hereby amended—

(a) by the substitution in subsection (3) of “1984-85” for “1983-84” (inserted by the Finance Act, 1983 ),

(b) by the substitution of the following subsection for subsection (5) (inserted by the Finance Act, 1978 )—

“(5) In the computation of a person's trading profits for an accounting period in which there is a decrease in stock value and which ends on a date in the period from the 6th day of April, 1976, to the 5th day of April, 1984, the amount of that decrease shall be treated as a trading receipt of the trade for that accounting period:

Provided that the amount which is so treated for any accounting period (hereafter in this proviso referred to as ‘the first-mentioned period’) shall not exceed an amount determined by the formula—

A−C

where—

A is the aggregate amount of the deductions which, under the provisions of this section, the person was entitled to make in computing his trading profits for accounting periods which end in the period (hereafter in this proviso referred to as ‘the relevant period’) beginning on the 6th day of April, 1975, or, if later, 10 years before the commencement of the first-mentioned period and ending on the day immediately preceding such commencement, and

C is the aggregate of the amounts which, under the provisions of this subsection, were treated as trading receipts of the person's trade for accounting periods which end in the relevant period.”,

and

(c) by the substitution of the following subsection for subsection ‘(6) (inserted by the Finance Act, 1977 )—

“(6) In the computation of a person's trading profits for any accounting period in which there is a decrease in stock value and which ends on or after the 6th day of April, 1984, there shall be treated as a trading receipt of the trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C

where—

A is the aggregate amount of the person's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1984,

B is the aggregate amount of the person's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1984, and

C is the aggregate of the amounts which are treated as trading receipts of the person's trade for preceding accounting periods which ended on or after the 6th day of April, 1984:

Provided that the amount which, by virtue of this subsection, is treated as a trading receipt of the person's trade, for any accounting period (hereafter in this proviso referred to as ‘the first-mentioned period’) shall not exceed an amount determined by the formula—

D−E

where—

D is the aggregate amount of the deductions which, under the provisions of this section, the person was entitled to make in computing his trading profits for accounting periods which end in the period (hereafter in this proviso referred to as ‘the relevant period’) beginning on the 6th day of April, 1975, or, if later, ten years before the commencement of the first-mentioned period and ending on the day immediately preceding such commencement, and

E is the aggregate of the amounts which, under the provisions of this section, were treated as trading receipts of the person's trade for accounting periods which end in the relevant period.”,

and the said subsection (3), as so amended, is set out in the Table to this subsection.

TABLE

(3) Any deduction allowed by virtue of this section in computing a person's trading profits for an accounting period shall not have effect for any purpose of the Income Tax Acts for any year of assessment prior to the year 1974-75 or later than the year 1984-85.

(4) Section 13 of the Finance Act, 1982 , is hereby amended by the substitution of the following proviso for the proviso to subsection (3):

“Provided that the amount by which a decrease in stock value for an accounting period (hereafter in this proviso referred to as ‘the first-mentioned period’) is to be increased under this subsection shall not exceed the amount determined by the formula—

(A−B)−(C−D)

where—

A is the aggregate amount of the deductions, in respect of which either subsection (1) (c) or (2), as may be appropriate, had effect and as increased under that subsection, which were made in computing the profits of the trade of farming for accounting periods which end in the period (hereafter in this proviso referred to as ‘the relevant period’) beginning 10 years before the commencement of the first-mentioned period or, if later and in a case in which subsection (1) (c) had effect, the 6th day of April, 1975, and ending on the day immediately preceding such commencement,

B is the aggregate amount of the deductions included in A before they were increased under the provisions of either subsection (1) (c) or (2),

C is the aggregate amount of the decreases in trading stock, in respect of which this subsection has had effect and as increased under this subsection, which were treated as trading receipts of the trade of farming for accounting periods which end in the relevant period, and

D is the aggregate amount of the decreases included in C before they were increased under the provisions of this subsection.”.

(5) (a) Where a trade of farming (hereafter in this subsection referred to as “the relevant trade”) is carried on by a person, or by the personal representative of a person who has died and who carried on the relevant trade prior to his death, (hereafter in this subsection referred to as “the predecessor”) and that relevant trade ceases to be carried on by the predecessor and immediately thereafter commences to be carried on by a person (hereafter in this subsection referred to as “the successor”) who in relation to the predecessor is a qualifying person, the predecessor, or the personal representative of the predecessor where the predecessor is a person who has died, and the successor may jointly or, where the successor is the personal representative of a person who has died, the successor alone may, by notice in writing given to the inspector within two years of the end of the year of assessment in which the successor commenced to carry on the relevant trade, elect that the following provisions shall have effect:—

(i) section 62 of the Income Tax Act, 1967 , shall not apply, and

(ii) notwithstanding anything in the Income Tax Acts—

(I) the successor shall be allowed such deductions under section 31 of the Finance Act, 1975 , in computing the profits of the relevant trade carried on by him, and

(II) there shall be treated, under the provisions of subsections (5) and (6) of section 12 of the Finance Act, 1976 and section 13 of the Finance Act, 1982 , as trading receipts of the relevant trade carried on by the successor such amounts,

as would have been so allowed or would have been so treated, as the case may be, if the predecessor had continued to carry on the relevant trade and had done all such things and been allowed all such allowances in connection therewith as were done by or allowed to the successor.

(b) For the purposes of paragraph (a), a person (hereafter in this paragraph referred to as “the first-mentioned person”) is a qualifying person in relation to the predecessor if—

(i) in the case where the predecessor is not the personal representative of a person who has died and who carried on the trade of farming prior to his death, the first-mentioned person—

(I) is resident in the State in the year of assessment in which he commences to carry on the relevant trade and is not resident elsewhere, and

(II) is—

(A) the personal representative of the predecessor, or

(B) the spouse or child of the predecessor,

and, if he is such spouse or child as aforesaid, does not, at the time he commences to carry on the relevant trade, have any trading stock of a trade of farming other than the trading stock of the relevant trade,

(ii) in the case where the predecessor is the personal representative of a person who has died and who carried on the relevant trade prior to his death, the first-mentioned person—

(I) is resident in the State in the year of assessment in which he commences to carry on the relevant trade and is not resident elsewhere, and

(II) is the spouse or child of the person who has died,

and, if he is such spouse or child as aforesaid, does not, at the time he commences to carry on the relevant trade, have any trading stock of a trade of farming other than the trading stock of the relevant trade.

(c) This subsection shall apply only where the relevant trade and the trading stock thereof pass in their entirety to the successor.

(d) This subsection shall, with any necessary modifications, apply in a case where the relevant trade ceases to be carried on by a predecessor and immediately thereafter commences to be carried on by two or more persons who, in relation to the predecessor, are qualifying persons and are carrying on the relevant trade in partnership.

(e) In this subsection—

“child” has the same meaning as in section 27 (inserted by the Capital Gains Tax (Amendment) Act, 1978 ) of the Capital Gains Tax Act, 1975 ;

“personal representative” has the meaning corresponding to that assigned to personal representatives in Part XXIX of the Income Tax Act, 1967 .

34. — Section 40 (1) of the Finance Act, 1977 (as extended by section 52 of the Finance Act, 1980 ) shall have effect in relation to the year 1984-85 as it has effect in relation to the years 1980-81 and 1981-82 with the modifications that—

(a) the reduced rate which, by virtue of the said section 40 (1) (as extended by this section) would, for the year 1984-85, be 70 per cent. of the standard rate shall, for that year, be 75 per cent. of the standard rate, and

(b) the amount representing income tax which, by virtue of the said section 40 (1) (as extended by this section) would, under an assessment made for 1984-85, be payable on the 1st day of January, 1985 (or, if it were later, on the day next after the day on which the assessment is made) shall be payable in two equal instalments as follows—

(i) the first instalment on the 1st day of October, 1984, or, if it is later, on the day next after the day on which the assessment is made, and

(ii) the second instalment on the 1st day of April, 1985, or, if it is later, on the day next after the day on which the assessment is made,

and the provisions of the Income Tax Acts as to the recovery of tax shall apply to each instalment of the tax in the same manner as they apply to the whole amount of the tax.

35. —Each of the provisions of the Income Tax Act, 1967 , which are specified in the Table to this section and which were inserted by the Corporation Tax Act, 1976 , shall have effect as if the reference therein to the 1st day of April, 1984 (as provided for in section 26 of the Finance Act, 1979 ) were a reference to the 1st day of April, 1985.

TABLE

Subsection (4) (d) of section 251 (initial allowances)

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

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

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

36. — Section 255 (1) of the Income Tax Act, 1967 , shall have effect, as respects capital expenditure incurred on or after the 25th day of January, 1984, as if the reference in paragraph (a) to a mill, factory or other similar premises included a reference to a laboratory the sole or main function of which is the analysis of minerals (including oil and natural gas) in connection with the exploration for, or the extraction of, such minerals.

37. —As respects any claim made after the passing of this Act under subsection (2) of section 23 of the Finance Act, 1981 , in relation to expenditure incurred on the construction of a qualifying premises, the definition in subsection (1) (a) of that section of “qualifying premises” shall have effect as if the following paragraph were substituted for paragraph (iii):

“(iii) in respect of which, if it is not a new house (within the meaning of section 4 of the Housing (Miscellaneous Provisions) Act, 1979 ) provided for sale, there is in force a certificate of reasonable cost the amount specified in which in respect of the cost of construction of the house to which the certificate relates is not less than the expenditure actually incurred on such construction, and”.

38. —(1) Section 25 of the Finance Act, 1981 , is hereby amended by the substitution in subsection (1), in the definition of “relevant expenditure”, of “1987” for “1984”, and the said definition, as so amended, is set out in the Table to this subsection.

TABLE

“relevant expenditure” means capital expenditure incurred on or after the 29th day of January, 1981, and before the 1st day of April, 1987, on the construction of a multi-storey car-park.

(2) The said section 25 is hereby further amended by the substitution of the following subsection for subsection (2):

“(2) All the provisions of the Tax Acts (other than section 25 of the Finance Act, 1978 ) relating to the making of allowances or charges in respect of capital expenditure on the construction of an industrial building or structure shall apply to relevant expenditure as if—

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

(b) the references to the 1st day of April, 1985 (as provided for by section 35 of the Finance Act, 1984) in the provisions of the Income Tax Act, 1967 (as inserted by the Corporation Tax Act, 1976 ) specified in the Table to this subsection, were references to the 1st day of April, 1987.

TABLE

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

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

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

39. — Section 26 of the Finance Act, 1981 , is hereby amended by the substitution in subsection (1), in the definition of “qualifying period”, of “1989” for “1984”, and the said definition, as so amended, is set out in the Table to this section.

TABLE

“qualifying period” means the period commencing on the 29th day of January, 1981, and ending on the 31st day of March, 1989;

40. —(1) (a) In this section—

“chargeable period or its basis period” has the meaning assigned to it by paragraph 1 (2) of the First Schedule to the Corporation Tax Act, 1976 ;

“the specified capital allowances” means capital allowances in respect of—

(i) expenditure incurred on machinery or plant provided on or after the 25th day of January, 1984, for leasing in the course of a trade of leasing, or

(ii) the diminished value of such machinery or plant by reason of wear and tear,

other than capital allowances in respect of machinery or plant to which subsection (6) applies;

“trade of leasing” means—

(i) a trade which consists wholly of the leasing of machinery or plant, or

(ii) any part of a trade treated as a separate trade by virtue of subsection (2).

(b) For the purposes of this section—

(i) letting on charter a ship or aircraft which has been provided for such letting, and

(ii) letting any item of machinery or plant on hire,

shall be regarded as leasing of machinery or plant if, apart from this paragraph, it would not be so regarded.

(c) Where a company carries on a trade of operating ships in the course of which a ship is let on charter, paragraph (b) shall not have effect so as to treat the letting on charter as the leasing of machinery or plant if, apart from this section, the letting would fall to be regarded for the purposes of Case I of Schedule D as part of the activities of the trade.

(2) Where in any chargeable period or its basis period which ends on or after the 25th day of January, 1984, a person carries on as part of a trade any leasing of machinery or plant, that leasing shall be treated for all the purposes of the Tax Acts, other than any provisions of those Acts relating to the commencement or cessation of a trade, as a separate trade, distinct from all other activities carried on by him as part of the trade, and any necessary apportionment shall be made of receipts or expenses.

(3) (a) Notwithstanding any of the provisions of section 307 of the Income Tax Act, 1967 , where relief is claimed under that section in respect of a loss sustained in a trade of leasing, the amount of that loss in so far as, by virtue of section 318 of that Act, it is referable to the specified capital allowances shall be treated for the purposes of subsections (1) and (2) (a) of the said section 307 as reducing profits or gains of that trade of leasing only and shall not be treated as reducing any other income.

(b) Where paragraph (a) applies in the case of any claimant to relief under the said section 307—

(i) any limitation imposed by section 319 of the said Act on the amount of capital allowances which may be taken into account under section 318 of that Act shall be referred, as far as may be, to the specified capital allowances rather than to any other capital allowances, and

(ii) notwithstanding subsection (2) of the said section 318 (but without prejudice to paragraph (a) and to the order in which income is to be treated as reduced under subsection (2) (a) of the said section 307), the claimant may specify the extent to which any reduction of income treated as occurring by virtue of the said section 307 is to be referred to so much of the loss as is attributable to the loss, if any, actually sustained in the trade of leasing, the specified capital allowances or any other capital allowances, and, where the claimant so specifies, section 320 of the said Act shall apply in accordance with the claimant's specification and not in accordance with the said subsection (2) of the said section 318.

(4) (a) Where in an accounting period a company carrying on a trade of leasing incurs a loss in that trade and any specified capital allowances have been treated by virtue of section 14 of the Corporation Tax Act, 1976 , as trading expenses in arriving at the amount of the loss, the relevant amount of the loss shall not be available—

(i) for relief under subsection (2) of section 16 of that Act, except to the extent that it can be set off under that subsection against the company's income from the trade of leasing only, or

(ii) to be surrendered by way of group relief.

(b) For the purposes of paragraph (a) “the relevant amount of the loss” shall be the full amount of the loss or, if it is less, an amount equal to—

(i) where no capital allowances other than the specified capital allowances have been treated by virtue of section 14 of the Corporation Tax Act, 1976 , as trading expenses in arriving at the amount of the loss, the amount of the specified capital allowances,

or

(ii) where, in addition to the specified capital allowances, other capital allowances have been so treated by virtue of the said section 14, the lesser of—

(I) the amount of the specified capital allowances,

and

(II) the amount by which the loss exceeds the amount of the other capital allowances:

Provided that, where the amount of the loss does not exceed the amount of the other capital allowances, “the relevant amount of the loss” shall be nil.

(5) The proviso to subsection (1) of section 296 of the Income Tax Act, 1967 , and sections 14 (6) and 116 (2) of the Corporation Tax Act, 1976 , shall not have effect in relation to capital allowances—

(a) in respect of expenditure incurred on or after the 25th day of January, 1984, on the provision of machinery or plant, or

(b) in respect of the diminished value of machinery or plant by reason of wear and tear if that machinery or plant was first acquired on or after the 25th day of January 1984, by the person to whom the capital allowances are to be or have been made,

other than capital allowances in respect of machinery or plant to which subsection (6) applies.

(6) References in this section to machinery or plant to which this subsection applies are references to machinery or plant provided on or after the 25th day of January, 1984, for leasing where the expenditure incurred on the provision of the machinery or plant (or, for the purposes of paragraph (a) in the case of a film to which section 6 or 7 of the Irish Film Board Act, 1980 , applies, the cost of the making of the film)—

(a) has been or is to be met directly or indirectly, wholly or partly, by the Industrial Development Authority, the Irish Film Board, the Shannon Free Airport Development Company Limited or Údarás na Gaeltachta, or

(b) was incurred under an obligation entered into by the person providing the machinery or plant (hereafter in this subsection referred to as “the lessor”) and the person to whom it is to be leased (hereafter in this subsection referred to as “the lessee”) and that obligation was entered into—

(i) before the 25th day of January, 1984, or

(ii) before the 1st day of March, 1984, pursuant to negotiations which were in progress between the lessor and the lessee before the 25th day of January, 1984:

Provided that—

(I) an obligation shall be treated for the purposes of subparagraphs (i) and (ii) as having been entered into before a particular date if, but only if, before that date, there was in existence a binding contract in writing under which that obligation arose, and

(II) negotiations pursuant to which an obligation was entered into shall not be regarded for the purposes of subparagraph (ii) as having been in progress before the 25th day of January, 1984, unless, on or before that date, preliminary commitments or agreements in relation to that obligation had been entered into between the lessor and the lessee.