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39 1997

TAXES CONSOLIDATION ACT, 1997

CHAPTER 3

Income tax and corporation tax

Small enterprise grants.

[FA93 s37]

223. —(1) This section shall apply to a grant made under section 10 (5)(a) of the Údarás na Gaeltachta Act, 1979 , or section 21 (5)(a) (as amended by the Industrial Development (Amendment) Act, 1991 ) of the Industrial Development Act, 1986 , being an employment grant—

(a) in the case of section 10 (5)(a) of the Údarás na Gaeltachta Act, 1979 , under the scheme known as “Deontais Fhostaíochta ó Údarás na Gaeltachta do Thionscnaimh Sheirbhíse Idir-Náisiúnta” or the scheme known as “Deontais Fhostaíochta ó Údarás na Gaeltachta do Thionscail Bheaga Dhéantúsaíochta”, or

(b) in the case of section 21 (5)(a) of the Industrial Development Act, 1986 (as so amended), under the scheme known as “Scheme Governing the Making of Employment Grants to Small Industrial Undertakings”.

(2) A grant to which this section applies shall be disregarded for the purposes of the Tax Acts.

Grants to medium and large industrial undertakings.

[FA95 s43]

224. —(1) This section shall apply to a grant made under section 10 (5)(a) of the Údarás na Gaeltachta Act, 1979 , or section 21 (5)(a) (as amended by the Industrial Development (Amendment) Act, 1991 ) of the Industrial Development Act, 1986 , being an employment grant—

(a) in the case of section 10 (5)(a) of the Údarás na Gaeltachta Act, 1979 , under the scheme known as “Deontais Fhostaíochta ó Údarás na Gaeltachta do Ghnóthais Mhóra/Mheánmhéide Thionsclaíocha”, or

(b) in the case of section 21 (5)(a) of the Industrial Development Act, 1986 (as so amended), under the scheme known as “Scheme Governing the Making of Employment Grants to Medium/Large Industrial Undertakings”.

(2) A grant to which this section applies shall be disregarded for the purposes of the Tax Acts.

Employment grants.

[FA82 s18; FA97 s146(1) and Sch9 PtI par12(2)]

225. —(1) This section shall apply to an employment grant made under—

(a) section 25 of the Industrial Development Act, 1986 , or

(b) section 12 of the Industrial Development Act, 1993 .

(2) A grant to which this section applies shall be disregarded for the purposes of the Tax Acts.

Certain employment grants and recruitment subsidies.

[FA96 s40(1) and (2); FA97 s40]

226. —(1) This section shall apply to an employment grant or recruitment subsidy made to an employer in respect of a person employed by such employer under—

(a) the Back to Work Allowance Scheme, being a scheme established on the 1st day of October, 1993, and administered by the Minister for Social, Community and Family Affairs,

(b) any scheme which may be established by the Minister for Enterprise, Trade and Employment with the approval of the Minister for Finance for the purposes of promoting the employment of individuals who have been unemployed for 3 years or more and which is to be administered by An Foras Áiseanna Saothair,

(c) paragraph 13 of Annex B to an operating agreement between the Minister for Enterprise, Trade and Employment and a County Enterprise Board, being a board specified in the Schedule to the Industrial Development Act, 1995,

(d) as respects grants or subsidies paid on or after the 6th day of April, 1997, the Employment Support Scheme, being a scheme established on the 1st day of January, 1993, and administered by the National Rehabilitation Board,

(e) as respects grants or subsidies paid on or after the 6th day of April, 1997, 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,

(f) the European Union Leader II Community Initiative 1994 to 1999, and which is administered in accordance with operating rules determined by the Minister for Agriculture and Food,

(g) the European Union Operational Programme for Local Urban and Rural Development which is to be administered by the company incorporated under the Companies Acts, 1963 to 1990, on the 14th day of October, 1992, as Area Development Management Limited,

(h) the Special European Union Programme for Peace and Reconciliation in Northern Ireland and the Border Counties of Ireland which was approved by the European Commission on the 28th day of July, 1995,

(i) the Joint Northern Ireland/Ireland INTERREG Programme 1994 to 1999, which was approved by the European Commission on the 27th day of February, 1995, or

(j) any initiative of the International Fund for Ireland, which was designated by the International Fund for Ireland (Designation and Immunities) Order, 1986 (S.I. No. 394 of 1986), as an organisation to which Part VIII of the Diplomatic Relations and Immunities Act, 1967 , applies.

(2) An employment grant or recruitment subsidy to which this section applies shall be disregarded for the purposes of the Tax Acts.

Certain income arising to specified non-commercial state-sponsored bodies.

[FA94 s32(1),(2),(3) and (4)]

227. —(1) In this section, “non-commercial state-sponsored body” means a body specified in Schedule 4 .

(2) For the purposes of this section, the Minister for Finance may by order amend Schedule 4 by the addition to that Schedule of any body or the deletion from that Schedule of any body standing specified.

(3) Where an order is proposed to be made under subsection (2), a draft of the order shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann.

(4) Notwithstanding any provision of the Tax Acts other than the provisions (apart from section 261 (c)) of Chapter 4 of Part 8 , income arising to a non-commercial state-sponsored body—

(a) which but for this section would have been chargeable to tax under Case III, IV or V of Schedule D, and

(b) from the date that such body was incorporated under the Companies Acts, 1963 to 1990, or was established by or under any other enactment,

shall be disregarded for the purposes of the Tax Acts; but a noncommercial state-sponsored body—

(i) which has paid income tax or corporation tax shall not be entitled to repayment of that tax, and

(ii) shall not be treated as—

(I) a company within the charge to corporation tax in respect of interest for the purposes of paragraph (f) of the definition of “relevant deposit” in section 256 , or

(II) a person to whom section 267 applies.

Income arising to designated bodies under the Securitisation (Proceeds of Certain Mortgages) Act, 1995.

[FA96 s39(1) and (2)]

228. —Notwithstanding any provision of the Tax Acts, income arising to a body designated under section 4(1) of the Securitisation (Proceeds of Certain Mortgages) Act, 1995, shall be exempt from income tax and corporation tax.

Harbour authorities and port companies.

[FA97 s60(1) and (3) to (5)]

229. —(1) (a) In this section—

relevant body” means—

(i) a harbour authority within the meaning of the Harbours Act, 1946,

(ii) a company established pursuant to section 7 of the Harbours Act, 1996, and

(iii) any other company which controls a harbour and carries on a trade which consists wholly or partly of the provision in that harbour of such facilities and accommodation for vessels, goods and passengers as are ordinarily provided by harbour authorities specified in paragraph (i), and companies specified in paragraph (ii) which control harbours, situate within the State, in those harbours;

relevant profits or gains” means so much of the profits or gains of a relevant body controlling a harbour situate within the State as arise from the provision in that harbour of such facilities and accommodation for vessels, goods and passengers as are ordinarily provided by—

(i) harbour authorities specified in paragraph (i), and

(ii) companies specified in paragraph (ii),

of the definition of “relevant body” which control harbours, situate within the State, in those harbours.

(b) For the purposes of this section, where an accounting period falls partly in a period, the part of the accounting period falling in the period shall be regarded as a separate accounting period.

(2) Exemption shall be granted from tax under Schedule D in respect of relevant profits or gains in the period beginning on the 1st day of January, 1997, and ending on the 31st day of December, 1998.

(3) Subsection (2) shall apply to a relevant body which is a harbour authority referred to in paragraph (i) of the definition of “relevant body” as if “in the period beginning on the 1st day of January, 1997, and ending on the 31st day of December, 1998” were deleted.

(4) Where a relevant body is chargeable to tax under Schedule D in respect of relevant profits or gains, the relevant profits or gains shall be reduced by an amount equal to—

(a) as respects accounting periods falling wholly or partly in the year 1999, two-thirds of those relevant profits or gains, and

(b) as respects accounting periods falling wholly or partly in the year 2000, one-third of those relevant profits or gains.

National Treasury Management Agency.

[FA91 s20(1) and (3)]

230. —(1) Notwithstanding any provision of the Corporation Tax Acts, profits arising to the National Treasury Management Agency in any accounting period shall be exempt from corporation tax.

(2) Notwithstanding any provision of the Tax Acts, any interest, annuity or other annual payment paid by the National Treasury Management Agency shall be paid without deduction of income tax.

Profits or gains from stallion fees.

[FA69 s18(2)(b); CTA76 s11(6); FA85 s14(1)]

231. —The profits or gains arising—

(a) (i) to the owner of a stallion, which is ordinarily kept on land in the State, from the sale of services of mares within the State by the stallion, or

(ii) to the part-owner of such a stallion from the sale of such services or of rights to such services, or

(b) to the part-owner of a stallion, which is ordinarily kept on land outside the State, from the sale of services of mares by the stallion or of rights to such services, where the part-owner carries on in the State a trade which consists of or includes bloodstock breeding and it is shown to the satisfaction of the inspector, or on appeal to the satisfaction of the Appeal Commissioners, that the part-ownership of the stallion was acquired and is held primarily for the purposes of the service by the stallion of mares owned or partly-owned by the part-owner of the stallion in the course of that trade,

shall not be taken into account for any purpose of the Tax Acts.

Profits from occupation of certain woodlands.

[FA69 s18(1) and (2)(c); CTA76 s11(6); FA96 s132(2) and Sch5 PtII]

232. —(1) In this section—

occupation”, in relation to any land, means having the use of that land;

woodlands” means woodlands in the State.

(2) Except where otherwise provided by section 75 , the profits or gains arising from the occupation of woodlands managed on a commercial basis and with a view to the realisation of profits shall not be taken into account for any purpose of the Tax Acts.

Stud greyhound service fees.

[FA96 s25(1) and (2)]

233. —(1) In this section—

greyhound bitches” means female greyhounds registered in the Irish Greyhound Stud Book or in any other greyhound stud book recognised for the purposes of the Irish Greyhound Stud Book;

stud greyhound” means a male greyhound registered as a sire for stud purposes in the Irish Greyhound Stud Book or in any other greyhound stud book recognised for the purposes of the Irish Greyhound Stud Book.

(2) The profits or gains arising—

(a) (i) to the owner of a stud greyhound, which is ordinarily kept in the State, from the sale of services of greyhound bitches within the State by the stud greyhound, or

(ii) to the part-owner of such a stud greyhound from the sale of such services or of rights to such services, or

(b) to the part-owner of a stud greyhound, which is ordinarily kept outside the State, from the sale of services of greyhound bitches by the stud greyhound or of rights to such services, where the part-owner carries on in the State a trade which consists of or includes greyhound breeding and it is shown to the satisfaction of the inspector, or on appeal to the satisfaction of the Appeal Commissioners, that the part-ownership of the stud greyhound was acquired and is held primarily for the purposes of the service by the stud greyhound of greyhound bitches owned or partly-owned by the part-owner of the stud greyhound in the course of that trade,

shall not be taken into account for any purpose of the Tax Acts.

Certain income derived from patent royalties.

[FA73 s34; CTA76 s140(1) and Sch2 PtI par35; FA81 s19; FA92 s19(1); FA94 s28; FA96 s32(1) and (3)(a) and s132(1) and Sch5 PtI par7; FA97 s146(1) and Sch9 PtI par6(2)]

234. —(1) In this section—

income from a qualifying patent” means any royalty or other sum paid in respect of the user of the invention to which the qualifying patent relates, including any sum paid for the grant of a licence to exercise rights under such patent, where that royalty or other sum is paid—

(a) for the purposes of activities which—

(i) would be regarded, otherwise than by virtue of paragraph (b) or (c) of section 445 (7) or section 446 , as the manufacture of goods for the purpose of relief under Part 14 , or

(ii) would be so regarded if they were carried on in the State by a company,

but, as respects a royalty or other sum paid on or after the 23rd day of April, 1996, where the royalty or other sum exceeds the royalty or other sum which would have been paid if the payer of the royalty or other sum and the beneficial recipient of the royalty or other sum were independent persons acting at arm's length, the excess shall not be income from a qualifying patent,

or

(b) by a person who—

(i) is not connected (within the meaning of section 10 as it applies for the purposes of capital gains tax) with the person who is the beneficial recipient of the royalty or other sum, and

(ii) has not entered into any arrangement in connection with the royalty or other sum the main purpose or one of the main purposes of which was to satisfy subparagraph (i);

qualifying patent” means a patent in relation to which the research, planning, processing, experimenting, testing, devising, designing, developing or similar activity leading to the invention which is the subject of the patent was carried out in the State;

resident of the State” means any person resident in the State for the purposes of income tax and not resident elsewhere;

a company shall be regarded as a resident of the State if it is managed and controlled in the State.

(2) (a) A resident of the State who makes a claim in that behalf and makes a return in the prescribed form of his or her total income from all sources, as estimated in accordance with the Income Tax Acts, shall be entitled to have any income from a qualifying patent arising to him or her disregarded for the purposes of the Income Tax Acts.

(b) In paragraph (a), the reference to a return of total income from all sources as estimated in accordance with the Income Tax Acts shall apply for corporation tax as if it were or included a reference to a return under section 884 .

(3) Notwithstanding subsection (2), an individual shall not be entitled to have any amount of income from a qualifying patent arising to him or her disregarded for any purpose of the Income Tax Acts unless the individual carried out, either solely or jointly with another person, the research, planning, processing, experimenting, testing, devising, designing, developing or other similar activity leading to the invention which is the subject of the qualifying patent.

(4) Where, under section 77 of the Patents Act, 1992 , or any corresponding provision of the law of any other country, an invention which is the subject of a qualifying patent is made, used, exercised or vended by or for the service of the State or the government of the country concerned, this section shall apply as if the making, user, exercise or vending of the invention had taken place in pursuance of a licence and any sums paid in respect of the licence were income from a qualifying patent.

(5) Where any income arising to a person is by virtue of this section to be disregarded, the person shall not be treated, by reason of such disregarding, as having ceased to possess the whole of a single source within the meaning of section 70 (1).

(6) For the purpose of determining the amount of income to be disregarded under this section for the purposes of the Income Tax Acts, the Revenue Commissioners may make such apportionments of receipts and expenses as may be necessary.

(7) The relief provided by this section may be given by repayment or otherwise.

(8) Subsections (3) and (4) of section 459 and paragraph 8 of Schedule 28 shall, with any necessary modifications, apply in relation to exemptions from tax under this section.

Bodies established for promotion of athletic or amateur games or sports.

[ITA67 s349; FA84 s9; FA97 s146(1) and Sch9 PtI par1(25)]

235. —(1) In this section, “approved body of persons” means—

(a) any body of persons established for and existing for the sole purpose of promoting athletic or amateur games or sports, and

(b) (i) any body of persons that, as respects the year 1983-84 or any earlier year of assessment, was granted exemption from income tax under section 349 of the Income Tax Act, 1967 , before that section was substituted by section 9 of the Finance Act, 1984 , or

(ii) any company that, as respects any accounting period ending before the 6th day of April, 1984, was granted exemption from corporation tax under section 349 (before the substitution referred to in subparagraph (i)) of the Income Tax Act, 1967 , as applied for corporation tax by section 11 (6) of the Corporation Tax Act, 1976 ;

but does not include any such body of persons to which the Revenue Commissioners, after such consultation (if any) as may seem to them to be necessary with such person or body of persons as in their opinion may be of assistance to them, give a notice in writing stating that they are satisfied that the body—

(I) was not established for the sole purpose specified in paragraph (a) or was established wholly or partly for the purpose of securing a tax advantage, or

(II) being established for the sole purpose specified in paragraph (a), no longer exists for such purpose or commences to exist wholly or partly for the purpose of securing a tax advantage.

(2) Exemption from income tax or, as the case may be, corporation tax shall be granted in respect of so much of the income of any approved body of persons as is shown to the satisfaction of the Revenue Commissioners to be income which has been or will be applied to the sole purpose specified in subsection (1)(a).

(3) Where a notice is given under subsection (1), the exemption from income tax or, as the case may be, corporation tax accorded to the body of persons to which it relates shall cease to have effect—

(a) if the notice is a notice to which paragraph (I) of that subsection applies—

(i) as respects income tax, for the year of assessment in which the body of persons was established or the year 1984-85, whichever is the later, and for each subsequent year of assessment, or

(ii) as respects corporation tax, for the first accounting period of the body of persons which commences on or after the 6th day of April, 1984, and for each subsequent accounting period;

(b) if the notice is a notice to which paragraph (II) of that subsection applies—

(i) as respects income tax, for the year of assessment in which in the opinion of the Revenue Commissioners the body of persons ceased to exist for the sole purpose specified in subsection (1)(a) or the year in which it commenced to exist wholly or partly for the purpose of securing a tax advantage, whichever is the earlier, but not being a year earlier than the year 1984-85, and for each subsequent year of assessment, or

(ii) as respects corporation tax, for the accounting period in which in the opinion of the Revenue Commissioners the body of persons ceased to exist for the sole purpose specified in subsection (1)(a) or the accounting period in which it commenced to exist wholly or partly for the purpose of securing a tax advantage, whichever is the earlier, but not being an accounting period which ends before the 6th day of April, 1984, and for each subsequent accounting period.

(4) Section 949 shall apply to a notice under subsection (1) as if the notice were a determination by the Revenue Commissioners of a claim to an exemption under the Income Tax Acts.

(5) Anything required or permitted to be done by the Revenue Commissioners or any power or function conferred or imposed on them by this section may be done, exercised or performed, as appropriate, by an officer of the Revenue Commissioners authorised by them in that behalf.

Loan of certain art objects.

[FA94 s19(1) to (6)]

236. —(1) In this section—

art object” has the meaning assigned to it by subsection (2)(a);

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;

the Minister” means the Minister for Arts, Heritage, Gaeltacht and the Islands;

relevant building” means an approved building within the meaning of section 482 ;

relevant garden” means an approved garden within the meaning of section 482 .

(2) (a) In this section, “art object” means any work of art (including a picture, sculpture, print, book, manuscript, piece of jewellery, furniture or other similar object) or scientific collection which, on application to them in that behalf by a person who owns or occupies a relevant building or a relevant garden, as the case may be, is determined—

(i) by the Minister, after consideration of any evidence in relation to the matter which the individual 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, 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 art object shall not be regarded as being reasonable access afforded, or the provision of reasonable facilities for viewing, to the public unless—

(i) subject to such temporary removal as is necessary for the purposes of the repair, maintenance or restoration of the object as is reasonable, access to it is afforded and facilities for viewing it are provided for not less than 60 days (including not less than 40 days during the period commencing on the 1st day of May and ending on the 30th day of September) in any year and, on each such day, such access is afforded and such facilities for viewing are provided in a reasonable manner and at reasonable times for a period, or periods in the aggregate, of not less than 4 hours,

(ii) such access is afforded and such facilities are provided to the public on the same days and at the same times as access is afforded to the public to the relevant building or the relevant garden, as the case may be, in which the object is kept, and

(iii) 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 the Revenue Commissioners make a determination under paragraph (a) in relation to an art object, and 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, the Revenue Commissioners may, by notice in writing given to the owner or occupier of the relevant building or relevant garden, as the case may be, in which the object is kept, revoke the determination with effect from the date on which they consider that such access or such facilities for viewing so ceased, and—

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

(ii) for the year of assessment in which this subsection ceases to apply to the object, subsection (3) shall cease to apply to any expense referred to in paragraph (a) of that subsection incurred or deemed to have been incurred by the body corporate concerned.

(3) Subject to this section, where—

(a) a body corporate incurs an expense solely in, or solely in connection with, or is deemed to incur an expense in connection with, the provision to an individual (being an individual who is employed by the body corporate in an employment to which Chapter 3 of Part 5 applies, or who is a director, within the meaning of that Chapter, of the body corporate) of a benefit or facility which consists of the loan of an art object of which the body corporate is the beneficial owner, and

(b) the object is kept in a relevant building or a relevant garden, as the case may be, owned or occupied by the individual,

then, section 436 (3) shall not apply to any such expense and section 118 (1) shall not apply to any such expense for any year of assessment for which a claim in that behalf is made by the individual to the Revenue Commissioners.

(4) (a) Where an individual makes an application under subsection (2) or a claim under subsection (3), an authorised person may at any reasonable time enter the relevant building or relevant garden concerned for the purpose of inspecting the art object to which the application or claim relates.

(b) Whenever an authorised person exercises any power conferred on him or her by this subsection, the authorised person shall on request produce his or her authorisation to any person concerned.

(c) Any person who obstructs or interferes with an authorised person in the course of exercising a power conferred on the authorised person by this subsection shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding £500.

(5) An application under subsection (2) or a claim under subsection (3)

(a) shall be made in such form as the Revenue Commissioners may from time to time prescribe, and

(b) in the case of a claim under subsection (3), shall be accompanied by such statements in writing as may be required by the prescribed form in relation to the expense in respect of which the claim is made, including statements by the body corporate which incurred the expense.

(6) Section 606 shall not apply to an object which is an art object.