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TAXES CONSOLIDATION ACT, 1997
Annual Payments, Charges and Interest
Annual payments payable wholly out of taxed income.
[ITA67 s433; FA69 s33 and Sch4 PtI; FA74 s5(1); CTA76 s164 and Sch4 PtI; FA89 s89(1); FA96 s132(1) and Sch5 PtI par1(19)]
237. —(1) Where any annuity or any other annual payment apart from yearly interest of money (whether payable in or outside the State, either as a charge on any property of the person paying the same by virtue of any deed or will or otherwise, or as a reservation thereout, or as a personal debt or obligation by virtue of any contract, or whether payable half-yearly or at any shorter or more distant periods), is payable wholly out of profits or gains brought into charge to income tax—
(a) the whole of those profits or gains shall be assessed and charged with income tax on the person liable to the annuity or annual payment, without distinguishing the same,
(b) the person liable to make such payment, whether out of the profits or gains charged with tax or out of any annual payment liable to deduction, or from which a deduction has been made, shall be entitled on making such payment to deduct and retain out of such payment a sum representing the amount of the income tax on such payment at the standard rate of income tax for the year in which the amount payable becomes due,
(c) the person to whom such payment is made shall allow such deduction on the receipt of the residue of such payment, and
(d) the person making such deduction shall be acquitted and discharged of so much money as is represented by the deduction as if that sum had been actually paid.
(2) Where any royalty or other sum is paid in respect of the user of a patent wholly out of profits or gains brought into charge to income tax, the person paying the royalty or other sum shall be entitled on making the payment to deduct and retain out of the payment a sum representing the amount of income tax on the payment at the standard rate of income tax for the year in which the royalty or other sum payable becomes due.
(3) This section shall not apply to any rents or other sums in respect of which the person entitled to them is chargeable to tax under Case V of Schedule D or would be so chargeable but for any exemption from tax.
Annual payments not payable out of taxed income.
[ITA67 s434(1) to (5A) and (8); FA69 s33 and Sch4; FA74 s11 and Sch1 PtII; CTA76 s151(14); FA90 s51(3); FA96 s132(1) and Sch5 PtI par1(20)]
238. —(1) In this section, “the inspector” means such inspector as the Revenue Commissioners may direct.
(2) On payment of any annuity or other annual payment (apart from yearly interest of money) charged with tax under Schedule D, or of any royalty or other sum paid in respect of the user of a patent, not payable or not wholly payable out of profits or gains brought into charge, the person by or through whom any such payment is made shall deduct out of such payment a sum representing the amount of the income tax on such payment at the standard rate of tax in force at the time of the payment.
(3) Where any such payment is made by or through any person, that person shall forthwith deliver to the Revenue Commissioners an account of the payment, or of so much of the payment as is not made out of profits or gains brought into charge, and of the income tax deducted out of the payment or out of that part of the payment, and the inspector shall assess and charge the payment of which an account is so delivered on that person.
(4) The inspector may, where any person has made default in delivering an account required by this section, or where he or she is not satisfied with the account so delivered, make an assessment according to the best of his or her judgment.
(5) The provisions of the Income Tax Acts relating to—
(a) persons who are to be chargeable with income tax,
(b) income tax assessments,
(c) appeals against such assessments,
(d) the collection and recovery of income tax,
(e) the rehearing of appeals, and
(f) cases to be stated for the opinion of the High Court,
shall, in so far as they are applicable, apply to the charge, assessment, collection and recovery of income tax under this section.
(6) Subsections (3) to (5) shall apply subject to sections 239 and 241 with respect to the time and manner in which certain companies resident in the State are to account for and pay income tax in respect of—
(a) payments from which tax is deductible, and
(b) any amount deemed to be an annual payment.
(7) Except where provided by section 1041 (1), this section shall not apply to any rents or other sums in respect of which the person entitled to them is chargeable to tax under Case V of Schedule D or would be so chargeable but for any exemption from tax.
Income tax on payments by resident companies.
[CTA76 s151(1) to (13) (apart from subsection (8)(c)); FA90 s49]
239. —(1) In this section, “relevant payment” means—
(a) any payment from which income tax is deductible and to which subsections (3) to (5) of section 238 apply, and
(b) any amount which under section 438 is deemed to be an annual payment.
(2) This section shall apply for the purpose of regulating the time and manner in which companies resident in the State—
(a) are to account for and pay income tax in respect of relevant payments, and
(b) are to be repaid income tax in respect of payments received by them.
(3) A company shall make for each of its accounting periods in accordance with this section a return to the inspector of the relevant payments made by it in that period and of the income tax for which the company is accountable in respect of those payments.
(4) A return for any period for which a return is required to be made under this section shall be made within 9 months from the end of that period.
(5) Income tax in respect of any payment required to be included in a return under this section shall be due at the time by which preliminary tax (if any) for the accounting period for which the return is required to be made under subsection (3) is due and payable, and income tax so due shall be payable by the company without the making of any assessment; but income tax which has become so due may be assessed on the company (whether or not it has been paid when the assessment is made).
(6) Where it appears to the inspector that there is a relevant payment which ought to have been but has not been included in a return, or where the inspector is dissatisfied with any return, the inspector may make an assessment on the company to the best of his or her judgment, and any income tax due under an assessment made by virtue of this subsection shall be treated for the purposes of interest on unpaid tax as having been payable at the time when it would have been payable if a correct return had been made.
(7) Where in any accounting period a company receives any payment on which it bears income tax by deduction, the company may claim to have the income tax on that payment set against any income tax which it is liable to pay under this section in respect of payments made by it in that period, and any such claim shall be included in the return made under subsection (3) for the accounting period in question, and (where necessary) income tax paid by the company under this section for that accounting period and before the claim is allowed shall be repaid accordingly.
(8) (a) Where a claim has been made under subsection (7), no proceedings for collecting tax which would be discharged if the claim were allowed shall be instituted pending the final determination of the claim, but this subsection shall not affect the date when the tax is due, and when the claim is finally determined any tax underpaid in consequence of this subsection shall be paid.
(b) Where proceedings are instituted for collecting tax assessed, or interest on tax assessed, under subsection (5) or (6), effect shall not be given to any claim under subsection (7) made after the institution of the proceedings so as to affect or delay the collection or recovery of the tax charged by the assessment or of interest on that tax.
(9) Income tax set against other tax under subsection (7) shall be treated as paid or repaid, as the case may be, and the same tax shall not be taken into account both under this subsection and under section 24 (2).
(10) (a) Where a company makes a relevant payment on a date which does not fall within an accounting period, the company shall make a return of that payment within 6 months from that date, and the income tax for which the company is accountable in respect of that payment shall be due at the time by which the return is to be made.
(b) Any assessment in respect of tax payable under this subsection shall be treated as relating to the year of assessment in which the payment is made.
(c) Subsection (11) shall not apply to an assessment under this subsection.
(11) (a) Subject to subsection (10)(b), income tax payable (after income tax borne by the company by deduction has been set, by virtue of any claim under subsection (7), against income tax which it is liable to pay under subsection (5)) in respect of relevant payments in an accounting period shall, for the purposes of the charge, assessment, collection and recovery from the company making the payments of that tax and of any interest or penalties on that tax, be treated and described as corporation tax payable by that company for that accounting period, notwithstanding that for all other purposes of the Tax Acts it is income tax.
(b) Tax paid by a company which is treated as corporation tax by virtue of this subsection shall be repaid to the company if it would have been so repaid under subsection (7) had it been treated as income tax paid by the company.
(c) Any tax assessable under one or more of the provisions of this section may be included in one assessment if the tax so included is all due on the same date.
(12) Nothing in this section shall be taken to prejudice any powers conferred by the Tax Acts for the recovery of tax by means of an assessment or otherwise.
(13) (a) The Revenue Commissioners may, by regulations made for the purposes mentioned in subsection (2), modify, supplement or replace any of the provisions of this section, and references in the Corporation Tax Acts and in any other enactment to this section shall be construed as including references to any such regulations and, without prejudice to the generality of the foregoing, such regulations may, in relation to tax charged by this section, modify any provision of the Tax Acts relating to returns, assessments, claims or appeals, or may apply any such provision with or without modification.
(b) Regulations under this subsection may—
(i) make different provision for different descriptions of companies and for different circumstances, and may authorise the Revenue Commissioners, where in their opinion there are special circumstances justifying it, to make special arrangements as respects income tax for which a company is liable to account or the repayment of income tax borne by a company;
(ii) include such transitional and other supplemental provisions as appear to the Revenue Commissioners to be expedient or necessary.
(c) Every regulation made under this subsection shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.
Provisions as to tax under section 239 .
[CTA76 s152; FA78 s46(1)(f), (2) and (3); FA81 s22; FA90 s50; FA97 s146(2) and Sch9 PtII]
240. —(1) Subsections (2) to (4) shall apply only in respect of a company to which section 239 (10) relates.
(2) The provisions of the Income Tax Acts relating to—
(a) persons who are to be chargeable to income tax,
(b) income tax assessments,
(c) appeals against such assessments (including the rehearing of appeals and the statement of a case for the opinion of the High Court), and
(d) the collection and recovery of income tax,
shall, in so far as they are applicable, apply to the charge, assessment, collection and recovery of income tax under section 239 .
(3) (a) Any tax payable in accordance with section 239 without the making of an assessment shall carry interest at the rate of 1.25 per cent for each month or part of a month from the date when the tax becomes due and payable until payment.
Income tax on payments by non-resident companies.
[FA90 s51(1) and (2)]
241. —(1) This section shall apply in relation to an accounting period of a company not resident in the State if the company is—
(a) required by virtue of section 238 (3) to deliver an account to the Revenue Commissioners, and
(b) within the charge to corporation tax in respect of the accounting period.
(2) Where this section applies in relation to an accounting period of a company, then—
(a) the company shall make a return to the inspector of—
(i) payments made by the company in the accounting period and in respect of which income tax is required to be deducted by virtue of section 238 (2), and
(ii) the tax deducted out of those payments by virtue of section 238 (2),
(b) income tax in respect of which a return is to be made under paragraph (a) shall, for the purposes of the charge, assessment, collection and recovery from the company making the payments of that tax and of any interest or penalties on that tax, be treated as if it were corporation tax chargeable for the accounting period for which the return is required under paragraph (a).
Annual payments for non-taxable consideration.
242. —(1) This section shall apply to any payment which is—
(a) an annuity or other annual payment charged with tax under Case III of Schedule D, other than—
(ii) an annuity granted in the ordinary course of a business of granting annuities, or
(iii) a payment made to an individual under a liability incurred in consideration of the individual surrendering, assigning or releasing an interest in settled property to or in favour of a person having a subsequent interest,
(b) made under a liability incurred for consideration in money or money's worth, where all or any part of such consideration is not required to be taken into account in computing for the purposes of income tax or corporation tax the income of the person making the payment.
(2) Any payment to which this section applies—
(a) shall be made without deduction of income tax,
(b) shall not be allowed as a deduction in computing the income or total income of the person by whom it is made, and
(c) shall not be a charge on income for the purposes of corporation tax.