Chapter 2

Income Tax

2. —As respects the year of assessment 1998-99 and subsequent years of assessment, the Principal Act is hereby amended—

(a) in section 187, by the substitution, in subsection (1), of “£8,200” and “£4,100”, respectively, for “£8,000” and “£4,000”, and

(b) in section 188, by the substitution, in subsection (2)—

(i) of “£10,000” and “£11,000”, respectively, for “£9,200” and “£10,400”, in paragraph (a), and

(ii) of “£5,000” and “£5,500”, respectively, for “£4,600” and “£5,200”, in paragraph (b),

and those subsections, as so amended, are set out in the Table to this section.

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(1) In this section, “the specified amount” means, subject to subsection (2)—

(a) in a case where the individual would apart from this section be entitled to a deduction specified in section 461(a), £8,200, and

(b) in any other case, £4,100.

(2) In this section, “the specified amount” means, subject to section 187(2)—

(a) in a case where the individual would apart from this section be entitled to a deduction specified in section 461(a), £10,000; but, if at any time during the year of assessment either the individual or the spouse of the individual was of the age of 75 years or over, “the specified amount” means £11,000, and

(b) in any other case, £5,000; but, if at any time during the year of assessment the individual was of the age of 75 years or over, “the specified amount” means £5,500.

3. — Section 15 of the Principal Act is hereby amended, as respects the year of assessment 1998-99 and subsequent years of assessment, by the substitution of the following Table for the Table to that section:

“TABLE

PART 1

PART 2

”

4. —(1) Where a deduction falls to be made from the total income of an individual for the year of assessment 1998-99 or any subsequent year of assessment in respect of relief to which the individual is entitled under a provision mentioned in column (1) of the Table to this subsection and the amount of the deduction would, but for this section, be an amount specified in column (2) of the said Table, the amount of the deduction shall, in lieu of being the amount specified in the said column (2), be the amount specified in column (3) of the said Table opposite the mention of the amount in the said column (2).

(2) Schedule 1 shall apply for the purpose of supplementing subsection (1).

5. —As respects the year of assessment 1998-99 and subsequent years of assessment, section 463 of the Principal Act is hereby amended by the substitution of the following subsection for subsection (2):

“(2) Where a claimant proves, in relation to any of the 5 years of assessment immediately following the year of assessment in which the claimant's spouse dies, that—

(a) he or she has not remarried before the commencement of the year, and

(b) a qualifying child is resident with him or her for the whole or part of the year,

the claimant shall, in respect of each of the years in relation to which the claimant so proves, be entitled, in computing the amount of his or her taxable income, to have a deduction made from his or her total income as follows—

(i) for the first of those 5 years, £5,000,

(ii) for the second of those 5 years, £4,000,

(iii) for the third of those 5 years, £3,000,

(iv) for the fourth of those 5 years, £2,000, and

(v) for the fifth of those 5 years, £1,000;

but this section shall not apply for any year of assessment in the case of a man and woman living together as man and wife.”.

6. — Section 126 of the Principal Act is hereby amended by the substitution, in subsection (8), of the following for paragraph (b):

“(b) Notwithstanding subsection (3) and the Finance Act, 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order, 1994 (S.I. No. 19 of 1994), subsection (3)(b) shall not apply as respects the years of assessment 1997-98 and 1998-99 in relation to unemployment benefit paid or payable to a person employed in short-time employment.”.

7. —Schedule 32 to the Principal Act is hereby amended, in subparagraph (1) of paragraph 27, by the substitution of “6th day of April, 2000” for “6th day of April, 1998” and that subparagraph, as so amended, is set out in the Table to this section.

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(1) Where—

(a) the conditions set out in subparagraph (3) are satisfied, and

(b) the Revenue Commissioners are satisfied that the application of the amendments to section 439 of the Income Tax Act, 1967 , effected by subsections (1) and (2) of section 13 of the Finance Act, 1995 , which subsections are re-enacted in subsections (1) and (2) of section 792, would give rise to hardship,

then, those amendments shall not, to the extent that the Revenue Commissioners consider just, apply before the 6th day of April, 2000, in respect of a disposition, to which clause (a) of subparagraph (2) applies, by a person (in this paragraph referred to as “the disponer”), in so far as, by virtue or in consequence of such disposition, income is payable in a year of assessment to or for the benefit of an individual to whom clause (b) of subparagraph (2) applies, and accordingly, notwithstanding that section 439 of the Income Tax Act, 1967 , as it stood before its amendment by subsections (1) and (2) of section 13 of the Finance Act, 1995 , is not re-enacted by this Act, this Act shall apply with any modifications necessary to give effect to this paragraph.

8. —As respects the year 1998-99 and subsequent years of assessment, section 66 of the Principal Act is hereby amended by the substitution of the following for subsection (2):

“(2) Any person chargeable with income tax in respect of the profits or gains of any trade or profession which has been set up and commenced within one year preceding the year of assessment shall be charged—

(a) if only one account was made up to a date within the year of assessment and that account was for a period of one year, on the full amount of the profits or gains of the year ending on that date,

(b) if—

(i) an account, other than an account to which paragraph (a) applies, was made up to a date in the year of assessment or more accounts than one were made up to dates in the year of assessment, and

(ii) the trade or profession was set up and commenced not less than 12 months before the first-mentioned date in subparagraph (i) or, as the case may be, the last of the second-mentioned dates in that subparagraph,

on the full amount of the profits or gains of the year ending on that first-mentioned date or, as the case may be, the last of those second-mentioned dates, or

(c) in any other case, on the full amount of the profits or gains of the year of assessment.”.

9. —(1) Section 191 of the Principal Act is hereby amended by the substitution of the following for subsections (1) and (2):

“(1) In this section—

‘the Act’ means the Hepatitis C Compensation Tribunal Act, 1997 ;

‘the Tribunal’ means the Tribunal known as the Hepatitis C Compensation Tribunal established under section 3 of the Act.

(2) This section shall apply to any payment in respect of compensation—

(a) by the Tribunal in accordance with the Act, or

(b) following the institution by or on behalf of a person of a civil action for damages in respect of personal injury,

to a person referred to—

(i) in subsection (1) of section 4 of the Act, in respect of matters referred to in that section, or

(ii) in any regulations made under section 9 of the Act, in respect of matters referred to in those regulations.”.

(2) This section shall apply as on and from the 1st day of November, 1997.

10. — Section 202 of the Principal Act is hereby amended–

(a) in subsection (1)—

(i) by the substitution in paragraph (a) of the following definition for the definition of “relevant agreement”:

“‘relevant agreement’, in relation to a qualifying company, means a collective agreement—

(a) that applies to—

(i) more than 50 per cent of the total number of qualifying employees of the company, or

(ii) more than 75 per cent of a bona fide class or classes of qualifying employees of the company if the number of participating employees in the class or classes, as the case may be, comprises at least 25 per cent of the total number of qualifying employees of the company,

(b) that provides amongst other things for—

(i) a substantial reduction in the basic pay of the participating employees to which it relates,

(ii) the payment of the reduced basic pay to the participating employees to which it relates for the duration of the relevant period, and

(iii) the payment to them of a lump sum to compensate for that reduction,

and

(c) that is registered with the Labour Relations Commission;”,

and

(ii) by the addition of the following paragraph after paragraph (b):

“(c) In determining for the purposes of the definition of ‘relevant agreement’ whether qualifying employees of a qualifying company are comprised in a bona fide class or classes, as the case may be, regard shall be had to matters such as common work practices, skills, established collective bargaining arrangements and the organisational structure and arrangements within the company.”,

and

(b) in subsection (2), by the substitution in paragraph (b) of the following subparagraphs for subparagraphs (i) and (ii):

“(i) the company is confronted with a substantial adverse change to its competitive environment which will determine its current or continued viability,

(ii) to accommodate that change and maintain its viability, it is necessary for it to enter into a relevant agreement with its qualifying employees, and”.

11. —(1) Section 479 of the Principal Act is hereby amended—

(a) in subsection (1)(a), by the substitution, in paragraph (ii) of the definition of “eligible shares”, of “the period of 3 years” for “the period of 5 years”,

(b) in subsection (3)—

(i) by the substitution of “the period of 3 years” for “the period of 5 years”, and

(ii) by the deletion of the words from “; but” to the end of the subsection,

and

(c) by the substitution of the following subsection for subsection (5)—

“(5) In relation to shares in respect of which relief has been given under subsection (2) and not withdrawn, any question—

(a) as to which (if any) such shares issued to an eligible employee at different times a disposal relates, or

(b) as to whether a disposal relates to such shares or to other shares,

shall for the purposes of this section be determined as it would be determined for the purposes of section 498 but without regard to the reference in subsection (4) (as amended by the Finance Act, 1998) of that section to subsection (3) of this section.”,

and the said paragraph (ii) and the said subsection (3), as so amended, are set out in the Table to this section.

(2) This section shall come into operation on the 12th day of February, 1998.

TABLE

(ii) throughout the period of 3 years beginning with the date on which they are issued, carry no present or future preferential right to dividends or to the company's assets on its winding up and no present or future preferential right to be redeemed,

(3) Subsection (2) shall not apply as respects any amount subscribed for eligible shares if within the period of 3 years from the date of their acquisition—

(a) those shares are disposed of, or

(b) the eligible employee who made the subscription receives in respect of those shares any money or money's worth which does not constitute income in his or her hands for the purpose of income tax,

and there shall be made all such assessments, additional assessments or adjustments of assessments as are necessary to withdraw any relief from income tax already given under subsection (2) in respect of the amount subscribed.

12. —(1) Chapter 1 of Part 33 of the Principal Act is hereby amended—

(a) in section 806—

(i) in subsection (3), by the substitution of “individuals resident or ordinarily resident in the State” for “individuals ordinarily resident in the State”, and

(ii) by the insertion of the following after subsection (5):

“(5A) Nothing in subsection (3) shall be taken to imply that the provisions of subsections (4) and (5) apply only if—

(a) the individual in question was resident or ordinarily resident in the State at the time when the transfer was made, or

(b) the avoidance of liability to income tax is the purpose, or one of the purposes, for which the transfer was effected.”,

and

(b) in section 808, in paragraph (a) of subsection (4), by the substitution of “an individual resident or ordinarily resident in the State” for “an individual ordinarily resident in the State”.

(2) This section shall apply irrespective of when the transfer or associated operations took place but shall apply only to income arising on or after the 12th day of February, 1998.

13. —The Principal Act is hereby amended by the insertion in Part 34 of the following section after section 825:

“Reduction in income tax for certain income earned outside the State.

825A.—(1) In this section—

‘authorised officer’ has the same meaning as in section 818;

‘proprietary director’ has the same meaning as in section 472;

‘qualifying employment’, in relation to a year of assessment, means an office (including an office of director of a company which would be within the charge to corporation tax if it were resident in the State, and which carries on a trade or profession) or employment which is held—

(a) outside the State in a territory with the Government of which arrangements are for the time being in force by virtue of section 826, and

(b) for a continuous period of not less than 13 weeks, but excluding any such office or employment—

(i) the emoluments of which are paid out of the revenue of the State,

(ii) with any board, authority or other similar body established in the State by or under statute;

‘the specified amount’ in relation to an individual means, as respects the year of assessment concerned, the amount of tax for that year determined by the formula—

where—

A is the amount of tax which, apart from this section, would be chargeable on the individual for that year of assessment, other than tax charged in accordance with section 16(2), and after taking account of any such reductions in tax as are specified in the provisions referred to in Part 2 of the Table to section 458 but before credit for any foreign tax paid on any income, profits or gains assessed for that year,

B is the total income of the individual for that year but excluding any income, profits or gains from a qualifying employment for that year,

C is the total income of the individual for that year.

(2) This section shall not apply in any case where the income, profits or gains from a qualifying employment are—

(a) chargeable to tax in accordance with section 71(3),

(b) income, profits or gains to which section 822 applies, or

(c) income, profits or gains paid to a proprietary director or to the spouse of that person by a company of which that person is a proprietary director.

(3) Where for any year of assessment an individual resident in the State makes a claim in that behalf to an authorised officer and satisfies that officer that—

(a) he or she is in receipt of income, profits or gains from a qualifying employment,

(b) the duties of that qualifying employment are performed wholly outside the State in a territory, or territories, with the Government or Governments of which arrangements are for the time being in force by virtue of section 826,

(c) the full amount of the income, profits or gains from that qualifying employment is, under the laws of the territory in which the qualifying employment is held or of the territory or territories in which the duties of the qualifying employment are performed, subject to, and not exempt or otherwise relieved from, the charge to tax,

(d) the foreign tax due on that income, profits or gains from that qualifying employment has been paid and not repaid or entitled to be repaid, and

(e) during any week in which he or she is absent from the State for the purposes of the performance of the duties of the qualifying employment, he or she is present in the State for at least one day in that week,

he or she shall, where the amount of tax payable in respect of his or her total income for that year would, but for this section, exceed the specified amount, be entitled to have the amount of tax payable reduced to the specified amount.

(4) In determining for the purposes of paragraph (b) of subsection (3) whether the duties of a qualifying employment are exercised outside the State, any duties performed in the State, the performance of which is merely incidental to the performance of the duties of the qualifying employment outside the State, shall be treated for the purposes of this section as having been performed outside the State.

(5) This section shall not apply in any case where the income, profits or gains of a qualifying employment are the subject of a claim for relief under—

(a) section 472B, or

(b) section 823.

(6) Where in any case an individual has the tax payable in respect of his or her total income for a year of assessment reduced in accordance with subsection (3), that individual shall, notwithstanding anything in Part 35, not be entitled to a credit for foreign tax paid on the income, profits or gains from a qualifying employment in that year.

(7) For the purposes of this section, an individual shall be deemed to be present in the State for a day if the individual is present in the State at the end of the day.

(8) Notwithstanding anything in the Tax Acts, the income, profits or gains from a qualifying employment shall for the purposes of this section be deemed not to include any amounts paid in respect of expenses incurred wholly, exclusively and necessarily in the performance of the duties of the qualifying employment.”.

14. —(1) The Principal Act is hereby amended—

(a) in section 458 by the insertion in Part 1 of the Table to that section after “Section 472A” (inserted by this Act) of “Section 472B”,

(b) in Chapter 1 of Part 15 by the insertion after section 472A (inserted by this Act) of the following section:

“Seafarer allowance, etc.

472B.—(1) In this section—

‘authorised officer’ has the same meaning as in section 818;

‘employment’ means an office or employment of profit such that any emoluments of the office or employment of profit are to be charged to tax under Schedule D or Schedule E;

‘international voyage’ means a voyage beginning or ending in a port outside the State;

‘Member State’ means a member state of the European Communities;

‘Member State's Register’ shall be construed in accordance with the Annex to the Official Journal of the European Communities (No. C205) of the 5th day of July, 1997;

‘qualifying employment’ means an employment, being an employment to which this section applies, the duties of which are performed wholly on board a sea-going ship on an international voyage;

‘qualifying individual’ means an individual who—

(a) holds a qualifying employment, and

(b) has entered into an agreement (known as ‘articles of agreement’) with the master of that ship;

‘sea-going ship’ means a ship which—

(a) is registered in a Member State's Register, and

(b) is used solely for the trade of carrying by sea passengers or cargo for reward,

but does not include a fishing vessel.

(2) For the purposes of this section—

(a) an individual shall be deemed to be absent from the State for a day if the individual is absent from the State at the end of the day, and

(b) a port outside the State shall be deemed to include a mobile or fixed rig, platform or installation of any kind in any maritime area other than an area designated by order under section 2 of the Continental Shelf Act, 1968 .

(3) (a) Subject to paragraph (b), this section shall apply to an employment other than—

(i) an employment the emoluments of which are paid out of the revenue of the State, or

(ii) an employment with any board, authority or other similar body established in the State by or under statute.

(b) This section shall not apply in any case where the income from an employment—

(i) is chargeable to tax in accordance with section 71(3), or

(ii) is income to which section 822 applies.

(4) Where for any year of assessment an individual resident in the State makes a claim in that behalf to an authorised officer and satisfies that officer that he or she is a qualifying individual and that he or she was absent from the State for at least 169 days, or such greater number of days as the Minister for Finance, after consultation with the Minister for the Marine and Natural Resources, may from time to time, by order made for the purposes of this subsection, substitute for that number of days (or, as the case may be, for the number of days substituted by the last previous order under this subsection), in that year for the purposes of performing the duties of a qualifying employment, he or she shall be entitled, in computing the amount of his or her taxable income, to have a deduction of £5,000 made from so much, if any, of his or her total income as is attributable to the income, profits or gains from the qualifying employment.

(5) Where, for a year of assessment, an individual claims a deduction under this section, he or she shall not be entitled to a deduction under section 823.

(6) For the purposes of the definition of ‘qualifying employment’ in this section, any duties of the employment not performed on board a sea-going ship on an international voyage, the performance of which is merely incidental to the performance of the duties of the employment on board a sea-going ship on an international voyage, shall be treated for the purposes of that definition as having been performed on board the sea-going ship.”,

(c) by the insertion in section 823 of the following subsection after subsection (2):

“(2A) (a) In this subsection, ‘qualifying employment’, ‘qualifying individual’ and ‘sea-going ship’ have the same meanings, respectively, as in section 472B.

(b) Where in any period of at least 14 consecutive days in which a qualifying individual is absent from the State for the purposes of the performance of the duties of a qualifying employment, the sea-going ship on which he or she, in that period, performs those duties—

(i) visits a port in the United Kingdom, and

(ii) also visits a port other than a port in the State or in the United Kingdom,

then subparagraph (ii) of subsection (2)(b) shall not apply to the income, profits or gains from the qualifying employment for such period.”,

and

(d) by the substitution in section 1024(2)(a)(viii) of “sections 472, 472A and 472B” for “section 472”.

(2) Paragraph (b) of subsection (1) shall come into operation on such day as the Minister for Finance may, by order, appoint.

15. —(1) The Principal Act is hereby amended in Chapter 4 of Part 5 by the insertion of the following section after section 122:

“122A.—(1) In this section—

‘acquisition’, in relation to shares, includes receipt by way of allotment or assignment;

‘connected person’ has the same meaning as in section 10;

‘emoluments’ has the same meaning as in section 113;

‘employee’ and ‘employer’ have the same meanings, respectively, assigned to them by section 122;

‘employment’ has the same meaning as in section 121;

‘market value’ shall be construed in accordance with section 548;

‘preferential loan’ has the same meaning as in section 122;

‘shares’ includes securities within the meaning of section 135 and stock.

(2) Where an employee, or a person connected with him or her, acquires shares in a company (whether the employing company or not) and those shares are acquired at an under-value in pursuance of a right or opportunity available by reason of his or her employment, he or she shall be deemed to have the benefit of a loan on which no interest is payable (in this section referred to as the ‘notional loan’) made directly or indirectly to him or her by a person who at the time the loan is made is, or who at a time subsequent to the making of the loan becomes, an employer in relation to the individual and such notional loan shall be deemed to be a preferential loan to which section 122 applies.

(3) This section shall apply, subject to Chapter 1 of Part 17, for a year of assessment in which an individual has, in accordance with subsection (2), a notional loan and in this section—

(a) references to shares being acquired at an under-value are references to shares being acquired either without payment for them at the time or being acquired for an amount then paid which is less than the market value of fully paid-up shares of that class (in either case with or without obligation to make payment or further payment at some later time), and

(b) any reference, in relation to any shares, to the under-value on acquisition is a reference to the market value of fully paid-up shares of that class less any payment then made for the shares.

(4) The amount initially outstanding of the notional loan shall be so much of the under-value on acquisition as is not chargeable to tax as an emolument of the employee, and—

(a) the loan shall remain outstanding until terminated under subsection (5), and

(b) payments or further payments made for the shares after the initial acquisition shall go to reduce the amount outstanding of the notional loan.

(5) The notional loan shall terminate on the occurrence of any of the following events—

(a) the whole amount of it outstanding is made good by means of payments or further payments made for the shares;

(b) the case being one in which the shares were not at the time of acquisition fully paid up, any outstanding or contingent obligation to pay for them is released, transferred or adjusted so as no longer to bind the employee or any person connected with him or her;

(c) the shares are so disposed of by surrender or otherwise that neither he nor she nor any such person any longer has a beneficial interest in the shares;

(d) the employee dies.

(6) If the notional loan terminates in a manner referred to in subsection (5) (b) or (c), the provisions of section 122(3) shall apply as if an amount equal to the then outstanding amount of the notional loan had been released or written off from a loan within that section.

(7) Where shares are acquired, whether or not at an under-value but otherwise as mentioned in subsection (2), and—

(a) the shares are subsequently disposed of by surrender or otherwise so that neither the employee nor any person connected with him or her any longer has a beneficial interest in them, and

(b) the disposal is for a consideration which exceeds the then market value of the shares,

then, for the year in which the disposal is effected, the outstanding amount of the excess shall be treated as emoluments of the employee's employment and accordingly chargeable to income tax under Schedule D or Schedule E.

(8) If at the time of the event giving rise to a charge by virtue of subsection (6) the employment in question has terminated, that subsection shall apply as if it had not.

(9) No charge arises under subsection (6) by reference to any disposal effected after the death of the employee, whether by his or her personal representatives or otherwise.

(10) This section applies in relation to acquisition and disposal of an interest in shares less than full beneficial ownership (including an interest in the proceeds of sale of part of the shares but not including a share option) as it applies in relation to the acquisition and disposal of shares, subject to the following:

(a) reference to the shares acquired shall be construed as reference to the interest in shares acquired,

(b) reference to the market value of the shares acquired shall be construed as reference to the proportion corresponding to the size of the interest of the market value of the shares in which the interest subsists,

(c) reference to shares of the same class as those acquired shall be construed as reference to shares of the same class as those in which the interest subsists,

(d) reference to the market value of fully paid-up shares of that class shall be construed as reference to the proportion of that value corresponding to the size of the interest.

(11) In this section, any reference to payment for shares includes giving any consideration in money or money's worth or making any subscription, whether in pursuance of a legal liability or not.”.

(2) Section 122A, as inserted by this section, shall apply—

(a) as regards subsection (2) thereof, as on and from the 4th day of March, 1998, as respects shares acquired (whether before or after that date); but where the shares were acquired before that date, the notional loan referred to in that subsection shall be deemed to have been made on the 4th day of March, 1998, in an amount equal to the amount of that loan outstanding at that date,

(b) as regards subsection (6) thereof, in respect of the termination of a loan on or after the 4th day of March, 1998, and

(c) as regards subsection (7) thereof, in respect of a disposal made on or after the 4th day of March, 1998.