Chapter 2

Income Tax

2. —As respects the year of assessment 2002 and subsequent years of assessment, section 15 of the Principal Act is amended by substituting—

(a) “€19,000” for “€13,967” in subsection (3), and

(b) the following Table for the Table to that section:

“TABLE

PART 1

PART 2

PART 3

”.

3. —(1) Where an individual is entitled under a provision of the Principal Act mentioned in column (1) of the Table to this subsection to have the income tax to be charged on the individual, other than in accordance with the provisions of section 16(2) of the Principal Act, reduced for the year of assessment 2002 or any subsequent year of assessment and the amount of the reduction would, but for this section, be an amount which is the lesser of—

(a) the amount specified in column (2) of that Table, and

(b) the amount which reduces that liability to nil,

the amount of the reduction in accordance with paragraph (a) shall be the amount of the tax credit specified in column (3) of the Table.

TABLE

(2) Section 2 of the Finance Act, 2001 , shall have effect subject to the provisions of this section.

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

4. —As respects the year of assessment 2002 and subsequent years of assessment, section 188 of the Principal Act is amended, in subsection (2), by substituting “€26,000” for “€21,586” and “€13,000” for “€10,793”.

5. —As respects the year of assessment 2002 and subsequent years of assessment, section 467 of the Principal Act is amended by substituting “€30,000” for “€12,700” in both places where it occurs.

6. —Section 477 is amended—

(a) in subsection (1), by deleting “‘specified limit’ means €195.”,

(b) in subsection (2), by deleting paragraph (b),

(c) in subsection (5)(a), by deleting “paragraph (a)(i) of” and by substituting “paragraph (c) of that subsection” for “clause (III) of that paragraph”,

(d) in subsection (6), by substituting the following for paragraph (c):

“(c) Each local authority shall, on or before 1 November each year, provide the Revenue Commissioners with a return in such computerised format as the Revenue Commissioners may require for the purposes of giving effect to the relief provided for in this section and containing, in respect of every claimant who has furnished an identifying number mentioned in subsection (4), the details specified in subparagraphs (i), (iii) and (iv) of paragraph (b).”,

and

(e) by substituting the following for subsection (7):

“(7) Where the service consists of the provision of domestic refuse collection or disposal, is provided and charged for by a person or body of persons other than a local authority, and where such person or body of persons has—

(a) notified its provision to the local authority in whose functional area such service is provided,

(b) furnished to that local authority such information as the local authority may from time to time request concerning that person or body of persons or the service provided by that person or body of persons, and

(c) given a receipt or acknowledgement to a claimant containing—

(i) the name, address and, as may be appropriate, the income tax or corporation tax reference number of the person or body of persons,

(ii) the claimant's name and address,

(iii) the amount paid, and

(iv) the financial year in respect of which the payment for the service was paid,

a claimant shall be entitled to relief, subject to this section other than subsection (6), in respect of the amount paid.

(7A) Where the service consists of the provision of domestic refuse collection or disposal, is provided by a local authority or a person or body of persons referred to in subsection (7)(a), is charged for other than by means of a specified annual charge in respect of that service, and a claimant is not entitled to make a claim for relief either under subsection (2), in respect of the provision of domestic refuse collection or disposal, or subsection (7), the claimant shall for the purposes of this section be taken to have made a payment of €195 in respect of that service and shall be entitled to relief, subject to this section other than subsections (5) and (6), in respect of such an amount.

(7B) Where a service charge is imposed in respect of the provision of a service other than a service referred to in subsections (7) and (7A), those subsections shall apply only where the claimant also qualifies for relief under this section in respect of the service charge.”.

7. —Section 126 of the Principal Act is amended by substituting the following for paragraph (b) (inserted by the Finance Act, 2001 ) of subsection (8):

“(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 in relation to unemployment benefit paid or payable, in the period commencing on 6 April 1997 and ending on 31 December 2002, to a person employed in short-time employment.”.

8. —Section 122 of the Principal Act is amended, as respects the year of assessment 2002 and subsequent years of assessment, by substituting “5 per cent” for “6 per cent” in both places where it occurs in the definition of “the specified rate” in paragraph (a) of subsection (1).

9. —As respects the year of assessment 2002 and subsequent years of assessment section 469 of the Principal Act is amended—

(a) in subsection (1)—

(i) by substituting the following for the definition of “dependant”:

“‘dependant’ in relation to an individual, means—

(a) a relative of the individual, and

(b) any other person being—

(i) an individual who, at any time during the year of assessment, is of the age of 65 years or over, or

(ii) an individual who is permanently incapacitated by reason of mental or physical infirmity,”,

(ii) in the definition of “health expenses”—

(I)  in paragraph (g), by deleting “or” after “practitioner,”, and

(II) in paragraph (h), by substituting “ambulance, or” for “ambulance,”,

(iii) in the definition of “routine ophthalmic treatment” by substituting “contact lenses;” for “contact lenses.”, and

(iv) by inserting the following definition after the definition of “qualified person”:

“‘relative’, in relation to an individual, means—

(a) husband, wife, ancestor, lineal descendant, brother or sister,

(b) mother or father of the individual's spouse,

(c) brother or sister of the individual's spouse,

(d) spouse of the individual's son or daughter, and

(e) a child, not being a child of the individual, who for the year of assessment—

(i) is in the custody of the individual and is maintained by the individual at the individual's own expense for the whole or part of the year of assessment, and

(ii)  (I) is under the age of 18 years, or

(II) if over the age of 18 years, at the commencement of the year of assessment, is receiving fulltime instruction at any university, college, school or other educational establishment;”,

and

(b) by deleting subsection (4).

10. —(1) Part 30 of the Principal Act is amended:

(a) in Chapter 1—

(i) in subsection (3) of section 772—

(I) by substituting the following for paragraph (b):

“(b) that any pension for any widow, widower, children or dependants of an employee who dies before retirement shall be a pension or pensions payable on the employee's death of an amount that does not or, as the case may be, do not in aggregate exceed any pension or pensions which, consonant with the condition in paragraph (a), could have been provided for the employee on retirement on attaining the specified age, if the employee had continued to serve until the employee attained that age at an annual rate of remuneration equal to the employee's final remuneration;”,

(II) by substituting the following for paragraph (d):

“(d) that any benefit for any widow, widower, children or dependants of an employee payable on the employee's death after retirement is a pension or pensions such that the aggregate amount of such pension or, as the case may be, pensions so payable does not exceed any pension or pensions payable to the employee;”,

and

(III) by deleting paragraph (e),

(ii) in subsection (7) of section 774, by substituting the following for paragraph (c):

“(c) The aggregate amount of annual contributions (whether ordinary annual contributions or contributions treated as ordinary annual contributions) allowed to be deducted in any year shall not exceed—

(i) in the case of an individual who at any time during the year of assessment was of the age of 30 years or over but had not attained the age of 40 years, 20 per cent,

(ii) in the case of an individual who at any time during the year of assessment was of the age of 40 years or over but had not attained the age of 50 years, 25 per cent,

(iii) in the case of an individual who at any time during the year of assessment was of the age of 50 years or over, 30 per cent, and

(iv) in any other case, 15 per cent,

of the remuneration for that year of the office or employment in respect of which the contributions are paid.”,

(iii) in subsection (2) of section 776, by substituting the following for paragraph (c):

“(c) The aggregate amount of annual contributions (whether ordinary annual contributions or contributions treated as ordinary annual contributions) allowed to be deducted in any year shall not exceed—

(i) in the case of an individual who at any time during the year of assessment was of the age of 30 years or over but had not attained the age of 40 years, 20 per cent,

(ii) in the case of an individual who at any time during the year of assessment was of the age of 40 years or over but had not attained the age of 50 years, 25 per cent,

(iii) in the case of an individual who at any time during the year of assessment was of the age of 50 years or over, 30 per cent, and

(iv) in any other case, 15 per cent,

of the remuneration for that year of the office or employment in respect of which the contributions are paid.”,

and

(iv) in section 780(5), by substituting “the standard rate in force at the time of payment” for “25 per cent”,

and

(b) in Chapter 2, by substituting the following for subsection (1) of section 784:

“(1) (a) Where an individual, being an individual referred to in paragraph (b), pays a premium or other consideration under an annuity contract for the time being approved by the Revenue Commissioners as being a contract by which the main benefit secured is, or would, but for the exercise of an option by the individual under subsection (2A), be a life annuity for the individual in his or her old age or under a contract for the time being approved under section 785 (in this Chapter referred to as a ‘qualifying premium’), relief from income tax may be given in respect of the qualifying premium under section 787.

(b) An individual referred to in this paragraph is an individual who is or was (or but for an insufficiency of profits or gains would be or would have been) for any year of assessment chargeable to tax in respect of relevant earnings from any trade, profession, office or employment carried on or held by him or her and who paid a qualifying premium in that year.”.

(2)  (a) Paragraph (a)(i) of subsection (1) applies from the passing of this Act.

(b) Paragraph (a)(iv) of subsection (1) applies to any repayment of contributions referred to in section 780 of the Principal Act which is made on or after 5 December 2001.

(c) Subsection (1) (other than paragraphs (a)(i) and (a)(iv)) applies as respects the year of assessment 2002 and subsequent years of assessment.

11. —(1) Section 128 of the Principal Act is amended—

(a) in subsection (1), by inserting the following in paragraph (a) before the definition of “company”:

“‘branch or agency’ has the same meaning as in section 4;”,

(b) in subsection (11), by substituting “31 March” for “30 June”, and

(c) by substituting the following for subsection (11A) (inserted by the Finance Act, 2000 ):

“(12) Where in relation to any right—

(a) the person referred to in subsection (11) is not resident in the State, and

(b) the person who obtains the right is a director or employee of a company which is either—

(i) resident in the State, or

(ii) not resident in the State but carries on a trade, profession or vocation in the State through a branch or agency in which the director or employee is employed,

subsection (11) shall, as regards a company referred to in paragraph (b)(i) apply to the company, and, as regards a company referred to in paragraph (b)(ii) apply to its agent, manager, factor or other representative.”.

(2)  (a) Paragraphs (a) and (c) of subsection (1) shall apply with effect from the passing of this Act.

(b) Paragraph (b) of subsection (1) applies as respects the year of assessment 2002 and subsequent years.

12. —Chapter 1 of Part 15 of the Principal Act is amended by inserting the following section after section 480:

“480A.—(1) In this section ‘basis period’, in relation to a year of assessment, means the period on the profits or gains of which income tax for the year of assessment is to be finally computed under the Income Tax Acts.

(2) Notwithstanding any other provision of the Income Tax Acts other than section 1006A, this section applies where in the year of assessment 2002 or any subsequent year of assessment an individual (in this section referred to as the ‘relevant individual’) who is resident in the State for that year of assessment and engaged in an occupation (in this section referred to as the ‘specified occupation’), or carries on a profession (in this section referred to as the ‘specified profession’), specified in Schedule 23A proves to the satisfaction of the Revenue Commissioners that he or she has in that year of assessment ceased permanently to be engaged in the specified occupation or to carry on the specified profession, as the case may be.

(3) Where this section applies, the relevant individual shall, on the making of a claim in that behalf, be entitled to have a deduction made from his or her total income for up to any 10 of the years of assessment mentioned in subsection (4).

(4) The years of assessment referred to in subsection (3) are the year of assessment in which the relevant individual ceases permanently to be engaged in the specified occupation or to carry on the specified profession, as the case may be, and any previous year of assessment not being earlier than the year of assessment 1990-91, for which the relevant individual was resident in the State.

(5) The amount of the deduction to be made under subsection (3) for any year of assessment shall be an amount equal to 40 per cent of the receipts, before deducting expenses, of the relevant individual for the basis period for that year of assessment which arose wholly and exclusively from the engagement of the relevant individual in the specified occupation or from the carrying on by the relevant individual of the specified profession, as the case may be.

(6) For the purposes of subsection (5), receipts shall be regarded as deriving wholly and exclusively from the engagement of the relevant individual in the specified occupation or from the carrying on by the relevant individual of the specified profession, as the case may be, only to the extent that such receipts derive directly from the actual participation by the relevant individual in the sport associated with the specified occupation or the specified profession, and accordingly—

(a) include—

(i) where the relevant individual is an employee, so much of all salaries, fees, wages, bonuses or perquisites paid to the relevant individual by his or her employer as a direct consequence of the participation by the relevant individual in the sport associated with the specified occupation, and

(ii) where the relevant individual carries on the specified profession, all match or performance fees, prize moneys and appearance moneys paid to the relevant individual by any other person as a direct consequence of the participation of the relevant individual in the sport associated with the specified profession,

but

(b) do not include—

(i) sponsorship moneys received by the relevant individual, or

(ii) receipts received by the relevant individual for participation in advertisements, promotions, videos or television or radio programmes, or for personal appearances or interviews, newspaper or magazine articles, or for the right to use the individual's image or name to promote or endorse products or services or in any other manner.

(7) A claim under this section shall be included in the return of income to be made by the relevant individual for the year of assessment in which the relevant individual ceases permanently to be engaged in the specified occupation, or to carry on the specified profession, as the case may be.

(8) (a) Relief from income tax under this section shall in all cases be given by means of repayment.

(b) Any repayment of income tax due under this section shall not carry interest.

(c) Relief under this section for any year of assessment shall not create or augment a loss for that year of assessment for the purposes of Chapter 1 of Part 12.

(9) A deduction given under this section for any year of assessment shall not be taken into account in determining the net relevant earnings (within the meaning of section 787) of the relevant individual for that year of assessment.

(10) Where any relief has been given to a relevant individual under this section and the relevant individual subsequently recommences to be engaged in the specified occupation or to carry on the specified profession, as the case may be, that relief shall be withdrawn by making an assessment to income tax under Case IV of Schedule D for the year of assessment for which that relief was given and, notwithstanding anything in the Income Tax Acts, such an assessment may be made at any time.”.

13. —(1) The Principal Act is amended—

(a) in section 509—

(i) in subsection (1), by substituting the following for the interpretation given to “shares”:

“‘shares’ includes stock and specified securities;

‘specified securities’ means securities (within the meaning of Schedule 12), other than ordinary shares, which—

(a) were transferred to the trustees of an approved scheme by the trustees of an employee share ownership trust to which section 519 applies, and

(b) were—

(i) securities issued to the trustees of the employee share ownership trust referred to in paragraph (a) in an exchange to which section 586 applies,

(ii) securities (in this subparagraph referred to as ‘similar securities’) similar to the securities referred to in subparagraph (i) and which were acquired by those trustees using dividends received in respect of the securities so referred to or in respect of similar securities so acquired,

(iii) securities issued to those trustees as a result of a reorganisation or reduction of share capital (in accordance with section 584) which occurred subsequent to the exchange referred to in subparagraph (i) and which securities represent the securities issued in that exchange and the similar securities (if any) referred to in subparagraph (ii), or

(iv) securities (in this subparagraph referred to as ‘similar securities’) similar to the securities first-mentioned in subparagraph (iii) and which were acquired by those trustees using dividends received in respect of the securities so mentioned in subparagraph (iii) or in respect of similar securities so acquired,

but subject to the condition that, where the company which issued the securities in the exchange referred to in paragraph (b) is a company limited by shares (within the meaning of section 5 of the Companies Act, 1963 ), the trustees of the employee share ownership trust have, as a result of the exchange, acquired such percentage of the ordinary share capital of the company which issued the securities that is not less than the percentage of the ordinary share capital of the company which the trustees held immediately prior to the exchange;”,

and

(ii) by inserting the following subsection after subsection (3):

“(4) The Revenue Commissioners may nominate any of their officers to perform any acts and discharge any functions authorised by this Chapter or by Schedule 11 to be performed or discharged by them.”,

(b) by substituting the following section for section 511A:

(c) in section 519—

(i) by substituting the following for subsection (7A):

“(7A) Where the trustees of a trust to which this section applies—

(a) sell securities on the open market, or

(b) receive a sum on the redemption of securities,

any gain accruing to such trustees shall not be a chargeable gain if, and to the extent that the proceeds of such sale or redemption, as the case may be, are used—

(i) to repay moneys borrowed by those trustees,

(ii) to pay interest on such borrowings, or

(iii) to pay a sum to the personal representatives of a deceased beneficiary.”,

(ii) by substituting the following for subsection (9)(d):

“(d) the gain accruing to the trustees of that trust from—

(i) the sale on the open market, or

(ii) the redemption,

of securities.”,

and

(iii) by substituting, in subsection (10), “securities” for “shares” in both places it occurs in paragraph (a) of the definition of “deceased beneficiary”,

(d) in Schedule 11—

(i) by deleting paragraph 7,

(ii) by substituting, in paragraph 8, “Subject to paragraph 8A, the shares shall form part of the ordinary share capital of—” for “The shares shall form part of the ordinary share capital of—”,

(iii) by substituting “concerned,” for “concerned, or” in paragraph 8(b),

(iv) by substituting “so owned, or” for “so owned.” in paragraph 8(c)(ii),

(v) by inserting the following in paragraph 8 after subparagraph (c):

“(d) a company which issued the shares to the trustees of an employee share ownership trust to which section 519 applies, in an exchange to which section 586 applies, which shares were transferred to the trustees of an approved scheme by the trustees of the employee share ownership trust.”,

(vi) by inserting the following after paragraph 8:

“8A. Any reference in subparagraph (d) of paragraph 8 to shares shall be construed as including a reference to shares which were issued to the trustees of the employee share ownership trust referred to in that subparagraph as a result of a reorganisation or reduction of share capital (in accordance with section 584) which occurred subsequent to the exchange referred to in that subparagraph and which shares represent—

(a) the shares issued in the exchange referred to in that subparagraph, or

(b) the specified securities issued in the exchange referred to in paragraph (b) of the definition of ‘specified securities’ in section 509(1).”,

(vii) by substituting “clause (a)” for “paragraph (a)” in paragraph 10(3)(b), and

(viii) by inserting the following in Part 3 after paragraph 11:

“11A. (1) Notwithstanding any other provision of this Schedule, in the case of specified securities, this Schedule shall, with any necessary modification, apply as if this paragraph were substituted for paragraphs 8 to 11.

(2) The specified securities shall be issued by—

(a) a company not under the control of another company, or

(b) a company under the control of a company (other than a company which is, or if resident in the State would be, a close company within the meaning of section 430) whose ordinary shares are quoted on a recognised stock exchange.

(3) The specified securities shall not be subject to any restrictions other than restrictions which attach to all specified securities of the same class, or a restriction authorised by subparagraph (4).

(4) Subject to subparagraphs (5) and (6), the specified securities may be subject to a restriction imposed by the company's articles of association—

(a) requiring all specified securities held by directors or employees of the company or of any other company of which it has control to be disposed of on ceasing to be so held, and

(b) requiring all specified securities acquired, in pursuance of rights or interests obtained by such directors or employees, by persons who are not, or have ceased to be, such directors or employees to be disposed of when they are acquired.

(5) A restriction is not authorised by subparagraph (4) unless—

(a) any disposal required by the restriction is to be by means of a sale for a consideration in money on terms specified in the articles of association, and

(b) the articles also contain general provisions by virtue of which any person disposing of specified securities of the same class (whether or not held or acquired as mentioned in subparagraph (4)) may be required to sell them on terms which are the same as those mentioned in clause (a).”,

and

(e) in Schedule 12—

(i) in the definition of “relevant company” in paragraph 1(1)—

(I) by deleting “or” in clause (a),

(II) by substituting “plc,” for “plc;” in clause (b), and

(III) by inserting the following after clause (b):

“(c) ACC Bank plc, or

(d) a company which acquired control of the Irish National Petroleum Corporation Limited;”,

(ii) in paragraph 13(3)(a), by inserting “or of securities to which subparagraph (ii) or (iv) of paragraph (b) of the definition of ‘specified securities’ in section 509(1) applies” after “the founding company”, and

(iii) in paragraph 15(a) by deleting—

(I) “, and the original shares the securities represent are shares in the founding company”, and

(II) “and ‘original shares’”.

(2) Subsection (1) shall apply and have effect as on and from 16 April 2001.

14. —Chapter 4 of Part 12 of the Principal Act is amended by inserting the following after section 409B:

“409C.—(1) In this section—

‘approved building’, ‘the Minister’ and ‘qualifying expenditure’ have, respectively, the meaning assigned to each of them by section 482(1)(a);

‘the claimant’ has the meaning assigned to it by section 482(2)(a);

‘eligible charity’ has the meaning assigned to it by paragraph 1 of Part 3 of Schedule 26A;

‘ownership interest’, in relation to a building, means an estate or interest in a building which would entitle the person who holds it, to make a claim under section 482 as owner of the building;

‘relevant determinations’, in relation to a building, means the determinations made by the Minister and the Revenue Commissioners, respectively, in accordance with section 482(5)(a).

(2) For purposes of this section, a scheme shall be a passive investment scheme, in relation to a building, in any case where—

(a) an ownership interest, in relation to the building, is transferred by one person (in this section referred to as the ‘transferor’) to another person (in this section referred to as the ‘transferee’),

(b) at the time of the transfer, or at any time in the period of 5 years commencing at that time, the building is an approved building, and

(c) (i) at the time of the transfer, arrangements subsist (whether express or implied and whether or not enforceable by legal proceedings) under or by virtue of which the transferor, or any person connected with the transferor (within the meaning of section 10)—

(I) may retain the right to determine how any qualifying expenditure in relation to the building is to be incurred,

(II) may obtain, whether directly or indirectly, a payment or other benefit representing any part of the value to the transferee of relief under the Tax Acts by virtue of a claim under section 482(2) in respect of qualifying expenditure in relation to the building, or

(III) may re-acquire the transferee's ownership interest (referred to in paragraph (a)),

or

(ii) the transfer is made for the sole or main purpose of facilitating a claim by the transferee under section 482(2).

(3) This section applies where—

(a) by virtue of subsection (2) of section 482, qualifying expenditure in relation to an approved building is treated as a loss sustained in a trade carried on by a claimant, as owner of the building, in a chargeable period (referred to in paragraph (b)(i) of that subsection),

(b) the claimant is an individual who is a transferee, and

(c) relief is claimed under section 381 in respect of the loss referred to in paragraph (a).

(4) Where this section applies, the amount of the loss referred to in subsection (3)(a) which can be treated as reducing income for a year of assessment under section 381(1) shall be—

(a) the full amount of the loss, or

(b) €31,750,

whichever is the lesser.

(5) Where by virtue of subsection (4) relief cannot be given for a year of assessment for part of the loss referred to in subsection (3)(a), then for the purposes of section 482(3) such relief shall be treated as not being given owing to an insufficiency of income.

(6) This section shall not apply—

(a) to qualifying expenditure, in relation to an approved building, incurred before 5 December 2001,

(b) to qualifying expenditure, in relation to an approved building, incurred on or after 5 December 2001 and before 31 December 2003, where the relevant determinations have been made in relation to that building before 5 December 2001,

(c) to qualifying expenditure, incurred before 31 December 2003, in relation to a building, in respect of which—

(i) the Revenue Commissioners have, before 5 December 2001, indicated in writing, that proposals made to them are broadly acceptable, so as to enable them to make a determination under section 482(5)(a), and

(ii) an officer of the Department of Arts, Heritage, Gaeltacht and the Islands has, before 5 December 2001, indicated in writing that, having inspected the building, the officer is satisfied that, if required, the officer would recommend to the Minister that a determination under section 482(5)(a) be made by the Minister, or

(d) to qualifying expenditure, incurred before 31 December 2003, in relation to a building where—

(i) the Minister has made a determination under section 482(5)(a) before 5 December 2001, in relation to the building, and

(ii) the claimant has undertaken to gift, whether directly or indirectly, to the transferor, who is an eligible charity, the full value of the relief to which the individual is entitled under the Tax Acts by virtue of making a claim under section 482(2), and the individual does so.”.

15. —As respects the year of assessment 2002 and subsequent years of assessment, paragraph 8 of Schedule 3 to the Principal Act is amended—

(a) by substituting “in the previous 10 years of assessment” for “previously”, and

(b) by substituting “€10,000” for “€5,080” in both places where it occurs.