(3)Where in any year of assessment the profits or gains from which a deduction may be made under this section come into computation, but owing to the time at which the amount of the corporation profits tax became ascertained it was impracticable to give effect to the deduction when assessing income tax, the amount by which that tax would have been reduced if effect had been given to the deduction shall be deducted from the amount payable for corporation profits tax or, if there is no corporation profits tax, shall be repaid to the company.
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Exclusion of annual value of property.
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65.—(1) The computation of tax shall be made exclusive of the annual value of property occupied for the purpose of the trade or profession and separately assessed and charged under Schedule A.
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(2)Where any lands, tenements, hereditaments or other premises of whatsoever description used for the purpose of any trade or profession are situate outside the State, no deduction or set-off shall, in estimating the amount of annual profits or gains arising or accruing from that trade or profession, in any manner be allowed on account or in respect of the annual value of those premises.
\n
(3)Where, in estimating the amount of annual profits or gains arising or accruing from any trade or profession and chargeable to tax under this Schedule, any sum is deducted on account of the annual value of the lands, tenements and hereditaments used for the purpose of such trade or profession, the sum so deducted shall not exceed the amount of the assessment of the lands, tenements and hereditaments for the purpose of tax under Schedule A as reduced for the purpose of collection.
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(4)(a) Subsection (3) shall not apply in the case of an industrial building or structure within the meaning of section 255 which is not a building or structure to which section 264 applies. (b) Where, in the case of premises valued under the Valuation Acts as a unit, a part is, and a part is not, a building or structure to which section 264 applies, the annual value of each part shall be arrived at by apportionment of the rateable valuation of the premises, and section 54 (3) (c) and section 54 (4) shall apply to any such apportionment as they apply to an apportionment required by section 54 (3).
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Power to omit Schedule A assessments in certain cases.
\n
66.—(1) In this section— “basis period” means, in relation to a year of assessment, the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D in respect of the trade in question or, where, by virtue of this Act, the profits or gains of any other period are to be taken to be the profits or gains of the said period, that other period; “company” means any body corporate; “short lease” has the same meaning as in Chapter VI of Part IV; “trade” means a trade within Case I of Schedule D; “unit of valuation” means any lands, tenements or hereditaments valued under the Valuation Acts as a unit.
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(2)(a) Subject as hereafter provided, this section applies to any unit of valuation in respect of which a company is assessable under Schedule A being a unit of valuation of which no part fails, at any time during the year of assessment, to satisfy one or other of the following conditions, that is to say: (i) that it is wholly occupied by the company assessable as aforesaid for the purposes of a trade, or (ii) that it, with or without other premises, is subject to a short lease granted by the company not being such a lease as is referred to in section 86. (b) This section does not apply to a unit of valuation— (i) of which the whole or a part is occupied for the purposes of a trade which consists wholly or partly of exempted trading operations within the meaning of Chapter I of Part XXV, or (ii) in respect of which any rent is payable under a short lease by the company assessable under Schedule A in respect thereof. (c) For the purposes of paragraph (a) (ii), the currency of a lease shall be determined as it would be determined for the purposes of section 81 (4).
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(3)Notwithstanding anything in this Act, no assessment under Schedule A need be made for any year of assessment in respect of a unit of valuation to which this section applies; and where, for any year of assessment, an assessment under Schedule A is not made, the annual value of the unit of valuation shall not, save as is hereafter provided, be taken into account for any purpose of this Act in relation to the company assessable under Schedule A in respect thereof.
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(4)Where— (a) the whole or a part of a unit of valuation to which this section applies (hereafter in this subsection referred to as the unit) is occupied at any time during a year of assessment (hereafter in this subsection referred to as the relevant year) for the purposes of a trade carried on by the company concerned, and (b) an assessment under Schedule A is not made for the relevant year in respect of the unit, the following provisions shall apply to the computation for the purpose of assessment of the amount of the profits or gains of the trade for the basis period for the relevant year but not to the computation for the purpose of relief of the amount of a loss sustained in the trade in that period: (i) the profits or gains of the basis period shall first be computed as if an assessment under Schedule A in respect of the unit had been made for every year of assessment falling wholly or partly within the basis period for which such an assessment was not made; (ii) the amount computed in accordance with paragraph (i) shall then be adjusted as if, in addition to the trading receipts taken into account in arriving at it, the company had received in the basis period an amount of trading receipts equal to the sum specified in the next following paragraph and the amount computed in accordance with paragraph, (i) as so adjusted shall for all purposes of this Act be taken to be the amount of the profits or gains of the basis period; (iii) the sum referred to in paragraph (ii) is a sum equal to the amount of the assessment under Schedule A which might have been made in respect of the unit for the relevant year or, in a case in which section 23 would have applied, the net amount, as reduced for the purposes of collection, of the assessment which might have been made as aforesaid, provided that in a case in which the whole of the unit is not occupied for the purposes of the trade throughout the relevant year, the sum hereinbefore specified shall be appropriately reduced.
\n
(5)(a) Where— (i) the assessment under Schedule A for any year of assessment (hereafter in this subsection referred to as the relevant year) in respect of a unit of valuation to which this section applies (hereafter in this subsection referred to as the unit) would, if made, fall to be reduced for the purposes of collection under section 23, (ii) an assessment under Schedule A is not made for that year in respect of the unit, (iii) a period (hereafter in this subsection referred to as the unassessed period) being the whole or a part of that year falls within a period (hereafter in this subsection referred to as the accounting period) for which the accounts of the company concerned are made up, and (iv) the whole or a part of the unit is occupied at any time during the unassessed period for the purposes of a trade carried on by the company, there shall be allowed in the computation of the amount of a loss sustained in the trade in the accounting period such deduction, if any, as is authorised by paragraph (b). (b) (i) In a case in which the unassessed period coincides with the relevant year and the whole of the unit was throughout that period occupied for the purposes of the trade, the deduction under paragraph (a) shall be equal to the amount, if any, by which the net amount of the assessment under Schedule A which might have been made for the relevant year in respect of the unit falls short of the sum which, if the said assessment had been made, would have fallen to be deducted, under section 65 in respect of the unassessed period on account of the annual value of the unit. (ii) In any other case, the deduction under paragraph (a) shall be the same proportion of the deduction which would have been allowable thereunder, if sub-paragraph (i) of this paragraph applied, as the proportion which the sum which in the circumstances of the case would, if an assessment under Schedule A in respect of the unit had been made for the relevant year, have fallen to be deducted, under section 65, in respect of the unassessed period on account of the annual value of the unit bears to the sum which would have fallen to be deducted under that section if the circumstances were as stated in the said subparagraph (i).
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(6)Where in consequence of the operation of the foregoing provisions of this section the amount of the profits or gains of a trade on which a company is chargeable to tax under Case I of Schedule D is, for any year of assessment, greater than it would otherwise have been, only so much of the profits or gains on which the company is so chargeable as does not exceed the amount on which it would have been so chargeable if this section had not been enacted and only so much of the tax payable by the company as is attributable to that part of the profits or gains shall be taken into account in determining the amount of any relief to which the company is entitled for the year of assessment under section 220 or Chapter II, III or IV of Part XXV.
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(7)The circumstance that in accordance with this section an assessment under Schedule A is not made in respect of any unit of valuation shall not have the effect that a sum, which would otherwise be treated in accordance with Chapter III of Part V, as a perquisite of an office or employment, is not so treated.
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(8)(a) A company may by notice in writing delivered to the inspector within the time limited by paragraph (b) elect that this section shall not have effect in relation to it and, where a company has so elected, no unit of valuation in respect of which it is assessable under Schedule A shall be a unit of valuation to which this section applies. (b) A notice under paragraph (a) shall be delivered— (i) in the case of a company in existence at the commencement of this Act (other than a company incorporated on a date more than six months before such commencement) within six months from the date on which the company was incorporated, (ii) in the case of a company not in existence at the commencement of this Act, within six months from the date on which the company is incorporated. (c) A company may at any time withdraw a notice given by it under paragraph (a) or under section 10
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(8)of the Finance Act, 1964 , and thereupon the notice shall cease to have effect as from the beginning of the next following year of assessment.
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Allowance for industrial premises.
\n
67.—(1) In this section “premises” means an industrial building or structure within the meaning of section 255 which is not a building or structure to which section 264 applies.
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(2)In estimating the amount of annual profits or gains arising or accruing from any trade the profits of which are chargeable to tax under Case I of Schedule D, there shall, notwithstanding anything in section 65, be allowed to be deducted, as expenses incurred in any year, on account of any premises owned by the person carrying on such trade and occupied by him for the purposes of the said trade, and situate outside the State, a deduction equal to one-third of the annual value of those premises.
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(3)In estimating the profits for any year of any of the concerns which, by virtue of section 53, are charged under Case I (b) of Schedule D, there shall be allowed to be deducted, as expenses incurred in any year, on account of any premises owned by the person carrying on the concern and occupied by him for the purposes of such concern, a deduction equal to one-third of the annual value of those premises.
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(4)Annual value for the purposes of this section shall be estimated according to the principles governing the estimation of the annual value for the purposes of Schedule A.
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Statement of profits.
\n
68.—(1) Every statement of profits to be charged under Schedule D which is made by any person— (i) on his own account; or (ii) on account of some other person for whom he is chargeable, or who is chargeable in his name, shall include every source of income so chargeable.
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(2)Where a person delivers a statement of profits as aforesaid on behalf of some other person, or of a body of persons, the statement shall be delivered in the assessment district where the person delivering the statement or the body of persons respectively would be assessable and chargeable if acting on his or their own behalf.
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Chapter III
\n
Trades and Professions Carried on in Partnership Interpretation.
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69.—(1) In this Chapter— “annual payment” means any payment from which, apart from any insufficiency of profits or gains of the person making it, tax is deductible under section 433; “balancing charge” means a balancing charge under Part XVI; “basis period” means, in relation to a year of assessment, the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D in respect of the trade in question or, where, by virtue of this Act, the profits or gains of any other period are to be taken to be the profits or gains of the said period, that other period; “capital allowance” means any allowance, other than an allowance falling to be made in computing profits or gains, under section 241 or Part XIV, XV, XVI or XVII; “partnership trade” means a trade which is carried on by two or more persons in partnership; “precedent partner” means in relation to a partnership the partner who, being resident in the State— (a) is first named in the partnership agreement, or (b) if there is no agreement, is named singly or with precedence to the other partners in the usual name of the firm, or (c) is the precedent acting partner, if the person named with precedence is not an acting partner, and any reference to precedent partner shall, in a case in which no partner is resident in the State, be construed as a reference to the agent, manager, or factor of the firm resident in the State; “relevant period” means in relation to a partnership trade a continuous period the whole or part of which is after the 5th day of April, 1965— (a) beginning at a time when either the trade was not carried on immediately before it by two or more persons in partnership or none of the persons then carrying on the trade in partnership was one of the persons who immediately before it carried on the trade in partnership, and (b) continuing so long as (but only so long as) there has not occurred a time when either the trade is not carried on immediately after it by two or more persons in partnership or none of the persons then carrying on the trade in partnership is one of the persons who immediately after it carry on the trade in partnership, subject to the proviso that, in the case of any such period which, apart from this proviso, would have begun before the 6th day of April, 1965, “the relevant period” shall be taken as having begun at the time, or at the last of two or more times, at which, a change having occurred in the partnership of persons then engaged in carrying on the trade, the persons so engaged immediately after the time fell to be treated for the purposes of income tax as having set up or commenced the trade at that time.
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(2)In relation to a case in which a partnership trade is from time to time during a relevant period carried on by two or more different partnerships of persons, any reference in this Chapter to the partnership shall, unless the context otherwise requires, be construed as including a reference to any partnership of persons by whom the trade has been carried on since the beginning of the relevant period and any reference to a partner shall be construed correspondingly.
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(3)The provisions of this Chapter shall, with any necessary modifications, apply in relation to professions, as they apply in relation to trades.
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Power to require return as to sources of partnership income and amounts derived therefrom.
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70.—(1) The precedent partner of any partnership, when required to do so by a notice given to him in relation to any year of assessment by an inspector, shall, within the time limited by the notice, prepare and deliver to the inspector a return in the prescribed form of— (a) all the sources of income of the partnership for the year of assessment (in this section referred to as the preceding year) immediately preceding the year of assessment in relation to which the notice is given; (b) the amount of income from each source for the preceding year computed in accordance with subsection (2); (c) such further particulars for the purposes of income tax (including sur-tax) for the preceding year or the year of assessment as may be required by the notice or indicated by the prescribed form.
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(2)The amount of income from any source to be included in a return under this section shall be computed in accordance with the provisions of this Act save that the computation shall be made in all cases by reference to the preceding year:
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Provided that— (a) in the case of such interest as is referred to in section 344 the computation shall be made without regard to that section; (b) where, in the case of a trade, an account has been made up to a date within the preceding year or more accounts than one have been made up to dates within that year, the computation shall be made by reference to the period or to all the periods, where there are more than one, for which accounts have been made up as aforesaid.
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(3)If a person delivers to any inspector a return in a prescribed form, he shall be deemed to have been required by a notice under this section to prepare and deliver that return.
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(4)In proceedings for recovery of a penalty incurred under section 500 or 501 in relation to a return referred to in the preceding provisions of this section— (a) a certificate signed by an inspector which certifies that he has examined his relevant records and that it appears from them that a stated notice was duly given to the defendant on a stated day shall be evidence until the contrary is proved that that person received that notice in the ordinary course, (b) a certificate signed by an inspector which certifies that he has examined his relevant records and that it appears from them that, during a stated period, a stated return was not received from the defendant shall be evidence until the contrary is proved that the defendant did not, during that period, deliver that return, (c) a certificate certifying as provided for in paragraph (a) or (b) and purporting to be signed by an inspector may be tendered in evidence without proof and shall be deemed until the contrary is proved to have been signed by such inspector.
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(5)In this section “prescribed” means prescribed by the Revenue Commissioners.
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Separate assessment of partners.
\n
71.—(1) In the case of a partnership trade this Act shall, subject to the provisions of this Chapter, have effect in relation to any partner in the partnership as if for any relevant period— (a) any profits or gains arising to him from the trade and any loss sustained by him therein were respectively profits or gains of, and loss sustained in, a trade (hereafter in this Chapter referred to as a several trade) carried on solely by him being a trade— (i) set up or commenced at the beginning of the relevant period, or if he commenced to be engaged in carrying on the partnership trade at some time in the relevant period other than the beginning thereof, at the time when he so commenced, and (ii) when he ceases to be engaged in carrying on the partnership trade, either during the relevant period or at the end thereof, permanently discontinued at the time when he so ceases, and (b) he had paid the part he was liable to bear of any annual payment paid by the partnership.
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(2)(a) For any year or period within the relevant period the amount of the profits or gains arising to any partner from his several trade, or the amount of loss sustained by him therein, shall, for the purposes of subsection (1), be taken to be so much of the full amount of the profits or gains of the partnership trade or, as the case may be, of the full amount of the loss sustained in the partnership trade as would fall to his share on an apportionment thereof made in accordance with the terms of the partnership agreement as to the sharing of profits and losses. (b) Where the year or period (hereafter in this paragraph referred to as the period of computation) for which the profits or gains of, or the loss sustained in, the several trade of a partner is to be computed under this subsection, is, or is part of, a year or period for which an account of the partnership trade has been made up, sections 60 and 107 shall apply in relation to the partner as if an account of his several trade had been made up for the period of computation. (c) Where in the case of the several trade of a partner the basis period for any year of assessment begins before the 6th day of April, 1965, the profits or gains of that basis period shall be computed in accordance with the foregoing provisions of this subsection notwithstanding that those provisions were not in force in that period or some part thereof.
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(3)For the purposes of subsection (2), the full amount of the profits or gains of the partnership trade for any year or period, or the full amount of the loss sustained in such trade in any year or period, shall, subject to section 73, be determined by the inspector and any such determination shall be made as it would have fallen to be made if the trade— (a) had been set up or commenced at the beginning of the relevant period, and (b) where the relevant period has come to an end, had been permanently discontinued at the end of that period, and (c) had at all times within the relevant period been carried on by one and the same person and everything done in the carrying on thereof to or by the persons by whom it was in fact carried on had been done to or by that person:
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Provided that in a case in which the relevant period began at some time before the 6th day of April, 1965, and the trade did not fall to be treated for the purposes of income tax as having been set up or commenced at that time, the relevant period shall, for the purposes of this subsection, be deemed to have begun at the time at which the trade was treated for the purposes of income tax as having been set up or commenced and, in any such case, any profits or gains arising to any person from the trade, or any loss sustained by him in the trade, for any year or period within the relevant period during which he was engaged in the trade on his own account shall be deemed to be profits or gains arising to him from, or, as the case may be, loss sustained by him in, a partnership trade in which he was entitled during the year or period in question to the full amount of the profits or gains arising or was liable to bear the full amount of the loss.
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(4)Where the shares to which the partners are entitled in the basis period for a year of assessment do not exhaust the profits of the trade carried on by the partnership for that period, an assessment shall be made under Case IV of Schedule D on the precedent partner in respect of the unexhausted portion of the profits and the precedent partner shall, if and when such balance falls to be paid to a person entitled thereto, be entitled to deduct from such balance any amounts of tax which have been assessed on and paid by him and he shall be acquitted and discharged of any such amounts.
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(5)This section shall not cause any income which, apart from this section, is not earned income to become earned income.
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Capital allowances and balancing charges in partnership cases.
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72.—(1) The provisions of this Act as regards the making of capital allowances and balancing charges in charging the profits or gains of a trade shall, in relation to the several trade of a partner in a partnership, have effect subject to the following provisions of this section.
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(2)Where for any year of assessment a claim has been made, as provided by subsection (9), by the precedent partner for the time being of any partnership, there shall be made to any partner in the partnership in charging the profits or gains of his several trade a capital allowance in respect of any expenditure or property equal to his appropriate share of any capital allowance for that year (excluding any amount carried forward from an earlier year) (hereafter in this section referred to as a joint allowance) which, apart from any insufficiency of profits or gains, might have been made in respect thereof in charging the profits or gains of the partnership trade if this Act had provided that those profits should be charged by joint assessment on the persons carrying on the trade in the year of assessment as if— (a) those persons had at all times been carrying on the trade and everything done to or by their predecessors in, or in relation to, the carrying on thereof had been done to or by them, and (b) the trade had been set up or commenced at the beginning of the relevant period and, where the relevant period has come to an end, had been permanently discontinued at the end of that period.
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(3)For any year of assessment there shall be made on any partner in a partnership in charging the profits or gains of his several trade a balancing charge equal to his appropriate share of any balancing charge (hereafter in this section referred to as a joint charge) which would have fallen to be made for that year in charging the profits or gains of the partnership trade if this Act had provided that those profits should be charged as specified in subsection (2).
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(4)Where at the end of the relevant period a person or a partnership of persons succeeds to a partnership trade and any property which, immediately before the succession takes place, was in use for the purposes of the partnership trade and, without being sold is, immediately after the succession takes place, in use for the purposes of the trade carried on by the successor or successors, section 300 (1) shall apply as it applies where, by virtue of any of the provisions of section 59, a trade is to be treated as discontinued.
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(5)Where for a partnership trade the relevant period began at some time before the 6th day of April, 1965, and the trade did not fall to be treated for the purposes of income tax as having been set up or commenced at that time, the relevant period shall, for the purposes of subsections (2) and (3), be deemed to have begun at the time at which the trade was treated for the purposes of income tax as having been set up or commenced.
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(6)(a) In relation to any partnership trade the total amount of all joint allowances for any year of assessment and the total amount of all joint charges for that year shall, subject to section 73, be determined by the inspector. (b) Where after a determination has been made under paragraph (a) the inspector becomes aware of any facts or events by reference to which the determination is in his opinion incorrect, he may from time to time and as often as appears to him to be necessary make a revised determination, and any such revised determination shall supersede any earlier determination and any such additional assessments or repayments of tax shall be made as may be necessary.
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(7)(a) Subject to the provisions of paragraph (b), for any year of assessment the partners' appropriate shares of a joint allowance, or of a joint charge, shall be arrived at by apportioning the full amount thereof between the partners on the same basis as a like amount of profits arising in the trading period from the partnership trade, and accruing from day to day over that period, would fall to be apportioned in accordance with the terms of the partnership if any salary, interest on capital or other sum to which any partner was entitled without regard to the amount of the profits arising from the partnership trade had already been provided for.
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In this paragraph “trading period” means, where the relevant period begins or ends during the year of assessment for which the joint allowance or joint charge is computed, the part of that year of assessment which falls within the relevant period or, in any other case, that year of assessment. (b) If for any year of assessment all the partners (any deceased partner being represented by his legal representatives) allege, by notice in writing signed by them and sent to the inspector within twelve months after the end of the year of assessment, that hardship is caused to one or more partners by the apportionment of a joint allowance or joint charge on the basis set out in paragraph (a), the Revenue Commissioners may, on being satisfied that hardship has been caused, give such relief as in their opinion is just by making a new apportionment of the joint allowance or joint charge, and any such new apportionment shall for all the purposes of this Act have effect as if it were an apportionment made under paragraph (a) and such additional assessments or repayments of tax shall be made as may be necessary.
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(8)For any year of assessment the aggregate amount of all capital allowances brought forward shall, for the purpose of making the assessments on the partners, be deemed to be a joint allowance for that year and subsection (7) shall apply accordingly.
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In this subsection a capital allowance brought forward means— (a) any capital allowance or part of a capital allowance falling to be made to the partnership for the year 1964-65 or any earlier year of assessment which might, if
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Part VIII
\n
of the Finance Act, 1965 , had not been enacted, have been carried forward and made as a deduction in charging the profits or gains of the partnership trade for the year 1965-66, and (b) any capital allowance or part of a capital allowance falling to be made to a partner for 1965-66 or a later year of assessment which, but for this subsection, might have been carried forward and made as a deduction in charging the profits or gains of the several trade of the partner for a year of assessment subsequent to that for which the capital allowance was computed.
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(9)In relation to a partnership trade— (a) any claim for a joint allowance for any year of assessment shall be made by the precedent partner as if it were a claim for a capital allowance falling to be made to him and shall be included in the return delivered by him, under section 70, in relation to that year of assessment, and (b) any claim for a joint allowance shall be deemed to be a claim by every partner for a capital allowance falling to be made to him being a capital allowance equal to his appropriate share of that joint allowance.
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Modification of provisions as to appeals.
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73.—(1) The inspector may give notice to the partnership concerned of any determination made by him under section 71 (3) or 72 (6) by delivering a statement in writing thereof to the precedent partner for the time being of the partnership and all the provisions of this Act relating to appeals against assessments to income tax shall, with any necessary modifications, apply in relation to any determination and any notice of a determination as if they were respectively such an assessment and notice of such an assessment.
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(2)Where a determination has become final and conclusive or, in the case of a determination under section 72 (6) has become final and conclusive subject to paragraph (b) of that subsection, no question as to its correctness shall be raised on the hearing or on the rehearing of an appeal by any partner either against an assessment in respect of the profits or gains of his several trade or against a determination by the inspector on a claim under section 307.
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(3)Where on any appeal such as is mentioned in subsection (2) any question arises as to an apportionment falling to be made under section 71 (2) or section 72 (7) and it appears that the question is material as respects the liability to income tax (for whatever year of assessment) of two or more persons, all those persons shall be notified of the time and place of the hearing and shall be entitled to appear and be heard by the Special Commissioners or to make representations to them in writing.
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Provision as to charges under section 288.
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74.—(1) Where for any year of assessment a charge under section 288 (hereafter in this section referred to as a joint charge) would have fallen to be made in charging the profits or gains of a partnership trade if this Act had provided that those profits or gains should be charged as specified in section 72 (2), there shall be made on any partner in the partnership in charging the profits or gains of his several trade a charge under the said section 288 equal to his appropriate share of the joint charge.
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(2)For the purposes of subsection (1) a partner's appropriate share of a joint charge shall be arrived at in the same way as his appropriate share of a joint charge within the meaning of section 72 is to be arrived at by virtue of subsection (7) of that section.
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Chapter IV
\n
Case III Income chargeable under Case III.
\n
75.—(1) Save as is hereinafter otherwise provided, income or profits chargeable under Case III of Schedule D shall, for all the purposes of ascertaining liability to income tax, be deemed to issue from a single source, and the provisions of section 77 shall apply accordingly.
\n
(2)Subsection (1) shall not apply to the following income or profits and such income or profits shall be deemed to arise from separate sources respectively, that is to say:— (i) income or profits chargeable under section 215. (ii) profits chargeable under section 78, and (iii) income from securities and possessions in any place outside the State tax on which under subsections (2) and (3) of section 76 is required to be computed by reference to the amount of the income received in the State.
\n
Foreign securities and possessions.
\n
76.—(1) Subject to the provisions of this section and section 77, tax chargeable under Case III of Schedule D in respect of income arising from securities and possessions in any place outside the State shall be computed on the full amount thereof arising in the year preceding the year of assessment whether the income has been or will be received in the State or not, subject, in the case of income not received in the State— (a) to the same deductions and allowances as if it had been so received; and (b) to the deduction, where such deduction cannot be made under, and is not forbidden by, any other provision of this Act, of any sum which has been paid in respect of income tax in the place where the income has arisen; and (c) to a deduction on account of any annual interest or any annuity or other annual payment payable out of the income to a person not resident in the State, and the provisions of this Act (including those relating to the delivery of statements) shall apply accordingly.
\n
(2)Subsection (1) shall not apply— (a) to any person who satisfies the Revenue Commissioners that he is not domiciled in the State, or that, being a citizen of Ireland, he is not ordinarily resident in the State, or (b) to income arising from such securities and possessions as aforesaid which form part of the investments of the foreign life assurance fund of an assurance company.
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(3)In the cases mentioned in subsection (2), the tax shall, subject to the provisions of section 77, be computed on the full amount of the actual sums received in the State from remittances payable in the State, or from property imported, or from money or value arising from property not imported, or from money or value so received on credit or on account in respect of such remittances, property, money or value brought into the State in the year preceding the year of assessment without any deduction or abatement.
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(4)Where the Revenue Commissioners are satisfied that the application of the provisions of this section would give rise to hardship in the case of income derived from an employment exercised wholly outside the State they may grant such relief as in their opinion is just.
\n
(5)Any person who is aggrieved by the decision of the Revenue Commissioners on any question as to domicile or ordinary residence arising under subsection (2) may, by notice in writing to that effect given to the Revenue Commissioners within two months from the date on which notice of the decision is given to him, make an application to have his claim for relief heard and determined by the Special Commissioners.
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(6)Where an application is made under this section, the Special Commissioners shall hear and determine the claim in like manner as an appeal made to them against an assessment and all the provisions of this Act relating to such an appeal (including the provisions relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law) shall apply accordingly with any necessary modifications.
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Basis of assessment.
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77.—(1) Tax under Case III of Schedule D shall, subject to the provisions of this section, be computed— (a) as respects the year of assessment in which the profits or income first arise, on the full amount of the profits or income arising within that year; and (b) as respects subsequent years of assessment, on the full amount of the profits or income arising within the year preceding the year of assessment:
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Provided that— (i) where the profits or income first arose on some day in the year preceding the year of assessment other than the 6th day of April, the computation shall be made on the profits or income of the year of assessment; and (ii) where the profits or income first arose on the 6th day of April in the year preceding the year of assessment, or on some day in the year next before the year preceding the year of assessment other than the 6th day of April, the person charged shall be entitled, on giving notice in writing to the inspector at any time within twelve months after the end of the year of assessment, to be charged on the amount of the profits or income of that year, and if the tax charged has been paid, any amount overpaid shall be repaid.
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(2)Tax shall, subject to the provisions of section 76, be paid on the actual amount computed as aforesaid without any deduction.
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(3)If in any year of assessment any person charged or chargeable in respect of income or profits under Case III of Schedule D ceases to possess the whole of such single source of income or profits as is mentioned in section 75 (1) or any of the sources the income of which is directed to be separately computed under subsection (2) of that section, section 58 (5) shall, subject to the necessary modifications, apply in any such case as if the cesser of the possession of such single source or separate sources, as the case may be, were the discontinuance of a trade.
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(4)The references in subsection (3) to a person ceasing to possess a source of income or profits shall be construed as referring to a cesser occurring by reason of the person dying while in possession of the source of income or profits as well as to a cesser occurring in the lifetime of such person, and for the purposes of subsection (3) such death shall be deemed to cause a cesser, and such cesser shall be deemed to take place on the day of such death.
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(5)The provisions of subsection (1) shall, in cases where income tax is to be computed by reference to the amount of income received in the State, have effect as if references therein to income which arises or which arose were references to income which is or was so received.
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Cattle and milk dealers.
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78.—If the inspector finds that lands which have been charged under Schedule B on the assessable value, and which are occupied by a dealer in cattle or a dealer in or a seller of milk, are insufficient for the keep of the cattle brought on to the lands, so that the assessable value affords no just estimate of the profits, he may require a statement of the profits to be delivered, and charge such further sum thereon as, together with the charge under Schedule B, will make up the full sum wherewith the dealer or seller ought to be charged in respect of the like amount of profits charged according to section 77.
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Chapter V
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Case IV—General Basis of assessment.
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79.—(1) The nature of the profits or gains, and the basis on which the amount thereof has been computed, including the average, if any, taken thereon, shall be stated to the inspector.
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(2)The computation shall be made, either on the full amount of the profits or gains arising in the year of assessment, or according to the average of such a period, not being greater than one year, as the case may require, and as may be directed by the inspector.
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(3)Every such statement and computation shall be made to the best of the knowledge and belief of the person in receipt of or entitled to the profits or gains.
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Chapter VI
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Taxation of Rents and Certain Other Payments Interpretation.
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80.—(1) In this Chapter, save where the context otherwise requires— “easement” includes any right, privilege or benefit in, over or derived from premises; “lease” includes an agreement for a lease and any tenancy, but does not include a mortgage, and “lessee” and “lessor” shall be construed accordingly, and “lessee” and “lessor” include, respectively, the successors in title of a lessee or a lessor; “long lease” means a lease granted for a term exceeding fifty years; “premises” means any lands, tenements or hereditaments in the State; “premium” includes any like sum, whether payable to the immediate or a superior lessor; “rent” includes anything in the nature of rent and any payment made by the lessee to defray the cost of work of maintenance of or repairs to the premises, not being work required by the lease to be carried out by the lessee; “short lease” means a lease granted for a term not exceeding fifty years; “unit of valuation” means any lands, tenements or hereditaments valued under the Valuation Acts as a unit.
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(2)In ascertaining, for the purposes of the definitions of “long lease” and “short lease” contained in subsection (1), the duration of a lease, the following provisions shall have effect: (a) where the terms of the lease include provision for the determination thereof by notice given either by the lessor or by the lessee, the lease shall not be treated as granted for a term longer than one ending at the earliest date on which it could be determined by notice; (b) where any of the terms of the lease (whether relating to forfeiture or to any other matter) or any other circumstance render it unlikely that the lease will continue beyond a date falling before the expiration of the term of the lease, the lease shall not be treated as having been granted for a term longer than one ending on that date.
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(3)Any reference in this Chapter to one person being connected with another shall be construed in accordance with section 96 (3).
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(4)Where the estate or interest of any lessor of any premises is the subject of a mortgage and either the mortgagee is in possession or the rents and profits are being received by a receiver appointed by or on the application of the mortgagee, that estate or interest shall be deemed, for the purposes of this Chapter, to be vested in the mortgagee, and references to a lessor shall be construed accordingly; but the amount of the liability to tax of any such mortgagee shall be computed as if the mortgagor was still in possession or, as the case may be, no receiver had been appointed, and as if it were the amount of the liability of the mortgagor that was being computed.
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Taxation of rents under short leases.
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81.—(1) The profits or gains arising from any rent in respect of any premises under a short lease shall, to the extent provided for by this Chapter, be deemed, for all the purposes of this Act, to be annual profits or gains within Schedule D and the lessor shall be chargeable in respect thereof under Case IV of that Schedule.
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(2)Notwithstanding anything in section 79 (2), income tax in respect of profits or gains chargeable by virtue of this section shall in all cases be computed on the full amount of the profits or gains of the year of assessment.
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(3)Subject to the subsequent provisions of this Chapter, the amount of the profits or gains to be charged under this section shall be arrived at by making from any rent to which the lessor becomes entitled in the year of assessment the deductions authorised by the next following subsection.
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(4)The deductions authorised by this subsection are deductions by reference to any or all of the following matters: (a) the amount, if any, on which the lessor is liable to pay, by deduction or otherwise, income tax under Schedule A for the year of assessment in respect of the premises; (b) the excess, if any, of the amount of any rent payable by the lessor in respect of the premises, or in respect of a portion thereof, under a short lease over the amount referred to in paragraph (a) or, as the case may be, the portion of the latter amount which is referable to the portion of the premises in respect of which the rent is payable by the lessor; (c) any sums borne by the lessor, in accordance with the conditions of the lease, in respect of county rate, municipal rate or other rate, whether such sums are by law charged upon him or upon the lessee; (d) the cost to the lessor of any services rendered or goods provided by him, otherwise than by way of maintenance or repairs, being services or goods which he is legally bound under the lease to render or provide but in respect of which he receives no separate consideration; (e) the cost of maintenance, repairs, insurance and management of the premises in so far as such cost is, by reason of obligations imposed by the lease, borne by the lessor, and the amount of the deduction to be made by reference to each of the foregoing matters shall be the amount which would fall to be so made in computing profits or gains under the provisions applicable to Case I of Schedule D if it were enacted that the receipt of rent under a short lease should be deemed to be a trade carried on during the currency of the lease by the lessor for the time being and that the premises comprised in the lease should be deemed to be occupied for the purposes of that trade.
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For the purposes of this subsection the currency of a lease shall be deemed to include a period, immediately following its termination, during which the lessor, immediately before the termination, was not in occupation of the premises or any part thereof, but was entitled to possession thereof, if at the end of that period the premises have become subject to another short lease granted by him.
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(5)Where a lessor is entitled to rent in respect of premises (hereafter in this subsection referred to as the said premises) under a short lease and— (a) the said premises do not comprise the whole of a unit of valuation or the whole of two or more such units, or (b) a rent is payable by the lessor under a short lease in respect of premises which comprise the whole or a part of the said premises and other premises, the inspector shall make, according to the best of his knowledge and judgment, any appropriate apportionment of rateable valuation or of rent payable by the lessor in determining the amount of any deduction under paragraph (a) (b) or (c) of subsection (4).
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(6)An apportionment made under subsection (5) may be amended by the Special Commissioners, or by the Circuit Judge, on the hearing, or the rehearing, of an appeal against an assessment made on the basis of such apportionment; but, on the hearing, or the rehearing, of any such appeal, a certificate of the Commissioner of Valuation, tendered by either party to the appeal and certifying, as regards premises valued under the Valuation Acts as a unit, the amount of the rateable valuation of the premises attributable to any part of the premises, shall be conclusive as to the amount so attributable.
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Additional deductions in certain cases.
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82.—(1) In this section— “excepted profits or gains” means profits or gains arising from rent under a short lease in respect of premises which comprise the whole of what was, on the 6th day of April, 1963, a unit of valuation where, for the year of assessment, all the following conditions are satisfied, that is to say: (a) the premises are premises to which subsection (2) applies; (b) the lease imposes no obligation on the lessee to maintain or repair the fabric or exterior of any building or to contribute to the cost of such maintenance or repairs, and (c) the rent to which the lessor is entitled or, in a case in which a deduction is allowable under section 81 (4) (c) in arriving at the amount of the profits or gains for the purpose of assessment under Case IV of Schedule D, the said rent reduced by the deduction allowable as aforesaid, does not exceed £52 per annum; “profit rent” means, in relation to any premises in respect of which a lessor is, in a year of assessment, entitled to rent under a short lease, the amount (hereafter in this definition referred to as the assessable amount) on which, but for the provisions of the following subsections of this section, the lessor would have been chargeable for the year of assessment under Case IV of Schedule D, in respect of profits or gains arising from the said rent, increased by any deduction allowed under section 81 (4) (a) in arriving at the assessable amount and reduced by the amount, if any, by which any deduction allowed under section 81 (4) (b) in arriving at the assessable amount falls short of the deduction which would have been so allowable if— (i) no deduction had been allowable under section 81 (4) (a), and (ii) section 81 (4) (b) and section 81 (5) applied to any payment to which section 93 applies as they apply to any rent payable under a short lease.
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(2)(a) This subsection applies to any premises which are shown to the satisfaction of the Revenue Commissioners (or, on appeal, to the satisfaction of the Special Commissioners) to be in the year of assessment a controlled dwelling within the meaning of the Rent Restrictions Act, 1960. (b) Where for any year of assessment a person is chargeable under Case IV of Schedule D in respect of profits or gains arising from any rent in respect of any premises to which this subsection applies under a short lease, the amount on which he would, apart from this subsection, be so chargeable shall be reduced by an amount equal to two-fifths of the profit rent:
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Provided that, for any year of assessment, the aggregate of all amounts by which profits or gains, other than excepted profits or gains, arising to any person are reduced by virtue of this paragraph shall not exceed £200.
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(3)The reference, in the proviso to subsection (2) (b), to profits or gains arising to any person shall be deemed to include, in the case of an individual, a reference to profits or gains arising to the wife or husband of the individual.
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In this subsection and subsection (4) “wife” means a married woman who under section 196 (1) is to be treated as living with her husband, and “husband” has a corresponding meaning.
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(4)(a) Where in any year of assessment profits or gains arise to both a husband and a wife from rents in respect of premises to which subsection (2) applies and the aggregate (hereafter in this subsection referred to as the gross aggregate) of all amounts by which the said profits or gains would have fallen to be reduced under this section, if the proviso to subsection (2) (b) (hereafter in this subsection referred to as the limiting provision) had been omitted from this section, exceeds what, in consequence of the operation of the limiting provision is the aggregate (hereafter in this subsection referred to as the net aggregate) of all amounts by which the said profits or gains may be reduced, the aggregate of all amounts by which the profits or gains arising to either spouse are reduced shall not exceed the sum which bears to the net aggregate the same proportion as the aggregate of all amounts by which, but for the limiting provision, the profits or gains arising to that spouse would have fallen to be reduced bears to the gross aggregate. (b) Any reference in this subsection to profits or gains does not include a reference to excepted profits or gains.
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Treatment of premiums, etc., as rent.
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83.—(1) Where the payment of any premium is required under a lease, or otherwise under the terms subject to which a lease is granted, and the lease is a short lease, the lessor shall be treated for the purposes of section 81 as becoming entitled, when the lease is granted, to an amount by way of rent (in addition to any actual rent) equal to the amount of the premium reduced by one-fiftieth of that amount for each complete period of twelve months, other than the first, comprised in the term of the lease.
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(2)Where the terms subject to which a lease of any premises is granted impose on the lessee an obligation to carry out any work on the premises, the lease shall be deemed for the purposes of this section to have required the payment of a premium to the lessor (in addition to any other premium) of an amount equal to the amount by which the value of the lessor's estate or interest, immediately after the commencement of the lease, falls short of what its then value would have been if the work had been carried out, but otherwise than at the expense of the lessee, and the rent were increased accordingly:
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Provided that this subsection shall not apply in so far as the obligation requires the carrying out of work payment for which would, if the lessor and not the lessee were obliged to carry it out, be deductible from the rent under section 81 (4).
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(3)Where, under the terms subject to which a lease is granted, a sum becomes payable by the lessee in lieu of the whole or a part of the rent for any period, or as consideration for the surrender of the lease, the lease shall be deemed for the purposes of this section to have required the payment of a premium to the lessor (in addition to any other premium) of the amount of that sum; but— (a) in computing tax chargeable by virtue of this subsection in respect of a sum payable in lieu of rent, the term of the lease shall be treated as not including any period other than that in relation to which the sum is payable; (b) notwithstanding anything in subsection (1), rent treated as arising by virtue of this subsection shall be deemed to become due when the sum in question becomes payable by the lessee.
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(4)Where, as consideration for the variation or waiver of any of the terms of a lease, a sum becomes payable by the lessee otherwise than by way of rent, the lease shall be deemed for the purposes of this section to have required the payment of a premium to the lessor (in addition to any other premium) of the amount of that sum; but in computing tax chargeable by virtue of this subsection the term of the lease shall be treated as not including any period which precedes the time at which the variation or waiver takes effect or falls after the time at which the variation or waiver ceases to have effect, and notwithstanding anything in subsection (1) rent treated as arising by virtue of this subsection shall be deemed to become due when the contract providing for the variation or waiver is entered into.
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(5)Where a payment such as is mentioned in subsection (1), (3) or (4) is due to a person other than the lessor, the said subsection (1), (3) or (4) shall not apply in relation to that payment, but any amount which would have fallen to be treated as rent if the payment had been due to the lessor shall be treated as an annual profit or gain of that other person and chargeable to tax under Case IV of Schedule D:
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Provided that where the amount relates to a payment falling within subsection (4), it shall not be so treated unless the payment is due to a person connected with the lessor.
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(6)(a) If an amount by reference to which a person is chargeable to tax by virtue of this section is payable by instalments, the following provisions shall, where this subsection applies, have effect in lieu of the foregoing provisions of this section: (i) each such instalment payable to the lessor for the time being shall be treated for the purposes of section 81 as if it were rent payable under the lease, and (ii) each such instalment payable to a person who is not a lessor shall be treated as an annual profit or gain of that person and chargeable to tax under Case IV of Schedule D. (b) This subsection applies where the person chargeable by virtue of this section by notice in writing, given to the inspector before the expiration of the year of assessment following that in which he becomes entitled to the first instalment, elects that it shall apply and where such notice of election is given all such additional assessments, alterations of assessments and repayments of tax shall be made as may be necessary.
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(7)For the purposes of this section any sum, other than rent, paid on or in connection with the granting of a lease shall be presumed to have been paid by way of premium except in so far as other sufficient consideration for the payment is shown to have been given.
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(8)Where the duration of a lease falls to be ascertained for the purposes of this section after a date on which the lease has for any reason come to an end, the duration shall, notwithstanding anything in section 80 (2), be taken to have extended from its commencement to that date; and where the duration falls to be ascertained for the said purposes at a time when the lease is subsisting, the provisions of section 80 (2) shall be applied in accordance with the circumstances obtaining at that time.
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Charge on assignment of lease granted at undervalue.
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84.—(1) Where the terms subject to which a short lease was granted are such that the lessor having regard to values prevailing at the time it was granted, and on the assumption that the negotiations for the lease were at arm's length, could have required the payment of an additional sum (hereafter in this section referred to as the amount foregone) by way of premium, or additional premium, for the grant of the lease, then, on any assignment of the lease for a consideration— (a) where the lease has not previously been assigned, exceeding the premium, if any, for which it was granted, or (b) where the lease has been previously assigned, exceeding the consideration for which it was last assigned, the amount of the excess, in so far as it is not greater than the amount foregone reduced by the amount of any such excess arising on a previous assignment of the lease, shall, in the same proportion as the amount foregone would under section 83 (1), have fallen to be treated as rent if it had been a premium under a lease, be treated as profits or gains of the assignor chargeable to tax under Case IV of Schedule D.
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(2)In computing the profits or gains of a trade of dealing in land, any trading receipts falling within this section shall be treated as reduced by the amount on which tax is chargeable by virtue of this section.
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Charge on sale of land with right to reconveyance.
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85.—(1) Where the terms subject to which an estate or interest in land is sold provide that it shall be, or may be required to be, reconveyed at a future date to the vendor or a person connected with him, the vendor shall be chargeable to tax under Case IV of Schedule D on any amount by which the price at which the estate or interest is sold exceeds the price at which it is to be reconveyed or, if the earliest date at which, in accordance with those terms, it would fall to be reconveyed is a date two years or more after the sale, on that excess reduced by one-fiftieth thereof for each complete year (other than the first) in the period between the sale and that date.
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(2)Where under the terms of the sale the date of the reconveyance is not fixed, then— (a) if the price on reconveyance varies with the date, the price shall be taken for the purposes of this section to be the lowest possible under the terms of the sale; (b) the vendor may, before the expiration of six years after the date on which the reconveyance takes place, claim repayment of any amount by which tax assessed on him by virtue of this section exceeded the amount which would have been so assessed if that date had been treated for the purposes of this section as the date fixed by the terms of the sale.
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(3)Where the terms of the sale provide for the grant of a lease directly or indirectly out of the estate or interest to the vendor or a person connected with him, this section shall apply as if the grant of the lease were a reconveyance of the estate or interest at a price equal to the sum of the amount of the premium (if any) for the lease and the value at the date of the sale of the right to receive a conveyance of the reversion immediately after the lease begins to run:
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Provided that this subsection shall not apply if the lease is granted, and begins to run, within one month after the sale.
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(4)In computing the profits or gains of a trade of dealing in land, any trading receipts falling within this section shall be treated as reduced by the amount on which tax is chargeable by virtue of this section, but where, on a claim being made under subsection (2) (b), the amount on which tax was chargeable by virtue of this section is treated as reduced, this subsection shall be deemed to have applied to the amount as reduced, and such adjustment of liability to tax shall be made (for all relevant years of assessment), whether by means of an additional assessment or otherwise, as may be necessary.
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Exclusion of certain lettings.
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86.—Neither section 81 nor section 89 shall have effect in relation to a case in which the rent reserved under a lease (including, where the lease was granted on or after the 6th day of April, 1963, an appropriate sum in respect of any premium payable under the lease) is insufficient, taking one year with another, to defray the cost to the lessor of fulfilling his obligations under the lease and of meeting any expense of maintenance, repairs, insurance and management of the premises subject to the lease which fall to be borne by him, and for this purpose the lessor shall be deemed to bear annually an expense of management (in addition to any actual expense) equal to the amount on which he is liable to bear tax under Schedule A in respect of the premises.
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Taxation of certain payments in respect of easements.
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87.—Where, in any year of assessment, any person is entitled to any payment, other than a payment to which section 93 applies, in respect of any easement in relation to any premises, not being premises of the whole of which he is, throughout the period in respect of which the payment is due, the sole occupier for the purposes of Schedule A, the payment shall be treated for the purposes of section 81 as if it were rent payable in respect of premises under a short lease, and the provisions of that section shall with the necessary adaptations apply accordingly.
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Provisions as to assessment.
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88.—(1) Where for any year of assessment profits or gains chargeable to tax under Case IV of Schedule D by virtue of the foregoing provisions of this Chapter arise to any person from two or more sources, the several amounts of profits or gains so chargeable may be assessed in one assessment.
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(2)Where an assessment, in respect of profits or gains chargeable as aforesaid for any year of assessment, is made in that year, whether pursuant to subsection (1) or otherwise— (a) it shall be made on the basis that all sources of profits or gains and all facts relevant to the computation of profits or gains are the same as for the last preceding year of assessment, and (b) tax shall be leviable accordingly, but any necessary adjustments shall be made after the end of the year, whether by way of additional assessment, repayment of tax or otherwise, to secure that tax is charged on the profits or gains of the year of assessment.
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(3)For the purposes of subsection (2) (a), any amounts which but for section 83 would not be taken into account in the computation of profits or gains shall be disregarded.
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Relief in respect of losses.
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89.—Where for any year of assessment the aggregate amount of the deductions authorised, in relation to any short lease, by section 81 (4) exceeds the amount of rent to which the lessor becomes entitled in the year, the excess shall be deemed to be such a loss as is mentioned in section 310 and the provisions of that section shall apply accordingly.
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Relief for amount not received.
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90.—(1) Where on a claim in that behalf a lessor proves that he has not received an amount which he was entitled to receive in relation to a short lease and— (a) if the non-receipt of the said amount was attributable to the default of the person by whom it was payable, that the said amount is irrecoverable, or (b) if he has waived payment of the said amount, that the waiver was made without consideration and was reasonably made in order to avoid hardship, the lessor shall be treated for the purposes of this Chapter as if he had not been entitled to receive the said amount and his liability to tax for the year of assessment in which he became entitled to receive the said amount and for any subsequent year shall be adjusted, by repayment or otherwise, as the circumstances of the case may require; but if all or any of the said amount is subsequently received, the lessor's liability to tax for all relevant years of assessment shall be appropriately re-adjusted by additional assessment or otherwise.
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(2)Any claim to repayment under this section shall be made to, and determined by, the inspector; but any person aggrieved by any determination of the inspector on any such claim may, on giving notice in writing to the inspector within twenty-one days after notification to him of the determination, appeal to the Special Commissioners.
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(3)The Special Commissioners shall hear and determine an appeal to them under subsection (2) as if it were an appeal against an assessment to income tax, and the provisions of this Act relating to the rehearing of an appeal or the statement of a case for the opinion of the High Court on a point of law, shall, with the necessary modifications, apply accordingly.
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Deduction by reference to premium, etc., paid in the computation of profits for purposes of Schedule D, Cases I & II.
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91.—(1) Where, in relation to any premises, an amount (hereafter in this section referred to as the amount chargeable)— (a) has become chargeable to tax under subsection (1), (2), (3), (4) or (5) of section 83 or under section 84 or 85, or (b) would have become so chargeable but for section 83 (6) or but for section 92 (2) or but for any exemption from tax, and, during any part of the relevant period, the premises are wholly or partly occupied by the person for the time being entitled to the lease, estate or interest as respects which the amount chargeable arose for the purposes of a trade or profession carried on by him, that person shall be treated, for the purpose of computing the profits or gains of the trade or profession for assessment under Case I or Case II of Schedule D, as paying in respect of the premises rent for any part of the relevant period during which the premises are occupied by him as aforesaid (in addition to any rent actually paid) an amount which bears to the amount chargeable the same proportion as that part of the relevant period bears to the whole, and such rent shall be taken as accruing from day to day.
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(2)In this section “the relevant period” means— (a) where the amount chargeable arose under section 83, the period treated, in computing that amount, as being the duration of the lease; (b) where the amount chargeable arose under section 84, the period treated, in computing that amount, as being the duration of the lease remaining at the date of the assignment; (c) where the amount chargeable arose under section 85, the period beginning with the sale and ending on the date fixed under the terms of the sale as the date of the reconveyance or grant, or, if that date is not fixed, ending with the earliest date at which the reconveyance or grant could take place in accordance with the terms of the sale.
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(3)Where the amount chargeable arose under section 83 (2) by reason of an obligation which included the incurring of expenditure in respect of which any allowance has fallen or will fall to be made under Chapter II of Part XV or under Part XVI, this section shall apply as if the obligation had not included the incurring of that expenditure and the amount chargeable had been calculated accordingly.
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(4)Where the amount chargeable arose under section 85 and the reconveyance or grant in question takes place at a price different from that taken in calculating that amount or on a date different from that taken in determining the relevant period, the foregoing provisions of this section shall be deemed to have had effect (for all relevant years of assessment) as they would have had effect if the actual price or date had been so taken and such adjustments of liability to tax shall be made, by means of additional assessment or otherwise, as may be necessary.
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Deductions by reference to premiums, etc., paid in computation of profits for purposes of this Chapter.
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92.—(1) Where in relation to any premises an amount has become or would have become chargeable to tax as mentioned in section 91 (1) by reference to a lease, estate or interest, the person for the time being entitled to that lease, estate or interest shall, subject to the provisions of the following subsections of this section, be treated for the purposes of section 81 (4) as paying rent, accruing from day to day, in respect of the premises (in addition to any rent actually paid), during any part of the relevant period in relation to the said amount for which he is entitled to the lease, estate or interest and in all bearing to that amount the same proportion as that part of the said relevant period bears to the whole.
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(2)Where in relation to any premises an amount has become or would have become chargeable to tax as aforesaid, and by reference to a lease granted out of, or a disposition of, the lease, estate or interest by reference to which the said amount (hereafter in this section referred to as the prior chargeable amount) so became or would have become chargeable, a person would apart from this subsection be chargeable under section 83, 84 or 85 on any amount (hereafter in this section referred to as the later chargeable amount), the amount on which he is so chargeable shall, where no claim is or can be made under section 83 (6), be the excess, if any, of the later chargeable amount over the appropriate fraction of the prior chargeable amount or, where the lease or disposition by reference to which the person would be chargeable as aforesaid extends to a part only of the said premises, the excess, if any, of the later chargeable amount over so much of the appropriate fraction of the prior chargeable amount as, on a just apportionment, is attributable to that part of the premises.
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(3)In a case in which subsection (2) operates to reduce the amount on which, apart from that subsection, a person would be chargeable by reference to a lease or disposition, subsection (1) shall apply for the relevant period in relation to the later chargeable amount only if the appropriate fraction of the prior chargeable amount exceeds the later chargeable amount and shall then apply as if the prior chargeable amount were reduced in the proportion which the said excess bears to the said appropriate fraction:
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Provided that where the lease or disposition extends to a part only of the premises mentioned in subsection (2), the said subsection (1) and this subsection shall be applied separately in relation to that part and to the remainder of the premises but as if for any reference to the prior chargeable amount there were substituted a reference to that amount proportionately adjusted.
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(4)In this section “the relevant period” means in relation to any amount— (a) where the amount arose under section 83, the period treated, in computing that amount, as being the duration of the lease; (b) where the amount arose under section 84, the period treated, in computing that amount, as being the duration of the lease remaining at the date of the assignment; (c) where the amount arose under section 85, the period beginning with the sale and ending on the date fixed under the terms of the sale as the date of the reconveyance or grant, or, if that date is not fixed, ending with the earliest date at which the reconveyance or grant could take place in accordance with the terms of the sale.
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(5)For the purposes of subsections (2) and (3) the appropriate fraction of the prior chargeable amount is the sum which bears to that amount the same proportion as the length of the relevant period in relation to the later chargeable amount bears to the length of the relevant period in relation to the prior chargeable amount.
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(6)Where the prior chargeable amount arose under section 83 (2) by reason of an obligation which included the incurring of expenditure in respect of which any allowance has fallen or will fall to be made under Part XVI, this section shall apply as if the obligation had not included the incurring of that expenditure and the prior chargeable amount had been calculated accordingly.
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(7)Where the prior chargeable amount arose under section 85 and the reconveyance or grant in question takes place at a price different from that taken in calculating that amount or on a date different from that taken in determining the relevant period in relation to that amount, the foregoing provisions of this section shall be deemed to have had effect (for all relevant years of assessment) as they would have had effect if the actual price or date had been so taken and such adjustments of liability to tax shall be made, by means of additional assessment or otherwise, as may be necessary.
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Taxation of rents under long leases and certain other payments.
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93.—(1) This section applies to the following payments: (a) any rent payable in respect of any premises the property in which is not separately assessed and charged under Schedule A, or in respect of any easement, where the premises or easement is used, occupied or enjoyed in connection with any of the concerns the profits of which are chargeable to tax under Case I (b) of Schedule D by virtue of section 53, (b) any rent payable in respect of any premises, other than premises used, occupied or enjoyed as aforesaid, under a long lease, and (c) any yearly interest, annuity, rentcharge, fee farm rent or other annual payment reserved in respect of, or charged on or issuing out of, any premises, not being a rent payable under a lease or in respect of premises used, occupied or enjoyed as mentioned in paragraph (a) or such a rentcharge as is mentioned in section 18 (5), being a payment falling due on or after the 6th day of April, 1963.
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In paragraph (a) the reference to rent shall be deemed to include a reference to a toll, duty, royalty or annual or periodical payment in the nature of rent, whether payable in money or money's worth or otherwise.
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(2)Neither section 18 (1) nor section 18 (3) shall have effect in relation to any payment to which this section applies.
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(3)Any payment to which this section applies shall— (a) so far as it does not fall within any other Case of Schedule D, be charged with tax under Case IV of that Schedule, and (b) subject to section 104, be treated, for the purposes of paragraph (m) of section 61 and of sections 433 and 434 as if it were a royalty paid in respect of the user of a patent:
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Provided that where such a rent as is mentioned in subsection (1) (a) is rendered in produce of the concern, this subsection shall have effect as if paragraph (b) were omitted; and the value of the produce so rendered shall be taken to be the amount of profits or income arising therefrom.
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(4)Section 8 (2) shall have effect as if “other annual payment”, in both places where occurring in that subsection, included a reference to any payment to which this section applies not being a payment of rent, interest or annuity.
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Returns, etc.
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94.—For the purpose of obtaining particulars of profits or gains chargeable to tax under Case IV of Schedule D by virtue of this Chapter, the inspector may by notice in writing require— (a) any lessor, or former lessor, of premises to give, within the time limited by the notice, such information as may be specified in the notice as to the provisions of the lease and the terms subject to which the lease was granted and as to payments made to or by him in relation to the premises; (b) any lessee, occupier, or former lessee or occupier of premises (including any person having, or having had, the use of premises) to give such information as may be specified in the notice as to the terms applying to the lease, occupation or use of the premises, and where any of those terms are established by any written instrument, to produce the instrument to the inspector for inspection; (c) any lessee or former lessee of premises to give such information as may be specified in the notice as to any consideration given for the grant to him of the lease; (d) any person who as agent manages premises or is in receipt of rent or other payments arising from premises to furnish the inspector with such particulars relating to payments arising therefrom as may be specified in the notice.
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Restriction of section 24.
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95.—Where for any year of assessment a deduction may be made under section 81 (4) in respect of the cost of maintenance, repairs, insurance or management of any premises, no relief from income tax under Schedule A in respect of the premises shall be allowed under section 24.
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Chapter VII
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Profits or Gains from Dealing in or Developing Land Interpretation.
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96.—(1) In this Chapter, except where the context otherwise requires— “control”, in relation to a body corporate, means the power of a person to secure, by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate, that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person and, in relation to a partnership, means the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership; “development” means, in relation to any land, the construction, demolition, extension, alteration or reconstruction of any building on the land or the carrying out of any engineering or other operation in, on, over or under the land to adapt it for materially altered use; and “develop”, “developing” and “developed” shall be construed correspondingly; “land” includes any interest in land; “market value” means, in relation to any property, the price which that property might reasonably be expected to fetch if sold in the open market; “trading stock” has the same meaning as in section 62; any reference to the disposal of an interest in land includes a reference to the creation of an interest and any reference to the acquisition of an interest in land includes a reference to the acquisition of an interest which ceases on the acquisition; any reference to price or consideration in relation to the acquisition or disposal of an interest in land shall, in a case in which a lease is granted, be construed as a reference to the fine, premium or like sum payable for the grant of the lease.
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(2)For the purposes of this Chapter— (a) the conveyance or transfer by way of security of any interest in any land or the granting of a lease, for a rent which is the only money consideration, of any land shall not be regarded as involving an acquisition or disposal of an interest in the land, and (b) an option or other right to acquire or dispose of any interest in any land shall be deemed to be an interest in the land.
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(3)(a) Any question whether a person is connected with another shall for the purpose of this Chapter be determined in accordance with the following paragraphs of this subsection, any provision that one person is connected with another being taken to mean that they are connected with one another. (b) A person is connected with an individual if that person is the individual's husband or wife, or is a relative, or the husband or wife of a relative, of the individual or of the individual's husband or wife. (c) A person in his capacity as trustee of a settlement, is connected with any individual who in relation to the settlement is a settlor, and with any person who is connected with such an individual. (d) A person is connected with any person with whom he is in partnership, and with the husband or wife or a relative of any individual with whom he is in partnership. (e) A company is connected with another company— (i) if the same person has control of both, or a person has control of one and persons connected with him, or he and persons connected with him have control of the other; or (ii) if a group of two or more persons has control of each company, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person with whom he is connected. (f) A company is connected with another person, if that person has control of it or if that person and persons connected with him together have control of it. (g) Any two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with one another and with any person acting on the directions of any of them to secure or exercise control of the company. (h) In this subsection— “company” includes any body corporate; “relative” means brother, sister, ancestor or lineal descendant; “settlement” includes any disposition, trust, covenant, agreement, or arrangement, and any transfer of money or other property or of any right to money or other property; “settlor”, in relation to a settlement, includes any person by whom the settlement was made or entered into directly or indirectly, and in particular (but without prejudice to the generality of the preceding words of this definition) includes any person who has provided or undertaken to provide funds directly or indirectly for the purpose of the settlement, or has made with any other person a reciprocal arrangement for that other person to make or enter into the settlement.
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(4)The provisions of this Chapter shall have effect notwithstanding anything in Schedule A or the provisions applicable to that Schedule or in Chapter VI of Part IV.
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Extension of Schedule D charge to certain profits from dealing in or developing land.
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97.—(1) Without prejudice to any other provision of this Act under which tax is to be charged under Schedule D, tax under that Schedule shall, subject to and in accordance with the provisions of this and the succeeding sections of this Chapter, be charged in respect of all profits or gains arising or accruing from any business of dealing in or developing land.
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(2)Without prejudice to the generality of the expression “dealing in or developing land”, a business of dealing in or developing land shall be deemed to be carried on where a person having an interest in any land— (a) disposes of that interest, or of an interest which derives therefrom, after he or a person connected with him has developed the land or secured its development or has entered into any obligation to develop the land or to secure its development, (b) disposes of that interest, or of an interest which derives therefrom, and the person to whom the disposition is made or a person connected with that person has at or before the time of the disposition entered into a contract (other than a contract with respect to which the Revenue Commissioners, or on appeal the Special Commissioners, are satisfied that the disponor had no knowledge of its existence and that he had no reason for thinking that it existed) for the development of the land, or the disposition is subject to any condition or stipulation as to the development of the land or is made in pursuance of any arrangement for the development of the land, (c) disposes of an interest which derives from that interest in such circumstances that, apart from this section, the consideration for the disposal would have fallen to be taken into account as a trading receipt of a trade carried on by him if it had been the consideration for the disposal of the full interest acquired by him, or (d) grants to any person for valuable consideration, other than a payment to which section 87 applies, any right in relation to the development of the land.
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Every reference in this subsection to disposing of an interest in, or to the development of, any land includes a reference to disposing of an interest in, or to the development of, any part of that land.
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(3)Where a person having acquired an interest in any land disposes of the whole of that interest after he has constructed, reconstructed, extended or altered any building on the land, his activities in relation to the land shall, notwithstanding anything in subsection (2) (a), be deemed not to have been carried out in the course of a business of dealing in or developing land where— (a) the person would, if the said activities were disregarded, not fall to be treated as having carried on, at any time within three years prior to the said disposal, a business of dealing in or developing land, and (b) either— (i) in a case in which the building was constructed or reconstructed, the period from the time when the construction or reconstruction was completed to the time when the interest was disposed of was not less than six years and for the whole of that period the person was the sole occupier of the building, or (ii) the person being an individual, the Revenue Commissioners, or on appeal the Special Commissioners, are satisfied that the building was constructed, reconstructed, extended or altered for exclusive occupation by him as his only or main residence and was in fact so occupied for substantially the whole of the period from the time when the construction, reconstruction, extension or alteration was completed to the time when the interest was disposed of, or (iii) the Revenue Commissioners, or on appeal the Special Commissioners, are satisfied that the building was constructed or reconstructed for exclusive occupation by the person as a farmhouse or farm building for the purpose of farming the land and was in fact so occupied for substantially the whole of the period from the time when the construction or reconstruction was completed to the time when the interest was disposed of, or (iv) in a case in which the building was reconstructed, extended or altered, for a period of not less than six years prior to the time when the reconstruction, extension or alteration was completed no part of the building was occupied otherwise than by the person or a parent or child of the person, and, for the purposes of paragraph (b) (ii), a building shall be deemed to be in the exclusive occupation of an individual as his residence where it is mainly occupied by him or by a parent or child of his as a residence and no part thereof is occupied for the purposes of a trade but a part thereof is occupied for the purposes of a profession.
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(4)(a) A business of dealing in or developing land shall be deemed to be a trade within Schedule D, or as the case may be, part of such a trade, and tax in respect of the profits or gains thereof shall be charged under Case I of the said Schedule D accordingly, both where, apart from this section, the business would fall to be regarded as such a trade or part of such a trade if every disposal of an interest in land effected in the course of the business was a disposal of the full interest in the land which the person carrying on the business had acquired and that interest had been acquired by him in the course of the business, as well as where, apart from this section, the business is such a trade or part of such a trade. (b) In any other case tax in respect of the profits or gains of a business of dealing in or developing land shall be charged under Case IV of Schedule D.
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Computation under Case I of Schedule D of profits or gains from dealing in or developing land.
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98.—(1) Where a business of dealing in or developing land is, or is to be regarded as, a trade within Schedule D or a part of such a trade, the provisions applicable to Case I of that Schedule shall, as respects the computation of the profits or gains of the business, have effect subject to the provisions of subsection (2).
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(2)(a) Any consideration, other than rent or an amount treated as rent under section 83, for the disposal of an interest in any land, or in a part of any land, shall be treated as a consideration for the disposal of trading stock and shall accordingly be taken into account as a trading receipt. (b) Any interest (hereafter in this subsection referred to as the superior interest) in any land held by the trader which has become trading stock of the trade shall thereafter continue at all times to be such trading stock and the value thereof at any time shall be taken to be an amount equal to the cost to the trader of its acquisition diminished by an amount equal to the cost to the trader of creating any interest (hereafter in this subsection referred to as an inferior interest) to which the superior interest has become subject. (c) For the purposes of paragraph (b) the cost of the acquisition of the superior interest shall, subject to paragraphs (e) and (f), be taken to be the aggregate of the following amounts, that is to say: (i) where the interest is a leasehold interest, the amount of any fine, premium or other like sum paid by the trader in consideration for the grant of the lease, or, if he has obtained the lease by assignment, the amount paid by him in consideration of the assignment; (ii) where the interest is a leasehold interest, an amount equal to the market value at the time of the acquisition of any rent reserved under the lease; (iii) where the interest is not a leasehold interest, the amount paid by the trader for the acquisition of the interest together with an amount equal to the market value at the time of the acquisition of any fee farm rent, rentcharge, annuity or other annual payment reserved or charged upon the land; (iv) the amount paid by the trader by way of legal and other expenses incidental to the acquisition of the interest; (v) where the trader has developed the land, the amount of the expenditure incurred by him on the development; but where the trader has more than one interest in the land, no amount shall be taken into account under subparagraph (v) except in relation to that interest to which the other or all the others are subject. (d) For the purposes of paragraph (b) the cost to the trader of creating an inferior interest shall be taken to be— (i) where the inferior interest is an interest in the whole of the land to which the superior interest extends, the amount by which the cost to the trader, computed in accordance with paragraph (c), of the acquisition of the superior interest exceeds the market value of any interest retained by him, or
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(ii) where the inferior interest is an interest in a part of the land to which the superior interest extends, the amount by which the portion of the cost of acquisition of the superior interest which is attributable to that part exceeds the market value of any interest in that part retained by him.
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For the purposes of subparagraph (ii) the portion of the cost of acquisition of the superior interest which is attributable to a part of the land to which that interest extends shall be arrived at by apportioning in such manner as is just each of the several amounts which, under paragraph (c), are taken as making up the said cost of acquisition. (e) Where the trader has acquired the superior interest in any land otherwise than for consideration in money or money's worth and, in particular, where he has acquired the interest under a will or an intestacy or by way of gift, he shall be deemed, for the purposes of paragraph (c), to have acquired the interest for a consideration equal to its market value at the time of acquisition. (f) The cost of acquisition of the superior interest shall be computed in accordance with the foregoing provisions of this subsection notwithstanding that at the time of acquisition the trade had not been commenced or the interest was not then appropriated as trading stock; but, where the period between the time of acquisition and the time of appropriation exceeds five years, the trader shall be deemed, for the purposes of the said provisions, to have purchased the interest five years before the time of appropriation for a consideration equal to its market value at that time.
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For the purposes of this paragraph, without prejudice to the occurrence otherwise of an appropriation of an interest in land as trading stock, there shall be such an appropriation on the occurrence of any of the following: (i) any interest in the land, or in any part of it, is disposed of, (ii) the trader holds himself out as being prepared to dispose of any interest in the land or in any part of it, (iii) the land or any part of it commences to be developed, or (iv) the trader or a person connected with him enters into any arrangement to develop, or to secure the development of, the land or any part of it. (g) Section 62 shall have effect as if the provision in subsection (2) thereof as regards a case in which a trade carried on by an individual is discontinued by reason of his death were omitted therefrom. (h) Any consideration (other than a payment to which section 87 applies) for the granting by the trader of any right in relation to the development of any land shall be taken into account as a trading receipt. (i) As respects any land an interest in which falls to be treated as trading stock— (i) rent payable or receivable shall, save to the extent provided by the foregoing provisions of this subsection, be disregarded, and (ii) other receipts and outgoings arising from, or attributable to, the occupation or use of the land by the trader (other than use for the purposes of the trade) or by any other person shall likewise be disregarded.
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Computation under Case IV of Schedule D of profits or gains from dealing in or developing land.
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99.—In the case of a business of dealing in or developing land the profits or gains of which are chargeable to tax under Case IV of Schedule D, the profits or gains arising in any year of assessment on the disposal of any interest in land shall be computed as they would, under section 98, have fallen to be computed for the purposes of Case I of Schedule D if the business were a trade:
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Provided that where— (a) the profits or gains in respect of which a person is, under the foregoing provisions of this Chapter, chargeable to tax under the said Case IV for any year of assessment are wholly profits or gains arising on a single transaction involving the disposal of an interest in land, and (b) if that transaction were disregarded, the person would not fall to be treated as having carried on, at any time within three years prior to the transaction, a business of dealing in or developing land, so much of those profits or gains as does not exceed £1,500 shall be disregarded.
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Transfers of interests in land between certain associated persons.
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100.—(1) For the purposes of an assessment for any year beginning on the 6th day of April, 1965, or on any succeeding 6th day of April, where an interest in land is disposed of by any person and— (a) the person to whom the disposition is made (hereafter referred to as the transferee) is a body of persons over whom the disponor has control or the disponor is a body of persons over whom the transferee has control or both the disponor and the transferee are bodies of persons and some other person has control over both of them; (b) the interest is disposed of at a price greater than its market value; and (c) the price— (i) does not fall to be taken into account, in relation to the disponor, in computing for tax purposes the profits or gains of a business of dealing in or developing land or of a trade which consists of or includes such a business, but (ii) does fall to be so taken into account in relation to the transferee, the transferee shall for tax purposes be deemed to have acquired the interest at a price equal to the market value thereof at the time of its acquisition by him.
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(2)For the purposes of an assessment for any year beginning on the 6th day of April, 1965, or on any succeeding 6th day of April, where an interest in land is disposed of by any person and— (a) the person to whom the disposition is made (hereafter referred to as the transferee) is a body of persons over whom the disponor has control or the disponor is a body of persons over whom the transferee has control or both the disponor and the transferee are bodies of persons and some other person has control over both of them; (b) the interest is disposed of at a price less than its market value, and (c) the price— (i) does not fall to be taken into account, in relation to the transferee, in computing for tax purposes the profits or gains of a business of dealing in or developing land or of a trade which consists of or includes such a business, but (ii) does fall to be so taken into account in relation to the disponor, the disponor shall for tax purposes be deemed to have disposed of the interest at a price equal to the market value thereof at the time of its disposal by him.
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(3)In this section “body of persons” includes a partnership.
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Tax to be charged under Case IV of Schedule D in relation to the sale of certain shares.
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101.—(1) Where the activities of a company consist of or include the construction or the securing of the construction of a building and after the construction has begun and not later than six years after its completion shares in the company are sold to a person who has, or in consequence of the sale will have, control of the company, and apart from this section the consideration for the sale would not be a receipt of an income nature in the hands of the seller, the consideration shall, if the conditions specified in subsection (2) are satisfied, be deemed to be income of the seller up to the amount specified in subsection (5), and shall be chargeable under Case IV of Schedule D accordingly.
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(2)The conditions referred to in subsection (1) are that— (a) the shares are sold on or after the 11th day of May, 1965; (b) at the time of the sale the company has (directly or indirectly) an interest in the building and the value of that interest and any interest which the company so has at that time in any other building (not being a building completed more than six years before that time nor one in relation to which the condition specified in paragraph (c) is not satisfied) the erection of which was carried out or secured by the company, amounts to one-fifth or more of the net assets of the company; (c) on a notice for the purpose having been served on it by the inspector, the company has not shown, within twenty-one days after the date of the notice or within such further time as the Revenue Commissioners may have allowed, that the said interest is trading stock of a trade carried on by it and has been or will be disposed of by it in the normal course of that trade.
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(3)Subsection (1) shall not apply if— (a) the shares in the company are sold by a person or persons to another company and the shares in each company are held (directly or indirectly) by the same person or by the same persons in the same proportion, or (b) the shares are sold by one company to another company and the shares in each company are held (directly or indirectly) by the same person or by the same persons in the same proportion, regard being had in each case to any differences in the nature of the shares or the rights attaching thereto.
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(4)Where before the sale of shares mentioned in subsection (1) the company— (a) has disposed of its interest in the building, or of an interest which derives therefrom, to the person who is the purchaser of the shares, or to a company connected with the purchaser, or (b) has disposed of any interest in the building to or in favour of any person, and the purchaser of the shares, or a company connected with the purchaser, acquires the interest, either before the sale or after the sale in pursuance of arrangements made not later than the sale, subsection (1) shall apply as if the interest disposed of were still vested in the first-mentioned company at the time of the sale of the shares, and as if any assets of the company representing the consideration for the disposal of the interest were not assets of the company.
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(5)The amount which under subsection (1) is to be deemed to be income of the seller is the appropriate proportion of the amount (if any) of the profits or gains of the company chargeable to tax which would have arisen if the interest referred to in paragraphs (b) and (c) of subsection (2) (or all such interests where there are more than one) had been trading stock of a trade carried on by the company and that interest or those interests had been sold at that time for a consideration equal to the following amount, that is to say, the amount of the proper consideration for all the issued shares in the company— (a) reduced by any excess of the market value of the assets of the company other than the said interest or interests over the aggregate liabilities of the company at the time of the sale, or (b) increased by any excess of the said aggregate liabilities over the said market value:
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Provided that, for the purposes of this and the next succeeding subsection, the market value of the goodwill of the company's business shall not be taken to be an amount exceeding three times the average for one year of the company's income (as computed for income tax purposes) for the three years immediately preceding the time of the sale of the shares or, where the company has been in existence for a period of less than three years, for such lesser period.
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(6)For the purposes of this section the proper consideration for all the issued shares in a company shall be the actual consideration for the sale of shares mentioned in subsection (1) increased (unless that sale was of all the issued shares) in the proportion which the total number of issued shares bears to the number of shares sold:
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Provided that where the issued shares of the company are not all of the same nature or do not all have the same rights attaching thereto and the said sale was not of all the issued shares, the proper consideration for all the issued shares in the company shall, for the purposes of this section, be taken to be the market value at the time of the sale of the shares of the interest or all the interests mentioned in subsection (5) reduced or, as the case may require, increased by the excess mentioned in paragraph (a) or (b) of subsection (5).
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(7)For the purposes of subsection (5) the appropriate proportion, in relation to any sale of shares, is the proportion which the actual consideration for that sale bears to the proper consideration for all issued shares in the company, so however that where the proviso to the foregoing subsection has effect the appropriate proportion is such proportion as may be just having regard to the number and nature of the shares sold and the rights attaching thereto, as compared with the number and nature of all the issued shares in the company and the rights or different rights attaching thereto.
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(8)Any tax chargeable on the seller by virtue of the foregoing provisions of this section and not paid by him shall be recoverable from the company, and where the seller is an individual the amount which (by virtue of subsection (1)) is deemed to be income of his shall be deemed for the purposes of this subsection to be the highest part of his income.
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(9)Where, in consequence of a sale of shares, any amount would have, under subsection (1), been deemed to be income of the seller if the condition specified in subsection (2) (c) had been satisfied, and on the sixth anniversary of the sale any interest in a building such as is mentioned in subsection (2) (b) is still held by the company, then, income of the like amount shall be deemed to have been received by the company on the said anniversary and shall be chargeable under Case IV of Schedule D accordingly.
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(10)If after the sale of the shares any receipts accrue to the company from the disposal, in the course of a business of dealing in or developing land, of an interest in a building, being an interest which the company had at the time of the sale of the shares and with respect to which the profit which would have arisen on the disposal thereof was taken into account in arriving at the amount of income chargeable to tax by reference to the sale under the foregoing provisions of this section, the receipts shall be disregarded for income tax purposes if and to the extent that it is just so to do having regard to any tax charged under the said provisions.
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(11)Where a building has been or has begun to be constructed by a company on land in which a company connected with that company has an interest and after the construction has been begun and not later than six years after its completion a person acquires control of the first company, then, as respects sales to that person of shares in the company having the interest in the land (whether effected before or after that person acquires control of the first company), the foregoing subsections shall apply as they apply to such a company as is therein mentioned but with the substitution for references to an interest in the building of references to an interest in the land.
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(12)Where a company not carrying on a trade, but of which the activities consist of or include the construction or the securing of the construction of a building, is wound up, and the commencement of the winding up falls at a time after the construction has begun and not later than six years after its completion, then, if immediately before that time the company had (directly or indirectly) an interest in the building, the company shall be treated for income tax purposes as having received immediately before that time untaxed profits, chargeable under Case IV of Schedule D, of an amount equal to the amount (if any) of profits or gains of the company chargeable to tax which would have arisen if, the interest being trading stock of a trade carried on by the company, the interest had, immediately before that time, been disposed of in the course of the trade for a consideration equal to its market value at that time.
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(13)For the purposes of the foregoing subsections an uncompleted building shall be taken to include so much of any materials belonging to the company as are required for erecting the building, and a building (whether complete or not) shall be taken to include its site.
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(14)For the purposes of this section— (a) “share” shall be construed in relation to a company not limited by shares (whether or not it has a share capital) as including references to the interests of the member in the company as such whatever the form of that interest, and (b) the sale of rights attached to or forming part of a share shall be treated as a sale of a share, as if the rights included in the sale and those not included had been separate shares.
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(15)Where by virtue of this section the consideration for a sale of shares is deemed to be income of the seller and any securities of the company other than shares in the company are included in the sale at a price in excess of the company's liability on the securities, the excess shall be treated for the purposes of this section as part of the consideration for the sale of the shares.
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Application of section 101 to sales of shares in holding companies.
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102.—(1) Subject to the provisions of this section, where— (a) a company (hereafter in this section referred to as the first company) is such that section 101 would apply if shares in the company were sold to a person who has, or in consequence of the sale would have, control of the company; (b) shares in that company belong (either directly or through a nominee) to another company (hereafter in this section referred to as the second company); (c) shares in the second company are at any time (hereafter in this section referred to as the relevant time) sold to a person who has, or in consequence of the sale will have, control of the first company; and (d) all the issued shares in the second company at the relevant time are of the same nature and carry the same rights, the appropriate number of shares in the first company shall be treated for the purposes of section 101 as having been sold at the relevant time to the person mentioned in paragraph (c) by the seller of the shares mentioned in that paragraph for a consideration equal to the amount specified in subsection (3).
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(2)For the purposes of the foregoing subsection, the appropriate number of shares in the first company is the number arrived at by multiplying the total number of shares in the first company which at the relevant time belonged (as aforesaid) to the second company by the fraction of which the numerator is the number of shares in the second company sold as mentioned in paragraph (c) of that subsection and the denominator is the total number of the issued shares in the second company at the relevant time.
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(3)The amount referred to in subsection (1) is the amount of the consideration for the sale mentioned in subsection (1) (c)— (a) reduced by the amount arrived at by multiplying by the fraction specified in the foregoing subsection any excess of the value specified in the following subsection over the aggregate liabilities of the second company at the relevant time, or (b) increased by the amount arrived at by multiplying by the said fraction any excess of the said aggregate liabilities over the said value.
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(4)The value referred to in the foregoing subsection is the market value at the relevant time of all the assets of the second company other than the shares in the first company belonging (as aforesaid) to it at that time.
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(5)Where, in the circumstances described in paragraphs (a) to (c) of subsection (1), all the issued shares in the second company at the relevant time are not of the same nature or do not carry the same rights, the foregoing provisions of this section shall have effect as if subsection (1) (d) were omitted and for the fraction specified in subsection (2) there were substituted such fraction as may be just having regard to the number and nature of the shares in the second company which were sold as mentioned in subsection (1) (c) and the rights attaching thereto, as compared with the number and nature of all the issued shares in the second company at the relevant time and the rights or different rights attaching thereto, any reference to the first-mentioned fraction being construed accordingly.
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(6)Where, in the circumstances described in paragraphs (a) to (c) of subsection (1)— (a) the second company is itself such a company as is mentioned in the said paragraph (a), and (b) the person to whom the shares in the second company are sold has, or in consequence of the sale will have, control of the second company, the provisions of section 101, and the foregoing provisions of this section, shall all apply.
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(7)Where, instead of shares in the second company being sold as mentioned in subsection (1) (c), the sale is of shares in a company (hereafter in this subsection referred to as the last company) which, through a series of companies, has an indirect interest in the shares of the first company, the foregoing provisions of this section shall apply with such modifications as may be necessary in relation to each company (being either the first company, the last company, or one of the series of companies) of which the person to whom the shares in the last company are sold either has control at the time of the sale or will have control in consequence of it.
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Provisions supplementary to sections 101 and 102.
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103.—(1) Where sales of associated parcels of shares in a company, being sales to the same person, take place at different times, and in consequence of any of the sales other than the first that person obtains control of the company, then, for the purposes of either of the two foregoing sections any sales earlier than that in consequence of which he obtains control (not being sales effected before the 11th day of May, 1965) shall be treated as having all taken place at the time of that sale.
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(2)For the purposes of the foregoing subsection parcels of shares shall be treated as associated if (either directly or through a nominee) they belong respectively to the same person or two or more persons with one of whom the other or each of the others is connected; and for the purposes of this subsection shares shall be treated as belonging to a person— (a) if they belong to a company under his control, or (b) if they are held by trustees in consequence of a settlement (as defined in section 96 (3)) in relation to which he is the settlor (as so defined).
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(3)Where a person acquires control of a company at any time— (a) any sale of shares in the company, whether to that person or to a person from whom he acquires the shares directly or indirectly, which took place before that time and was effected in pursuance of arrangements for transferring control of the company, or (b) any sale of shares in the company to another person from whom the first-mentioned person acquired them, directly or indirectly, being a sale which took place after that time and was effected in pursuance of arrangements for transferring the shares to the first-mentioned person, shall be treated for the purposes of the two foregoing sections as a sale in consequence of which the immediate purchaser will have control of the company.
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(4)For the purposes of this and the two foregoing sections a sale to a company under a person's control, or to his nominee, shall be treated as a sale to him, and the creation of an interest in favour of a company under a person's control, or in favour of his nominee, shall be treated as the creation of the interest in his favour.
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(5)For the purposes aforesaid two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as a single person.
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(6)Where a sale of shares is effected in pursuance of a previous agreement, the time of the sale shall be taken for the purposes of the two foregoing sections and of the foregoing provisions of this section to be the time of the making of the agreement.
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Chapter VIII
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Payment of Certain Rents Without Deduction of Tax Payment of certain rents without deduction of tax.
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104.—(1) In this section— “lessor” means a person to whom rent is payable; “premises” means any lands, tenements or hereditaments in the State; “rent” means any such payment as is mentioned in section 93 (1) (b).
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(2)(a) It shall be lawful for the inspector to enter into an arrangement with a lessor whereby the income tax chargeable on any or all rents payable to the lessor is assessed and charged by assessment under Case IV of Schedule D instead of being deducted under section 433 or 434. (b) Where pursuant to such an arrangement a lessor is for any year of assessment chargeable by assessment under Case IV of Schedule D in respect of two or more amounts of rent, the several amounts may be assessed in one assessment. (c) Any such arrangement shall come into force as from the beginning of a year of assessment. (d) Either party to any such arrangement may at any time give notice in writing to the other that he wishes to terminate the arrangement, and, on the expiration of one month from the giving of such notice, the arrangement shall be terminated.
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(3)In connection with the making of an arrangement under this section and from time to time during the currency of such an arrangement, the inspector may by notice in writing require the lessor to deliver within the time limited by the notice such information as may be specified in the notice as to the rents receivable by him and, in particular and without prejudice to the generality of the foregoing, may require the lessor to deliver a statement setting out the names and addresses of all persons by whom rents are payable to him, the annual amount of the rent so payable by each such person and the situation of the premises in respect of which such rent is payable.
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(4)Where it is necessary to do so for the purpose of giving effect to subsection (2), the inspector may give to any person by whom a rent is payable— (a) a notice in writing instructing him that payments of the rent becoming payable by him to the lessor concerned on or after a specified date (which shall be not less than one month after the date of the notice) are to be paid without deduction of tax; (b) a notice in writing instructing him that the notice previously given under paragraph (a) is cancelled and that tax is deductible from all payments of the rent paid after a specified date (which shall be not less than seven days after the date of the notice).
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(5)The following provisions shall have effect in relation to payments of rent which by reference to instructions given under subsection (4) are payable without deduction of tax— (a) section 93 shall have effect in relation to the payments as if subsection (3) (b) of that section were deleted; (b) the payments shall be deemed for the purposes of section 81 (4) (b) to have been payable under a short lease; (c) where the payments becoming payable in a year of assessment are paid in respect of premises occupied for the purposes of a trade or profession carried on by the person by whom they are paid, that person shall be allowed, by repayment or otherwise, such relief, if any, as may be necessary to reduce the total amount of tax ultimately borne by him for the year to the amount which would have been so borne if the notice under subsection (4) (a) had not been given; (d) so much of the payments becoming payable in a year of assessment as do not otherwise fall to be taken into account in the computation, for the purposes of income tax, of the amount of any profits or gains or loss of the person by whom they are paid shall be deducted from or set off against the income for the year of assessment of that person.
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Chapter IX
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Miscellaneous Provisions as to Schedule D Persons chargeable.
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105.—Tax under Schedule D shall be charged on and paid by the persons or bodies of persons receiving or entitled to the income in respect of which tax under that Schedule is in this Act directed to be charged.
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Interest payable out of rates.