(c) by inserting the following after section 730F: “Assessment of appropriate tax where tax not deducted under section 730F.
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730FA.—(1) Where section 730F(4)(b) applies then, notwithstanding any other provision of the Tax Acts or the Capital Gains Tax Acts, this section shall apply for the purposes of regulating the time and manner in which any appropriate tax which remains to be accounted for and paid in connection with a chargeable event, which happened in the period commencing on 26 September 2001 and ending on 5 December 2001, in relation to a personal portfolio life policy shall be assessed, accounted for and paid.
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(2)An assurance company shall for each personal portfolio life policy in respect of which it has not— (a) deducted an amount equal to the amount of appropriate tax, for which the assurance company is liable to account, in accordance with subsection (3)(a)(i) of section 730F, or (b) appropriated and realised sufficient assets to meet the amount of appropriate tax, for which the assurance company is liable to account, in accordance with subsection (3)(a)(ii) of section 730F, make and deliver to the inspector to whom it is customary for the assurance company to make a return under section 951 a return on or before 31 December 2001 containing in each case— (i) the name, address and, if appropriate, the registered office, of the policyholder, (ii) the amount of the gain arising on the happening of the chargeable event in relation to the policy, including details of all amounts referred to in subsections (3) and (4) of section 730D which are relevant to the determination of the gain arising on the chargeable event in question, (iii) the amount actually deducted in accordance with section 730F(3)(a)(i) or the amount actually realised in accordance with section 730F(3)(a)(ii), (iv) the method of payment of the benefits under the policy, (v) if payment was made to a person other than the policyholder, details of the name and address of that person, and (vi) details of the property which is a linked asset in relation to the personal portfolio life policy.
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(3)An assurance company which fails to deliver, within the time specified in subsection (2), the return referred to in that subsection or which fails to deliver such a return which is correct may, in addition to any penalty to which it may be liable, be made liable for the payment of any appropriate tax due in respect of a personal portfolio life policy to which that subsection applies which remains unpaid. An inspector may make an assessment on the assurance company to the best of his or her judgement of the appropriate tax so unpaid.
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(4)Where, in connection with a chargeable event in relation to a personal portfolio life policy, an assurance company— (a) fails to deduct an amount equal to the appropriate tax which should have been deducted in accordance with subsection (3)(a)(i) of section 730F, or (b) fails to appropriate and realise sufficient assets to meet the full amount of appropriate tax for which the assurance company is liable to account for in accordance with subsection (3)(a)(ii) of section 730F, then the policyholder or the person to whom the payment referred to in subsection (2) was made shall be liable for the payment of any appropriate tax due in relation to the personal portfolio life policy which remains unpaid. An inspector may make an assessment on the policyholder or the person concerned to the best of his or her judgement of the appropriate tax so unpaid.
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(5)Where an inspector makes an assessment under subsection (3) or (4) it shall not be necessary to set out in the notice of assessment any particulars other than particulars as to the amount of appropriate tax to be paid by the assurance company or the policyholder, as appropriate.
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(6)(a) An inspector may at any time amend or further amend an assessment made on a person under subsection (3) or (4) by making such alterations in or additions to the assessment as he or she considers necessary and the inspector shall give notice to the person of the assessment so amended or so further amended. (b) After the end of a period of 6 years starting from 31 December 2001, no assessment shall be made under subsection (3) or (4) or no assessment made under either of those subsections shall be amended or further amended.
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(7)For the purposes of making an assessment under subsection (3) or (4) or for the purposes of amending or further amending such an assessment an inspector may make such enquiries or take such action within his or her powers as he or she considers necessary— (a) to satisfy himself or herself as to the accuracy or otherwise of the return referred to in subsection (2), or (b) where no such return is made or an incorrect return is made, for the purposes of ascertaining the information which should have been included in such a return.
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(8)Appropriate tax specified in an assessment made under subsection (3) or (4) or in an amended assessment made under subsection (6) shall be due and payable within one month after the issue of the notice of assessment or the amended assessment, as appropriate, subject to any appeal against the assessment.”.
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(2)The Principal Act is amended in Chapter 6 of Part 26— (a) by substituting the following for paragraph (a) of section 730J: “(a) where the person is not a company, and— (i) income represented by the payment is correctly included in a return made by the person, then, notwithstanding section 15, the rate of income tax to be charged on the income shall be— (I) where the payment is a relevant payment, the standard rate (within the meaning of section 3) of income tax in force at the time of the payment, and (II) where the payment is not a relevant payment and is not made in consideration of the disposal, in whole or in part, of the foreign life policy— (A) in the case of a foreign life policy which is a personal portfolio life policy, at the rate determined by the formula— (S + 23) per cent where S is the standard rate per cent for the year of assessment in which the payment is made, and (B) in any other case, at the rate determined by the formula— (S + 3) per cent where S is the standard rate per cent for the year of assessment in which the payment is made, and (ii) where the income represented by the payment is not correctly included in a return made by the person, the income shall be charged to income tax— (I) in the case of a foreign life policy which is a personal portfolio life policy, at the rate determined by the formula— (H + 20) per cent where H is a rate per cent determined in relation to the person by section 15 for the year of assessment in which the payment is made, and (II) in any other case, at a rate determined in relation to the person by section 15 for the year of assessment in which the payment is made”, and (b) by substituting the following for the formula in subsection (1) of section 730K: “(a) in the case of a foreign life policy which is a personal portfolio life policy, at the rate determined by the formula— (S + 23) per cent where S is the standard rate per cent for the year of assessment in which the payment is made, and (b) in any other case, at the rate determined by the formula— (S + 3) per cent where S is the standard rate per cent for the year of assessment in which the payment is made,”.
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(3)The Principal Act is amended as on and from 5 December 2001 in section 904C(1) by substituting the following for the definition of “return”: “‘return’ means a return under section 730FA or section 730G;”.
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(4)The Principal Act is amended as on and from 5 December 2001 in Schedule 29, column 1, by inserting “section 730FA(2)” before “section 730G(2)”.
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(5)(a) Paragraph (a) of subsection (1) shall apply as respects— (i) the happening of a chargeable event in relation to a life policy (within the meaning of Chapter 5 of Part 26), or (ii) the receipt by a person of a payment in respect of a foreign life policy (within the meaning of Chapter 6 of that Part) or the disposal in whole or in part of a foreign life policy (within that meaning), on or after 26 September 2001. (b) Paragraphs (b) and (c) of subsection (1) shall apply as respects the happening of a chargeable event in relation to a life policy (within the meaning of Chapter 5 of Part 26) on or after 26 September 2001. (c) Subsection (2) shall apply as respects the receipt by a person of a payment in respect of a foreign life policy (within the meaning of Chapter 6 of Part 26) or the disposal in whole or in part of a foreign life policy (within that meaning) on or after 26 September 2001.
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Donations to certain sports bodies.
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41.—(1) Chapter 36 of the Principal Act is amended by inserting the following section after section 847 (inserted by the Finance Act, 2001 ): “847A.—(1) In this section— ‘Acts’ means— (a) the Tax Acts, (b) the Capital Gains Tax Acts, and (c) the Value-Added Tax Act, 1972 and the enactments amending or extending that Act, and any instruments made thereunder; ‘appropriate certificate’, in relation to a relevant donation by a donor who is an individual (other than an individual referred to in subsection (9)), means a certificate which is in such form as the Revenue Commissioners may prescribe and which contains— (a) statements to the effect that— (i) the donation satisfies the requirements of subsection (5), and (ii) the donor has paid or will pay to the Revenue Commissioners income tax of an amount equal to income tax at the standard rate or the higher rate or partly at the standard rate and partly at the higher rate, as the case may be, for the relevant year of assessment on the grossed up amount of the donation, but not being— (I) income tax which the donor is entitled to charge against any other person or to deduct, retain or satisfy out of any payment which the donor is liable to make to any other person, or (II) appropriate tax within the meaning of Chapter 4 of Part 8, (b) a statement specifying how much of the grossed up amount referred to in paragraph (a)(ii) has been or will be liable to income tax at the standard rate and the higher rate for the relevant year of assessment, and (c) the identifying number, known as the Personal Public Service Number (PPSN) of the donor; ‘approved project’ means a project in respect of which the Minister has given a certificate under subsection (4), which certificate has not been revoked under that subsection; ‘approved sports body’ means a body which is in possession of— (a) a certificate from the Revenue Commissioners stating that in their opinion the body is a body of persons to which section 235 applies, and (b) a valid tax clearance certificate, but does not include a body to whom the Revenue Commissioners have given a notice under section 235(1); ‘Minister’ means the Minister for Tourism, Sport and Recreation; ‘project’, in relation to an approved sports body, means one or more of the following: (a) the purchase, construction or refurbishment of a building or structure, or part of a building or structure, to be used for sporting or recreation activities provided by the approved sports body, (b) the purchase of land to be used by the approved sports body in the provision of sporting or recreation facilities,
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(c) the purchase of permanently based equipment (excluding personal equipment) for use by the approved sports body in the provision of sporting or recreation facilities, (d) the improvement of the playing pitches, surfaces or facilities of the approved sports body, and (e) the repayment of, or the payment of interest on, money borrowed by the approved sports body on or after 1 May 2002 for any of the purposes mentioned in paragraphs (a) to (d); ‘relevant accounting period’, in relation to a relevant donation made by a company, means the accounting period in which that donation is made by the company; ‘relevant donation’ means a donation which satisfies the requirements of subsection (5) and takes the form of the payment by a person (in this section referred to as the ‘donor’) of a sum or sums of money amounting to at least €250 to an approved sports body which is made— (a) where the donor is an individual, in a year of assessment, and (b) where the donor is a company, in an accounting period, but where an accounting period of a company is less than 12 months in length the amount of €250 shall be proportionately reduced; ‘relevant year of assessment’, in relation to a relevant donation made by an individual, means the year of assessment in which that donation is made by the individual; ‘tax clearance certificate’ shall be construed in accordance with subsection (3).
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(2)For the purposes of this section and in relation to a donation by a donor who is an individual (other than an individual referred to in subsection (9)), references to the grossed up amount are to the amount which after deducting income tax at the standard rate or the higher rate or partly at the standard rate and partly at the higher rate, as the case may be, for the relevant year of assessment leaves the amount of the donation.
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(3)(a) Where a body which is in compliance with the obligations imposed on it by the Acts in relation to— (i) the payment or remittance of any taxes, interest or penalties required to be paid or remitted under the Acts to the Revenue Commissioners, and (ii) the delivery of any returns required to be made under the Acts, applies to the Collector-General in that behalf, the Collector-General shall issue to the body a certificate (in this section referred to as a ‘tax clearance certificate’) for the purposes of this section stating that the body is in compliance with those obligations. (b) Subsection (5) to (9) of section 1094 shall apply to an application for a tax clearance certificate under this subsection as they apply to an application for a tax clearance certificate under that section.
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(4)(a) The Minister, on the making of an application by an approved sports body in advance of the undertaking by that body of a project, may give a certificate to that body stating that the project to be undertaken by that body may be treated as an approved project for the purposes of this section. (b) An application under this subsection shall be in such form and contain such information as the Minister may direct. (c) The Minister may, by notice in writing given to the body, revoke the certificate given in respect of a project under paragraph (a), and the project shall cease to be an approved project as respects any donations made to the body after the date of the Minister's notice. (d) The Minister shall not give a certificate to any body in respect of a project under paragraph (a) if the aggregate cost of the project is, or is estimated to be, in excess of €40,000,000.
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(5)A donation shall satisfy the requirements of this subsection if— (a) it is made to the approved sports body for the sole purpose of funding an approved project, (b) it is or will be applied by the approved sports body for that purpose, (c) apart from this section, it is neither deductible in computing for the purposes of tax the profits or gains of a trade or profession nor an expense of management deductible in computing the total profits of a company, (d) it is not a relevant donation to which section 848A applies, (e) it is not subject to a condition as to repayment, (f) neither the donor nor any person connected with the donor receives, either directly or indirectly, a benefit in consequence of making the donation, including, in particular, a right to membership of the approved sports body or a right to use the facilities of that body, (g) it is not conditional on or associated with, or part of an arrangement involving, the acquisition of property by the approved sports body, otherwise than by way of gift, from the donor or a person connected with the donor, and (h) in the case of a donation made by an individual, the individual— (i) is resident in the State for the relevant year of assessment, (ii) has (except in the case of an individual referred to in subsection (9)) given an appropriate certificate in relation to the donation to the approved sports body, and (iii) has (except in the case of an individual referred to in subsection (9)) paid the tax referred to in such appropriate certificate and is not entitled to claim a repayment of that tax or any part of that tax.
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(6)Where it is proved to the satisfaction of the Revenue Commissioners that a person has made a relevant donation, subsection (7), (9) or (11), as the case may be, shall apply.
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(7)Where a company makes a relevant donation, other than a relevant donation to which subsection (18) applies, then, for the purposes of corporation tax, the amount of that donation shall be treated as— (a) a deductible trading expense of a trade carried on by the company in, or (b) an expense of management deductible in computing the total profits of the company for, the relevant accounting period.
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(8)A claim by a company under this section shall be made with the return required to be delivered by it under section 951 for the relevant accounting period.
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(9)(a) Where a relevant donation, other than a relevant donation to which subsection (18) applies, is made by an individual who is a chargeable person (within the meaning of Part 41) for the relevant year of assessment, then— (i) the amount of the donation shall be deducted from or set off against any income of the individual chargeable to income tax for that year of assessment and tax shall, where necessary, be discharged or repaid accordingly, and (ii) the total income of the individual or, where the individual's spouse is assessed to income tax in accordance with section 1017, the total income of the spouse shall be calculated accordingly. (b) For the purposes of paragraph (a), any such deduction or set-off shall not be taken into account in determining the net relevant earnings (within the meaning of section 787) of the individual or, as the case may be, the individual's spouse for the relevant year of assessment.
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(10)Where a relevant donation is made by an individual who is an individual referred to in subsection (9), a claim under this section shall be made with the return required to be delivered by that individual under section 951 for the relevant year of assessment.
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(11)Where a relevant donation, other than a relevant donation to which subsection (18) applies, is made by an individual who is not an individual referred to in subsection (9), the Tax Acts shall apply in relation to the approved sports body to which that donation is made as if— (a) the grossed up amount of the donation were an annual payment which was the income of that body received by it under deduction of tax, in the amounts and at the rates specified in the statement referred to in paragraph (b) of the definition of ‘appropriate certificate’, for the relevant year of assessment, and (b) the provisions of the Tax Acts which apply in relation to a claim to repayment of tax applied in relation to any claim to repayment of such tax by that body; but, if the total amount of the tax referred to in paragraph (b) of the definition of ‘appropriate certificate’ is not paid, the amount of any repayment which would otherwise be made to that body in accordance with this section shall not exceed the amount of tax actually paid by that individual.
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(12)The details contained in an appropriate certificate shall be given by the approved sports body to the Revenue Commissioners in an electronic format approved by the Revenue Commissioners in connection with the making of a claim to repayment of tax to which subsection (11)(b) refers and, where those details are so given, those details shall be accompanied by a declaration made by the approved sports body, on a form prescribed or authorised for that purpose by the Revenue Commissioners, to the effect that those details are correct and complete.
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(13)Where the Revenue Commissioners are satisfied that an approved sports body does not have the facilities to give the details contained in an appropriate certificate in the electronic format referred to in subsection (12), such details shall be given in writing in a form prescribed or authorised by the Revenue Commissioners and shall be accompanied by a declaration made by the approved sports body to the effect that the claim is correct and complete.
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(14)Every approved sports body, when required to do so by notice in writing from the Minister, shall within the time limited by the notice prepare and deliver to the Minister a return containing particulars of the aggregate amount of relevant donations received by the body in respect of each approved project.
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(15)Where any question arises as to whether for the purposes of this section a project is an approved project, or a donation is a relevant donation, the Revenue Commissioners may consult with the Minister.
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(16)For the purposes of a claim to relief under this section, but subject to subsection (17), an approved sports body shall, on acceptance of a relevant donation, give to the person making the relevant donation a receipt which shall— (a) contain a statement that— (i) it is a receipt for the purposes of this section, (ii) the body is an approved sports body for the purposes of this section, (iii) the donation in respect of which the receipt is given is a relevant donation for the purposes of this section, and (iv) the project in respect of which the relevant donation has been made is an approved project, (b) show— (i) the name and address of the person making the relevant donation, (ii) the amount of the relevant donation in both figures and words, (iii) the date the relevant donation was made, (iv) the full name of the approved sports body, (v) the date on which the receipt was issued, and (vi) particulars of the approved project in respect of which the relevant donation has been made, and (c) be signed by a duly authorised official of the approved sports body.
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(17)An approved sports body shall not be required to give a receipt under subsection (16) to a donor— (a) who is an individual but who is not an individual to which subsection (9) applies, or (b) in respect of a relevant donation to which subsection (18) applies.
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(18)Relief under this section shall not be given in respect of a relevant donation which is made at any time to an approved sports body in respect of an approved project if, at that time, the aggregate of the amounts of that relevant donation and all other relevant donations made to the approved sports body in respect of the approved project at or before that time exceeds €40,000,000.
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(19)Where relief under this section has been granted in respect of a relevant donation and— (a) that donation has not been used by the sports body concerned for the purpose of undertaking the approved project concerned, or (b) which relief is otherwise found not to have been due, section 235(2) shall not apply to the amount of that relevant donation.
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(20)The Revenue Commissioners may nominate any of their officers to perform any acts and discharge any functions authorised by this section to be performed or discharged by them.”.
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(2)This section applies as on and from 1 May 2002.
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Amendment of section 482 (relief for expenditure on significant buildings and gardens) of Principal Act.
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42.—(1) Section 482 of the Principal Act is amended— (a) in subsection (1)(a), in the definition of “relevant expenditure”, by substituting the following for subparagraph (ii): “(ii) in the case of expenditure incurred in a chargeable period earlier than that referred to in subparagraph (i), expenditure incurred by the person who owned or occupied the approved garden on the maintenance or restoration of the garden;”, (b) in subsection (2)(b)(ii), by substituting “on or before the 1st day of November” for “on or before the 1st day of January”, (c) in subsection (8), by substituting “on or before 1 November” for “on or before 1 January”, and (d) after subsection (10), by inserting the following subsection: “(11) The Tax Acts shall apply to a loss referred to in subsection (2) as they would apply if sections 396A and 420A had not been enacted.”.
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(2)(a) Paragraph (a) of subsection (1) applies as on and from 30 November 1997. (b) Paragraphs (b) and (c) of subsection (1) apply as respects a chargeable period, being the year of assessment 2002 and any subsequent year of assessment or an accounting period of a company beginning on or after 1 January 2002. (c) Paragraph (d) of subsection (1) applies as on and from 6 March 2001.
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Amendment of section 486B (relief for investment in renewable energy generation) of Principal Act.
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43.—(1) Section 486B(1) of the Principal Act is amended by substituting for the definition of “qualifying period” the following definition: “‘qualifying period’ means the period commencing on the commencement date and ending on 31 December 2004;”
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(2)Subsection (1) comes into operation on such day as the Minister for Finance appoints by order.
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Amendment of section 739D (gain arising on a chargeable event) of Principal Act.
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44.—Section 739D of the Principal Act is amended— (a) in subsection (1) by substituting “In this Chapter and Schedule 2B” for “In this Chapter”, (b) in subsection (6) by substituting the following for paragraph (f): “(f) (i) is a person who— (I) is exempt from income tax under Schedule D by virtue of section 207(1)(b), or (II) is exempt from corporation tax by virtue of section 207(1)(b) as it applies for the purposes of corporation tax under section 76(6), and (ii) has made a declaration to the investment undertaking in accordance with paragraph 7 of Schedule 2B,”, (c) in subsection (8D) by substituting the following for paragraphs (a) and (b): “(a) In this subsection— ‘offshore fund’ means any of the following— (i) a company not resident in the State, (ii) a unit trust scheme, the trustees of which are neither resident nor ordinarily resident in the State, and (iii) any arrangements not within subparagraphs (i) or (ii) which take effect by virtue of the law of a territory outside the State and which under that law create rights in the nature of co-ownership (without restricting that expression to its meaning in the law of the State), in which persons have an interest and which is established for the purposes of collective investment by such persons and references in this subsection to an offshore fund shall be construed as a reference to any such company, unit trust scheme or arrangements, in which such persons have an interest; ‘scheme of migration and amalgamation’ means an arrangement whereby the assets of an offshore fund are transferred to an investment undertaking in exchange for the issue by the investment undertaking of units to each of the persons who have an interest in the offshore fund, in proportion to the value of that interest, and as a result of which the value of that interest becomes negligible. (b) A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder where— (i) under a scheme of migration and amalgamation the unit holder acquires units in the investment undertaking in exchange for the unit holder's interest in an offshore fund, and (ii) within 30 days of the scheme of migration and amalgamation taking place, the investment undertaking forwards to the Collector-General a declaration of a kind referred to in paragraph (c), otherwise than in respect of a unit holder whose name is included in the schedule referred to in paragraph (c)(ii).”, and (d) by substituting the following for subsection (9):
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“(9) A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder, where immediately before the chargeable event the investment undertaking or an investment undertaking associated with the first-mentioned investment undertaking— (a) is, in relation to the units concerned, in possession of a declaration of a kind referred to in paragraph 13 of Schedule 2B, and (b) is not in possession of any information which would reasonably suggest that— (i) the information contained in that declaration is not, or is no longer, materially correct, (ii) the intermediary failed to comply with the undertaking referred to in paragraph 13(e) of Schedule 2B, or (iii) any of the persons, on whose behalf the intermediary holds units of, or receives payments from, the investment undertaking, is resident or ordinarily resident in the State. (9A) A gain shall not be treated as arising to an investment undertaking on the happening of a chargeable event in respect of a unit holder where immediately before the chargeable event the investment undertaking or an investment undertaking associated with the first-mentioned investment undertaking— (a) is, in relation to the units concerned, in possession of a declaration of a kind referred to in paragraph 14 of Schedule 2B, and (b) is not in possession of any information which would reasonably suggest that— (i) the information contained in that declaration is not, or is no longer, materially correct, (ii) the intermediary failed to comply with the undertaking referred to in paragraph 14(e) of Schedule 2B, or (iii) any of the persons, on whose behalf the intermediary holds units of, or receives payment from, the investment undertaking, is not a person referred to in paragraphs (a) to (h) of section 739D(6).”.
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Amendment of Schedule 2B (investment undertakings declarations) to Principal Act.
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45.—(1) Schedule 2B to the Principal Act is amended— (a) in paragraph 13 by substituting the following for subparagraphs (d) and (e): “(d) declares that— (i) at the time of making the declaration, to the best of the intermediary's knowledge and belief, the person who has beneficial entitlement to each of the units in respect of which the declaration is made— (I) is not resident in the State, where that person is a company, and (II) where that person is not a company, the person is neither resident nor ordinarily resident in the State, and (ii) unless the investment undertaking is notified in writing to the contrary, every subsequent application by the intermediary to acquire units in the investment undertaking or an investment undertaking associated with the first-mentioned investment undertaking, shall be on behalf of such a person, (e) contains an undertaking that where the intermediary becomes aware at any time that the declaration made in accordance with subparagraph (d) is no longer correct, the intermediary will notify the investment undertaking in writing accordingly, and”, and (b) by inserting the following after paragraph 13: “Certain resident entities: declaration of intermediary 14. The declaration referred to in section 739D(9A)(a) is a declaration in writing to the investment undertaking which— (a) is made and signed by the intermediary, (b) is made in such form as may be prescribed or authorised by the Revenue Commissioners, (c) contains the name and address of the intermediary, (d) declares that— (i) at the time of making the declaration, to the best of the intermediary's knowledge and belief, the person who has beneficial entitlement to each of the units in respect of which the declaration is made is a person referred to in paragraphs (a) to (h) of section 739D(6), and (ii) unless the investment undertaking is notified in writing to the contrary, every subsequent application by the intermediary to acquire units in the investment undertaking or an investment undertaking associated with the first-mentioned investment undertaking, shall be on behalf of such a person, (e) contains an undertaking that where the intermediary becomes aware at any time that the declaration made under subparagraph (d) is no longer correct, the intermediary will notify the investment undertaking in writing accordingly, and (f) contains such other information as the Revenue Commissioners may reasonably require for the purposes of Chapter 1A of Part 27.”.
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Amendment of Chapter 4 (certain offshore funds — taxation and returns) of Part 27 of Principal Act.
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46.—(1) Chapter 4 of Part 27 of the Principal Act is amended— (a) in section 747D by substituting the following for paragraph (b): “(b) where the person is a company and the payment is not taken into account as a receipt of a trade carried on by the company, the income represented by the payment shall be charged to tax under Case III of Schedule D.”, and (b) in section 747E by substituting the following for subsection (1): “(1) Where on or after 1 January 2001 a person who has a material interest in an offshore fund, disposes of an interest in the offshore fund and the disposal gives rise to a gain computed in accordance with subsection (2) then, notwithstanding sections 745 and 747, where the gain is not taken into account in computing the profits or gains of a trade carried on by a company, the amount of that gain shall— (a) be treated as an amount of income chargeable to tax under Case IV of Schedule D, and (b) where the person is not a company, and the person has correctly included details of the disposal in a return made by the person, the rate of income tax to be charged on that income shall, notwithstanding section 15, be the rate determined by the formula— (S + 3) per cent, where S is the standard rate per cent.”.
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(2)This section shall be deemed to have applied as on and from 1 January 2001.
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Amendment of section 579A (attribution of gains to beneficiaries) of Principal Act.
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47.—(1) Section 579A of the Principal Act is amended— (a) by substituting the following for subsection (2): “(2) (a) This section shall apply to a settlement for any year of assessment (beginning on or after 6 April 1999) during which the trustees are at no time resident or ordinarily resident in the State, and— (i) the settlor does not have an interest in the settlement at any time in that year of assessment, or (ii) the settlor does have an interest in the settlement but— (I) was not domiciled in the State, and (II) was neither resident nor ordinarily resident in the State, in that year of assessment, or when the settlor made the settlement. (b) Section 579 shall not apply as respects chargeable gains accruing after 5 April 1999 to trustees of a settlement to which this section applies; and references in subsections (4) and (5) to capital payments received by beneficiaries do not include references to any payments received before 11 February 1999 or any payments received on or after that date so far as they represent a chargeable gain which accrued to the trustees in respect of a disposal by the trustees before 11 February 1999. (c) For the purposes of this subsection a settlor has an interest in a settlement if— (i) any relevant property which is, or may at any time become, comprised in the settlement is, or will or may become, applicable for the benefit of or payable in any circumstances to, a relevant beneficiary, (ii) any relevant income which arises, or may arise, under the settlement is, or will or may become, applicable for the benefit of or payable in any circumstances to, a relevant beneficiary, or (iii) a relevant beneficiary enjoys a benefit directly or indirectly from any relevant property which is comprised in the settlement or any relevant income arising under the settlement. (d) In this subsection— ‘relevant beneficiary’ means— (i) the settlor, (ii) the spouse of the settlor, (iii) a company controlled by either or both the settlor and the spouse of the settlor, or (iv) a company associated with a company referred to in paragraph (iii) of this definition; ‘relevant income’ means income originating from the settlor; ‘relevant property’ means property originating from the settlor. (e) For the purposes of this subsection— (i) references to property originating from a person are references to property provided by that person, and property representing that property, (ii) references to income originating from a person are references to income from property originating from that person and income provided by that person,
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(iii) whether a company is controlled by a person or persons shall be construed in accordance with section 432 without regard to subsection (6) of that section, (iv) whether a company is associated with another company shall be construed in accordance with section 432 without regard to subsection (6) of that section, and (v) references to relevant property comprised in a settlement being, or becoming, applicable for the benefit of or payable in any circumstances to, a relevant beneficiary, do not include references to the repayment of, or obligation to repay, a loan to a settlor which loan was provided by the settlor to the trustees of the settlement on terms that it would be repaid. (f) Where, for the year of assessment 2002 or any subsequent year of assessment, chargeable gains are treated as accruing to a beneficiary under a settlement by virtue of section 579, then notwithstanding that section such chargeable gains, in so far as they are in respect of a disposal made on or after 7 March 2002 by the trustees of the settlement, shall be treated as accruing to the settlor in relation to the settlement and not to any other person, if the settlor is resident or ordinarily resident in the State, whether or not the settlor is the beneficiary.”, and (b) by deleting subsections (10) and (11).
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(2)Subsection (1) is deemed to have applied as on and from 11 February 1999.
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Amendment of Chapter 5 (policyholders — new basis) of Part 26 of Principal Act.
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48.—(1) Chapter 5 of Part 26 of the Principal Act is amended— (a) by substituting the following for section 730D(2)(b)(iii): “(iii) a person who— (I) is exempt from income tax under Schedule D by virtue of section 207(1)(b), or (II) is exempt from corporation tax by virtue of section 207(1)(b) as it applies for the purposes of corporation tax under section 76(6), and”, (b) by inserting the following after section 730D(2): “(2A) (a) In this subsection— ‘EEA Agreement’ means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993; ‘EEA state’ means a State, other than the State, which is a Contracting Party to the EEA Agreement; ‘offshore state’ means a State, other than the State, which is— (a) a Member State of the European Communities, or (b) a State which is an EEA state. (b) A gain shall not be treated as arising on the happening of a chargeable event in relation to a life policy where— (i) the assurance company which commenced the life policy has established a branch in an offshore state, (ii) the commitment represented by that life policy is covered through that branch, and (iii) the assurance company has received written approval from the Revenue Commissioners, to the effect that the provisions of subsection (2)(a) need not apply to the life policy, and that approval has not been withdrawn. (c) The Revenue Commissioners may give the approval referred to in paragraph (b)(iii) subject to such conditions as they consider necessary. (d) The Revenue Commissioners may nominate in writing an inspector or other officer to perform any acts and discharge any functions authorised by this subsection to be performed or discharged by the Revenue Commissioners.”, and (c) by substituting the following for section 730E(3)(e)(iii): “(iii) (I) a person who is entitled to exemption from income tax under Schedule D by virtue of section 207(1)(b), or (II) a person who is entitled to exemption from corporation tax by virtue of section 207(1)(b) as it applies for the purposes of corporation tax under section 76(6),”.
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Amendment of Part 36A (special savings incentive accounts) of Principal Act.
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49.—Part 36A of the Principal Act is amended— (a) in section 848C by substituting the following for paragraph (h): “(h) for the account to be treated as maturing (otherwise than in respect of the death of the qualifying individual) in accordance with section 848H(1), the qualifying individual shall make a declaration of a kind referred to in section 848I at any time within the period of 3 months ending on the fifth anniversary of the end of the month in which a subscription was first made to the account,”, (b) in section 848E by inserting the following after subsection (3): “(3A) The provisions of section 267B(2) shall not apply to shares held in a special share account (within the meaning of section 267A) where the shares are a qualifying asset.”, (c) in section 848H— (i) by substituting the following for subsection (1)(a): “(a) on the fifth anniversary of the end of the month in which a subscription was first made to the account where the qualifying individual has made a declaration of a kind referred to in section 848I and the qualifying savings manager is in possession of that declaration at that time, or,”, and (ii) by inserting the following after subsection (3): “(4) Where at any time a special savings incentive account is treated as maturing or, as the case may be, ceasing, the amount of any income which accrues in respect of qualifying assets held in the account, in so far as it was not, but for this subsection, taken into account in determining a gain under section 848J, 848K or 848L, shall, when received, be treated as an amount of cash withdrawn from the account before the account is treated as maturing, or as the case may be, ceasing, and the qualifying savings manager shall be liable to tax in accordance with section 848M on the gain thereby arising under section 848L.”, and (d) in section 848M— (i) by substituting the following for subsection (1): “(1) A qualifying savings manager shall be liable to tax (in this Part referred to as ‘relevant tax’) representing income tax on a gain treated under this Part as accruing to a special savings incentive account in an amount equal to 23 per cent of the amount of that gain.”, and (ii) in subsection (4) by substituting “to the best of the inspector's judgement” for “to the best of his or their judgement”.
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Amendment of section 838 (special portfolio investment accounts) of Principal Act.
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50.—Section 838(4) of the Principal Act is amended by inserting the following after paragraph (b): “(bb) Notwithstanding paragraph (b), where, at the time a special portfolio investment account is closed, a loss has not been relieved under that paragraph because of an insufficiency of relevant income or gains at that time, that loss shall for the purposes of section 31 be treated as an allowable loss accruing at that time to the individual in whose name the special portfolio investment account was held.”.
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Amendment of Chapter 2 (payments to subcontractors in certain industries) of Part 18 of Principal Act.
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51.—(1) Chapter 2 of Part 18 of the Principal Act is amended— (a) in section 530(1)— (i) in paragraph (b) of the definition of “construction operations”, by inserting “telecommunication apparatus,” after “power lines,”, and (ii) in the definition of “meat processing operations”, by inserting the following after paragraph (f): “(fa) the rendering of the carcasses or any part of the carcasses of slaughtered cattle, sheep, pigs, domestic fowl, turkeys, guinea-fowl, ducks or geese,”, and (b) in section 531— (i) in subsection (8), by substituting “the Income Tax (Relevant Contracts) Regulations 2000 ( S.I. No. 71 of 2000 )” for “the Income Tax (Construction Contracts) Regulations, 1971 ( S.I. No. 1 of 1971 ),”, (ii) in subsection (10), by substituting “the Income Tax (Relevant Contracts) Regulations 2000” for “the Income Tax (Construction Contracts) Regulations, 1971 ( S.I. No. 1 of 1971 ),”, and (iii) in subsection (11)— (I) in paragraph (a)(iv)(A), by substituting “taxes, interest and penalties” for “taxes”, and (II) in paragraph (b), by substituting “subparagraphs (i) to (iv) and (vi)” for “subparagraphs (i) to (iv)”.
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(2)(a) Paragraph (a), and subparagraph (iii)(I) of paragraph (b), of subsection (1) shall apply as on and from 1 April 2002. (b) Subparagraph (i) and (ii) of subsection (1)(b) shall be deemed to have come into operation as on and from 6 April 2000.
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Amendment of section 951 (obligation to make a return) of Principal Act.
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52.—Section 951(11) of the Principal Act is amended by inserting the following after paragraph (c): “(d) The Collector-General may designate an address for the delivery of returns which, in accordance with subsection (1), are required to be delivered to him or her by chargeable persons who are chargeable to income tax or capital gains tax for a chargeable period which is a year of assessment, being the year of assessment 2001 or any subsequent year of assessment. (e) Where the Collector-General designates an address under paragraph (d), that address shall be published in Iris Oifigiúil as soon as is practicable after such designation.”.
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CHAPTER 4
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Corporation Tax Tonnage tax.
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53.—(1) The Principal Act is amended by inserting the following after Part 24: “PART 24A SHIPPING: TONNAGE TAX Interpretation(Part 24A).
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697A.—(1) In this Part and in Schedule 18B— ‘bareboat charter terms’, in relation to the charter of a ship, means the letting on charter of a ship for a stipulated period on terms which give the charterer possession and control of the ship, including the right to appoint the master and crew; ‘chartered in’ means— (a) in relation to a single company, the letting on charter of a ship to the company otherwise than on bareboat charter terms, and (b) in relation to a group of companies, the letting on charter of a ship otherwise than on bareboat charter terms to a qualifying company that is a member of the group by a person who is not a qualifying company that is a member of the group; ‘company election’ and ‘group election’ have the meanings respectively assigned to them by section 697D(1); ‘commencement date’ means the day appointed by the Minister for Finance by order as the day section 53 of the Finance Act, 2002, comes into operation; ‘control’ shall be construed in accordance with subsections (2) to (6) of section 432; ‘initial period’ has the meaning assigned to it by paragraph 2 of Schedule 18B; ‘group of companies’ means— (a) all the companies of which an individual has control, or (b) where a company that is not controlled by another person controls one or more other companies, that company and all the companies of which that company has control, and references to membership of a group and group shall be construed accordingly; ‘Member State’ means a Member State of the European Communities; ‘qualifying company’ means a company— (a) within the charge to corporation tax, (b) that operates qualifying ships, and (c) which carries on the strategic and commercial management of those ships in the State; ‘qualifying group’ means a group of companies of which one or more members are qualifying companies; ‘qualifying ship’ means, subject to subsection (2), a self-propelled seagoing vessel (including a hovercraft) of 100 tons or more gross tonnage which is certificated for navigation at sea by the competent authority of any country or territory, but does not include a vessel (in this Part and in Schedule 18B referred to as a ‘vessel of an excluded kind’) which is— (a) a fishing vessel or a vessel used for subjecting fish to a manufacturing or other process on board the vessel, (b) a vessel of a kind whose primary use is for the purposes of sport or recreation, (c) a harbour, estuary or river ferry, (d) an offshore installation, including a mobile or fixed rig, a platform or other installation of any kind at sea,
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(e) a tanker used for petroleum extraction activities (within the meaning of Chapter 2 of Part 24), (f) a dredger, including a vessel used primarily as a floating platform for working machinery or as a diving platform, (g) a tug in respect of which a certificate has not been given by the Minister for the Marine and Natural Resources certifying that in the opinion of the Minister the tug is capable of operating in seas outside the portion of the seas which are, for the purposes of the Maritime Jurisdiction Act, 1959 , the territorial seas of the State; ‘tonnage tax’ has the meaning assigned to it in section 697B; ‘tonnage tax activities’, in relation to a tonnage tax company, means activities carried on by the company in the course of a trade which consists of one or more than one of the activities described in paragraphs (a) to (j) and paragraph (m) of the definition of ‘relevant shipping income’; ‘tonnage tax asset’ means an asset used wholly and exclusively for the purposes of the tonnage tax activities of a tonnage tax company; ‘tonnage tax company’ and ‘tonnage tax group’ mean, respectively, a company or group in relation to which a tonnage tax election has effect; ‘tonnage tax election’ has the meaning assigned to it in section 697D(1); ‘tonnage tax profits’, in relation to a tonnage tax company, means the company's profits for an accounting period calculated in accordance with section 697C; ‘tonnage tax trade’, in relation to a tonnage tax company, means a trade carried on by the company the income from which is within the charge to corporation tax and which consists solely of the carrying on of tonnage tax activities or, in the case of a trade consisting partly of the carrying on of such activities and partly of other activities, that part of the trade consisting solely of the carrying on of tonnage tax activities and which is treated under section 697L as a separate trade carried on by the company; ‘relevant shipping income’, in relation to a tonnage tax company, means the company's income from— (a) the carriage of passengers by sea in a qualifying ship operated by the company, including income in respect of which the conditions set out in section 697I are met, (b) the carriage of cargo by sea in a qualifying ship operated by the company, including income in respect of which the conditions set out in section 697I are met, (c) towage, salvage or other marine assistance by a qualifying ship operated by the company, (d) transport in connection with other services of a kind necessarily provided at sea by a qualifying ship operated by the company,
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(e) the provision on board a qualifying ship operated by the company of services ancillary to the carriage of passengers or cargo, (f) the granting of rights by virtue of which another person provides or will provide such ancillary services on board a qualifying ship operated by the company, (g) other ship-related activities that are a necessary and integral part of the business of operating the company's qualifying ships, (h) the provision at sea of marine research facilities on board a qualifying ship operated by the company, (i) the letting on charter of a qualifying ship for use for the carriage by sea of passengers and cargo where the operation of the ship and the crew of the ship remain under the direction and control of the company, (j) the provision of ship management services for qualifying ships operated by the company, (k) a dividend or other distribution of a company not resident in the State (in this Part referred to as the ‘overseas company’) in respect of which the conditions set out in section 697H(1) are met, (l) gains treated as income by virtue of section 697J, (m) activities which are incidental to the activities described in paragraphs (a) to (j) (in this paragraph referred to as the ‘core activities’) where the turnover in an accounting period of the company from all such incidental activities does not exceed 0.25 per cent of the company's turnover from its core activities, ‘relevant shipping profits’, in relation to a tonnage tax company, means— (a) the company's relevant shipping income, and (b) so much of the company's chargeable gains as are excluded from the charge to tax by section 697N; ‘renewal election’ has the meaning assigned to it in paragraph 6 of Schedule 18B; ‘75 per cent limit’ has the meaning assigned to it by section 697E.
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(2)A vessel is not a qualifying ship for the purposes of this Part if the main purpose for which it is used is the provision of goods or services of a kind normally provided on land.
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(3)(a) References in this Part and in Schedule 18B to a company or group entering or leaving tonnage tax are references to its becoming or ceasing to be a tonnage tax company or group. (b) References in this Part and in Schedule 18B to a company or group of companies being subject to tonnage tax are references to the company or group being entitled to calculate its profits in accordance with the provisions of this Part and that Schedule.
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(4)Schedule 18B shall apply for the purposes of this Part.
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Application.
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697B.—Notwithstanding any other provision of the Tax Acts or the Capital Gains Tax Acts, this Part and Schedule 18B shall apply to provide an alternative method (in this Part referred to as ‘tonnage tax’) for computing the profits of a qualifying company for the purposes of corporation tax.
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Calculation of profits of tonnage tax company.
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697C.—(1) The tonnage tax profits of a tonnage tax company shall be charged to corporation tax in place of the company's relevant shipping profits.
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(2)Where the profits of a tonnage tax company would be relevant shipping income, any loss accruing to the company in respect of its tonnage tax activities or any loss which would, but for this subsection, be taken into account by virtue of section 79 in computing the trading income of the company shall not be brought into account for the purposes of corporation tax.
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(3)A company's tonnage tax profits for an accounting period in respect of each qualifying ship operated by the company shall be calculated in accordance with this section by reference to the net tonnage of each qualifying ship operated by the company and, for this purpose, the net tonnage of a ship shall be rounded down (if necessary) to the nearest multiple of 100 tons.
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(4)The daily profit to be attributed to each qualifying ship operated by the company shall be determined by reference to the net tonnage of the ship as follows: (a) for each 100 tons up to 1,000 tons, €1.00, (b) for each 100 tons between 1,000 and 10,000 tons, €0.75, (c) for each 100 tons between 10,000 and 25,000 tons, €0.50, and (d) for each 100 tons above 25,000 tons, €0.25.
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(5)The profit to be attributed to each qualifying ship for the accounting period shall be determined by multiplying the daily profit as determined under subsection (4) by— (a) the number of days in the accounting period, or (b) if the ship was operated by the company as a qualifying ship for only part of the period, by the number of days in that part of the accounting period.
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(6)The amount of the company's tonnage tax profits for the accounting period shall be the aggregate of the profit determined in respect of each qualifying ship operated by the company in accordance with subsection (5).
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(7)If 2 or more companies are to be regarded as operators of a ship by virtue of a joint interest in the ship, or in an agreement for the use of the ship, the tonnage tax profits of each company shall be calculated as if each were entitled to a share of the profits proportionate to its share of that interest.
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(8)If 2 or more companies are to be treated as the operator of a ship otherwise than as mentioned in subsection (7), the tonnage tax profits of each shall be computed as if each were the only operator.
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Election for tonnage tax.
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697D.—(1) Tonnage tax shall apply only if an election (in this Part and Schedule 18B referred to as a ‘tonnage tax election’) under this Part to that effect is made by a qualifying single company (in this Part and in Schedule 18B referred to as a ‘company election’) or by a qualifying group of companies (in this Part and in Schedule 18B referred to as a ‘group election’).
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(2)(a) Tonnage tax shall only apply to a company which is a member of a group of companies if the company joins in a group election which shall be made jointly by all the qualifying companies in the group. (b) A group election shall have effect in relation to all qualifying companies in the group.
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(3)A tonnage tax election shall be made only if the requirements of section 697E and 697F are met.
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(4)Part 1 of Schedule 18B shall apply for the purposes of making and giving effect to an election under this Part.
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Requirement that not more than 75 per cent of fleet tonnage is chartered in.
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697E.—(1) It shall be a requirement (in this Part and Schedule 18B referred to as the ‘75 per cent limit’) of entering or remaining within tonnage tax— (a) in the case of a single company, that not more than 75 per cent of the net tonnage of the qualifying ships operated by it is chartered in, (b) in the case of a group of companies, that not more than 75 per cent of the aggregate net tonnage of the qualifying ships operated by the members of the group that are qualifying companies is chartered in.
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(2)A ship shall not be counted more than once in determining for the purposes of subsection (1)(b) the aggregate net tonnage of the qualifying ships operated by the members of a group that are qualifying companies.
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(3)Where a tonnage tax election (not being a renewal election) is made before the end of the initial period and the 75 per cent limit is exceeded in the first relevant accounting period, the election shall be treated as never having been of any effect.
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(4)Where a tonnage tax election (not being a renewal election) is made after the end of the initial period, then— (a) if the 75 per cent limit is exceeded in the first relevant accounting period, the election shall not have effect in relation to that period, (b) if the 75 per cent limit is exceeded in the first and second relevant accounting periods, the election shall not have effect in relation to either of those periods, and (c) if the 75 per cent limit is exceeded in the first, second and third relevant accounting periods, the election shall be treated as never having been of any effect.
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(5)For the purposes of subsection (3) and (4) the first, second or third relevant accounting period means— (a) in relation to a single company, the accounting period that, if the election had been effective, would have been the first, second or third accounting period of the company after its entry into tonnage tax, and (b) in relation to a group of companies, the accounting period that, if the election had been effective, would have been the first, second or third accounting period of a member of the group that would have been a tonnage tax company.
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(6)Reference in this section to the 75 per cent limit being exceeded in an accounting period are to the limit being exceeded on average over the accounting period in question.
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(7)(a) If the 75 per cent limit is exceeded in 2 or more consecutive accounting periods of a tonnage tax company (in this subsection referred to as the ‘relevant company’) the Revenue Commissioners may give notice excluding the relevant company or the group of companies of which the relevant company is a member from tonnage tax. (b) The effect of any such notice is that the relevant company's tonnage tax election or the tonnage tax election of the group of which the relevant company is a member shall cease to be in force from such date as may be specified in the notice. (c) The specified date shall not be earlier than the beginning of the accounting period of the relevant company that follows the second consecutive accounting period of that company in which the limit is exceeded. (d) Subject to any arrangement under paragraph 22 of Schedule 18B, a notice under this subsection need only be given to the relevant company.
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Requirement not to enter into tax avoidance arrangements.
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697F.—(1) It shall be a condition of remaining within tonnage tax that a company is not a party to any transaction or arrangement that is an abuse of the tonnage tax regime.
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(2)A transaction or arrangement shall be such an abuse as is referred to in subsection (1) if in consequence of its being, or having been, entered into the provisions of this Part and Schedule 18B may be applied in a way that results (or would but for this subsection result) in— (a) a tax advantage (within the meaning of section 811) being obtained for— (i) a company other than a tonnage tax company, or (ii) a tonnage tax company in respect of its non-tonnage tax activities, or (b) the amount of the tonnage tax profits of a tonnage tax company being artificially reduced.
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(3)If a tonnage tax company is a party to any such transaction or arrangement as is referred to in subsection (1), the Revenue Commissioners may— (a) if it is single company, give notice excluding it from tonnage tax; (b) if it is a member of a group, subject to paragraph 22 of Schedule 18B, give notice to the tonnage tax company excluding the group from tonnage tax.
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(4)The effect of such a notice as is referred to in subsection (3)— (a) in the case of a single company, is that the company's tonnage tax election shall cease to be in force from the beginning of the accounting period in which the transaction or arrangement was entered into, and (b) in the case of a group, is that the group's tonnage tax election shall cease to be in force from such date as may be specified in the notice, but the date so specified shall not be earlier than the beginning of the earliest accounting period in which any member of the group entered into the transaction or arrangement in question.
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(5)The provisions of sections 697P apply where a company ceases to be a tonnage tax company by virtue of this section.
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Appeals.
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697G.—Any person aggrieved by the giving of such a notice as is referred to in section 697E or 697F may by notice in writing to that effect made to the Revenue Commissioners within 30 days from the date of the giving of the first-mentioned notice appeal to the Appeal Commissioners. In the case of a notice given to a tonnage tax company which is a member of a group of companies only one appeal may be brought, but it may be brought jointly by 2 or more members of the group concerned.
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Relevant shipping income: distributions of overseas shipping companies.
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697H.—(1) The conditions referred to in paragraph (k) of the definition of ‘relevant shipping income’ in section 697A are— (a) that the overseas company operates qualifying ships; (b) that more than 50 per cent of the voting power in the overseas company is held by a company resident in a Member State, or that 2 or more companies each of which is resident in a Member State hold in aggregate more than 50 per cent of that voting power; (c) that the 75 per cent limit is not exceeded in relation to the overseas company in any accounting period in respect of which the distribution is paid; (d) that all the income of the overseas company is such that, if it were a tonnage tax company, it would be relevant shipping income; (e) that the distribution is paid entirely out of profits arising at a time when— (i) the conditions in paragraphs (a) to (d) were met, and (ii) the tonnage tax company was subject to tonnage tax; and (f) the profits of the overseas company out of which the distribution is paid are subject to a tax on profits (in the country of residence of the company or elsewhere, or partly in that country and partly elsewhere).
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(2)A dividend or other distribution of an overseas company which is made out of profits which are referable to a dividend or other distribution in relation to which the conditions of subsection (1) are met shall be deemed for the purposes of this Part to be a dividend or other distribution in respect of which the conditions in subsection (1) are met.
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(3)Section 440 shall not apply to dividends and other distributions of an overseas company which is relevant shipping income of a tonnage tax company.
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Relevant shipping income: cargo and passengers.
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697I.—The conditions referred to in paragraphs (a) and (b) of the definition of ‘relevant shipping income’ in section 697A are— (a) that the income arises from the transport of passengers or cargo, (b) that there is a single contract between the tonnage tax company and a customer for the transport of cargo or passengers which includes carriage by sea in a qualifying ship operated by the company, and (c) that the transport for the remainder of the journey is purchased or obtained by the tonnage tax company by way of a bargain made at arm's length such as would be made between persons who are not connected.
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Relevant shipping income: foreign currency gains.
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697J.—(1) This section shall apply to— (a) any gain, whether realised or unrealised, attributable to a relevant monetary item (within the meaning of section 79) which would but for this Part be taken into account in computing the trading income of a company's tonnage tax trade in accordance with section 79, and (b) any gain, whether realised or unrealised, attributable to a relevant contract (within the meaning of section 79) which would but for this Part be taken into account in computing the trading income of a company's tonnage tax trade in accordance with section 79.
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(2)Where this section applies to any gain, the gain shall be treated as income for the purposes of the definition of ‘relevant shipping income’ in section 697A.
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General exclusion of investment income.
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697K.—(1) Income from investments shall not be relevant shipping income, and for this purpose ‘income from investments’ includes any income chargeable to tax under Case III, IV or V of Schedule D or under Schedule F.
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(2)To the extent that an activity gives rise to income from investments it shall not be regarded as part of a company's tonnage tax activities.
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(3)Subsection (1) shall not apply to income that is relevant shipping income under sections 697H and 697I or to income that is relevant shipping income by virtue of paragraph (m) of the definition of ‘relevant shipping income’.
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Tonnage tax trade.
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697L.—(1) Subject to section 697M, where in an accounting period a tonnage tax company carries on as part of a trade tonnage tax activities, those activities shall be treated for the purposes of the Corporation Tax Acts (other than any provision of those Acts relating to the commencement or cessation of a trade) as a separate trade distinct from all other activities carried on by the company as part of the trade.
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(2)An accounting period of a company shall end (if it would not otherwise do so) when the company enters or leaves tonnage tax.
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Exclusion of reliefs, deductions and set-offs.
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697M.—(1) No relief, deduction or set-off of any description is allowed against the amount of a company's tonnage tax profits.
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(2)(a) When a company enters tonnage tax, any losses that have accrued to it before entry and are attributable— (i) to activities that under tonnage tax become part of the company's tonnage tax trade, or (ii) to a source of income that under tonnage tax becomes relevant shipping income, shall not be available for loss relief in any accounting period beginning on or after the company's entry into tonnage tax. (b) Any apportionment necessary to determine the losses so attributable shall be made on a just and reasonable basis. (c) In paragraph (a) ‘loss relief’ includes any means by which a loss might be used to reduce the amount in respect of which that company, or any other company, is chargeable to tax.
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(3)(a) Any relief or set-off against a company's tax liability for an accounting period shall not apply in relation to so much of that tax liability as is attributable to the company's tonnage tax profits. (b) Relief to which this subsection applies includes, but is not limited to, any relief or set-off under section 826, 828 or Part 2 of Schedule 24. (c) This subsection shall not apply to any set-off under section 24(2) or 25(3).
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Chargeable gains.
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697N.—(1) Where for one or more continuous periods of at least 12 months part of an asset has been used wholly and exclusively for the purposes of the tonnage tax activities of a tonnage tax company and part has not, this section shall apply as if the part so used were a separate asset.
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(2)Where subsection (1) applies, any necessary apportionment of the gain or loss on the disposal of the whole asset shall be made on a just and reasonable basis.
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(3)(a) When an asset is disposed of that is or has been a tonnage tax asset— (i) any gain or loss on the disposal, which but for this paragraph would have been the amount of the chargeable gain or the allowable loss, shall be a chargeable gain or allowable loss only to the extent (if any) to which it is referable to periods during which the asset was not a tonnage tax asset, and (ii) any such chargeable gain or allowable loss on a disposal by a tonnage tax company shall be treated as arising otherwise than in the course of the company's tonnage tax trade. (b) For the purposes of paragraph (a), the proportion of the gain or loss referable to periods during which the asset was not a tonnage tax asset shall be determined by the formula: (P — T) P where P is the total length of the period since the asset was created or, if later, the last third-party disposal, and T is the length of the period (or the aggregate length of the periods) since— (I) the asset was created, or (II) if later, the last third-party disposal, during which the asset was a tonnage tax asset. (c) In paragraph (b) a ‘third-party disposal’ means a disposal (or deemed disposal) that is not treated as one on which neither a gain nor a loss accrues to the person making the disposal.
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(4)A tonnage tax election shall not affect the deduction under section 31 as applied by section 78(2) of relevant allowable losses (within the meaning of section 78) that accrued to a company before it became a tonnage tax company.
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Capital allowances: general.
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697O.—(1) A company's tonnage tax trade shall not be treated as a trade for the purposes of determining the company's entitlement to capital allowances under Part 9 or under any other provision which is to be construed as one with that Part, but nothing in this subsection shall be taken as preventing the making of a balancing charge under those provisions as applied by Schedule 18B.
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(2)Notwithstanding any other provision of the Tax Acts, Part 9 insofar as it relates to machinery or plant shall not apply to machinery or plant provided for leasing by a lessor (within the meaning of section 403) who is an individual to a lessee (within the meaning of section 403) for use in a tonnage tax trade carried on or to be carried on by the lessee.
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(3)Part 3 of Schedule 18B shall apply for the purposes of applying the provisions of Part 9 or any other provision which is to be construed as one with that Part for the purposes of a tonnage tax trade of a tonnage tax company.
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Withdrawal of relief etc. on company leaving tonnage tax.
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697P.—(1) This section shall apply where a company ceases to be a tonnage tax company— (a) on ceasing to be a qualifying company for reasons relating wholly or mainly to tax, or (b) under section 697F.
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(2)Where this section applies, section 697N shall apply in relation to chargeable gains (within the meaning of the Capital Gains Tax Acts), but not losses, on all relevant disposals as if the company had never been a tonnage tax company and for this purpose a ‘relevant disposal’ means a disposal— (a) on or after the day on which the company ceases to be a tonnage tax company, or (b) at any time during the period of 6 years immediately preceding that day when the company was a tonnage tax company.
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(3)Where subsection (2) operates to increase the amount of the chargeable gain on a disposal made at a time within the period mentioned in subparagraph (2)(b), the gain is treated to the extent of the increase— (a) as arising immediately before the company ceased to be a tonnage tax company, and (b) as not being relevant shipping profits of the company.
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(4)No relief, deduction or set-off of any description shall be allowed against the amount of that increase or the corporation tax charged on that amount.
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(5)Where this section applies and in a relevant accounting period during which the company was a tonnage tax company the company was liable to a balancing charge in relation to which paragraph 16 or 17, as appropriate, of Schedule 18B applied to reduce the amount of the charge, then the company shall be treated as having received an additional amount of profits chargeable to corporation tax equal to the aggregate of the amounts by which those balancing charges were reduced.
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(6)For the purposes of subsection (5) a ‘relevant accounting period’ means an accounting period ending not more than 6 years before the day on which the company ceased to be a tonnage tax company.
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(7)The additional profits referred to in subsection (5) shall be treated— (a) as arising immediately before the company ceased to be a tonnage tax company, and (b) as not being relevant shipping profits of the company.
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(8)No relief, deduction or set-off of any description shall be allowed against those profits or against the corporation tax charged on them.
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Ten year disqualification from re-entry into tonnage tax.
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697Q.—(1) This section shall apply in every case where a company ceases to be a tonnage tax company otherwise than on the expiry of a tonnage tax election.
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(2)Where this section applies— (a) a company election made by a former tonnage tax company shall be ineffective if made before the end of the period of 10 years beginning with the date on which the company ceased to be a tonnage tax company, and (b) a group election that— (i) is made in respect of a group whose members include a former tonnage tax company, and (ii) would result in that company becoming a tonnage tax company, shall be ineffective if made before the end of the period of 10 years beginning with the date on which that company ceased to be a tonnage tax company.
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(3)This section shall not prevent a company becoming a tonnage tax company under and in accordance with the rules in Part 4 of Schedule 18B.
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(4)In this section ‘former tonnage tax company’ means a company that is not a tonnage tax company but has previously been a tonnage tax company.”.
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(2)The Principal Act is amended by inserting the following after Schedule 18A: “SCHEDULE 18B TONNAGE TAX
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Part 1
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Matters relating to election for tonnage tax Method of making election 1. (1) A tonnage tax election shall be made by notice to the Revenue Commissioners.
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(2)The notice shall contain such particulars and be supported by such evidence as the Revenue Commissioners may require.
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When election may be made 2. (1) A tonnage tax election may be made at any time before the end of the period (in this Schedule referred to as the ‘initial period’) of 36 months beginning on the commencement date.
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(2)After the end of the initial period a tonnage tax election may only be made in the circumstances specified in subparagraphs (3) and (4).
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(3)(a) An election may be made after the end of the initial period in respect of a single company that becomes a qualifying company and has not previously been a qualifying company at any time on or after the commencement date. (b) Any election under this subparagraph shall be made before the end of the period of 36 months beginning with the day on which the company became a qualifying company.
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(4)(a) An election may be made after the end of the initial period in respect of a group of companies that becomes a qualifying group of companies by virtue of a member of the group becoming a qualifying company, not previously having been a qualifying company, at any time on or after the commencement date. (b) This subparagraph shall not apply if the group of companies- (i) was previously a qualifying group at any time on or after the commencement date, or (ii) is substantially the same as a group that was previously a qualifying group of companies at any such time. (c) An election under this subparagraph shall be made before the end of the period of 36 months beginning with the day on which the group of companies became a qualifying group of companies.
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(5)This paragraph shall not prevent an election being made under Part 4.
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(6)The Minister for Finance may by order provide for further periods within which a tonnage tax election may be made, and any such order may provide for this Part of this Schedule to apply, with any necessary modifications, as appears to the Minister to be appropriate in relation to such further periods as it applies in relation to the initial period.
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When election takes effect 3. (1) Subject to this paragraph, a tonnage tax election shall have effect from the beginning of the accounting period in which it is made.
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(2)A tonnage tax election shall not have effect in relation to an accounting period beginning before 1 January 2002, but where a tonnage tax election would have effect under subparagraph (1) for an accounting period beginning before 1 January 2002 the election shall have effect from the beginning of the accounting period following that in which it is made.
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(3)The Revenue Commissioners may allow a tonnage tax election made before the end of the initial period to have effect from the beginning of an accounting period earlier than that in which it is made (but not one beginning before 1 January 2002).
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(4)The Revenue Commissioners may allow a tonnage tax election made before the end of the initial period to have effect from the beginning of the accounting period following that in which it is made or, where the Revenue Commissioners determine that due to exceptional circumstances, unrelated to the avoidance or reduction of tax, it is commercially impracticable for the election to take effect, the beginning of the next following accounting period.
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(5)In the case of a group election made in respect of a group of companies where the members have different accounting periods, subparagraph (1) or, if appropriate, subparagraph (3) or (4) shall apply in relation to each qualifying company by reference to that company's accounting periods.
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(6)Subject to section 697E(4), a tonnage tax election under paragraph 2(3) or (4) shall have effect from the time at which the company in question became a qualifying company.
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Period for which election is in force 4. (1) Subject to subparagraphs (2) and (3) and paragraph 6(3), a tonnage tax election shall remain in force until it expires at the end of the period of 10 years beginning— (a) in the case of a company election, with the first day on which the election has effect in relation to the company, and (b) in the case of a group election, with the first day on which the election has effect in relation to any member of the group.
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(2)A tonnage tax election shall cease to be in force— (a) in the case of a company election, if the company ceases to be a qualifying company, and (b) in the case of a group election, if the group of companies ceases to be a qualifying group.
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(3)A tonnage tax election may also cease to be in force under Part 4.
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Effect of election ceasing to be in force 5. A tonnage tax election that ceases to be in force shall cease to have effect in relation to any company.
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Renewal election 6. (1) At any time when a tonnage tax election is in force in respect of a single company or group of companies a further tonnage tax election (in Part 24A and this Schedule referred to as a ‘renewal election’) may be made in respect of that company or group.
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(2)Section 697D and paragraphs 1, 4 and 5 shall apply in relation to a renewal election as they apply in relation to an original tonnage tax election.
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(3)A renewal election supersedes the existing tonnage tax election.
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Part 2
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Matters relating to qualifying ships Company temporarily ceasing to operate qualifying ships 7. (1) This paragraph shall apply where a company temporarily ceases to operate any qualifying ships.
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(2)This paragraph shall not apply where a company continues to operate a ship that temporarily ceases to be a qualifying ship.
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(3)If a company which temporarily ceases to operate any qualifying ships gives notice to the Revenue Commissioners stating— (a) its intention to resume operating qualifying ships, and (b) its wish to remain within tonnage tax, the company shall be treated for the purposes of Part 24A and this Schedule as if it had continued to operate the qualifying ship or ships it operated immediately before the temporary cessation.
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(4)The notice must be given on or before the specified return date for the chargeable period (within the meaning of Part 41) of the company in which the temporary cessation begins.
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(5)This paragraph shall cease to apply if and when the company— (a) abandons its intention to resume operating qualifying ships, or (b) again in fact operates a qualifying ship.
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Meaning of operating a ship 8. (1) Subject to this paragraph, a company is regarded for the purposes of Part 24A and this Schedule as operating any ship owned by, or chartered to, the company.
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(2)(a) A company shall not be regarded as the operator of a ship where part only of the ship has been chartered to it. (b) For the purpose of subparagraph (a), a company shall not be taken as having part only of a ship chartered to it by reason only of the ship being chartered to it jointly with one or more other persons.
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(3)Except as provided by subparagraphs (4) and (5), a company shall not be regarded as the operator of a ship that has been chartered out by it on bareboat charter terms.
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(4)(a) A company shall be regarded as operating a ship that has been chartered out by it on bareboat charter terms if the person to whom it is chartered is not a third party. (b) For the purpose of subparagraph (a), a ‘third party’ means— (i) in the case of a single company, any other person, (ii) in the case of a member of a group of companies— (I) any member of the group that is not a tonnage tax company (and does not become a tonnage tax company by virtue of the ship being chartered to it), or (II) any person who is not a member of the group.
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(5)A company shall not be regarded as ceasing to operate a ship that has been chartered out by it on bareboat charter terms if— (a) the ship is chartered out because of short-term over-capacity, and (b) the term of the charter does not exceed 3 years.
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(6)A company shall be regarded as operating a qualifying ship for the purposes of the activity described in paragraph (j) of the definition of ‘relevant shipping income’ in section 697A if that company has entered contractual arrangements in relation to the provision of ship management services for the qualifying ship for a stipulated period and the terms of those arrangements give the company— (a) possession and control of the ship, (b) control over the day to day management of the ship, including the right to appoint the master and crew and route planning, (c) control over the technical management of the ship, including decisions on its repair and maintenance, (d) control over the safety management of the ship, including ensuring that all necessary safety and survey certificates are current, (e) control over the training of the officers and crew of the ship, and (f) the management of the bunkering, victualling and provisioning of the ship, and those terms are actually implemented for the period in which the company provides ship management services in respect of that ship.
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Qualifying ship used as vessel of an excluded kind 9. (1) A qualifying ship that begins to be used as a vessel of an excluded kind ceases to be a qualifying ship when it begins to be so used, but if— (a) a company operates a ship throughout an accounting period of the company, and (b) in that period the ship is used as a vessel of an excluded kind on not more than 30 days, that use shall be disregarded in determining whether the ship is a qualifying ship at any time during that period.
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(2)In the case of an accounting period shorter than a year, the figure of 30 days in subparagraph (1) shall be proportionately reduced.
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(3)If a company operates a ship during part only of an accounting period of the company, subparagraph (1) shall apply as if for 30 days, or the number of days substituted by subparagraph (2), there were substituted the number of days that bear to the length of that part of the accounting period the same proportion that 30 days bears to a year.
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Part 3
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Capital Allowances, Balancing Charges and Related Matters Plant and machinery used wholly for tonnage tax trade 10. (1) (a) This subparagraph shall apply where, on a company's entry to tonnage tax, machinery or plant, in respect of which capital expenditure was incurred by the company before its entry into tonnage tax, is to be used wholly and exclusively for the purposes of the company's tonnage tax trade. (b) Where this subparagraph applies— (i) no balancing charge or balancing allowance shall be made under section 288 as a result of the machinery or plant concerned being used for the purposes of the company's tonnage tax trade, (ii) any allowance attributable to the machinery or plant referred to in subparagraph (a) which, but for this clause, would have been made to the company under Part 9 or under any provision that is construed as one with that Part for any accounting period in which the company is a tonnage tax company shall not be made, and (iii) section 287 shall not apply as respects any accounting period during which the machinery or plant has been used wholly and exclusively for the purposes of a company's tonnage tax trade.
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(2)(a) This subparagraph shall apply where the machinery or plant referred to in subparagraph (1)(a) begins to be used wholly or partly for purposes other than those of the company's tonnage tax trade. (b) Where this subparagraph applies and the asset begins to be wholly used for purposes other than the company's tonnage tax trade— (i) no balancing allowance shall be made on the company under section 288(2) for any period in which the company is subject to tonnage tax, (ii) for the purposes of making a balancing charge under section 288 on the happening of any of the events referred to in subsection (1) of that section— (I) section 296 shall not apply as respects any accounting period of a company in which the company is subject to tonnage tax, (II) where the event occurs at a time when the company is subject to tonnage tax, the amount of the capital expenditure of the company still unallowed at the time of the event shall, notwithstanding section 296, be the amount of the capital expenditure of the company on the provision of the machinery or plant which was still unallowed at the time the company's election into tonnage tax had effect, and (III) where the event occurs at a time when the company is subject to tonnage tax, the references in section 288 to sale, insurance, salvage or compensation moneys and the reference in section 289(3)(b) to the open-market price of the machinery or plant shall be taken to be references to the least of— (A) the actual cost to the company of the machinery or plant for the purpose of the trade carried on by the company, (B) the price the machinery or plant would have fetched if sold in the open market at the time the company's election into tonnage tax had effect, and (C) the sale, insurance, salvage or compensation moneys (within the meaning of Part 9) arising from the event or, where paragraph (b) of section 289(3) applies, the open-market price of the machinery or plant (within the meaning of that section) at the time of the event. (c) Where this subparagraph applies and the asset begins to be partly used for purposes other than the company's tonnage tax trade— (i) the machinery or plant shall be treated as 2 separate assets one in use wholly and exclusively for the purposes of the tonnage tax trade and the other in use wholly and exclusively for purposes other than the company's tonnage tax trade, (ii) subparagraph (2)(b) shall apply in relation to the part of the asset treated by virtue of this subparagraph as in use wholly and exclusively for the purposes of the tonnage tax trade as it applies in relation to machinery or plant which begins to be used wholly for purposes other than the company's tonnage tax trade,
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(iii) in determining the amount of any capital allowance or balancing charge, if any, to be made under Part 9 or under any other provision to be construed as one with that Part in relation to the part of the asset treated by virtue of this subparagraph as in use wholly and exclusively for purposes other than the company's tonnage tax trade regard shall be had to all relevant circumstances and, in particular, to the extent of the use, if any, of the machinery or plant for the purposes of a trade, and there shall be made to or on the company, in respect of that trade, an allowance of such an amount or a balancing charge of such an amount, as may be just and reasonable.
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Plant and machinery used partly for purposes of tonnage tax trade 11. (1) This paragraph shall apply where, on a company's entry into tonnage tax, machinery or plant, in respect of which capital expenditure was incurred by the company before its entry into tonnage tax, is to be used partly for the purposes of the company's tonnage tax trade and partly for purposes other than the company's tonnage tax trade.
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(2)Where this paragraph applies— (a) the machinery or plant referred to in subparagraph (1) shall be treated as 2 separate assets one in use wholly and exclusively for the purposes of the tonnage tax trade and the other in use wholly and exclusively for the purposes of the other trade of the company, (b) subject to clause (c), in determining the amount of— (i) any capital allowance or balancing charge to be made in respect of that part of the asset treated as in use wholly and exclusively for purposes other than the company's tonnage tax trade under Part 9 or under any provision which is to be construed as one with that Part, or (ii) the amount of any balancing charge to be made for the purpose of the tonnage tax trade under Part 9, or under any provision which is to be construed as one with that Part, as applied by this Schedule, regard shall be had to all relevant circumstances and, in particular, to the extent of the use of the machinery or plant for the purposes of a trade other than the tonnage tax trade, and there shall be made to or on the company, in respect of that trade, an allowance of such an amount, or, in respect of both the tonnage tax trade and the other trade, a balancing charge of such an amount, as may be just and reasonable, and (c) paragraph 10(1)(b) and paragraph 10(2)(b) shall apply in relation to the part of the asset treated by virtue of this paragraph as in use wholly and exclusively for the purposes of the tonnage tax trade as they apply in relation to the machinery or plant referred to in paragraph 10(1)(a).
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Plant and machinery: new expenditure partly for tonnage tax purposes 12. (1) This paragraph shall apply where a company subject to tonnage tax incurs capital expenditure on the provision of machinery or plant partly for the purposes of its tonnage tax trade and partly for the purposes of another trade carried on by the company.
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(2)Where this paragraph applies the machinery or plant shall be treated as 2 separate assets one in use wholly and exclusively for the purposes of the tonnage tax trade and the other in use wholly and exclusively for the purposes of the other trade of the company and, in determining the amount of any capital allowance, or the amount of any charge to be made, under Part 9 or under any provision which is to be construed as one with that Part in the case of that part of the asset treated as a separate asset for the purposes of the other trade of the company, regard shall be had to all relevant circumstances and, in particular, to the extent of the use of the machinery or plant for the purposes of the other trade, and there shall be made to or on the company, in respect of the other trade, an allowance of such an amount, or a charge of such an amount, as may be just and reasonable.
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Plant and machinery: change of use of tonnage tax asset 13. (1) This paragraph shall apply where, at a time when a company is subject to tonnage tax, machinery or plant acquired after the company became so subject and which is used wholly and exclusively for the purposes of the company's tonnage tax trade begins to be used wholly or partly for purposes of another trade.
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(2)Where this paragraph applies— (a) if the asset begins to be used wholly for purposes of another trade the provisions of Part 9 shall apply as if capital expenditure had been incurred by the person carrying on the other trade on the provision of the plant or machinery for the purposes of that trade in that person's chargeable period (within the meaning of Part 9) in which the plant or machinery is brought into use for those purposes, and the amount of that expenditure shall be taken as the lesser of— (i) the amount of the capital expenditure actually incurred by the person, and (ii) the price which the machinery or plant would have fetched if sold on the open market on the date on which it was so brought into use, and (b) if the asset begins to be used partly for purposes of another trade of the company and partly for the purposes of the tonnage tax trade— (i) the machinery or plant shall be treated as 2 separate assets one in use wholly and exclusively for the purposes of the tonnage tax trade and the other in use wholly and exclusively for the purposes of the other trade of the company, (ii) Part 9 shall apply as if the company had incurred capital expenditure on the provision of that part of the asset treated as in use wholly and exclusively for the other trade of the company in the accounting period of the company in which that part of the asset is brought into use for those purposes, and (iii) in determining the amount of any capital expenditure incurred on the provision of that part of the asset treated as in use as a separate asset for the purposes of the other trade of the company regard shall be had to all relevant circumstances as is just and reasonable.
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Plant and machinery: change of use of non-tonnage tax asset 14. (1) This paragraph shall apply where, at a time when a company is subject to tonnage tax, plant or machinery wholly and exclusively used for the purposes of another trade carried on by the company not being a tonnage tax trade begins to be used wholly or partly for the purposes of the company's tonnage tax trade.
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(2)Where this paragraph applies and the asset begins to be wholly used for the purposes of the company's tonnage tax trade— (a) no balancing allowance or balancing charge shall be made as a consequence of the change in use, and (b) for the purposes of making a balancing charge under section 288 on the happening subsequent to the change in use of any of the events referred to in subsection (1) of that section— (i) section 296 shall not apply as respects any accounting period of the company in which the asset is used wholly and exclusively for the purposes of the company's tonnage tax trade, (ii) where the event occurs at a time when the asset is so used, the amount of the capital expenditure of the company still unallowed at the time of the event shall, notwithstanding section 296, be the amount of the capital expenditure of the company on the provision of the machinery or plant which was still unallowed at the time the asset began to be so used, and (iii) where the event occurs at a time when the asset is so used, the references in section 288 to sale, insurance, salvage or compensation moneys and the reference in section 289(3)(b) to the open-market value of the machinery or plant shall be taken to be references to the least of— (I) the actual cost to the company of the machinery or plant for the purpose of the trade carried on by the company, (II) the price the machinery or plant would have fetched if sold in the open market at the time the asset began to be so used, and (III) the sale, insurance, salvage or compensation moneys (within the meaning of Part 9) arising on the event or, where paragraph (b) of section 289(3) applies, the open-market price of the machinery or plant (within the meaning of that section) at the time of the event.
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(3)Where this paragraph applies and the asset begins to be partly used for the purposes of the company's tonnage tax trade— (a) the machinery or plant referred to in subparagraph (1) shall be treated as 2 separate assets one in use wholly and exclusively for the purposes of the other trade of the company and the other in use wholly and exclusively for the purposes of the tonnage tax trade of the company, (b) no balancing charge or balancing allowance shall be made in respect of the part treated as in use wholly and exclusively for the purposes of the tonnage tax trade as a consequence of the change in use, (c) subparagraph (2)(b) shall apply in relation to the part of the asset treated by virtue of this subparagraph as in use wholly and exclusively for the purposes of the tonnage tax trade as it applies in relation to the machinery or plant wholly used for the purposes of the company's tonnage tax trade.
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Plant and machinery: provisions relating to balancing charges 15. (1) A balancing charge arising under Part 9 as applied by this Schedule or under this Schedule shall— (a) be treated as arising in connection with a trade carried on by the company other than the company's tonnage tax trade, and (b) be made in taxing that trade.
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(2)Subject to paragraph 16 or 17, the charge shall be given effect in the accounting period in which it arises.
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(3)On the first occasion of the happening of an event which gives rise to a balancing charge (including such an event arising in respect of more than one asset on the same date) under Part 9 as applied by this Schedule, or under this Schedule, on a tonnage tax company, the tonnage tax company shall by notice in writing to the Revenue Commissioners elect for relief against that charge under either paragraph 16 or, if applicable, paragraph 17 but not for relief under both, and any such election shall be irrevocable and be included in the company's return under section 951 for the accounting period in which the charge arises.
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(4)Where a balancing charge arises on a tonnage tax company under Part 9 as applied by this Schedule or under this Schedule subsequent to any charge on the company such as is referred to in subparagraph (3), relief against that charge shall only be available under the paragraph for which the company elected for relief in accordance with that subparagraph.
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(5)Relief under paragraph 16 or 17 shall not be available to a company unless the company has made an election under subparagraph (3).
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Reduction in balancing charge by reference to time in tonnage tax 16. The amount of any balancing charge under Part 9 as applied by this Schedule or under this Schedule shall be reduced by 20 per cent of the amount of the charge for each whole year in which the company on which the charge is to be made has been subject to tonnage tax calculated by reference to the time of the event giving rise to the charge.
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Set-off of accrued losses against balancing charge 17. Where a balancing charge under Part 9 as applied by this Schedule or under this Schedule arises in connection with the disposal of a qualifying ship, then the company may set off against any balancing charge so arising any losses (including any losses referable to capital allowances treated by virtue of section 307 or 308 as trading expenses of the company) which accrued to the company before its entry to tonnage tax and which are attributable to— (a) activities which under tonnage tax became part of the company's tonnage tax trade, or (b) a source of income which under tonnage tax becomes relevant shipping income.
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Deferment of balancing charge on re-investment 18. (1) Where— (a) a balancing charge under Part 9 as applied by this Schedule arises in connection with the disposal of a qualifying ship, and (b) within the period beginning on the date the company's election for tonnage tax takes effect and ending 5 years after the date of the event giving rise to the balancing charge, the company or another qualifying company which is a member of the same tonnage tax group as the company incurs capital expenditure on the provision of one or more other qualifying ships (in this paragraph referred to as the ‘new asset’), then (i) if the amount on which the charge would have been made, as reduced under paragraph 16 or 17, if applicable, is greater than the capital expenditure on providing the new asset, the balancing charge shall be made only on an amount equal to the difference, and (ii) if the capital expenditure on providing the new asset is equal to or greater than the amount on which the charge would have been made, as reduced under paragraph 16 or 17, if applicable, the balancing charge shall not be made.
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(2)Where an event referred to in section 288(1) occurs in relation to the new asset in the period in which the company which incurs the expenditure on the new asset is subject to tonnage tax then a balancing charge shall be made under this paragraph on that company.
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(3)Subject to any reduction under paragraph 16 or 17 and to any further application of this paragraph, the amount of the charge referred to in subparagraph (2) shall be— (a) where subparagraph (1)(i) applies, the difference between the balancing charge which, but for subparagraph (1), would have been made on the disposal referred to in subparagraph (1) and the actual charge made, (b) where subparagraph (1)(ii) applies, the amount of the charge which, but for subparagraph (1), would have been made on the disposal referred to in that subparagraph.
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(4)Section 290 shall not apply in relation to balancing charges to which this paragraph applies.
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(5)For the purposes of subparagraph (1), where machinery or plant is let to a tonnage tax company on the terms of that company being bound to maintain the machinery or plant and deliver it over in good condition at the end of the lease, and if the burden of the wear and tear on the machinery or plant will in fact fall directly on the company, then the capital expenditure on the provision of the machinery and plant shall be deemed to have been incurred by that company and the machinery and plant shall be deemed to belong to that company.
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Exit: plant and machinery 19. (1) Where a company leaves tonnage tax the amount of capital expenditure incurred on the provision of machinery or plant in respect of each asset used by the company for the purposes of its tonnage tax trade which asset was acquired at a time the company was subject to tonnage tax and held by the company at the time it leaves tonnage tax shall be deemed to be the lesser of— (a) the capital expenditure actually incurred by the company on the provision of that machinery or plant for the purposes of the company's tonnage tax trade, and (b) the price the machinery or plant would have fetched if sold in the open market at the date the company leaves tonnage tax.
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(2)For the purposes of the making of allowances and charges under Part 9 or any provision construed as one with that Part, the capital expenditure on the provision of the machinery or plant as determined in accordance with subparagraph (1) shall be deemed to have been incurred on the day immediately following the date the company leaves tonnage tax.
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(3)(a) This subparagraph applies where a company— (i) leaves tonnage tax having incurred expenditure on the provision of machinery or plant for the purposes of a trade carried on by the company before entry into tonnage tax, (ii) has used that machinery or plant for the purposes of its tonnage tax trade, (iii) has been denied allowances in respect of that machinery or plant by virtue of section 697O and the provisions of paragraph 10(1)(b)(ii) or paragraph 11(2)(c), and (iv) on leaving tonnage tax starts, recommences or continues to use that machinery or plant for the purposes of a trade carried on by it. (b) Subject to clauses (c) and (d), where this subparagraph applies any allowance which, but for section 697O and paragraph 10(1)(b) or 11(2)(c), would have been made under Part 9 or any provision construed as one with that Part to the company for any accounting period in which it was subject to tonnage tax shall, subject to compliance with that Part, be made instead for such accounting periods immediately after the company leaves tonnage tax as will ensure, subject to that Part, that all such allowances are made to the company in those accounting periods as would have been made to the company in respect of that machinery or plant if the company had never been subject to tonnage tax. (c) No wear and tear allowance shall be made by virtue of this subparagraph in respect of any machinery or plant for any accounting period of a company if such allowance when added to the allowances in respect of that machinery or plant made to that company for any previous accounting period will make the aggregate amount of the allowances exceed the actual cost to that company of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by means of renewal, improvement or reinstatement. (d) A wear and tear allowance in respect of any machinery or plant made by virtue of this subparagraph for any accounting period shall not exceed the amount appropriate to that machinery or plant as set out in section 284(2).
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Industrial buildings 20. (1) Where any identifiable part of a building or structure is used for the purposes of a company's tonnage tax trade, that part is treated for the purposes of Chapter 1 of Part 9 as used otherwise than as an industrial building or structure.
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(2)(a) This subparagraph applies where, in an accounting period during which a company is subject to tonnage tax, an event giving rise to a balancing charge occurs in relation to an industrial building or structure in respect of which capital expenditure was incurred by the company before its entry into tonnage tax. (b) Where this subparagraph applies— (i) the sale, insurance, salvage or compensation moneys to be brought into account in respect of any industrial building or structure shall be limited to the market value of the relevant interest when the company entered tonnage tax, and (ii) the amount of any balancing charge under that Part shall, subject to subparagraphs (3) to (5) of paragraph 15, be reduced in accordance with paragraph 16 or 17, as appropriate.
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(3)Where a company subject to tonnage tax disposes of the relevant interest in an industrial building or structure, section 277 shall apply to determine the residue of expenditure in the hands of the person who acquires the relevant interest, as if— (a) the company had not been subject to tonnage tax, and (b) all writing-down allowances, and balancing allowances and charges, had been made as could have been made if the company had not been subject to tonnage tax.
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(4)Where a company leaves tonnage tax the amount of capital expenditure qualifying for relief under Chapter 1 of Part 9 shall be determined as if— (a) the company had never been subject to tonnage tax, and (b) all such allowances and charges under that Part had been made as could have been made.
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Part 4
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Groups, Mergers and Related Matters Company not to be treated as member of more than one group 21. (1) Where a company is a member of both a tonnage tax group and a non-tonnage tax group which if a group election had been made would have been a tonnage tax group (in this paragraph referred to as a qualifying non-tonnage tax group), the company shall be treated as a member of the tonnage tax group and not of the qualifying non-tonnage tax group.
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(2)Where a company is a member of 2 tonnage tax groups, the company shall be treated as a member of the group whose tonnage tax election was made first and not of the other tonnage tax group. In the case of group elections made at the same time, the company shall choose which election it joins in and for the purposes of Part 24A and this Schedule the company shall be treated as a member of the group in respect of which that election is made and not of any other tonnage tax group.
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Arrangements for dealing with group matters 22. (1) The Revenue Commissioners may enter into arrangements with the qualifying companies in a group for one of those companies to deal on behalf of the group in relation to matters arising under Part 24A and this Schedule that may conveniently be dealt with on a group basis.
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(2)Any such arrangements— (a) may make provision in relation to cases where companies become or cease to be members of a group; (b) may make provision for or in connection with the termination of the arrangements; and (c) may make such supplementary, incidental, consequential or transitional provision as is necessary or expedient for the purposes of the arrangements.
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(3)Any such arrangements shall not affect— (a) any requirement under Part 24A and this Schedule that an election be made jointly by all the qualifying companies in the group; or (b) any liability under Part 24A, this Schedule or any other provision of the Tax Acts of a company to which the arrangements relate.
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Meaning of ‘merger’ and ‘demerger’ 23. (1) In this Schedule— ‘merger’ means a transaction by which one or more companies become members of a group, and ‘demerger’ means a transaction by which one or more companies cease to be members of a group.
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(2)References to a merger to which a group is a party include any merger affecting a member of the group.
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Merger: between tonnage tax groups or companies 24. (1) This paragraph shall apply where there is a merger— (a) between 2 or more tonnage tax groups, (b) between one or more tonnage tax groups and one or more tonnage tax companies, or (c) between two or more tonnage tax companies.
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(2)Where this paragraph applies the group resulting from the merger is a tonnage tax group as if a group election had been made.
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(3)The deemed election referred to in subparagraph (2) continues in force, subject to the provisions of this Part, until whichever of the existing tonnage tax elections had the longest period left to run would have expired.
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Merger: tonnage tax group/ company and qualifying non-tonnage tax group/ company 25. (1) This paragraph shall apply where there is a merger between a tonnage tax group or company and a qualifying non-tonnage tax group or company.
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(2)Where this paragraph applies the group resulting from the merger may elect that— (a) it be treated as if a group election had been made which deemed election shall continue in force until the original election made by the tonnage tax group or company would have expired, or (b) the tonnage tax election of the group or company ceases to be in force as from the date of the merger.
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(3)Any election under subparagraph (2) shall be made jointly by all the qualifying companies in the group resulting from the merger and by way of notice in writing to the Revenue Commissioners within 12 months of the merger.
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Merger: tonnage tax group or company and non-qualifying group or company 26. (1) This paragraph shall apply where there is a merger between a tonnage tax group or company and a non-qualifying group or company.
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(2)Where this subsection applies the group resulting from the merger is a tonnage tax group by virtue of the election of the tonnage tax group or company.
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Merger: non-qualifying group or company and qualifying non-tonnage tax group or company 27. (1) This paragraph shall apply where there is a merger between a non-qualifying group or company and a qualifying non-tonnage tax group or company.
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(2)Where this paragraph applies, the group resulting from the merger may make a tonnage tax election having effect as from the date of the merger.
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(3)Any such election shall be made jointly by all the qualifying companies in the group resulting from the merger, by notice in writing to the Revenue Commissioners, within 12 months of the merger.
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Demerger: single company 28. (1) This paragraph shall apply where a tonnage tax company ceases to be a member of a tonnage tax group and does not become a member of another group.
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(2)Where this paragraph applies— (a) the company in question remains a tonnage tax company as if a single company election had been made, and (b) that deemed election continues in force, subject to the provisions of this Schedule, until the group election would have expired.
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(3)If 2 or more members of the previous group remain, and any of them is a qualifying company, the group consisting of those companies shall be a tonnage tax group by virtue of the previous group election.
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Demerger: group 29. (1) This paragraph shall apply where a tonnage tax group splits into two or more groups.
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(2)Where this paragraph applies each new group that contains a qualifying company that was a tonnage tax company before the demerger shall be a tonnage tax group as if a group election had been made.
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(3)That deemed election continues in force, subject to the provisions of this Schedule, until the group election would have expired.
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Duty to notify Revenue Commissioners of group changes 30. (1) A tonnage tax company that becomes or ceases to be a member of a group, or of a particular group, shall give notice in writing to the Revenue Commissioners of that fact.
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(2)The notice shall be given within the period of 12 months beginning with the date on which the company became or ceased to be a member of the group.
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Part 5
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Miscellaneous and supplemental Measurement of tonnage of ship 31. (1) References in Part 24A and in this Schedule to the gross or net tonnage of a ship are to that tonnage as determined— (a) in the case of a vessel of 24 metres in length or over, in accordance with the IMO International Convention on Tonnage Measurement of Ships 1969; (b) in the case of a vessel under 24 metres in length, in accordance with tonnage regulations.
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(2)A ship shall not be treated as a qualifying ship for the purposes of this Part and this Schedule unless there is in force— (a) a valid International Tonnage Certificate (1969), or (b) a valid certificate recording its tonnage as measured in accordance with tonnage regulations.
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(3)In this paragraph ‘tonnage regulations’ means regulations under section 91 of the Mercantile Marine Act, 1955 or the provisions of the law of a country or territory outside the State corresponding to those regulations.
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Second or subsequent application of sections 697P and 697Q 32. Where sections 697P and 697Q apply on a second or subsequent occasion on which a company ceases to be a tonnage tax company (whether or not those sections applied on any of the previous occasions)— (a) the references to the company ceasing to be a tonnage tax company shall be read as references to the last occasion on which it did so, and (b) the references to the period during which the company was a tonnage tax company do not include any period before its most recent entry into tonnage tax.
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Appeals 33. Where in Part 24A and in this Schedule there is provision for the determination of any matter on a just and reasonable basis and it is not possible for the company concerned and the appropriate inspector (within the meaning of section 950) to agree on what is just and reasonable in the circumstances then there shall be the right of appeal to the Appeal Commissioners in the like manner as an appeal would lie against an assessment to corporation tax and the provisions of the Tax Acts relating to appeals shall apply accordingly.
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Delegation of powers and functions 34. The Revenue Commissioners may nominate any of their officers to perform any acts and discharge any functions authorised by Part 24A or this Schedule to be performed or discharged by the Revenue Commissioners.”.
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(3)The Principal Act is amended in subsection (1A) of section 21 by inserting the following after paragraph (b): “(c) Notwithstanding subsection (1), for the financial year 2002, in relation to a tonnage tax company (within the meaning of Part 24A), tonnage tax profits shall be charged to corporation tax at the rate of 12½ per cent.”.
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(4)Schedule 29 of the Principal Act is amended by inserting “Schedule 18B, paragraph 30” after “Schedule 18, paragraph 1(2)” in column 2.
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(5)This section shall come into operation on such day as the Minister for Finance may by order appoint.
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Relief for certain losses on a value basis.
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54.—(1) The Principal Act is amended— (a) in Part 8 by inserting the following after section 243A: “Relief for certain charges on income on a value basis.
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243B.—(1) In this section— ‘charges on income paid for the purposes of the sale of goods’ has the same meaning as in section 454; ‘relevant corporation tax’, in relation to an accounting period of a company, means the corporation tax which, apart from this section and sections 239, 241, 396B, 420B, 440 and 441, would be chargeable on the company for the accounting period; ‘relevant trading charges on income’ has the same meaning as in section 243A.
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(2)Where a company pays relevant trading charges on income in an accounting period and the amount so paid exceeds an amount equal to the aggregate of the amounts allowed as deductions against— (a) the income of the company in accordance with section 243A, and (b) the income from the sale of goods in accordance with section 454, of the company for the accounting period, the company may claim relief under this section for the accounting period in respect of the excess.
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(3)Where for any accounting period a company claims relief under this section in respect of the excess, the relevant corporation tax of the company for the accounting period shall be reduced— (a) in so far as the excess consists of charges on income paid for the purpose of the sale of goods (within the meaning of section 454), by an amount equal to 10 per cent of those charges on income paid for the purpose of the sale of goods, and (b) in so far as the excess consists of charges on income (in this section referred to as ‘other relevant trading charges on income’) which are not charges on income paid for the purposes of the sale of goods (within the meaning of section 454), by an amount determined by the formula— C × R 100 where— C is the amount of the other relevant trading charges on income, and R is the rate per cent of corporation tax which, by virtue of section 21, applies in relation to the accounting period.
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(4)(a) Where a company makes a claim for relief under this section in respect of any relevant trading charges on income paid in an accounting period, an amount (which shall not exceed the amount of the excess in respect of which a claim under this section may be made), determined in accordance with paragraph (b), shall be treated for the purposes of the Tax Acts as relieved under this section. (b) Subject to paragraph (c), the amount determined in accordance with this paragraph in relation to an accounting period is an amount equal to the aggregate of the following amounts: (i) where relief is given under paragraph (a) of subsection (3) for the accounting period, an amount equal to 10 times the amount by which the relevant corporation tax for the accounting period is reduced by virtue of that paragraph, and (ii) where relief is given under paragraph (b) of subsection (3) for the accounting period, an amount determined by the formula— T × 100 R where— T is the amount by which the relevant corporation tax for the accounting period is reduced by virtue of that paragraph, and R is the rate per cent of corporation tax which, by virtue of section 21, applies in relation to the accounting period.”, (b) in Part 12— (i) in section 396— (I) in subsection (1), by substituting “subsection (2) or section 396A(3), 396B(2) or 455(3)” for “subsection (2) or section 455(3)”, and