Finance Act, 1987

Finance Act, 1987 Skip to content Disclaimer Feedback Helpdesk Gaeilge Léim go dtí an t-ábhar Séanadh Aiseolas Deasc chabhrach English Gaeilge English Produced by the Office of the Attorney General Táirgthe ag Oifig an Ard-Aighne Home Legislation Acts of the Oireachtas Statutory Instruments Pre-1922 Legislation Constitution External Resources Bills (Houses of the Oireachtas) Iris Oifigiúil / Official Gazette Revised Acts (LRC) Classified List of Legislation (LRC) Translations (acts.ie) Translations (Houses of the Oireachtas) Government Publications for Sale EU Law (EUR-Lex) FAQ Disclaimer Feedback Helpdesk Search Baile Reachtaíocht Achtanna an Oireachtais Ionstraimí Reachtúla Reachtaíocht Réamh-1922 Bunreacht Acmhainní Seachtracha Billí (Tithe an Oireachtais) Iris Oifigiúil Achtanna Athbhreithnithe (CAD) (An Coimisiún um Athchóiriú an Dlí) Liosta Rangaithe Reachtaíochta Aistriúcháin (achtanna.ie) Aistriúcháin (Tithe an Oireachtais) Foilseacháin Rialtais ar Díol Dlí AE (EUR-Lex) CCanna (Ceisteanna Coitianta) Séanadh Aiseolas Deasc chabhrach Cuardach TitleTeideal Year(s) or rangeBliain nó blianta nó raon TypeCineál All Legislation Acts Statutory Instruments Advanced SearchCuardach Casta HomeBaile ActsAchtanna 1987 Finance Act, 1987 Finance Act, 1987 Permanent Page URL View by SectionAmharc de réir Ailt View Full ActAmharc ar an Acht Iomlán Bill History Stair Bille Commencement, Amendments, SIs made under the Act Tosach Feidhme, Leasuithe, IRí arna ndéanamh faoin Acht Print Full ActPriontáil an tAcht Iomlán Number 10 of 1987 FINANCE ACT, 1987 ARRANGEMENT OF SECTIONS PART I Income Tax and Corporation Tax Chapter I Income Tax Section 1. Amendment of section 6 (special allowance in respect of P.R.S.I. for 1982-83) of Finance Act, 1982. 2. Application of section 10 (exemption of certain income from leasing of farm land) of Finance Act, 1985. 3. Application of section 16 (credit for farm tax) of Finance Act, 1986. 4. Residence of persons working abroad. 5. Amendment of section 14 (taxation treatment of certain dividends) of Finance Act, 1986. 6. Amendment of provisions relating to relief in respect of interest. 7. Alternative amount on account of appropriate tax. Chapter II Income Tax: Relief for Investment in Corporate Trades 8. Amendment of section 12 (the relief) of Finance Act, 1984. 9. Amendment of section 13 (limits on relief) of Finance Act, 1984. 10. Amendment of section 15 (qualifying companies) of Finance Act, 1984. 11. Amendment of section 16 (qualifying trades) of Finance Act, 1984. 12. Amendment of provisions relating to subsidiaries. Chapter III Payments in respect of Professional Services by Certain Persons 13. Interpretation (Chapter III). 14. Accountable persons. 15. Deduction of tax from relevant payments. 16. Identification of, and issue of documents to, specified persons. 17. Returns and collection of appropriate tax. 18. Credit for appropriate tax borne. 19. Interim refunds of appropriate tax. 20. Apportionment of credits or interim refunds of appropriate tax. 21. Limitation on credits or interim refunds of appropriate tax. Chapter IV Income Tax and Corporation Tax 22. Farming: amendment of provisions relating to relief in respect of increase in stock values. 23. Repeal of section 362 (relief on profits from business of sea or air transport) of Income Tax Act, 1967. 24. Capital allowances for certain road vehicles. 25. Application of section 52 (capital allowances: treatment of grants, etc.) of Finance Act, 1986, to food processing trade. 26. Amendment of section 40 (capital allowances for certain leased assets) of Finance Act, 1984. 27. Designated areas for urban renewal relief. Chapter V Corporation Tax 28. Relief in relation to income from qualifying shipping trade. 29. Relief in relation to income of Special Trading Houses. 30. Relief in relation to income from certain trading operations carried on in Custom House Docks Area. 31. Amendment of Chapter VI (manufacturing companies) of Part I of Finance Act, 1980. 32. Companies: credit for farm tax. 33. Application of section 79 (reduced rate of corporation tax for certain income) of Corporation Tax Act, 1976, to certain interest. 34. Exemption from corporation tax of profits arising from the National Lottery. 35. Relief for investment in films. PART II Customs and Excise 36. Relief for certain hydrocarbon oil. 37. Confirmation of Orders. PART III Value-Added Tax 38. Interpretation (Part III). 39. Amendment of section 1 (interpretation) of Principal Act. 40. Amendment of section 11 (rates of tax) of Principal Act. 41. Amendment of section 12 (deduction for tax borne or paid) of Principal Act. 42. Amendment of section 12A (special provisions for tax invoiced by flat-rate farmers) of Principal Act. 43. Amendment of section 13 (remission of tax on goods exported, etc.) of Principal Act. 44. Amendment of section 32 (regulations) of Principal Act. 45. Amendment of First Schedule to Principal Act. 46. Amendment of Second Schedule to Principal Act. 47. Amendment of Sixth Schedule to Principal Act. PART IV Stamp Duties 48. Levy on banks. 49. Amendment of section 92 (levy on certain premiums of insurance) of Finance Act, 1982. PART V Capital Acquisitions Tax 50. Amendment of section 54 (provisions relating to charities, etc.) of Capital Acquisitions Tax Act, 1976. PART VI Miscellaneous 51. Capital Services Redemption Account. 52. Amendment of section 162 (Collector-General) of Income Tax Act, 1967. 53. Amendment of section 21 (institution of proceedings for fines, etc.) of Inland Revenue Regulation Act, 1890. 54. Care and management of taxes and duties. 55. Short title, construction and commencement. Acts Referred to Agriculture (An Chomhairle Oiliúna Talmhaíochta) Act, 1979 1979, No. 9 Agriculture (An Foras Talúntais) Act, 1958 1958, No. 1 Capital Acquisitions Tax Act, 1976 1976, No. 8 Central Bank Act, 1971 1971, No. 24 Corporation Tax Act, 1976 1976, No. 7 Export Promotion Act, 1959 1959, No. 20 Finance Act, 1950 1950, No. 18 Finance Act, 1970 1970, No. 14 Finance Act, 1975 1975, No. 6 Finance Act, 1976 1976, No. 16 Finance Act, 1979 1979, No. 11 Finance Act, 1980 1980, No. 14 Finance Act, 1981 1981, No. 16 Finance Act, 1982 1982, No. 14 Finance Act, 1984 1984, No. 9 Finance Act, 1985 1985, No. 10 Finance Act, 1986 1986, No. 13 Finance (Miscellaneous Provisions) Act, 1968 1968, No. 7 Harbours Act, 1946 1946, No. 9 Higher Education Authority Act, 1971 1971, No. 22 Income Tax Act, 1967 1967, No. 6 Industrial Development Act, 1950 1950, No. 29 Industrial Development (No. 2) Act, 1981 1981, No. 14 Industrial Development Act, 1986 1986, No. 9 Industrial Training Act, 1967 1967, No. 5 Inland Revenue Regulation Act, 1890 1890, c. 21 Insurance Act, 1936 1936, No. 45 Local Government Act, 1941 1941, No. 23 Local Government Services (Corporate Bodies) Act, 1971 1971, No. 6 Mercantile Marine Act, 1955 1955, No. 29 National Lottery Act, 1986 1986, No. 28 Road Traffic Act, 1961 1961, No. 24 Shannon Free Airport Development Company Limited Acts, 1959 to 1986 Social Welfare (Consolidation) Act, 1981 1981, No. 1 Stamp Act, 1891 1891, c. 39 Succession Duty Act, 1853 1853, c. 51 Tourist Traffic Act, 1939 1939, No. 24 Tourist Traffic Acts, 1939 to 1983 Údarás na Gaeltachta Act, 1979 1979, No. 5 Unit Trusts Act, 1972 1972, No. 17 Value-Added Tax Act, 1972 1972, No. 22 Value-Added Tax (Amendment) Act, 1978 1978, No. 34 Vocational Education Act, 1930 1930, No. 29 Number 10 of 1987 FINANCE ACT, 1987 AN ACT TO CHARGE AND IMPOSE CERTAIN DUTIES OF CUSTOMS AND INLAND REVENUE (INCLUDING EXCISE), TO AMEND THE LAW RELATING TO CUSTOMS AND INLAND REVENUE (INCLUDING EXCISE) AND TO MAKE FURTHER PROVISIONS IN CONNECTION WITH FINANCE. [9th July, 1987] BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS: PART I Income Tax and Corporation Tax Chapter I Income Tax Amendment of section 6 (special allowance in respect of P.R.S.I. for 1982-83) of Finance Act, 1982. 1.— Section 6 of the Finance Act, 1982 , shall have effect for the purpose of ascertaining the amount of income on which an individual referred to therein is to be charged to income tax for the year 1987-88, as if in subsection (2)— (a) “1987-88” were substituted for “1982-83”, and (b) “£286” were substituted for “£312”, in each place where it occurs. Application of section 10 (exemption of certain income from leasing of farm land) of Finance Act, 1985. 2.—(1) In this section, “qualifying lease”, “qualifying lessor” and “the specified amount” have the meanings respectively assigned to them by section 10 (1) of the Finance Act, 1985 . (2) As respects a qualifying lease or qualifying leases made in the period beginning on the 20th day of January, 1987, and ending on the 31st day of December, 1987, the said section 10 (1) shall have effect as if references therein to £2,000 were references to £2,800: Provided that, where the income of a qualifying lessor consists of, or includes, rent or rents from a qualifying lease or qualifying leases made within the said period and from a qualifying lease or qualifying leases made at any other time, the specified amount shall not exceed £2,800. Application of section 16 (credit for farm tax) of Finance Act, 1986. 3.— Section 16 of the Finance Act, 1986 , shall apply and have effect for the year of assessment 1986-87 as if references therein to farm tax paid or borne in that year of assessment were references to such tax paid or borne on or before the 30th day of June, 1987. Residence of persons working abroad. 4.—(1) Where an individual, who is domiciled in the State, is engaged full-time in one or more of the following, that is to say, a trade, profession, office or employment, and the condition mentioned in subsection (2) is satisfied, the question whether he is resident in the State for tax purposes shall be decided without regard to any place of abode maintained in the State for his use. (2) The said condition is that no part of the trade or profession is carried on in the State and all the duties of the office or employment are performed outside the State. (3) In determining whether the duties of an office or employment are performed outside the State, any duties performed in the State, the performance of which is merely incidental to the performance of the duties of the office or employment outside the State, shall be treated for the purposes of this section as having been performed outside the State. Amendment of section 14 (taxation treatment of certain dividends) of Finance Act, 1986. 5.— Section 14 of the Finance Act, 1986 , is hereby amended, as respects the year 1987-88 and any subsequent year of assessment— (a) by the insertion in subsection (1) after “A dividend” of “in respect of eligible shares”, (b) by the insertion after subsection (1) of the following subsection: “(1A) (a) In this section ‘eligible shares’, in relation to a company, means shares forming part of the ordinary share capital of the company which— (i) are fully paid up, (ii) carry no present or future preferential right to dividends or to the company's assets on its winding up and no present or future preferential right to be redeemed, and (iii) are not subject to any different treatment from the treatment which applies to all shares of the same class, in particular, different treatment in respect of— (I) the dividend payable, (II) repayment, (III) restrictions attaching to the shares, or (IV) any offer of substituted or additional shares, securities or rights of any description in respect of the shares. (b) Except where the shares are in a company whose ordinary share capital consists of shares of one class only, shares shall not be eligible shares for the purposes of this section unless, at the time of payment of the dividend in respect of the shares to which the claim under this section relates, the majority of the issued shares of the same class as those shares are held by persons other than— (i) persons who acquired their shares in pursuance of any benefit or right conferred on them or an opportunity afforded to them as a director or employee of the company concerned or any other company and not in pursuance of an offer to the public, and (ii) trustees holding shares on behalf of persons who acquired their beneficial interest in the shares in pursuance of such a benefit, right or opportunity as is mentioned in subparagraph (i). (c) In this subsection, ‘ordinary share capital’ has the meaning assigned to it by section 155 (5) of the Corporation Tax Act, 1976 . (d) Shares in a company shall not be treated for the purposes of this section as being of one class only or of the same class unless they would be so treated if dealt in on a stock exchange in the State.”, (c) by the substitution of the following proviso for the proviso to subsection (2): “Provided that the amount by which the income of an individual which is represented by qualifying dividends is reduced in accordance with this section for any year of assessment shall not exceed— (i) in the case of qualifying dividends paid by a company— (I) which exists wholly for the purpose of carrying on wholly or mainly in the State a trade which consists wholly or mainly of the manufacture of goods within the meaning of Chapter VI of Part I of the Finance Act, 1980 , and (II) which has established a profit sharing scheme which has been approved of, and continues to be so approved of, by the Revenue Commissioners in accordance with Part I of the Third Schedule to the Finance Act, 1982 , £9,000, and (ii) in the case of qualifying dividends paid by any other company, £7,000: Provided further that the total amount by which the income of an individual which is represented by qualifying dividends is to be reduced under this section for any year of assessment shall not exceed £9,000.”, and (d) by the insertion after subsection (2) of the following subsection: “(2A) For the purposes of subsection (2), a trade, which consists partly of the manufacture of goods within the meaning of Chapter VI of Part I of the Finance Act, 1980 , and partly of other trading operations, shall be regarded as consisting wholly or mainly of the manufacture of goods within the said meaning if, but only if, the total amount receivable by the company carrying on the trade from the sale of such goods is not less than 75 per cent. of the total amount receivable by the company from all sales made in the course of the trade.”, and the said subsection (1), as so amended, is set out in the Table to this section. TABLE (1) A dividend in respect of eligible shares which is paid on or after the 6th day of April, 1986, by a company resident in the State and which is a relevant distribution for the purposes of section 45 of the Finance Act, 1980 , shall be a qualifying dividend for the purposes of this section. Amendment of provisions relating to relief in respect of interest. 6.—(1) In relation to any interest paid in respect of any period beginning on or after the 6th day of April, 1987, relief shall not be given under sections 76 (1) (c) and 496 of, and paragraph 1 (2) of Part III of Schedule 6 to, the Income Tax Act, 1967 , in respect of the excess of the amount, or of the aggregate amount, of the interest over 90 per cent. of the amount, or of the aggregate amount, of the interest in respect of which, apart from this section, relief would otherwise have been given under those provisions. (2) The provisions of this section shall not apply to interest on money borrowed to pay death duties. Alternative amount on account of appropriate tax. 7.—(1) For the purposes of this section— (a) interest shall be treated, if not otherwise so treated, as accruing from day to day, (b) references to “general crediting date”, as respects a relevant deposit taker, shall be construed as references to a date on which the relevant deposit taker credits to all, or to the majority, of relevant deposits held by it on that date interest accrued due on those deposits (whether or not the interest is added to the balances on the relevant deposits on that date for the purpose of calculating interest due at some future date), and (c) references to the “principal section” shall be construed as references to section 33 of the Finance Act, 1986 . (2) Where, for any year of assessment (being the year 1986-87 or any subsequent year of assessment), the amount of appropriate taxwhich is due and payable by a relevant deposit taker for that year under the principal section is less than the amount of appropriate tax which would have been so due and payable by the relevant deposit taker for the year if the total amount of the interest which had accrued, in the period of twelve months ending on— (a) the general crediting date as respects that relevant deposit taker falling in that year of assessment, or (b) if there is more than one general crediting date as respects that relevant deposit taker falling in that year of assessment, the last such date, or (c) if there is no general crediting date as respects that relevant deposit taker falling in that year of assessment, the 5th day of April in that year, on all relevant deposits held by the relevant deposit taker in that period (and no more) had been paid by it in that period, the provisions of this section shall apply to that relevant deposit taker for the year of assessment immediately succeeding that year of assessment and for each subsequent year of assessment. (3) Notwithstanding anything contained in the principal section, where the provisions of this section apply to a relevant deposit taker for any year of assessment, subsection (4) of the principal section shall not apply to the relevant deposit taker for that year of assessment but subsection (4) of this section shall apply to that relevant deposit taker for that year and, as respects that relevant deposit taker for that year, any reference in the Tax Acts, apart from this section, to subsection (4) of the principal section, shall be construed as a reference to subsection (4) of this section. (4) Notwithstanding subsection (3) of the principal section, a relevant deposit taker shall, for each year of assessment, pay to the Collector within 15 days from the 5th day of October in that year of assessment an amount on account of appropriate tax which shall be not less than the amount determined by the formula set out in the Table to this subsection; and any amount on account of appropriate tax so paid by the relevant deposit taker for a year of assessment shall be treated as far as may be as a payment on account of any appropriate tax due and payable by it for that year of assessment under the said subsection (3): Provided that, where the amount on account of appropriate tax paid by a relevant deposit taker for a year of assessment under this subsection exceeds the amount of appropriate tax due and payable by it for that year of assessment under the said subsection (3), the excess shall be carried forward and shall be set off against any amount due and payable under this subsection or the said subsection (3) by the relevant deposit taker for any subsequent year of assessment (any such set-off being effected as far as may be against an amount so due and payable at an earlier date rather than at a later date). TABLE A − (B − C) where A is the amount of appropriate tax which would be due and payable by the relevant deposit taker for the year of assessment (hereafter in this Table referred to as the “relevant year”) in accordance with subsection (3) of the principal section if the total amount of the relevant interest whichhad accrued in the period of twelve months ending on the 5th day of October in the relevant year on all relevant deposits held by the relevant deposit taker in that period (and no more) had been paid by it in the relevant year, B is the amount of appropriate tax which was due and payable by the relevant deposit taker for the year of assessment immediately preceding the relevant year in accordance with the said subsection (3), and C is an amount equal to the lesser of the amount at B and the amount treated, in accordance with the provisions of this subsection or in accordance with the provisions of subsection (4) of the principal section, as paid by the relevant deposit taker on account of the appropriate tax due and payable by it for the year of assessment immediately preceding the relevant year. (5) This section shall be construed together with Chapter IV of Part I of the Finance Act, 1986 , and any tax payable in accordance with this section shall be deemed to be payable in accordance with that Chapter. Chapter II Income Tax: Relief for Investment in Corporate Trades Amendment of section 12 (the relief) of Finance Act, 1984. 8.— Section 12 of the Finance Act, 1984 , is hereby amended— (a) by the addition to paragraph (c) of subsection (1) of the following proviso: “Provided that, where the money raised was used, is being used, or is intended to be used, by the company for the purpose of purchasing a ship for use by it in the course of a qualifying shipping trade carried on by it, the aforementioned evidence shall include a certificate by the Minister for the Marine certifying that the purchase of the ship was, is or would be eligible to be grant-aided under a statutory scheme of assistance for the purchase of ships administered by the Department of the Marine.”, and (b) by the addition to subsection (3), with effect as on and from the 6th day of April, 1987, of the following proviso: “Provided that where— (a) in accordance with the provisions of section 27, relief is due in respect of an amount subscribed as nominee for a qualifying individual by the managers of a designated fund, and (b) the eligible shares in respect of which the amount is subscribed are issued in the year of assessment next following the year of assessment in which that amount was subscribed to the designated fund, the individual may elect, by notice in writing to the inspector, to have the relief due given as a deduction from his total income for the year of assessment in which the amount was subscribed to the designated fund instead of as a deduction from his total income for the year of assessment in which the shares are issued.”. Amendment of section 13 (limits on relief) of Finance Act, 1984. 9.— Section 13 of the Finance Act, 1984 , is hereby amended, with effect as on and from the 6th day of April, 1984, by the insertion after subsection (2) of the following subsections: “(2A) If, in any year of assessment, a greater amount of relief would be given to an individual in respect of the amount or the total amount subscribed by him for eligible shares (in this subsection referred to as ‘the relevant subscription’) issued to him in that year or, where the proviso (inserted by the Finance Act, 1987) to section 12 (3) applies, in the next following year of assessment but for either or both of the following reasons, that is— (a) an insufficiency of total income, or (b) the operation of subsection (2), the amount of the relief which would be given but for those reasons less the amount, or the aggregate amount, of any relief in respect of the relevant subscription which is given in that year of assessment, shall be carried forward to the next following year of assessment, and shall be treated for the purposes of the relief as an amount subscribed directly by the individual for eligible shares issued to him in that following year: Provided that this subsection shall not apply or have effect for any year of assessment subsequent to the year 1990-91. (2B) If, and so far as, an amount once carried forward under subsection (2A) (and treated as an amount subscribed directly by an individual for eligible shares issued to him in the said following year of assessment) is not deducted from his total income for that year of assessment, it shall be carried forward again to the next following year of assessment (and treated as an amount subscribed directly by him for eligible shares issued to him in that next following year), and so on for succeeding years of assessment: Provided that this subsection shall not apply or have effect for any year of assessment subsequent to the year 1990-91. (2C) Relief shall be given to an individual for any year of assessment in the following order— (a) firstly, in respect of an amount carried forward from an earlier year of assessment in accordance with the provisions of subsection (2A) or (2B), and, in respect of such an amount so carried forward, for an earlier year of assessment in priority to a later year of assessment, and (b) then, and only then, in respect of any other amount for which relief is to be given in that year of assessment.”. Amendment of section 15 (qualifying companies) of Finance Act, 1984. 10.— Section 15 of the Finance Act, 1984 , is hereby amended— (a) by the insertion after subsection (3) of the following subsection: “(3A) (a) A company, whose trade includes one or more tourist traffic undertakings within the meaning of section 16 (2A) (inserted by the Finance Act, 1987), shall not be a qualifyingcompany unless and until it has shown to the satisfaction of the Revenue Commissioners that it has submitted to, and has had approved of by, Bord Fáilte Éireann (hereafter in this Chapter referred to as ‘the Bord’) a three-year development and marketing plan in respect of that undertaking, or those undertakings, as the case may be, which plan is primarily designed and formulated to increase tourist traffic, and revenue, from outside the State. (b) In considering whether to approve of such a plan, the Bord shall have regard only to such guidelines in relation to such approval as may, from time to time, be agreed, with the consent of the Minister for Finance, between it and the Minister for Tourism and Transport, and those guidelines may, without prejudice to the generality of the foregoing, set out— (i) the extent to which the company's interests in land and buildings may form part of its total assets, (ii) specific requirements which have to be met in order to comply with the objective mentioned in paragraph (a), and (iii) the extent to which the money raised through the issue of eligible shares should be used in promoting outside the State the undertaking or undertakings, as the case may be.”, and (b) by the insertion after subsection (12) of the following new subsection: “(13) Notwithstanding any of the foregoing provisions of this section, a company shall not be a qualifying company if, during the relevant period— (a) the company would not be a qualifying company but for the provisions of subsection (1A) (inserted by the Finance Act, 1987) of section 26, and (b) the company or any of its subsidiaries— (i) subscribes for new or existing share capital in, or (ii) makes loans to, a subsidiary which is a qualifying subsidiary by virtue of the said subsection (1A).”. Amendment of section 16 (qualifying trades) of Finance Act, 1984. 11.— Section 16 of the Finance Act, 1984 , is hereby amended— (a) by the substitution in subsection (2) for paragraph (a) of the following paragraph: “(a) consist wholly or mainly of one or more of thefollowing trading operations (in this Chapter referred to as ‘qualifying trading operations’)— (i) the manufacture of goods within the meaning of Chapter VI of Part I of the Finance Act, 1980 : Provided that trading operations or activities included in the definition of, or regarded as the manufacture within the State of, goods for the purposes of the said Chapter VI by any enactment enacted after the passing of this Act, shall not, subject to the following provisions of this paragraph, be regarded as qualifying trading operations for the purposes of this Chapter, (ii) the rendering of services (other than relevant trading operations within the meaning of section 39B (inserted by the Finance Act, 1987) of the Finance Act, 1980 ) in the course of a service undertaking in respect of which an employment grant was made by the Industrial Development Authority under section 2 of the Industrial Development (No. 2) Act, 1981 , (iii) in respect of a subscription for eligible shares made on or after the 1st day of January, 1987, the carrying on of qualifying shipping activities within the meaning of section 28 (1) of the Finance Act, 1987, (iv) in respect of a subscription for eligible shares made on or after the 6th day of April, 1987, the operation of one or more tourist traffic undertakings within the meaning of subsection (2A) (inserted by the Finance Act, 1987), and (v) in respect of a subscription for eligible shares made on or after the date on which section 29 of the Finance Act, 1987, comes into effect, the sale of export goods by a Special Trading House within the meaning of subsection (1CC2) (inserted by the Finance Act, 1987) of section 39 of the Finance Act, 1980 ,”, and (b) by the insertion after subsection (2) of the following subsection: “(2A) For the purposes of subsection (2), tourist traffic undertakings mean— (a) the operation of tourist accommodation facilities such as hotels, guest houses, caravan and camping sites and self-catering accommodation for which the Bord maintains a register in accordance with the Tourist Traffic Acts, 1939 to 1983, (b) the operation of such other classes of facilities asmay be approved of for the purposes of the relief by the Minister for Finance, in consultation with the Minister for Tourism and Transport, on the recommendation of the Bord in accordance with specific codes of standards laid down by it, or (c) the promotion outside the State of any of the facilities mentioned in paragraphs (a) and (b).”. Amendment of provisions relating to subsidiaries. 12.—(1) Section 26 of the Finance Act, 1984 , is hereby amended by the insertion, after subsection (1), of the following subsection: “(1A) (a) Notwithstanding the provisions of subsection (1), a qualifying company whose trade consists wholly or mainly of the carrying on of qualifying shipping activities within the meaning of section 28 (1) of the Finance Act, 1987, may have one or more subsidiaries which do not satisfy either of the conditions in paragraph (b) of subsection (1): Provided that the condition mentioned in paragraph (b) of this subsection is satisfied. (b) The said condition is that the subsidiary or each subsidiary is a company which exists for the purpose of carrying on a trade consisting wholly or mainly of the carrying on of qualifying shipping activities. (c) In paragraph (b), ‘qualifying shipping activities’ has the meaning assigned to it by section 28 (1) of the Finance Act, 1987, as if, in the definition of a ‘qualifying ship’ for the purposes of the said meaning, paragraphs (a) and (b) of that definition were deleted. (d) In this subsection, the question of whether a trade consists wholly or mainly of the carrying on of qualifying shipping activities shall, with any necessary modifications, be construed in accordance with the proviso to section 16 (2).”. (2) The Second Schedule to the Finance Act, 1984 , is hereby amended, by the substitution for paragraph 1 of the following paragraph: “1. The shares issued by the qualifying company may, instead of, or as well as, being issued for the purpose mentioned in subsection (1) (b) of section 12, be issued for the purpose of raising money for a qualifying trade which is being carried on by a subsidiary (other than a subsidiary which is a qualifying subsidiary by virtue of section 26 (1A) (inserted by the Finance Act, 1987)) or which such a subsidiary intends to carry on; and where shares are so issued subsections (1) (c), (4), (5), (7) (b) and (8) of section 12 shall have effect as if references to the company were or, as the case may be, included, references to the subsidiary.”. Chapter III Payments in respect of Professional Services by Certain Persons Interpretation (Chapter III). 13.—(1) In this Chapter— “accountable person” has the meaning assigned to it by section 14 ; “appropriate tax”, in relation to a relevant payment, means— (a) where such payment does not include value-added tax, a sum representing income tax on the amount of that payment at the standard rate in force at the time of payment, and (b) where such payment includes value-added tax, a sum representing income tax at the standard rate in force at the time of payment on the amount of that payment exclusive of the value-added tax; “basis period for a year of assessment”, in relation to a specified person, means— (a) where a relevant payment is to be included in a computation of profits or gains of the said person for the purposes of Case I or II of Schedule D, the period on the profits or gains of which income tax for that year falls to be finally computed for the purposes of the said Case I or II: Provided that— (i) where two basis periods overlap, the period common to both shall be deemed, for the purposes of this Chapter, to fall in the second basis period only, (ii) where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment, then, the interval shall be deemed to be part of the second basis period, (iii) the reference in subparagraph (i) to the overlapping of two periods shall be construed as including a reference to the coincidence of two periods or to the inclusion of one period in another, and the reference to the period common to both shall be construed accordingly, and (b) in any other case, the year of assessment; “income tax month” means a month beginning on the 6th day of any of the months of April to March in any year; “professional services” includes— (a) services of a medical, dental, pharmaceutical, optical, aural or veterinary nature, (b) services of an architectural, engineering, quantity surveying or surveying nature, and related services, (c) services of accountancy, auditing or finance and services of financial, economic, marketing, advertising or other consultancies, (d) services of a solicitor or barrister and other legal services, (e) geological services, and (f) training services provided on behalf of An Chomhairle Oiliúna; “relevant payment” means a payment made on or after the 6th dayof June, 1987, in respect of professional services whether or not such services are provided to the accountable person making the payment, but excludes— (a) emoluments within the scope of Chapter IV of Part V of the Income Tax Act, 1967 , to which that Chapter applies, and (b) payments under a construction contract within the meaning of section 17 of the Finance Act, 1970 , from which tax has been deducted in accordance with the provisions of subsection (2) of that section, or would have been so deducted but for the provisions of subsection (8) of that section; “specified person” means, in relation to a relevant payment, the person to whom that payment is made; “tax” means income tax or corporation tax, as the context may require. (2) For the purposes of this Chapter— (a) any reference in this Chapter to the amount of a relevant payment shall be construed as a reference to the amount which would be the amount of that payment if no appropriate tax were to be deducted therefrom, and (b) in relation to a specified person, appropriate tax referable to an accounting period or to a basis period for a year of assessment means the appropriate tax deducted from a relevant payment which is taken into account in computing the specified person's profits or gains for the said period and where there is more than one such relevant payment in the said period the aggregate of the appropriate tax deducted from such payments. Accountable persons. 14.—(1) In this Chapter, “accountable person” means— (a) a Minister of the Government, (b) a local authority within the meaning of section 2 (2) of the Local Government Act, 1941 , and includes a body established under the Local Government Services (Corporate Bodies) Act, 1971 , (c) a health board, (d) the General Medical Services (Payments) Board established under the General Medical Services (Payments) Board (Establishment) Order, 1972 (S.I. No. 184 of 1972), (e) the Attorney General, (f) the Director of Public Prosecutions, (g) the Revenue Commissioners, (h) the Commissioners of Public Works in Ireland, (i) the Legal Aid Board, (j) a vocational education committee or a regional technical college established under the Vocational Education Act, 1930 , (k) An Chomhairle Oiliúna established under the Industrial Training Act, 1967 , (l) a harbour authority established under the Harbours Act, 1946 , (m) An Chomhairle Oiliúna Talmhaíochta established under the Agriculture (An Chomhairle Oiliúna Talmhaíochta) Act, 1979 , (n) An Foras Talúntais established under the Agriculture (An Foras Talúntais) Act, 1958 , (o) Údarás na Gaeltachta established under the Údarás na Gaeltachta Act, 1979 , (p) the Industrial Development Authority established under the Industrial Development Act, 1950 , and continued in being by the Industrial Development Act, 1986 , (q) Córas Tráchtála established under the Export Promotion Act, 1959 , (r) Shannon Free Airport Development Company Limited being the company referred to in the Shannon Free Airport Development Company Limited Acts, 1959 to 1986, (s) Bord Fáilte Éireann established under the Tourist Traffic Act, 1939 , or (t) an institution of higher education within the meaning of the Higher Education Authority Act, 1971 . (2) For the purposes of this Chapter the Minister for Finance may by Regulations extend the meaning of accountable person by the inclusion in subsection (1) of further persons or classes of persons but such inclusion shall not have effect in relation to payments made before a date to be specified in the Regulations. (3) Where a Regulation is proposed to be made under subsection (2), a draft thereof shall be laid before Dáil Éireann and the Regulation shall not be made until a resolution approving of the draft has been passed by Dáil Éireann. Deduction of tax from relevant payments. 15.—(1) An accountable person making a relevant payment shall deduct out of the amount of the payment the appropriate tax in relation to the payment. The specified person to whom such payment is made shall allow such deduction upon receipt of the residue of the payment, and the accountable person making such deduction shall be acquitted and discharged of so much money as is represented by the deduction, as if that sum had actually been paid. (2) The provisions of the Tax Acts in relation to the computation of profits or gains shall not be affected by the deduction of appropriate tax from relevant payments in accordance with the provisions of subsection (1) and, accordingly, the amount of such relevant payments shall be taken into account in computing the profits or gains of the specified person for tax purposes. Identification of, and issue of documents to, specified persons. 16.—(1) The specified person shall furnish to the accountable person concerned— (a) in the case of a specified person resident in the State or a person having a permanent establishment or fixed base in the State— (i) details of his income tax or corporation tax number, as may be appropriate, and (ii) if the relevant payment includes an amount in respect of value-added tax, his value-added tax registration number, and (b) in the case of a specified person, other than a person mentioned in paragraph (a), details of his country of residence and his tax reference in that country. (2) Where the specified person has complied with subsection (1), the accountable person, on making a relevant payment, shall give to such person, in a form prescribed by the Revenue Commissioners, particulars of— (a) the name and address of the specified person, (b) the person's tax reference as furnished in accordance with paragraph (a) (i) or (b) of subsection (1), (c) the amount of the relevant payment, (d) the amount of the appropriate tax deducted from that payment, and (e) the date on which the payment is made. Returns and collection of appropriate tax. 17.—(1) Within ten days from the end of every income tax month, the accountable person shall remit to the Collector all amounts of appropriate tax which he is liable under this Chapter to deduct from relevant payments made by him during that income tax month. (2) Each remittance under subsection (1) shall be accompanied by a return containing, in relation to each specified person to whom a relevant payment has been made in the income tax month concerned, the particulars required by the return. (3) A return shall be required to be made by an accountable person for an income tax month notwithstanding that no relevant payments were made by the accountable person in that income tax month. (4) Every return shall be in a form prescribed by the Revenue Commissioners and shall include a declaration to the effect that the return is correct and complete. (5) The Collector shall give the accountable person a receipt for the total amount so remitted. (6) All the provisions of the Income Tax Acts relating to the collection and recovery of income tax shall, so far as they are applicable, apply to the collection and recovery of appropriate tax. Credit for appropriate tax borne. 18.—(1) Where, in relation to an accounting period, a specified person is within the charge to corporation tax and has borne appropriate tax referable to that accounting period he may, subject to the provisions of section 21 , claim to have the amount of appropriate taxspecified in subsection (4) set against corporation tax chargeable for that accounting period and, where such appropriate tax exceeds such corporation tax, to have the excess refunded to him. (2) Where, in relation to a year of assessment, a specified person is within the charge to income tax and has borne appropriate tax referable to the basis period for that year of assessment he may, subject to the provisions of section 21 , claim to have the amount of appropriate tax specified in subsection (4) set against the income tax chargeable for that year of assessment and, where such appropriate tax exceeds such income tax, to have the excess refunded to him. (3) The specified person shall, in respect of each claim under subsection (1) or (2), furnish, in respect of each amount of appropriate tax included in the claim, the form given to him by an accountable person in accordance with the provisions of section 16 (2). (4) The amount of the appropriate tax to be set against corporation tax for an accounting period or income tax for a year of assessment in accordance with subsection (1) or (2) shall be the total of the appropriate tax referable to the accounting period or to the basis period for the year of assessment, as the case may be, which is included in the forms furnished in accordance with subsection (3) and not repaid under any of the provisions of this Chapter. Interim refunds of appropriate tax. 19.—(1) A specified person may make a claim for an interim refund of the whole or part of the appropriate tax referable to an accounting period or to a basis period for a year of assessment, as the case may be (in this section referred to as “the first-mentioned period”), and the inspector shall, if he is satisfied that the specified person making the claim has complied with the requirements of subsection (2), make such refund as is specified in subsection (3) and, subject to the said requirements as modified in subsection (4) (a), make such refund as is specified in that subsection. (2) The requirements of this subsection are that— (a) the profits or gains for the accounting period or for the basis period for the year of assessment, as the case may be, immediately preceding the first-mentioned period have been finally determined for tax purposes and the amount of tax which was payable for the said accounting period or year of assessment corresponding to the said basis period has been paid (whether by credit for appropriate tax or otherwise), and (b) the specified person shall, in respect of each relevant payment included in the claim, furnish to the inspector the form given to him by an accountable person in accordance with the provisions of section 16 (2). (3) The amount of the tax to be refunded shall be the excess of the total of the appropriate tax included in the forms furnished in accordance with the provisions of subsection (2) (b) (and not already repaid under the provisions of this section) over the amount of tax referred to in subsection (2) (a) less the amount which he is liable to pay or remit— (a) under the Value-Added Tax Act, 1972 , and the Regulations made thereunder, (b) under Chapter IV of Part V of the Income Tax Act, 1967 , and the Regulations made thereunder, and (c) in respect of employment contributions under the Social Welfare (Consolidation) Act, 1981 , and the Regulations made thereunder. (4) (a) Where the first-mentioned period is the period in which the trade or profession of the specified person has been set up and commenced, the provisions of subsection (2) (a) shall not apply and the inspector shall, in accordance with the following provisions of this subsection, make an interim refund to the specified person in respect of appropriate tax deducted from relevant payments taken, or to be taken, into account in computing the profits or gains of the said trade or profession. (b) For the purposes of determining the amount of the said interim refund the inspector shall determine— (i) an amount equal to the amount of tax at the standard rate on an amount determined by the formula: E × A ___ B × C ___ P where— A is the estimated total amount of the relevant payments to be taken into account as income in computing for tax purposes the profits or gains of the first-mentioned period, B is the estimated total sum of all amounts to be so taken into account as income in computing the said profits or gains, C is the estimated number of months or fractions of months comprised in the period in respect of which the claim to the refund is made, E is the estimated amount to be laid out or expended wholly and exclusively by the specified person in the first-mentioned period for the purposes of the trade or profession, and P is the estimated number of months or fractions of months comprised in the first-mentioned period, and the inspector shall make the estimates referred to in this formula to the best of his knowledge and belief and in accordance with the information available to him, and (ii) the amount of appropriate tax deducted from the relevant payments in respect of which forms have been submitted in accordance with the provisions of subsection (2) (b) after deducting therefrom any amount of such tax already refunded for the period in respect of which the claim to a refund is made. (c) The inspector shall refund an amount of appropriate tax equal to the lesser of the amounts determined at subparagraphs (i) and (ii) of paragraph (b). (5) In circumstances where the specified person claims and proves the presence of particular hardship, the Revenue Commissioners may waive (in whole or in part) one or more of the conditions for the making of a refund specified in this section and, where the Revenue Commissioners so waive such condition or conditions, they shall determine, having regard to all the circumstances and taking into account the objects and intentions of the previous provisions of this section, an amount of a refund or a further refund which they consider to be just and reasonable and they shall authorise the inspector to make such refund or such further refund, as the case may be, accordingly. (6) For the purposes of this section, the income of a specified person for an accounting period or a basis period for a year of assessment shall be the total of all amounts received or receivable by him which are taken into account in computing the profits or gains of his trade or profession for that period. Apportionment of credits or interim refunds of appropriate tax. 20.—Where the form referred to in either section 18 (3) or section 19 (2) (b) relates to two or more specified persons, any necessary apportionment shall be made for the purposes of giving effect to sections 18 and 19 . Limitation on credits or interim refunds of appropriate tax. 21.—No amount of appropriate tax shall be set off or refunded more than once under the provisions of this Chapter and any amount of appropriate tax refunded in accordance with the provisions of section 19 shall not be available for set-off under the provisions of section 18 . Chapter IV Income Tax and Corporation Tax Farming: amendment of provisions relating to relief in respect of increase in stock values. 22.—(1) Section 31A (inserted by the Finance Act, 1976 ) of the Finance Act, 1975 , is hereby amended by the substitution of “1987” for “1986” (inserted by the Finance Act, 1986 )— (a) in paragraph (iv) (inserted by the Finance Act, 1979 ) of the proviso to subsection (4) (a), and (b) in each place where it occurs in subsections (7) and (9) (inserted by the Finance Act, 1984 ), and the said paragraph (iv), the said subsection (7) (apart from the proviso) and the said subsection (9) (apart from the proviso), as so amended, are set out in the Table to this subsection. TABLE (iv) a deduction shall not be allowed under the provisions of this section in computing a company's trading income for any accounting period which ends on or after the 6th day of April, 1987. (7) Where in relation to an accounting period a company's opening stock value exceeds its closing stock value, the amount of the excess (in this section referred to as the company's “decrease in stock value”) shall, if the accounting period ends on a date before the 6th day of April, 1987, be treated in the computation of the company's trading income for the purposes of corporation tax, as a trading receipt of the company's trade for that accounting period: (9) In the computation of a company's trading income for the purposes of corporation tax for any accounting period which ends on or after the 6th day of April, 1987, in which there is a decrease in stock value, there shall be treated as a trading receipt of the company's trade for that accounting period the amount (if any) by which A exceeds the aggregate of ? and C where— A is the aggregate amount of the company's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1987, B is the aggregate amount of the company's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1987, and C is the aggregate of the amounts which under this subsection are treated as trading receipts of the company's trade for preceding accounting periods: (2) Section 12 of the Finance Act, 1976 , is hereby amended— (a) by the substitution in subsection (3) of “1987-88” for “1986-87” (inserted by the Finance Act, 1986 ), and (b) by the substitution of “1987” for “1986” (inserted by the Finance Act, 1986 ) in each place where it occurs in subsections (5) and (6) (inserted by the Finance Act, 1984 ), and the said subsection (3), the said subsection (5) (apart from the proviso) and the said subsection (6) (apart from the proviso), as so amended, are set out in the Table to this subsection. TABLE (3) Any deduction allowed by virtue of this section in computing a person's trading profits for an accounting period shall not have effect for any purpose of the Income Tax Acts for any year of assessment prior to the year 1974-75 or later than the year 1987-88. (5) In the computation of a person's trading profits for an accounting period in which there is a decrease in stock value and which ends on a date in the period from the 6th day of April, 1976, to the 5th day of April, 1987, the amount of that decrease shall be treated as a trading receipt of the trade for that accounting period: (6) In the computation of a person's trading profits for any accounting period in which there is a decrease in stock value and which ends on or after the 6th day of April, 1987, there shall be treated as a trading receipt of the trade for that accounting period the amount (if any) by which A exceeds the aggregate of ? and C where— A is the aggregate amount of the person's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1987, B is the aggregate amount of the person's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1987, and C is the aggregate of the amounts which are treated as trading receipts of the person's trade for preceding accounting periods which ended on or after the 6th day of April, 1987: (3) This section shall have effect only as respects a trade of farming. Repeal of section 362 (relief on profits from business of sea or air transport) of Income Tax Act, 1967. 23.—(1) Section 362 of the Income Tax Act, 1967 , is hereby repealed. (2) Notwithstanding the repeal of section 362 of the Income Tax Act, 1967 , effected by subsection (1), where, prior to the commencement of this Act, an order has been made under that section, the arrangement to which the order relates shall have the force of law to the same extent as if this section had not been enacted. Capital allowances for certain road vehicles. 24.—(1) (a) In this section— “car” means any mechanically propelled road vehiclebeing a vehicle which has been constructed or adapted to be primarily suited to the carriage of passengers and not to the conveyance of goods or burden of any description or to the haulage by road of other vehicles, and which is a vehicle of a type commonly used as a private vehicle and suitable to be so used, and includes a vehicle in use for the purpose referred to in paragraph (ii) of the definition of “qualifying purposes”; “chargeable period” and “chargeable period or its basis period” haver, respectively, the meanings assigned to them by paragraph 1 (2) of the First Schedule to the Corporation Tax Act, 1976 ; “qualifying purposes” means the use, in the ordinary course of trade, of a car for the purposes of— (i) short-term hire to members of the public, or (ii) the carriage of members of the public while the car is a licensed public hire vehicle fitted with a taximeter in pursuance of the Road Traffic (Public Service Vehicles) Regulations, 1963 (S.I. No. 191 of 1963); “short-term hire” means, in relation to a car, the hire of the car to a person under a hire-drive agreement (within the meaning of section 3 of the Road Traffic Act, 1961 ) for a continuous period which does not exceed eight weeks: Provided that, where a period of hire of a car to a person by another person is followed within seven days of the end of that period by a further period of hire of a car (whether the same car or not) to that person by that other person, the two periods shall be deemed for the purposes of this section, including any subsequent application of this proviso, to constitute together a single continuous period of hire, so that where that continuous period of hire exceeds eight weeks, the period of hire of any car included in that continuous period of hire shall not be treated as a period of short-term hire, and, for the purposes of this proviso, any reference to a person shall be treated as including a reference to any other person who would be regarded as connected with that person under section 16 of the Finance (Miscellaneous Provisions) Act, 1968 ; “tax” means income tax or corporation tax, as the case may be. (b) For the purposes of this section, a car shall be regarded as used by a person for qualifying purposes as respects a chargeable period if, and only if, not less than 75 per cent. of its use (determined by reference to the periods of time in which the car is used, or available for use, for any purpose) by that person in the chargeable period or its basis period is for qualifying purposes: Provided that, where as respects a chargeable period the use of a car for qualifying purposes doesnot satisfy the requirements of this paragraph but would have satisfied those requirements if the reference to “75 per cent.” were a reference to “50 per cent.”, the car shall be deemed to be used for qualifying purposes as respects that chargeable period if the use of the car by that person for qualifying purposes satisfied the requirements of this paragraph as respects the immediately preceding chargeable period, or the car shall be deemed to be so used if the said use of the car has satisfied those requirements as respects the immediately succeeding chargeable period and the inspector shall accordingly adjust the amount of capital allowances falling to be made in taxing the person's trade and any amount of tax overpaid shall be repaid. (2) In determining what capital allowances fall to be made to a person, for any chargeable period ending on or after the 6th day of April, 1987, in taxing a trade which consists of or includes the carrying on of qualifying purposes, section 241 of the Income Tax Act, 1967 , shall apply to a car which, as respects that period, has been used by the person for qualifying purposes as if— (a) the reference in subsection (1) of that section to “five-fourths of the amount” were a reference to “twice the amount”, and (b) the second proviso to the said subsection (1) were deleted. Application of section 52 (capital allowances: treatment of grants, etc.) of Finance Act, 1986, to food processing trade. 25.—(1) For the purposes of this section— “food processing trade” means a trade which consists of, or includes, the manufacture of processed food; “processed food” means goods, manufactured within the State in the course of a trade by a company, which— (a) are intended for human consumption as a food, and (b) have been manufactured by a process involving the use of machinery or plant whereby the goods which are produced by the application of that process differ substantially in form and value from the materials to which the process has been applied and, without prejudice to the generality of the foregoing, the process does not consist primarily of— (i) the acceleration, retardation, alteration or application of a natural process, or (ii) the application of methods of preservation, pasteurisation or any similar treatment; “qualifying machinery or plant” means machinery or plant used solely in the course of a process of manufacture whereby processed food is produced. (2) The provisions of subsection (1) of section 52 of the Finance Act, 1986 , shall not apply, and shall be deemed never to have applied,where an allowance falls to be made under section 241 or section 251 of the Income Tax Act, 1967 , in taxing a food processing trade carried on by a company and the capital expenditure in respect of which the allowance falls to be made was incurred by that company and was so incurred in respect of qualifying machinery or plant: Provided that the reference in this subsection to expenditure incurred by a company shall not include any expenditure which it is deemed to have incurred in accordance with the provisions of section 241 (2) or section 252 of the said Act. Amendment of section 40 (capital allowances for certain leased assets) of Finance Act, 1984. 26.— Section 40 of the Finance Act, 1984 , is hereby amended by the substitution in paragraph (a) of subsection (10) (inserted by the Finance Act, 1986 ) of “lessee” for “borrower”, and the said paragraph, as so amended, is set out in the Table to this section. TABLE (a) the manufacture of goods (including activities which would, if the lessee were to make a claim for relief in respect of the trade under Chapter VI of Part I of the Finance Act, 1980 , fall to be regarded for the purposes of that Chapter as the manuf …