Finance Act, 1944

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FINANCE ACT, 1944.

ARRANGEMENT OF SECTIONS

PART I.

Income Tax.

Section

Section 1

Income tax and sur-tax for year 1944-45.

Section 2

Amendment of Rule 6 of the Rules applicable to Cases I and II of Schedule D.

Section 3

Amendments of enactments consequent upon the substitution in county boroughs and the borough of Dun Laoghaire of the municipal rate for the poor rate and certain other rates.

Section 4

Exemption of children's allowance from income tax and reduction of deductions under section 21 of the Finance Act, 1920.

Section 5

Amendment of section 22 of the Finance Act, 1920.

Section 6

Amendment of section 3 of the Finance Act, 1925.

Section 7

Exemption in respect of certain profits from sweepstakes organised by the Irish Red Cross Society.

Section 8

Emergency allowances in respect of certain machinery or plant.

Section 9

Schedule D and Schedule E Assessment Districts.

Section 10

Publication of reports of case stated.

PART II.

Corporation Profits Tax.

Section 11

Definition in this Part of this Act.

Section 12

Meaning of word “remuneration” in relation to a director.

Section 13

Provisions in respect of deductions for the remuneration of directors in relation to excess corporation profits tax.

Section 14

Subsidiary companies.

Section 15

Transactions designed to avoid liability to corporation profits tax.

Section 16

Standard profits of certain new companies.

Section 17

Continuance of certain exemptions.

Section 18

Construction of this Part of this Act.

PART III.

Miscellaneous and General.

Section 19

Amendment of section 34 of the Finance Act, 1931.

Section 20

Transfer of money from the Road Fund to the Exchequer.

Section 21

Power of Minister for Finance to direct transfer of assets of wound-up funds to the Savings Certificates Reserve Fund.

Section 22

Care and management of taxes and duties.

Section 23

Short title, construction and commencement.

SCHEDULE.

Amendments of enactments consequent upon the substitution in county boroughs and the borough of Dun Laoghaire of the municipal rate for the poor rate and certain other rates.

Acts Referred to Finance Act, 1941 No. 14 of 1941 Local Government (Dublin) Act, 1930 No. 27 of 1930 Limerick City Management Act, 1934 No. 35 of 1934 Waterford City Management Act, 1939 No. 25 of 1939 Cork City Management (Amendment) Act, 1941 No. 5 of 1941 Children's Allowances Act, 1944 No. 2 of 1944 Finance Act, 1938 No. 25 of 1938 Public Hospitals Act, 1933 No. 18 of 1933 Public Hospitals (Amendment) (No. 2) Act, 1939 No. 29 of 1939 Finance Act, 1942 No. 14 of 1942 Emergency Powers Act, 1939 No. 28 of 1939 Finance Act, 1929 No. 32 of 1929 Finance Act, 1931 No. 31 of 1931 Finance Act, 1932 No. 20 of 1932 Finance Act, 1943 No. 16 of 1943 Finance Act, 1925 No, 28 of 1925 Number 18 of 1944.

FINANCE ACT, 1944.

AN ACT TO CHARGE AND IMPOSE CERTAIN DUTIES OF INLAND REVENUE, TO AMEND THE LAW RELATING TO INLAND REVENUE, AND TO MAKE FURTHER PROVISIONS IN CONNECTION WITH FINANCE. [11th July, 1944.] BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:—

PART I.

Income Tax.

Income tax and sur-tax for year 1944-45.

1.—(1) Income tax shall be charged for the year beginning on the 6th day of April, 1944, at the rate of seven shillings and sixpence in the pound.

Part II

of the Finance Act, 1941 (No. 14 of 1941), to the excess sur-tax to be charged as aforesaid for the year beginning on the 6th day of April, 1944, the said Part II shall have effect with and subject to the following modifications, that is to say:— (a) the expression “the 6th day of April, 1944” shall be substituted for the expression “the 6th day of April, 1941,” wherever that expression occurs in the said Part II; (b) in paragraph (b) of sub-section (3) of section 7 of the said Act, the expression “the 5th day of April, 1945” shall be substituted for the expression “the 5th day of April, 1942,” and the word “eight” shall be substituted for the word “five” and the expression “the 5th day of April, 1944,” shall be substituted for the expression “the 5th day of April, 1941”.

Amendment of Rule 6 of the Rules applicable to Cases I and II of Schedule D.

2.—Paragraph (2) of Rule 6 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, shall have effect as if the words “provided that the burden of the wear and tear of the machinery or plant will in fact fall directly on him.” were added at the end of the said paragraph.

Amendments of enactments consequent upon the substitution in county boroughs and the borough of Dun Laoghaire of the municipal rate for the poor rate and certain other rates.

3.—(1) The amendments specified in the second column of the Schedule to this Act shall be made in the enactments specified in the first column of that Schedule.

Exemption of children's allowance from income tax and reduction of deductions under section 21 of the Finance Act, 1920.

4.—(1) A children's allowance under the Act of 1944 shall be exempt from income tax (including sur-tax) and shall not be reckoned in computing income for the purposes of the Income Tax Acts.

Amendment of section 22 of the Finance Act, 1920.

5.—Sub-section (1) of section 22 (which relates to deduction in respect of dependent relatives) of the Finance Act, 1920 , shall have effect as if the words “a person (being a son or daughter of the claimant)” were substituted for the words “a daughter”.

Amendment of section 3 of the Finance Act, 1925.

6.—

Section 3

(which relates to exemption of certain military pensions and gratuities) of the Finance Act, 1925 (No, 28 of 1925), is hereby amended by the insertion therein of the following sub-section section in lieu of sub-section (2) now (by virtue of section 4 of the Finance Act, 1938 (No. 25 of 1938)) contained in the said section 3 , that is to say— “(2) The wounds and disabilities pensions to which section 16 of the Finance Act, 1919 , applies shall include and be deemed always to have included all wound and disability pensions granted under the Army Pensions Acts, 1923 to 1943, and all gratuities in respect of wounds or disabilities similarly granted, and the said section 16 shall be construed and have effect accordingly.”

Exemption in respect of certain profits from sweepstakes organised by the Irish Red Cross Society.

7.—(1) Exemption shall be granted from tax under Schedule D of the Income Tax Act, 1918, in respect of the profits of any sweepstake held under the Act of 1933 by the Irish Red Cross Society which, but for this section, would have been assessable under Case 1 of the said Schedule on the Irish Red Cross Society or on the sweepstake committee appointed in pursuance of the Act of 1933 for the purpose of such sweepstake by the Irish Red Cross Society.

Emergency allowances in respect of certain machinery or plant.

8.—(1) Where— (a) a person shows to the satisfaction of the Revenue Commissioners— (i) that machinery or plant has been acquired by him during the appointed period for the sole purpose of overcoming difficulties in the carrying on by him of a trade chargeable to tax under Schedule D of the Income Tax Act, 1918, and (ii) that those difficulties are due exclusively to circumstances created by or arising from the present national emergency (including circumstances continuing after the termination of that emergency), and (iii) that it is likely that the said machinery or plant will, before the expiration of the appointed period, cease to be employed by that person for the purpose of carrying on the said trade, and (b) that person applies, in accordance with this section, to the Revenue Commissioners for an allowance under this section in respect of the said machinery or plant in respect of any year of assessment falling wholly or partly within the appointed period, and (c) that person shows to the satisfaction of the Revenue Commissioners that, during the year of assessment to which the application relates, he was possessed of the said machinery or plant, the Revenue Commissioners may cause such allowance (in this section referred to as an emergency allowance) as they consider just to be made, by repayment or otherwise, in respect of the said machinery or plant from the assessment made on him for the year of assessment to which the application relates in respect of the profits of the said trade.

Schedule D and Schedule E Assessment Districts.

9.—(1) Notwithstanding anything contained in the Income Tax Acts, assessments to income tax under Schedules D and E shall be made for such districts as the Revenue Commissioners shall from time to time direct.

Publication of reports of case stated.

10.—The holding (whether before or after the passing of this Act) in camera, in pursuance of sub-section (9) of section 5 of the Finance Act, 1929 (No. 32 of 1929), of the hearing by the High Court or the Supreme Court of a case stated under the enactments mentioned in that sub-section shall not preclude the publication, in the law reports published by the Incorporated Council of Law Reporting for Ireland or in any other recognised law reports or in any reports printed with the permission of the said Incorporated Council, of a report of the proceedings before, or the judgments given by, the High Court or the Supreme Court, but no such report shall disclose the name of the person whose chargeability to tax is the subject of the case.

PART II.

Corporation Profits Tax.

Definition in this Part of this Act.

11.—In this Part of this Act, the expression “the Act of 1941” means the Finance Act, 1941 (No. 14 of 1941), as amended or extended by subsequent enactments.

Meaning of word “remuneration” in relation to a director.

12.—For the purpose of removing doubts, it is hereby enacted and declared that the word “remuneration”, when used in relation to a director of a company in any enactment relating to corporation profits tax (including excess corporation profits tax), shall be construed as meaning, and as having always meant, all remuneration, whether by way of fees, salary, bonus, commission or otherwise howsoever, payable by a company to a person in respect of a period during which he is or was a director of that company, whether that remuneration is or was payable to him wholly in his capacity as director of that company or wholly in some other capacity or partly in his capacity as such director and partly in some other capacity.

Provisions in respect of deduetions for the remuneration of directors in relation to excess corporation profits tax.

13.—(1) The following provisions shall apply and have effect in relation to the ascertainment, for the purpose of a charge to excess corporation profits tax, of the profits, for any accounting period ending after the 31st day of December, 1943, of a company the directors whereof have a controlling interest therein, that is to say:— (a) in the case of a company, the standard profits of which are the profits of a trade year, the amount of the deduction in respect of the total remuneration of all directors (in this sub-section referred to as the total deduction) to be allowed shall not exceed the total deduction which was allowed in computing, under the enactments for the time being in force in relation to corporation profits tax, the profits of the company for that trade year; (b) in the case of a company, the standard profits of which are the substituted standard or the sum of two thousand five hundred pounds, and which had one and only one trade year (being a trade year ended in the year ended on the 31st day of August, 1939) or which had two and only two consecutive trade years the later of which ended in the year ended on the 31st day of August, 1939, or which had three or more consecutive trade years the last of which ended in the year ended on the 31st day of August, 1939, the total deduction to be allowed shall not exceed the total deduction which was allowed in computing, under the said enactments, the profits of the company for— (i) if there was one and only one such trade year, that trade year, or (ii) if there were two and only two such consecutive trade years, whichever of those trade years there was so allowed the greater total deduction, or (iii) if there were three and only three such consecutive trade years, whichever of those trade years there was so allowed the greatest total deduction, or (iv) if there were four or more such consecutive trade years, whichever of the last three of those trade years there was so allowed the greatest total deduction; (c) in the case of a company the standard profits of which are the substituted standard or the sum of two thousand five hundred pounds and which had no trade year ended in the year ended on the 31st day of August, 1939, the total deduction to be allowed shall not exceed a sum representing three per cent. of the paid up issued capital of the company, unless, where the paid up issued capital is not less than fifteen thousand pounds, the Revenue Commissioners otherwise direct, in which case the total deduction to be allowed shall be the amount specified in the direction;

(d) the references in paragraph (b) of this sub-section to the profits of a company for a trade year shall, where the company has incurred a loss for that trade year, be construed as references to the loss of the company for that trade year, and such loss shall be computed in like manner as profits are required by law to be computed for the purposes of a charge to corporation profits tax; (e) in the application of the provisions of the foregoing paragraphs of this sub-section to the assessment of excess corporation profits tax in respect of an accounting period or part of an accounting period which is less than twelve months, the maximum amount which may be allowed to be deducted under those provisions in respect of the total deduction shall be reduced to a sum which bears to the maximum amount specified in whichever of those provisions is applicable the same proportion as the said accounting period or part of an accounting period bears to twelve months; (f) where, in the case of a company which had one or more trade years, a person, who is a director required to devote substantially the whole of his time to the service of the company in a managerial or technical capacity, was not a director during the trade year, by reference to which the total deduction under paragraph (a) or paragraph (b) of this sub-section is computed, but was during that trade year employed by the company, then, notwithstanding anything contained in this sub-section, the Revenue Commissioners, if they so think fit, may increase the total deduction by such amount (not exceeding the remuneration paid to that person for the said trade year) as they think proper; (g) in this sub-section— the word “capital” has the same meaning as it has in sub-paragraph (i) of paragraph (c) of sub-section (2) of section 16 of the Finance Act, 1942 (No. 14 of 1942), the word “director” includes any person in accordance with whose directions or instructions the directors of a company are accustomed to act, but does not include a director who is required to devote substantially the whole of his time to the service of the company in a managerial or technical capacity and is not the beneficial owner of, or able (directly or through the medium of other companies or by any other indirect means) to control more than five per cent. of the ordinary stock or shares of the company.

(2)

Section 43

of the Act of 1941 as amended by section 18 of the Finance Act, 1942 (No. 14 of 1942), shall cease to apply in respect of any accounting period ending after the 31st day of December, 1943.

Subsidiary companies.

14.—(1) Where a post-appointed day company is an auxiliary of a pre-appointed day company, the post-appointed day company shall be deemed, for the purposes of this section, to be a subsidiary of the pre-appointed day company.

Transactions designed to avoid liability to corporation profits tax.

15.—(1) Where the Revenue Commissioners are of opinion that the main purpose for which any transaction or transactions was or were effected (whether before or after the passing of this Act) was the avoidance or reduction of liability to corporation profits tax, they may, if they think fit, direct that such adjustments shall be made as respects liability, in respect of any accounting period ending after the 31st day of December, 1943, to corporation profits tax as they consider appropriate so as to counteract the avoidance or reduction of liability to corporation profits tax which would otherwise be effected by the transaction or transactions.

Standard profits of certain new companies.

16.—Where— (a) a company (in this section referred to as the new company) applies in writing to the Revenue Commissioners to make an apportionment under this section, and (b) the new company satisfies the Revenue Commissioners— (i) that it was incorporated after the 31st day of August, 1939, to carry on a trade or business similar in character to, but smaller in scale than, the trade or business of a company (in this section referred to as the old company) which has been dissolved and which had one or more trade years, and (ii) that it does so carry on such trade or business, and (iii) that more than fifty per cent. of the ordinary issued capital of the new company is held by persons who held in the aggregate more than fifty per cent. of the ordinary issued capital of the old company, and (iv) that a substantial part of the organisation of the old company has been taken over by the new company, and (v) that the new company was incorporated not later than one month after the dissolution of the old company, and (c) the new company furnishes to the Revenue Commissioners such accounts, particulars and information as the Revenue Commissioners require for the purposes of the application, the following provisions shall have effect—

Continuance of certain exemptions.

17.—The exemptions from corporation profits tax given by section 33 of the Finance Act, 1929 (No. 32 of 1929), as amended by section 30 of the Finance Act, 1931 (No. 31 of 1931) and paragraph (b) of sub-section (1) of section 47 of the Finance Act, 1932 (No. 20 of 1932), and continued until the 31st day of December, 1943, by section 44 of the Act of 1941, shall be and are hereby continued until the 31st day of December, 1946.

Construction of this Part of this Act.

18.—This part of this Act shall be read and construed together with Part V of the Finance Act, 1920 , as amended or extended by subsequent enactments, and, in particular, shall be read and construed together with Part V of the Act of 1941,

Part IV

of the Finance Act, 1942 (No, 14 of 1942), and

Part III

of the Finance Act, 1943 (No. 16 of 1943).

PART III.

Miscellaneous and General.

Amendment of section 34 of the Finance Act, 1931.

19.—Sub-section (1) of section 34 of the Finance Act, 1931 (No. 31 of 1931), is hereby amended by the substitution, for paragraph (b) of the said sub-section, of the following paragraph, that is to say:— “(b) in respect of the financial year commencing on the 1st day of April, 1945, and of each subsequent financial year, such sum, not exceeding forty thousand pounds, as the Minister for Finance may from time to time determine.”

Transfer of money from the Road Fund to the Exchequer.

20.—With a view to providing moneys to meet general charges which will fall upon the Central Fund, the sum of one hundred thousand pounds shall be transferred and paid from the Road Fund to the Exchequer at such time or times in the financial year ending on the 31st day of March, 1945, and in such manner as the Minister for Finance shall direct.

Power of Minister for Finance to direct transfer of assets of wound-up funds to the Savings Certificates Reserve Fund.

21.—On the winding up of any fund or account the assets of which fall to be paid into or disposed of for the benefit of the Exchequer, the Minister for Finance may direct that such assets shall, to such extent as he may think proper, be paid and transferred to the Savings Certificates Reserve Fund and placed to the credit of the Principal Reserve Account.

Care and management of taxes and duties.

22.—All taxes and duties imposed by this Act are hereby placed under the care and management of the Revenue Commissioners.

Short title, construction and commencement.

23.—(1) This Act may be cited as the Finance Act, 1944.

(2)

Part I

of this Act shall be construed together with the Income Tax Acts.

(3)

Part I

of this Act shall, save as is otherwise expressly provided therein, be deemed to come into force on and shall take effect as on and from the 6th day of April, 1944.

SCHEDULE.

Amendments of enactments consequent upon the substitution in county boroughs and the borough of Dun Laoghaire of the municipal rate for the poor rate and certain other rates.

Enactments to be amended Nature of amendment The Income Tax Act, 1918: section 187.

In sub-section (1), the words “under the Valuation Acts” shall be substituted for the words “for the purposes of poor rates”.

In sub-section (2), the words “or the municipal rate” shall be inserted after the words “poor rates”.

In sub-section (6)— (a) the words “or which is assessable to the municipal rate on a proportion only of the valuation under the Valuation Acts” shall be inserted after the words “poor rates”, and (b) the words “or is liable to be assessed in respect of that rent to the municipal rate on a proportion only of the valuation under the Valuation Acts” shall be inserted after the words “any poor rate”.

The Income Tax Act, 1918: section 191.

In sub-section (1), the words “or the municipal rate” shall be inserted after the words “poor rates”.

The Income Tax Act, 1918: section 192.

In sub-section (1), the words “or the municipal rate” shall be inserted after the words “poor rates”.

The Income Tax Act, 1918: section 193.

In sub-section (1), the words “under the Valuation Acts” shall be substituted for the words “for the purposes of the poor rates”.

The Income Tax Act, 1918: section 194.

In paragraph (a), the words “or of the proportion applicable to the relief of the poor of the municipal rate” shall be inserted after the words “poor rates”.

In paragraph (b), the words “or of the proportion applicable to the relief of the poor of the municipal rate” shall be inserted after the words “poor rate”.

The Income Tax Act, 1918: section 201.

The words “or of the proportion applicable to the relief of the poor of the municipal rate” shall be inserted after the words “poor rates” wherever the latter words occur.

The Income Tax Act, 1918: section 203.

The words “or of the proportion applicable to the relief of the poor of the municipal rate” shall be inserted after the words “poor rates”.

The Finance Act, 1923 : section 5.

In sub-section (2), the words “under the Valuation Acts” shall be substituted for the words “for the purposes of poor rates”.

The Finance Act, 1930 : section 3.

In sub-section (2), the words “or the municipal rate” shall be inserted after the words “poor rate”.

The Finance Act, 1935 : section 3.

In sub-section (7), the words “or the municipal rate” shall be inserted after the words “poor rate” wherever the latter words occur.

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