Finance Act, 1988

Finance Act, 1988 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 1988 Finance Act, 1988 Finance Act, 1988 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 12 of 1988 FINANCE ACT, 1988 ARRANGEMENT OF SECTIONS

PART I

Income Tax, Corporation Tax, Capital Gains Tax and Pension Fund Levy

Chapter I

Income Tax Section

Section 1

Amendment of provisions relating to exemption from income tax.

Section 2

Alteration of rates of income tax.

Section 3

Personal reliefs.

Section 4

Amendment of section 6 (special allowance in respect of P.R.S.I. for 1982-83) of Finance Act, 1982.

Section 5

Application of section 16 (credit for farm tax) of Finance Act, 1986.

Section 6

Amendment of Second Schedule to Finance Act, 1986.

Section 7

Amendment of section 16 (qualifying trades) of Finance Act, 1984.

Section 8

Amendment of Chapter III (Payments in Respect of Professional Services by Certain Persons) of Part I of Finance Act, 1987.

Chapter II

Arrangements with regard to Returns, Assessments and Appeals

Section 9

Interpretation (Chapter II).

Section 10

Obligation to make a return.

Section 11

Obligation to pay preliminary tax.

Section 12

Notices of preliminary tax.

Section 13

Making of assessments.

Section 14

Amendment of and time limit for assessments.

Section 15

Inspector's right to make enquiries and amend assessments.

Section 16

Application of section 48 (surcharge for late submission of returns) of Finance Act, 1986.

Section 17

Appeals.

Section 18

Date for payment of tax.

Section 19

Interest.

Section 20

Estimation of certain amounts.

Section 21

Miscellaneous.

Chapter III

Income Tax, Corporation Tax and Capital Gains Tax

Section 22

Exemption of certain payments by Minister for Labour and An Foras Áiseanna Saothair.

Section 23

Farming: amendment of provisions relating to relief in respect of increase in stock values.

Section 24

Capital allowances for, and deduction in respect of, vehicles.

Section 25

Amendment of section 44 (allowance to owner-occupiers in respect of certain premises) of Finance Act, 1986.

Section 26

Designated areas for urban renewal relief: extension of certain time limits.

Section 27

Amendment of section 23 (deduction for certain expenditure on construction of rented residential accommodation) of Finance Act, 1981.

Section 28

Application of section 21 (rented residential accommodation: deduction for expenditure on refurbishment) of Finance Act, 1985, etc.

Section 29

Application of section 22 (extension of application of relief for conversion of certain buildings) of Finance Act, 1985, etc.

Section 30

Pension funds: extension of tax exemptions to dealings in financial futures and traded options.

Section 31

Tax credits in respect of distributions.

Section 32

Amendment of section 45 (distributions) of Finance Act, 1980.

Chapter IV

Corporation Tax

Section 33

Rates of corporation tax.

Section 34

Amendment of Part XI (group relief) of Corporation Tax Act, 1976.

Section 35

Amendment of section 39A (relief in relation to income from certain trading operations carried on in Shannon Airport) of Finance Act, 1980.

Section 36

Amendment of section 39B (relief in relation to income from certain trading operations carried on in Custom House Docks Area) of Finance Act, 1980.

Section 37

Application of section 84 (matters to be treated as distributions) of Corporation Tax Act, 1976, to certain interest.

Section 38

Amendment of section 31 (interest payments by companies and to non-residents) of Finance Act, 1974.

Section 39

Exemption of certain income of Nítrigin Éireann Teoranta.

Section 40

Amendment of section 28 (relief in relation to income from qualifying shipping trade) of Finance Act, 1987.

Section 41

Relief from corporation tax in respect of certain dividends from a non-resident subsidiary.

Section 42

Exemption from corporation tax of profits of Custom House Docks Development Authority.

Chapter V

Capital Allowances

Section 43

Amendment of section 251 (initial allowances for machinery and plant) of Income Tax Act, 1967.

Section 44

Amendment of section 254 (industrial building allowance) of Income Tax Act, 1967.

Section 45

Amendment of section 265 (balancing allowances and balancing charges) of Income Tax Act, 1967.

Section 46

Amendment of section 11 (wear and tear allowances for certain machinery and plant in undeveloped areas) of Finance Act, 1967.

Section 47

Amendment of section 26 (increase of wear and tear allowances for certain machinery and plant) of Finance Act, 1971.

Section 48

Amendment of section 25 (increase of writing-down allowances for certain industrial buildings) of Finance Act, 1978.

Section 49

Amendment of section 25 (allowance for expenditure on multi-storey car-parks) of Finance Act, 1981.

Section 50

Continuation of certain allowances.

Section 51

Application of certain allowances in relation to certain areas and certain expenditure.

Section 52

Farming.

Chapter VI

Pension Fund Levy

Section 53

Pension fund levy.

PART II

Customs and Excise

Section 54

Interpretation (Part II).

Section 55

Tobacco products.

Section 56

Hydrocarbons.

Section 57

Removal of substances mixed with goods liable to excise duty.

Section 58

Confirmation of an Order.

PART III

Value-Added Tax

Section 59

Interpretation (Part III).

Section 60

Amendment of section 1 (interpretation) of Principal Act.

Section 61

Amendment of section 11 (rates of tax) of Principal Act.

Section 62

Amendment of section 12A (special provisions for tax invoiced by flat-rate farmers) of Principal Act.

Section 63

Amendment of Second Schedule to Principal Act.

PART IV

Stamp Duties

Section 64

Levy on banks.

Section 65

Amendment of First Schedule to Stamp Act, 1891.

PART V

Capital Acquisitions Tax

Section 66

Amendment of section 63 (allowance for capital gains tax on the same event) of Finance Act, 1985.

PART VI

Miscellaneous

Section 67

Capital Services Redemption Account.

Section 68

Amendment of section 54 of Finance Act, 1970.

Section 69

Provisions relating to sums advanced to Local Loans Fund.

Section 70

Securities of Bord Telecom Éireann and Irish Telecommunications Investments p.l.c.

Section 71

Poundage and certain other fees.

Section 72

Incentive to bring tax affairs up to date.

Section 73

Deduction from payments due to defaulters of amounts due in relation to tax.

Section 74

Construction of certain Acts in accordance with Status of Children Act, 1987.

Section 75

Guarantee of deposits with Agricultural Credit Corporation plc and Industrial Credit Corporation plc.

Section 76

Care and management of taxes and duties.

Section 77

Short title, construction and commencement.

FIRST SCHEDULE Amendment of Enactments SECOND SCHEDULE Tax Credits

PART I

Amendments Consequential on Changes in Amounts of Tax Credits in respect of Distributions

PART II

Amendments of Chapter VI (corporation tax: relief in relation to certain income of manufacturing companies) of Part I of Finance Act, 1980 THIRD SCHEDULE Changes in Rates of Corporation Tax: Consequential Provisions

PART I

Application of sections 6 (3), 13 (1B), 28, 79, 182 and 184 of Corporation Tax Act, 1976, for financial years 1988 and 1989

PART II

Amendment of Chapter VI (corporation tax: relief in relation to certain income of manufacturing companies) of Part I of Finance Act, 1980 FOURTH SCHEDULE Rates of Excise Duty on Tobacco Products Acts Referred to Agricultural Credit Act, 1978 1978, No. 2 Appropriation Act, 1965 1965, No. 21 Appropriation Act, 1969 1969, No. 31 Capital Acquisitions Tax Act, 1976 1976, No. 8 Capital Gains Tax Act, 1975 1975, No. 20 Central Bank Act, 1971 1971, No. 24 Companies Act, 1963 1963, No. 33 Corporation Tax Act, 1976 1976, No. 7 Court Officers Act, 1926 1926, No. 27 Criminal Justice Act, 1984 1984, No. 22 Criminal Procedure Act, 1967 1967, No. 12 Enforcement of Court Orders Act, 1926 1926, No. 18 Finance Act, 1920 1920, c. 1 Finance Act, 1930 1930, No. 20 Finance Act, 1950 1950, No. 18 Finance Act, 1967 1967, No. 17 Finance Act, 1968 1968, No. 33 Finance Act, 1969 1969, No. 21 Finance Act, 1970 1970, No. 14 Finance Act, 1971 1971, No. 23 Finance Act, 1972 1972, No. 19 Finance Act, 1973 1973, No. 19 Finance Act, 1974 1974, No. 27 Finance Act, 1975 1975, No. 6 Finance Act, 1976 1976, No. 16 Finance Act, 1977 1977, No. 18 Finance Act, 1978 1978, No. 21 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, 1983 1983, No. 15 Finance Act, 1984 1984, No. 9 Finance Act, 1985 1985, No. 10 Finance Act, 1986 1986, No. 13 Finance Act, 1987 1987, No. 10 Finance (Excise Duty on Tobacco Products) Act, 1977 1977, No. 32 Finance (Miscellaneous Provisions) Act, 1968 1968, No. 7 Health Contributions Act, 1979 1979, No. 4 Income Tax Act, 1967 1967, No. 6 Industrial Credit (Amendment) Act, 1958 1958, No. 10 Local Loans Fund Act, 1935 1935, No. 16 Mercantile Marine Act, 1955 1955, No. 29 Stamp Act, 1891 1891, c. 39 Status of Children Act, 1987 1987, No. 26 Succession Duty Act, 1853 1853, c. 51 Unit Trusts Act, 1972 1972, No. 17 Value-Added Tax Act, 1972 1972, No. 22 Value-Added Tax (Amendment) Act, 1978 1978, No. 34 Youth Employment Agency Act, 1981 1981, No. 32 Number 12 of 1988 FINANCE ACT, 1988 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. [25th May, 1988] BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:

PART I

Income Tax, Corporation Tax, Capital Gains Tax and Pension Fund Levy

Chapter I

Income Tax Amendment of provisions relating to exemption from income tax.

1.—As respects the year 1988-89 and subsequent years of assessment, the Finance Act, 1980 , is hereby amended— (a) in subsection (2) of section 1, by the substitution of “£5,500” for “£5,300” (inserted by the Finance Act, 1985 ), and of “£2,750” for “£2,650” (inserted by the Finance Act, 1985 ), and (b) in subsection (6) of section 2, by the substitution of “£6,500” for “£6,300” (inserted by the Finance Act, 1986 ), of “£7,600” for “£7,350” (inserted by the Finance Act, 1986 ), of “£3,250” for “£3,150” (inserted by the Finance Act, 1986 ), and of “£3,800” for “£3,675” (inserted by the Finance Act, 1986 ), and the said subsections (2) and (6), as so amended, are set out in the Table to this section.

TABLE

Provided that, if at any time during the year of assessment either the individual or his spouse was of the age of seventy-five years or upwards, “the specified amount” means £7,600; (b) in any other case, £3,250:

Provided that, if at any time during the year of assessment the individual was of the age of seventy-five years or upwards, “the specified amount” means £3,800.

Alteration of rates of income tax.

2.—

Section 2

of the Finance Act, 1986 , is hereby amended, as respects the year 1988-89 and subsequent years of assessment, by the substitution of the following Table for the Table to the said section: “TABLE

PART I

Part of taxable income Rate of tax Description of rate

(1)

(2)

PART II

Part of taxable income Rate of tax Description of rate

(1)

(2)

Personal reliefs.

3.—(1) Where a deduction falls to be made from the total income of an individual for the year 1988-89 or any subsequent year of assessment in respect of relief to which the individual is entitled under a provision mentioned in column (1) of the Table to this subsection and the amount of the deduction would, but for this section, be an amount specified in column (2) of the said Table, the amount of the deduction shall, in lieu of being the amount specified in the said column (2), be the amount specified in column (3) of the said Table opposite the mention of the amount in the said column (2).

TABLE Statutory provision Amount to be deducted from total income for 1987-88 Amount to be deducted from total income for 1988-89 and subsequent years

(1)

(2)

(2)

Section 3

of the Finance Act, 1986 , shall have effect subject to the provisions of this section.

Amendment of section 6 (special allowance in respect of P.R.S.I. for 1982-83) of Finance Act, 1982.

4.—

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 1988-89, as if in subsection (2)— (a) “1988-89” were substituted for “1982-83”, and (b) “£286” were substituted for “£312” in each place where it occurs.

Application of section 16 (credit for farm tax) of Finance Act, 1986 .

5.—(1) Where, but for an insufficiency of profits or gains, a reduction of income tax would have been granted to an individual under the provisions of section 16 of the Finance Act, 1986 , in respect of the full amount of farm tax paid by him on or before 31st December, 1986, he may claim to have his income tax in respect of profits or gains from farming for the years 1985-86 and 1987-88 reduced by the amount by which the farm tax so paid by him exceeds the tax appropriate to the profits or gains from farming in relation to that individual for the year 1986-87:

Provided that— (a) the reduction to be granted under this subsection shall be set off, so far as possible, against the individual's liability for the year 1985-86, and (b) no reduction under this subsection shall be allowed more than once in respect of the same amount of farm tax paid by the individual.

Amendment of Second Schedule to Finance Act, 1986.

6.—As respects any right obtained on or after the 6th day of April, 1988, by an individual to acquire shares in a body corporate, the Second Schedule to the Finance Act, 1986 , is hereby amended as follows: (a) in subparagraph (1) of paragraph 1, by the deletion of the definitions of “full-time director” and “qualifying employee”, and (b) in subparagraphs (1) (a) and (2) of paragraph 5, by the deletion of “full-time” and by the substitution of “an” for “a qualifying”, and the said subparagraphs (1) (a) and (2), as so amended, are set out in the Table to this section.

TABLE (a) unless he is a director or an employee of the grantor or, in the case of a group scheme, of a participating company;

Amendment of section 16 (qualifying trades) of Finance Act, 1984.

7.—

Section 16

of the Finance Act, 1984 , is hereby amended, in paragraph (a) (inserted by the Finance Act, 1987 ) of subsection (2), by the insertion after subparagraph (iii) of the following subparagraph: “(iiia) in respect of a subscription for eligible shares made on or after the 6th day of April, 1988, such cultivation of plants as is referred to in subsection (1CC3) (inserted by the Finance Act, 1987 ) of section 39 of the Finance Act, 1980 ,”.

Amendment of Chapter III (Payments in Respect of Professional Services by Certain Persons) of Part I of Finance Act, 1987.

8.—

Chapter III

of

Part I

of the Finance Act, 1987 , is hereby amended— (a) in section 13 (1), by— (i) the insertion of the following definitions: “‘authorised insurer’ has the same meaning as in section 145 of the Income Tax Act, 1967 ; ‘contract of insurance’ means a contract between an authorised insurer and a subscriber in respect of such insurance as is referred to in section 145

shall be acquitted and discharged of such amount as is represented by the deduction, as if that amount had actually been paid. (1A) Where— (a) in accordance with the provisions of section 14A (inserted by the Finance Act, 1988), a relevant payment has been made to a practitioner by an authorised insurer, and (b) in accordance with the provisions of subsection (1), the practitioner has allowed a deduction of appropriate tax in respect of that payment and a subscriber or member has been acquitted and discharged of so much money as is represented by the deduction, the practitioner shall, if any amount in respect of the relevant medical expenses to which the relevant payment relates has been paid by the subscriber or member, pay to the subscriber or member, as the case may be, an amount equal to the amount by which the aggregate of the amount paid by the subscriber or member and the amount of the relevant payment exceeds the relevant medical expenses. (1B) (a) The Minister for Finance may make such regulations as he considers necessary or expedient for the purpose of giving full effect to this Chapter in so far as it relates to amendments made thereto by the Finance Act, 1988, and, in particular, but without prejudice to the generality of the foregoing, regulations under this subsection may— (i) specify the circumstances and the manner in which a payment (other than a relevant payment) may be made or claimed in respect of relevant medical expenses, and (ii) provide for the indemnification of an individual against claims in respect of relevant medical expenses, or any other claims arising out of acts done or omitted to be done by the individual in pursuance of this Chapter or regulations made under this subsection in so far as it relates or they relate to the amendments aforesaid. (b) Every regulation made under this subsection shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.”.

Chapter II

Arrangements with regard to Returns, Assessments and Appeals Interpretation (

Chapter II

).

9.—(1) In this Chapter, except where the context otherwise requires— “appeal” means an appeal under section 416 of the Income Tax Act, 1967 ; “appropriate inspector” means, in relation to a chargeable person— (a) the inspector who has last given notice in writing to the chargeable person that he is the inspector to whom the chargeable person is required to deliver a return or statement of income or profits, (b) in the absence of such an inspector as is referred to in paragraph (a), the inspector to whom it is customary for the chargeable person to deliver such return or statement, or (c) in the absence of such an inspector as is referred to in paragraphs (a) and (b), the inspector of returns; “assessment” means an assessment to tax made under the Income Tax Acts or the Corporation Tax Acts, as the case may be; “chargeable period” has the same meaning as in paragraph 1 of the First Schedule to the Corporation Tax Act, 1976 ; “chargeable person” means, as respects a chargeable period, a person who is chargeable to tax for that period, whether on his own account or on account of some other person, but does not include a person— (a) whose total income for the chargeable period consists solely of emoluments to which Chapter IV of Part V of the Income Tax Act, 1967 , applies, and for this purpose a person whose total income for the chargeable period, other than emoluments to which the said Chapter IV applies, is deducted in determining the amount of his tax-free allowances for the chargeable period by virtue of Regulation 10 (1) (b) of the Income Tax (Employments) Regulations, 1960 ( S.I. No. 28 of 1960 ), shall be deemed for that chargeable period to be a person whose total income consists solely of emoluments to which the said Chapter IV applies, (b) who, for the chargeable period, has been exempted by an inspector from the requirements of section 10 by reason of a notice given under subsection (6) of that section, or (c) who is chargeable to tax for the chargeable period by reason only of the provisions of section 433 or 434 of the Income Tax Act, 1967 , or section 151 of the Corporation Tax Act, 1976 ; “determination of the appeal” means a determination by the Appeal Commissioners under section 416

Obligation to make a return.

10.—(1) Every chargeable person shall, as respects a relevant chargeable period, prepare and deliver to the appropriate inspector on or before the specified return date for the chargeable period, a return in the prescribed form of— (a) in the case of a chargeable person, who is chargeable to income tax for a chargeable period which is a year of assessment, all such matters and particulars as would be required to be contained in a statement delivered pursuant to a notice given to the chargeable person by the appropriate inspector under section 169 of the Income Tax Act, 1967 , if the period specified in such notice were the year of assessment immediately preceding the relevant chargeable period, and where the chargeable person is an individual who is chargeable to income tax for a relevant chargeable period, in addition to such matters and particulars as aforesaid, all such matters and particulars as would be required to be contained in a return for the period delivered to the appropriate inspector pursuant to a notice given to the chargeable person by the appropriate inspector under section 172 of the said Act, or (b) in the case of a chargeable person who is chargeable to corporation tax for a relevant chargeable period which is an accounting period, all such matters and particulars in relation to the chargeable period as would be required to be contained in a return delivered pursuant to a notice given by the appropriate inspector to the chargeable person under section 143 of the Corporation Tax Act, 1976 , and such further particulars as may be required by the prescribed form.

Provided that, where, before the passing of this Act, a person has been given notice by the inspector that he need not prepare and deliver a return for or until a specified chargeable period or until the happening of any event, he shall be deemed to have been given notice to that effect under this subsection.

Obligation to pay preliminary tax.

11.—(1) Every person who is a chargeable person as respects any relevant chargeable period shall be liable to pay to the Collector in accordance with this section and section 18 the amount of his preliminary tax appropriate to that chargeable period.

Notices of preliminary tax.

12.—(1) Where— (a) a chargeable person defaults in the making of a payment of preliminary tax for a relevant chargeable period, or (b) at any time prior to the due date for the payment of an amount of preliminary tax for a relevant chargeable period, the inspector considers it appropriate to do so, the inspector may give notice in writing to the chargeable person of the amount of the preliminary tax which, in the opinion of the inspector, ought to be paid by the chargeable person for that chargeable period:

Provided that a notice shall not be given under this subsection to a chargeable person for a relevant chargeable period at any time after the chargeable person has delivered a return for that chargeable period.

Provided that, where action for the recovery of an amount of preliminary tax specified in a notice given under subsection (1), being action by way of the institution of proceedings in any court or the issue of a certificate under section 485 of the Income Tax Act, 1967 , has been taken, this subsection shall not apply to that amount of preliminary tax.

Section 113

of the Finance Act, 1986 , shall apply in all respects to an amount of preliminary tax specified in a notice under subsection (1) as if it were an amount of tax specified in an assessment.

Section 537

of the Income Tax Act, 1967 , shall apply to preliminary tax specified in a notice as it applies to tax specified in an assessment.

Provided that— (a) interest shall not be payable under this subsection if it amounts to less than £10, and (b) income tax shall not be deductible on payment of interest under this subsection and such interest shall not be reckoned in computing income for the purposes of the Tax Acts.

(10)

Section 190

of the Income Tax Act, 1967 , shall, with any necessary modifications, apply to notices of preliminary tax under this section as it applies to assessments.

Making of assessments.

13.—(1) An assessment shall not be made on a chargeable person for a relevant chargeable period at any time before the specified return date for the chargeable period unless at that time the chargeable person has delivered a return for the chargeable period and an assessment shall not be made at a time when the making of the assessment is precluded under the provisions of section 14

Provided that, subject to section 14

Amendment of and time limit for assessments.

14.—(1) Subject to subsection (2) and to section 211 of the Income Tax Act, 1967 , an inspector may, at any time, amend an assessment made on a chargeable person for a relevant chargeable period by making such alterations therein or additions thereto as he thinks necessary, notwithstanding that tax may have been paid or repaid in respect of the assessment and notwithstanding that he may have amended the assessment on a previous occasion or on previous occasions and he shall give notice to the chargeable person of the assessment as so amended.

Provided that nothing in this subsection shall prevent the amendment of an assessment— (a) where a relevant return does not contain a full and true disclosure of the aforementioned facts, (b) to give effect to a determination upon any appeal against an assessment, (c) to take account of any fact or matter arising by reason of an event occurring after the return is delivered, (d) to correct an error in calculation, (e) to correct a mistake of fact whereby any matter in the assessment does not properly reflect the facts disclosed by the chargeable person, or (f) to give effect to the provisions of section 20

Provided that this subsection shall not apply where the inspector is or, on appeal, the Appeal Commissioners are, not satisfied that the doubt was genuine and is or are of the opinion that the chargeable person was acting with a view to the evasion or avoidance of tax and in such a case the chargeable person shall be deemed not to have made a full and true disclosure with regard to the matter in question.

(5)

Section 186

of the Income Tax Act, 1967 , and section 144

Inspector's right to make enquiries and amend assessments.

15.—(1) For the purpose of making an assessment on a chargeable person for a relevant chargeable period or for the purpose of amending such an assessment, the inspector may accept either in whole or in part any statement or other particular contained in a return delivered by the chargeable person for that chargeable period and he may assess any amount of income, profits or gains or allow any deduction, allowance or relief by reference to such statement or particular; but the making of an assessment or the amendment of an assessment by reference to any such statement or particular contained in the chargeable person's return shall not preclude the inspector from making such enquiries or taking such actions, within his powers, as he considers necessary to satisfy himself as to the accuracy or otherwise of that statement or particular and, subject to section 14

Provided that any such enquiries and any such actions shall not be made in the case of any chargeable person for any relevant chargeable period at any time after the expiry of the period of 6 years commencing at the end of the chargeable period in which the chargeable person has delivered a return for the relevant chargeable period unless at that time the inspector has reasonable grounds for believing that the return is insufficient due to its having been completed in a fraudulent or negligent manner.

Application of section 48 (surcharge for late submission of returns) of Finance Act, 1986.

16.—

Section 48

of the Finance Act, 1986 , shall have effect, as respects any chargeable person for a relevant chargeable period, as if the definition of “return of income” in the said section 48 included the return which the chargeable person is required to deliver under the provisions of section 10 and as if references to the specified date in relation to a return of income were references to the specified return date for the chargeable period for which a return is to be delivered and it shall apply in relation to an amount of preliminary tax, whether paid under section 11 or specified in a notice under section 12 , as it applies to an amount of tax specified in an assessment.

Appeals.

17.—(1) No appeal may be made against— (a) a notice of preliminary tax under section 12 , (b) the amount of any income, profits or gains or the amount of any allowance, deduction or relief specified in an assessment or an amended assessment made on a chargeable person for a relevant chargeable period where the inspector has determined that amount by accepting without the alteration of and without departing from the statement or statements or the particular or particulars with regard to income, profits or gains or allowances, deductions or reliefs specified in the return delivered by the chargeable person for that chargeable period, or (c) the amount of any income, profits or gains or the amount of any allowance, deduction or relief specified in an assessment or an amended assessment made on a chargeable person for a relevant chargeable period where that amount had been agreed between the inspector and the chargeable person, or any person authorised by the chargeable person in that behalf, prior to the making of the assessment or the amendment of the assessment, as the case may be.

Date for payment of tax.

18.—(1) Preliminary tax appropriate to a relevant chargeable period shall be due and payable— (a) where the chargeable period is a year of assessment, on or before the 1st day of October in that year of assessment, or (b) where the chargeable period is an accounting period of a company, within the period of 6 months from the end of the accounting period, and references in this Chapter to the due date for the payment of an amount of preliminary tax shall be construed as references to the 1st day of October in the relevant year of assessment or the last day of that period of 6 months, as the case may be.

Provided that if— (a) the assessment was made after the chargeable person had delivered a return containing a full and true disclosure of all material facts necessary for the making of the assessment, or (b) the assessment had previously been amended following the delivery of the return containing such disclosure, the additional tax so due shall be deemed to have been due and payable on the day immediately following the date of the amendment.

Provided that— (a) where the tax which the chargeable person had so paid is not less than 90 per cent. of the tax so found to be payable on the determination of the appeal, and (b) where the tax charged by the assessment was due and payable in accordance with the provisions of subsection (2), the said excess shall be deemed to be due and payable on the date of the determination of the appeal.

Interest.

19.—(1) Subsection (2A) of section 550 of the Income Tax Act, 1967 , shall not apply to an assessment made on a chargeable person for a relevant chargeable period.

Estimation of certain amounts.

20.—(1) Where, in the case of a chargeable person who is chargeable to income tax for a relevant chargeable period (hereafter in this section referred to as “the first period”)— (a) the total income of the chargeable person for the first period includes income from any source or sources which falls to be computed on the basis of the actual amounts receivable in the first period or where, in the first period, any deductions allowable on account of any sums paid out of the profits or gains of the chargeable person fall to be allowed as deductions in respect of the chargeable period in which they are payable, and (b) at any time before the delivery by the chargeable person of a return for the immediately succeeding chargeable period, a computation of the tax payable by the chargeable person for the first period falls to be made by the inspector or the chargeable person or an assessment for the first period is being made or amended by the inspector, the inspector or the chargeable person, as the case may be, shall make the computation, assessment or amendment, as the case may be, on the basis that— (i) the amount of income from the source or each source referred to in paragraph (a) is an amount equivalent to the amount of the income from the source or each source receivable in the chargeable period immediately preceding the first period, and (ii) the amount of the deductions referred to in paragraph (a) is an amount equivalent to the amount of those deductions in the chargeable period immediately preceding the first period.

(5)

Section 528

of the Income Tax Act, 1967 , shall not apply to a chargeable person as respects any relevant chargeable period.

Miscellaneous.

21.—(1)

Section 211

of the Income Tax Act, 1967 , shall apply to an amendment of an assessment under section 14 as it applies to an additional first assessment under section 186 of that Act.

(2)

Section 509

of the Income Tax Act, 1967 , shall have effect as if the definition of “assessment” included an assessment as amended under the provisions of section 14 .

(6)

Section 30

of the Finance Act, 1976 , shall not apply in relation to an assessment made on any person for a relevant chargeable period.

Chapter III

Income Tax, Corporation Tax and Capital Gains Tax Exemption of certain payments by Minister for Labour and An Foras Áiseanna Saothair.

22.—(1) A payment to which this section applies shall be disregarded for all the purposes of the Tax Acts.

Farming: amendment of provisions relating to relief in respect of increase in stock values.

23.—(1) Section 31A (inserted by the Finance Act, 1976 ) of the Finance Act, 1975 , is hereby amended by the substitution of “1988” for “1987” (inserted by the Finance Act, 1987 )— (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, 1988.

(2)

Section 12

of the Finance Act, 1976 , is hereby amended— (a) by the substitution in subsection (3) of “1988-89” for “1987-88” (inserted by the Finance Act, 1987 ), and (b) by the substitution of “1988” for “1987” (inserted by the Finance Act, 1987 ) 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

Capital allowances for, and deduction in respect of, vehicles.

24.—(1) (a) Sections 25 to 29 of the Finance Act, 1973 , shall have effect, in relation to expenditure incurred on the provision or hiring of a vehicle to which those sections apply, as if for “£2,500”, in each place where it occurs in those sections, there were substituted “£6,000”. (b) The reference in paragraph (a) to expenditure incurred on the provision or hiring of a vehicle does not include— (i) as respects the said sections 25 to 27, a reference to expenditure incurred before the 28th day of January, 1988, or incurred within 12 months after that day under a contract entered into before that day, and (ii) as respects subsections (2) and (3) of the said section 28 and the said section 29, a reference to expenditure under a contract entered into before the said 28th day of January, 1988.

(2)

Section 32

of the Finance Act, 1976 , shall have effect, in relation to qualifying expenditure (within the meaning of that section) incurred after the 27th day of January, 1988, as if for “£3,500”, in each place where it occurs, there were substituted “£6,000”.

Amendment of section 44 (allowance to owner-occupiers in respect of certain premises) of Finance Act, 1986.

25.—

Section 44

of the Finance Act, 1986 , is hereby amended by the deletion from the definition of “qualifying owner-occupied dwelling” in section (1) (a) of “other than the Custom House Docks Area”.

Designated areas for urban renewal relief: extension of certain time limits.

26.—The provisions of the Finance Act, 1986 , specified in the Table to this section shall have effect as if, in the definition of “qualifying period”, the reference to the 31st day of May, 1989, were a reference to the 31st day of May, 1991.

TABLE Subsection (1) of section 42 (allowance in relation to construction of certain commercial premises).

Subsection (1) (a) of section 44 (allowance to owner-occupier in respect of certain premises).

Subsection (1) (a) of section 45 (double rent allowance as a deduction in computing trading income).

Amendment of section 23 (deduction for certain expenditure on construction of rented residential accommodation) of Finance Act, 1981.

27.—(1) As respects expenditure to which this section applies, section 23 of the Finance Act, 1981 , shall apply as if— (a) in subsection (1) (a) for the definition of “qualifying period” there were substituted the following definition— “‘qualifying period’ means the period commencing on the 27th day of January, 1988, and ending on the 31st day of March, 1991;”, and (b) in the definition of “qualifying premises” in the said subsection (1) (a) “90 square metres” were substituted for “75 square metres”.

Application of section 21 (rented residential accommodation: deduction for expenditure on refurbishment) of Finance Act, 1985, etc.

28.—As respects relevant expenditure (within the meaning of subsection (1) (a) of section 21 of the Finance Act, 1985 ) incurred in the period commencing on the 27th day of January, 1988, and ending on the 31st day of March, 1991, the said section 21 shall have effect as if— (a) in subsection (2) (a) (iii) for the definition of “qualifying period” there were substituted the following definition— “‘qualifying period’ means the period commencing on the 27th day of January, 1988, and ending on the 31st day of March, 1991;”, and (b) the proviso to section 29

Application of section 22 (extension of application of relief for conversion of certain buildings) of Finance Act, 1985, etc.

29.—With respect to expenditure incurred in the period commencing on the 27th day of January, 1988, and ending on the 31st day of March, 1991, section 22 of the Finance Act, 1985 , shall have effect as if— (a) (i) in subsections (1) and (2) of the said section 22, for “commencing on the 1st day of April, 1985, and ending on the 31st day of March, 1987,” and (ii) in section 30

Pension funds: extension of tax exemptions to dealings in financial futures and traded options.

30.—(1) In this section— “financial futures” and “traded options” mean, respectively, financial futures and traded options which are for the time being dealt in or quoted on a futures exchange or a stock exchange in the State.

Tax credits in respect of distributions.

31.—(1) The provisions of the Corporation Tax Act, 1976 , specified in paragraph 1 of

Part I

of the Second Schedule shall have effect— (a) in relation to distributions made in the year 1988-89, as if the standard rate for that year of assessment were 32 per cent., and (b) in relation to distributions made on or after the 6th day of April, 1989, as if the standard rate for the year 1989-90 and subsequent years of assessment were 28 per cent.

(2)

Part I

of the Second Schedule shall have effect for the purpose of supplementing subsection (1).

Amendment of section 45 (distributions) of Finance Act, 1980.

32.—(1)

Section 45

of the Finance Act, 1980 , is hereby amended as respects distributions made by a company on or after the 6th day of April, 1989, by the substitution for subsections (1), (2) and (3) of the following subsections: “(1) (a) There shall be treated as a specified distribution for the purposes of subsection (2) so much of a distribution (hereafter in this paragraph referred to as ‘the first-mentioned distribution’) treated under subsection (1A) as made by a company for an accounting period as is equal to the amount, which may be nil, determined by the formula Y × (A−B) + E−U ______________ (R−S) + T−U where, subject to sections 46 to 49— A is the amount of the company's income, the corporation tax referable to which is reduced under section 41, for the relevant accounting period which coincides with or is included in the accounting period, B is the amount of the corporation tax, as reduced under section 41, referable to the amount mentioned in the definition of A, E is the amount of the relevant distributions, whether made before the 6th day of April, 1989, or on or after that day, received by the company in the accounting period, which is included in its franked investment income of the accounting period, other than franked investment income against which relief is given under section 15

Provided that a distribution that is— (a) an interim dividend paid by the directors in respect of the profits of the accounting period in which it is paid, pursuant to powers conferred on them by the articles of association of the company, or (b) a distribution by virtue only of subparagraph (ii), (iii) (I) or (v) of section 84

Provided also that— (a) (i) where the first-mentioned day falls in an accounting period of the company which begins on the day on which the company commenced to be within the charge to corporation tax, the distribution or distributions, as the case may be, shall be treated as made for that accounting period and, where the total amount of distributions made by the company on or after the 6th day of April, 1989, which are treated as having been made for that accounting period would otherwise exceed the amount of the distributable income of the company for that accounting period, the excess shall be treated as a distribution or distributions, as the case may be, which has not or have not been made for any accounting period, and (ii) where the first-mentioned day falls on or after the first day of an accounting period of the company which ends on a day on which the company ceases to be within the charge to corporation tax, the distribution or distributions, as the case may be, shall be treated as made for that accounting period; (b) (i) where the total amount of distributions made by the company on or after the 6th day of April, 1989, which are treated as having been made for an accounting period, would otherwise exceed the amount of the distributable income of the company for that accounting period, the excess shall be treated as a distribution or distributions, as the case may be, made for the immediately preceding accounting period of the company, and (ii) where the total amount of distributions made by the company on or after the 6th day of April, 1989, which are treated as having been made for the immediately preceding accounting period referred to in subparagraph (i), would otherwise exceed the amount of the distributable income of the company for that accounting period, the excess shall be treated as a distribution or distributions, as the case may be, made for the next immediately preceding accounting period of the company and so on, and (c) where by virtue of the application of the provisions of this subsection to the distribution or distributions, as the case may be, made by the company on the first-mentioned day there is an excess such as is mentioned in this proviso, that excess— (i) where there is only one distribution made by the company on the first-mentioned day, shall be wholly attributed to that distribution, or (ii) where there is more than one distribution so made on the first-mentioned day, shall be partly attributed to each of those distributions in the same respective proportion as the amount of each such distribution bears to the total amount of the distributions made by the company on that day,

so that any distribution made by the company on the first-mentioned day shall be treated as consisting of two or, if there is more than one such excess, more distributions each of which is made by the company for a different accounting period (if any). (1B) For the purposes of this section— (a) the amount of the distributable income of a company for an accounting period shall be the amount determined by the formula (R−S) + T−U where R, S, T and U have the same meanings as in subsection (1), and (b) the amount of the distributable manufacturing income of a company for an accounting period shall be the amount determined by the formula (A−B) + E where A, B and E have the same meanings as in subsection (1).

Part II

of the Second Schedule .

(3)

Part II

of the Second Schedule shall have effect for the purpose of supplementing subsection (1).

Chapter IV

Corporation Tax Rates of corporation tax.

33.—(1) As respects any accounting period ending on or after the 1st day of April, 1988, section 1 of the Corporation Tax Act, 1976 , is hereby amended by the substitution of the following subsection for subsection (1): “(1) For the financial year 1974 and each subsequent financial year there shall be charged on profits of companies a tax, to be called corporation tax, at the rate of— (a) 50 per cent. for— (i) each financial year until and including the year 1987, and (ii) that part of the financial year 1988 beginning on the 1st day of January, 1988, and ending on the 31st day of March, 1988; (b) 47 per cent. for— (i) that part of the financial year 1988 beginning on the 1st day of April, 1988, and ending on the 31st day of December, 1988, and (ii) that part of the financial year 1989 beginning on the 1st day of January, 1989, and ending on the 31st day of March, 1989; and (c) 43 per cent. for— (i) that part of the financial year 1989 beginning on the 1st day of April, 1989, and ending on the 31st day of December, 1989, and (ii) each subsequent financial year.”.

Amendment of Part XI (group relief) of Corporation Tax Act, 1976.

34.—Part XI of the Corporation Tax Act, 1976 , is hereby amended by the insertion after section 116 of the following section: “116A—(1) (a) In this section— ‘trade’ means a trade carried on by a company which consists of or includes the manufacture of goods (including activities carried on in an accounting period which would, if the company had sufficient profits in that period and made a claim for relief in respect of the trade under Chapter VI of Part I of the Finance Act, 1980 , for that period, fall to be regarded for the purposes of that Chapter as the manufacture of goods); ‘income from the sale of goods’ in an accounting period in the course of a trade carried on by a company shall, subject to section 118 as applied for the purposes of relief under this section, be such income as would be ‘the income from the sale of those goods’ in that period in the course of the trade for the purposes of a claim under section 41

Provided that a loss such as is mentioned in section 28

Amendment of section 39A (relief in relation to income from certain trading operations carried on in Shannon Airport) of Finance Act, 1980.

35.—Section 39A of the Finance Act, 1980 , is hereby amended by the deletion of the proviso to subsection (2).

Amendment of section 39B (relief in relation to income from certain trading operations carried on in Custom House Docks Area) of Finance Act, 1980.

36.—(1) Subsection (7) (c) of section 39B (inserted by the Finance Act, 1987 ) of the Finance Act, 1980 , is hereby repealed and shall be deemed never to have been enacted.

Application of section 84 (matters to be treated as distributions) of Corporation Tax Act, 1976, to certain interest.

37.—(1) (a) This section applies to so much of any interest as— (i) is a distribution by virtue only of section 84

Amendment of section 31 (interest payments by companies and to non-residents) of Finance Act, 1974.

38.—

Section 31

of the Finance Act, 1974 , is hereby amended by the insertion in subsection (3), after paragraph (c), of the following paragraph— “(cc) interest paid to a person whose usual place of abode is outside the State by a company in the course of carrying on relevant trading operations within the meaning of section 39A (inserted by the Finance Act, 1981 ) or section 39B (inserted by the Finance Act, 1987 ) of the Finance Act, 1980 , or”.

Exemption of certain income of Nítrigin Éireann Teoranta.

39.—Notwithstanding any provision of the Corporation Tax Acts, income— (a) arising to Nítrigin Éireann Teoranta in any accounting period ending in the period commencing on the 1st day of January, 1987, and ending on the 31st day of December, 1992, from the business of supplying gas, purchased from Bord Gáis Éireann, to Irish Fertilizer Industries Limited under a contract between Nítrigin Éireann Teoranta and Irish Fertilizer Industries Limited, and (b) which, but for this section, would have been chargeable to corporation tax under Case I of Schedule D, shall be exempt from corporation tax.

Amendment of section 28 (relief in relation to income from qualifying shipping trade) of Finance Act, 1987.

40.—(1) Subsection (1) of section 28 of the Finance Act, 1987 , is hereby amended— (a) by the insertion after “vessel” in paragraph (i) of the definition of “qualifying ship” of “other than a vessel normally used for the purposes of an activity mentioned in paragraph (d) of the definition of qualifying shipping activities in this subsection”, and (b) in the definition of “qualifying shipping activities”— (i) by the deletion of “and” in paragraph (c), and (ii) by the substitution for paragraph (d) of the following paragraphs— “(d) the subjecting of fish to a manufacturing process on board a qualifying ship, and (e) the letting on charter of a qualifying ship for use for the said purposes where the operation of the ship, and the crew of the ship, remain under the direction and control of the company;”, and the said definitions as so amended are set out in the Table to this section.

TABLE “qualifying ship” means a sea-going vessel which— (a) is owned to the extent of not less than 51 per cent. by a person or persons ordinarily resident in the State, (b) is registered in the State under

Part II

of the Mercantile Marine Act, 1955 , (c) is of not less than 100 tons gross tonnage, and (d) is self-propelled, but notwithstanding anything in paragraphs (a), (b), (c) or (d) of this definition does not include— (i) a fishing vessel other than a vessel normally used for the purposes of an activity mentioned in paragraph (d) of the definition of qualifying shipping activities in this subsection, (ii) a tug, (iii) a vessel (including a dredger) used primarily as a floating platform for working machinery or as a diving platform, (iv) a vessel used for the purposes of transporting supplies or personnel to, or providing services in respect of, a mobile or fixed rig, platform, vessel or installation of any kind at sea, and (v) any other vessel of a type which is not normally used for the purposes of qualifying shipping activities; “qualifying shipping activities” means activities carried on by a company in the course of a trade and which consist of— (a) the use of a qualifying ship for the purpose of carrying by sea passengers or cargo for reward, (b) the provision, on board the qualifying ship, of services ancillary to the said use of the qualifying ship, (c) the granting of rights by virtue of which another person provides, or will provide, the said services, on board the said qualifying ship, (d) the subjecting of fish to a manufacturing process on board a qualifying ship, and (e) the letting on charter of a qualifying ship for use for the said purposes where the operation of the ship, and the crew of the ship, remain under the direction and control of the company; (c) the letting on charter of a ship referred to at paragraph (a) (ii), in the course of a trade, shall be deemed notwithstanding paragraph (c) of subsection (1) of section 40 of the Finance Act, 1984 , to be a trade of leasing for the purposes of that section and to be a separate trade as provided for in subsection (2) of that section.

Relief from corporation tax in respect of certain dividends from a non-resident subsidiary.

41.—(1) (a) In this section— “approved investment plan” means an investment plan in respect of which the Minister has given a certificate in accordance with subsection (2) to the company concerned; “investment plan” means a plan of a company resident in the State which is directed towards the creation or maintenance of employment in the State in trading operations carried on, or to be carried on, in the State and which has, prior to its implementation, been submitted to the Minister by the company for the purpose of enabling it to claim relief under this section; “Minister” means the Minister for Finance; “relevant dividends” means dividends received on or after the 6th day of April, 1988, by a company resident in the State (being the company claiming the relief under this section) from a foreign subsidiary of the company and which are— (i) applied, not earlier than the 6th day of April, 1988, and within a period which commences one year before the day on which the dividends are received in the State and ends two years after that day, for the purposes of an approved investment plan, and (ii) specified in a certificate given by the Minister under subsection (2); “relief under this section” means, in relation to a company for an accounting period, the amount by which any corporation tax payable by the company is reduced by virtue of subsection (3). (b) (i) The reference in paragraph (a) to “a foreign subsidiary” means a 51 per cent. subsidiary of a company where the company is resident in the State and the subsidiary is a resident of the United States of America or of a territory with the government of which arrangements having the force of law by virtue of section 361 of the Income Tax Act, 1967 , have been made. (ii) For the purposes of subparagraph (i)— “resident of the United States of America” has the meaning assigned to it by the Convention set out in Schedule 8 to the Income Tax Act, 1967 ; a company shall be regarded as being a resident of a territory other than the United States of America if it is so regarded under the provisions of arrangements made with the government of that territory and having the force of law by virtue of section 361 of the said Act.

Exemption from corporation tax of profits of Custom House Docks Development Authority.

42.—Notwithstanding any provision of the Corporation Tax Acts, profits arising to the Custom House Docks Development Authority in any accounting period ending after the 17th day of November, 1986, shall be exempt from corporation tax.

Chapter V

Capital Allowances Amendment of section 251 (initial allowances for machinery and plant) of Income Tax Act, 1967.

43.—

Section 251

(as amended by section 20 of the Finance Act, 1985 ) of the Income Tax Act, 1967 , is hereby amended— (a) by the insertion in subsection (4), after paragraph (b), of the following paragraph: “(bb) (i) in relation to capital expenditure incurred on or after the 1st day of April, 1988, and before the 1st day of April, 1989, as if ‘three-fourths’ were substituted for ‘one-fifth’ in subsection (1), and (ii) in relation to capital expenditure incurred on or after the 1st day of April, 1989, and before the 1st day of April, 1991, as if ‘one-half’ were substituted for ‘one-fifth’ in subsection (1).”, and (b) by the insertion after subsection (6) of the following subsection: “(7) Where an allowance in respect of capital expenditure incurred on or after the 1st day of April, 1988, on the provision of new machinery or plant is made under this section, section 11 of the Finance Act, 1967 , and section 26 of the Finance Act, 1971 , shall not have effect in relation to an allowance which falls to be made under section 241 of the Income Tax Act, 1967 , for wear and tear of the said machinery or plant.”.

Amendment of section 254 (industrial building allowance) of Income Tax Act, 1967.

44.—

Section 254

(as amended by section 20 of the Finance Act, 1985 ) of the Income Tax Act, 1967 , is hereby amended by the insertion after subsection (6) of the following subsection: “(7) Where an allowance in respect of capital expenditure incurred on or after the 1st day of April, 1988, on the construction of a building or structure is made under this section, no increase in any allowance under section 264 of the Income Tax Act, 1967 , by virtue of the provisions of section 25 of the Finance Act, 1978 , shall be made in relation to that capital expenditure.”.

Amendment of section 265 (balancing allowances and balancing charges) of Income Tax Act, 1967.

45.—

Section 265

(as amended by section 20 of the Finance Act, 1985 ) of the Income Tax Act, 1967 , is hereby amended— (a) by the insertion in subsection (1) after paragraph (c) of the following paragraph: “(d) where consideration (other than rent or an amount treated as rent under section 83 of the Income Tax Act, 1967 ) is received by the person entitled to the relevant interest in respect of an interest which is subject to that relevant interest,”, (b) by the substitution for subsection (2) of the following subsection: “(2) Where there are no sale, insurance, salvage or compensation moneys, or consideration of the type referred to in paragraph (d) of subsection (1), or where the residue of the expenditure immediately before the event exceeds those moneys or that consideration, a balancing allowance shall be made and the amount thereof shall be the amount of the said residue or, as the case may be, of the excess thereof over the said moneys or the said consideration.”, and (c) by the substitution for subsection (3) of the following subsection: