Finance Act, 1973

Finance Act, 1973 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 1973 Finance Act, 1973 Finance Act, 1973 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 19 of 1973 FINANCE ACT, 1973 ARRANGEMENT OF SECTIONS PART I Income Tax, Sur-Tax and Corporation Profits Tax Chapter I Income Tax Section 1. Amendment of section 129 of Income Tax Act, 1967. 2. Amendment of section 138 of Income Tax Act, 1967. 3. Amendment of section 141 of Income Tax Act, 1967. 4. Amendment of section 142 of Income Tax Act, 1967. 5. Amendment of section 154 of Income Tax Act, 1967. 6. Amendment of section 211 of Income Tax Act, 1967. 7. Amendment of section 229 of Income Tax Act, 1967. 8. Restriction of section 246 of Income Tax Act, 1967. 9. Amendment of section 251 of Income Tax Act, 1967. 10. Amendment of section 254 of Income Tax Act, 1967. 11. Amendment of section 272 of Income Tax Act, 1967. 12. Amendment of section 336 of Income Tax Act, 1967. 13. Amendment of section 357 of Income Tax Act, 1967. 14. Amendment of section 387 of Income Tax Act, 1967. 15. Amendment of section 439 of Income Tax Act, 1967. 16. Amendment of section 22 of Finance Act, 1971. 17. Amendment of section 26 of Finance Act, 1971. 18. Amendment of section 21 of Finance Act, 1972. 19. Payments in respect of thalidomide children. 20. Bodies for the promotion of Universal Declaration of Human Rights and the implementation of European Convention for the Protection of Human Rights and Fundamental Freedoms. 21. Payments to universities. 22. Recovery of income tax. 23. Policies of life insurance. 24. Business entertainment expenses. 25. Capital allowances for cars costing over £2,500. 26. Limit on renewals allowance for cars. 27. Limit on deductions, etc., for hiring cars. 28. Cars: provisions as to hire-purchase, etc.. 29. Cars: provisions where hirer becomes owner. 30. Supplementary provisions relating to sections 25 to 29. 31. Income tax on certain dividends. 32. Confirmation of agreement on double taxation. Chapter II Income Tax, Sur-tax and Corporation Profits Tax 33. Extension of charge to tax to profits and income derived from activities carried on and employments exercised on the Continental Shelf. 34. Exemption from tax of income from patent royalties. 35. Interest on unpaid taxes and duties. Chapter III Corporation Profits Tax 36. Continuance of certain exemptions from corporation profits tax. 37. Corporation profits tax on certain dividends. 38. Confirmation of protocol on double taxation. Chapter IV Anti-avoidance and penalty provisions 39. Change in ownership of company: disallowance of trading losses and restriction of capital allowances. 40. Restriction of balancing allowances on sale of industrial buildings and structures. 41. Amendment of section 117 of Income Tax Act, 1967. 42. Cesser of section 121 of Income Tax Act, 1967. 43. Amendment of section 128 of Income Tax Act, 1967. 44. Amendment of section 335 of Income Tax Act, 1967. 45. Amendment of Section 413 of Income Tax Act, 1967. 46. Amendment of Section 503 of Income Tax Act, 1967. PART II Customs and Excise 47. Beer. 48. Spirits. 49. Tobacco. 50. Tobacco (excise duty on certain stocks). 51. Cigarettes for export. 52. Confirmation of Orders. PART III Death Duties 53. Alteration of rates of estate duty. 54. Provisions consequential on alteration of rates of estate duty. 55. Amendment of rates of legacy duty and succession duty. 56. Abatement of estate duty. 57. Amendment of section 61 of Finance (1909-10) Act, 1910. 58. Amendment of section 24 of Finance Act, 1965. 59. Relief for certain moneys payable under policies of assurance. 60. Exemption from duty of certain unit trusts. 61. Amendment of section 33 of Finance Act, 1935. PART IV Stamp Duties Chapter I Miscellaneous 62. Commencement (Chapter I). 63. Amendment of section 88 of Stamp Act, 1891. 64. Amendment of First Schedule to Stamp Act, 1891. 65. Amendment of section 50 of Finance Act, 1969. 66. Revocation of Order. Chapter II Stamp Duty on Capital Companies 67. Interpretation (Chapter II). 68. Charge of stamp duty. 69. Statement to be charged with stamp duty. 70. Amount on which stamp duty chargeable. 71. Abolition of certain stamp duty and relief in respect of certain payments of stamp duty. 72. Reconstructions or amalgamations of capital companies. 73. Exemption for certain companies. 74. Appeals in certain cases. 75. Recovery of stamp duty and furnishing of information. PART V Value-Added Tax 76. Commencement (Part V). 77. “Principal Act”. 78. Amendment of section 3 of Principal Act. 79. Amendment of section 5 of Principal Act. 80. Amendment of section 11 of Principal Act. 81. Amendment of section 12 of Principal Act. 82. Amendment of section 19 of Principal Act. 83. Amendment of section 26 of Principal Act. 84. Amendment of section 27 of Principal Act. 85. Amendment of section 32 of Principal Act. 86. Amendment of section 35 of Principal Act. 87. Amendment of First Schedule to Principal Act. 88. Amendment of Second Schedule to Principal Act. 89. Amendment of Third Schedule to Principal Act. 90. Miscellaneous amendments of Principal Act. PART VI Miscellaneous 91. Capital Services Redemption Account. 92. Securities of certain European bodies. 93. Amendment of Finance (Excise Duties) (Vehicles) Act, 1952. 94. Charge on first licensing of mechanically propelled vehicles. 95. Increase of driving licence duty. 96. Repeals. 97. Care and management of taxes and duties. 98. Short title, construction and commencement. FIRST SCHEDULE Policies of Life Insurance SECOND SCHEDULE Agreement between the Government of Ireland and the Government of the United Kingdom with respect to certain exemptions from tax THIRD SCHEDULE Extension of Charge to Tax to Profits and Income Derived from Activities Carried on and Employments Exercised on the Continental Shelf — Supplementary Provisions FOURTH SCHEDULE Protocol between the Government of Ireland and the Government of the United Kingdom amending the Agreement for the Reciprocal Relief of Double Taxation in respect of Irish Corporation Profits Tax and United Kingdom Profits Tax, signed on 18 May 1949 FIFTH SCHEDULE Part I Disallowance of Trading Losses and Restriction of Capital Allowances Part II Provisions for Determining the amount of Capital held in a Company through other Companies SIXTH SCHEDULE Spirits (Rates of Ordinary Customs Duty) SEVENTH SCHEDULE Duties on Tobacco Part I Customs Part II Customs Part III Customs Part IV Excise EIGHTH SCHEDULE Scale of Rates of Estate Duty NINTH SCHEDULE Stamp Duties on Instruments Part I Bond, Covenant or Instrument of any kind whatsoever Part II Conveyance or Transfer on sale of any property other than stocks or marketable securities Part III Part IV Mortgage, Bond, Debenture, Covenant (except a marketable security) and Warrant of Attorney to confess and enter up judgment TENTH SCHEDULE Amendment of Enactments ELEVENTH SCHEDULE Enactments Repealed Acts Referred to Income Tax Act, 1967 1967, No. 6 Finance Act, 1969 1969, No. 21 Finance Act, 1972 1972, No. 19 Finance Act, 1971 1971, No. 23 Continental Shelf Act, 1968 1968, No. 14 Finance Act, 1968 1968, No. 33 Finance Act, 1936 1936, No. 45 Other Minerals Development Act, 1960 1960, No. 7 Patents Act, 1964 1964, No. 12 Stamp Act, 1891 1891, c. 39 Value-Added Tax Act, 1972 1972, No. 22 Finance Act, 1929 1929, No. 32 Finance Act, 1920 1920, c. 18 Finance Act, 1949 1949, No. 13 Finance Act, 1964 1964, No. 15 Finance (Miscellaneous Provisions) Act, 1968 1968, No. 7 Friendly Societies Act, 1896 1896, c. 25 Finance Act, 1933 1933, No. 15 Finance Act, 1919 1919, c. 32 Finance Act, 1926 1926, No. 35 Finance Act, 1932 1932. No. 20 Finance Act, 1940 1940, No. 14 Finance Act, 1934 1934, No. 31 Tobacco Act, 1842 1842, c. 93. Manufactured Tobacco Act, 1863 1863, c. 7 Finance Act, 1961 1961, No. 23 Finance Act, 1931 1931, No. 31 Finance (1909-10) Act, 1910 1910, c. 8 Finance Act, 1965 1965, No. 22 Unit Trusts Act, 1972 1972, No. 17 Finance Act, 1951 1951, No, 15 Finance Act, 1956 1956, No. 22 Finance Act, 1970 1970, No. 14 Finance Act, 1935 1935, No. 28 Central Bank Act, 1971 1971, No. 24 Limited Partnerships Act, 1907 1907, c. 24 Finance Act, 1899 1899, c. 9 Finance (Excise Duties) (Vehicles) Act, 1952 1952, No. 24 Road Traffic Act, 1961 1961, No. 24 Roads Act, 1920 1920, c. 72 Finance Act, 1962 1962, No. 15 Number 19 of 1973 FINANCE ACT, 1973 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. [4th August, 1973] BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS: PART I Income Tax, Sur-Tax and Corporation Profits Tax Chapter I Income Tax Amendment of section 129 of Income Tax Act, 1967. 1.—(1) Section 129 of the Income Tax Act, 1967 , is hereby amended by the addition of the following: “Provided that if the amount of the interest as so calculated is less than £5, the amount of interest payable shall be £5.”. (2) Subsection (1) shall have effect in relation to interest chargeable for any month commencing on or after the date of the passing of this Act, or any part of such a month, on tax for the transmission of which an employer is or was liable whether before, on or after such date. Amendment of section 138 of Income Tax Act, 1967. 2.— Section 138 (3) of the Income Tax Act, 1967 , is hereby amended by the substitution of “£104” for “£74”. Amendment of section 141 of Income Tax Act, 1967. 3.— Section 141 of the Income Tax Act, 1967 , is hereby amended— (1) by the substitution for subsection (1A) (inserted by the Finance Act, 1969 ) of the following subsection: “(1A) The deduction referred to in subsection (1) shall be: (a) (i) in the case of a child to whom paragraph (a) of that subsection applies and who is shown by the claimant to have been over the age of 11 years at the commencement of the year of assessment, £170, and in the case of any other such child, £155, or (ii) in the case of a child to whom paragraph (aa) of that subsection applies and who is shown by the claimant to have been over the age of 11 years at the commencement of the year of assessment, £220, and in the case of any other such child, £205; (b) in the case of a child to whom subsection (1) (b) (i) applies, £170; (c) in the case of a child to whom subsection (1) (b) (ii) applies and who is wholly or partly maintained by the claimant at his own expense, £220 if the amount expended by the claimant in the year of assessment on the maintenance of the child is not less than £220, and, where the amount so expended is less than £220, that amount: Provided that— (i) any deduction under subsection (1) (b) (ii) shall be in substitution for, and not in addition to, any deduction to which the claimant might be entitled in respect of the child under section 142; and (ii) a claimant shall not be entitled to more than one deduction under subsection (1) in respect of the same child.”. (2) by the insertion after subsection (1A) of the following subsections— “(1AA) Where the claimant is or would on due application be entitled throughout the year of assessment to a children's allowance in respect of more than one child, the deduction to be given under subsections (1) and (2) shall— (i) in the case of one such child be reduced by £15, and (ii) in the case of any such children in excess of one, be reduced by £23 each. (1AAA) Where for the year 1973-74 or any subsequent year of assessment a claimant's total income for the relevant year of assessment from all sources, as estimated in accordance with the provisions of the Income Tax Acts, exceeds £2,500 and the claimant is or would on due application be entitled throughout the year of assessment, to a children's allowance in respect of any child, any deduction in respect of that child to be given under this section shall, in addition to any reduction to be made by virtue of subsection (1AA), be reduced by £42 for the year 1973-74 and by £50 for any subsequent year: Provided that a claimant who in consequence of the provisions of this subsection has the amount of income tax payable by him increased shall be entitled to have that amount reduced to a sum equal to the aggregate of the following amounts, that is to say, the amount of tax which would have been payable if his total income had amounted to, but not exceeded, £2,500 and the amount by which his total income exceeds £2,500.”. (3) by the substitution in subsection (1B) of the following definition for the definition of “children's allowance”: “‘children's allowance’ means an allowance under the Social Welfare (Children's Allowances) Acts, 1944 to 1970, and any subsequent Act together with which those Acts may be cited.”. (4) Section 523 (1) (a) of the Income Tax Act, 1967 , shall have effect as if section 141 (1AAA) (inserted by the Finance Act, 1973) had not been enacted. Amendment of section 142 of Income Tax Act, 1967. 4.— Section 142 (1) of the Income Tax Act, 1967 , is hereby amended by the substitution of “£407” for “£355” (inserted by the Finance Act, 1972 ) in both places where it occurs and by the substitution of “£347” for “£295” (inserted by the said Finance Act, 1972 ). Amendment of section 154 of Income Tax Act, 1967. 5.—For the purposes of section 154 of the Income Tax Act, 1967 , no account shall be taken of any tax paid in respect of income for a year of assessment beginning after the year 1972-73 or of any relief to which a person would have been entitled for such a year of assessment in the circumstances mentioned in that section. Amendment of section 211 of Income Tax Act, 1967. 6.— Section 211 of the Income Tax Act, 1967 , is hereby amended by the deletion of subsection (4). Amendment of section 229 of Income Tax Act, 1967. 7.— Section 229 (1) (i) of the Income Tax Act, 1967 , is hereby amended, as on and from the 6th day of April, 1972, by the deletion of the words from “whichever of the following amounts” to the end of the paragraph and the substitution therefor of “an amount equal to four times the person's final remuneration”. Restriction of section 246 of Income Tax Act, 1967. 8.—(1) Section 246 of the Income Tax Act, 1967 , shall not apply to any expenditure incurred on or after the 24th day of July, 1973, and before the 1st day of April, 1975, on the purchase of a new ship. (2) This section shall not apply to any expenditure incurred under a contract entered into before the 24th day of July, 1973. Amendment of section 251 of Income Tax Act, 1967. 9.—(1) Section 251 of the Income Tax Act, 1967 , is hereby amended by the substitution in subsection (4) (d) (inserted by the Finance Act, 1972 ) of “the 1st day of April, 1975” for “the 1st day of April, 1973”. (2) Where on or after the 3rd day of July, 1973, a claim is made by a person for an initial allowance under section 251 of the Income Tax Act, 1967 , for any year of assessment in respect of machinery or plant, any allowance made to the person under that section shall not exceed such sum as will, when added to— (a) the amount of any deduction in respect of the machinery or plant allowed to the person under section 241 of the said Act for that year of assessment, and (b) the aggregate amount of any deductions allowed to the person in respect of the machinery or plant under the said sections 241 and 251 for earlier years of assessment, equal the actual amount of the expenditure incurred by him on the provision of the said machinery or plant. Amendment of section 254 of Income Tax Act, 1967. 10.— Section 254 (2) of the Income Tax Act, 1967 , is hereby amended by the substitution of “the 1st day of April, 1975” for “the 1st day of April, 1973” (inserted by the Finance Act, 1971 ). Amendment of section 272 of Income Tax Act, 1967. 11.—(1) Section 272 of the Income Tax Act, 1967 , is hereby amended by the substitution for subsection (5) of the following subsections: “(5) Where the aggregate amount of initial allowances and wear and tear allowances made to any person in respect of any machinery or plant exceeds the actual amount of the expenditure incurred by him on the provision of the said machinery or plant, the amount of such excess (in this subsection referred to as the excess amount) shall, on the occurrence of an event falling within any of the paragraphs (a), (b) or (c) of subsection (1), be deemed to be a payment of an equal amount received by the person on account of sale, insurance, salvage or compensation moneys and shall be added to any other such moneys received in respect of the said machinery or plant and a balancing charge shall be made, and the amount on which it is made shall be an amount equal to— (a) where there are no sale, insurance, salvage or compensation moneys, the said excess amount, or (b) where there are sale, insurance, salvage or compensation moneys, the aggregate of such moneys and the said excess amount. (5A) Where, as respects any machinery or plant, an event falling within any of the paragraphs (a), (b) or (c) of subsection (1) is followed by another event falling within any of those paragraphs, any balancing allowance or balancing charge made to or on a person by virtue of the happening of the later event shall take account of any balancing allowance or balancing charge previously made to or on that person in respect of the expenditure incurred by him on the provision of that machinery or plant.”. (2) This section shall have effect where, as respects any machinery or plant, the event giving rise to a balancing charge in respect of that machinery or plant occurs or occurred on or after the 3rd day of July, 1973. Amendment of section 336 of Income Tax Act, 1967. 12.— Section 336 of the Income Tax Act, 1967 , is hereby amended by the substitution of “£450” for “£350” (inserted by the Finance Act, 1971 ). Amendment of section 357 of Income Tax Act, 1967. 13.— Section 357 (3) of the Income Tax Act, 1967 , shall have effect in relation to any dividend paid on or after the 6th day of April, 1973, as if “controls, directly or indirectly, not less than ten per cent. of the voting power in” were substituted for “beneficially owns, directly or indirectly, not less than three-quarters of the ordinary share capital of”. Amendment of section 387 of Income Tax Act, 1967. 14.— Section 387 of the Income Tax Act, 1967 , is hereby amended by the addition thereto of the following subsection— “(4) (a) Where, under section 456, a body corporate is entitled to deduct income tax from any dividend, not being a dividend to which subsection (2) or (3) applies, tax shall not in any case be deducted at a rate exceeding the rate of income tax as reduced by any relief from that tax given under or by virtue of this Chapter, and the provisions of section 457 shall apply accordingly, with any necessary modifications. (b) The rate of income tax at which any repayment of income tax for any year of assessment falls to be made shall be subject to such adjustments as may be proper in cases in which relief is given under or by virtue of this Chapter. (c) Where, by virtue of paragraph (a), income tax is deducted from a dividend at a reduced rate, the amount to be included in respect of the dividend in any return for the purpose of sur-tax shall be an amount which bears the same proportion to the amount of the dividend as the rate of income tax deducted therefrom bears to the rate which would have been authorised to be deducted if this subsection had not been enacted.”. Amendment of section 439 of Income Tax Act, 1967. 15.— Section 439 (1) of the Income Tax Act, 1967 , is hereby amended by the insertion, after paragraph (ii), of the following paragraph: “(iia) being payable to any body of persons to which the provisions of section 20 of the Finance Act, 1973, apply, is so payable for a period which is or may be three years or longer, or”. Amendment of section 22 of Finance Act, 1971. 16.— Section 22 (2) of the Finance Act, 1971 , is hereby amended by the substitution of “the 1st day of April, 1975” for “the 1st day of April, 1973”. Amendment of section 26 of Finance Act, 1971. 17.— Section 26 (1) of the Finance Act, 1971 , is hereby amended by the substitution of “the 1st day of April, 1975” for “the 1st day of April, 1973”. Amendment of section 21 of Finance Act, 1972. 18.— Section 21 of the Finance Act, 1972 , is hereby amended— (a) by the addition to subsection (2) of the following proviso: “Provided that, in the case of any repayment under a statutory scheme established under a public statute, the administrator of the scheme shall be entitled to deduct the tax chargeable in respect of that repayment from the amount thereof”, and (b) by the substitution in subsection (4) of “if the administrator is entitled under the rules of the relevant scheme or otherwise” for “if the rules of the relevant scheme permit its administrator”. Payments in respect of thalidomide children. 19.—(1) Income to which this section applies shall be disregarded for all the purposes of the Income Tax Acts. (2) This section applies to any income consisting of payments made by the foundation known as the Hilfswerk für behinderte Kinder to or in respect of any person handicapped by reason of infirmity which can be linked with the taking by the person's mother during her pregnancy of preparations containing thalidomide. Bodies for the promotion of Universal Declaration of Human Rights and the implementation of European Convention for the Protection of Human Rights and Fundamental Freedoms. 20.—Where any body of persons having consultative status with the United Nations Organisation or the Council of Europe— (a) has as its sole or main object the promotion of observance of the provisions of the Universal Declaration of Human Rights or the implementation of the European Convention for the Protection of Human Rights and Fundamental Freedoms or both, and (b) is precluded by its rules or constitution from the direct or indirect payment or transfer, otherwise than for valuable and sufficient consideration, to any of its members of any of its income or property by way of dividend, gift, division, bonus or otherwise howsoever by way of profit, there shall, on a claim in that behalf being made to the Revenue Commissioners, be allowed, in the case of the body, such exemption from income tax as falls to be allowed under section 333 of the Income Tax Act, 1967 , in the case of a body of persons established for charitable purposes only the whole income of which is applied to charitable purposes only. Payments to universities. 21.—(1) Where a person carrying on a trade or profession— (a) pays, on or after the 6th day of April, 1973, any sum to an Irish university for the purpose of enabling the university to undertake research in, or engage in the teaching of, approved subjects, and (b) the sum so paid is not income to which section 439 of the Income Tax Act, 1967 , applies, the sum so paid shall, if not otherwise so deductible, be deducted as an expense in computing the profits or gains of the person's trade or profession. (2) For the purposes of this section, “approved subjects” means— (a) industrial relations, (b) marketing, and (c) any other subject which is approved for the purposes of this section by the Minister for Finance. Recovery of income tax. 22.— Section 131 of the Income Tax Act, 1967 , shall apply to the recovery of— (a) any amount of tax estimated under section 7 of the Finance Act, 1968 , and (b) any amount of tax estimated under section 8 of the said Finance Act, 1968 , or any balance of tax so estimated but remaining unpaid, as if the amount so estimated or the balance of tax so estimated but remaining unpaid were an amount of tax which any person paying emoluments was liable under Chapter IV of Part V of the Income Tax Act, 1967 , and any regulations thereunder, to pay to the Revenue Commissioners. Policies of life insurance. 23.—(1) This section applies to any policy of life insurance made on the life of a person under the age of fifty-six years which is an endowment policy within the meaning of subsection (2) and which is or was issued in respect of an insurance made on or after the 16th day of May, 1973: Provided that a policy of life insurance issued in respect of an insurance made before the 16th day of May, 1973, shall be treated for the purposes of this section as issued in respect of one made after that date if it is varied on or after that date so as to increase the benefits secured or to extend the term of the insurance. (2) In this section and in the First Schedule “an endowment policy” means a policy of life insurance which secures a capital sum payable either on survival for a specified term or on earlier death, or earlier death or disability but does not include a policy issued in the course of an industrial assurance business, within the meaning of section 3 of the Insurance Act, 1936. (3) Relief from income tax under section 143 of the Income Tax Act, 1967 , shall be granted in respect of the premiums payable on an endowment policy only if the policy is a qualifying policy within the meaning of the said First Schedule. Business entertainment expenses. 24.—(1) Section 61 (a) of the Income Tax Act, 1967 , shall as respects expenses incurred in providing business entertainment have effect as if “wholly, exclusively and necessarily” were substituted for “wholly and exclusively”. (2) Expenses incurred in providing business entertainment shall not, except to the extent that they are wholly, exclusively and necessarily laid out or expended for the purposes of a business, be included in computing any expenses of management in respect of which relief may be claimed under section 214 (1) of the Income Tax Act, 1967 . (3) For the purposes of section 241, Chapter III of Part XIV, Chapters I and III of Part XV and Chapters II and V of Part XVI of the Income Tax Act, 1967 , and section 22 of the Finance Act, 1971 , the use of any asset for providing business entertainment shall, except to the extent that the asset is used for providing business entertainment the expenses incurred in the provision of which are wholly, exclusively and necessarily laid out or expended for the purposes of a trade, be treated as use otherwise than for the purposes of a trade. (4) The expenses to which subsection (1) applies include, in the case of any person, any sum paid by him to, or on behalf of, or placed by him at the disposal of, a member of his staff for the purpose of defraying expenses incurred or to be incurred by him in providing business entertainment. (5) For the purposes of this section “business entertainment” means entertainment (including hospitality of any kind) provided by a person, or by a member of his staff, in connection with a trade carried on by that person, but does not include anything provided by him for bona fide members of his staff unless its provision for them is incidental to its provision also for others. (6) This section shall apply in relation to the provision of a gift as it applies in relation to the provision of entertainment. (7) In this section— a reference to expenses incurred in, or to the use of an asset for, providing entertainment includes a reference to expenses incurred in, or to the use of an asset for, providing anything incidental thereto; a reference to a trade includes a reference to a business or profession; a reference to the members of a person's staff is a reference to persons employed by that person, directors of a company or persons engaged in the management thereof being for this purpose deemed to be persons employed by it. (8) Subsections (1) and (2) shall apply to expenses incurred on or after the 16th day of May, 1973, and subsection (3) shall apply to use on or after that date. Capital allowances for cars costing over £2,500. 25.—(1) In relation to a vehicle to which this section applies, section 241 of the Income Tax Act, 1967 , shall have effect as if, for the purposes of subsection (7) of that section, the actual cost of the vehicle were taken to be £2,500 where the expenditure incurred on the provision of the vehicle exceeded that amount and, where a deduction which, apart from this subsection, would be allowed under the said section 241 falls to be reduced by virtue of this subsection, any reference in the Income Tax Acts to a deduction allowed under the said section 241 shall be construed as a reference to that deduction as reduced under this subsection. (2) In relation to a vehicle to which this section applies, the deductions under the said section 241 to be taken into account for the purposes of Chapters II and V of Part XVI of the Income Tax Act, 1967 , in computing the amount of expenditure still unallowed at any time, shall be limited to those computed in accordance with the provisions of subsection (1) and the expenditure incurred on the provision of the vehicle to be taken into account for the said purposes shall be limited to £2,500. (3) Where the expenditure incurred on the provision of a vehicle to which this section applies exceeds £2,500, any balancing allowance or balancing charge shall be computed, in a case where there are sale, insurance, salvage or compensation moneys, as if the amount of those moneys (or, where in consequence of any provision of the Income Tax Acts other than this subsection some other amount is to be treated as the amount of those moneys, that other amount) were reduced in the proportion which £2,500 bears to the actual amount of the said expenditure. (4) If, where the expenditure incurred on the provision of a vehicle to which this section applies exceeds £2,500— (a) the person providing the vehicle (hereinafter referred to as the prior owner) sells the vehicle and the sale is a sale to which section 299 of the Income Tax Act, 1967 , applies, or (b) the prior owner sells the vehicle or gives it away so that subsection (4) of section 277 of the Income Tax Act, 1967 , or that subsection as applied by subsection (5) of that section, has effect in relation to the purchaser or donee, or (c) in consequence of a succession to the trade or profession of the prior owner, section 300 (1) of the Income Tax Act, 1967 , has effect, then, in relation to the purchaser, donee or successor, the price which the vehicle would have fetched if sold in the open market or the expenditure incurred by the prior owner on the provision of the vehicle shall be treated for the purposes of the said section 277, 299 or 300 as reduced in the proportion which £2,500 bears to the actual amount of the said expenditure; and, in the application of subsection (3) to the purchaser, donee or successor, references to the expenditure incurred on the provision of the vehicle shall be construed as references to the expenditure so incurred by the prior owner: Provided that where this subsection has had effect on any occasion in relation to the vehicle, and no sale or gift of the vehicle has since occurred other than one to which either of the said sections 277 and 299 applies, then, in relation to all persons concerned, the like consequences under this subsection shall ensue as respects a sale, gift or succession falling within paragraphs (a) to (c) which occurs on any subsequent occasion as if the person who in relation to that sale, gift or succession is the prior owner had incurred expenditure on the provision of the vehicle of an amount equal to the expenditure so incurred by the person who was the prior owner on the first-mentioned occasion. (5) In the application of section 273 (1) of the Income Tax Act, 1967 , to a case where the vehicle is the new plant referred to in that subsection, the expenditure shall be disregarded in so far as it exceeds £2,500, but this provision is without prejudice to the application of the foregoing subsections to the vehicle. (6) Where the expenditure incurred on the provision of a vehicle exceeds £2,500 but under section 303 (3) of the Income Tax Act, 1967 , any part of it is to be treated as not having been incurred by a person, the amount which (subject to the foregoing provisions of this section) is to be treated for the purposes of Part XVI of the Income Tax Act, 1967 , as having been incurred by that person, shall be reduced in the proportion which £2,500 bears to the said capital expenditure incurred on the provision of the vehicle. Limit on renewals allowance for cars. 26.—In determining what amount (if any) is allowable— (a) to be deducted in computing profits or gains chargeable to tax under Schedule D, or (b) to be deducted from emoluments chargeable to tax under Schedule E, or (c) to be taken into account for the purposes of a management expenses claim under section 214 of the Income Tax Act, 1967 , in respect of capital expenditure, being expenditure exceeding £2,500, incurred on the provision of a vehicle to which this section applies, the excess over £2,500 shall be disregarded for all purposes; but if on the replacement of the vehicle any amount becomes allowable as aforesaid in respect of capital expenditure on any other vehicle, any deduction falling to be made, in determining the last-mentioned amount, for the value or proceeds of sale of the replaced vehicle or otherwise in respect thereof shall be reduced in the proportion which £2,500 bears to the cost of the replaced vehicle. Limit on deductions, etc., for hiring cars. 27.—Where apart from this section the amount of any expenditure on the hiring (otherwise than by way of hire-purchase) of a vehicle to which this section applies would be allowed to be deducted or taken into account as mentioned in section 26, and the retail price of the vehicle at the time it was made exceeded £2,500, the said amount shall be reduced in the proportion which £2,500 bears to the said price. Cars: provisions as to hire-purchase, etc. 28.—(1) In the case of a vehicle to which this section applies, being a vehicle of which the retail price at the time of the contract in question exceeds £2,500, the following provisions shall have effect. (2) Where a person, having incurred capital expenditure on the provision of a vehicle to which this section applies under a contract providing that he shall or may become the owner of the vehicle on the performance of the contract, ceases to be entitled to the benefit of the contract without becoming the owner of the vehicle, that expenditure shall, so far as it relates to the vehicle, be left out of account for the purposes of section 241 and Chapters II and V of Part XVI of the Income Tax Act, 1967 , and in determining what amount (if any) is allowable as mentioned in section 26. (3) Where subsection (2) has effect, all payments made under the contract shall be treated for income tax purposes (including in particular the purposes of section 27) as expenditure incurred on the hiring of the vehicle otherwise than by way of hire-purchase. (4) Where the person providing the vehicle takes it under a hire-purchase contract, then in apportioning the payments under the contract between capital expenditure incurred on the provision of the vehicle and other expenditure so much of those payments shall be treated as such capital expenditure as is equal to the price which would be chargeable, at the time the contract is entered into, to the person providing the vehicle if he were acquiring it on a sale outright. Cars: provisions where hirer becomes owner. 29.—Where a person, having hired (otherwise than by way of hire-purchase) a vehicle to which section 27 applies subsequently becomes the owner thereof and the retail price of the vehicle at the time it was made exceeded £2,500, then for the purposes of the Income Tax Acts (and in particular sections 25 and 27)— (a) so much of the aggregate of the payments for the hire of the vehicle and of any payment for the acquisition thereof as does not exceed the retail price of the vehicle at the time it was made shall be treated as capital expenditure incurred on the provision of the vehicle, and as having been incurred when the hiring began, and (b) the payments to be treated as expenditure on the hiring of the vehicle shall be rateably reduced so as to amount in the aggregate to the balance. Supplementary provisions relating to sections 25 to 29. 30.—(1) Subject to the next following subsection, the vehicles to which sections 25 to 29 apply are mechanically propelled road vehicles constructed or adapted for the carriage of passengers, other than vehicles of a type not commonly used as a private vehicle and unsuitable to be so used. (2) Sections 25 to 27 and subsections (2) and (3) of section 28 and section 29 do not apply where a vehicle is provided, or, as the case may be, hired, wholly or mainly for the purpose of hire to, or the carriage of, members of the public in the ordinary course of trade. (3) None of the provisions of sections 25 and 26 or of subsections (2) and (3) of section 28 and section 29 shall apply in relation to a vehicle provided by a person who is a manufacturer of such vehicles as are mentioned in subsection (1), or of parts or accessories for such vehicles, if he shows that it was provided solely for the purpose of testing the vehicle or parts or accessories for such vehicles: Provided that if during the period of five years beginning with the time when the vehicle was provided he puts it, to any substantial extent, to a use which does not serve that purpose and that purpose only, this subsection shall be deemed not to have had effect in relation to the vehicle. (4) (a) There shall be made all such additional assessments and adjustments of assessments (including assessments and adjustments of assessments to corporation profits tax) as may be necessary for the purpose of giving effect to subsections (2) and (3) of section 28, section 29 and subsection (3) and any such additional assessments or adjustments of assessments may be made at any time. (b) in the case of the death of a person who, if he had not died, would under the provisions of subsections (2) and (3) of section 28, section 29 and subsection (3) have become chargeable to tax for any year, the tax which would have been so chargeable shall be assessed and charged upon his executors or administrators and shall be a debt due from and payable out of his estate. (5) References in sections 25 to 27 to expenditure incurred on the provision or hiring of a vehicle do not include references to expenditure incurred before the 16th day of May, 1973, or to expenditure incurred under a contract entered into before that day where either— (a) the expenditure is incurred within twelve months after that day, or (b) the contract is one of hire-purchase or for purchase by instalments, and subsections (2) and (3) of section 28 and section 29 shall not apply where the contract was entered into before that day. (6) This section and sections 25 to 29 shall be construed as one with Part XIII and Chapters II and V of Part XVI of the Income Tax Act, 1967 , except that in section 26 “capital expenditure” shall be construed without regard to section 303 (1) of that Act. Income tax on certain dividends. 31.—Subject to the provisions of sections 76 and 77 of the Income Tax Act, 1967 , as modified by Part III of Schedule 6 to that Act, where income tax is chargeable under Case III of Schedule D in respect of income which is a dividend, within the meaning of Article 1 of the Agreement set forth in the Second Schedule, being a dividend paid on or after the 6th day of April, 1973, and not later than the 5th day of April, 1975, the income so chargeable to income tax shall include the amount of the tax credit for the payment of which provision is made in the said Article 1. Confirmation of agreement on double taxation. 32.—The agreement, set forth in the Second Schedule, made on the 2nd day of May, 1973, between the Government and the United Kingdom Government amending the agreement made on the 14th day of April, 1926, and set forth in Part I of Schedule 6 to the Income Tax Act, 1967 , as amended by the agreement made on the 25th day of April, 1928, and set forth in that Part, is hereby confirmed and, subject to confirmation by the United Kingdom Parliament, shall have effect accordingly. Chapter II Income Tax, Sur-tax and Corporation Profits Tax Extension of charge to tax to profits and income derived from activities carried on and employments exercised on the Continental Shelf. 33.—(1) In this section and in the Third Schedule— (a) “exploration or exploitation activities” means activities carried on in connection with the exploration or exploitation of so much of the sea bed and subsoil and their natural resources as is situated in the State or in a designated area; (b) “exploration or exploitation rights” means rights to assets to be produced by exploration or exploitation activities or to interests in or to the benefit of such assets; (c) “designated area” means an area designated by order under section 2 of the Continental Shelf Act, 1968 ; (d) “tax” means income tax, sur-tax or corporation profits tax, as appropriate, and “for tax purposes” means for purposes of any of the said taxes. (2) Any profits or gains from exploration or exploitation activities carried on in a designated area or from exploration or exploitation rights shall be treated for tax purposes as profits or gains from activities or property in the State. (3) Any profits or gains arising to any person not resident in the State from exploration or exploitation activities carried on in the State or in a designated area or from exploration or exploitation rights shall be treated for tax purposes as profits or gains of a trade carried on by that person in the State through a branch or agency. (4) Where exploration or exploitation activities are carried on by a person on behalf of the holder of a licence granted under the Petroleum and Other Minerals Development Act, 1960 , the holder of the licence shall, for the purpose of any assessment to tax, be deemed to be the agent of that person. (5) Any emoluments from an office or employment in respect of duties performed in a designated area in connection with exploration or exploitation activities shall be treated for tax purposes as emoluments in respect of duties performed in the State. (6) This section shall have effect for the purposes of income tax (including sur-tax) for the year 1973-74 and subsequent years of assessment and for the purposes of corporation profits tax as respects any profits arising on or after the 1st day of April, 1973. (7) The Third Schedule shall have effect for the purpose of supplementing this section. Exemption from tax of income from patent royalties. 34.—(1) In this section— “a qualifying patent” means a patent in relation to which the research, planning, processing, experimenting, testing, devising, designing, developing or similar activity leading to the invention which is the subject of the patent was carried out in the State; “income from a qualifying patent” means any royalty or other sum paid in respect of the user of the invention to which the qualifying patent relates and includes any sum paid for the grant of a licence to exercise rights under such patent; “resident of the State” means any person who is resident in the State for the purposes of income tax and who is not resident elsewhere; a company shall be regarded as a resident of the State if it is managed and controlled in the State. (2) A resident of the State who makes a claim in that behalf and makes a return in the prescribed form of his total income from all sources, as estimated in accordance with the provisions of the Income Tax Acts, shall be entitled to have any income from a qualifying patent arising to him on or after the 6th day of April, 1973, disregarded for all the purposes of the Income Tax Acts, and of the enactments relating to corporation profits tax. (3) Where, under section 92 of the Patents Act, 1964 , or any corresponding provisions of the law of any other country, an invention which is the subject of a patent is made, used, exercised or vended by or for the service of the State or the government of the country concerned, the provisions of this section shall have effect as if the making, user, exercise or vending of the invention had taken place in pursuance of a licence and any sums paid in respect thereof were income from a qualifying patent. (4) Where any income arising to a person is, by virtue of this section, to be disregarded, the person shall not be treated, by reason of such disregarding, as having ceased to possess the whole of a single source within the meaning of section 75 of the Income Tax Act, 1967 . (5) For the purpose of arriving at the amount of income to be disregarded under this section for all the purposes of the Income Tax Acts, the Revenue Commissioners may make such apportionments of receipts and expenses as may be necessary. (6) The relief provided by this section may be given by repayment or otherwise. (7) The provisions of Schedule 4 and of paragraph IX of Schedule 18 to the Income Tax Act, 1967 , shall, with any necessary modifications, apply in relation to exemptions from tax under this section. Interest on unpaid taxes and duties. 35.—Interest payable under— (a) section 15 of the Stamp Act, 1891, and subsections (2) and (3) of section 69 of this Act, (b) section 129 of the Income Tax Act, 1967 , or (c) section 21 of the Value-Added Tax Act, 1972 , shall be payable without any deduction of income tax and shall not be allowed in computing any income, profits or losses for any of the purposes of the Income Tax Acts or of the enactments relating to corporation profits tax. Chapter III Corporation Profits Tax Continuance of certain exemptions from corporation profits tax. 36.—The exemptions from corporation profits tax specified in section 33 (1) of the Finance Act, 1929 , shall be given in respect of the period beginning on the 1st day of January, 1973, and ending on the 31st day of December, 1973. Corporation profits tax on certain dividends. 37.—Where profits chargeable to corporation profits tax under section 52 of the Finance Act, 1920 , include a dividend, within the meaning of Article 1 of the Agreement set forth in the Second Schedule to this Act, being a dividend paid on or after the 6th day of April, 1973, and not later than the 5th day of April, 1975, the profits so chargeable shall include the amount of any tax credit appropriate to the dividend for the payment of which provision is made in the said Article I. Confirmation of protocol on double taxation. 38.—The protocol, set forth in the Fourth Schedule to this Act, signed on the 2nd day of May, 1973, between the Government and the United Kingdom Government amending the agreement set forth in Part I of the Fifth Schedule to the Finance Act, 1949 , is hereby confirmed, and, subject to confirmation by the United Kingdom Parliament, shall have effect accordingly. Chapter IV Anti-avoidance and penalty provisions Change in ownership of company: disallowance of trading losses and restriction of capital allowances. 39.—(1) Where a relevant change in the ownership of a company takes place— (a) no relief shall be given under section 309 of the Income Tax Act, 1967 , in respect of a loss sustained in a trade carried on by the company in any year of assessment ending before the change in ownership, by deducting such loss from or setting it off against the amount of the profits or gains on which the company is assessed to income tax under Schedule D in respect of that trade for any year of assessment beginning after the said change in ownership; (b) the amount of the capital allowances falling to be made in charging the profits or gains of a trade carried on by the company in any year of assessment ending before the change in ownership shall not, for the purposes of section 241 (3), 244 (7), 245 (6), 248 , 252 , 254 (5), 295 or 305 (1) of the Income Tax Act, 1967 , be added to, or deemed to be, or deemed to be part of, the amount of the capital allowances falling to be made in charging the profits or gains of that trade for any year of assessment beginning after the said change in ownership; (c) no relief shall be given under section 25 of the Finance Act, 1964 , in respect of a loss sustained by the company in an accounting period beginning before the change in ownership by deducting such loss from or setting it off against profits arising to the company in an accounting period ending after the change in ownership. (2) (a) This subsection applies to any company in the ownership of which a relevant change takes place, and which sustains a loss in the year of assessment in which the change in ownership takes place. (b) In the case of a company to which this subsection applies— (i) the amount of the loss sustained by the company in the year of assessment in which the change of ownership takes place shall be apportioned on the basis specified in section 107 of the Income Tax Act, 1967, the amount apportioned to that part of the year of assessment falling before the change in ownership being referred to in this subsection as the pre-change loss and the amount apportioned to that part of the year of assessment falling after the change in ownership being referred to in this subsection as the post-change loss, (ii) the amount of any income, from which income tax has been deducted, of the company for the said year of assessment shall be apportioned by reference to the date on which that income was received by the company, the amount received in that part of the said year falling before the change in ownership being referred to in this subsection as the pre-change taxed income, and the amount of the said income received in that part of the said year falling after the change in ownership being referred to in this subsection as the post-change taxed income, (iii) the amount of any income for the said year, other than such income as is referred to in subparagraph (ii), shall be apportioned on the basis specified in section 107 of the Income Tax Act, 1967 , the amount apportioned to that part of the said year falling before the change in ownership being referred to in this subsection as the pre-change income and the amount apportioned to that part of the said year falling after the change in ownership being referred to in this subsection as the post-change income. (c) Where relief under section 307 of the Income Tax Act, 1967 , is claimed by a company to which this subsection applies in respect of the year of assessment in which the change in ownership takes place, the amount of any relief to be given under the said section 307 for that year of assessment shall not exceed the sum of the following: (i) the amount of the relief which would have been given for that year of assessment if the loss sustained by the company in that year of assessment had been only the amount of the pre-change loss and the income of the company for the said year of assessment had been only the amount of the pre-change taxed income together with the amount of the pre-change income; and (ii) the amount of the relief which would have been given if the loss sustained by the company in that year of assessment had been only the amount of the post-change loss and the income of the company for the said year of assessment had been only the amount of the post-change taxed income together with the amount of the post-change income. (d) Any pre-change loss, for which relief is not given or is not given fully under any provision of the Income Tax Acts as modified by this subsection, shall not be taken into account for the purposes of section 309 of the Income Tax Act, 1967 . (3) Where, in charging the profits or gains of a trade carried on by a company, in the ownership of which a relevant change takes place, for the year of assessment in which the change of ownership takes place, capital allowances fall to be made— (a) so much of any deduction falling to be made under section 241 of the Income Tax Act, 1967 , as is attributable to that part of the year of assessment falling before the change in ownership, and (b) so much of any capital allowances, falling to be made under any provision other than the said section 241, as are in respect of expenditure incurred before the change in ownership, shall be deemed to be an amount of capital allowances falling to be made in respect of a year of assessment ending before the change in ownership. (4) (a) Where relief in respect of a loss or an amount of capital allowances given or made to a company in the ownership of which a relevant change takes place has been restricted under this section, then, notwithstanding section 304 (6) of the Income Tax Act, 1967 , in applying the provisions of Part XVI of that Act in relation to balancing charges to the company by reference to any event after the change in ownership, any capital allowances falling to be made to the company for any year of assessment ending before the change in ownership shall be disregarded unless the profits or gains of that year of assessment or any subsequent year of assessment ending before the change in ownership were sufficient to give effect to the allowances. (b) In the application of paragraph (a) it shall be assumed that any profits or gains are applied in giving effect to any such capital allowances in preference to being set off against any loss which is not attributable to such allowances. (5) In applying subsection (1) (c) to the accounting period in which the relevant change in the ownership of a company takes place, the part ending with the change in ownership, and the part beginning thereafter, shall be treated as two separate accounting periods, and the profits or losses of the accounting period shall be apportioned to the two parts. The apportionment shall be on a time basis according to the respective lengths of those parts except that if it appears that that method would work unreasonably or unjustly such other method shall be used as appears just and reasonable. (6) (a) For the purposes of this section a relevant change in the ownership of a company shall be regarded as having taken place if— (i) within any period of three years there is both a change in the ownership of the company and a major change in the nature or conduct of a trade carried on by the company, whether such major change occurs before or after or at the same time as the change in ownership, or (ii) at any time after the scale of the activities in a trade carried on by the company has become small or negligible, and before any considerable revival of the trade, there is a change in the ownership of the company. (b) In paragraph (a) “major change in the nature or conduct of a trade” includes— (i) a major change in the type of property dealt in, or services or facilities provided, in the trade, or (ii) a major change in customers, outlets or markets of the trade, and this section shall apply even if the change is the result of a gradual process which began outside the period of three years mentioned in paragraph (a) (i). (c) The Fifth Schedule to this Act shall have effect for the purpose of supplementing this section. (7) In this section and in the Fifth Schedule to this Act— “capital allowances” means allowances, other than allowances falling to be made in computing profits or gains, under section 241 of the Income Tax Act, 1967 , or under Part XIV, XV, XVI or XVII of that Act; “company” means any body corporate. (8) This section shall not apply if the change of ownership took place before the 16th day of May, 1973, and subsection (6) (a) (i) shall not apply if the major change in the nature or conduct of the trade was completed before that date; but, in other respects, this section shall have effect by reference to circumstances and events before that date as well as by reference to later circumstances and events. Restriction of balancing allowances on sale of industrial buildings and structures. 40.—(1) This section shall have effect where— (a) the relevant interest in a building or structure is sold subject to an inferior interest; and (b) by virtue of the sale a balancing allowance under section 265 of the Income Tax Act, 1967 , would, apart from this section, fall to be made to or for the benefit of the person (in this section referred to as the relevant person) who was entitled to the relevant interest immediately before the sale; and (c) either— (i) the relevant person, the person to whom the relevant interest is sold and the grantee of the inferior interest, or any two of them, are connected with each other within the meaning of subsection (6), or (ii) it appears with respect to the sale or the grant of the inferior interest, or with respect to transactions including the sale or grant, that the sole or main benefit which, but for this section, might have been expected to accrue to the parties or any of them was the obtaining of an allowance or deduction under Chapter I of Part XVI of the Income Tax Act, 1967 . (2) For the purposes of the said section 265 the net proceeds to the relevant person of the sale— (a) shall be taken to be increased by an amount equal to any premium receivable by him for the grant of the inferior interest; and (b) shall, where no rent, or no commercial rent, is payable in respect of the inferior interest, be taken to be the sum of— (i) what those proceeds would have been if a commercial rent had been payable and the relevant interest had been sold in the open market, and (ii) any amount to be added under paragraph (a); but the net proceeds of the sale shall not, by virtue of this subsection, be taken to be greater than such amount as will secure that no balancing allowance falls to be made. (3) Where subsection (2) operates, in relation to a sale, to deny or reduce a balancing allowance in respect of any expenditure, the residue of that expenditure immediately after the sale shall be calculated for the purposes of the said Chapter I as if that balancing allowance had been made or, as the case may be, had not been reduced. (4) Where the terms on which an inferior interest is granted are varied before the sale of the relevant interest, any capital consideration for the variation shall be treated, for the purposes of this section, as a premium for the gran …