INTRODUCTION
Action
Aid is an international child-sponsorship organisation with development
programmes located in different part of the Third World, particularly India and
Kenya. In 1983 Action Aid was established in Ireland by means of a company
limited by guarantee registered in this country, called Action Aid Ltd. It is a
registered corporate charity and is the appellant in these proceedings. The
company raises part of its funds by means of payments under Deeds of Covenant
from Irish donors in favour of named children in Third World countries. The
form of covenant used was one by which the covenantor covenanted with Action
Aid Ltd (called the "Trustee") and the named child in the Third World country
that for a period of seven years or during the lifetime of the child (which
ever would be the shorter period) they would pay to the trustee every year such
sum as would after deduction of income tax at the standard rate amount to a sum
stated in the deed. It further provided that "such sum, together with any
income tax recovered from the tax deducted is to be applied for the benefit of
the named covenantee".
These
arrangements are entered into to obtain benefits from the income tax code which
are available when covenants comply with certain statutory conditions. The
first which is relevant to these proceedings is section 439 of the
Income Tax
Act, 1967 which provides that subject to certain exceptions where a person
makes a disposition of income (other than for valuable consideration) for the
benefit of another person it shall, subject to certain exceptions, be deemed to
be the income of the person by whom the disposition was made. The relevant
exception is sub-paragraph (iv) which exempts from the provision of the section
income "being applicable for the benefit of a named person who is an
individual, is so applicable for a period which exceeds or may exceed six
years".
If
the exception applies, then the income under the disposition is deemed to be
the income of the covenantee. It is crucial, so that the benefits of the
covenant may arise, to establish that the payments made under it are as a
matter of law to be treated as the income of the covenantee under this
sub-section. If they are then the Action Aid Ltd as trustee for the children
named in the covenants, may be able to recover back the income tax paid by the
covenanters on the covenanted sums and the covenanters in addition, depending
on the level of their incomes, may be able to obtain tax relief on the level of
tax they pay arising from the payments they will have made.
Since
about the year 1984 Action Aid Ltd was in correspondence with the Revenue
Commissioners seeking the repayment of the tax on behalf of the individual
children named in deeds of covenant executed by taxpayers in this country. In
1984 the Revenue accepted that the appellants were entitled to the refunds
(subject to the use of a particular form of covenant) and repayments of the tax
paid were made to the company as trustees in the years 1986 and 1987. During
this time 734 refunds were paid totally a sum in excess of £28,000.
However,
in January 1988 a change of attitude occurred and the Revenue Commissioners
notified Action Aid Ltd by telephone that no further repayments would be made.
As a result of correspondence and meetings certain problems were resolved. But
others remained. These included a request from the Revenue that evidence be
supplied that the monies had in fact been expended for the benefit of the
children named in the covenants. The negotiations became very protracted.
Finally at a meeting of the 28 February 1992. Action Aid Ltd was advised that
two issues remained.
The
first was whether or not the evidence established that the payments made under
the covenant had been applied for the benefit of the covenantees within the
meaning of section 439(1)(iv) of The
Income Tax Act 1967. The Revenue argued
that it had not been so applied and that therefore the children were not within
the exception contained in the sub-section, that the income under the covenants
was therefore the income of the covenantors and so no claim for repayment of
tax to the children's trustees was sustainable. The second was whether or not
the children could avail of the low income exemption contained in section I of
the 1980 Act. The Revenue submitted that this section only applied to residents
and as the children were non-residents they could not avail of it and
accordingly no claim for repayments of tax to the trustees was sustainable.
By
a formal determination of claim made on the 16 July, 1992 the claim by Action
Aid Ltd for the refund of tax was refused on the two grounds to which I have
referred; (1) that it had not been proved that the sums in the deeds of
covenant had been applied for the benefit of named individuals so as to comply
with section 439(1)(iv) of the
Income Tax Act 1967, and (2) that because the
covenantees were non-residents they could not avail of the benefits of Section
I of the 1980 Act. Action Aid Ltd appealed to the Appeal Commissioners who, on
the 20 October, 1993 upheld the determination. The matter then came before His
Honour Judge Devally by way of re-hearing pursuant to section 439 of the
Income
Tax Act, 1967. He dismissed the appeal. On request of Action Aid Ltd he stated
a case (dated the 19 October, 1995) for the opinion of the High Court. The two
questions raised and which I am now required to consider are as follows:-
"(a)
Whether on the facts found or admitted the Appellant came with the provisions
of Section 439(1)(4) of the Income Tax Act, 1976; and if the answer to (a) is
in the affirmative:
(b)
Whether the Appellant in its capacity as trustee for certain non-resident
minors is entitled to the income exemption limits contained in
section 1 of the
Finance Act, 1980".
THE
FIRST QUESTION
As
explained already Action Aid Ltd could only reclaim the tax paid by the
covenantors on behalf of children named in the covenants if it could show that
for tax purposes the income from the covenants belonged to the children. For
this purpose it had to establish that the children came within the exception
referred to in section 439(I)(iv), that is that the income was "applicable for
the benefit of a named person who is an individual" for a period which exceeds
or may exceed six years". The Revenue has submitted that the evidence does not
establish that the income paid under the covenants was so applied and so the
exception does not apply, and the Income under the deed is that of the
covenanters and the tax paid cannot be reclaimed.
To
understand this submission I must refer to the evidence established in the
case-stated.
There
was no oral evidence given before the learned Circuit Court judge but affidavit
evidence was accepted from Don Randolph Batten with an address in Nairobi,
Kenya which is part of the case stated. It was established that monies raised
in this country were transferred and applied for the construction of schools
for the benefit of children living in the locality where the children named in
the deeds of covenant live. The effect of the evidence was summarised by the
learned trial judge as follows:-
"The
monies collected by the appellant for the benefit of the named covenantees are
used in the provision of facilities and services and in particular schools for
the non-resident infants in question. Infants other than the named covenantees
also attend such schools. In effect, the appellant constructs and runs schools
in Kenya and India and in other countries which are attended by named
covenantees and other local children". (paragraph 20 of case stated).
(a)
THE REVENUE'S SUBMISSION
The
Revenue's argument is this. The payments made under the covenants were paid
into a fund which was used to benefit a group rather than the covenantees and
because the payments had been applied for the benefit of the group and not the
named children it could not be said that the payments were applied for the
benefit of the individual covenant as required by section 439(I)(iv), of the
Income Tax Act 1967.
It
explained its attitude in a letter of the 25 September 1992 which (formed part
of the case stated) as follows:-
"I
wish to inform you that in order to satisfy Section 439(I),
Income Tax Act,
1967, a payment must be made solely to a covenantee or to a third party (for
example a guardian) on his/her behalf. The covenantee would need to have a
beneficial interest in the payment and it should not be possible to use the
money for any purpose other than for the direct benefit of the covenantee. The
Revenue's view of this case is that the payments are, in effect, going into a
fund which is used to benefit a group rather than the individual covenantee".
In
support of its submission I was referred to one aspect of the legislative
history of section 439. It was pointed out that the original legislation
concerning the impact of income tax on sums payable under covenants was section
20 of the
Finance Act, 1920 which provided that income under a disposition
would be treated as that of the disponer in certain circumstances including
income payable or applicable for the benefit of any other person "under a
covenant for not longer than six years". This section was repeated by section 3
of the 1940
Finance Act which replaced it with a provision which excluded from
the benefit of schemes for covenanting income "applicable for the benefit of a
named person who is an individual". It was urged that the reason for the change
to the more restrictive provisions of section 3 was to disallow covenanting to
bodies of persons established for charitable purposes. Section 439 contains
similar provisions to those in section 3 and so, it was claimed, should be so
construed as to exclude any community or public benefit from the operation of
its provisions.
ACTION
AID'S SUBMISSIONS
Action
Aid's submits that the evidence establishes that the payments made under the
covenants is in fact applied for the benefit of each covenantee. It is claimed
that the Revenue has misconstrued sub-section (I)(iv) of the section 439. This
paragraph does not require that it be shown that the payments under the
covenant be actually made to the covenantee -- it refers to payment being
applied for the benefit of the covenantee. This fact is underlined by the
distinction made in the section itself. Sub-section (I) exempts (i) income
"payable" to any University of College in certain circumstances (sub-paragraph
(ii), income "payable" to any body or person to which
section 20 of the
Finance
Act, 1970 applies (sub-paragraph (iii; (iii) whilst sub-paragraph (iv) refers
to "income applicable for the benefit of a named person who is an individual"
in certain circumstances. Once it is shown that the income was applied for the
benefit of the named individual the sub-paragraph applies. This has been shown
here. Each of the children benefit from the fact that the money paid under each
of the covenants is used to build a school which each of the covenantees
attend. No school is built for the benefit of any child and children attending
the school built in part with the money received under the covenants benefits
each child at the school, including the covenantees. The fact that others
(non-covenantees) also benefit from the payments does not alter the fact that
the covenantees have received a benefit. The test cannot be that money
covenanted must have no beneficial side-effects for others; the test is that
all the covenanted money is applied so as to benefit the child named in the
covenant. The covenants in this case, it is submitted pass this test.
The
company claims that support for its case is to be found The Revenue
Commissioner's VHI (Irish Income Tax Cases, Vol 3 p 242). This case concerned
covenants entered into by three members of a religious order by which they
covenanted to pay sums to the prior of the monastery for the benefit of each of
the seventeen members of the order. The covenanted income went into a general
account and the prior regarded himself as trustee of the moneys on behalf of
the grantees. It was claimed that the tax deducted for the payments should be
refunded to the grantees and reliance was placed on section 439(I)(iv) of the
1967 Act. This claim was resisted by the Revenue who argued that the scheme was
devised to benefit the order and not the individual grantees. On a case stated
to the High Court it was decided that the grantees claim succeeded, that there
was no evidence that the money was paid for the benefit of the order, and that
the money could be "applicable for the benefit" of an individual within the
meaning of the sub-section without actually being paid to him.
CONCLUSION
I
do not think that the Revenue's construction of the section is the correct one.
The sub-section does not require that the payment be made directly to the
covenantee, in order that the covenant falls within its terms. Nor is there any
requirement that the covenantee should have a "beneficial interest in the
payment" -- the only requirement is that the money be applied for his or her
benefit. If it can be shown that the payment is so applied then the income
under this deed is that of the covenantee and not the covenantor.
The
claim that the sub-section does not apply if it can be shown that payment is
made into a "fund" used to benefit a "group" rather than the individual
covenantee is to apply a wrong test to section. The test is; has the money been
applied for the benefit of the covenantee.
To
show how the test can be applied I can give an example. If a wealthy benefactor
covenants to pay a sum of money for the benefit of a named child and directs
that it be applied to pay the cost of a mini-bus to bring him daily to a clinic
then clearly the covenant is within the sub-section. If ten benefactors
collaborate for this purpose and enter into similar deeds and agree among
themselves to share the cost of a minibus to bring the ten covenantees daily to
the clinic and use the income under the covenants to do so then clearly each
covenantor has applied the income under his covenant for the benefit of the
child with whom he has entered into the deed. And this must be so even though
the money under each covenant is paid into a common fund and even though other
children travel on the bus who do not enjoy the benefit of a covenant.
It
seems to me that if a covenantor co-operates with others in providing a service
which confers a benefit on the covenantee and the covenantor applies the income
under the covenant to assist the provision of the service then there may well
be compliance with section 439(I)(iv) of the
Income Tax Act 1967. Each case
must depend on its own facts. But when, as here, the connection between the
application of the income under the covenant and the benefit conferred on the
covenantee is a close one then I think it can properly be said that the income
has been applied for the benefit of the covenantee within the meaning of the
sub-section.
I
agree that the facts of the case to which I have referred (Revenue
Commissioners v HI) are different in important respects from those of the
present one. Nonetheless, its decision supports my view that (a) the deed may
comply with the sub-section even though (a) payments are not made direct to the
covenantee and (b) the money is paid into a common fund used to benefit others
as well as the covenantee.
I
cannot agree that the legislative history to which I have been referred
requires a different conclusion to that which I have just given. The 1940 Act
amended the 1920 Act by requiring that the income be "applicable for the
benefit of a person who is an individual" instead of for "the benefit of any
other person". This had the effect of limiting the application of the section
to individuals and excluding artificial persons from benefiting from it and
does require me to alter my opinion on the manner in which the sub-section is
to be construed.
I
propose to answer the first question therefore by stating that on the facts
found or admitted the appellants came within the provisions of section
439(I)(iv) of the
Income Tax Act, 1967. This means that the income under the
covenants is to be regarded as their income and that the trustees are entitled
to reclaim the tax paid, unless the second question is answered in the
Revenue's favour.
THE
SECOND QUESTION
The
second objection taken by the Revenue to the trustees claim is that it is based
on the premise that the children named as covenantees have no income, that
therefore they are exempt from liability to tax by virtue of
section 1 of the
Finance Act, 1980, and accordingly the trustees are entitled to reclaim the tax
paid on the payments made under the covenants. The Revenue say this argument
fails because section I of the 1980 Act does not apply to non-residents.
(a)
THE REVENUE'S SUBMISSIONS
To
understand the Revenue's claim and the issues to which it gives rise a somewhat
labyrinthine journey through the 1980 Act, the 1967 Act, and some of the
intervening Finance Acts needs to be undertaken.
Section
I of the 1980 Act provides:-
(1)
"Where, for the year 1980-81 or any subsequent year of assessment --
(a)
An individual makes a claim for the purpose, makes a return in the prescribed
form of his total income for that year and proves that it does not exceed the
specified amount, he shall be entitled to exemption from income tax . . ."
This
section in no way suggest that its benefit is only conferred on residents in
the State. But the Revenue draws attention to sub-section 4 of the following
section. Sub-section 1 of that section provides that it is to apply to persons
aged 65 years and upwards. Sub-section 2 provides that an individual to which
the section applies proves that his total income for the year of assessment
does not exceed specified amount he shall be entitled to exemption from income
tax. Sub-section 3 permits a further reduction in liability and sub-section 4
provides as follows:-
"All
such provisions of the Income Tax Acts as apply in relation to the deduction
specified in
sections 138 to
143 of the
Income Tax Act, 1967, shall apply in
relation to exemption from or any reduction of tax under this section or under
section 1".
I
have underlined the words "under section 1" in this sub-section because the
sub-section clearly contains provisions relating to
section 1 as well as
section 2. The Revenue submitted that its effect is to apply to claims for low
income exemption under
section 1 all the provisions of the Income Tax Acts
which apply in relation to the deductions which are specified in
sections
134-
143 of the 1967 Act.
The
next step in the argument is to consider what provisions of the Income Tax Acts
apply to the deductions specified in
sections 134-
143. The Revenue says that
Section 153 of the 1967 Act so applies and so it also applies to section I of
the 1980 Act. As originally enacted this section provided as follows;
(1)
"Save as otherwise prescribed by this section, the following provisions shall
have effect in the case of an individual who is not resident in the State:-
(a)
He shall not be entitled to any allowance in respect of earned income relief
under
Section 134;
(b)
He shall not be entitled to any deduction from unearned income under
section
135;
(c)
He shall not be entitled to any deduction or relief under
section 136;
(d)
He shall not be entitled to any of the deductions from assessable income
provided for by
section 138-
143".
It
will readily be appreciated that this section is dealing with non-residents and
declares that non-residents will not be entitled to certain allowances and
deductions in the sections which are specified in the four sub-paragraphs
(a)-(d).
Because
the specified allowances are not available to non-residents by virtue of
section 153 and because this section is applied to the low income exemption
contained in section I of the 1980 Act it follows, the Revenue argues, that the
low income exemption is not available to non-residents and so the claim by the
trustees for repayment of the tax must fail.
THE
SUBMISSIONS OF ACTION AID LTD
Against
the Revenue's argument Action Aid Ltd has made two separate submissions.
The
first is a simple and straightforward one. It is said that sub-section (iv) of
section 2 of the 1980 Act does not apply in this case because that section only
applies to persons aged 65 years or upwards. The application of all the
sub-sections of the section is governed by the terms of sub-section I, it is
claimed, which provides as follows:-
Section
2(i)
(2)(i)
"This section applies, for the year 1980-'81 or any subsequent year of
assessment, to an individual who makes a claim for the purpose, makes a return
in the prescribed form of his total income for that year and proves that, at
some time during the year of assessment, either he or, in a case where the
individual would, apart from this section, be entitled to a deduction specified
in
section 138(a) of the
Income Tax Act, 1967, his spouse, was of the age of 65
years or upwards".
It
seems to me that the construction of this sub-section is perfectly clear; it
expressly provides that the section is to apply to an individual who makes the
claim referred to it and who is aged 65 years and upwards. No part of the
section therefore applies in the case of individuals who are children or who
were otherwise under the age of 65. Quite clearly, then, whole section has only
a limited application. Sub-section 4 makes provision for an individual to whom
the section applies (ie those aged 65 years or upwards) and it's effect is that
claims for exemption from, or any reduction of, tax under
sections 2 or
section
1 of the 1980 Act by such individuals are to be subject to the provisions of
the Income Tax Acts in the way described in the sub-section. In my opinion no
provision of the section applies in the case of children and so it does not
deny to the benefits of section I of
the Act to the covenantees on the ground
that they are non-residents.
ACTION
AID LTD'S SECOND SUBMISSION
Although
the conclusions I have just given dispose of the case I think it is advisable
that I express my conclusions on all its aspects. This means that I must
consider a second submission made on behalf of Action Aid Ltd to the effect
that the Revenue's argument misconstrues the meaning of
section 1 and
2 of the
1980 Act. It is argued that the Court may and, indeed, should have regard to
the legislative history of those sections and the state of the law at the time
when the 1980 statute was enacted. By so doing, it is submitted, it will be
seen that the sections do not exclude non-residents from the benefit of the
low-income exemption contained in section I of the 1980 Act.
This
argument proceeds as follows:-
(a)
The consolidated
Income Tax Act, 1967 contains a number of provisions allowing
deductions to be made for the purpose of arriving at "taxable income" from
"assessable income".
Section 137 of
the Act declares that an individual who in
the manner prescribed makes a claim and who makes a return in the prescribed
form of his total income shall be entitled to have deductions made and it
applies the provisions of two of the Acts schedules to the making of claims for
such deductions. Certain deductions are allowed in the following sections,
sections 138-
143. The 1967 Act not only contains provisions relating to
deductions but also provides for low income exemption in a predecessor section
to section I of the 1980 Act from tax liability. This was contained in
section
144 and is in identical terms to section I
Section 144 of the 1967 Act (like
section 1 of the 1980 Act) made no reference to non-residents. But
section 153
of the 1967 Act did. This is the section which I have already quoted and which
had the effect of expressly excluding non-residents from the benefits of
allowances, deductions, and reliefs under
sections 134,
135,
136 and
138-
143 as
well as
section 151 of
the Act. It did not apply the provisions of
section 144
to non-residents and accordingly the low income exemption contained in that
section applied to residents and non-residents alike.
Section 144 was repealed
by
section 32 of the
Finance Act, 1979 but re-enacted by the 1980 Act. It is
therefore argued that if the Revenue's submission is correct then a radical
amendment of the law was effected by
sections 1 and
2 of the
Finance Act, 1980
and it is pointed out on behalf of Action Aid Ltd, that there is no express
reference in the Statute itself or in the Dail debates on the 1980 Finance Bill
to any intention to effect such an amendment, and this lends support to the
view that the submission is incorrect.
(b)
A second argument is as follows:-
Section
2(iv) of the 1980 Act applies to the deduction and exemption to
sections 1 and
2 those provisions of the Income Tax Acts which apply to the deductions which
may be made from assessable income under sections 138-143. There are a number
of sections which obviously so apply. Sub-section (ii) of section 137 of the
1967 Act provided for the machinery for making claims for the deductions
contained in
the Act by applying certain paragraphs in two schedules to the
deductions. Section 146 contained a general provision relating to allowances
reliefs and deductions in sections 134-135; section 149 provided the method by
which "any allowance or deduction" under sections 134-145 was to be effected,
while section 497 provided for the rate of tax at which repayments of tax
arising from the right to make deduction was to be made. These sections of the
Income Tax Acts were clearly designed to provide for procedural machinery and
ancillary matters by which deductions allowances and reliefs were to be claimed
and readily applicable to new deductions and exemptions in the 1980 Act.
Action
Aid Ltd point to what is claimed is a highly relevant historical fact. Over the
years the deductions which taxpayers claim could make from assessable income
were added to from time to time beginning in the year 1967 itself, and it is
urged that when the Oireachtas wished to exclude non-residents from the benefit
of these new deductions it expressly so provided by amending section 153 of the
1967 Act. Thus, the
Finance Act, 1967,
section 12, provided for a permissible
deduction in respect of health sections. It then contained an additional
sub-section (similar to the one in the 1980 Act on which the Revenue relies)
which provided:-
"All
such provisions of the Income Tax Acts as apply in relation to every deduction
specified in sections 138-143 of the Income Tax 1967, shall apply in relation
to a deduction under this section".
Section 12(v)(c).
But
the Act did not stop there. The Oireachtas decided that the benefit of this
section would not be conferred non-residents and in order to give effect to
this decision an express amendment of section 153 of the 1967 Act was made
(section 12 [vi]) to the effect that the new deduction for health expenses was
not to be available to non-residents. So it is clear, the company submits, that
had the words of
section 12(v)(c) had the effect of applying the provisions of
section 153 to the new deductions (and thereby excluding non-residents from its
benefit) it would have been unnecessary to make this additional amendment. It
follows further, it is submitted, that the section applying the provisions of
the Income Tax Acts to the new deduction should be understood as applying the
provisions of the Acts dealing with the machinery for obtaining deductions and
other ancillary matters and not as applying the provisions of the Income Tax
Acts relating to non-residents.
The
same thing happened in later years when new deductions were granted and it is
pointed out that when it was decided that these deductions were not to be
allowed to non-residents the formula adopted in the
Finance Act, 1967 was
adopted.
Section 3 of the
Finance Act 1969 allowed a deduction for employing a
person to take care of an incapacitated tax payer or his wife. The Act then
went on to apply sections 146-149 of the 1967
Income Tax Act to these
deductions and then specifically amended
section 153 of the 1967 Act so as to
provide that the deduction would not be available to non-residents.
Section 11
of the
Finance Act 1971 gave relief to blind persons by means of a specified
deduction from total income. It made similar provisions as those contained in
the
Finance Act, 1967 and the
Finance Act, 1969 and specifically amended
section 153 of the 1967 Act so as to ensure that the deduction was not
available to non-residents. The same thing happened when deductions for an age
allowance was made by
section 8 of the
Finance Act, 1974 and again a specific
provision was made (see Schedule 1, paragraph 1(vii)(b) of
the Act) so that
this benefit was not conferred on non-residents.
Action
Aid Ltd conclude by pointing out that
section 1 of the 1980 Act exempted from
Income Tax person whose total income falls below a specified level.
Section
2(iv) applies the provisions of the Income Tax Acts by using the same formula
as that contained in the earlier Finance Acts to which I have referred.
Significantly, however, neither
section 1 nor
section 2 of the 1980 Act
contained any amendment of section 153(1)(d) so as to exclude non-residents. It
follows, therefore, it is said, that non-residents are not excluded from the
benefit of the low income exemption because the Oireachtas deliberately
refrained from creating such an exclusion.
CONCLUSION
Let
me quote again
section 2(4) of the 1980 Act on which the Revenue relies;
"All
such provisions of the Income Tax Acts as apply in relation to the deduction
specified in
section 138-
143 of the
Income Tax Act 1967, shall apply in
relation to exemption from or any reduction of tax under this section or under
section 1".
This
sub-section calls for an inquiry as to what provisions of the Income Tax Acts
apply in relation to the deductions which are to be found in
sections 138-
143
of the
Income Tax Act 1967. I have already referred to those sections of the
1967 Act which are clearly applied to the specified deductions. I think that
the Revenue is incorrect in its view that
section 153 is also applied to them.
As originally drafted this section provided that "the following provisions
shall have effect in the case of an individual who is a non-resident . . . (d)
he shall not be entitled to any of the deductions from assessable income
provided for by
sections 138 to
143". The section does not apply its provisions
to the deductions contained in
sections 138 to
143 -- it makes a substantive
provision to the effect that individuals who are not residents in the State are
not entitled to them. Nor is there any provision elsewhere to the effect that
section 153 applies to the deductions, nor do any of the amendments to the
section so provide. It follows therefore that as the section does not apply to
the specified deductions it does not apply to low income exemption provided for
in section I of the 1980 Act and so the section is not limited to the case of
individuals who are residents in the State.
This
construction of the section finds support by the application of certain
long-established and well known principles of statutory interpretation. In the
construction of an enactment due attention should be paid to relevant aspects
of the state of the law before
the Act was passed and where an Act uses a form
of words with a previous legal history this may be relevant in interpretation.
In addition if two Acts are in pari materia it will be assumed that
universality of language and meaning was intended (see Bennion "Statutory
Interpretation", second ed p 438, 439, 441).
Applying
these principles I conclude as follows:-
(a)
The benefit of a provision conferring low income relief on potential taxpayers
was available to residents and non-residents for a great number of years. Low
income relief was abolished for residents and non-residents alike in 1979 but
reintroduced in 1980 (by
section 1 of the 1980 Act). It is reasonable to assume
that, unless clearly stated, it's reintroduction would, as formerly, apply to
both residents and non-residents. This assumption lends support for the view
that the correct construction of the two sections of the 1980 Act is as I have
indicated.
(b)
Prior to the enactment of the 1980 Act, when the Oireachtas conferred a new
benefit (either by way of deduction, allowance or relief) and wished to apply
to the new benefit the existing provisions of the income tax code relevant to
it, it enacted a section in the same terms as those contained in
section 2(4)
of the 1980 Act. When it did so, however, and when it wished to deny the
benefit of the new provision to non-residents it expressly amended
section 153
of the 1967 Act. The fact that this was not done when the 1980 Act reintroduced
a low income exemption strongly suggests that the Oireachtas did not intend to
limit the exemption to residents in the State, and confirms the construction I
have placed on the section.
In
the light of the above considerations I propose to answer question (b) in the
case stated as follows.
"Action
Aid Ltd, as trustee for certain non-resident minors, is entitled to the income
exemption limits contained in
section 1 of the
Finance Act, 1980".
