Number 3 of 2003

FINANCE ACT 2003

ARRANGEMENT OF SECTIONS

PART 1

Income Tax, Corporation Tax and Capital Gains Tax

Chapter 1

Interpretation

Chapter 2

Income Tax

Chapter 3

Income Tax, Corporation Tax and Capital Gains Tax

Chapter 4

Corporation Tax

Chapter 5

Capital Gains Tax

PART 2

Excise

Chapter 1

Alcohol Products Tax

Chapter 2

Miscellaneous

PART 3

Value-Added Tax

PART 4

Stamp Duties

PART 5

Capital Acquisitions Tax

PART 6

Residential Property Tax

PART 7

Miscellaneous

SCHEDULE 1

Repeals and Revocations Relating to Excise Law

SCHEDULE 2

Rates of Alcohol Products Tax

SCHEDULE 3

Rates of Excise Duty on Tobacco Products

SCHEDULE 4

Gaming Licences

SCHEDULE 5

Stamp Duty on Instruments

SCHEDULE 6

Miscellaneous Technical Amendments in Relation to Tax

Number 3 of 2003

FINANCE ACT 2003

AN ACT TO PROVIDE FOR THE IMPOSITION, REPEAL, REMISSION, ALTERATION AND REGULATION OF TAXATION, OF STAMP DUTIES AND OF DUTIES RELATING TO EXCISE AND OTHERWISE TO MAKE FURTHER PROVISION IN CONNECTION WITH FINANCE INCLUDING THE REGULATION OF CUSTOMS.

[28th March, 2003]

BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:

PART 1

Income Tax, Corporation Tax and Capital Gains Tax

Chapter 1

Interpretation

Interpretation (Part 1).

1.—In this Part “Principal Act” means the Taxes Consolidation Act 1997 .

Chapter 2

Income Tax

Age exemption.

2.—As respects the year of assessment 2003 and subsequent years of assessment, section 188 of the Principal Act is amended, in subsection (2), by substituting “€30,000” for “€26,000” (inserted by the Finance Act 2002 ) and “€15,000” for “€13,000” (as so inserted).

Employee tax credit.

3.—(1) As respects the year of assessment 2003 and subsequent years of assessment, section 472 of the Principal Act is amended, in subsection (4), by substituting “€800” for “€660” (inserted by the Finance Act 2002 ) in both places where it occurs.

(2) Section 3 of the Finance Act 2002 , shall have effect subject to the provisions of this section.

Amendment of section 122 (preferential loan arrangements) of Principal Act.

4.—Section 122 of the Principal Act is amended, as respects the year of assessment 2003 and subsequent years of assessment, by substituting in the definition of “the specified rate” in paragraph (a) of subsection (1)—

(a) “4.5 per cent” for “5 per cent” (inserted by the Finance Act 2002 ) in both places where it occurs, and

(b) “11 per cent” for “12 per cent” (inserted by the Finance Act 2001 ).

Amendment of section 126 (tax treatment of certain benefits payable under Social Welfare Acts) of Principal Act.

5.—Section 126 of the Principal Act is amended by substituting the following for paragraph (b) (inserted by the Finance Act 2002 ) of subsection (8):

“(b) Notwithstanding subsection (3) and S.I. No. 19 of 1994 ), subsection (3)(b) shall not apply in relation to unemployment benefit paid or payable, in the period commencing on 6 April 1997 and ending on 31 December 2004, to a person employed in short-time employment.”.

Application of PAYE to perquisites, benefits-in-kind, etc.

6.—(1) The Principal Act is amended—

(a) in section 119 by substituting the following for subsection (4):

“(4) For the purposes of subsection (3), the annual value of the use of an asset shall be taken to be—

(a) in the case of an asset being premises, the rent which might reasonably be expected to be obtained on a letting from year to year if the tenant undertook to pay all usual tenant's rates, and if the landlord undertook to bear the costs of repairs and insurance, and the other expenses, if any, necessary for maintaining the premises in a state to command that rent, and

(b) in the case of any other asset, 5 per cent of the market value (within the meaning of section 548) of the asset at the time when it was first applied by the body corporate in making any provision mentioned in section 118(1).”,

(b) in section 121—

(i) in subsection (1)(a)—

(I) by substituting the following for the definition of “car”:

“ ‘car’ means any mechanically propelled road vehicle designed, constructed or adapted for the carriage of the driver or the driver and one or more other persons other than—

(a) a motor-cycle,

(b) a van (within the meaning of section 121A), or

(c) a vehicle of a type not commonly used as a private vehicle and unsuitable to be so used;”,

and

(II) by inserting the following definition after the definition of “employment”:

“ ‘motor-cycle’ means a mechanically propelled vehicle with less than four wheels and the weight of which unladen does not exceed 410 kilograms;”,

(ii) in subsection (2)(b), by substituting the following for subparagraph (ii)—

“(ii)  there shall be treated for that year as emoluments of the employment by reason of which the car is made available, and accordingly chargeable to income tax, the amount, if any, by which the cash equivalent of the benefit of the car for the year exceeds the aggregate for the year of the amount which the employee is required to make good and actually makes good to the employer in respect of any part of the costs of providing or running the car.”,

(iii) by substituting the following for paragraph (a) of subsection (3)—

“(a)  The cash equivalent of the benefit of a car for a year of assessment shall be 30 per cent of the original market value of the car.”,

(iv) in subsection (4)—

(I) by substituting the following for paragraph (a):

“(a) Where in relation to a person the business mileage for a year of assessment exceeds 15,000 miles the cash equivalent of the benefit of the car for that year, instead of being the amount ascertained under subsection (3) shall be the percentage of the original market value of the car applicable to the business mileage under the Table to this subsection.”,

(II) by inserting the following after paragraph (b):

“(c) Where a car in respect of which this section applies in relation to a person for a year of assessment is made available to the person for part only of that year, the cash equivalent of the benefit of that car as respects that person for that year shall be an amount determined by applying paragraph (a) as if—

(i) the figure 15,000 referred to in that paragraph were replaced by a figure (in this paragraph referred to as the ‘new figure’) determined by the formula—

where—

A  is the number of days in the part of the year, and

(ii) each figure in columns (1), (2) and (3) of the Table to this section were reduced in the same proportion as the new figure bears to 15,000.”,

(III) by substituting the following for the Table to that subsection:

and

(v) in subsection (6), by deleting paragraph (c),

(c) by inserting the following after section 121:

and

(d) by inserting the following after section 985:

(2) This section applies and has effect as on and from 1 January 2004.

Payment of tax in respect of share options in certain circumstances.

7.—Part 5 of the Principal Act is amended in section 128A—

(a) in subsection (1)(a), by deleting “on or after 6 April 2000” and substituting “in the period from 6 April 2000 to the date of the passing of the Finance Act 2003”,

(b) by inserting the following after subsection (4):

“(4A) (a) Notwithstanding subsection (4), where an election has been made in accordance with subsection (3) and—

(i) relevant shares are disposed of (in this subparagraph referred to as the ‘first-mentioned disposal’), and

(I) but for this subparagraph, tax would be payable, by reference to the first-mentioned disposal, in accordance with subsection (4)(a), and

(II) the market value of those shares at the date of the first-mentioned disposal is less than the tax chargeable under section 128, by reference to the exercise of an option to acquire those shares,

then an amount, being an amount equal to that market value, shall be due and payable to the Collector-General within 30 days after the date of the first-mentioned disposal or, if later, on or before 30 June 2003, and the balance of the tax chargeable remaining unpaid after that payment shall be payable in the event of, and by reference to, disposals of any shares in a company in a year of assessment, in accordance with paragraph (d), being disposals after the date of the first-mentioned disposal, or

(ii) relevant shares are held at 31 December in the year of assessment beginning 7 years after the relevant year (in this subparagraph referred to as the ‘first-mentioned date’), and

(I) but for this subparagraph, tax would be payable in accordance with subsection (4)(b), and

(II) the market value of the relevant shares is, at the first-mentioned date, less than the tax chargeable under section 128, by reference to the exercise of an option to acquire those shares,

then an amount, being an amount equal to that market value, shall be due and payable to the Collector-General within 30 days after the date of the first-mentioned date and the balance of the tax chargeable remaining unpaid after that payment shall be payable in the event of, and by reference to, disposals of any shares in a company in a year of assessment, in accordance with paragraph (d), being disposals after the first-mentioned date.

(b) Where a person who is entitled to make an election in accordance with subsection (3), after 6 February 2003 and on or before 31 October in the year of assessment following the relevant year in respect of relevant shares, does not do so, or tax chargeable under section 128, in respect of any gain realised by the exercise before 6 February 2003 of a right to acquire shares, is due after 6 February 2003 but on or before 31 October in the year of assessment following the relevant year, and the market value of the shares on—

(i) that 31 October, or

(ii) where the shares are disposed of before that date, the date of the disposal (referred to in this paragraph as the ‘first-mentioned disposal’) of the shares,

is less than the tax chargeable under section 128, then an amount, being an amount equal to that market value, shall be due and payable to the Collector-General within 30 days after the said 31 October, and the balance of the tax chargeable remaining unpaid after that payment shall be payable in the event of, and by reference to, disposals of any shares in a company in a year of assessment, in accordance with paragraph (d), being disposals after the said 31 October or the date of the first-mentioned disposal of the shares, as the case may be.

(c) In all cases other than those referred to in paragraph (a) or (b), where tax is chargeable under section 128 on an amount equal to a gain realised by the exercise, at any time before 6 February 2003, of a right to acquire shares in a company, and the market value of the shares on—

(i) that date, or

(ii) where the shares are disposed of before that date, the date of the disposal of the shares,

is less than the tax chargeable under section 128, then an amount, being an amount equal to that market value, shall be due and payable to the Collector-General on or before 30 June 2003, and the balance of the tax chargeable remaining unpaid after that payment shall be payable in the event of, and by reference to, disposals of any shares in a company in a year of assessment, in accordance with paragraph (d), being disposals after 6 February 2003.

(d) (i) A payment that is to be made in the event of, and by reference to, disposals of any shares in a year of assessment shall be a payment which is the lesser of—

(I) the aggregate of the balances of unpaid tax referred to in paragraphs (a), (b) and (c), as reduced by tax payable in accordance with this paragraph by reference to disposals of shares in a previous year of assessment, and

(II) the aggregate of the net gains (if any) arising in respect of disposals of shares in the year of assessment.

(ii) For the purposes of subparagraph (i)(II), the net gain arising in relation to a disposal of shares shall be the market value at the date of disposal of those shares reduced by so much of the aggregate of—

(I) the amount of the consideration, if any, given for the shares (including, where relevant, the grant of a right to acquire the shares),

(II)(A) where this subsection does not apply to the payment of income tax chargeable under section 128 by reference to the acquisition of the shares, the amount of the income tax so chargeable, or

(B) where this subsection does apply to the payment of income tax chargeable under section 128 by reference to the acquisition of the shares, the total amount paid, before the date of the disposal, in respect of that income tax,

and

(III) capital gains tax chargeable by reference to the disposal of the shares,

as does not exceed that market value.

(iii) For the purposes of subparagraph (ii), the income tax or capital gains tax, as the case may be, so chargeable shall be the amount by which the income tax or capital gains tax, as the case may be, chargeable on the taxpayer for the year of assessment would have been reduced if the acquisition or disposal of the shares, as the case may be, had not taken place.

(iv) Payments referred to in paragraph (d)(i) which are to be made by reference to disposals of shares shall be due and payable to the Collector-General on or before 31 October in the year following the year of assessment in which the disposal of those shares takes place.

(e) (i) A taxpayer who wishes to be entitled to avail of the provisions of this subsection shall so elect, by giving notice in writing to the inspector, on or before 1 June 2003 in a form prescribed or authorised by the Revenue Commissioners, and the notice shall contain details of—

(I) the date of exercise of the option,

(II) the number of shares acquired by exercise of the option,

(III) the market value of the shares at date of exercise of that option, and

(IV) such further particulars for the purposes of this subsection as may be required or indicated by the Revenue Commissioners.

(ii) The inspector or such other officer as the Revenue Commissioners shall appoint in that behalf may admit a late election under subparagraph (i) in circumstances where he or she is satisfied that the delay in making the election was due to absence, illness or other reasonable cause.

(f) In any case where, at any time, the requirements of this subsection have not been fully complied with, any amount of tax chargeable under section 128 which is unpaid shall be due and payable as if this subsection had not been enacted.

(g) Any tax chargeable under section 128 which is due and payable in accordance with subsection (4) or this subsection, which remains unpaid at the date of death of the chargeable person, shall be discharged by the Revenue Commissioners.

(h) Any amount paid before 6 February 2003 in respect of tax chargeable under section 128 shall not be repaid by reference to any provision of this subsection.

(i) The reference in paragraph (d) to the disposal of shares includes a reference to the disposal of shares by the spouse of the person chargeable—

(I) in a case where section 1017 applies,

or

(II) in a case where that section does not apply, but the disposal by the spouse is subsequent to a transfer, on or after 25 February 2003, of the shares from the other spouse, except where the spouses are separated in the circumstances referred to in paragraph (a) or (b) of section 1015(2), or their marriage has been dissolved under either section 5 of the Family Law (Divorce) Act 1996 , or the law of a country or jurisdiction other than the State, being a dissolution that is entitled to be recognised as valid in the State.

(j) A person shall not, at any time, be entitled to avail of the provisions of this subsection where, at that time, he or she has not paid, or agreed an arrangement acceptable to the Collector-General for the payment of, tax due and payable which is chargeable under section 128 in respect of the exercise of a right to acquire shares to which this subsection does not apply.

(k) In this subsection—

‘market value’ shall be construed in accordance with section 548;

‘shares’ includes securities within the meaning of section 135 and stock.

(4B) In any case where the provisions of subsection (4A) apply, the amount by which the market value of the shares at the time of acquisition exceeds the market value at the date of disposal of those shares, or any part of that amount, shall not be an allowable loss for the purposes of the Capital Gains Tax Acts until such time as the tax liability of the person under section 128 has been paid in full to the Collector-General.”,

(c) in subsection (5), by substituting “subsections (4)(a) and (4A)” for “subsection (4)(a)”, and

(d) in subsection (7), by substituting “subsections (4) and (4A) but notwithstanding any provisions of subsection (4A) that subsection shall have no effect as respects the payment of any tax in relation to a gain realised by the exercise on or after 6 February 2003 of a right to acquire shares.” for “subsection (4).”.

Payment of tax under section 128 (tax treatment of directors of companies and employees granted rights to acquire shares or other assets) of Principal Act.

8.—(1) Chapter 5 of Part 5 of the Principal Act is amended—

(a) by inserting the following after section 128A:

and

(b) in section 128(2A), by deleting paragraph (a).

(2) (a) Paragraph (a) of subsection (1) shall come into operation as on and from 30 June 2003.

(b) Paragraph (b) of subsection (1) shall apply as respects the exercise, assignment or release of a right (within the meaning of section 128 of the Principal Act) on or after 30 June 2003.

Amendment of section 244 (relief for interest paid on certain home loans) of Principal Act.

9.—(1) Section 244(1)(a) of the Principal Act is amended, in the definition of “relievable interest”, by substituting—

(a) “7 years” for “5 years”,

(b) “€8,000” for “€6,350”, and

(c) “€4,000” for “€3,175”.

(2) Subsection (1) shall not apply to an individual for whom the fifth year of assessment for which he or she had an entitlement to relief under section 244 of the Principal Act in respect of a qualifying loan (within the meaning of that section) was prior to the year of assessment 2002.

Amendment of Chapter 1 (payments in respect of professional services by certain persons) of Part 18 of, and Schedule 13 to, Principal Act.

10.—(1) Chapter 1 of Part 18 of the Principal Act is amended:

(a) in section 520(1), in the definition of “relevant payment”—

(i) in subparagraph (i) by substituting “applies,” for “applies, and”,

(ii) in subparagraph (ii) by substituting “section, and” for “section;”, and

(iii) by inserting the following after subparagraph (ii):

“(iii) a payment by one accountable person to another in reimbursement of a relevant payment;”, and

(b) in section 525 by substituting the following for subsection (6):

“(6) The provisions of Chapter 2 relating to the assessment, collection and recovery of tax deductible under section 531(1) shall apply to the assessment, collection and recovery of appropriate tax.”.

(2) Schedule 13 to the Principal Act is amended—

(a) by substituting “79. Horse Racing Ireland.” for paragraph 79,

(b) by deleting “104. The National Pensions Reserve Fund Commission.”, and

(c) by adding the following after paragraph 120:

“121. Human Rights Commission.

122. Pensions Ombudsman.

123. Refugee Appeals Tribunal.

124. The Dublin Institute for Advanced Studies.

125. Pre-Hospital Emergency Care Council.

126. Sustainable Energy Ireland — The Sustainable Energy Authority of Ireland.

127. The Health Insurance Authority.

128. Commission for Aviation Regulation.

129. Railway Procurement Agency.

130. The National Council on Ageing and Older People.

131. National Qualifications Authority of Ireland (NQAI).

132. BreastCheck, The National Breast Screening Programme.

133. The National Council for the Professional Development of Nursing and Midwifery.

134. Mater and Children's Hospital Development Ltd.

135. The National Consultative Commission on Racism and Interculturalism.

136. Office of Tobacco Control.

137. The Marine Casualty Investigation Board.

138. National Treasury Management Agency as regards the performance of functions by it conferred on, or delegated to, it by or under Part 2 of the National Treasury Management Agency (Amendment) Act 2000 . (State Claims Agency).

139. National Development Finance Agency.”.

(3) (a) Paragraph (a) of subsection (2) applies with effect from 18 December 2001.

(b) Paragraph (c) of subsection (2) applies with effect from 1 May 2003.

Amendment of section 65 (Cases I and II: basis of assessment) of Principal Act.

11.—Section 65 of the Principal Act is amended in subsection (3) by inserting “notwithstanding anything to the contrary in section 66(2),” after “then,”.

Restriction of reliefs where individual is not actively participating in certain trades.

12.—(1) Chapter 4 of Part 12 of the Principal Act is amended by inserting the following after section 409C:

“409D.—(1) In this section—

‘active trader’, in relation to a trade, means an individual who works for the greater part of his or her time on the day-to-day management or conduct of the trade;

‘electronic’ includes electrical, digital, magnetic, optical, electromagnetic, biometric, photonic and any other form of related technology;

‘specified provisions’ means sections 305 and 381;

‘specified trade’ means a trade consisting of or including—

(a) the generation of electricity,

(b) trading operations which are petroleum activities (within the meaning of section 21A),

(c) the development or production of—

(i) films,

(ii) film projects,

(iii) film properties, or

(iv) music properties,

(d) the acquisition of rights to participate in the revenues of—

(i) film properties, or

(ii) music properties,

or

(e) the production of, the distribution of, or the holding of an interest in—

(i) either or both a film negative and its associated soundtrack, a film tape or a film disc,

(ii) an audio tape or audio disc, or

(iii) a film property produced by electronic means or a music property produced by electronic means;

‘relevant year of assessment’ means—

(a) in relation to a trade consisting of or including the generation of electricity, the year of assessment 2002 or any subsequent year during which the individual carried on such trade otherwise than as an active trader, and

(b) in relation to any other specified trade, the year of assessment 2003 or any subsequent year during which the individual carried on that trade otherwise than as an active trader.

(2) Where, in the case of an individual who carries on a specified trade otherwise than as an active trader, an amount may apart from this section be given or allowed under any of the specified provisions—

(a) in respect of a loss sustained by the individual in the specified trade in a relevant year of assessment, including a loss which is computed taking account of interest laid out or expended by the individual in respect of a loan where the proceeds of the loan were used to incur expenditure on machinery or plant used for the purposes of the specified trade concerned, or

(b) as an allowance to be made to the individual for a relevant year of assessment either in taxing the specified trade or by means of discharge or repayment of tax to which he or she is entitled by reason of the individual carrying on the specified trade concerned,

then, notwithstanding any other provision of the Tax Acts, such an amount may be given or allowed only against income from the specified trade concerned and shall not be allowed in computing any other income or profits or in taxing any other trade or in charging any other income to tax.”.

(2) This section applies as respects—

(a) an allowance under Part 9 in respect of machinery or plant to be made—

(i) for the year of assessment 2002 or any subsequent year in relation to a trade consisting of or including the generation of electricity, and

(ii) for the year of assessment 2003 or any subsequent year in relation to any other trade,

and

(b) any loss sustained in—

(i) a trade consisting of or including the generation of electricity in the year of assessment 2002 or any subsequent year, and

(ii) any other trade in the year of assessment 2003 or any subsequent year.

Income tax: ring-fence on use of certain capital allowances on certain industrial buildings and other premises.

13.—(1) Chapter 4 of Part 12 of the Principal Act is amended by inserting the following section after section 409D (inserted by section 12 ):

“409E.—(1) In this section—

‘company’ has the same meaning as in section 4;

‘rent’ has the same meaning as in Chapter 8 of Part 4;

‘relevant interest’ has the same meaning as in section 269;

‘residue of expenditure’ shall be construed in accordance with section 277;

‘specified amount of rent’, in relation to a specified building and an individual for a year of assessment, means the amount of the surplus in respect of the rent from the specified building to which the individual becomes entitled for the year of assessment, as computed in accordance with section 97(1);

‘specified building’ means—

(a) a building or structure, or a part of a building or structure, which is or is to be an industrial building or structure by reason of its use or deemed use for a purpose specified in section 268(1) and in relation to which an allowance has been, or is to be, made to a company under Chapter 1 of Part 9, or

(b) any other building or structure, or a part of any other building or structure, in relation to which an allowance has been, or is to be, so made to a company by virtue of Part 10 or section 843 or 843A,

in respect of—

(i) the capital expenditure incurred or deemed to be incurred on the construction or refurbishment of the building or structure or, as the case may be, the part of the building or structure, or

(ii) the residue of that expenditure.

(2) This section applies where—

(a) at any time beginning on or after 1 January 2003 a company is entitled to the relevant interest in relation to any capital expenditure incurred or deemed to be incurred on the construction or refurbishment of a specified building,

(b) subsequent to the time referred to in paragraph (a) an individual becomes entitled to that relevant interest or any part of that relevant interest, whether or not subsequent to that time any other person or persons had previously become so entitled, and

(c) the individual is entitled, in charging income under Case V of Schedule D, to an allowance under Chapter 1 of Part 9 in respect of the capital expenditure referred to in paragraph (a) or the residue of that expenditure.

(3) Where this section applies, then, notwithstanding any other provision of the Income Tax Acts—

(a) any allowance to be made to the individual for any year of assessment (being the year of assessment 2003 or any subsequent year of assessment) under Chapter 1 of Part 9, in respect of the capital expenditure referred to in subsection (2)(a) or the residue of that expenditure, shall—

(i) not exceed the specified amount of rent for that year of assessment,

(ii) be made in charging the specified amount of rent under Case V of Schedule D for that year of assessment, and

(iii) be available only in charging the specified amount of rent,

(b) section 278 shall apply with any modifications necessary to give effect to paragraph (a), and

(c) section 305(1)(c) shall apply in relation to an allowance to be made in accordance with paragraph (a).”.

(2) Section 305(1) of the Principal Act is amended by inserting the following after paragraph (b):

“(c) Notwithstanding any other provision of this subsection, where under this Part an allowance, the amount of which has been determined in accordance with section 409E(3)(a)(i), is to be made to an individual for any year of assessment and the allowance is to be—

(a) made in charging the specified amount of rent (within the meaning of section 409E) under Case V of Schedule D for that year of assessment, and

(b) is to be available only in charging that specified amount of rent,

then—

(i) in charging income under Case V of Schedule D the amount of that allowance shall be deducted from or set off against that specified amount of rent, and

(ii) if the amount of the allowance which would have been made in charging income under Case V of Schedule D if section 409E had not been enacted is greater than that specified amount of rent, the excess shall—

(I) be added to the amount of the allowance to be made to the individual for the next year of assessment under Chapter 1 of this Part in respect of the capital expenditure incurred on the construction or refurbishment of the specified building (within the meaning of section 409E) or the residue of that expenditure (within the meaning of section 409E), and be deemed to be part of the allowance to be so made for that next year, or

(II) if there is no such allowance for that next year, be deemed to be the allowance for that next year,

and so on for subsequent years of assessment, and section 409E(3) shall apply in relation to the resulting allowance to be made for that next year or, as the case may be, for any subsequent year of assessment.”.

Pension arrangements.

14.—(1) The Principal Act is hereby amended—

(a) in Part 19, by substituting the following for subsection (2) of section 608:

“(2) A gain shall not be a chargeable gain if accruing to a person from the person's disposal of assets held by that person as part of a fund approved under section 774, 784(4) or 785(5) or held by that person as PRSA assets (within the meaning of section 787A).”,

(b) in Chapter 1 of Part 30—

(i) in section 774—

(I) by substituting in subsection (7)(b)(ii), “in the case of a contribution to which paragraph (ba) applies, be apportioned” for “be apportioned”,

(II) by inserting the following after paragraph (b) of subsection (7):

“(ba) This paragraph applies to a contribution, which is not an ordinary annual contribution, and which—

(i) is required by the rules of the scheme to be made, in respect of a benefit to which section 772(3)(b) applies, by way of deduction from a lump sum payable to the employee in accordance with section 772(3)(f), or

(ii) is, following resumption of or change of employment, made, on retirement, in connection with the repayment by the employee to the scheme of superannuation contributions previously refunded to the employee or of relevant benefits provided to the employee on the employee's leaving an employment in relation to service in which the superannuation contributions or, as the case may be, the relevant benefits related.”,

(III) by inserting the following after paragraph (c) of subsection (7):

“(d) Where in any year of assessment a reduction or a greater reduction would be made under this section in the remuneration of an individual but for an insufficiency of remuneration, the amount of the reduction which would have been made but for that reason, less the amount of the reduction which is made in that year, shall be carried forward to the next year of assessment, and shall be treated for the purposes of relief under this section as the amount of an annual contribution paid in the next year of assessment.

(e) In so far as an amount once carried forward under paragraph (d) (and treated as an amount of an annual contribution paid in the next year of assessment) is not deducted from or set off against the individual's remuneration for that year of assessment, it shall be carried forward again to the following year of assessment (and treated as the amount of an annual contribution paid in that year of assessment) and so on for succeeding years.”,

and

(IV) by inserting the following after subsection (7):

“(8) Subject to paragraphs (b) and (ba) of subsection (7) where in relation to a year of assessment any contribution, which is not an ordinary annual contribution, is paid by an employee under the scheme after the end of the year of assessment but before the specified return date for the chargeable period (within the meaning of Part 41), the contribution may, if the individual so elects on or before that date, be treated for the purposes of this section as paid in the earlier year (and not in the year in which it is paid); but where the amount of that contribution, together with any other contribution to the scheme paid by the individual in the year to which the contribution relates (or treated as so paid by virtue of any previous election under this subsection), exceeds the maximum amount of contributions allowed to be deducted in that year, the election shall have no effect as respects the excess.”,

(ii) in section 776—

(I) by substituting in subsection (2)(b)(ii), “in the case of a contribution to which paragraph (ba) applies, be apportioned” for “be apportioned”,

(II) by the insertion after subsection (2)(b) of the following paragraph:

“(ba) This paragraph applies to a contribution, which is not an ordinary annual contribution, and which—

(i) is required by the statute under which the scheme is established or by any other statute or regulation to be made in respect of the provision of a pension for any widow, widower, children or dependants of the officer or employee by way of a deduction from a lump sum payable to the employee on retirement, or

(ii) is, following resumption of or on change of employment, made, on retirement, in connection with the repayment by the officer or employee to the scheme of superannuation contributions previously refunded to the officer or employee or of relevant benefits provided to the officer or employee on the officer or employee's leaving the office or employment in relation to service in which the superannuation contributions or, as the case may be, the relevant benefits related.”,

(III) by inserting the following after paragraph (c) of subsection (2):

“(d) Where in any year of assessment a reduction or a greater reduction would be made under this section in the remuneration of an individual but for an insufficiency of remuneration, the amount of the reduction which would have been made but for that reason, less the amount of the reduction which is made in that year, shall be carried forward to the next year of assessment, and shall be treated for the purposes of relief under this section as the amount of an annual contribution paid in the next year of assessment.

(e) In so far as an amount once carried forward under paragraph (d) (and treated as an amount of an annual contribution paid in the next year of assessment) is not deducted from or set off against the individual's remuneration for that year of assessment, it shall be carried forward again to the following year of assessment (and treated as the amount of an annual contribution paid in that year of assessment) and so on for succeeding years.”,

and

(IV) by inserting the following after subsection (2):

“(3) Subject to paragraphs (b) and (ba) of subsection (2), where in relation to a year of assessment any contribution, which is not an ordinary annual contribution, is paid by an employee under the scheme after the end of the year of assessment but before the specified return date for the chargeable period (within the meaning of Part 41), the contribution may, if the individual so elects on or before that date, be treated for the purposes of this section as paid in the earlier year (and not in the year in which it is paid); but where the amount of that contribution, together with any other contribution to the scheme paid by the individual in the year to which the contribution relates (or treated as so paid by virtue of any previous election under this subsection), exceeds the maximum amount of contributions allowed to be deducted in that year, the election shall have no effect as respects the excess.”,

(c) in Chapter 2 of Part 30—

(i) in section 783—

(I) in subsection (1)(a)—

(A) by substituting “In this Chapter” for “In this section”,

(B) by inserting the following after the definition of “approved retirement fund”:

“ ‘close company’ has the same meaning as in section 430;

‘connected person’ has the same meaning as in section 10;”,

and

(C) by inserting the following after the definition of “investment income”:

“ ‘participator’ has the same meaning as in section 433;”,

(II) in subsection (2)—

(a) by substituting in paragraph (a), “benefits of a kind referred to in paragraphs (b) and (c) of section 772(3), including any similar benefit provided under a statutory scheme established under a public statute,” for “a lump sum payable on the termination of the service through death before the age of 70 years or some lower age or disability before the age of 70 or some lower age”,

and

(b) by inserting the following after paragraph (b):

“(c) For the purposes of calculating the amount of any reduction in net relevant earnings in respect of any qualifying premium or of any PRSA contribution (within the meaning of Chapter 2A of this Part) this Chapter and Chapter 2A shall apply as if any contribution by an employee to a sponsored superannuation scheme relating to service in an office or employment, which is not a pensionable office or employment within the meaning of paragraph (a), were a payment of a qualifying premium for which relief had been given under this Chapter.”,

(ii) in section 784A, by inserting the following after subsection (1):

“(1A) Without prejudice to the generality of subsection (1)(d), where assets of an approved retirement fund are used in connection with any of the transactions referred to in subsection (1B), the transaction shall be regarded as a distribution for the purposes of this section of the amount specified in that subsection.

(1B) The transactions referred to in subsection (1A) and the amount to be regarded as a distribution in relation to any such transaction are as follows—

(a) in the case of a loan made to the individual beneficially entitled to the assets in an approved retirement fund or to any person connected with that individual, the amount to be regarded as a distribution for the purposes of this section is an amount equal to the value of the assets of the approved retirement fund used to make such a loan or used as security for such a loan,

(b) in the case of the acquisition of property from the individual beneficially entitled to the assets in an approved retirement fund or from any person connected with that individual, the amount to be regarded as a distribution for the purposes of this section is an amount equal to the value of the assets in the approved retirement fund used in or in connection with that acquisition,

(c) in the case of the sale of any asset in an approved retirement fund to the individual beneficially entitled to the assets in an approved retirement fund or to any person connected with that individual, the amount to be regarded as a distribution for the purposes of this section is an amount equal to the value of the asset sold,

(d) in the case of the acquisition of—

(i) any property which is to be used as holiday property, or

(ii) property which is to be used as a residence,

by the individual beneficially entitled to the assets in the approved retirement fund or by any person connected with that individual, the amount to be regarded as a distribution for the purposes of this section is an amount equal to the value of the assets in the approved retirement fund used in or in connection with that acquisition, but where property is acquired, on or after 6 February 2003, in relation to the acquisition of which a distribution is not treated as arising under this Chapter and that property commences to be used for one of the purposes mentioned in subparagraphs (i) or (ii) of this paragraph, the distribution shall be treated as arising at the date such use commences and the amount to be regarded as a distribution for the purposes of this section is an amount equal to the value of the assets of the approved retirement fund used in or in connection with the acquisition together with any assets used in or in connection with any expenditure on the improvement or repair of the property in question,

(e) in the case of the acquisition of shares or any other interest in a company, which is a close company or which would be a close company but for the fact that the company is not resident in the State, in relation to which the individual beneficially entitled to the assets in the approved retirement fund or a person connected with that individual is a participator, the amount to be regarded as a distribution for the purposes of this section is an amount equal to the value of assets in the approved retirement fund used in or in connection with that acquisition, and

(f) in the case of the acquisition of tangible moveable property, the amount to be regarded as a distribution for the purposes of this section is an amount equal to the value of the assets in the approved retirement fund used in or in connection with that acquisition.

(1C) An amount which has been regarded as a distribution from an approved retirement fund, in accordance with this section, shall not be regarded as an asset in that approved retirement fund for any purpose.

(1D) Any property, the acquisition or sale of which is regarded as giving rise to a distribution of assets in an approved retirement fund, shall not be regarded as an asset in that approved retirement fund.

(1E) For the purposes of subsection (1B) references to the value of an asset in an approved retirement fund shall, except where the asset is cash, be construed as references to the market value of the asset, within the meaning of section 548.”,

(iii) in section 784A, by inserting the following after subsection (7):

“(8) (a) Within one month of commencing to act as manager of approved retirement funds, a qualifying fund manager shall give notice to that effect to the Revenue Commissioners.

(b) A qualifying fund manager who commenced to act as manager of an approved retirement fund prior to the passing of the Finance Act 2003 shall give notice to that effect to the Revenue Commissioners within three months of the passing of that Act.

(c) A notice under paragraph (a) or (b) shall specify the date the qualifying fund manager commenced to so act.”,

and

(iv) in section 784C(5), by substituting “, including any distribution or amount regarded under this Chapter as a distribution, other than—” for “other than—”,

(d) in Chapter 2A of Part 30—

(i) in subsection (1) of section 787E, by substituting the following for subparagraphs (a) to (c):

“(a) in the case of an individual who at any time during the year of assessment was of the age 30 years or over but had not attained the age of 40 years, 20 per cent,

(b) in the case of an individual who at any time during the year of assessment was of the age 40 years or over but had not attained the age of 50 years, 25 per cent,

(c) in the case of an individual who at any time during the year of assessment was of the age 50 years or over or who for the year of assessment was a specified individual, 30 per cent,

and

(d) in any other case, 15 per cent,”,

(ii) in subsection (3) of section 787E, by substituting “Where during a year of assessment an individual is a member either of an approved scheme or of a statutory scheme (hereafter referred to as a ‘scheme’) in relation to an office or employment, not being a scheme under which the benefits provided in respect of that service are limited to benefits of a kind referred to in paragraphs (b) and (c) of section 772(3), including any similar benefit provided under a statutory scheme established under a public statute,” for “Where during a year of assessment an individual is a member either of an approved scheme or of a statutory scheme (hereafter referred to as a ‘scheme’) in relation to an office or employment”,

(iii) in section 787G, by inserting the following after subsection (4):

“(4A) Without prejudice to the generality of subsection (4), the circumstances in which a PRSA administrator shall, for the purposes of this Chapter, be treated as making assets of a PRSA available to an individual shall include the use of those assets in connection with any transaction which would, if the assets were assets of an approved retirement fund, be regarded under section 784A as giving rise to a distribution for the purposes of that section and the amount to be regarded as made available shall be calculated in accordance with that section.”,

(e) in Chapter 4 of Part 30, by inserting the following after section 790:

(f) in Part 42, by substituting in subparagraph (ii) of paragraph (g) (inserted by the Pensions (Amendment) Act 2002 ) of section 986(1), “Chapter 1, Chapter 2 or Chapter 2A of Part 30” for “Chapter 1 or Chapter 2A of Part 30”,

and

(g) in Schedule 29, in column 3, by inserting “section 784A(8)”, after “section 734(5)”.

(2) (a) Paragraphs (c)(i)(II) and (d) of subsection (1) shall apply as on and from 1 January 2003;

(b) paragraphs (b), (c)(i)(I), (c)(ii) and (c)(iv) of subsection (1) shall be taken to have come into force and have effect as on and from 6 February 2003;

(c) paragraph (e) of subsection (1) shall be taken to have come into force and have effect as on and from 1 January 2002, but shall not apply in respect of any employee's contribution, qualifying premium or PRSA contribution made before 4 December 2002;

(d) subsection (1) (other than paragraphs (b), (c)(i), (c)(ii), (c)(iv), (d) and (e)) shall have effect as on and from the passing of this Act.

Chapter 3

Income Tax, Corporation Tax and Capital Gains Tax

Amendment of Part 16 (income tax relief for investment in corporate trades — business expansion scheme and seed capital scheme) of Principal Act.

15.—Part 16 of the Principal Act is amended—

(a) in section 494(2)(b), by substituting “sections 496(2)(a)(iv) and 496(2)(a)(xv)” for “section 496(2)(a)(iv)”,

(b) in section 495(3)(a)(ii)(III), by inserting the following after “section 496(2)(a)(iv)”:

“and, in the case of a company to which this clause applies, its business shall be regarded as having complied with the conditions of this clause throughout the relevant period (where, otherwise, it would not have done so) if it so complied for that part of the relevant period up to and including 31 December 2002”,

(c) in section 496—

(i) in subsection (2)(a)(ii)(III), by substituting “1979,” for “1979, or”,

(ii) in subsection (2)(a)(ii)(IV)—

(I) by inserting “and before the passing of the Finance Act 2003” after “6 April 2001”, and

(II) by substituting “concerned, or” for “concerned,”,

(iii) by inserting the following after subsection (2)(a)(ii)(IV):

“(V) as respects a subscription for eligible shares issued on or after the passing of the Finance Act 2003, a County Enterprise Board (being a board referred to in the Schedule to the Industrial Development Act 1995 ) has, in accordance with guidelines agreed between the board and the Minister for Enterprise, Trade and Employment, with the consent of the Minister for Finance, given a certificate certifying that the service industry is a qualifying service industry for the purposes of this section,”,

(iv) in subsection (2)(a)(iv), by inserting the following after “(within the meaning of section 332)”:

“and in the case of a relevant investment made on or before 31 December 2002, trading operations undertaken on or after 1 January 2003 on an exchange facility established in the Customs House Docks Area will be deemed to be relevant trading operations for the purposes of this section notwithstanding the expiry, in accordance with the provisions of section 446(2)(b), of the certificate given by the Minister for Finance under that subsection”,

(v) by inserting the following after subsection (2)(a)(xiv):

“(xv) in respect of a relevant investment made on or after 1 January 2003, the rendering of trading operations carried on for the purposes of or in connection with trading operations on an exchange facility established in the Custom House Docks Area (within the meaning of section 322),”,

(vi) by deleting subsection (2)(b), and

(vii) in subsection (4)(b)(III), by substituting “subsections (2)(a)(iv) and (2)(a)(xv)” for “subsection (2)(a)(iv)”,

and

(d) in section 497(4)(a), by substituting “sections 496(2)(a)(iv) and 496(2)(a)(xv)” for “section 496(2)(a)(iv)”.

Rental income: restriction of relief for certain interest.

16.—(1) The Principal Act is amended—

(a) in section 97—

(i) in subsection (2G), by substituting “in the purchase, other than from the spouse of the person chargeable” for “in the purchase”, and

(ii) by inserting the following after subsection (2G):

“(2H) The reference to ‘spouse’ in subsection (2G) does not include a spouse to a marriage—

(a) in which the spouses are separated under an order of a court of competent jurisdiction or by deed of separation, or

(b) that has been dissolved under either—

(i) section 5 of the Family Law (Divorce) Act 1996 , or

(ii) the law of a country or jurisdiction other than the State, being a divorce that is entitled to be recognised as valid in the State.”, and

(b) in section 248A, by inserting the following after subsection (3):

“(4) Notwithstanding subsection (3), subsection (2) shall apply in relation to interest referred to in subsection (2) where the purpose of the loan is the purchase of a residential premises from the spouse of the individual to whom relief is given under section 248 or 253.

(5) The reference to ‘spouse’ in subsection (4) does not include a spouse to a marriage—

(a) in which the spouses are separated under an order of a court of competent jurisdiction or by deed of separation, or

(b) that has been dissolved under either—

(i) section 5 of the Family Law (Divorce) Act 1996 , or

(ii) the law of a country or jurisdiction other than the State, being a divorce that is entitled to be recognised as valid in the State.”.

(2) This section shall apply and have effect in relation to interest referred to in sections 97(2G) and 248A(2) which accrues on or after 6 February 2003 and, for the purposes of this subsection, such interest shall be treated as accruing from day to day.

Claims for repayment, interest on repayments and time limits for assessment.

17.—(1) With effect from the day appointed by the Minister for Finance in accordance with the provisions of subsection (2), the Principal Act is amended—

(a) by substituting the following for section 865:

(b) in section 941(9), by substituting the following for paragraph (a):

“(a) if too much tax has been paid, the amount overpaid shall be refunded with interest in accordance with the provisions of section 865A, or”,

(c) in section 942(6), by substituting the following for paragraph (b):

“(b) Notwithstanding paragraph (a), where the amount of tax is altered by the determination of the judge or by giving effect to an agreement under subsection (8), then, if too much tax has been paid, the amount or amounts overpaid shall be repaid and in so far as the amount to be repaid represents tax paid in accordance with this subsection it shall, subject to the provisions of subsection (4) of section 865A, be repaid with interest at the rate specified in subsection (3) of section 865A from the date or dates of payment of the amount or amounts giving rise to the overpayment to the date on which the repayment is made.”,

(d) by deleting sections 930 and 953,

(e) in section 931(3), by substituting “sections 920, 922, 924, 928 and 929” for “sections 920, 922, 924 and 928 to 930”,

(f) by substituting “4 years” for “10 years” in each place where it occurs in the following provisions, namely, sections 401(6), 504(3), 599(4)(b), 611(1)(c), 919(5)(c) and 924(2)(b),

(g) in section 955(2), by substituting the following for paragraph (a):

“(a) Where a chargeable person has delivered a return for a chargeable period and has made in the return a full and true disclosure of all material facts necessary for the making of an assessment for the chargeable period, an assessment for that period or an amendment of such an assessment shall not be made on the chargeable person after the end of 4 years commencing at the end of the chargeable period in which the return is delivered and—

(i) no additional tax shall be payable by the chargeable person after the end of that period of 4 years, and

(ii) no tax shall be repaid after the end of a period of 4 years commencing at the end of the chargeable period for which the return is delivered,

by reason of any matter contained in the return.”,

(h) in section 956(1)(c), by substituting “4 years” for “6 years”, and

(i) in section 997—

(a) in subsection (1)—

(i) by deleting—

(I) “within 5 years from the end of the year of assessment” in paragraph (a), and

(II) “or estimated to be deductible”, and

(b) by inserting the following after subsection (1):

“(1A) Notwithstanding subsection (1), an assessment under Schedule E in respect of emoluments to which this Chapter applies shall not be made for any year of assessment—

(a) where paragraph (a) of that subsection applies, unless the person assessable has requested the assessment—

(i) in the case of any year of assessment prior to the year of assessment 2003, within 5 years, and

(ii) in the case of the year of assessment 2003 or any subsequent year of assessment, within 4 years,

from the end of the year of assessment concerned, and

(b) where paragraph (b) or (c) of that subsection applies, at any time later than 4 years from the end of the year of assessment concerned.”.

(2) (a) This section shall come into operation on such day or days as the Minister for Finance may by order or orders appoint either generally or with reference to any particular purpose or provision and different days may be so appointed for different purposes or different provisions.

(b) Notwithstanding the generality of paragraph (a), any order made by the Minister for Finance in accordance with the provisions of that paragraph may contain, and be subject to, such conditions as the Minister considers appropriate and which are specified in the order.

Amendment of section 666 (deduction for increase in stock values) of Principal Act.

18.—(1) Section 666 of the Principal Act is amended by the substitution of the following for subsection (4):

“(4) (a) A deduction shall not be allowed under this section in computing a company's trading income for any accounting period which ends after 31 December 2004.

(b) Any deduction allowed by virtue of this section in computing the profits or gains of the trade of farming for an accounting period of a person other than a company shall not apply for any purpose of the Income Tax Acts for any year of assessment later than the year 2004.”.

(2) This section comes into operation on 6 February 2003.

Amendment of section 667 (special provisions for qualifying farmers) of Principal Act.

19.—(1) Section 667 of the Principal Act is amended in paragraph (b) of subsection (2) by the substitution of the following for subparagraph (ii):

“(ii) on or after 6 April 1995 and on or before 31 December 2004, for the year of assessment in which the individual becomes a qualifying farmer and for each of the 3 immediately succeeding years of assessment.”.

(2) This section shall come into operation on such day as the Minister for Finance may by order appoint.

Amendment of Chapter 4 (transmission capacity rights) of Part 29 of Principal Act.

20.—(1) Chapter 4 of Part 29 of the Principal Act is amended—

(a) in section 769A(1), by inserting the following after the definition of “capacity rights”:

“ ‘control’ shall be construed in accordance with section 432;

‘qualifying expenditure’ means capital expenditure incurred on the purchase of capacity rights, but does not include expenditure incurred on or after 6 February 2003 which consists of a licence fee or other payment paid to the Commission for Communications Regulation in respect of a licence or permission granted by that Commission on or after that date under—

(a) the Wireless Telegraphy Acts 1926 to 1988, or

(b) the Postal and Telecommunications Services Act 1983 ;”,

(b) in section 769B—

(i) by substituting “qualifying expenditure” for “capital expenditure” in both places where it occurs in subsection (1) and in the meaning of “A” in subsection (2)(b), and

(ii) by inserting the following after subsection (2):

“(3) (a) Notwithstanding any other provisions of this Chapter, where a company (in this paragraph referred to as the ‘buyer’) incurs qualifying expenditure on the purchase from another company (in this paragraph referred to as the ‘seller’) of capacity rights, no allowances shall be made under this Chapter to the buyer in respect of that expenditure if both companies are companies within a group of companies, unless an allowance had been made under this Chapter to the seller (or would have been made to the seller if it had not sold those rights) in respect of the capital expenditure it incurred on the purchase of those rights.

(b) For the purposes of this subsection—

(i) a ‘group of companies’ means a company and any other companies of which it has control or with which it is associated, and

(ii) a company is associated with another company where it could reasonably be considered that—

(I) any person or any group of persons or groups of persons having a reasonable commonality of identity has or have, as the case may be, or had the means or power, either directly or indirectly, to determine the trading operations carried on or to be carried on by both companies, or

(II) both companies are under the control of any person or any group of persons or groups of persons having a reasonable commonality of identity.”,

(c) in section 769C, by substituting “qualifying expenditure” for “capital expenditure” in each place where it occurs in subsections (1) to (5),

(d) in section 769E(2), by substituting “qualifying expenditure” for “capital expenditure”, and

(e) in section 769F by the substitution of “on the date of the passing of the Finance Act 2003” for “on such day as the Minister for Finance may, by order, appoint”.

(2) This section applies as on and from the date of the passing of this Act.

Amendment of section 848A (donations to approved bodies) of Principal Act.

21.—(1) Section 848A of the Principal Act is amended—

(a) in subsection (1)(a), in the definition of “relevant donation” by the insertion of “, subject to subsection (3A),” after “means”, and

(b) by the insertion of the following after subsection (3):

“(3A) (a) Notwithstanding any other provision of this section, where the aggregate of the amounts of all donations made by an individual in any year of assessment to an approved body or approved bodies with which the individual is associated is in excess of 10 per cent of the total income of the individual for that year of assessment, the amount of the excess shall not be treated as a relevant donation for the purposes of this section.

(b) For the purposes of this subsection—

(i) an individual is associated with an approved body if, at the time the donation is made, the individual is an employee or member of, the approved body or another approved body which is associated with that approved body, and

(ii) an approved body is associated with another approved body if, at the time the donation is made, it could reasonably be considered that—

(I) any person or any group of persons or groups of persons having a reasonable commonality of identity has or have, or had the means or power, either directly or indirectly, to determine the activities carried on or to be carried on by both approved bodies, or

(II) any person or any group of persons or groups of persons having a reasonable commonality of identity exercises or exercise, or is or are able to exercise, control over the affairs of both approved bodies.”.

(2) Subsection (1) shall apply as respects donations made on or after 6 February 2003.

Amendment of Schedule 26A (donations to approved bodies, etc.) to Principal Act.

22.—(1) Schedule 26A to the Principal Act is amended in Part 1 by inserting the following after paragraph 18:

“19. The company incorporated under the Companies Acts 1963 to 2001, on 30 January 2003, as US-Ireland Alliance Limited.”.

(2) Subsection (1) applies as respects donations made on or after 6 February 2003.

Wear and tear allowances.

23.—(1) The Principal Act is amended—

(a) in section 284(2)—

(i) in paragraph (a), by substituting “paragraphs (aa), (ab) and (ad)” for “paragraphs (aa) and (ab)”,

(ii) by inserting the following after paragraph (ac):

“(ad) Notwithstanding any other provision of this subsection but subject to subsection (4), where capital expenditure is incurred on or after 4 December 2002 on the provision of machinery or plant, the amount of the wear and tear allowance to be made shall be an amount equal to 12.5 per cent of the actual cost of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by means of renewal, improvement or reinstatement; but this paragraph shall not apply in the case of—

(i) machinery or plant to which subsection (3A) relates,

(ii) machinery or plant which consists of a car within the meaning of section 286, used for qualifying purposes, within the meaning of that section, or

(iii) machinery or plant provided under the terms of a binding contract evidenced in writing before 4 December 2002 and in respect of the provision of which capital expenditure is incurred on or before 31 January 2003.”,

and

(iii) in paragraph (b), by substituting “the amount specified in any other provision of this subsection” for “the amount specified in subparagraph (i) or (ii) of paragraph (a), the amount specified in paragraph (aa) or, as the case may be, the amount specified in subparagraph (i) or (ii) of paragraph (ab)”,

(b) in section 310, by substituting the following for subsection (2A):

“(2A) Where, by virtue of subsection (2), a person is entitled to an allowance under section 284 then, for the purposes of determining the amount of wear and tear allowances to be made for any chargeable period or its basis period for the purposes of this section, section 284 shall apply—

(a) as if the reference in paragraph (aa) of subsection (2) of that section to ‘20 per cent of the actual cost of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by means of renewal, improvement or reinstatement’ were a reference to ‘20 per cent of the capital sum contributed in the chargeable period or its basis period’, and

(b) as if the reference in paragraph (ad) of subsection (2) of that section to ‘12.5 per cent of the actual cost of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by means of renewal, improvement or reinstatement’ were a reference to ‘12.5 per cent of the capital sum contributed in the chargeable period or its basis period’.”,

and

(c) in section 692(2), by substituting “as if the references in paragraphs (a)(i), (aa) and (ad) of that section to 15 per cent, 20 per cent and 12.5 per cent, respectively, were each a reference to 100 per cent” for “as if the reference to paragraph (a)(i) of that section to 15 per cent were a reference to 100 per cent”.

(2) This section applies as on and from 4 December 2002.

Capital allowances for certain day hospitals.

24.—(1) Section 268 of the Principal Act is amended, in subsection (2A), by substituting the following for paragraph (d) of the definition of ‘qualifying hospital’:

“(d) has the capacity to provide—

(i) out-patient services and accommodation on an overnight basis of not less than 70 in-patient beds, or

(ii) day-case and out-patient medical and surgical services and accommodation for such services of not less than 40 beds,”.

(2) This section applies as respects capital expenditure incurred on or after the date of the passing of this Act on the construction (within the meaning of section 270 of the Principal Act) of a building or structure.

Provisions relating to certain industrial buildings or structures.

25.—(1) Chapter 1 of Part 9 of the Principal Act is amended—

(a) in section 268—

(i) in subsection (3) by substituting “shall, subject to subsection (13), be deemed” for “shall be deemed”,

(ii) in subsection (12)—

(I) by substituting the following for “6 April 2001,”:

“6 April 2001 (being capital expenditure in respect of which but for this subsection a writing-down allowance in excess of 4 per cent would be available under section 272 for a chargeable period),”,

and

(II) by substituting the following for paragraph (c):

“(c) that, in the case of expenditure incurred on or after 1 January 2003 on the construction or refurbishment of a building or structure provided for the purposes of a project which is subject to the notification requirements of—

(i) the ‘Multisectoral framework on regional aid for large investment projects’¹ prepared by the Commission of the European Communities and dated 7 April 1998, or

(ii) the ‘Multisectoral framework on regional aid for large investment projects’² prepared by the Commission of the European Communities and dated 19 March 2002,

as the case may be, approval of the potential capital allowances involved has been received from that Commission by the Minister for Finance, or by such other Minister of the Government, agency or body as may be nominated for that purpose by the Minister for Finance, and”,

and

(iii) by inserting the following after subsection (12):

“(13)  (a) Notwithstanding subsection (3) but subject to paragraph (b), a holiday cottage referred to in that subsection shall not, as respects capital expenditure incurred on or after 4 December 2002 on its construction (within the meaning of section 270), be deemed to be a building or structure in use for the purposes of the trade of hotelkeeping.

(b) This subsection shall not apply as respects expenditure incurred on or before 31 December 2004 on the construction or refurbishment of a holiday cottage if—

(i) (I) a planning application (not being an application for outline permission within the meaning of section 36 of the Planning and Development Act 2000 ) in respect of the holiday cottage is made in accordance with the Planning and Development Regulations 2001 to 2002,

(II) an acknowledgement of the application, which confirms that the application was received on or before 31 May 2003, is issued by the planning authority in accordance with article 26(2) of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ), and

(III) the application is not an invalid application in respect of which a notice is issued by the planning authority in accordance with article 26(5) of those regulations,

or

(ii) (I) a planning application in respect of the holiday cottage was made in accordance with the Local Government (Planning and Development) Regulations 1994 ( S.I. No. 86 of 1994 ), not being an application for outline permission within the meaning of article 3 of those regulations,

(II) an acknowledgement of the application, which confirms that the application was received on or before 10 March 2002, was issued by the planning authority in accordance with article 29(2)(a) of the regulations referred to in clause (I), and

(III) the application was not an invalid application in respect of which a notice was issued by the planning authority in accordance with article 29(2)(b)(i) of those regulations.”,

(b) in section 272—

(i) in subsection (3)(c)—

(I) in subparagraph (i) by deleting “or” after “1994,”,

(II) in subparagraph (ii) by inserting “or” after “1994,”, and

(III) by inserting the following after subparagraph (ii):

“(iii) subject to subsection (8), 4 per cent of the expenditure referred to in subsection (2)(c), if the capital expenditure on the construction (within the meaning of section 270) of the building or structure is incurred on or after 4 December 2002,”,

(ii) in subsection (4)(c)—

(I) in subparagraph (i) by deleting “or” after “1994,”,

(II) in subparagraph (ii) by inserting “or” after “1994,”, and

(III) by inserting the following after subparagraph (ii):

“(iii) subject to subsection (8), 25 years beginning with the time when the building or structure was first used, in the case where the capital expenditure on the construction (within the meaning of section 270) of the building or structure is incurred on or after 4 December 2002,”,

and

(iii) by inserting the following after subsection (7):

“(8) Subsections (3)(c)(iii) and (4)(c)(iii) (as inserted by the Finance Act 2003) shall not apply as respects capital expenditure incurred on or before 31 December 2004 on the construction or refurbishment of a building or structure if—

(a) (i) a planning application (not being an application for outline permission within the meaning of section 36 of the Planning and Development Act 2000 ) in respect of the building or structure is made in accordance with the Planning and Development Regulations 2001 to 2002,

(ii) an acknowledgement of the application, which confirms that the application was received on or before 31 May 2003, is issued by the planning authority in accordance with article 26(2) of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ), and

(iii) the application is not an invalid application in respect of which a notice is issued by the planning authority in accordance with article 26(5) of those regulations,

(b) (i) a planning application in respect of the building or structure was made in accordance with the Local Government (Planning and Development) Regulations 1994 ( S.I. No. 86 of 1994 ), not being an application for outline permission within the meaning of article 3 of those regulations,

(ii) an acknowledgement of the application, which confirms that the application was received on or before 10 March 2002, was issued by the planning authority in accordance with article 29(2)(a) of the regulations referred to in subparagraph (i), and

(iii) the application was not an invalid application in respect of which a notice was issued by the planning authority in accordance with article 29(2)(b)(i) of those regulations,

or

(c) (i) the construction or refurbishment of the building or structure is a development in respect of which an application for a certificate under section 25(7)(a)(ii) of the Dublin Docklands Development Authority Act 1997 is made to the Authority (within the meaning of that Act),

(ii) an acknowledgement of the application, which confirms that the application was received on or before 31 May 2003, is issued by that Authority, and

(iii) the application is not an invalid application.”,

and

(c) in section 274—

(i) in subsection (1)(b)(iii)—

(I) in clause (I) by deleting “or” after “1994,”,

(II) in clause (II) by inserting “or” after “1994,”, and

(III) by inserting the following after clause (II):

“(III) subject to subsection (1A), 25 years after the building or structure was first used, in the case where the capital expenditure on the construction (within the meaning of section 270) of the building or structure is incurred on or after 4 December 2002,”,

and

(ii) by inserting the following after subsection (1):

“(1A) Subsection (1)(b)(iii)(III) (as inserted by the Finance Act 2003) shall not apply as respects capital expenditure incurred on or before 31 December 2004 on the construction or refurbishment of a building or structure if—

(a) (i) a planning application (not being an application for outline permission within the meaning of section 36 of the Planning and Development Act 2000 ) in respect of the building or structure is made in accordance with the Planning and Development Regulations 2001 to 2002,

(ii) an acknowledgement of the application, which confirms that the application was received on or before 31 May 2003, is issued by the planning authority in accordance with article 26(2) of the Planning and Development Regulations 2001 ( S.I. No. 600 of 2001 ), and

(iii) the application is not an invalid application in respect of which a notice is issued by the planning authority in accordance with article 26(5) of those regulations,

(b) (i) a planning application in respect of the building or structure was made in accordance with the Local Government (Planning and Development) Regulations 1994 ( S.I. No. 86 of 1994 ), not being an application for outline permission within the meaning of article 3 of those regulations,

(ii) an acknowledgement of the application, which confirms that the application was received on or before 10 March 2002, was issued by the planning authority in accordance with article 29(2)(a) of the regulations referred to in subparagraph (i), and

(iii) the application was not an invalid application in respect of which a notice was issued by the planning authority in accordance with article 29(2)(b)(i) of those regulations,

or

(c) (i) the construction or refurbishment of the building or structure is a development in respect of which an application for a certificate under section 25(7)(a)(ii) of the Dublin Docklands Development Authority Act 1997 is made to the Authority (within the meaning of that Act),

(ii) an acknowledgement of the application, which confirms that the application was received on or before 31 May 2003, is issued by that Authority, and

(iii) the application is not an invalid application.”.

(2)  (a) Subject to paragraph (b), subsection (1) applies as on and from 4 December 2002.

(b) Paragraph (a)(ii)(II) of subsection (1) applies as on and from 1 January 2003.

Amendment of Part 10 (income tax and corporation tax: reliefs for renewal and improvement of certain urban areas, certain resort areas and certain islands) of Principal Act.

26.—Part 10 of the Principal Act is amended—

(a) in section 372A—

(i) in subsection (1), in the definition of “relevant local authority”, by substituting the following for paragraph (a):

“(a) in relation to a qualifying area—

(i) the county council or the city council or the borough council or, where appropriate, the town council, within the meaning of the Local Government Act 2001 , in whose functional area the area is situated, or

(ii) the authorised company (within the meaning of section 3(1) of the Urban Renewal Act 1998 ) which prepared the integrated area plan (within the meaning of that section) in respect of the area,

and”,

and

(ii) in subsection (1A) by substituting the following for paragraph (a):

“(a) This subsection shall apply where—

(i) the relevant local authority gives a certificate in writing on or before 30 September 2003, to the person constructing or refurbishing a building or structure or part of a building or structure, the site of which is wholly within a qualifying area, stating that it is satisfied that not less than 15 per cent of the total cost of constructing or refurbishing the building or structure or the part of the building or structure, as the case may be, and the acquisition of the site thereof had been incurred on or before 30 June 2003, and

(ii) the application for such a certificate is received by the relevant local authority on or before 31 July 2003.”,

(b) in section 372U(1), in the definition of “qualifying period”, by substituting “31 December 2004” for “30 June 2004”,

(c) in section 372AA(1) by substituting the following for the definition of “qualifying period”:

“ ‘qualifying period’ means, subject to section 372AB, the period commencing on 6 April 2001 and ending on 31 December 2004;”,

(d) in section 372AK, by substituting the following for the definition of “relevant local authority”:

“ ‘relevant local authority’,—

(a) in relation to a qualifying urban area, means—

(i) the county council or the city council or the borough council or, where appropriate, the town council, within the meaning of the Local Government Act 2001 , in whose functional area the area is situated, or

(ii) the authorised company (within the meaning of section 3(1) of the Urban Renewal Act 1998 ) which prepared the integrated area plan (within the meaning of that section) in respect of the area,

and

(b) in relation to the construction of a house the site of which is wholly within the site of a qualifying park and ride facility and which is a qualifying premises for the purposes of this Chapter, has the same meaning as it has in section 372U(1) in relation to the construction or refurbishment of a park and ride facility or a qualifying premises within the meaning of section 372W;”,

and

(e) in section 372AL—

(i) in subsection (1)—

(I) in paragraph (d) by substituting “31 December 2004” for “30 June 2004”,

(II) in paragraph (e) by substituting “31 December 2004” for “31 December 2003”, and

(III) in paragraph (f)(ii) by substituting “31 December 2004” for “30 September 2005”,

and

(ii) in subsection (2) by substituting the following for paragraph (a):

“(a) This subsection shall apply where—

(i) the relevant local authority gives a certificate in writing on or before 30 September 2003, to the person constructing, converting or, as the case may be, refurbishing a building or part of a building, the site of which is wholly within a qualifying urban area, stating that it is satisfied that not less than 15 per cent of the total cost of constructing, converting or refurbishing the building or the part of the building, as the case may be, and the acquisition of the site thereof had been incurred on or before 30 June 2003, and

(ii) the application for such a certificate is received by the relevant local authority on or before 31 July 2003.”.

Amendment of Chapter 7 (qualifying areas) of Part 10 of Principal Act.

27.—(1) Chapter 7 of Part 10 of the Principal Act is amended—

(a) in section 372A(1) by inserting the following after the definition of “existing building”:

“ ‘facade’, in relation to a building or structure or part of a building or structure, means the exterior wall of the building or structure or, as the case may be, the part of the building or structure which fronts on to a street;”,

(b) in section 372B—

(i) by substituting the following for paragraph (b) of subsection (1):

“(b) where such an area or areas is or are to be a qualifying area—

(i) for the purposes of section 372D—

(I) one or more of the categories of building or structure mentioned in subsection (2) shall or shall not be a qualifying premises within the meaning of that section, and

(II) that area or those areas shall be a qualifying area for the purposes of either or both the construction of, and the refurbishment of, a qualifying premises within the meaning of that section;

(ii) for the purposes of section 372AR, that area or those areas shall be a qualifying area for the purposes of one or more of the following:

(I) the construction of,

(II) the conversion into, and

(III) the refurbishment (within the meaning of Chapter 11 of this Part) of,

a qualifying premises (within the meaning of that Chapter),”,

(ii) by substituting the following for subsection (2):

“(2) The categories of building or structure referred to in subsection (1)(b)(i)(I) shall be—

(a) buildings or structures which consist of office accommodation,

(b) multi-storey car parks,

(c) any other buildings or structures and in respect of which not more than 10 per cent of the capital expenditure incurred in the qualifying period on their construction or refurbishment relates to the construction or refurbishment of office accommodation,

(d) the facade of a building or structure or part of a building or structure referred to in paragraph (a),

(e) the facade of a building or structure or part of a building or structure referred to in paragraph (c).”,

and

(iii) by inserting the following after subsection (2):

“(2A) The power to make an order under subsection (1) includes the power to amend or revoke the order.”,

(c) in section 372BA by inserting the following after subsection (2):

“(2A) The power to make an order under subsection (1) includes the power to amend or revoke the order.”,

(d) in section 372D—

(i) in subsection (2)(a), by substituting the following for subparagraph (ii):

“(ii) where any activity—

(I) carried on in the qualifying premises, or

(II) in a case where the facade of a building or structure or part of a building or structure is a qualifying premises, carried on in the building or structure or the part of the building or structure,

is not a trade, as if it were a trade.”,

and

(ii) in subsection (3A)—

(I) by substituting the following for paragraph (a)(ii):

“(ii) apart from the capital expenditure incurred in the qualifying period on the construction or refurbishment of the qualifying premises, expenditure is incurred on the upper floor or floors of the existing building or the replacement building, as the case may be, which is—

(I) eligible expenditure within the meaning of Chapter 11 of this Part (being eligible expenditure on necessary construction, or conversion expenditure or refurbishment expenditure within the meaning of that Chapter), or

(II) qualifying expenditure within the meaning of Chapter 11 of this Part (being qualifying expenditure on necessary construction, on conversion or on refurbishment within the meaning of that Chapter),

and in respect of which a deduction has been given, or would on due claim being made be given, under section 372AP or 372AR.”,

and

(II) by substituting the following for paragraph (b):

“(b) Notwithstanding paragraph (a), subsection (2) shall not apply in relation to so much (if any) of the capital expenditure incurred in the qualifying period on the construction or refurbishment of the qualifying premises as exceeds the amount of the deduction, or the aggregate amount of the deductions, which has been given, or which would on due claim being made be given, under section 372AP or 372AR in respect of the eligible expenditure referred to in paragraph (a)(ii)(I) or the qualifying expenditure referred to in paragraph (a)(ii)(II).”,

and

(e) in section 372K—

(i) in subsection (1), by substituting the following for paragraph (c):

“(c) in respect of expenditure incurred on or after 1 January 2003 on the construction or refurbishment of any building or structure or qualifying premises provided for the purposes of a project which is subject to the notification requirements of—

(i) the ‘Multisectoral framework on regional aid for large investment projects’¹ prepared by the Commission of the European Communities and dated 7 April 1998, or

(ii) the ‘Multisectoral framework on regional aid for large investment projects’² prepared by the Commission of the European Communities and dated 19 March 2002,

as the case may be, unless approval of the potential capital allowances involved has been received from that Commission by the Minister for Finance, or by such other Minister of the Government, agency or body as may be nominated for that purpose by the Minister for Finance.”,

and

(ii) in subsection (2), by substituting “sections 372C and 372D” for “sections 372C, 372D, 372G and 372H”.

(2)  (a) Subject to paragraphs (b), (c) and (d), subsection (1) is deemed to have applied as on and from 1 March 1999.

(b) Paragraph (c) of subsection (1) is deemed to have applied as on and from 6 April 2001.

(c) Paragraphs (d)(ii) and (e)(ii) of subsection (1) are deemed to have applied as on and from 1 January 2002.

(d) Paragraph (e)(i) of subsection (1) applies as on and from 1 January 2003.

Amendment of section 372T (non-application of relief in certain circumstances and provision against double relief) of Principal Act.

28.—Section 372T(1) of the Principal Act is amended by inserting the following after paragraph (aa):

“(ab) in respect of expenditure incurred on or after 1 January 2003 on the construction or refurbishment of any building or structure or qualifying premises provided for the purposes of a project which is subject to the notification requirements of—

(i) the ‘Multisectoral framework on regional aid for large investment projects’¹ prepared by the Commission of the European Communities and dated 7 April 1998, or

(ii) the ‘Multisectoral framework on regional aid for large investment projects’² prepared by the Commission of the European Communities and dated 19 March 2002,

as the case may be, unless approval of the potential capital allowances involved has been received from that Commission by the Minister for Finance, or by such other Minister of the Government, agency or body as may be nominated for that purpose by the Minister for Finance,”.

Amendment of Chapter 10 (designated areas of certain towns) of Part 10 of Principal Act.

29.—(1) Chapter 10 of Part 10 of the Principal Act is amended—

(a) in section 372AA(1)—

(i) by inserting the following after “In this Chapter—”:

“ ‘facade’, in relation to a building or structure, part of a building or structure, or a house, means the exterior wall of the building or structure, the part of the building or structure or, as the case may be, the house which fronts on to a street;”,

(ii) in the definition of “refurbishment” by substituting “structure;” for “structure.”, and

(iii) by inserting the following after the definition of “refurbishment”:

“ ‘street’, includes part of a street and the whole or part of any road, square, quay or lane.”,

(b) in section 372AB—

(i) by substituting the following for paragraph (b) of subsection (1):

“(b) where such an area or areas is or are to be a qualifying area—

(i) for the purposes of section 372AC, that area or those areas shall be a qualifying area for the purposes of one or more of the following—

(I) the construction,

(II) the refurbishment, and

(III) the refurbishment of the facade,

of a building or structure to which that section applies,

(ii) for the purposes of section 372AD—

(I) one or more of the categories of building or structure mentioned in subsection (2) shall or shall not be a qualifying premises within the meaning of that section, and

(II) that area or those areas shall be a qualifying area for the purposes of either or both the construction of, and the refurbishment of, a qualifying premises within the meaning of that section,

and

(iii) for the purposes of section 372AR, that area or those areas may be a qualifying area for the purposes of one or more of the following—

(I) the construction of,

(II) the conversion into,

(III) the refurbishment (within the meaning of Chapter 11 of this Part) of, and

(IV) the refurbishment (within the meaning of Chapter 11 of this Part) of the facade of,

a qualifying premises (within the meaning of that Chapter),”,

(ii) by substituting the following for paragraphs (ba)(ii) and (ba)(iii) of subsection (1):

“(ii) conversion expenditure incurred in relation to a house,

(iii) refurbishment expenditure incurred in relation to a house, and

(iv) refurbishment expenditure incurred in relation to the facade of a house,”,

(iii) by substituting the following for subsection (2):

“(2) The categories of building or structure referred to in subsection (1)(b)(ii)(I) shall be—

(a) buildings or structures in use as offices,

(b) any other buildings or structures and in respect of which not more than 10 per cent of the capital expenditure incurred in the qualifying period on their construction or refurbishment relates to the construction or refurbishment of buildings or structures in use as offices,

(c) the facade of a building or structure or part of a building or structure referred to in paragraph (a), and

(d) the facade of a building or structure or part of a building or structure referred to in paragraph (b).”,

and

(iv) by inserting the following after subsection (2):

“(2A) The power to make an order under subsection (1) includes the power to amend or revoke the order.”,

(c) in section 372AD(2)(a), by substituting the following for subparagraph (ii):

“(ii) where any activity—

(I) carried on in the qualifying premises, or

(II) in a case where the facade of a building or structure or part of a building or structure is a qualifying premises, carried on in the building or structure or the part of the building or structure,

is not a trade, as if it were a trade.”,

and

(d) in section 372AJ—

(i) in subsection (1), by substituting the following for paragraph (c):

“(c) in respect of expenditure incurred on or after 1 January 2003 on the construction or refurbishment of any building or structure or qualifying premises provided for the purposes of a project which is subject to the notification requirements of—

(i) the ‘Multisectoral framework on regional aid for large investment projects’¹ prepared by the Commission of the European Communities and dated 7 April 1998, or

(ii) the ‘Multisectoral framework on regional aid for large investment projects’² prepared by the Commission of the European Communities and dated 19 March 2002,

as the case may be, unless approval of the potential capital allowances involved has been received from that Commission by the Minister for Finance, or by such other Minister of the Government, agency or body as may be nominated for that purpose by the Minister for Finance.”,

and

(ii) in subsection (2), by substituting “sections 372AC and 372AD” for “sections 372AC, 372AD, 372AF and 372AG”.

(2) (a) Subject to paragraphs (b) and (c), subsection (1) is deemed to have applied as on and from 6 April 2000.

(b) Paragraph (d)(i) of subsection (1) applies as on and from 1 January 2003.

(c) Paragraph (d)(ii) of subsection (1) is deemed to have applied as on and from 1 January 2002.

Amendment of Chapter 11 (reliefs for lessors and owner-occupiers in respect of expenditure incurred on the provision of certain residential accommodation) of Part 10 of Principal Act.

30.—(1) Chapter 11 of Part 10 of the Principal Act is amended—

(a) in section 372AK, in paragraph (b) of the definition of “refurbishment”, by inserting “carried out” after “renewal”,

(b) in section 372AM(4)(c)(ii)(II) by substituting “the conversion or the refurbishment of the house” for “the refurbishment of the house”, and

(c) in section 372AS by inserting the following after subsection (2):

“(2A) For the purposes of determining the amount of eligible expenditure or qualifying expenditure incurred on or in relation to a building, the site of which—

(a) is situated partly inside and partly outside the boundary of a qualifying urban area, or

(b) is situated partly inside and partly outside the boundary of a qualifying town area,

and where expenditure incurred or treated as having been incurred in the qualifying period is attributable to the building in general, such an amount of that expenditure shall be deemed to be attributable to the part which is situated outside the boundary of the qualifying area as bears to the whole of that expenditure the same proportion as the floor area of the part situated outside the boundary of the qualifying area bears to the total floor area of the building.”.

(2) Subsection (1) is deemed to have applied as on and from 1 January 2002.

Amendment of section 749 (dealers in securities) of Principal Act.

31.—(1) Section 749 of the Principal Act is amended by inserting the following after subsection (2):

“(2A) (a) Subsection (1) shall not apply for a chargeable period if the securities are overseas securities purchased by the first buyer in the ordinary course of the first buyer's trade as a dealer in securities and the following conditions are satisfied—

(i) that the interest payable in respect of all such overseas securities to which this Chapter applies is brought into account in computing, for the purposes of the Tax Acts, the profits or gains arising from, or losses sustained in, the trade for the chargeable period, and

(ii) where credit against tax would, but for this section, fall to be allowed for the chargeable period in respect of that interest by virtue of Part 14 or 35 or Schedule 24, that the first buyer elects by notice in writing, on or before the specified return date for the chargeable period, that such credit shall not be so allowed.

(b) In this subsection—

‘foreign local authority’ means an authority, corresponding in substance to a local authority for the purposes of the Local Government Act 2001 , which is established outside the State and whose functions are carried on primarily outside the State;

‘foreign local government’ means any local or regional government in any jurisdiction outside the State;

‘foreign public authority’ means an authority, corresponding in substance to a public authority for the purposes of the Local Government Act 2001 , which is established outside the State and whose functions are carried on primarily outside the State;

‘overseas securities’ means securities issued—

(i) by a government of a territory outside of the State,

(ii) by a foreign local authority, foreign local government or foreign public authority, or

(iii) by any other body of persons not resident in the State;

‘specified return date for the chargeable period’ has the same meaning as in section 950.

(2B) Where an election is made in accordance with subsection (2A)(a)(ii)—

(a) then, notwithstanding Parts 14 and 35 and Schedule 24, credit against tax in respect of the interest shall not be allowed by virtue of either of those Parts or, as the case may be, that Schedule,

(b) that election shall be included in the return, required to be made by the first buyer under section 951, for the chargeable period, and

(c) that election shall have effect only for the chargeable period for which it is made.

(2C) Subsection (1) shall not apply for a chargeable period if the securities are securities, which are not chargeable assets for the purposes of the Capital Gains Tax Acts by virtue of section 607, purchased by the first buyer in the ordinary course of the first buyer's trade as a dealer in securities and the interest payable in respect of all such securities to which this Chapter applies is brought into account in computing, for the purposes of the Tax Acts, the profits or gains arising from, or losses sustained in, the trade for the chargeable period.”.

(2) Subsection (1) applies as respects securities purchased on or after 1 January 2003.

Conditions relating to relief in respect of expenditure incurred on provision of certain student accommodation.

32.—(1) Section 372AM of the Principal Act is amended by inserting the following after subsection (9):

“(9A) A house, the site of which is wholly within a qualifying student accommodation area, is not a qualifying premises or a special qualifying premises for the purposes of section 372AP—

(a)  (i) if any person, other than the person (in this subsection referred to as the “investor”) who incurred or, by virtue of subsection (8), (9) or (10) of that section, is treated as having incurred eligible expenditure on or in relation to the house, receives or is entitled to receive the rent, or any part of the rent, from the letting of the house during the relevant period in relation to the house, or

(ii) where two or more investors have incurred or, by virtue of subsection (8), (9) or (10) of that section, are treated as having incurred eligible expenditure on or in relation to the house, unless that part of the gross rent received or receivable from the letting of the house during the relevant period in relation to the house which is received or receivable by each investor bears the same proportion to that gross rent as the amount of the eligible expenditure which is incurred, or is so treated as having been incurred, on or in relation to the house by that investor bears to the total amount of the eligible expenditure which is incurred, or is so treated as having been incurred, on or in relation to the house by all such investors;

(b) where borrowed money is employed by an investor in the construction of, conversion into, refurbishment of, or, as the case may be, purchase of, the house, unless—

(i) that borrowed money is borrowed directly by the investor from a financial institution (within the meaning of section 906A),

(ii) the investor is personally responsible for the repayment of, the payment of interest on, and the provision of any security required in relation to, that borrowed money, and

(iii) there is no arrangement or agreement, whether in writing or otherwise and whether or not the person providing that borrowed money is aware of such agreement or arrangement, whereby any other person agrees to be responsible for any of the investor's obligations referred to in subparagraph (ii);

(c) where management or letting fees payable to a person in relation to the letting of the house are claimed by the investor as a deduction under section 97(2) for any chargeable period (within the meaning of section 321) ending in the relevant period in relation to the house, unless—

(i) such fees are shown by the claimant to be bona fide fees which reflect the level and extent of the services rendered by the person, and

(ii) the aggregate amount of such fees for that chargeable period is not more than an amount which is equal to 15 per cent of the gross amount of the rent received or receivable by the investor from the letting of the house for that chargeable period.

(9B) Subject to subsection (9C), subsection (9A) applies—

(a) as respects eligible expenditure incurred on or in relation to a house on or after 18 July 2002, unless a binding contract for the construction of, conversion into or, as the case may be, refurbishment of the house was evidenced in writing before that date, and

(b) where subsection (9) or (10) of section 372AP applies, as respects expenditure incurred on the purchase of a house on or after 18 July 2002, unless a binding contract for the purchase of the house was evidenced in writing before that date.

(9C) Paragraphs (a) and (c) of subsection (9A) shall not apply as respects eligible expenditure incurred on or in relation to a house or, where subsection (9) or (10) of section 372AP applies, as respects expenditure incurred on the purchase of a house where, before 6 February 2003, the Revenue Commissioners have given an opinion in writing to the effect that the lease of the house between an investor and an educational institution referred to in the relevant guidelines, or a subsidiary (within the meaning of section 155 of the Companies Act 1963 ) of such an institution, would be a qualifying lease.”.

(2) This section is deemed to have come into operation as on and from 18 July 2002.

Relevant contracts tax.

33.—(1) Section 531 of the Principal Act is amended—

(a) by inserting the following after subsection (3A):

“(3B) (a) Subject to paragraph (b), where a principal or any person who was previously a principal makes a remittance of tax in respect of a year of assessment or a period comprised in a year of assessment and details of the remittance are not included in a return required to be made under subsection (3A), the amount comprised in the remittance shall be deemed to be a remittance in respect of the first income tax month of the year of assessment.

(b) Where, within 1 month of interest being demanded of a person by the Collector-General under subsection (9) by virtue of the application of paragraph (a), the person makes a return to the Collector-General under subsection (3A) for the income tax month or months to which the remittance of tax relates and of the amount comprised in the remittance for each of those income tax months, paragraph (a) shall be deemed not to have applied and the remittance shall be treated for the purposes of this section as a remittance or, as the case may be, remittances of tax for the respective income tax month or months.”,

(b) by substituting the following for paragraph (ii) of subsection (10):

“(ii) where the notice relates to a year of assessment, for the first income tax month in the year of assessment to which the notice relates, but where the inspector determines, or, on appeal against the notice, the Appeal Commissioners determine, the amount of tax which the person was liable to remit, but had not remitted, for each income tax month comprised in the year of assessment, interest shall be calculated and payable in respect of each amount so determined in accordance with subsection (9) as if that amount were included in a notice in respect of the income tax month in question.”,

and

(c) in subsection (12)—

(i) by substituting the following for paragraph (c):

“(c) Notwithstanding paragraphs (a) and (b), a principal may apply for a relevant payments card in respect of a subcontractor for a year of assessment where—

(i) the principal has been issued with a relevant payments card in respect of the subcontractor for the immediately preceding year of assessment,

(ii) the relevant contract between the principal and the subcontractor in relation to which the relevant payments card is required is likely to be ongoing at the end of that preceding year, and

(iii) the principal has obtained from the subcontractor details of the subcontractor's certificate of authorisation for the year of assessment to which the application for the relevant payments card relates.”,

and

(ii) in paragraph (d), by substituting “the making of an application under paragraph (a), (b) or (c)” for “such application”.

(2) (a) Paragraphs (a) and (b) of subsection (1) apply as respects the year of assessment 2003 and subsequent years of assessment.

(b) Paragraph (c) of subsection (1) applies as respects applications made under section 531(12)(c) of the Principal Act on or after the date of the passing of this Act.

Filing date for certain returns and elections.

34.—(1) The Principal Act is amended—

(a) in section 128A, by substituting the following for subsection (3):

“(3) An election under this section shall be made by notice in writing to the inspector on or before—

(a) where the relevant year is the year of assessment 2000-2001, 31 January 2002, and

(b) where the relevant year is the year of assessment 2001 or any subsequent year of assessment, 31 October in the year of assessment following the relevant year.”,

(b) in section 894(1), by substituting the following for paragraph (a) of the definition of “specified return date for the chargeable period”:

“(a) (i) where the chargeable period is the year of assessment 2000-2001, 31 January 2002, and

(ii) where the chargeable period is the year of assessment 2001 or any subsequent year of assessment, 31 October in the year of assessment following that year,

and”,

(c) in section 895(1), by substituting the following for paragraph (a) of the definition of “specified return date for the chargeable period”:

“(a) (i) where the chargeable period is the year of assessment 2000-2001, 31 January 2002, and

(ii) where the chargeable period is the year of assessment 2001 or any subsequent year of assessment, 31 October in the year of assessment following that year,

and”,

and

(d) in section 950(1), by substituting the following for paragraph (a) of the definition of “specified return date for the chargeable period”:

“(a) (i) where the chargeable period is a year of assessment for income tax or capital gains tax purposes, being the year of assessment 2000-2001, 31 January 2002, and

(ii) where the chargeable period is a year of assessment for income tax or capital gains tax purposes, being the year of assessment 2001 or any subsequent year of assessment, 31 October in the year of assessment following that year,”.

(2) This section is deemed to have come into operation as on and from 6 April 2001.

Amendment of certain provisions relating to exempt income.

35.—(1) The Principal Act is amended—

(a) in section 231—

(i) by renumbering the existing provision as subsection (1) of that section,

(ii) by substituting in that provision “shall be exempt from income tax and corporation tax” for “shall not be taken into account for any purpose of the Tax Acts”, and

(iii) by inserting the following after that provision:

“(2) As respects the making of a return of income (being a return which a chargeable person, within the meaning of section 950, is required to deliver under section 951), the Tax Acts shall apply—

(a) as if subsection (1) had not been enacted,

(b) notwithstanding anything to the contrary in Part 41, as if a person to whom profits or gains referred to in subsection (1) arise for any chargeable period (within the meaning of section 321(2)) were, if such person would not otherwise be, a chargeable person (within the meaning of section 950) for that chargeable period,

(c) where a person to whom profits or gains referred to in subsection (1) arise for any chargeable period (within the meaning of section 321(2)) is a person to whom a notice under section 951(6) has been issued, as if such a notice had not been issued, and

(d) in so far as those Acts relate to the keeping of records (within the meaning of section 886) and the making available of such records for inspection, as if such profits or gains were chargeable to income tax or corporation tax, as the case may be.

(3) For the purposes of subsection (2)—

(a) profits or gains referred to in subsection (1) or a loss referred to in paragraph (b) shall be computed in accordance with the Tax Acts as if subsection (1) had not been enacted, and

(b) where a loss is incurred for any chargeable period (within the meaning of section 321(2)), the amount of that loss shall be included in the return of income referred to in subsection (2) for that chargeable period.”,

(b) in section 232—

(i) in subsection (2), by substituting “shall be exempt from income tax and corporation tax” for “shall not be taken into account for any purpose of the Tax Acts”, and

(ii) by inserting the following after subsection (2):