I move:—
(1) That where the owner of any securities sells or transfers the right to receive any particular interest payable (whether before or after such sale or transfer) in respect of the said securities without selling or transferring the said securities, then and in every such case, subject to such qualifications, exemptions, reliefs, and other provisions as may be prescribed by statute, the said interest shall, for all the purposes of the Income-Tax Acts, be deemed to be the income of the said owner or, where he is not the beneficial owner of the said securities, of the person beneficially entitled to the said securities, and in either case shall, where appropriate, be chargeable to tax under Case VI of Schedule D of the Income-Tax Act, 1918.
(2) That this Resolution shall have effect in relation to every year of assessment which began before the 6th day of April, 1938, as well as every year of assessment beginning on or after that date.
In the Budget speech I intimated that it would be necessary for me to move this Resolution, which arises out of a decision recently given in the courts of England. A case has not yet arisen here, but, lest it should, it is necessary for us to declare that the law is what it has always been assumed to be. In the English case to which I have referred, the holder of certain foreign bonds sold the interest coupons whilst retaining the bonds themselves, and it was held that the proceeds of the sale were not the income of the holder of the bonds. If a loophole similar to that which is created in the English law by the English decision were to be allowed to be made in our law, Irish holders of foreign bonds would have a ready means of evading income-tax by selling the coupons to a foreign purchaser instead of cashing the coupons through an Irish Bank, and the holder of such securities would escape both income-tax and surtax on the proceeds of such sale. The device could be used in the case of interest payable on English or Irish securities from which tax is not deductible at the source, as in the case of our own National Loans. This legislation which we propose provides that the proceeds of the sale of the right to receive interest by the holder of the securities shall be assessed under Clause VI of Schedule D as the income of the holder or the beneficial owner.
