Very little, I confess. The section secures that such statements, etc. shall not, by reason only of their having been possibly so induced, be inadmissible as evidence in penalty proceedings. The section will obviate the danger of proceedings failing on such a ground where a person has promised a voluntary disclosure but in fact makes an incomplete disclosure and deliberately witholds essential information.
Section 5 provides that any notice to be given under the Income Tax Acts by the Revenue Commissioners or by an inspector of taxes may be served by post and also that any notice to be given by the Revenue Commissioners may be given by an officer authorised by them. Notices previously issued are validated.
Section 6 which is relevant to Part IV of the Bill, extends the scope of the information which employers are obliged to given to the revenue regarding cash payments to or on behalf of their employees.
Section 7 brings up to date, by reference to the Army Pensions Act, 1957, the existing exemption in respect of wounds and disability pensions and gratuities payable under the Army Pensions Acts. The section is so worded as to continue the exemption, without the necessity for further Finance Bill legislation, in the event of future amendments of the Army Pensions code.
Sections 8 to 12 recast and assemble together the chief provisions concerning assessment and collection of tax in the case of husband and wife.
Section 8 re-enacts existing law by providing that income of a wife, who is living with her husband, shall be deemed to be his income and that tax in respect thereof shall be assessable on him (subject to the right of either spouse to claim separate assessment).
Section 9 prescribes the method for division of personal reliefs between husband and wife where separate assessment is claimed. It is mainly a repetition of Section 25 of the Finance Act, 1920.
Section 10, which is a new provision, enables the Revenue for 1958-59 or any subsequent year to recover, from a wife, income-tax or surtax assessed on her husband and not paid by him, in so far as it is attributable to her income.
Section 11, likewise a new provision, empowers a husband to serve, on his deceased wife's personal representatives and on the inspector of taxes, a notice disclaiming responsibility for unpaid tax in respect of his deceased wife's income, whereupon the Revenue will exercise their powers of recovery under the previous section as against the wife's estate. This section and the preceding one were covered by Financial Resolution No. 5, passed on Budget Day.
Section 12 defines the circumstances in which a married woman is not to be treated for tax purposes as living with her husband.
Part II of the Bill — Customs and Excise: Section 13 terminates the customs duty on cinematograph films.
Section 14 is a technical amendment of the law necessitated by the Transport Bill, 1958, at present before the Dáil, so as to preserve existing duty relief of 6d. per gallon on diesel oil used on road passenger services.
Section 15 removes as now being inappropriate the limitation as to seating capacity placed on certain fully assembled private motor cars of British or Canadian manufacture which are, under Section 12 of the Finance (Agreement with the U.K.) Act, 1938, admitted on importation at a special rate of customs duty.
Section 16 increases the entertainments duty rebate granted to certain cine-variety shows in patent theatres from 30 per cent. to 50 per cent.
Section 17 terminates the additional excise duty on licences to sell cigarettes and tobacco.
Section 18 exempts persons who sell hydrocarbon oils or lubricating grease from the requirement of a hawker's licence.
Section 19 confirms in force four Imposition of Duties Orders, two relating to the special import levies and miscellaneous customs duties, one relating to the termination of the customs duty on roofing slates, and another restricting to shows of a certain length the rebate of entertainments duty payable on film shows having a specified content of sound films in languages other than English.
Part III of the Bill—Death Duties: Section 20, corresponding to Financial Resolution No. 8 passed on Budget Day, provides that any death duty payable in a foreign country on a death, whether occurring before or after the passing of the Finance Act, in respect of property situate there shall not, if double taxation relief arrangements subsist between Ireland and that country, be deductible from the value of the property for purposes of assessment to estate duty.
Part IV—Expenses Allowances and Benefits in Kind: Income-tax and Surtax: Section 21 makes chargeable to income-tax, including surtax, expenses payments, not already so chargeable, made to directors of trading companies and to certain higher-paid employees as defined in Section 24 of the Bill.
Section 22 provides, subject to certain exceptions, for the taxation of benefits in kind made available to directors and higher-paid employees. This and the preceding section, which operate subject to the normal claim for properly allowable expenses, correspond with Financial Resolution No. 2, which was passed on Budget Day
Section 23 lays down the methods to be used for valuing certain benefits in kind, including living accommodation placed at the disposal of a director or employee and other assets which may be provided for his use.
Section 24 is concerned with definitions. It defines among other things the employments, as distinct from directorships, to which this Part of the Bill applies. These are employments the emoluments of which, including benefits in kind but without any deduction for allowable expenses, are £1,500 or more in the material year.
Section 25 provides, in the main, for apportionment of expenses where payments by the employer are partly in respect of expenses taxable in the hands of a director or employee and partly in respect of other matters.
Section 26 is to the effect that this Part of the Bill shall apply in relation to a body corporate only if it is carrying on a trade, or is wholly or mainly an investment or property-holding concern.
Section 27 relates to interpretation.
Section 28 applies the provisions of this Part of the Bill, subject to necessary modifications, to persons employed by unincorporated societies and other bodies and to employees of partnerships or individuals engaged in a trade, profession or vocation.
Part V of the Bill—retirement and other benefits for directors and employees: income-tax and surtax—which will not take effect until the 6th April, 1959, is designed primarily to prevent avoidance of tax by means of certain arrangements made by companies and other bodies for the provision, for their directors and employees, of retirement benefits which are not bona fide superannuation. The benefits may be given by way of non-taxable lump sums or of pensions convertible into lump sums; or may be excessive by reference to generally accepted standards. Financial Resolution No. 3 passed on Budget Day, foreshadowed this legislation.
Section 29 defines various terms used in the subsequent sections.
Section 30 lays it down that, in general, an amount equal to the cost to a company of providing retirement benefits is to be treated as income of the director or employee concerned. Where the cost borne by the company is represented by a premium paid under a life assurance policy, the director or employee is to get the relief to which he would have been entitled if he had himself paid the premium.
Section 31 excludes from the scope of Section 30:—
(a) superannuation funds for employees approved by the Revenue Commissioners under Section 32 of the Finance Act, 1921;
(b) existing schemes operated through assurance companies, provided that certain classes of directors and employees are excluded from them and that they are closed to all new members as from the 6th April, 1959;
(c) statutory schemes;
(d) schemes (whether existing or future) relating to ordinary arm's-length employees which do not provide benefits in excess of £3,000 for any individual, and
(e) schemes approved by the Revenue Commissioners under Section 32 of the present Bill.
Provision is also made for repayment of tax paid under Section 30, if the individual concerned proves that he has not and will not receive the benefits.
Section 32 sets out the conditions with which a retirement benefits scheme must comply in order to be entitled to approval for purposes of this part of the Bill.
These conditions are intended to secure that the scheme is a bona fide one and that the benefits it provides are reasonable. As regards the quantum and nature of the benefits, the standard adopted is generally that set by statutory superannuation schemes, but it is more liberal in certain respects.
The Revenue Commissioners are empowered to approve a scheme which does not wholly satisfy the prescribed conditions.
One of the conditions of approval is that directors or employees of a company holding more than 10 per cent. of the company's ordinary shares may not be members of the scheme. Such persons, considered in the case of any particular company as a group, are, for practical purposes, proprietors rather than employees of the business in which they work and will, as regards retirement benefits, be put by the Bill in the same position as self-employed persons.
It is provided that, if an existing scheme is altered before the 6th April, 1960, so as to qualify for approval, such approval may be back-dated to the 6th April, 1959.
Section 33 provides that, for the purpose of this part of the Bill, a "scheme" includes an agreement with a single director or employee. All schemes relating to an individual (or a class of individuals) are to be taken together in considering whether the conditions of approval are satisfied; but a part of a scheme may be approved although the scheme as a whole does not comply with the prescribed conditions.
Section 34 is concerned with an approved scheme which may afford a lump sum benefit on retirement in excess of the ordinary limit (i.e., one-fourth of the total benefit), for (say) a person whose expectation of the life at the date of retirement is abnormally short. It enacts that so much of the lump sum as exceeds the prescribed limit will be taxed, at a rate depending on the circumstances of the particular individual.
Section 35 relates to an approved scheme under which a large lump sum may be paid on the death in service of a director or employee (e.g., where there is no widow or other dependent to whom a pension might be paid). In such a case, so much of the lump sum as may be in excess of the prescribed limit will bear income-tax at the standard rate; but it will not be treated as income of a beneficiary of the deceased's estate for the purposes of repayment or of liability to surtax.
Section 36 enables contributions paid by directors or employees under approved schemes to be treated for tax purposes as expenses incurred in the year of payment and relieved accordingly. The maximum amount of contribution which may be relieved in any year is limited to 15 per cent. of the individual's remuneration for that year.
Where contributions are repaid, they will bear an amount of tax approximately equal to the amount of relief given in respect of them, when paid.
Section 37 imposes an obligation on companies and other bodies to furnish particulars of their retirement benefits schemes. It also enables periodical returns to be obtained from persons having the management of approved schemes.
Part VI of the Bill—Retirement Annuities: Income-Tax and Surtax— introduces a new form of tax relief for self-employed persons and non-pensionable employees. It provides for relief from income-tax and surtax in respect of certain payments made by such persons to secure annuities for themselves in their old age. It also provides that income arising from the investment of such payments will be exempted from tax; and that the annuities purchased by them will be treated as earned income for tax purposes.
Section 38 defines the persons entitled to the new relief as those engaged in a trade or profession, either on their own account or in partnership, or in non-pensionable employment. It also links the relief to the payment of a "qualifying premium", i.e., a payment made by way of premium under an approved annuity contract, or by way of contribution under an approved trust scheme established by a trade or professional organisation. Approval of a contract or scheme will be conditional on certain conditions being satisfied.
Where the contributions under an approved scheme are accumulated in a fund, the income arising will be exempted from tax.
The annuities purchased will qualify for earned income relief in so far as they are attributable to premiums or contributions in respect of which relief is given to the payers.
Section 39 provides that the payment of a "qualifying premium" will be treated as reducing the payer's "relevant earnings", a term which means his earned income exclusive of any pension or remuneration from a pensionable employment. The amount which may be so treated, however, may not exceed £500 or one-tenth of the person's "net relevant earnings" for the year concerned (i.e., his "relevant earnings", reduced by certain deductions allowable in computing total income tax purposes). Both these limits are varied in certain circumstances by the First Schedule.
Section 40 exempts from tax the investment income of the part of the annuity fund of an assurance company which relates to contracts made by the self-employed, etc., and approved under Section 38 of the Bill; contracts made by the trustees of trust schemes so approved; and contracts made by the trustees of superannuation funds for employees approved under Section 32 of the Finance Act, 1921. Provision is made, however (following Financial Resolution No. 4 passed on Budget Day), for taxation of the profit derived by the company from such business; and accordingly the exemption extends only to so much of the income as is applied for the benefit of annuities under the contracts and schemes mentioned.
Section 41 contains a number of machinery provisions. It prescribes the manner in which relief in respect of a qualifying premium is to be claimed and gives the taxpayer a right of appeal if his claim is not admitted. It also enables the Revenue Commissioners to make regulations as regards certain matters of procedure; and provides a penalty for false claims to relief.
Part VII of the Bill—Relief from Double Taxation: Income-tax, surtax, Corporation Profits Tax and Death Duties—enables the Government, subject to the prior approval of Dáil Éireann, to give effect by Order to arrangements, whether inter-governmental or inter-State, with foreign countries for the relief of double taxation. Hitherto the only available method of investing such an arrangement with the force of law has been to schedule both it and the requisite technical rules to the next Finance Bill after the conclusion of the arrangement.
Section 42, which concerns arrangements for the relief of double taxation in relation to income-tax, surtax or corporation profits tax, provides for the giving of the force of law to any such arrangement concluded with a foreign country and incorporated in an Order made by the Government. The section furthermore applies, to such arrangements, the technical rules, set out in the Second Schedule, governing the method of allowing "credit" relief. These rules have already been enacted for the Conventions with the United States and with Canada but now they are being set forth in one place to apply to all such arrangements.
Section 43 makes provision for the necessary apportionments for corporation profits tax.
Section 44, which concerns arrangements for the relief of double taxation in relation to estate duty in similar terms to Section 42.
Section 45 empowers the Revenue Commissioners to make regulations.
Section 46 provides for the necessary relaxation of secrecy obligations.
Section 47 provides that any Order made under this part of the Bill may be revoked; and also that, before an Order is made, a draft of it must be laid before and approved by Dáil Éireann.
Section 48 is inserted to make it clear that arrangements as to relief of double taxation of profits from the business of shipping or air transport, to which effect may be given by Governmental Order under Section 15 of the Finance Act, 1951, may include inter-State arrangements as well as inter-Governmental arrangements.
Part VIII of the Bill—Recovery of Taxes and Amendment of Finance (Miscellaneous Provisions) Act, 1956: Income-tax, Surtax and Corporation Profits Tax: Section 49 is intended broadly to bring the position in the High Court, as to recovery of tax, into line with that existing in the Circuit and District Courts under Section 11 of the Finance Act, 1924, and Section 39 of the Finance Act, 1926. It authorises, without prejudice to existing methods of recovery, High Court proceedings to be taken in the name of an officer of the Revenue Commissioners; and prescribes a simplified mode of prima facie proof.
Section 50 extends the recovery procedure, embodied in Section 7 of the Finance Act, 1923, to arrears of surtax and corporation profits tax. Section 7 of the Finance Act, 1923, provides for recovery, by a county registrar or sheriff, of arrears of income-tax on the authority of a certificate issued by the collector by whom the tax in default is collectable.
Section 51 amends the Finance (Miscellaneous Provisions) Act, 1956, mainly that part of it dealing with "exports" exemptions.
(i) As things stand, "exports relief" is available only where goods are manufactured in the State and exported by the manufacturer, but the scope of the measure is now, with full retrospective effect, being widened to include the case of fish produced on a fish farm and cultivated mushrooms.
(ii) In relation to new or increased exports, the present section lengthens the exemption period from five to ten years. Income-tax relief, however, is not to be given for any year subsequent to 1969-70.
(iii) Where a company gets relief under the exempting legislation, it is required to pass on that relief when making a dividend distribution. It is proposed now to ensure that, if the recipient of such a dividend is itself a company, it will likewise be required to pass on the relief to its shareholders.
(iv) This section also provides that, where an "industrial building allowance" prevents the granting, within the six years limit, of relief in respect of a trading loss carried forward, the displaced loss is to be carried forward for relief purposes without restriction as to time.
Part IX of the Bill—Stamp Duties: Section 52 authorises the Revenue Commissioners to enter into agreements with bankers for the payment in bulk of the Stamp Duty of 2d. chargeable on cheques. Under existing law, each cheque must be separately stamped with either an adhesive stamp or an impressed stamp.
Section 53 exempts, from Stamp Duty, receipts issued by the Land Commission for certain payments made to them in their capacity as successors to the Commissioners of Church Temporalities in Ireland.
Section 54 exempts from Stamp Duty any instrument which otherwise would have to be stamped solely out of moneys provided by the Oireachtas.
Section 55 repeals the Stamp Duty at present chargeable on bonds required for Customs and Excise purposes. These bonds relate mainly to the temporary importation of motor vehicles, the importation of goods for further manufacture, the payment of Entertainments Duty on the basis of certified returns, etc.
Part X of the Bill—Miscellaneous and General: Section 56 is the usual section to provide for the charging of annuities in respect of voted capital services.
Section 57 removes the requirement contained in Section 4 of the Central Fund Act, 1956, that Exchequer receipts in respect of Special Import Levy be paid into the Capital Fund.
Section 58 consolidates and extends the powers relating to the holding and investment of moneys of the Post Office Savings Bank. The new powers of investment relate to the holding of these moneys in United States and Canadian currency and securities, stock of the Bank of Ireland, mortgages of certain local authorities, securities and mortgages of harbour authorities and interest-bearing deposit accounts with banks in the State, Britain, U.S.A. and Canada.
Section 59 provides that the powers of investment of the Savings Certificates Reserve Fund shall be the same as those for the time being applicable to the Post Office Savings Bank.
Section 60 enables the Minister for Finance to determine the manner in which the remuneration payable for the management of Prize Bonds will be computed.
Section 61 and the Third Schedule deal with repeals.
Section 62 is the customary clause placing the various taxes and duties under the Revenue Commissioners' care and management.
Section 63 is concerned with the short Title of the Bill; and with its construction and commencement.
First Schedule of the Bill—Retirement annuities (Adjustments of Limit on Qualifying Premiums): The First Schedule modifies the limits of relief in respect of "qualifying premiums", specified in Section 39 of the Bill, in certain cases.
Part I of the Schedule provides for a reduction in the £500 limit in the case of a person whose earnings include remuneration from a pensionable employment. Part II increases both the £500 limit and the percentage limit, on a sliding scale according to age, in the case of persons who had attained the age of 40 years before the 1st January last.
Second Schedule of the Bill—Provisions as to Relief from Income-Tax (including Surtax) and Corporation Profits Tax by way of Credit in respect of Foreign Tax: The Second Schedule contains the technical rules which prescribe the method of giving "credit" relief from double taxation authorised by any arrangement having the force of law.
Third Schedule—Enactments Repealed: The Third Schedule, which is connected with Section 61 of the Bill, is concerned with repeals.
I am very conscious of the fact that the Bill is, of necessity, long and abounding in technical complexity. I hope to be able to deal with any point of particular detail on the Committee Stage. It would be helpful if Deputies could notify me before that stage of any aspect of the Bill or any clause on which they may require elucidation.