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Dáil Éireann debate -
Wednesday, 16 May 1979

Vol. 314 No. 5

Finance Bill, 1979: Financial Resolutions.

I move:

That no relief or deduction under any provision of the Income Tax Acts be given or allowed in respect of any contribution paid under the Social Welfare Acts, 1952 to 1979, by a person as an employed contributor or as a voluntary contributor.

This resolution relates to the withdrawal of tax relief in respect of social insurance contributions.

Is this in section 9 of the Finance Bill?

It refers to section 5 of the Finance Bill.

What is the connection between that section and section 9 later on?

It is making provision for the expenditure of the money involved. It is a Financial Resolution.

We will have a chance to discuss it under section 5 if it comes up, is that right?

Question put and agreed to.

I move:

(1) That, with effect from the year of assessment 1980-81, provision be made in the Act giving effect to this Resolution so as to ensure that benefits to which this Resolution applies—

(a) shall be deemed to be—

(i) profits or gains arising or accruing from an employment, and

(ii) emoluments within the meaning of Chapter IV of Part V of the Income Tax Act, 1967.

and

(b) shall be chargeable to tax under Schedule E of the said Income Tax Act, 1967, the tax to be computed under section 110 (1) of that Act.

(2) That this Resolution applies to the following benefits:

(a) any benefit payable under a permanent health scheme approved by the Revenue Commissioners for the purpose of the relevant provision in the Act giving effect to this Resolution, and

(b) any benefit payable under

(i) the Social Welfare Acts, 1952 to 1979, or

(ii) the Insurance (Intermittent Unemployment) Acts, 1942 to 1978,

being a benefit specified in the Act giving effect to this Resolution.

I presume agreement to these motions does not prevent us putting in amendments later on?

That is true.

Question put and agreed to.

I move:

That, to the extent specified in the Act giving effect to this Resolution, relief under section 496 of the Income Tax Act, 1967, or under any other provision of the Income Tax Acts, in respect of interest on loans or advances of money shall, in a case where the interest on the loan or advance is at a rate of less than 12 per cent per annum, be restricted in the manner specified in the Act giving effect to this Resolution.

Question put and agreed to.

I move:

That provision be made in the Act giving effect to this Resolution—

(a) for the amendment of section 15 of the Finance Act, 1974, by the substitution of "£50" for "£60",

(b) for the amendment of section 19 of the said Finance Act, 1974—

(i) by the substitution in the definition of V in subsection (1) of "£49" for "£59", and

(ii) by the substitution in subsection (2) of "£59" for "£69", and

(c) for the amendment of section 21 of the said Finance Act, 1974, by the substitution, in the formula in subsection (1), of "125" for "90".

Question put and agreed to.

I move:

(1) That where, for a year of assessment (in this Resolution referred to as "the first year of assessment") an individual who is carrying on the trade of farming—

(a) is chargeable to tax for that year, on his profits or gains from farming, by reference to the provisions of section 21 of the Finance Act, 1974, by virtue of an election by him under subsection (1) of section 20 of that Act, made in respect of—

(i) the year of assessment immediately preceding the first year of assessment, or

(ii) the year of assessment immediately preceding the year firstly referred to in clause (i) of this subparagraph, and

(b) elects, in the manner specified in the Act giving effect to this Resolution, to be charged to tax for the first year of assessment in accordance with the provisions of section 58 of the Income Tax Act, 1967,

the individual shall be charged to tax in accordance with the provisions of the said section 58 for the first year of assessment and for each of the following two years of assessment.

(2) That, in any case where an individual is charged to tax as provided for in paragraph (1), such assessments shall be made on the individual for the year of assessment immediately preceding the first year of assessment or, in a case in which subparagraph (a) (ii) of paragraph (1) of this Resolution applies, for the two years of assessment immediately preceding the first year of assessment, as will ensure that the tax ultimately borne by the individual for that year or those years of assessment shall not be less than the amount of tax which would have been borne by him if, for that year or those years, he had been charged to tax in accordance with the provisions of section 58 of the Income Tax Act, 1967.

Question put and agreed to.

I move:

That section 307 of the Income Tax Act, 1967, be amended—

(a) by the deletion from subsection (1) of "or in the occupation of woodlands managed on a commercial basis and with a view to the realisation of profits,", and

(b) by the insertion after subsection (1A) of the following subsections:

(1AA) Where in any year of assessment any person carries on any trade other than farming, or any profession or employment, either solely or in partnership, or farming in a case in which this section applies, in the carrying on of which he has sustained a loss in the year preceding the year of assessment, he may make a claim under subsection (1) for the year of assessment in respect of the said loss in so far as relief has not already been given for that loss under the said subsection (1) or under any other provision of this Act; and any repayment of tax by virtue of this subsection shall be made in priority to any repayment of tax under the said subsection (1) in respect of a loss sustained in the year for which the repayment is claimed.

(1AAA) The provisions of this section shall not apply to any loss sustained in the year of assessment 1979-80 or any subsequent year of assessment by the owner of a stallion from the sale of services of mares by the stallion or of rights to such services or by the part-owner of a stallion from the sale of such services or such rights.".

What is the background to this?

Which number are we on?

No. 9 on the Order Paper, section 307 of the Income Tax Act, 1967, the amendment.

It is in relation to section 16 of the Bill. This resolution modifies the existing provisions relating to relief for losses incurred in a trade or profession. The restrictive aspect of section 16 is to deny relief in respect of losses incurred (a) in the occupation of woodlands and (b) in relation to stud fees. Profits arising from these activities are exempt from tax and, therefore, it is anomalous to allow losses incurred in the activities to be set against other income.

Question put and agreed to.

I move:

That section 308 of the Income Tax Act, 1967, be amended by the insertion of the following proviso:

"Provided that no deduction or set off shall be allowed in respect of a loss sustained in the year 1979-80 or in any subsequent year of assessment.".

This relates to relief for losses in respect of a person carrying on two or more trades.

Section 308 of the Income Tax Act, 1967 to which this financial resolution refers states:

A person who carries on, either solely or in partnership, two or more distinct trades the profits of which are chargeable under Schedule D may deduct from or set off against the profits as computed under this Act in respect of one or more such trades, the loss so computed sustained in any other such trade, and may make separate statements as to each such trade.

This financial resolution seems to amend section 308 because it states:

Provided that no deduction or set off shall be allowed in respect of a loss sustained in the year 1979-80 or in any subsequent year of assessment.

That has the effect of negativing section 308 of the Income Tax Act, 1967.

When we come to the section the Deputy may discuss the matter fully.

I am not sure if there is any such section in the Finance Bill.

The Deputy is correct in saying that this would bring an end to the relief under section 308 but the relief would be available then under section 307. Section 308 permitted a person carrying on two or more trades to set off a loss incurred in one trade against the profits of another trade. The application of the commencing provisions enabled a loss to be set off for more than one year of assessment so that excessive relief was obtained, that is, relief greater than the amount of the loss. This will no longer be the position. Full relief, and in some circumstances at an earlier stage, will be available under section 307 of the Income Tax Act, 1967 which is amended by section 16 of this Bill.

The Minister is not allowing a loss in one trade as against a loss in another. The section the Minister referred to only allows a continuous loss in the same trade. I think I am correct in that.

No, that is not correct. The Deputy may be under the impression that some people were under that we are putting an end to the relief of loss in one trade as against another trade. We are not putting an end to that.

I was certainly under that impression. Perhaps the Minister will enlighten me on the matter when we come to the section.

Question put and agreed to.

I move:

That section 25 of the Finance Act, 1978, be amended by the substitution in subsection (1) of "the person" for "a person" and of "the allowance" for "an allowance".

Question put and agreed to.

I move:

(1) That in this Resolution "any relevant year of assessment" means any of the years 1974-75, 1975-76 and 1976-77.

(2) That section 144 of the Income Tax Act, 1967, be repealed.

(3) That in order to remove doubts, it be declared and enacted that, as respects any relevant year of assessment, section 144 of the Income Tax Act, 1967, shall not apply to, and shall be deemed never to have applied to, an individual whose total income for that year of assessment exceeded £15,000.

Question put and agreed to.

I move:

That section 439 of the Income Tax Act, 1967, be amended in the manner and to the extent specified in the Act giving effect to this Resolution so as to ensure that where, for any year of assessment, income under a disposition by a person is payable to or for the benefit of one or more descendants of the disponer, that income in so far as it exceeds 5 per cent of the total income of the disponer for that year of assessment shall, subject to such exception as is provided for in the Act giving effect to this Resolution, be deemed to be the income of the disponer.

Will the Minister say why this was necessary?

This resolution is connected with section 28 of the Bill which is designed to counteract a tax avoidance practice whereby taxpayers in the higher income brackets have been executing deeds of covenant in favour of their sons and daughters over the age of 21 years.

That is not necessarily a bad thing in all circumstances.

We can discuss it on the section.

Will the Chair tell me if we have dealt with resolutions in this way in every Finance Bill?

There may not have been as many resolutions and usually there is no discussion on them. It is just bringing attention to the fact that a tax is involved. Discussion is in order on the section and the Deputy is in order in asking questions.

Question put and agreed to.

I move:

That Schedule 12 of the Income Tax Act, 1967 (No. 6 of 1967), be amended in the manner and to the extent specified in the Act giving effect to this Resolution so as to ensure that, in the determination for the purposes of that schedule of a company's profits in a given period, any group relief given to the company for any accounting period in the period under Part XI of the Corporation Tax Act, 1976 (No. 7 of 1976), shall be deducted.

Question put and agreed to.

I move:

That section 15 of the Finance Act, 1934, be repealed.

This is the one dealing with the importation of antiques?

This was an extraordinary thing to do and I shall want an explanation when we come to it. The provision that we had before was quite good. It also defined an antique which was a rather difficult thing to do.

Question put and agreed to.

I move:

That interest at the rate of 1.25 per cent, without deduction of income tax, be payable in accordance with the provisions of the Act giving effect to this Resolution on stamp duty charged on statements required to be delivered under section 69 (1) (b) of the Finance Act, 1973, and remaining unpaid, for each month or part of a month for which it remains unpaid.

Question put and agreed to.

I move:

That provision be made in the Act giving effect to this Resolution for the payment by the Stock Exchange—Irish, where default is made—

(a) in the delivery of any account required by any agreement entered into by the Revenue Commissioners with the Stock Exchange—Irish for the composition of certain stamp duty, or

(b) in paying any stamp duty payable on the delivery of any such account,

of interest at the rate of 15 per cent per annum from the date when the default begins until the date of payment.

Question put and agreed to.

I move:

That provision be made in the Act giving effect to this Resolution so as to ensure that, to the extent specified in that Act—

(a) subsection (4) of section 31 of the Capital Gains Tax Act, 1975 (No. 20 of 1975), shall not have effect as respects gains accruing to a unit trust to which subsection (5A) of that section applies, and

(b) the exemption provided for in subsection (5) of that section in respect of the units of a unit trust shall not apply as respects any year of assessment throughout which all the assets of the unit trust are not assets of the kind referred to in that subsection.

Question put and agreed to.
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