I move amendment No. 6:
In page 10, before section 6, to insert the following section:—
6.—(1) In this section—
`relevant payment' means any sum paid on or after the 6th day of April, 1981, by the Minister for the Environment to an individual under a scheme providing for the payment of a special mortgage subsidy to first-time owner-occupiers of certain houses;
`specified loan or loans' means a loan or loans in relation to which a relevant payment is made;
`relevant tax repayment', in relation to an individual, means, subject to subsection (3), the amount of tax which, apart from this section, would fall to be repaid to the individual under the provisions (hereafter in this section referred to as `the relevant provisions') of section 496 of the Income Tax Act, 1967, for a year of assessment on the amount of interest paid on a specified loan or loans by the individual in the year of assessment.
(2) Where, for any year of assessment, in the case of an individual, a relevant tax repayment would fall to be made, that relevant tax repayment shall be reduced by the amount determined by the formula set out in the Table to this subsection, and notwithstanding any other provisions of the Income Tax Acts, the amount of tax as so reduced, and no other amount of tax, shall be repaid under the relevant provisions to the individual on the amount of interest paid by him in the year of assessment on a specified loan or loans.
R is the relevant tax repayment,
S is the aggregate amount of any relevant payments made to the individual in the year of assessment or the amount of any relevant payment made to the individual where only one such payment was made in the year of assessment, and
(a) an amount equal to (R+S), or
(b) the amount of any payment, or the aggregate amount of any payments where more than one payment was made, made by the individual in the year of assessment by way of repayment of the principal of any specified loan or loans or by way of payment of interest on any specified loan or loans.
whichever is the less,
(3) For the purposes of this section, in the case of an individual who, in the year of assessment, in addition to interest on a specified loan or loans, has paid other interest, the amount of the relevant tax repayment shall be the amount determined by the formula—
A is the amount of tax which, apart from this section, would fall to be repaid to the individual for the year of assessment under the relevant provisions on all interest paid by him in the year of assessment, and
B is the amount of tax which would fall to be repaid to the individual for the year of assessment under the relevant provisions if no interest on a specified loan or loans had been paid by him in the rear of assessment.
(4) Where a relevant payment is made in respect of any period, that relevant payment shall be deemed for the purposes of this section to be made in the year of assessment into which the period falls:
Provided that where the period falls partly into one year of assessment and partly into another year of assessment, the amount of the relevant payment made in respect of that period shall be apportioned to each year of assessment in the proportion which the part of the period falling into each year of assessment bears to the whole of the period and the amount so apportioned to a year of assessment shall be deemed, for the purposes of this section, to be paid in that year of assessment.
The purpose of the proposed amendment is to implement paragraph (iv) of the special mortgage subsidy scheme for first time owner-occupiers of grant size houses announced by the Minister for the Environment on 16 April 1981. That paragraph states that the subsidy, plus income tax relief, would not exceed the amount of the annual loan repayments and that, subject to this, income tax relief would be allowable in the normal way—that statutory tax relief limits would apply.
The proposed new section will ensure that in any case where the subsidy plus the income tax relief in respect of the interest paid on loans coming within the ambit of the scheme exceed the total loan repayments the income tax relief will be reduced by the amount of the excess. In no case will any reduction be made in the subsidy payment by virtue of the provision in the proposed section. Section 496 of the Income Tax Act provides for the giving of relief by way of repayment of interest paid subject to certain restrictions on the amount of the interest which may qualify for relief. These restrictions are not being changed.
It has been customary in the case of persons liable to tax under PAYE to provide relief for interest under section 496 of the Income Tax Act, 1967, not by way of repayment but by an appropriate increase in the tax free allowances. This practice will continue unaltered and any reduction in tax relief under the present section will be effected by review of the taxpayer's liability after the end of the year of assessment to which the subsidy payments relate. The review for 1981-82 will take place some time after the end of that year. Before the review takes place the full amount of subsidy for that year will have to have been received by the taxpayer from the Department of the Environment and any reduction in tax relief for that year of assessment will be effected by an appropriate reduction in the tax free allowance for 1982-83.