I move:
(1) THAT Chapter 1B of Part 27 of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended—
(a) in section 739K(1), by inserting the following definitions:
“ ‘balance sheet’ means the balance sheet, statement of financial position or equivalent prepared in respect of an investment undertaking or sub-fund, as the case may be, in accordance with international accounting standards or alternatively in accordance with the generally accepted accounting practice specified in the investment undertaking’s prospectus;
‘market value’ shall be construed in accordance with section 548;
‘value of an IREF taxable event’ in relation to an IREF taxable event within the meaning of—
(a) paragraph (a) of the definition of ‘IREF taxable event’, means the value of the relevant payment,
(b) paragraphs (b), (c), (d), (e) and (f) of the definition of ‘IREF taxable event’, means the market value of the unit less any amount subscribed for that unit, and
(c) paragraph (g) of the definition of ‘IREF taxable event’, means the amount of the accrued IREF profits sold or transferred;”,
(b) in section 739L—
(i) by substituting “A x B/C – D + E"
for “A x B/C – D ”,
(ii) by substituting “A is the value of the IREF taxable event which is attributable to the retained profits of the IREF,” for “A is the portion of the IREF taxable event which is attributable to the retained profits of the IREF,”,
(iii) by substituting “IREF,” for “IREF, and”,
(iv) by substituting “by the IREF, and” for “by the IREF.”, and
(v) by inserting the following:
“E is an amount calculated as the difference between the value of the IREF taxable event and the value of the unit in accordance with the balance sheet of the IREF, where the IREF taxable event is one referred to in paragraph (b) of the definition of ‘value of an IREF taxable event’ in section 739K(1) and the value of the unit in accordance with the balance sheet of the IREF is less than the value of the IREF taxable event.”,
and
(c) by inserting the following sections after section 739L:
“Profit: financing cost ratio 739LA. (1) In this section—
‘adjusted property financing costs’ means the property financing costs less any amount of income referred to in subsection (2)(b);
‘property financing costs’ means costs, being costs of debt finance or finance leases, which are taken into account in arriving at the profits of an IREF, including amounts in respect of—
(a) interest, discounts, premiums, or net swap or hedging costs, and
(b) fees or other expenses associated with raising debt finance or arranging finance leases;
‘property financing costs ratio’ means the ratio of the sum of profits of an IREF and the adjusted property financing costs of an IREF to the adjusted property financing costs of the IREF;
‘relevant cost’ means the amount which would be allowable as a deduction for the purposes of the Capital Gains Tax Acts under section 552(1);
‘specified debt’ means any debt incurred by an IREF in respect of monies borrowed by, or advanced to, the IREF.
(2) (a) This subsection applies where the aggregate of the specified debt exceeds an amount equal to 50 per cent of the relevant cost of the IREF assets (and that excess is referred to in this subsection as the ‘excess specified debt’).
(b) Where this subsection applies, the IREF shall be treated for the purposes of the Income Tax Acts as receiving an amount of income determined by the formula—
A x B/C
where—
A is the property financing costs, B is the excess specified debt, and C is the total specified debt.
(3) (a) This subsection applies where the property financing costs ratio of the IREF is less than 1.25:1 for an accounting period.
(b) Where this subsection applies, the IREF shall be treated for the purposes of the Income Tax Acts as receiving an amount of income equal to the amount by which the adjusted property financing costs would have to be reduced for the property financing costs ratio to equal 1.25:1 for that accounting period.
(4) The amount of income referred to in subsections (2) and (3) shall be charged to income tax under Case IV of Schedule D and shall be treated as income—
(a) arising in the year of assessment in which the accounting period in which the amount was taken into account ends, and
(b) against which no loss, deficit, expense or allowance may be set off.
Profit: calculating profits available for distribution
739LB. (1) This section applies to any amount taken into account by an IREF in computing the profits of the IREF, in respect of any disbursement or expense, not being money wholly and exclusively laid out or expended for the purposes of the IREF business (referred to in this section as the ‘disallowed amount’).
(2) The IREF shall be treated as receiving for the purposes of the Income Tax Acts an amount of income equal to the disallowed amount.
(3) The amount of income referred to in subsection (2) shall be charged to income tax under Case IV of Schedule D and shall be treated as income—
(a) arising in the year of assessment in which the accounting period in which the disallowed amount was taken into account ends, and
(b) against which no loss, deficit, expense or allowance may be set off.”.
(2) THAT paragraph (1) of this Resolution shall apply to accounting periods commencing on or after 9 October 2019 and where an accounting period commences before 9 October 2019 and ends after that date, it shall be divided into two parts, one beginning on the date on which the accounting period begins and ending on 8 October 2019 and the other beginning on 9 October 2019 and ending on the date on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods of the IREF.
(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).