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Select Committee on Finance and General Affairs debate -
Wednesday, 23 Apr 1997

SECTION 131.

Amendments Nos. 115 and 116 are related and may be discussed together.

I move amendment No. 115:

In page 123, subsection (10), between lines 44 and 45, to insert the following:

"(f) sections 75 and 87 shall take effect as on and from such date as the Minister for Finance may by order, appoint;".

Section 131(10) provides for commencement dates for the measures in Part III which relate to VAT. The purpose of the amendments is to provide for the commencement date, by Order, of sections 75 and 86. These amendments are essentially technical.

Amendment agreed to.

I move amendment No. 116:

In page 123, subsection (10)(f), line 46, to delete "and (e)" and substitute ", (e) and (f)".

Amendment agreed to.
Question proposed: "That section 131, as amended, stand part of the Bill."

Until this year there was an income tax voluntary assessment sheet at the end of the tax assessment form. Why has that been abolished for the 1996-97 tax year?

I do not know. I will take note of the question and reply before the close of business.

It may be an administrative matter and nothing to do with the law.

Is the Minister taking new steps to enforce the tax law and bringing in new expertise from the DPP's office to head a tax enforcement section?

That is not entirely the case, we have had consultations. Tax collection and prosecutions arising from failure to comply is a matter for the Revenue Commissioners. This has nothing to do with the Criminal Assets Bureau. I have been dissatisfied with the level of prosecution of people criminally evading tax — I am not talking about normal difficulties, defaulting or publication but those who set out to defraud. I had a number of meetings with senior gardaí and the Revenue Commissioners to review progress and procedures and I have requested that the present system, including the DPP's office, be examined with a view to ensuring a more efficient prosecution where a case is capable of being so prosecuted. We are not taking powers away from anyone as such.

It was represented to me that a senior official in the DPP's office was becoming the supremo for Revenue prosecutions and I wondered whether this was true.

No, a lawyer from the DPP's office is working closely with the Office of the Chief Inspector of Taxes. The practice was that Revenue prepared a file which went in turn to the gardaí and the DPP but by that time the DPP's office felt it could not pursue the matter. We now have agreement from the DPP's office and the gardaí that Revenue can prepare the file and send it directly to the DPP. Revenue, with assistance, is now preparing files in such a way that the information the DPP would require on receipt of the file is gathered in the first instance. As the Deputy knows probably better than anyone else in this room, information must be gathered and documentation presented in such a manner that the file is complete in itself.

A time lapse was also involved. I received a report on about 40 cases. The sums in question were quite substantial — up to £1.5 million in some cases but all over £100,000. Five or six cases were not proceeded with because too much time had elapsed, which I thought scandalous. My view, which is probably shared by Deputies opposite, is that no one likes paying tax but it is galling for compliant tax payers to see people flouting the law and apparently doing so with impunity. Such people should be vigorously pursued. It is ultimately for the courts to decide what the punishment should be but I would not be unhappy if such a defaulter ultimately went to prison. It would have a salutary effect.

Question put and agreed to.
First Schedule agreed to.
SECOND SCHEDULE.

Amendments Nos. 117 and 118 are related and may be discussed together.

I move amendment No. 117:

In page 126, paragraph 1, line 4, to delete "section (1)" and substitute "section 33(1)".

The purpose of these two amendments is, in the case of the first, to correct a drafting omission — the reference to section 33 of the Corporation Tax Act, 1976 was omitted from the Bill as initiated — and, in the case of the second, to correct a drafting error as the Bill as initiated contained a reference to section 66(2) of the Corporation Tax Act, 1976 whereas the correct reference is to section 66A(1).

Amendment agreed to.

I move amendment No. 118:

In page 126, paragraph 1, line 5, to delete "66(2)" and substitute "66A(1)".

Amendment agreed to.
Second Schedule, as amended, agreed to.
NEW SCHEDULE.

I move amendment 118a:

In page 127, before the Third Schedule, to insert the following new Schedule:

"THIRD SCHEDULE

EMPLOYEE SHARE OWNERSHIP TRUSTS

Interpretation

1. (I) For the purposes of this Schedule—

‘ordinary share capital' has the meaning assigned to it by section 155 of the Corporation Tax Act, 1976;

‘securities' mean shares (including stock) and debentures.

(2) For the purposes of this Schedule, the question whether one company is controlled by another shall be construed in accordance with section 102 of the Corporation Tax Act, 1976.

(3) For the purposes of this Schedule a person shall be regarded as an employee or a director of a company falling within the founding company's group at a particular time if, at the time or within 18 months prior to the time, that person is or was an employee or director of

(a) the founding company, being a company resident in the State,

(b) a company resident in the State and controlled by the founding company, or

(c) a company, being the founding company or a company controlled by the founding company, which carries on a trade in the State through a branch or agency in which that person is employed.

(4)(a) For the purposes of this Schedule a person shall be treated as having a material interest in a company if the person, either on his or her own or with any one or more of his or her associates, or if any associate of his or her with or without any such other associates is the beneficial owner of, or able directly or through the medium of other companies or by any other indirect means to control, more than 5 per cent. of the ordinary share capital of the company.

(b) In this subparagraph—

‘associate' has the meaning given to it by section 103 of the Corporation Tax Act, 1976;

‘control' has the same meaning as in section 102 of that Act.

(5) For the purposes of this Schedule a trust is established when the deed under which it is established is executed.

Approval of Qualifying Trusts

2. On the application of a body corporate (in this Schedule referred to as ‘the founding company') which has established an employee share ownership trust, the Revenue Commissioners shall approve of the trust as a qualifying employee share ownership trust if they are satisfied that the conditions set out in paragraphs 6 to 18 are met in relation to the trust.

3. (1) If, at any time after the Revenue Commissioners have approved of a trust—

(a) there is, with respect to the operation of the trust, any contravention of the conditions set out in paragraphs 6 to 18, or

(b) any shares of a class of which shares have been acquired by the trustees receive different treatment in any respect from the other shares of that class, in particular, different treatment in respect of—

(i) the dividend payable,

(ii) repayment,

(iii) the restrictions attaching to the shares, or

(iv) any offer of substituted or additional shares, securities or rights of any description in respect of the shares,

the Revenue Commissioners may, subject to subparagraph (3), withdraw the approval with effect from that time or from such later time as they may specify.

(2) If, at any time after the Revenue Commissioners have approved of a trust, an alteration is made to the terms of the trust, the approval shall not have effect after the date of the alteration unless they have approved of the alteration.

(3) It shall not be a ground for withdrawal of approval of a trust that shares which have been newly issued receive, in respect of dividends payable with respect to a period beginning before the date on which the shares were issued, treatment which is less favourable than that accorded to shares issued before that date.

(4) The Revenue Commissioners may by notice in writing require any person to furnish to them, within such time as they may direct which is not less than 30 days, such information as they think necessary to enable them to either or both—

(a) determine whether to approve of an employee share ownership trust or withdraw an approval already given, and

(b) determine the liability to tax of any beneficiary under an approved employee share ownership trust.

4. (1) If the founding company is aggrieved by—

(a) the failure of the Revenue Commissioners to approve of an employee share ownership trust,

(b) the failure of the Revenue Commissioners to approve of an alteration as mentioned in paragraph 3(2), or

(c) the withdrawal of approval,

the company may, by notice in writing given to the Revenue Commissioners within 30 days from the date on which it is notified of their decision, make an application to have its claim for relief heard and determined by the Appeal Commissioners.

(2) Where an application is made under subparagraph (1), the Appeal Commissioners shall hear and determine the claim in like manner as an appeal made to them against an assessment and all the provisions of the Income Tax Acts relating to such an appeal (including the provisions relating to the re-hearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law) shall apply accordingly with any necessary modifications.

5. The Revenue Commissioners may nominate any of their officers, including an inspector, to perform any acts and discharge any functions authorised by this Schedule to be performed or discharged by them.

General

6. (I) The trust shall be established under a deed (in this Schedule and section 37, referred to as ‘the trust deed').

(2) The trust shall be established by the founding company which, at the time the trust is established, is not controlled by another company.

Trustees

7. The trust deed shall provide for the establishment of a body of trustees complying with the provisions of paragraph 8, 9 or 10.

8. (1) The trust deed shall—

(a) appoint the initial trustees;

(b) contain rules for the retirement and removal of trustees;

(c) contain rules for the appointment of replacement and additional trustees.

(2) The trust deed shall provide that at any time while the trust subsists (in this subparagraph referred to as ‘the relevant time')—

(a) the number of trustees shall not be less than three;

(b) all the trustees shall be resident in the State;

(c) the trustees shall include one person who is a trust corporation, a solicitor, or a member of such other professional body as the Revenue Commissioners may from time to time allow for the purposes of this paragraph;

(d) the majority of the trustees must be persons who are not and have never been directors of any company which falls within the founding company's group at the relevant time;

(e) the majority of the trustees shall be representatives of the employees of the companies which fall within the founding company's group at the relevant time, and who do not have and have never had a material interest in any such company;

(f) the trustees to whom subparagraph (e) relates, shall, before being appointed as trustees, have been selected by a majority of the employees of the companies falling within the founding company s group at the time of the selection.

9. (1) The trust deed shall—

(a) appoint the initial trustees;

(b) contain rules for the retirement and removal of trustees;

(c) contain rules for the appointment of replacement and additional trustees.

(2) The trust deed shall be so framed that at any time while the trust subsists the conditions set out in subparagraph (3) are fulfilled as regards the persons who are then trustees, and in that subparagraph ‘the relevant time' means that time.

(3) The conditions referred to in subparagraph (2) are that—

(a) the number of trustees is not less than three;

(b) all the trustees are resident in the State;

(c) the trustees include at least one person who is a professional trustee and at least two persons who are non-professional trustees;

(d) at least half of the non-professional trustees were, before being appointed as trustees, selected in accordance with subparagraph (6) or (7);

(e) all the trustees so selected are persons who are employees of companies which fall within the founding company's group at the relevant time, and who do not have and have never had a material interest in any such company.

(4) For the purposes of this paragraph a trustee is a professional trustee at a particular time if—

(a) the trustee is then a trust corporation, a solicitor, or a member of such other professional body as the Revenue Commissioners allow for the purposes of this subparagraph

(b) the trustee is not then an employee or director of any company then falling within the founding company's group, and

(c) the trustee meets the requirements of subparagraph (5),

and for the purposes of this paragraph a trustee is a non-professional trustee at a particular time if the trustee is not then a professional trustee for those purposes.

(5) A trustee meets the requirements of this subparagraph if—

(a) if he or she was appointed as an initial trustee and, before being appointed as trustee, was selected by, and only by, the persons who later became the non-professional initial trustees, or

(b) he or she was appointed as a replacement or additional trustee and, before being appointed as trustee, was selected by, and only by, the persons who were the non-professional trustees at the time of selection.

(6) Trustees are selected in accordance with this subparagraph if the process of selection is one under which—

(a) all the persons who are employees of the companies which fall within the founding company's group at the time of the selection, and who do not have and have never had a material interest in any such company, are, so far as is reasonably practicable, given the opportunity to stand for selection,

(b) all the employees of the companies falling within the founding company's group at the time of the selection are, so far as is reasonably practicable, given the opportunity to vote, and

(c) persons gaining more votes are preferred to those gaining less.

(7) Trustees are selected in accordance with this subparagraph if they are selected by persons elected to represent the employees of the companies falling within the founding company's group at the time of the selection.

10. (1) This paragraph applies where the trust deed provides that at any time while the trust subsists there shall be a single trustee.

(2) The trust deed shall—

(a) be so framed that at anytime while the trust subsists the trustee is a company which at that time is resident in the State and controlled by the founding company;

(b) appoint the initial trustee;

(c) contain rules for the removal of any trustee and for the appointment of a replacement trustee.

(3) The trust deed shall be so framed that at any time while the trust subsists the company which is then the trustee is a company so constituted that the conditions set out in subparagraph (4) are then fulfilled as regards the persons who are then directors of the company, and in that subparagraph ‘the relevant time' means that time and ‘the trust company' means that company.

(4) The conditions referred to in subparagraph (3) are that—

(a) the number of directors is not less than three;

(b) all the directors are resident in the State;

(c) the directors include at least one person who is a professional director and at least two persons who are non-professional directors;

(d) at least half of the non-professional directors were, before being appointed as directors, selected in accordance with subparagraph (7) or (8);

(e) all the directors so selected are persons who are employees of companies which fall within the founding company's group at the relevant time, and who do not have and have never had a material interest in any such company.

(5) For the purposes of this paragraph a director is a professional director at a particular time if—

(a) the director is then a solicitor or a member of such other professional body as the Revenue Commissioners may at that time allow for the purposes of this subparagraph,

(b) the director is not then an employee of any company then falling within the founding company's group,

(c) the director is not then a director of any such company other than the trust company, and

(d) the director meets the requirements of subparagraph (6), and for the purposes of this paragraph a director is a non-professional director at a particular time if the director is not then a professional director for those purposes.

(6) A director meets the requirements of this subparagraph if—

(a) he or she was appointed as an initial director and, before being appointed as director, was selected by and only by the persons who later became the non-professional initial directors, or

(b) he or she was appointed as a replacement or additional director and, before being appointed as director, was selected by and only by the persons who were the non-professional directors at the time of the selection.

(7) Directors are selected in accordance with this subparagraph if the process of selection is one under which—

(a) all the persons who are employees of the companies which fall within the founding company's group at the time of the selection, and who do not have and have never had a material interest in any such company, are, so far as is reasonably practicable, given the opportunity to stand for selection,

(b) all the employees of the companies falling within the founding company's group at the time of the selection are, so far as is reasonably practicable, given the opportunity to vote, and

(c) persons gaining more votes are preferred to those gaining less.

(8) Directors are selected in accordance with this subparagraph if they are selected by persons elected to represent the employees of the companies falling within the founding company's group at the time of the selection.

Beneficiaries

11. (1) The trust deed shall contain provision as to the beneficiaries under the trust, in accordance with the following.

(2) The trust deed shall provide that a person is a beneficiary at a particular time (in this subparagraph referred to as ‘the relevant time') if

(a) the person is at the relevant time an employee or director of a company which at that time falls within the founding company's group,

(b) at each given time in a qualifying period the person was such an employee or director of a company falling within the founding company's group at that given time, and

(c) in the case of a director, at that given time the person worked as a director of the company concerned at the rate of at least 20 hours a week (ignoring such matters as holidays and sickness).

(3) The trust deed may provide that a person is a beneficiary at a particular time (in this subparagraph referred to as ‘the relevant time') if—

(a) the person has at each given time in a qualifying period been an employee or director of a company falling within the founding company's group at that given time,

(b) the person has ceased to be an employee or director of the company or the company has ceased to fall within that group, and

(c) at the relevant time a period of not more than 18 months has elapsed since the person so ceased or the company so ceased, as the case may be.

(4) The trust deed may provide for a person to be a beneficiary if the person is a charity and the circumstances are such that—

(a) there is no person who is a beneficiary within the rule which is included in the deed and conforms with subparagraph (2) or with any rule which is so included and conforms with subparagraph (3), and

(b) the trust is in consequence being wound up.

(5) For the purposes of subparagraph (2) a qualifying period is a period—

(a) whose length is not more than 5 years,

(b) whose length is specified in the trust deed, and

(c) which ends with the relevant time (within the meaning of that subparagraph).

(6) For the purposes of subparagraph (3)9 a qualifying period is a period—

(a) whose length is equal to that of the period specified in the trust deed for the purposes of a rule which conforms with subparagraph (2), and

(b) which ends when the person or company, as the case may be, ceased as mentioned in subparagraph (3)(b).

(7) The trust deed shall not provide for a person to be a beneficiary unless the person falls within the rule which is included in the deed and conforms with subparagraph (2) or any rule which is so included and conforms with subparagraph (3) or (4).

(8) The trust deed shall provide that, notwithstanding any other rule which is included in it, a person cannot be a beneficiary at a particular time (in this subparagraph referred to as ‘the relevant time') by virtue of a rule which conforms with subparagraph (2), (3) or (4) if—

(a) at the relevant time the person has a material interest in the founding company, or

(b) at any time in the period of one year preceding the relevant time the person has had a material interest in that company.

(9) For the purposes of this paragraph ‘a charity' means any body of persons or trust established for charitable purposes only.

Trustees' functions

12. (1) The trust deed shall contain provision as to the functions of the trustees.

(2) The functions of the trustees shall be so expressed that it is apparent that their general functions are—

(a) to receive sums from the founding company and other sums, by way of loan or otherwise;

(b) to acquire securities;

(c) to grant rights to acquire shares to persons who are beneficiaries under the terms of the trust deed;

(d) to transfer either or both securities and sums to persons who are beneficiaries under the terms of the trust deed;

(e) to transfer securities to the trustees of profit sharing schemes approved under Part I of the Third Schedule to the Finance Act, 1982;

(f) pending transfer, to retain the securities and to manage them, whether by exercising voting rights or otherwise.

Sums

13. (1) The trust deed shall require that any sum received by the trustees—

(a) shall be expended within the expenditure period,

(b) may be expended only for one or more of the qualifying purposes, and

(c) shall, while it is retained by them, be kept as cash, or be kept in an account with a relevant deposit taker (within the meaning of section 31 of the Finance Act, 1986).

(2) For the purposes of subparagraph (1) the expenditure period is the period of 9 months beginning with the day determined as follows:

(a) in a case where the sum is received from the founding company, or a company which is controlled by that company at the time the sum is received, the day following the end of the accounting period in which the sum is expended by the company from which it is received;

(b) in any other case, the day the sum is received.

(3) For the purposes of subparagraph (1) each of the following is a qualifying purpose—

(a) the acquisition of shares in the founding company;

(b) the repayment of sums borrowed;

(c) the payment of interest on sums borrowed;

(d) the payment of any sum to a person who is a beneficiary under the terms of the trust deed;

(e) the meeting of expenses.

(4) The trust deed shall provide that, in ascertaining for the purposes of a relevant rule (being a provision which is included in the trust deed and conforms with subparagraph (1)) whether a particular sum has been expended, sums received earlier by the trustees shall be treated as expended before sums received by them later.

(5) The trust deed shall provide that, where the trustees pay sums to different beneficiaries at the same time, all the sums shall be paid on similar terms.

(6) For the purposes of subparagraph (5) the fact that terms vary according to the levels of remuneration of beneficiaries, the length of their service, or similar factors, shall not be regarded as meaning that the terms are not similar.

Securities

14. (1) Subject to paragraph 15, the trust deed shall provide that securities acquired by the trustees shall be shares in the founding company which—

(a) form part of the ordinary share capital of the company,

(b) are fully paid up,

(c) are not redeemable, and

(d) are not subject to any restrictions other than restrictions which attach to all shares of the same class or a restriction authorised by subparagraph (2).

(2) Subject to subparagraph (3), a restriction is authorised by this subparagraph if—

(a) it is imposed by the founding company's articles of association,

(b) it requires all shares held by directors or employees of the founding company, or of any other company which it controls for the time being, to be disposed of on ceasing to be so held, and

(c) it requires all shares acquired, pursuance of rights or interests obtained by such directors or employees, by persons who are not, or have ceased to be, such directors or employees to be disposed of when they are acquired.

(3) A restriction is not authorised by subparagraph (2) unless—

(a) any disposal required by the restriction will be by way of sale for a consideration in money on terms specified in the articles of association, and

(b) the articles also contain general provisions by virtue of which any person disposing of shares of the same class (whether or not held or acquired as mentioned in subparagraph (2)) may be required to sell them on terms which are the same as those mentioned in clause (a).

(4) The trust deed shall provide that shares in the founding company may not be acquired by the trustees at a price exceeding the price they might reasonably be expected to fetch on a sale in the open market.

(5) The trust deed shall provide that shares in the founding company may not be acquired by the trustees at a time when that company is controlled by another company.

15. The trust deed may provide that the trustees may acquire securities other than shares in the founding company—

(a) if they are securities issued to the trustees in exchange in circumstances mentioned in paragraph 4 of Schedule 2 to the Capital Gains Tax Act, 1975, or

(b) if they are securities acquired by the trustees as a result of a reorganisation or reduction of share capital, and the original shares the securities represent are shares in the founding company (construing ‘reorganisation or reduction of share capital' and ‘original shares' in accordance with paragraph 2 of that Schedule).

16. (1) The trust deed shall provide that—

(a) where the trustees transfer securities to a beneficiary, they shall do so on qualifying terms;

(b) the trustees shall transfer securities before the expiry of twenty years beginning with the date on which they acquired them.

(2) For the purposes of subparagraph (1) a transfer of securities is made on qualifying terms if—

(a) all the securities transferred at the same time are transferred on similar terms.

(b) securities have been offered to all the persons who are beneficiaries under the terms of the trust deed when the transfer is made, and

(c) securities are transferred to all such beneficiaries who have accepted.

(3) For the purposes of subparagraph (2), the fact that terms vary according to the levels of remuneration of beneficiaries, the length of their service, or similar factors, shall not be regarded as meaning that the terms are not similar.

(4) The trust deed shall provide that, in ascertaining for the purposes of a relevant rule (being a provision which is included in the trust deed and conforms with subparagraph (1)) whether particular securities are transferred, securities acquired earlier by the trustees shall be treated as transferred by them before securities acquired by them later.

Other features

17. The trust deed shall not contain features which are not essential or reasonably incidental to the purpose of acquiring sums and securities, transferring sums and securities to employees and directors, and transferring securities to the trustees of profit sharing schemes approved under Part I of the Third Schedule to the Finance Act, 1982.

18. (1) The trust deed shall provide that, for the purposes of the deed, the trustees—

(a) acquire securities when they become entitled to them;

(b) transfer securities to another person when that other becomes entitled to them;

(c) retain securities if they remain entitled to them.

(2) If the trust deed provides for the matter set out in paragraph 15, it shall provide for the following exceptions to any rule which is included in it and conforms with subparagraph (1)(a), namely, that—

(a) if securities are issued to the trustees in exchange in circumstances mentioned in paragraph 4 of Schedule 2 to the Capital Gains Tax Act, 1975, they shall be treated as having acquired them when they became entitled to the securities for which they are exchanged;

(b) if the trustees become entitled to securities as a result of a reorganisation or reduction of share capital, they shall be treated as having acquired them when they became entitled to the original shares which those securities represent (construing ‘reorganisation or reduction of share capital' and ‘original shares' in accordance with paragraph 2 of the said Schedule 2).

(3) The trust deed shall provide that—

(a) if the trustees agree to take a transfer of securities, for the purposes of the deed they become entitled to them when the agreement is made and not on a later transfer made pursuant to the agreement:

(b) if the trustees agree to transfer securities to another person, for the purposes of the deed the other person becomes entitled to them when the agreement is made and not on a later transfer made pursuant to the agreement.'.

Amendment agreed to.
Third Schedule agreed to.
NEW SCHEDULE.

I move amendment No. 119:

In page 128, before the Fourth Schedule to insert the following new Schedule:

"FOURTH SCHEDULE

REPLACEMENT OF HARBOUR COMPANIES BY PORT COMPANIES.

Interpretation

1. In this Schedule—

‘relevant port company' means a company formed pursuant to section 7 or 87 of the Harbours Act, 1996;

‘relevant transfer' means—

(a) the vesting in a relevant port company of assets in accordance with section 96 of the Harbours Act, 1996, and

(b) the transfer to a relevant port company of rights and liabilities in accordance with section 97 of the said Act of 1996.

Capital Allowances

2. (1) The provisions of this paragraph shall have effect for the purposes of—

(a) allowances and charges provided for in Parts XIII to XVIII of the Income Tax Act, 1967, or any other provision of the Income Tax Acts relating to the making of allowances or charges under or in accordance with any of those Parts, and

(b) allowances or charges provided for by section 14 of the Corporation Tax Act, 1976.

(2) The relevant transfer shall not be treated as giving rise to any such allowance or charge under any of the provisions referred to in subparagraph (1).

(3) There shall be made to or on the relevant port company in accordance with section 14 of the Corporation Tax Act, 1976, all such allowances and charges in respect of an asset acquired by it in the course of a relevant transfer as would have fallen to be made if—

(a) allowances in relation to the asset made to the person from whom the asset was acquired had been made to the relevant port company, and

(b) everything done to or by that person, in relation to the asset had been done to or by the relevant port company.

Capital Gains

3. (1) The provisions of this paragraph shall have effect for the purposes of the Capital Gains Tax Acts and of the Corporation Tax Act, 1976, in so far as it relates to chargeable gains.

(2) The disposal of an asset by a person in the course of a relevant transfer shall be deemed to be for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to the person.

(3) Where subparagraph (2) has had effect in relation to a disposal of an asset, then in relation to any subsequent disposal of the asset by the relevant port company, the relevant port company shall be treated as if the acquisition or provision of the asset by the person from whom it was acquired by the said relevant port company was that company's acquisition or provision of it.

(4) For the purposes of section 28 of the Capital Gains Tax Act, 1975, the relevant port company and the person from whom an asset was acquired in the course of a relevant transfer, shall be treated as if they were the same person.".

Amendment agreed to.
Fourth, Fifth and Sixth Schedules, agreed to.
SEVENTH SCHEDULE.

I move amendment No. 120:

In page 140, paragraph 1 (9) (a), lines 9 to 14, to delete all words from and including "applies," in line 9 down to and including line 13 and substitute the following: "applies.', and

(b) in subsection (2A) (a), for clause (i) of subparagraph (i) there shall be substituted ‘(i) the individual is a specified employed contributor, or,'.".

It is a straightforward and simple drafting amendment to clarify the wording that should have appeared as "the" in subparagraph (9).

Amendment agreed to.

I move amendment No. 121:

In page 141, paragraph 1 (13) (v), between lines 19 and 20, to insert the following:

"(XII) section 42 of the Finance Act, 1997.".

This is likewise a drafting order.

Amendment agreed to.

I move amendment No. 122:

In page 150, paragraph 9, between lines 12 and 13, to insert the following:

"(3) In section 38 (1), for ‘for references to income' there shall be substituted references to capital gains' there shall be substituted for ‘references to income' there shall be substituted references to chargeable gains, for references to this Act there shall be substituted references to the Capital Gains Tax Acts.".

This technical amendment proposes a minor change in the wording of section 38 (1) of the Capital Gains Tax Act, 1975. Schedule 10 of the Income Tax Act, 1967, contains provisions for relief from income tax in respect of foreign tax. That Schedule is then applied subject to certain modifications by section 38 of the Capital Gains Tax Act, 1975, for the purposes of relief from capital gains tax in respect of foreign tax.

The consolidation exercise revealed that there are a couple of anomalies in the wording of the existing legislation in the context of its application to capital gains tax. These arise from the way in which section 38 of the Capital Gains Tax Act, 1975, requires Schedule 10 to the Income Tax Act, 1967, to be applied. These anomalies would be rectified as a result of this amendment.

Amendment agreed to.

I move amendment No. 123:

In page 151, paragraph 10, between lines 12 and 13, to insert the following:

"(6) In section 124 (6), for ‘Part XVI (Annual Allowances for Certain Capital Expenditure) of that Act' there shall be substituted ‘Parts XIII to XVI of that Act and in the Finance (Taxation of Profits of Certain Mines) Act, 1974,'.".

This is technical pre-consolidation amendment.

Amendment agreed to.

I move amendment No. 124:

In page 156, in column (3), between lines 36 and 37, to insert "Section 486 (3).".

This amendment proposes the inclusion of an additional item in the list of provisions being repealed in Part II of the Seventh Schedule. The item in question is section 486 (3) of the Income Tax Act, 1967. Section 486 (3) broadly provides for the production by the Collector General or other officer of the duplicate of an assessment in proceedings under the section to be conclusive evidence of the fact that the assessment to tax has been made. The transmission of duplicates of assessments by inspectors to the Collector General has ceased to be the method whereby the Collector General is formally advised of the tax due for collection. Such details are now transmitted by electronic means and statutory authority for this is contained in section 113 of the Finance Act, 1986. The enactment of section 113 of the Finance Act, 1986, has rendered redundant section 486 (3) of the Income Tax Act, 1967, and it should therefore be repealed. It is part of the tidying up exercise.

Amendment agreed to.

I move amendment No. 125:

In page 157, in column (3), between lines 7 and 8, to insert "Section 46 (4).".

This amendment involves the addition of a further item to the list of provisions being repealed in Part II of the Seventh Schedule to the Bill which caters for pre-consolidation repeals. The measure now being repealed is section 46 (4) of the Finance Act, 1986. This provides that a loss, to the extent that it is allowable by virtue of section 318 of the Income Tax Act, 1967, will be treated for the purposes of the restrictions on losses and capital allowances for limited partnerships as being allowable in the year of loss and not in the year of assessment for which the year of loss is the basis year. As the proposed rewrite of 318 (1) of the Income Tax Act, 1967 — in paragraph 1 (23) of Part I of the Seventh Schedule — renders subsection (4) of section 46 of the Finance Act, 1986, redundant it is appropriate that that subsection be repealed. It is a tidying up measure.

Amendment agreed to.
Seventh Schedule, as amended, agreed to.
Title agreed to.
Report of Select Committee.

I propose the following draft report. "The Select Committee of Finance and General Affairs has considered the Finance Bill, 1997, and has made amendments thereto. The Bill, as amended, is reported to the Dáil". Is that agreed? Agreed.

Report agreed to.

Ordered to report to the Dáil accordingly.

The Select Committee adjourned at 4.06 p.m.

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