Amendments Nos. 25 and 26 are cognate and may be taken together. They are minor drafting amendments.
SECTION 90.
I move amendment No. 25:
In page 84, in subsection (2), lines 61 and 62, to delete " applies in respect of the distribution or ".
The section provides for an assessment to be made on a company in certain circumstances in order to recover from it the tax equivalent to the tax credits which will apply in respect of a distribution made by it. The tax credit in question is the normal tax credit which applies where the recipient is an individual resident in the State. The words to be deleted are, therefore, unnecessary
Amendment agreed to.
I move amendment No. 26:
In page 85, in subsection (4), line 18, to delete " applies in respect of the distribution or ".
Amendment agreed to.
Question proposed: That section 90, as amended, stand part of the Bill."
What is the general purpose of the section?
It provides that where a distribution is made after April 5th, 1976, out of a capital profit the company making the distribution will be assessed to income tax to recover from it tax equivalent to the tax credit in respect of that distribution less the amount of any capital gains tax or equivalent corporation tax borne by the company in respect of it. Provision is also made for the case where a company makes a payment to a participator or his associate, or pays interest to a director or his associate in such circumstances that the payment is a distribution by virtue of sections 96 or 97. If such a distribution is greater than the profits of the company, the excess will be deemed to be made out of capital profits which have not been charged to capital gains tax or to corporation tax for the purpose of recovering from the company the equivalent of the full amount of the tax credit in respect of the distribution.
This only affects distributions made by companies resident within the State?
Yes. I have circulated an example.
Question put and agreed to