PART II

Provisions Consequent Upon Or Incidental To The Abolition Of Assessments Under Schedules A And B Of Income Tax Act, 1967

18. —(1) In this section—

“farming” means farming farm land, that is, land in the State wholly or mainly occupied for the purposes of husbandry, the profits or gains from the occupation of which would, but for the repeal by this Act of Schedule B of the Income Tax Act, 1967 , be chargeable under that Schedule;

“occupation”, in relation to any land, means the having the use thereof;

“woodlands” means woodlands in the State.

(2) Except as otherwise provided by section 81 of the Income Tax Act, 1967 , or by section 19 of this Act, the profits or gains arising—

(a) from farming, or

(b) to the owner of a stallion from the sale of services of mares by the stallion or to the part-owner of a stallion from the sale of such services or of rights to such services, or

(c) from the occupation of woodlands managed on a commercial basis and with a view to the realisation of profits,

shall not be taken into account for any purpose of the Income Tax Acts.

19. —(1) In this section “farm land” and “occupation” have the same meanings as in section 18.

(2) The occupation by a dealer in cattle or a dealer in or a seller of milk of farm land which is insufficient for the keep of the cattle brought on to the land shall be treated as the carrying on of a trade and the profits or gains thereof shall be charged under Case 1 of Schedule D.

20. —(1) In this section “exempt profits” means any profits or gains which by virtue of section 18 are not chargeable to tax under Schedule D.

(2) Where a dividend is paid in part out of exempt profits and in part out of other profits, sections 456 and 457 of the Income Tax Act, 1967 , shall apply as if the dividend consisted of two dividends respectively paid out of exempt profits and out of other profits.

(3) So much of any dividend as has been paid out of exempt profits shall not be regarded as income or profits for any purpose of the Income Tax Acts.

(4) Section 458 of the Income Tax Act, 1967 , shall apply and have effect in relation to every warrant, cheque or order drawn or made by a company (within the meaning of that section) for the payment of a dividend payable wholly or in part out of exempt profits as if the statement referred to in that section were required to show, in addition to the particulars required to be given apart from this section, either (as the case may require)—

(a) that the whole of the sum for which the warrant, cheque or order is drawn or made is a payment of a dividend out of exempt profits, or

(b) that a part of such sum is a payment out of exempt profits and that a part (the gross amount of which, before any deduction in respect of income tax, is separately stated) of such sum is a payment out of other profits.

21. —Paragraph 1 of Part III of Schedule 6 to the Income Tax Act, 1967 , is hereby amended—

(a) by the insertion in subparagraph (2) after “stocks, shares, or rents” of “or the occupation of land”;

(b) by the deletion of the proviso to subparagraph (2); and

(c) by the deletion of subparagraph (3).

22. —The following section is hereby substituted for section 81 of the Income Tax Act, 1967 :

“81.—(1) Without prejudice to any other provisions of the Income Tax Acts, the profits or gains arising from—

(a) any rent in respect of any premises, and

(b) any receipts in respect of any easement,

shall, subject to and in accordance with the provisions of the Income Tax Acts, be deemed for all purposes of those Acts to be annual profits or gains within Schedule D and the person entitled to such profits or gains (hereafter in this Chapter referred to as the person chargeable) shall be chargeable in respect thereof under Case V (inserted by the Finance Act, 1969) of that Schedule:

Provided that the said rents or receipts do not include any payments to which section 93 applies.

(2) Profits or gains chargeable under Case V of Schedule D shall, for all the purposes of ascertaining liability to income tax, be deemed to issue from a single source and the provisions of subsection (3) shall apply accordingly.

(3) (a) Tax under Case V of Schedule D shall, subject to the provisions of this subsection, be computed—

(i) as respects the year of assessment in which the profits or gains first arise, on the full amount of the profits or gains arising within that year, and

(ii) as respects subsequent years of assessment, on the full amount of the profits or gains arising within the year preceding the year of assessment:

Provided that—

(I) where the profits or gains first arose on some day in the year preceding the year of assessment other than the 6th day of April, the computation shall be made on the profits or gains of the year of assessment;

(II) where the profits or gains first arose on the 6th day of April in the year preceding the year of assessment, or on some day in the year next before the year preceding the year of assessment other than the 6th day of April, the person chargeable shall be entitled, on making a claim at any time within twelve months after the end of the year of assessment, to be charged on the amount of the profits or gains of that year, and, if the tax charged has been paid, any amount overpaid shall be repaid; and

(III) where in computing the profits or gains on which tax is finally charged for any year of assessment any part of a premium or other sum chargeable by virtue of section 83 and in respect of which no election has been or could have been made under subsection (6) of that section, has been taken into account, the amount so taken into account shall be disregarded in computing the amount of the profits or gains on which tax is charged for any subsequent year.

(b) If in any year of assessment the person chargeable ceases to possess the whole of such single source of profits or gains as is mentioned in subsection (2), section 58 (5) shall, subject to the necessary modifications, apply in any such case as if the cesser of the possession of such single source were the discontinuance of a trade.

(c) The reference in paragraph (b) to a person ceasing to possess the whole of a single source of profits or gains shall be construed as referring to a cesser occurring by reason of the person dying while in possession of such single source of profits or gains as well as to a cesser occurring in the lifetime of such person and for the purposes of paragraph (b) such death shall be deemed to cause a cesser and such cesser shall be deemed to take place on the day of such death.

(4) Subject to the subsequent provisions of this Chapter, the amount of the profits or gains arising in any year shall, for the purposes of Case V of Schedule D, be computed as follows:

(a) the amount of any rent shall be taken to be the gross amount thereof before any deduction for income tax;

(b) subject to section 82, the amount of the profits or gains arising in any year shall be the aggregate of the surpluses computed in accordance with paragraph (c), reduced by the aggregate of the deficiencies as likewise computed;

(c) the amount of the surplus or deficiency in respect of each rent or in respect of the total receipts from easements shall be computed by making from the rent or total receipts from easements, as the case may be, to which the person chargeable becomes entitled in any year, the deductions authorised by the next following subsection.

(5) The deductions authorised by this subsection are deductions by reference to any or all of the following matters:

(a) the amount of any rent payable by the person chargeable in respect of the premises or in respect of a portion thereof;

(b) any sums borne by the person chargeable—

(i) in the case of a rent under a lease, in accordance with the conditions of the lease, and

(ii) in any other case, relating to and constituting an expense of the transaction or transactions under which the rents or receipts were received,

in respect of county rate, municipal rate or other rate, whether such sums are by law chargeable upon him or upon some other person;

(c) the cost to the person chargeable of any services rendered or goods provided by him, otherwise than by way of maintenance or repairs, being services or goods which—

(i) in the case of a rent under a lease, he is legally bound under the lease to render or provide but in respect of which he receives no separate consideration, and

(ii) in any other case, relate to and constitute an expense of the transaction or transactions under which the rents or receipts were received not being an expense of a capital nature;

(d) the cost of maintenance, repairs, insurance and management of the premises borne by the person chargeable and relating to and constituting an expense of the transaction or transactions under which the rents or receipts were received, not being an expense of a capital nature;

(e) interest on borrowed money employed in the purchase, improvement or repair of the premises.

(6) (a) The amount of the deductions authorised by subsection (5) shall be the amount which would fall to be deducted in computing profits or gains under the provisions applicable to Case I of Schedule D if the receipt of rent were deemed to be a trade carried on—

(i) in the case of a rent under a lease, during the currency of the lease, and

(ii) in the case of a rent not under a lease, during the period during which the person chargeable was entitled to the rent,

by the person chargeable and the premises comprised in the lease or to which the rent relates were deemed to be occupied for the purpose of that trade.

(b) For the purpose of this subsection the currency of a lease shall be deemed to include a period immediately following its termination, during which the lessor immediately before the termination was not in occupation of the premises or any part thereof, but was entitled to possession thereof, if at the end of that period the premises have become subject to another lease granted by him.

(7) (a) Where the person chargeable is entitled in respect of any premises (hereafter in this subsection referred to as the said premises) to a rent or to receipts from any easement and a sum by reference to which a deduction is authorised to be made by subsection (5) is payable by him in respect of premises which comprise the whole or a part of the said premises and other premises, the inspector shall make, according to the best of his knowledge and judgment, any appropriate apportionment of the said sum in determining the amount of any deduction under that subsection.

(b) Where the person chargeable retains possession of a part of any premises and that part is used in common by persons respectively occupying other parts of the premises, the provisions of paragraph (a) shall apply as if a payment made in respect of the part used in common had been made in respect of those other parts.

(8) Any amount or part of an amount shall not be deducted under subsection (5) if it has otherwise been allowed as a deduction in computing the income of any person for the purposes of income tax.

(9) Notwithstanding anything in section 190, relief shall not be given under that section by reason only of the fact that a rent falling due on or before the 5th day of April, 1969, and from which income tax was deducted on payment thereof was taken into account in computing the profits or gains on which tax is chargeable under Case V of Schedule D for the year 1969-70.

(10) If any person who was assessed and charged to tax for the year 1969-70 in respect of profits or gains chargeable under Case V of Schedule D proves that the amount of the assessment in respect of the said profits or gains was greater by more than 20 per cent, than the actual amount of those profits or gains arising to him in the said year he shall be entitled on making a claim on or before the 30th day of September, 1970, to have the assessment for the year 1969-70 reduced to the amount of the actual profits or gains of the year and if the tax charged has been paid any amount overpaid shall be repaid.”.

23. —The following section is hereby substituted for section 82 of the Income Tax Act, 1967 :

“82.—(1) In this section—

‘excepted profits or gains’ means profits or gains arising from rent under a lease in respect of premises where, for the year on the profits or gains of which tax under Case V of Schedule D is finally computed for the year of assessment, all the following conditions are satisfied that is to say:

(a) the premises are premises to which subsection (2) applies;

(b) the lease was granted for a term not exceeding fifty years and imposes no obligation on the lessee to maintain or repair the fabric or exterior of any building or to contribute to the cost of such maintenance or repairs, and

(c) the rent to which the lessor is entitled or, in a case in which a deduction is allowable under section 81 (5) (b) in arriving at the amount of the profits or gains for the purpose of assessment under Case V of Schedule D, the said rent reduced by the deduction allowable as aforesaid does not exceed £52 per annum;

‘profit rent’ means, in relation to any premises in respect of which the person chargeable is, in the year on the profits or gains of which tax under Case V of Schedule D is finally computed for the year of assessment, entitled to a rent under a lease, the amount of the rent receivable in that year reduced by the deductions authorised by section 81 (5).

(2) (a) This subsection applies to any premises which are shown to be, in the year on the profits or gains of which tax is finally computed for the year of assessment, a controlled dwelling within the meaning of the Rent Restrictions Acts, 1960 and 1967.

(b) Where, in computing the profits or gains on which tax under Case V of Schedule D is finally computed for any year of assessment, a rent under a lease of any premises to which this subsection applies falls to be taken into account, the amount which would, apart from this subsection, be required to be taken into account shall be reduced by an amount equal to two-fifths of the profit rent:

Provided that, for any year of assessment, the aggregate of all amounts by which profits or gains, other than excepted profits or gains, arising to any person are reduced by virtue of this paragraph shall not exceed £200

(3) The reference, in the proviso to subsection (2) (b), to profits or gains arising to any person shall be deemed to include, in the case of an individual, a reference to profits or gains arising to the wife or husband of the individual.

In this subsection and subsection (4) ‘wife’ means a married woman who under section 196 (1) is to be treated as living with her husband, and ‘husband’ has a corresponding meaning.

(4) (a) Where in any year of assessment profits or gains chargeable under Case V of Schedule D arise to both a husband and a wife from rents in respect of premises to which subsection (2) applies and the aggregate (hereafter in this subsection referred to as the gross aggregate) of all amounts by which the said profits or gains would have fallen to be reduced under this section, if the proviso to subsection (2) (b) (hereafter in this subsection referred to as the limiting provision) had been omitted from this section, exceeds what in consequence of the operation of the limiting provision is the aggregate (hereinafter in this subsection referred to as the net aggregate) of all amounts by which the said profits or gains may be reduced, the aggregate of all amounts by which the profits or gains arising to either spouse are reduced shall not exceed the sum which bears to the net aggregate the same proportion as the aggregate of all amounts by which, but for the limiting provision, the profits or gains arising to that spouse would have fallen to be reduced bears to the gross aggregate.

(b) Any reference in this subsection to profits or gains does not include a reference to excepted profits or gains.”.

24. —(1) The following section is hereby substituted for section 89 of the Income Tax Act, 1967 :

“89.—(1) Where in any year of assessment the aggregate amount of the deficiencies, computed in accordance with section 81 (4), exceeds the aggregate of the surpluses as so computed, the excess may, on a claim being made in that behalf, be deducted from or set off, as far as may be, against the amount of profits or gains on which the person chargeable is assessed under Case V of Schedule D for that year, and any portion of the excess for which relief is not so given shall be carried forward and, so far as may be, deducted from or set off against the amount of profits or gains on which he is assessed under Case V of Schedule D for any subsequent year of assessment, and, if tax has been overpaid, the amount overpaid shall be repaid.

(2) Any relief under this section by way of carrying forward any portion of such excess as is referred to in subsection (1) shall be given as far as possible from the first subsequent assessment, and so far as it cannot be so given then from the next assessment and so on.”.

(2) (a) Where in any of the years of assessment 1963-64 to 1968-69—

(i) the aggregate amount of the deductions authorised by section 81 (4) of the Income Tax Act, 1967 , in relation to any lease of a duration not exceeding fifty years exceeded the amount of the rent to which a person became entitled, and

(ii) such excess, having been deemed to be such a loss as is mentioned in section 310 of the Income Tax Act, 1967 , was not relieved or was not fully relieved under that section,

then, any loss or portion of a loss not so relieved shall be carried forward and, as far as may be, deducted from or set off against the amount of the profits or gains on which that person is assessed under Case V of Schedule D for the year 1969-70 or any subsequent year.

(b) Any relief under paragraph (a) shall be given as far as possible from the assessment for the year 1969-70, and, so far as it cannot be so given, then from the assessment for the year 1970-71 and so on:

Provided that where, by reason of an insufficiency of profits or gains chargeable under Case V of Schedule D for any year, full relief in respect of any loss or portion thereof carried forward under paragraph (a) cannot be given by deduction from or set-off against the profits or gains so chargeable, that portion of the loss for which relief has not been so given shall, so far as may be, be deducted from or set off, against the amount of any profits or gains on which that person is assessed under Case IV of Schedule D for that year; and the balance of any loss so carried forward to that year for which relief cannot be given against profits or gains so chargeable for that year under the said Cases IV or V shall be carried forward to any subsequent year of assessment.

25. —(1) Section 200 of the Income Tax Act, 1967 , shall not apply to—

(a) tax on profits or gains chargeable to tax under Case V of Schedule D, or

(b) tax on any of the profits or gains chargeable under Case IV of Schedule D which arise under the terms of a lease, but to a person other than the lessor, or otherwise arise out of any disposition or contract such that if they arose to the person making it they would be chargeable under the said Case V,

where payment is made (whether in the State or elsewhere) directly to a person whose usual place of abode is outside the State, but section 434 of the Income Tax Act, 1967 , shall apply in relation to the payment as it applies to other payments being annual payments charged with tax under Schedule D and not payable out of profits or gains brought into charge to tax.

(2) Where by virtue of subsection (1) the tax chargeable for any year of assessment on a person's profits or gains chargeable to tax under either or both of the Cases therein mentioned would but for this subsection be greater than the tax which would be chargeable thereon but for the said subsection (1), then on a claim in that behalf being made relief shall be given from the excess, whether by repayment or otherwise.

26. —(1) Where by virtue of a contract for the sale of an estate or interest in premises there falls to be apportioned between the parties a receipt or outgoing in respect of the estate or interest which becomes due after the making of the contract but before the time at which the apportionment falls to be made, and a part of the receipt is therefore receivable by the vendor in trust for the purchaser or, as the case may be, a part of the outgoing is paid by the vendor as trustee for the purchaser, the purchaser shall be treated for the purposes of tax under Case V of Schedule D as if that part had become receivable or payable on his behalf immediately after the time at which the apportionment falls to be made.

(2) Where by virtue of such a contract there falls to be apportioned between the parties a receipt or outgoing in respect of the estate or interest which became due before the making of the contract, the parties shall be treated for the purposes of tax under Case V of Schedule D as if the contract had been entered into before the receipt or outgoing became due, and subsection (1) shall apply accordingly.

(3) Where on the sale of an estate or interest in premises there is apportioned to the vendor a part of a receipt or outgoing in respect of the estate or interest which becomes receivable or is paid by the purchaser after the making of the apportionment, then for the purposes of tax under Case V of Schedule D—

(a) when the receipt becomes due or, as the case may be, the outgoing is paid, the amount of it shall be treated as reduced by so much thereof as was apportioned to the vendor;

(b) the part apportioned to the vendor shall be treated as if it were of the same nature as the receipt or outgoing and had become receivable, or had been paid, directly by him, and, where it is a part of an outgoing, had become due, immediately before the time at which the apportionment is made.

(4) Any reference in subsection (1) or (2) to a party to a contract shall include a person to whom the rights and obligations of that party under the contract have passed by assignment or otherwise.

(5) In this section “premises” has the same meaning as in section 80 (1) of the Income Tax Act, 1967 .

(6) This section shall come into operation on the date of the passing of this Act.

27. — Section 80 of the Income Tax Act, 1967 , is hereby amended—

(a) by the deletion in subsection (1) of the definitions of “long lease”, “short lease” and “unit of valuation”.

(b) by the substitution in subsection (1) of the following definition for the definition of “rent”:

“‘rent’ includes—

(i) any rentcharge, fee farm rent and any payment in the nature of rent, notwithstanding that the payment may relate partly to premises and partly to goods or services, and

(ii) any payment made by the lessee to defray the cost of work of maintenance of or repairs to the premises, not being work required by the lease to be carried out by the lessee;”,

(c) by the substitution in subsection (2) of “for the purposes of this Chapter” for “for the purpose of the definition of ‘long lease’ and ‘short lease’ contained in subsection (1)”, and

(d) by the substitution in subsection (3) of “section 16 (3) of the Finance (Miscellaneous Provisions) Act, 1968” for “section 96 (3)”.

28. —The following section is hereby substituted for section 90 of the Income Tax Act, 1967 :

“90.—Where on a claim in that behalf a person chargeable proves that he has not received an amount to which he is entitled and which falls to be taken into account in computing the profits or gains on which he is chargeable by virtue of this Chapter under Case IV or V of Schedule D, and

(a) if the non-receipt of the said amount was attributable to the default of the person by whom it was payable, that the said amount is irrecoverable, or

(b) if he has waived payment of the said amount, that the waiver was made without consideration and was reasonably made in order to avoid hardship,

the person chargeable shall be treated for tax purposes for all relevant years of assessment as if he had not been entitled to receive the said amount, and such adjustment shall be made, by repayment or otherwise, as the case may require; but if all or any part of the said amount is subsequently received, the person's liability to tax for all relevant years of assessment shall be appropriately re-adjusted by additional assessment or otherwise.”.

29. —The following section is hereby substituted for section 93 of the Income Tax Act, 1967 :

“93.—(1) This section applies to the following payments:

(a) any rent payable in respect of any premises or easements, where the premises or easements are used, occupied or enjoyed in connection with any of the concerns the profits or gains arising out of which are chargeable to tax under Case 1 (b) of Schedule D by virtue of section 53, and

(b) any yearly interest, annuity or other annual payment reserved in respect of, or charged on or issuing out of any premises, not being a rent or a payment in respect of an easement,

being payments falling due on or after the 6th day of April, 1969.

In paragraph (a) the reference to rent shall be deemed to include a reference to a toll, duty, royalty or annual or periodical payment in the nature of rent, whether payable in money or money's worth or otherwise.

(2) Any payment to which this section applies shall—

(a) so far as it does not fall within any other Case of Schedule D, be charged with tax under Case IV of that Schedule, and

(b) be treated, for the purposes of paragraph (m) of section 61 and of sections 433 and 434 as if it were a royalty paid in respect of the user of a patent:

Provided that where such a rent as is mentioned in subsection (1) (a) is rendered in produce of the concern, this subsection shall have effect as if paragraph (b) were omitted; and the value of the produce so rendered shall be taken to be the amount of profits or gains arising therefrom.

(3) Section 8 (2) shall have effect as if ‘other annual payment’ in both places where occurring in that subsection, included a reference to any payment to which this section applies not being a payment of rent, interest or annuity.”.

30. — Section 65 of the Income Tax Act, 1967 , is hereby amended—

(a) by the addition to subsection (1) of the following proviso—

“Provided that where the computation is for the purposes of tax for the year 1968-69, the amount to be excluded in respect of the annual value of such property shall, if the person carrying on the trade or profession so elects by notice in writing given to the inspector on or before the 31st day of December, 1969, be the annual value of such property as assessed and charged under Schedule A for the year 1968-69.”, and

(b) by the insertion after subsection (4) of the following new subsection—

“(5) This section shall cease to have effect for the year 1969-70 and subsequent years.”.

31. — Section 67 of the Income Tax Act, 1967 , is hereby amended—

(a) by the deletion in subsection (2) of “notwithstanding anything in section 65” and “, and situate outside the State”,

(b) by the substitution in subsections (2) and (3) for “one-third of the annual value” of “five-twelfths of the rateable valuation”, and

(c) by the insertion of the following subsection after subsection (3)—

“(3A) (a) Where, in the case of property valued under the Valuation Acts as a unit, a part is, and a part is not, premises, the rateable valuation of each part shall be arrived at by apportionment of the rateable valuation of the property.

(b) Any apportionment required by this subsection shall be made by the inspector according to the best of his knowledge and judgment.

(c) An apportionment made under paragraph (b) may be amended by the Appeal Commissioners or by the Circuit Court on the hearing, or the rehearing, of an appeal against an assessment made on the basis of the apportionment, but, on the hearing, or the rehearing, of any such appeal, a certificate of the Commissioner of Valuation tendered by either party to the appeal and stating, as regards property valued under the Valuation Acts as a unit, the amount of the rateable valuation of the property attributable to any part of the property, shall be evidence of the amount so attributable.”; and

(d) by the deletion of subsection (4).

32. — Section 118 of the Income Tax Act, 1967 , is hereby amended in relation to tax for the year 1969-70 and subsequent years—

(a) by the deletion of subsections (3) and (5),

(b) by the deletion from subsection (4) of “and the asset is not premises”, and

(c) by the insertion at the end of subsection (4) of the following—

“In the case of an asset being premises, the annual value of the use of the asset shall be taken for the purposes of this subsection to be the rent which might reasonably be expected to be obtained on a letting from year to year if the tenant undertook to pay all usual tenant's rates, and if the landlord undertook to bear the costs of the repairs and insurance, and the other expenses, if any, necessary for maintaining the premises in a state to command that rent.”.

33. —(1) Each enactment mentioned in column (2) of Part I of the Fourth Schedule to this Act is, in relation to tax for the year 1969-70 and subsequent years, hereby amended as specified in column (3) of that Part.

(2) The enactment mentioned in column (2) of Part II of the Fourth Schedule to this Act is, in relation to deaths occurring after the 5th day of April, 1969, hereby amended as specified in column (3) of that Part.