Finance Act, 1982
|
Restriction of relief for interest. |
21.—(1) In this section and in sections 22 and 23 — | |
“dependent relative” means, in relation to an individual, any of the persons mentioned in paragraphs (a) or (b) of section 142 (1) of the Income Tax Act, 1967 , in respect of whom the individual is entitled to a deduction under that section; | ||
“loan” means any loan or advance or any other arrangement whatsoever by virtue of which interest is paid or payable; | ||
“the operative date” means the 25th day of March, 1982; | ||
“the principal sections” means sections 76 (1) and 496 of, and paragraph 1 (2) of Part III of Schedule 6 to, the Income Tax Act, 1967 ; | ||
“qualifying loan” means, in relation to an individual, a loan which without having been used for any other purpose, is used by the individual solely for the purpose of defraying money employed in the purchase, repair, development or improvement of a qualifying residence or in paying off another loan used for such purpose; | ||
“qualifying residence” means, in relation to an individual, a residential premises situated in the State, or in Northern Ireland or Great Britain, which is used— | ||
(a) as the sole or main residence of the individual, or | ||
(b) as the sole or main residence of a former or separated spouse of his, or | ||
(c) as the sole or main residence of a person who in relation to the individual is a dependent relative and is, where the residential premises is provided by the individual, provided rent-free and without any other consideration; | ||
“residential premises” means— | ||
(a) a building or part of a building used, or suitable for use, as a dwelling, and | ||
(b) land which the occupier of a building or part of a building used as a dwelling has for his own occupation and enjoyment with the said building or part as its garden or grounds of an ornamental nature; | ||
“separated” means separated under an order of a court of competent jurisdiction or by deed of separation or in such circumstances that the separation is likely to be permanent. | ||
(2) Subject, as regards paragraph (a), to the provisions of subsection (9), the principal sections shall not apply to— | ||
(a) any interest paid or payable on a loan made after the operative date, or | ||
(b) interest paid or payable on or after the 6th day of April, 1985, on a loan made on or before the operative date: | ||
Provided that this subsection shall not apply to interest paid or payable by an individual on a loan which, in relation to the individual, is a qualifying loan. | ||
(3) (a) Notwithstanding the provisions of subsection (2), the principal sections shall apply— | ||
(i) as respects the year of assessment 1982-83, 1983-84 or 1984-85, to the amount or the aggregate amount of any interest paid or payable on a loan or loans made after the operative date, and | ||
(ii) as respects the year of assessment 1985-86 or any subsequent year of assessment, to the amount or the aggregate amount of any interest paid or payable on a loan or loans made at any time, | ||
to the extent that the amount of the loan or the aggregate amount of the loans on which such interest is paid or payable in a year of assessment does not exceed the specified limit for the year of assessment and, if the said amount or the said aggregate amount on which interest is paid or payable on the loan or loans exceeds the specified limit for the year of assessment, the principal sections shall apply only to so much of that interest as bears to the whole of that interest the same proportion as that part of the said amount or the said aggregate amount which does not exceed the specified limit bears to the whole of the said amount or the said aggregate amount. | ||
(b) In this subsection “specified limit”, in relation to a year of assessment, means— | ||
(i) in the case of a husband who is assessed to tax for the year of assessment in accordance with the provisions of section 194 of the Income Tax Act, 1967 , £5,000, | ||
(ii) in the case of a widowed person, £3,600, or | ||
(iii) in any other case, £2,500. | ||
(4) A loan shall be deemed, for the purposes of this section and sections 22 and 23 , to have been made on the date on which a binding contract for the making of the loan was entered into: | ||
Provided that— | ||
(a) a loan which, without being used for any other purpose, is used solely for the purpose of paying off another loan shall be deemed to have been made on the date that the other loan was deemed to have been made, and | ||
(b) a loan which is a qualifying loan shall be deemed to have been made on the date on which a written commitment was given by the person making the loan to advance the loan in a specified amount in respect of a specified qualifying residence if the loan is used for a purpose specified in the definition of “qualifying loan” in subsection (1) within six months from that date or within such longer period as the Revenue Commissioners may allow as being appropriate to the circumstances of the case, and | ||
(c) where an alteration is made in the terms under which a loan is made (other than an alteration in the rate of interest or the period over which the loan is repayable made in the ordinary course of business in relation to all loans of the same class) or the amount of the loan is increased or any amount of the loan which has been repaid is re-advanced under the same contract as that under which the original advance was made— | ||
(i) in relation to any interest or additional interest paid or payable, by virtue of the alteration, increase or re-advancement, in the period of twelve months commencing with the date of such alteration, increase or re-advancement, the loan shall be deemed to have been made on that date, and | ||
(ii) in relation to any interest whatsoever, paid or payable on the loan after the end of that period of twelve months, including interest on the original amount of the loan, the increased amount or the amount readvanced, the loan shall be deemed to have been made on the date mentioned in subparagraph (i). | ||
(5) Notwithstanding anything in this section, a loan shall not be a qualifying loan in relation to an individual if it is used for the purpose of defraying money applied in the— | ||
(a) purchase of a residential premises or any interest therein from a person who is the spouse of the purchaser, or | ||
(b) purchase of a residential premises or any interest therein if, at any time after the operative date, that premises or interest was disposed of by the purchaser or by his spouse or if any interest which is reversionary to the interest purchased was so disposed of after that date, or | ||
(c) purchase, repair, development or improvement of a residential premises and the person who, directly or indirectly, received the money is connected with the individual and it appears that the purchase price of the premises substantially exceeds the value of what is acquired or, as the case may be, the cost of the repair, development or improvement substantially exceeds the value of the work done: | ||
Provided that the provisions of paragraphs (a) and (b) of this subsection shall not apply in the case of a husband and wife who are separated. | ||
(6) Where an individual acquires a new sole or main residence but does not dispose of his previous sole or main residence and he shows to the satisfaction of the inspector that it was his intention, at the time of acquisition of the new sole or main residence, to dispose of his previous sole or main residence and that he has taken and continues to take all reasonable steps necessary to dispose of it, the previous sole or main residence shall be treated as a qualifying residence, in relation to the individual, for the period of twelve months commencing with the date of the acquisition of the new sole or main residence. | ||
(7) (a) Where any interest paid on a loan used for a purpose mentioned in the definition of “qualifying loan” by persons as the personal representatives of a deceased person or as trustees of a settlement made by the will of a deceased person would, on the assumptions stated in paragraph (b), be eligible for relief under the principal sections and, in a case where the condition stated in that paragraph applies, that condition is satisfied, that interest shall be so eligible notwithstanding the preceding provisions of this section. | ||
(b) For the purposes of paragraph (a) it shall be assumed that the deceased would have survived and been the borrower; and if, at his death, the residential premises was used as his sole or main residence, it shall be further assumed that he would have continued so to use it and the following condition shall then apply, namely, that the residential premises was, at the time the interest was paid, used as the sole or main residence of the deceased's widow or widower or of any dependent relative of the deceased. | ||
(c) In this subsection “personal representatives” has the meaning assigned to it by section 450 of the Income Tax Act, 1967 . | ||
(8) The provisions of this section shall not apply to interest on money borrowed to pay death duties. | ||
(9) For the purposes of giving relief under the principal sections in respect of interest paid before the 6th day of April, 1985, on a loan made before the 6th day of April, 1982, this section shall apply as if— | ||
(a) the definition of “qualifying residence” were deleted and | ||
(b) the reference in the definition of “qualifying loan” to a qualifying residence were a reference to a residential premises. | ||
(10) For the purposes of this section, a person shall be regarded as connected with another person if he would be so regarded under section 16 (3) of the Finance (Miscellaneous Provisions) Act, 1968 , for the purposes of Part IV of that Act. |