Finance Act, 1990

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Restriction of certain reliefs.

34.—(1) (a) In this section—

“the Act of 1976” means the Corporation Tax Act, 1976 ;

“distribution” has the same meaning as it has for the purposes of the Act of 1976.

(b) For the purposes of this section—

(i) any question whether a person is connected with another shall be determined in accordance with section 157 of the Act of 1976, and

(ii) an amount specified or implied shall include an amount specified or implied in a foreign currency.

(2) (a) This section shall apply to shares in a company where any agreement, arrangement or understanding exists which could reasonably be considered to eliminate the risk that the person beneficially owning those shares—

(i) might, at or after a time specified in or implied by that agreement, arrangement or understanding, be unable to realize directly or indirectly, in money or money's worth, an amount so specified or implied, other than a distribution, in respect of those shares, or

(ii) might not receive an amount so specified or implied of distributions in respect of those shares.

(b) The reference in this subsection to the person beneficially owning shares shall be deemed to be a reference to both that person and any person connected with that person.

(3) Where any person receives a distribution on or after the 21st day of July, 1989, in respect of shares to which this section applies and, apart from the application of the provisions of this subsection to the distribution, section 64, 76 (2) (a), 93 (3) (a) or 170 (3) (a) of the Act of 1976 would apply to the distribution, then, notwithstanding any provision of the Tax Acts, other than subsection (5), and for all the purposes of those Acts—

(a) none of the said sections of the Act of 1976 shall apply to the distribution,

(b) that person shall not be entitled to a tax credit in respect of the distribution, and

(c) the distribution shall be treated as income chargeable to income tax or corporation tax, as the case may be, under Case IV of Schedule D.

(4) Notwithstanding any provision of Chapter III of Part I of the Finance Act, 1984 , relief from income tax shall not be allowed under that Chapter in respect of the amount subscribed for any shares to which this section applies issued on or after the 20th day of April, 1990.

(5) The provisions of subsection (3) shall not apply to a distribution received—

(a) by a company—

(i) none of the shares of which is beneficially owned by a person resident in the State, and

(ii) which, if this subsection had not been enacted, would not be chargeable to corporation tax in respect of any profits other than distributions which would be so chargeable by virtue of this section, or

(b) by a person who is not resident in the State.

(6) Notwithstanding subsection (5), the liability to income tax or corporation tax, as the case may be, of any person resident in the State, other than a company to which paragraph (a) of that subsection relates, shall be determined as if that subsection had not been enacted.