Finance Act, 1993
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Special portfolio investment accounts. |
14.—(1) (a) In this section— | |
“designated broker” means a person— | ||
(i) which is a dealing member firm of the Irish Stock Exchange, and | ||
(ii) which has sent to the Revenue Commissioners a notification of its name and address and of its intention to accept specified deposits; | ||
“gains” means chargeable gains within the meaning of the Capital Gains Tax Acts including gains which would, but for the provisions of section 19 of the Capital Gains Tax Act, 1975 , be chargeable gains; | ||
“market value” has the meaning assigned to it in section 49 of the Capital Gains Tax Act, 1975 ; | ||
“ordinary shares”, in relation to a company, means all the issued share capital (by whatever name called) of the company, other than capital in respect of which the holders have a right to a dividend at a fixed rate but have no other right to share in the profits of the company; | ||
“qualifying shares” means ordinary shares in a company which are— | ||
(i) listed in the official list of the Irish Stock Exchange, or | ||
(ii) dealt in on the smaller companies market, the unlisted securities market or the exploration securities market of the Irish Stock Exchange, | ||
other than— | ||
(I) shares in an investment company within the meaning of Part XIII of the Companies Act, 1990 , | ||
(II) shares in an undertaking for collective investment in transferable securities within the meaning of the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 1989 ( S.I. No. 78 of 1989 ), or | ||
(III) shares in a company being shares the market value of which may be expected to approximate at all times to the market value of the proportion of the assets of the company which they represent; | ||
“relevant income or gains” means the aggregate of the income and gains, including losses, arising from relevant investments: | ||
Provided that only so much of income arising to or gains accruing to the special portfolio investment account shall be relevant income or gains as is or is to be— | ||
(i) paid to, or | ||
(ii) accumulated or invested for the benefit of, | ||
the individual in whose name the special portfolio investment account is held, or would be so paid, accumulated or invested if any gains accruing to the account in accordance with paragraph (c) of subsection (4) were gains on an actual disposal of the assets concerned; | ||
“relevant investment” means an investment in— | ||
(i) qualifying shares and specified qualifying shares, or | ||
(ii) qualifying shares, specified qualifying shares and securities, | ||
as the case may be, acquired by a designated broker by the expenditure of money contributed by way of a specified deposit, and held by a designated broker in a special portfolio investment account; | ||
“securities” means securities— | ||
(i) issued under the authority of the Minister for Finance, or | ||
(ii) issued by the Electricity Supply Board, Radio Telefís Éireann, the Industrial Credit Corporation public limited company, Bord Telecom Éireann, Irish Telecommunications Investments public limited company, Córas Iompair Éireann, ACC Bank public limited company, Bord na Móna, Aerlínte Éireann cuideachta phoiblí theoranta, Aer Lingus public limited company, or Aer Rianta cuideachta phoiblí theoranta, | ||
which are listed in the official list of the Irish Stock Exchange; | ||
“special portfolio investment account” means an account, opened on or after the 1st day of February, 1993, in which a relevant investment is held and in respect of which the conditions referred to in subsection (1) (c) are complied with; | ||
“specified deposit” means a sum of money paid by an individual to a designated broker for the purpose of acquiring assets which will form part of a relevant investment; | ||
“specified qualifying shares”, in relation to a special portfolio investment account, means qualifying shares in a company which, when the shares are acquired for the account, has an issued share capital the market value of which is less than £100,000,000. | ||
(b) For the purposes of this section, Chapter IV of Part I of the Finance Act, 1986 , shall be construed and have effect— | ||
(i) as if references to “deposit”, “interest”, “relevant deposit”, “relevant deposit taker”, “relevant interest” and “special savings account” were, respectively, references to “specified deposit”, “income or gains”, “relevant investment”, “designated broker”, “relevant income or gains” and “special portfolio investment account” as defined in paragraph (a), and | ||
(ii) as if subsections (4) and (5) of section 33 had not been enacted. | ||
(c) Notwithstanding subsection (3), section 37A (inserted by the Finance Act, 1992 , and amended by this Act) of the Finance Act, 1986 , shall apply to a special portfolio investment account— | ||
(i) as if paragraphs (b), (c), (cc), (d) and (e) of subsection (1) of that section had not been enacted, and | ||
(ii) as if the conditions in subsection (2) of this section had been included in the said subsection (1). | ||
(2) The conditions referred to in subsection (1) (c) (ii) are as follows: | ||
(a) each special portfolio investment account and all assets held in such an account shall be kept separately from all other investment accounts, if any, operated by a designated broker; | ||
(b) the amount of a specified deposit or, if there is more than one, the aggregate of such amounts in respect of assets held at the same time as part of a special portfolio investment account shall not exceed £50,000; | ||
(c) the designated broker shall ensure that the aggregate of the market value of a relevant investment does not exceed £50,000 at any time on or after the fifth anniversary of the date on which the first specified deposit was made by an individual in respect of that relevant investment; | ||
(d) the aggregate of the consideration given for shares which are, at any time before the 1st day of February, 1994, assets of a special portfolio investment account shall not be less than— | ||
(i) as respects qualifying shares, 40 per cent., and | ||
(ii) as respects specified qualifying shares, 6 per cent., | ||
of the aggregate of the consideration given for the assets of the account at that time; | ||
(e) the aggregate of the consideration given for shares which are, at any time within the year ending on the 31st day of January, 1995, assets of a special portfolio investment account shall not be less than— | ||
(i) as respects qualifying shares, 45 per cent., and | ||
(ii) as respects specified qualifying shares, 9 per cent., | ||
of the aggregate of the consideration given for the assets of the account at that time; | ||
(f) the aggregate of the consideration given for shares which are, at any time within the year ending on the 31st day of January, 1996, assets of a special portfolio investment account shall not be less than— | ||
(i) as respects qualifying shares, 50 per cent., and | ||
(ii) as respects specified qualifying shares, 12 per cent., | ||
of the aggregate of the consideration given for the assets of the account at that time; | ||
(g) the aggregate of the consideration given for shares which are, at any time on or after the 1st day of February, 1996, assets of a special portfolio investment account shall not be less than— | ||
(i) as respects qualifying shares, 55 per cent., and | ||
(ii) as respects specified qualifying shares, 15 per cent., | ||
of the aggregate of the consideration given for the assets of the account at that time; | ||
and for the purposes of— | ||
(I) paragraphs (b) and (c), a disposal of shares or securities, being shares or securities, as the case may be, of the same class acquired for a special portfolio investment account at different times, shall be assumed to be a disposal of shares or securities, as the case may be, acquired later, rather than of shares or securities, as the case may be, acquired earlier for the special portfolio investment account, and | ||
(II) paragraphs (d) to (g), the amount of the consideration given for shares shall be determined in accordance with the provisions of section 9 of the Capital Gains Tax Act, 1975 , and paragraph 4 of Schedule 1 to the Capital Gains Tax (Amendment) Act, 1978 . | ||
(3) The provisions of Chapter IV of Part I of the Finance Act, 1986 , shall, subject to the provisions of this section and with any other necessary modifications, apply to special portfolio investment accounts as they apply to special savings accounts. | ||
(4) Notwithstanding any other provision of the Tax Acts and the Capital Gains Tax Acts— | ||
(a) where, for any year of assessment, a loss arises from the computation of relevant income or gains that loss shall be included in the computation of the relevant income or gains of the special portfolio investment account for the next subsequent year of assessment, and, in so far as relief for the loss cannot be so given, then it shall be set against such relevant income or gains in the next year of assessment and, where appropriate, in each subsequent year of assessment in so far as it cannot be so relieved and no further relief shall be allowed under any provision of the Tax Acts or the Capital Gains Tax Acts in respect of that loss; | ||
(b) (i) subsection (4) of section 13, subsections (1) and (2) of section 16 and section 19 of the Capital Gains Tax Act, 1975 , and | ||
(ii) section 3 of, and paragraph 8 of Schedule 1 to, the Capital Gains Tax (Amendment) Act, 1978 , | ||
shall not apply or have effect in relation to any gains referable to a relevant investment; | ||
(c) for the purpose of computing relevant income or gains of a special portfolio investment account for a year of assessment each asset of a special portfolio investment account on the 5th day of April in that year of assessment shall be deemed to have been disposed of and immediately reacquired by the designated broker on that day at the asset's market value on the said day: | ||
Provided that— | ||
(i) this paragraph shall apply with effect from the 5th day of April, 1994, and | ||
(ii) the year of assessment 1993-94 shall, for the purposes of the paragraph, be deemed to be the period from the 1st day of February, 1993, to the said 5th day of April, 1994; | ||
(d) subject to subsection (5), where in a year of assessment the relevant income or gains of a special portfolio investment account includes a distribution from a company resident in the State, the aggregate of the amount or value of that distribution and the amount of the tax credit in respect of the distribution shall be taken into account in computing the relevant income or gains for that year of assessment and the designated broker may set the tax credit against appropriate tax payable in respect of that special portfolio investment account for the year of assessment in which the distribution is made and, where the tax credit exceeds that appropriate tax, may claim to have the excess paid to him in his capacity as the designated broker for that special portfolio investment account; | ||
(e) a tax credit in respect of a distribution to which paragraph (d) applies shall not be available for any purpose other than that specified in that paragraph; | ||
(f) capital gains tax shall not be chargeable on the disposal of assets held as part of a relevant investment but this paragraph shall not prevent any such disposals from being taken into account in computing the amount of relevant income or gains on which appropriate tax is payable. | ||
(5) (a) Without prejudice to the treatment of losses on eligible shares as allowable losses, gains accruing on the disposal or deemed disposal of eligible shares in qualifying companies shall not, for the purposes of computing appropriate tax in accordance with subsection (6), be treated as gains. | ||
(b) Distributions included in the relevant income or gains of a special portfolio investment account in respect of eligible shares shall not be taken into account in computing appropriate tax in accordance with subsection (6): | ||
Provided that, notwithstanding the provisions of paragraph (d) of subsection (4) or section 88 of the Corporation Tax Act, 1976 , the tax credit in respect of a distribution to which this subsection applies shall be ignored for all the purposes of the Tax Acts and the Capital Gains Tax Acts. | ||
(c) In this subsection— | ||
“eligible shares” has the same meaning as it has in section 12 (2) of the Finance Act, 1984 ; | ||
“qualifying companies” has the same meaning as it has in section 15 of the Finance Act, 1984 . | ||
(6) (a) For the purposes of sections 32 and 33 of the Finance Act, 1986 , a designated broker shall, in relation to each special portfolio investment account, be deemed to have made a payment on the 5th day of April in each year of assessment of the amount of relevant income or gains for that year of assessment and the designated broker shall be liable to make a payment of appropriate tax in relation to such payment and the designated broker may deduct an amount on account of any such payment of appropriate tax and the individual beneficially entitled to the assets in the special portfolio investment account shall allow such deduction from any income or from the proceeds of the sale of any assets which the designated broker holds as part of the special portfolio investment account: | ||
Provided that where there are no such funds or insufficient funds available out of which the designated broker may satisfy the appropriate tax, the amount of such tax shall be an amount due to the designated broker from the person beneficially entitled to the relevant investment. | ||
(b) This subsection shall apply with effect from the 5th day of April, 1994, and, for the purposes of this subsection, the year of assessment 1993-94 shall be deemed to be the period from the 1st day of February, 1993, to the said 5th day of April, 1994. | ||
(c) For the purposes of this section, section 33 of the Finance Act, 1986 , shall apply and have effect for the year 1993-94 and for each subsequent year of assessment as if, in subsection (2) of that section, for “within 15 days from the end of the year of assessment” there were substituted “on or before the 1st day of November following that year of assessment”. | ||
(7) The provisions of Chapter III of Part I of the Finance Act, 1984 , shall not apply or have effect in relation to any shares which form part of a relevant investment. |