Finance Act, 1993
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Amendment of section 35 (relief for investment in films) of Finance Act, 1987. |
48.— Section 35 of the Finance Act, 1987 , is hereby amended, as respects relevant investments made on or after the 6th day of May, 1993— | |
(a) in subsection (1)— | ||
(i) by the substitution of the following definition for the definition of “qualifying film”: | ||
“ ‘qualifying film’ means a film in respect of which— | ||
(a) not less than 75 per cent. of the work on the production of the film is carried out in the State, and | ||
(b) not more than 60 per cent. of the cost of the production of the film is met by relevant investments: | ||
Provided that where paragraph (b) is complied with in relation to a film and paragraph (a) is not but not less than 10 per cent, of the said work is carried out in the State and the Minister for Arts, Culture and the Gaeltacht gives a certificate to the qualifying company concerned stating that the film may be treated as a qualifying film for the purposes of this section, the film shall be so treated and the certificate shall be published in Iris Oifigiúil as soon as may be after it is given: | ||
Provided also that where, in relation to a film referred to in the foregoing proviso, the percentage of the work aforesaid carried out in the State (referred to subsequently in this proviso as the specified percentage) is less than 60 per cent., paragraph (b) shall be construed as if the reference to 60 per cent. were a reference to the specified percentage;”, | ||
(ii) by the insertion of the following definition after the definition of “qualifying film”: | ||
“ ‘qualifying individual’ means, in relation to a qualifying company, an individual who is not connected with the company;”, | ||
(iii) by the substitution of the following definition for the definition of “qualifying period” (as amended by section 58 of the Finance Act, 1992 ): | ||
“ ‘qualifying period’ means— | ||
(a) in relation to an allowable investor company, the period commencing on the 9th day of July, 1987, and ending on the 31st day of March, 1996, and | ||
(b) in relation to a qualifying individual, the period commencing on the 6th day of May, 1993, and ending on the 5th day of April, 1996;”, | ||
and | ||
(iv) by the substitution of the following paragraphs for paragraphs (a) and (b) of the definition of “relevant investment”: | ||
“(a) paid in the qualifying period to a qualifying company, whether in respect of shares in the company or otherwise, by an allowable investor company on its own behalf or by a qualifying individual on his own behalf, and | ||
(b) paid by the allowable investor company or the qualifying individual, as the case may be, for the purpose of enabling the qualifying company to produce a qualifying film, and”, | ||
(b) in subsection (2), by the substitution of “on making a claim in that behalf” for “on due claim and on proof of the facts”, | ||
(c) in subsection (3) (inserted by section 28 of the Finance Act, 1989 ), by the substitution of “£350,000” for “£200,000”, in each place where it occurs, and of “£1,050,000” for “£600,000”, in both places where it occurs, | ||
(d) by the insertion of the following subsections after subsection (3): | ||
“(3A) Subject to the provisions of this section, where, in any year of assessment, a qualifying individual makes a relevant investment, he shall, on making a claim in that behalf, be given a deduction of the amount of that investment from his total income for that year of assessment. | ||
(3B) A deduction shall not be given under this section in respect of any relevant investment made by a qualifying individual in a qualifying company in any year of assessment unless the amount of that relevant investment, or the total amount of the relevant investments, made by him in the qualifying company in that year is £200 or more: | ||
Provided that, in the case of a qualifying individual who is a husband assessed to tax for a year of assessment in accordance with the provisions of section 194 (inserted by section 18 of the Finance Act, 1980 ) of the Income Tax Act, 1967 , any relevant investment made by his spouse in the qualifying company in that year of assessment shall be deemed to have been made by him. | ||
(3C) A deduction shall not be given to a qualifying individual under this section for a year of assessment to the extent to which the amount of the relevant investment, or the total amount of the relevant investments (whether or not made in the same qualifying company), made by him in that year of assessment exceeds £25,000. | ||
(3D) If, for any year of assessment, a greater deduction would be given to a qualifying individual under this section but for either or both of the following reasons, that is to say— | ||
(a) an insufficiency of total income, or | ||
(b) the operation of subsection (3C), | ||
the amount of the deduction which would be given to him under this section but for either or both of those reasons, less the amount of the deduction which is given to him under this section for that year of assessment shall be carried forward to the next year of assessment and shall be treated for the purposes of this section as a relevant investment made by him in that following year: | ||
Provided that this subsection shall not apply or have effect for any year of assessment after the year 1995-96. | ||
(3E) If, and so far as, an amount once carried forward to a year of assessment under subsection (3D) (and treated as a relevant investment made by a qualifying individual in that year of assessment) is not deducted from the qualifying individual's total income for that year of assessment, it shall be carried forward again to the next following year of assessment (and treated as a relevant investment made by him in that next following year), and so on for succeeding years of assessment: | ||
Provided that this subsection shall not apply or have effect for any year of assessment after the year 1995-96. | ||
(3F) A deduction under this section shall be given to a qualifying individual for any year of assessment as follows: | ||
(a) firstly, in respect of an amount carried forward from an earlier year of assessment in accordance with the provisions of subsection (3D) or (3E), and, in respect of such an amount so carried forward, for an earlier year of assessment in priority to a later year of assessment, and | ||
(b) then, and only then, in respect of any other amount for which a deduction is to be given in that year of assessment.”, | ||
(e) in subsection (4)— | ||
(i) by the deletion of “the inspector is satisfied that”, and | ||
(ii) by the substitution of “the company or the individual, as the case may be, making the claim” for “it appears that the company making the claim”, | ||
(f) by the substitution of the following subsection for subsection (5): | ||
“(5) An allowable investor company or a qualifying individual shall not be entitled to relief in respect of a relevant investment unless the relevant investment— | ||
(a) has been made for bona fide commercial reasons and not as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, | ||
(b) has been, or will be, used in the production of a qualifying film, and | ||
(c) is made at the risk of the allowable investor company or the qualifying individual, as the case may be, and— | ||
(i) in a case where it is made by an allowable investor company, neither the company nor any person who would be regarded as connected with the company, or, | ||
(ii) in a case where it is made by a qualifying individual, neither the individual nor any person who would be regarded as connected with him, | ||
is entitled to receive directly or indirectly, any payment from the qualifying company other than a payment made on an arm's length basis for goods or services supplied or a payment out of the proceeds of exploiting the film to which the allowable investor company or the qualifying individual, as the case may be, is entitled under the terms subject to which the relevant investment is made.”, | ||
(g) in subsection (6), by the substitution for “by making an assessment to corporation tax under Case IV of Schedule D for the accounting period or accounting periods in which relief was given,” of “by making an assessment to corporation tax or income tax, as the case may be, under Case IV of Schedule D for the accounting period or accounting periods, or the year of assessment or years of assessment, as the case may be, in which relief was given”, | ||
(h) in subsection (7)— | ||
(i) by the insertion after paragraph (a) of the following paragraph: | ||
“(aa) Subject to paragraph (b), where a qualifying individual is entitled to relief under this section in respect of any sum, or any part of a sum, or would be so entitled on making due claim, as a deduction from his total income for any year of assessment— | ||
(i) he shall not be entitled to any relief for that sum or part in computing his total income, or as a deduction from his total income, for any year of assessment under any other provision of the Income Tax Acts, and | ||
(ii) that sum or part shall be treated as a sum which, by reason of paragraph 4 of Schedule 1 to the Capital Gains Tax Act, 1975 , is to be excluded from the sums allowable as a deduction in the computation of gains and losses for the purposes of the Capital Gains Tax Acts.”, | ||
and | ||
(ii) by the substitution of the following paragraphs for paragraph (b) and paragraph (bb) (inserted by section 28 of the Finance Act, 1989 ): | ||
“(b) Where an allowable investor company or a qualifying individual has made a relevant investment by way of a subscription for new ordinary shares of a qualifying company and none of those shares are disposed of by the allowable investor company or the qualifying individual, as the case may be, within three years of their acquisition by that company or that individual, as the case may be, then the sums allowable as deductions from the consideration in the computation for the purpose of capital gains tax of the gain or loss accruing to the company or the individual, as the case may be, on the disposal of those shares shall be determined without regard to any relief under this section which the company or the individual, as the case may be, has obtained, or would be entitled on due claim to obtain, except that where those sums exceed the consideration they shall be reduced by an amount equal to— | ||
(i) the amount in respect of which the allowable investor company or the qualifying individual, as the case may be, has obtained relief under this section in respect of the subscription for those shares, or | ||
(ii) the amount of the excess, | ||
whichever is the less: | ||
Provided that, if the disposal of shares is by a qualifying individual, and the disposal falls within section 13 (5) of the Capital Gains Tax Act, 1975 , the preceding provisions of this paragraph shall not apply. | ||
(bb) Notwithstanding paragraph (b), where, on or after the 6th day of May, 1993, an allowable investor company or a qualifying individual has made a relevant investment (hereafter in this paragraph referred to as ‘the first relevant investment’) by way of a subscription for new ordinary shares of a qualifying company and those shares are disposed of by the allowable investor company or the qualifying individual, as the case may be, on a day which is not earlier than 12 months after the date of their acquisition by the allowable investor company or the qualifying individual, as the case may be, and— | ||
(i) the consideration upon such disposal is used, and used only, by the allowable investor company or the qualifying individual, as the case may be, within the period of 12 months commencing on that day for the purpose of making a further relevant investment by way of a subscription for new ordinary shares of a qualifying company, and | ||
(ii) the qualifying company uses the sum invested to produce a qualifying film other than a qualifying film on the production of which the first relevant investment was expended, | ||
then, the provisions of paragraph (b) regarding the determination, in respect of the computation of a gain or loss for the purpose of capital gains tax, of sums allowable as deductions from a consideration to which paragraph (b) relates shall apply in respect of the consideration used for the purpose of making the further relevant investment as they apply in respect of the consideration to which paragraph (b) relates: | ||
Provided that where an allowable investor company has made a relevant investment by way of a subscription for new ordinary shares of a qualifying company and that relevant investment is one to which paragraph (b) of subsection (3) refers, then, if those shares are disposed of by the allowable investor company not earlier than 12 months after the date of their acquisition by that company, this paragraph (other than so much thereof as would require the consideration upon the disposal to be used for making a further relevant investment) shall apply— | ||
(I) in case the relevant investment, or the aggregate of that investment and any other relevant investment made by the allowable investor company for the purposes of enabling the qualifying company to make the qualifying film concerned, is not less than £1,050,000, in respect of the consideration upon such disposal, or | ||
(II) in case the relevant investment, or the aggregate of that investment and any other relevant investment made by the allowable investor company for the purposes of enabling the qualifying company to make the qualifying film concerned, is less than £1,050,000, in respect of such part of the consideration upon such disposal as bears to the total consideration on disposal the same proportion as the excess of the relevant investment, or the excess of the aggregate of that investment and any other relevant investment made by the allowable investor company for the purposes aforesaid, over £350,000 bears to the total amount of the relevant investment, or the aggregate of the total amount of that investment and the total amount of any other relevant investments made by the allowable investor company for the purposes aforesaid.”, | ||
and | ||
(i) by the insertion, after subsection (8), of the following subsections: | ||
“(9) In the case of an individual, all such provisions of the Income Tax Acts as apply in relation to the deductions specified in sections 138 to 142 of the Income Tax Act, 1967 , shall, with any necessary modifications, apply in relation to relief under this section. | ||
(10) Section 198 (inserted by section 18 of the Finance Act, 1980 ) of the Income Tax Act, 1967 , is hereby amended, in subsection (1) (a), by the insertion of the following subparagraph after subparagraph (xii) (inserted by section 4 of the Finance Act, 1989 ): | ||
‘(xiii) so far as it flows from relief under section 35 of the Finance Act, 1987 , in the proportions in which they made the relevant investment giving rise to the relief,’.”. |