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Amendment of Chapter 4 (interest payments by certain deposit takers) of Part 8 of Principal Act.
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28.—(1) Section 256 of the Principal Act is amended in subsection (1) by the substitution for the definition of “appropriate tax” of the following:
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“ ‘appropriate tax’, in relation to a payment of relevant interest, means a sum representing income tax on the amount of the payment—
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(a) in the case of a relevant deposit or relevant deposits held in a special savings account, at the rate of 20 per cent,
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(b) in the case of a relevant deposit the interest in respect of which is payable annually or at more frequent intervals or a relevant deposit which is a specified deposit within the meaning of section 260, at the standard rate in force at the time of payment, and
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(c) in the case of any other relevant deposit, being a deposit made on or after the date of the passing of the Finance Act, 2000, at a rate determined by the formula—
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(S + 3) per cent
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where S is the standard rate per cent (within the meaning of section 4(1)) in force at the time of payment;”.
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(2) Section 261 of the Principal Act is amended by the substitution for subparagraph (i) of paragraph (c) of the following:
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“(i) the amount of any payment of relevant interest shall be regarded as income chargeable to tax under Case IV of Schedule D, and under no other Case or Schedule, and shall be taken into account in computing the total income of the person entitled to that amount, but, in relation to such a person (being an individual)—
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(I) except for the purposes of a claim to repayment under section 267(3), the specified amount within the meaning of section 187 or 188 shall, as respects the year of assessment for which he or she is to be charged to income tax in respect of the relevant interest, be increased by the amount of that payment,
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(II) the part of taxable income on which he or she is charged to income tax at the standard rate for that year shall be increased by the part of such relevant interest which comes within paragraph (b) or the definition of ‘appropriate tax’ in section 256(1), and
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(III) as respects any part of relevant interest which comes within paragraph (c) of the definition of ‘appropriate tax’ in section 256(1), the person shall be chargeable to tax at the rate at which tax was deducted from that relevant interest,
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and”.
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