Finance Act, 2000

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“Relief from income tax in respect of income from dealing in residential development land.

644A.—(1) In this section—

‘basis period’ has the same meaning as in section 127(1);

‘construction operations’, in relation to residential development land, means operations of any of the descriptions referred to in the definition of ‘construction operations’ in section 530(1) other than such operations as consist of—

(a) the demolition or dismantling of any building or structure on the land,

(b) the construction or demolition of any works forming part of the land, being roadworks, water mains, wells, sewers or installations for the purposes of land drainage, or

(c) any other operations which are preparatory to residential development on the land other than the laying of foundations for such development;

‘residential development’ includes any development which is ancillary to the development and which is necessary for the proper planning and development of the area in question;

‘residential development land’ means land—

(a) disposed of to—

(i) a housing authority (within the meaning of section 23 of the Housing (Miscellaneous Provisions) Act, 1992 ),

(ii) the National Building Agency Limited (being the company referred to in section 1 of the National Building Agency Limited Act, 1963), or

(iii) a body standing approved of for the purposes of section 6 of the Housing (Miscellaneous Provisions) Act, 1992 ,

which land is specified in a certificate in writing given by a housing authority or the National Building Agency Limited, as appropriate, as land being required for the purposes of the Housing Acts, 1966 to 1998,

(b) in respect of which permission for residential development has been granted under section 26 of the Local Government (Planning and Development) Act, 1963 , and such permission has not ceased to exist, or

(c) which is, in accordance with a development objective (as indicated in the development plan of the planning authority concerned), for use solely or primarily for residential purposes.

(2) This section applies to profits or gains being—

(a) profits or gains arising from dealing in or developing residential development land in the course of a business consisting of or including dealing in or developing land which is, or is regarded as, a trade within Schedule D or a part of such a trade, or

(b) any gain of a capital nature arising from the disposing of residential development land which, by virtue of section 643, constitutes profits or gains chargeable to tax under Case IV of Schedule D.

(3) Notwithstanding any other provision of the Tax Acts and subject to subsections (4) and (5)—

(a) to the extent to which profits or gains of a basis period for a year of assessment consist of profits or gains to which this section applies, those profits or gains—

(i) shall be chargeable to income tax for that year at the rate of 20 per cent, and

(ii) shall not be reckoned in computing total income for that year for the purposes of the Income Tax Acts,

and

(b) the provisions of sections 187 and 188, and the reductions specified in Part 2 of the Table to section 458 shall not apply as regards income tax so charged.

(4) For the purposes of this section—

(a) where a trade consists partly of dealing in residential development land and partly of other operations or activities, the part of the trade consisting of dealing in residential development land and the part of the trade consisting of other operations or activities shall each be treated as a separate trade, and the total amount receivable from sales made and services rendered in the course of the trade, and of expenses incurred in the trade, shall be apportioned to each such part,

(b) in computing the profits or gains to which this section applies, no account shall be taken, in determining those profits or gains, of that part, if any, of profits or gains which are attributable to construction operations on the land, and

(c) where, in order to give effect to the provisions of this section, an apportionment of profits and gains, amounts receivable or expenses incurred is required to be made, such apportionment shall be made in a manner that is just and reasonable.

(5) This section shall not apply to profits or gains arising to a person in a year of assessment if that person so elects by notice in writing to the inspector on or before the specified return date for the chargeable period (within the meaning of section 950).

Relief from corporation tax in respect of income from dealing in residential development land.

644B.—(1) In this section—

‘excepted trade’ has the same meaning as in section 21A;

‘residential development’ and ‘residential development land’ have the same meaning as each has in section 644A.

(2) (a)  Where in an accounting period a company carries on an excepted trade the operations or activities of which consist of or include dealing in land which, at the time at which it is disposed of by the company, is residential development land, the corporation tax payable by the company for the accounting period, in so far as it is referable to trading income from dealing in residential development land, shall be reduced by one-fifth.

(b) For the purposes of paragraph (a)—

(i) the corporation tax payable by a company for an accounting period which is referable to trading income from dealing in residential development land shall be such amount as bears to the amount of corporation tax for the period referable to income of an excepted trade the same proportion as—

(I) the amount receivable by the company in the accounting period from the disposal in the course of the excepted trade of residential development land, exclusive of so much of that amount as is attributable to construction operations (within the meaning of section 21A) carried out by or for the company on the land, bears to

(II) the total amount receivable by the company in the accounting period, exclusive of so much of that amount as is attributable to construction operations (within the meaning of section 21A) carried out by or for the company on land disposed of by it, in the course of the excepted trade,

and

(ii) corporation tax referable to income from an excepted trade for an accounting period shall be such sum as bears to the amount of corporation tax charged for the period in accordance with section 21A at the rate of 25 per cent the same proportion as the amount of the company's profits treated under section 21A as consisting of income from the excepted trade bears to the total amount of the profits of the company for the period so charged at the rate of 25 per cent.

(3)  (a) Where in an accounting period income of a company which is chargeable under Case IV of Schedule D by virtue of section 643 consists of or includes an amount in respect of a gain obtained from disposing of land which, at the time of its disposal, is residential development land, the corporation tax payable by the company for the accounting period, in so far as it is referable to that gain, shall be reduced by one-fifth.

(b) For the purposes of paragraph (a)—

(i) the corporation tax payable by a company for an accounting period which is referable to a gain from disposing of residential development land shall be such amount as bears to the amount of corporation tax for the accounting period referable to a gain charged to tax in accordance with section 643 the same proportion as so much of the amount (in this subparagraph referred to as the ‘specified amount’) of the last-mentioned gain as is attributable to the disposal of residential development land (exclusive of any part of the gain as is referable to construction operations, within the meaning of section 644A, carried out by the company) bears to the specified amount, and

(ii) corporation tax referable to a gain from disposing of land which is treated by virtue of section 643 as income chargeable under Case IV of Schedule D shall be such sum as bears to the amount of corporation tax charged for the accounting period in accordance with section 21A at the rate of 25 per cent the same proportion as the amount of the company's profits which consists of income chargeable under Case IV of Schedule D by virtue of section 643 bears to the total amount of the profits of the company for the period so charged at the rate of 25 per cent.

(4) (a)  Where a company makes a claim in that behalf, the corporation tax payable by the company for an accounting period ending before 1 January 2001 shall be computed as if subparagraph (ii) of paragraph (a) of the definition of excepted operations in section 21A did not have effect in relation to residential development land.

(b) For the purposes of this subsection where an accounting period of a company begins before 1 January 2001 and ends on or after that day, it shall be divided into two parts, one beginning on the day on which the accounting period begins and ending on 31 December 2000 and the other beginning on 1 January 2001 and ending on the day on which the accounting period ends, and both parts shall be treated for the purpose of this section as if they were separate accounting periods of the company.”.