|
|
Taxation of stallion profits and gains.
|
26.— (1) The Principal Act is amended—
|
|
| |
(a) in section 381 by inserting the following after subsection (2):
|
|
| |
“(2A) Subsection (2) shall cease to have effect as respects losses arising on or after 1 August 2008 and, as respects the chargeable period in which 1 August 2008 occurs, the amount of such losses will be determined by the formula—
|
|
| |
A x B
|
|
| |
C
|
|
| |
where—
|
|
| |
A is the total amount of losses arising in the chargeable period,
|
|
| |
B is the length, in days, of the period beginning on 1 August 2008 and ending on the last day of the chargeable period in which 1 August 2008 occurs, and
|
|
| |
C is the length, in days, of the chargeable period.”,
|
|
| |
and
|
|
| |
(b) by inserting the following Chapter into Part 23 after Chapter 3:
|
|
| |
“Chapter 4
|
|
| |
Taxation of stallion profits and gains
|
|
| |
Interpretation (Chapter 4).
|
|
| |
669G.— In this Chapter—
|
|
| |
‘ excess relief ’ has the same meaning as in section 485C;
|
|
| |
‘ initial value ’ in relation to a stallion means its market value on—
|
|
| |
(a) 1 August 2008, or
|
|
| |
(b) the day it is either acquired for, or appropriated to, stud activities, as the case may be,
|
|
| |
whichever is later, and any reference to a stallion includes a reference to an interest in a stallion;
|
|
| |
‘ market value ’, at any time in relation to a stallion, means the price which the stallion might reasonably be expected to fetch on a sale in the open market and in a case where a person (the ‘purchaser’) acquires the stallion from another person (the ‘vendor’)—
|
|
| |
(a) at arm’s length, and
|
|
| |
(b) the purchaser and the vendor are not connected persons (within the meaning of section 10),
|
|
| |
then the market value is the price paid;
|
|
| |
‘ relevant amount ’, in relation to a year of assessment and an individual, means an amount determined by the formula—
|
|
| |
A — B
|
|
| |
where—
|
|
| |
A is the amount of income tax payable by the individual for the year of assessment, and
|
|
| |
B is the amount of income tax which would be payable by the individual for the year of assessment if—
|
|
| |
(a) the entry at Reference Number 6 of Schedule 25B had not been enacted, and
|
|
| |
(b) for the purposes of the entry at Reference Number 1 of Schedule 25B the definition of ‘exempt profits’ in section 140(1) did not include profits or gains which by virtue of section 231 were not charged to tax;
|
|
| |
‘ relevant excess relief ’, in relation to a year of assessment and an individual, means an amount determined by the formula—
|
|
| |
C — D
|
|
| |
where—
|
|
| |
C is the amount of excess relief which is carried forward to the next year of assessment and which the individual is entitled to deduct from his or her total income for that year, and
|
|
| |
D is the amount of excess relief which would be carried forward to the next year of assessment and which the individual would be entitled to deduct from his or her total income for that year if—
|
|
| |
(a) the entry at Reference Number 6 of Schedule 25B had not been enacted, and
|
|
| |
(b) for the purposes of the entry at Reference Number 1 of Schedule 25B the definition of ‘exempt profits’ in section 140(1) did not include profits or gains which by virtue of section 231 were not charged to tax;
|
|
| |
‘ residual value ’, in relation to a stallion, at any time, means—
|
|
| |
(a) an amount equal to the initial value of the stallion, or
|
|
| |
(b) if less, the amount by which the initial value of the stallion exceeds—
|
|
| |
(i) the amount which has been allowed as a deduction under section 669I for a chargeable period ending before that time, or
|
|
| |
(ii) where there is more than one such amount, the aggregate of such amounts.
|
|
| |
Charging provisions.
|
|
| |
669H.— (1) The profits or gains arising in any chargeable period to the owner or part-owner of a stallion from the sale of services of mares by the stallion or rights to such services shall be chargeable to income tax or corporation tax, as the case may be, in accordance with subsection (2).
|
|
| |
(2) (a) In a case in which the owner or part-owner of a stallion carries on in the chargeable period referred to in subsection (1) the trade of farming in respect of which the owner or part-owner is within the charge to tax under Case I of Schedule D, the profits or gains referred to in subsection (1) and any amount chargeable under subsection (3)(c) of section 669I shall be chargeable under that Case of that Schedule as part of that trade.
|
|
| |
(b) In a case, other than one referred to in paragraph (a), the profits or gains referred to in subsection (1) and any amount chargeable under subsection (3)(c) of section 669I shall be chargeable under Case IV of Schedule D.
|
|
| |
Provisions as to deductions.
|
|
| |
669I.— (1) Where any person acquires ownership or part-ownership of a stallion, the profits or gains in relation to which are chargeable in accordance with section 669H(2), then that person, in computing the amount of income to be charged to tax under the Tax Acts for any chargeable period, shall not be entitled, other than in accordance with subsection (2), to any deduction in respect of expenditure incurred on such acquisition.
|
|
| |
(2) (a) Where the profits or gains referred to in subsection (1) are chargeable in accordance with section 669H(2)(a), for each of 4 consecutive chargeable periods, the first of which begins with the chargeable period in which—
|
|
| |
(i) 1 August 2008 occurs, in a case where the stallion is owned or part-owned on that day, or
|
|
| |
(ii) in any other case, the stallion is either acquired for, or appropriated to, stud activities, as the case may be,
|
|
| |
the owner or part-owner of the stallion shall, in computing for the purposes of tax the trading income of the trade of farming referred to in that section, be entitled to a deduction under this section equal to 25 per cent of the initial value of the stallion, as if the deduction were a trading expense incurred in the chargeable period.
|
|
| |
(b) Subject to section 669K(3), where the profits or gains referred to in subsection (1) are chargeable in accordance with section 669H(2)(b), in determining the amount of income to be charged to tax under Case IV of Schedule D, such income shall be computed in accordance with the provisions applicable to Case I of Schedule D, taking into account this Chapter.
|
|
| |
(3) Where, in any chargeable period a stallion to which this Chapter applies is disposed of or dies, then—
|
|
| |
(a) no deduction which would otherwise be allowed under subsection (2)(a) or (2)(b), as the case may be, in respect of the initial value of that stallion shall be allowed for that chargeable period or for any subsequent chargeable period,
|
|
| |
(b) a deduction of an amount equal to the residual value of the stallion at the time of its disposal or death shall be allowed for that chargeable period as if it were a deduction under subsection (2)(a), and
|
|
| |
(c) the owner or part-owner of the stallion shall be chargeable to income tax or corporation tax, as the case may be, on—
|
|
| |
(i) the amount received in money or money’s worth, in respect of its disposal or death, or
|
|
| |
(ii) in the case of a disposal, if greater, the price which the stallion might reasonably have been expected to fetch at the time of its disposal on a sale, at arm’s length between persons who are not connected (within the meaning of section 10), in the open market.
|
|
| |
Credit for tax paid.
|
|
| |
669J.— (1) Subject to the provisions of this section, any individual, to whom Chapter 2A of Part 15 applies for any year of assessment, who has made a payment which includes a relevant amount in respect of that year of assessment shall, without prejudice to the payment so made, be treated as having made a payment on account of income tax of an amount equal to the relevant amount.
|
|
| |
(2) So much of a payment of tax (referred to in this section as the ‘deemed payment on account of tax’) for a year of assessment by an individual as is treated in accordance with subsection (1) shall, in so far as possible, be set against any liability to income tax of the individual, for the year of assessment following the first-mentioned year of assessment.
|
|
| |
(3) To the extent that the deemed payment on account of tax has not been set off in accordance with subsection (2), the balance remaining shall be set off against a liability to income tax for any subsequent year of assessment of the individual who is treated as having made the payment, in the order of being set off against a liability for an earlier period in priority to a liability for a later period.
|
|
| |
(4) Only the excess of an overpayment of income tax for any year of assessment over the deemed payment on account of tax to be made for that year of assessment by virtue of this section may be repaid and interest shall not be payable in respect of any part of such overpayment other than the excess.
|
|
| |
(5) Where in any year of assessment section 485E applies to an individual, then for the purposes of section 485F the excess relief for the year shall be reduced by an amount equal to the amount of the relevant excess relief.
|
|
| |
Miscellaneous (Chapter 4).
|
|
| |
669K.— (1) For the purposes of determining the market value of a stallion to which this Chapter applies, the Revenue Commissioners may consult with such person or body of persons as, in their opinion, may be of assistance to them.
|
|
| |
(2) Notwithstanding any other provisions of the Tax Acts, trading stock comprising stallions shall be disregarded for all purposes of section 666.
|
|
| |
(3) In a case in which in any chargeable period the computation of the amount of income of a person to be charged to tax under Case IV of Schedule D under this Chapter results in a loss, then, notwithstanding section 383, the amount of the loss may not be deducted from or set off against other income charged to tax under Case IV of Schedule D arising in that chargeable period, and any loss, when carried forward to a subsequent chargeable period, may only be deducted from or set off against income to which section 669H(2)(b) applies arising in that subsequent chargeable period.”.
|
|
| |
(2) Subsection (1) comes into operation on the making of an order to that effect by the Minister for Finance.
|
