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Amendment of section 299 (allowances to lessees) of Principal Act.
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36.— (1) Section 299 of the Principal Act is amended—
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(a) by substituting the following for subsection (1):
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“(1) Subject to subsection (3), where machinery or plant is let by means of a finance lease (within the meaning of section 76D) to a person, by whom a trade is carried on, on the terms of that person being bound to maintain the machinery or plant and deliver it over in good condition at the end of the lease, and if the burden of the wear and tear of the machinery or plant in fact falls directly on that person, then, for the purposes of sections 283 and 284, the capital expenditure on the provision of the machinery or plant shall be deemed to have been incurred by that person and not by any other person and the machinery or plant shall be deemed to belong to that person and not to any other person.”,
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and
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(b) by inserting the following after subsection (2):
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“(3) (a) In this subsection ‘lease payments’, ‘lessee’ and ‘lessor’ have, respectively, the same meanings as in section 80A.
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(b) Subsection (1) shall only apply where—
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(i) the lessor and lessee jointly elect, or
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(ii) where the lessor is not a person within the charge to tax under Schedule D, the lessee elects,
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that this section shall apply for the purposes of sections 283 and 284 by giving notice in writing to the inspector on or before the specified return date for the chargeable period (within the meaning of section 950) in a form approved by the Revenue Commissioners and containing such particulars relating to the lessor and lessee and in connection with the lease as may be specified in the approved form.
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(c) Where this section applies—
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(i) the amount to be deducted in computing the profits or gains to be charged to tax under Case 1 of Schedule D for any chargeable period of the lessee in relation to lease payments to be paid in respect of the finance lease, shall be the amount in respect of those lease payments which in accordance with generally accepted accounting practice would be deducted in a profit and loss account for that period, and accordingly, the aggregate amount (referred to in subparagraph (ii) as the ‘aggregate deductible amount’) to be deducted in computing the profits or gains to be charged to tax under Case 1 of Schedule D for any chargeable period of the lessee in relation to lease payments to be paid in respect of and over the term of the lease, shall be the amount in relation to those lease payments which in accordance with generally accepted accounting practice would be deducted in the profit and loss account over the term of the lease, and
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(ii) where capital expenditure deemed to have been incurred by the lessee would otherwise exceed the amount by which the aggregate amount of lease payments to be paid in respect of the lease exceeds the aggregate deductible amount, then the amount of capital expenditure on the provision of plant and machinery for the purposes of subsection (1) shall be deemed to be the amount by which the aggregate amount of the lease payments made in respect of and over the term of the lease exceeds the aggregate deductible amount.”.
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(2) This section applies to chargeable periods (within the meaning of Part 9 of the Principal Act) commencing on, or after, the passing of this Act.
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