Corporation Tax Act, 1976
|
PART VII Special Exemptions | |||||
|
Reduced rate of corporation tax for certain income. |
79.—(1) Where in any accounting period the profits of a company include any income to which this section applies— | ||||
(a) the corporation tax charged on that income for the accounting period shall, notwithstanding the provisions of section 1 (introduction for companies of corporation tax in place of income tax and corporation profits tax), be calculated as if the rate of corporation tax for the financial year 1974 and each subsequent financial year were 35 per cent., and | |||||
(b) the income shall be disregarded for all purposes of section 28 (reduction of corporation tax liability of small companies). | |||||
(2) For the purposes of this section the income of a company for an accounting period is its income for that period as defined in section 28 for the purposes of that section. | |||||
(3) The income to which this section applies is— | |||||
(a) in the case of a public utility company which, by or by virtue of any Act, is precluded in respect of the whole of the trade or business carried on by it either from charging any higher price or from distributing any higher rate of dividend than that authorised by or by virtue of such Act, any income of such company; | |||||
(b) in the case of a public utility company which, by or by virtue of any Act, is precluded in respect of part only of the trade or business carried on by it either from charging any higher price or from distributing any higher rate of dividend than that authorised by or by virtue of such Act, so much of the income of such company as is derived from the part of its trade or business to which such preclusion applies; | |||||
(c) in the case of a company which owns a controlling interest in and directs or is entitled to direct the management of any public utility company, the income derived by the first-mentioned company from such public utility company; | |||||
(d) the income of The Agricultural Credit Corporation Limited; | |||||
(e) the income of a company which carries on a railway undertaking; | |||||
(f) the income of an association which is registered under section 24 of the Companies Act, 1963 , as a company with limited liability without the addition of the word “limited” to its name, so long as it continues to be so registered; | |||||
(g) the income of a company which is established solely for the advancement of religion or education and which under its memorandum or articles of association is prohibited from distributing any part of its profits to its members; | |||||
(h) the income of a company formed before the 4th day of August, 1920, whose assets consist wholly of stock or other securities issued by any public authority and formerly held by the persons by whom the company was formed; | |||||
(i) the income of a company which is precluded by its constitution from distributing any part of its profits amongst its members; and | |||||
(j) so much of the income of an investment trust company as is derived from dividends and other distributions received from any body corporate which is liable to the tax in Northern Ireland and Great Britain known as corporation tax to the extent that such dividends and distributions have been paid out of profits which have borne that tax. | |||||
(4) In this section “public utility company” means a company which carries on in the State any tramway, dock or canal undertaking. | |||||
(5) For the purposes of subsection (3) (i), a company shall be regarded as being precluded by its constitution from distributing any part of its profits amongst its members if, but only if— | |||||
(a) it is a company within the meaning of the Companies Act, 1963 , and its memorandum or articles of association contain provisions— | |||||
(i) prohibiting the distribution of any part of its profits amongst its members by way of dividend, bonus or otherwise, and | |||||
(ii) securing that if, after the satisfaction of all the debts and liabilities of the company on its winding up or dissolution, any property of the company is undisposed of, it shall not be given to or distributed amongst its members but shall be— | |||||
(I) given to the Minister for Finance for the benefit of the Central Fund, or | |||||
(II) given to a body of persons (within the meaning of the Income Tax Acts) selected by the members of the company at or before the time of the winding up or dissolution aforesaid the objects of which are similar to the objects of the company, and the constitution or other governing rules of which contains or contain provisions prohibiting (to an extent at least as great as the extent of the prohibitions referred to in relation to the company in this and the other subparagraphs of this paragraph) the distribution of any part of its income or property amongst its members or proprietors, or | |||||
(III) given to a body of persons (within the meaning of the Income Tax Acts) or trust established for charitable purposes only, and | |||||
(iii) securing that the aforementioned provisions may not be altered or deleted without the previous consent or approval of the Minister for Finance, or the previous consent or approval of any other Minister of State given after consultation with the Minister for Finance; or | |||||
(b) it is a company, established by or under a statute (within the meaning of section 3 of the Interpretation Act, 1937 ) and named therein, or incorporated by or under a charter, and— | |||||
(i) is prohibited by or under the statute or charter, as the case may be, from distributing any part of its profits amongst its members by way of dividend, bonus or otherwise or, if not so prohibited, is not authorised by or under the statute or charter to distribute any part of its profits amongst its members, or | |||||
(ii) is required to apply its income and property as directed by or under the statute or charter or by a Minister of State. | |||||
(6) Where provisions of the kind specified in subsection (5) (a) are contained in the memorandum or articles of association of a company and those provisions are altered or deleted without the previous consent or approval of the Minister for Finance, or the previous consent or approval of any other Minister of State given after consultation with the Minister for Finance, as the case may be, then— | |||||
(a) where the company makes a distribution out of income to which this section applies or out of profits which were, by virtue of section 43 (3) of the Finance Act, 1922 , not charged to corporation profits tax or out of that income and those profits, the company shall be assessed to income tax at the standard rate under Case IV of Schedule D on an amount the income tax on which at the standard rate for the year in which the distribution is made is equal to the amount of the tax credit which would apply in respect of the distribution if the person receiving it were an individual resident in the State; | |||||
(b) where the company distributes, on or after the 27th day of November, 1975, its assets amongst its members or proprietors on the winding up or dissolution of the company the company shall be assessed to income tax for the year of assessment in which the winding up or dissolution occurs at the standard rate under Case IV of Schedule D on an amount determined by the formula | |||||
| |||||
where— | |||||
A is the standard rate per cent. for the year of assessment in which the winding up or dissolution occurs, and | |||||
D is the amount by which the total value of the assets distributed to the members or proprietors on the winding up or dissolution exceeds the amount of the paid up share capital of the company. | |||||
(7) (a) In this section— | |||||
“investment trust company” means a company which complies with the following conditions— | |||||
(i) it is incorporated and resident in the State, | |||||
(ii) it has issued for public subscription not less than 80 per cent. in nominal value of its shares carrying voting rights, whether immediate or to arise in certain future circumstances, | |||||
(iii) its business consists mainly in the making of investments, | |||||
(iv) the distribution as dividend of surpluses arising from the realisation of investments is prohibited by the company's memorandum or articles of association; | |||||
“Irish securities” means securities of the Government, securities guaranteed by the Minister for Finance and any stocks, shares, debentures, bonds or obligations of any municipal corporation in the State, or any company or other body corporate incorporated in the State; | |||||
“securities” includes stocks, shares, bonds and obligations of any Government, municipal corporation, company or other body corporate. | |||||
(b) The provisions of subsection (1) shall not apply to the income of an investment trust company for any accounting period unless the following conditions are satisfied— | |||||
(i) throughout the accounting period— | |||||
(I) the value of the Irish securities held by the investment trust company was not less than 15 per cent. of the value of the securities held by the investment trust company, | |||||
(II) the securities (whether of one class or more than one class) held by the investment trust company in any one body corporate, other than an investment trust company, did not represent more than 15 per cent. by value of the first-mentioned investment trust company's securities, | |||||
(III) the number of shareholders was not less than fifty and no one shareholder was the beneficial owner of more than 49 per cent. of the shares of the investment trust company, | |||||
(IV) the value of the securities quoted on a recognised stock exchange which were held by the investment trust company was not less than 85 per cent. of the value of the securities held by the investment trust company, | |||||
and | |||||
(ii) the investment trust company did not retain more than 15 per cent. of its profits— | |||||
(I) in any accounting period, and | |||||
(II) in any period (not being a period for which the company was within the charge to corporation tax) for which accounts of the company were made up and which ended on or after the 29th day of July, 1968. | |||||
(c) The Minister for Finance may, after consultation with the Revenue Commissioners, direct that the provisions of subsection (1) shall apply in relation to an investment trust company for any accounting period notwithstanding that one or more of the conditions stated in paragraph (b) (i) of this subsection was or were not complied with and notification of any such direction shall be published in Iris Oifigiúil as soon as may be after it is given. | |||||
(8) Any amount on which by virtue of this section income tax is charged on a company by an assessment under Case IV of Schedule D shall not be regarded as income of the company for any purpose of the Tax Acts. |