IE-1976-act-7 — Corporation Tax Act, 1976

Introduction for companies of corporation tax in place of income tax, corporation profits tax and capital gains tax. 1. —(1) For the financial year 1974 and each subsequent financial year there shall be charged on profits of companies a tax, to be called corporation tax, at the rate of 50 per cent. (2) For years of assessment after the year 1975–76 the provisions of the Income Tax Acts relating to the charge of income tax shall not apply to income of a company (not arising to it in a fiduciary or representative capacity) if— ( a ) the company is resident in the State; or ( b ) the income is, in the case of a company not so resident, within the chargeable profits of the company as defined for the purposes of corporation tax. (3) A company shall not be chargeable to capital gains tax in respect of gains accruing to it so that it is chargeable in respect of them to corporation tax. (4) Corporation profits tax shall not be chargeable for accounting periods or parts of accounting periods falling after the 5th day of April, 1976. (5) In this Act, unless the context otherwise requires— ( a ) “company” means any body corporate but does not include— (i) a health board, (ii) a vocational education committee established under the Vocational Education Act, 1930 , (iii) a committee of agriculture established under the Agriculture Act, 1931 , or (iv) a local authority, and for this purpose “local authority” has the meaning assigned to it by section 2 (2) of the Local Government Act, 1941 , and includes a body established under the Local Government Services (Corporate Bodies) Act, 1971 ; ( b ) “the financial year 1974” means the period of nine months beginning on the 1st day of April, 1974; ( c ) “profits” means income and chargeable gains, and “chargeable gains” has the same meaning as in the Capital Gains Tax Act, 1975 , but does not include gains accruing on disposals which were made before the 6th day of April, 1976; ( d ) “trade” includes “vocation” and includes also an office or employment; ( e ) such other words and expressions as are specified in section 155 (interpretation) have the meanings given by or indicated in that section. Irish resident company distributions not chargeable to corporation tax. 2. —Except as otherwise provided by this Act, corporation tax shall not be chargeable on dividends and other distributions of a company resident in the State, nor shall any such dividends or distributions be taken into account in computing income for corporation tax. Income tax on payments made or received by a company resident in the State. 3. —(1) No payment made after the 5th day of April, 1976, by a company resident in the State shall by virtue of this section or otherwise be treated for any purpose of the Income Tax Acts as paid out of profits or gains brought into charge to income tax; nor shall any right or obligation under the Income Tax Acts to deduct income tax from any payment be affected by the fact that the recipient is a company not chargeable to income tax in respect of the payment. (2) Subject to the provisions of this Act, where after the 5th day of April, 1976, a company resident in the State receives any payment on which it bears income tax by deduction, the income tax thereon shall be set off against any corporation tax assessable on the company by an assessment made for the accounting period in which that payment falls to be taken into account for corporation tax (or would fall to be taken into account but for any exemption from corporation tax); and accordingly in respect of that payment the company, unless wholly exempt from corporation tax, shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due. (3) References in this section to payments received by a company apply to any received by another person on behalf of or in trust for the company, but not to any received by the company on behalf of or in trust for another person. Claims for repayment of income tax deducted from receipts. 4. —Effect shall be given— ( a ) to section 1 (2), and to that section as modified by sections 3 (2) and 8 (3), and ( b ) so far as the exemptions from income tax conferred by the Corporation Tax Acts call for repayment of tax, to those exemptions, by means of a claim. Explanation of tax credit to be annexed to interest and dividend warrants. 5. —(1) Every warrant or cheque or other order drawn or made, or purporting to be drawn or made, in payment by any company of any dividend, or of any interest which is a distribution, shall have annexed thereto or be accompanied by a statement in writing showing— ( a ) the amount of the dividend (distinguishing a dividend or any part of it which is paid out of capital profits of the company) or interest paid, ( b ) (whether or not the recipient is a person entitled to a tax credit in respect thereof) the amount of the tax credit to which a recipient who is such a person is entitled in respect thereof, and ( c ) the period for which the dividend or interest is paid. (2) If a company fails to comply with any of the provisions of this section the company shall incur a penalty of £10 in respect of each offence but the aggregate amount of the penalties imposed under this section on any company in respect of offences connected with any one distribution of dividends or interest shall not exceed £100. PART II Corporation Tax General scheme of corporation tax. 6. —(1) Subject to any exceptions provided for by this Act, a company shall be chargeable to corporation tax on all its profits wherever arising. (2) A company shall be chargeable to corporation tax on profits accruing for its benefit under any trust, or arising under any partnership, in any case in which it would be so chargeable if the profits accrued to it directly; and a company shall be chargeable to corporation tax on profits arising in the winding up of the company, but shall not otherwise be chargeable to corporation tax on profits accruing to it in a fiduciary or representative capacity except as respects its own beneficial interest (if any) in those profits. (3) Corporation tax for any financial year shall be charged on profits arising in that year; but assessments to corporation tax shall be made on a company by reference to accounting periods, and the amount chargeable (after making all proper deductions) of the profits arising in an accounting period shall, where necessary, be apportioned between the financial years in which the accounting period falls. (4) ( a ) Except as otherwise provided by this subsection, corporation tax assessed for an accounting period shall be paid in two equal instalments as follows— (i) the first instalment within nine months from the end of the accounting period or, if it is later, within two months from the making of the assessment; and (ii) the second instalment within fifteen months from the end of the accounting period or, if it is later, within two months from the making of the assessment. ( b ) Where, in respect of a source of income, a company is within the charge to income tax under Schedule D for the year of assessment 1975-76, and in respect of that source of income comes within the charge to corporation tax on or before the 6th day of April, 1975, then (so long as the company continues to be within the charge to corporation tax in respect of that source of income) the second instalment of corporation tax assessed for an accounting period shall be paid as follows— (i) in respect of the first accounting period for which the company is within the charge to corporation tax— (I) where that accounting period is a period of twelve months, on or before the 1st day of January, 1977, and (II) where that accounting period is a period of less than twelve months, within the like interval from the end of the accounting period as the 1st day of January, 1977, would have been from the end of the first accounting period if that accounting period had been a period of twelve months commencing on the date on which the company comes within the charge to corporation tax; and (ii) in respect of any subsequent accounting period, within the like interval from the end of such accounting period as there was between the end of the first accounting period for which the company was within the charge to corporation tax and the date on or before which the second instalment of corporation tax for that first accounting period would have become payable if the assessment for that accounting period had been made on the day immediately following the end of that accounting period: Provided that in no case shall the second instalment of corporation tax assessed for an accounting period become payable before the expiration of nine months from the end of the accounting period for which it is assessed or before the expiration of two months from the making of the assessment. (5) Corporation tax shall be under the care and management of the Revenue Commissioners who may do all such acts as may be deemed necessary and expedient for raising, collecting, receiving and accounting for the tax in the like manner as they are authorised to do with relation to any other duties under their care and management. (6) Section 1 of the Provisional Collection of Taxes Act, 1927 , is hereby amended by the insertion of “and corporation tax” before “but no other tax or duty”. (7) Section 39 of the Inland Revenue Regulation Act, 1890 , is hereby amended by the insertion of “corporation tax,” before “stamp duties”. Tax on company in liquidation. 7. —An assessment on a company's profits for an accounting period which falls after the commencement of the winding up of the company shall not be invalid because made before the end of the accounting period. Companies not resident in the State. 8. —(1) A company not resident in the State shall not be within the charge to corporation tax unless it carries on a trade in the State through a branch or agency but, if it does so, it shall, subject to any exceptions provided for by this Act, be chargeable to corporation tax on all its chargeable profits wherever arising. (2) For purposes of corporation tax the chargeable profits of a company not resident in the State but carrying on a trade there through a branch or agency shall be— ( a ) any trading income arising directly or indirectly through or from the branch or agency, and any income from property or rights used by, or held by or for, the branch or agency (but so that this paragraph shall not include distributions received from companies resident in the State); and ( b ) such chargeable gains as, but for this Act, would be chargeable to capital gains tax in the case of a company which is not resident in the State: Provided that such chargeable profits shall not include chargeable gains accruing to the company on the disposal of assets which, at or before the time when the chargeable gains accrued, were not used in or for the purposes of the trade and were not used or held or acquired for the purposes of the branch or agency. (3) Subject to section 45 (overseas life assurance companies), where in the year 1976-77 or any later year of assessment, a company not resident in the State receives any payment on which it bears income tax by deduction, and the payment forms part of, or is to be taken into account in computing, the company's income chargeable to corporation tax, the income tax thereon shall be set off against any corporation tax assessable on that income by an assessment made for the accounting period in which the payment falls to be taken into account for corporation tax; and accordingly in respect of that payment the company shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due. (4) Without prejudice to the general application of income tax procedure to corporation tax, the provisions of Chapter II of Part IX of the Income Tax Act, 1967 (Special Provisions as to Non-residents and Temporary Residents), and section 209 in Chapter III of the said Part (liability of trustees, etc.) relating to the assessment and charge of income tax on persons not resident in the State, so far as they are applicable to tax chargeable on a company, shall apply with any necessary adaptations in relation to corporation tax chargeable on companies not resident in the State. Basis of, and periods for, assessment. 9. —(1) Except as otherwise provided by this Act, corporation tax shall be assessed and charged for any accounting period of a company on the full amount of the profits arising in the period (whether or not received in or remitted to the State) without any other deduction than is authorised by this Act. (2) An accounting period of a company shall begin for purposes of corporation tax whenever— ( a ) the company, not then being within the charge to corporation tax, comes within it whether by the coming into force of any provision of this Act, or by the company becoming resident in the State or acquiring a source of income, or otherwise; or ( b ) an accounting period of the company ends without the company then ceasing to be within the charge to corporation tax. (3) An accounting period of a company shall end for purposes of corporation tax on the first occurrence of any of the following— ( a ) the expiration of twelve months from the beginning of the accounting period; ( b ) an accounting date of the company or, if there is a period for which the company does not make up accounts, the end of that period; ( c ) the company beginning or ceasing to trade or to be, in respect of the trade or (if more than one) of all the trades carried on by it, within the charge to corporation tax; ( d ) the company beginning or ceasing to be resident in the State; ( e ) the company ceasing to be within the charge to corporation tax. (4) For the purposes of this section a company resident in the State, if not otherwise within the charge to corporation tax, shall be treated as coming within the charge to corporation tax on the 6th day of April, 1976, or at the time when it commences to carry on business, whichever is the later. (5) If a company carrying on more than one trade makes up accounts of any of them to different dates, and does not make up general accounts for the whole of the company's activities, subsection (3) ( b ) shall apply with reference to the accounting date of such one of the trades as the Revenue Commissioners may determine. (6) If, on or after the 6th day of April, 1976, a chargeable gain or allowable loss accrues to a company at a time not otherwise within an accounting period of the company, an accounting period of the company shall then begin for the purposes of corporation tax, and the gain or loss shall accrue in that accounting period. (7) Notwithstanding anything in the preceding subsections, where a company is wound up, an accounting period shall end and a new one begin with the commencement of the winding up, and thereafter an accounting period shall not end otherwise than by the expiration of twelve months from its beginning or by the completion of the winding up. For this purpose a winding up is to be taken to commence on the passing by the company of a resolution for the winding up of the company, or on the presentation of a winding up petition if no such resolution has previously been passed and a winding up order is made on the petition, or on the doing of any other act for a like purpose in the case of a winding up otherwise than under the Companies Act, 1963 . (8) Where it appears to the inspector that the beginning or end of any accounting period of a company is uncertain, he may make an assessment on the company for such period, not exceeding twelve months, as appears to him appropriate, and that period shall be treated for all purposes as an accounting period of the company unless either the inspector on further facts coming to his knowledge sees fit to revise it or on an appeal against the assessment in respect of some other matter the company shows the true accounting periods; and if on an appeal against an assessment made by virtue of this subsection the company shows the true accounting periods the assessment appealed against shall, as regards the period to which it relates, have effect as an assessment or assessments for the true accounting periods, and there may be made such other assessments for any such periods or any of them as might have been made at the time when the assessment appealed against was made. Allowance of charges on income. 10. —(1) In computing the corporation tax chargeable for any accounting period of a company any charges on income paid by the company in the accounting period, but not before the 6th day of April, 1976, so far as paid out of the company's profits brought into charge to corporation tax, shall be allowed as deductions against the total profits for the period as reduced by any other relief from tax other than group relief. (2) Subject to the following subsections and to any other express exceptions, “charges on income” means for the purposes of corporation tax payments of any description mentioned in subsection (3), not being dividends or other distributions of the company, but no payment which is deductible in computing profits or any description of profits for purposes of corporation tax shall be treated as a charge on income. (3) Subject to subsections (4) to (7), the payments referred to in subsection (2) are— ( a ) any yearly interest, annuity or other annual payment and any such other payments as are mentioned in section 93 (taxation of rents under long leases and certain other payments) or section 433 (2) (yearly interest, etc., payable wholly out of taxed profits) of the Income Tax Act, 1967 , and ( b ) any other interest payable in the State on an advance from a bank carrying on a bona fide banking business in the State, or from a person who in the opinion of the Revenue Commissioners is bona fide carrying on business as a member of a stock exchange in the State or bona fide carrying on the business of a discount house in the State; and for the purposes of this section any interest payable by a company as mentioned in paragraph ( b ) shall be treated as paid on its being debited to the company's account in the books of the person to whom it is payable. (4) No such payment as is mentioned in subsection (3) ( a ) made by a company to a person not resident in the State shall be treated as a charge on income unless the company is resident in the State and either— ( a ) the company deducts income tax from the payment in accordance with section 434 of the Income Tax Act, 1967 (interest, etc., not payable out of taxed profits), or the provisions of that section as applied by section 31 of the Finance Act, 1974 , and accounts under section 151 (income tax on payments) for the tax so deducted; or ( b ) the payment is one payable out of income which is brought into charge to tax under Case III of Schedule D and which arises from securities and possessions outside the State. (5) No such payment made by a company as is mentioned in subsection (3) shall be treated as a charge on income if— ( a ) the payment is charged to capital, or the payment is not ultimately borne by the company; or ( b ) the payment is not made under a liability incurred for a valuable and sufficient consideration and, in the case of a company not resident in the State, incurred wholly and exclusively for the purposes of a trade carried on by it in the State through a branch or agency: Provided that for the purposes of paragraph ( b ) a payment falling within section 439 (1) (ii) or (ii a ) of the Income Tax Act, 1967 (dispositions for short periods), shall be treated as incurred for valuable and sufficient consideration. (6) Subject to subsection (7), any yearly or other interest such as is mentioned in subsection (3) shall be treated for the purposes of this section as a charge on income paid in any accounting period only to the extent that it does not exceed the lesser of— ( a ) an amount calculated at the rate of £2,000 per annum, and ( b ) in relation to a company which is connected with an individual or another company within the meaning of section 157 (connected persons), an amount determined by the formula where— A is the total amount of interest payable by the company in respect of the accounting period, B is the aggregate amount of the interest payable in respect of the accounting period by the company and all the persons with whom it is connected, and C is the number of months or fractions of months comprised in the accounting period; and for this purpose all such apportionments and aggregations as may be necessary shall be made: Provided that for the purposes of paragraph ( b ) interest shall be deemed not to include any amount which the company or any person with whom it is connected is entitled to deduct in computing income of any description, or any amount to which the provisions of subsection (7) or of section 32 , 34 or 36 of the Finance Act, 1974 (borrowings related to acquisition of interest in other companies, or recovery of, or replacement of capital), apply. (7) Subject to subsection (8), the provisions of subsection (6) shall not apply to any payment of interest on a loan to a company to defray money applied for a purpose mentioned in section 33 (2) of the Finance Act, 1974 , if the conditions specified in subsection (3) of that section and in section 35 (4) of that Act are fulfilled. (8) The provisions of section 35 of the Finance Act, 1974 , excluding subsection (5) thereof, shall have effect for corporation tax as for income tax; and references to section 33 of the Finance Act, 1974 , to the investing company and to the borrower, to interest eligible for relief, and to affording relief for interest shall have effect accordingly as if they were or included references to subsection (7) of this section, to such a company as is mentioned in the said subsection (7), to interest to be treated as a charge on income, and to treating part only of a payment of interest as a charge on income. Computation of income: application of income tax principles. 11. —(1) Except as otherwise provided by this Act or any other enactment relating to income tax or corporation tax, the amount of any income shall for purposes of corporation tax be computed in accordance with income tax principles, all questions as to the amounts which are or are not to be taken into account as income, or in computing income, or charged to tax as a person's income, or as to the time when any such amount is to be treated as arising, being determined in accordance with income tax law and practice as if accounting periods were years of assessment. (2) For the purposes of this section “income tax law” means, in relation to any accounting period, the law applying, for the year of assessment in which the period ends, to the charge on individuals of income tax, except that— ( a ) it includes also all such enactments of the Income Tax Acts applying for the year 1975-76 as make special provision for companies in relation to matters referred to in subsection (1), and ( b ) it does not include such of the enactments of the Income Tax Acts so applying as make special provision for individuals in relation to those matters. (3) Accordingly for purposes of corporation tax income shall be computed, and the assessment shall be made, under the like Schedules and Cases as apply for purposes of income tax, and in accordance with the provisions applicable to those Schedules and Cases, but (subject to the provisions of this Act) the amounts so computed for the several sources of income, if more than one, together with any amounts to be included in respect of chargeable gains, shall be aggregated to arrive at the total profits. (4) Nothing in this section shall be taken to mean that income arising in any period is to be computed by reference to any other period (except in so far as this results from apportioning to different parts of a period income of the whole period). (5) Subject to section 12 and to any enactment applied by this section which expressly authorises such a deduction, no deduction shall be made in computing income from any source— ( a ) in respect of dividends or other distributions; nor ( b ) in respect of any yearly interest, annuity or other annual payment or any such other payments as are mentioned in section 93 or 433 (2) of the Income Tax Act, 1967 , but not including sums which are, or but for any exemption would be, chargeable under Case V of Schedule D. (6) Without prejudice to the generality of subsection (1), any provision of the Income Tax Acts (excluding the provisions of Part XXV of the Income Tax Act, 1967 (Temporary Relief from Taxation)), or of any other statute, which confers an exemption from income tax, or which provides for the disregarding of a loss, or which provides for a person to be charged to income tax on any amount (whether expressed to be income or not, and whether an actual amount or not), shall, except as otherwise provided, have the like effect for purposes of corporation tax. (7) This section shall not have effect so as to apply for the purposes of corporation tax anything in section 76 of the Income Tax Act, 1967 (foreign securities and possessions). (8) Where, by virtue of this section or otherwise, any enactment applies both to income tax and to corporation tax, it shall not be affected in its operation by the fact that they are distinct taxes but, so far as is consistent with the Corporation Tax Acts, shall apply in relation to income tax and corporation tax as if they were one tax, so that, in particular, a matter which in a case involving two individuals is relevant for both of them in relation to income tax shall in a like case involving an individual and a company be relevant for him in relation to that tax and for it in relation to corporation tax; and for that purpose in any such enactment references to a relief from or charge to income tax, or to a specified provision of the Income Tax Acts shall, in the absence of or subject to any express adaptation, be construed as being or including a reference to any corresponding relief from or charge to corporation tax, or to any corresponding provision of the Corporation Tax Acts. Miscellaneous special rules for computation of income. 12. —(1) For purposes of corporation tax, income tax law as applied by section 11 shall have effect subject to the following subsections. (2) Where a company begins or ceases to carry on a trade, or to be within the charge to corporation tax in respect of a trade, the company's income shall be computed as if that were the commencement or, as the case may be, discontinuance of the trade, whether or not the trade is in fact commenced or discontinued: Provided that where any provision of the Income Tax Acts is applied for corporation tax by this Act, this subsection shall not have effect for any purpose of that provision if under any enactment a trade is not to be treated as permanently discontinued for the corresponding income tax purpose. (3) In computing income from a trade section 11 (5) ( b ) shall not prevent the deduction of yearly interest. (4) In computing a company's income for any accounting period from the letting of rights to work minerals in the State there may be deducted any sums disbursed by the company wholly, exclusively and necessarily as expenses of management or supervision of those minerals in that period: Provided that any enactments restricting the relief from income tax that might be given under section 553 of the Income Tax Act, 1967 (allowance to owner of mineral rights for expenses), shall apply to restrict in like manner the deductions that may be made under this subsection. (5) Where a company is chargeable to corporation tax in respect of a trade under Case III of Schedule D, the income from the trade shall be computed in accordance with the provisions applicable to Case I of Schedule D. (6) The amount of any income arising from securities and possessions in any place outside the State shall be treated as reduced (where such a deduction cannot be made under, and is not forbidden by, any provision of the Income Tax Acts applied by this Act) by any sum which has been paid in respect of income tax in the place where the income has arisen. (7) Paragraphs ( e ) and ( f ) of Case III of Schedule D in section 53 (1) of the Income Tax Act, 1967 , shall for purposes of corporation tax extend to companies not resident in the State, so far as those companies are chargeable to tax on income of descriptions which, in the case of companies resident in the State, fall within those paragraphs (but without prejudice to any provision of the Income Tax Acts specially exempting non-residents from income tax on any particular description of income). (8) The provisions of section 64 (1) of the Income Tax Act, 1967 , shall not apply in computing income from a trade. Computation of chargeable gains. 13. —(1) Subject to the provisions of this section, the amount to be included in respect of chargeable gains in a company's total profits for any accounting period shall be the following amount reduced by 48 per cent. thereof, namely, the total amount of chargeable gains accruing to the company in the accounting period after deducting (a) any allowable losses accruing to the company in the accounting period and (b) any allowable losses previously accruing to the company while it has been within the charge to corporation tax so far as they have not been allowed as a deduction from chargeable gains accruing in any previous accounting period. (2) Except as otherwise provided by this Act, the chargeable gains and allowable losses shall for purposes of corporation tax be computed in accordance with the principles applying for capital gains tax, all questions as to the amounts which are or are not to be taken into account as chargeable gains or as allowable losses, or in computing gains or losses, or charged to tax as a person's gain, or as to the time when any such amount is to be treated as accruing being determined in accordance with the provisions relating to capital gains tax as if accounting periods were years of assessment. (3) Subject to subsection (5), where the enactments relating to capital gains tax contain any reference to income tax or to the Income Tax Acts the reference shall, in relation to a company be construed as a reference to corporation tax or to the Corporation Tax Acts; but— ( a ) this subsection shall not affect the reference to income tax in paragraph 4 (2) of Schedule 1 to the Capital Gains Tax Act, 1975 (exclusion of expenditure by reference to hypothetical income tax), ( b ) nothing in this section shall be taken as applying for corporation tax section 6 of the said Act (capital gains accruing to an individual: alternative charge), and ( c ) in so far as the said provisions operate by reference to matters of any specified description, account shall for corporation tax be taken of matters of that description which are confined to companies, but not of any which are confined to individuals. (4) The Capital Gains Tax Act, 1975 , as extended by this section shall not be affected in its operation by the fact that capital gains tax and corporation tax are distinct taxes but, so far as is consistent with this Act, shall apply in relation to capital gains tax and corporation tax on chargeable gains as if they were one tax, so that, in particular, a matter which in a case involving two individuals is relevant for both of them in relation to capital gains tax shall in a like case involving an individual and a company be relevant for him in relation to that tax and for it in relation to corporation tax. (5) Where assets of a company are vested in a liquidator, this section and the enactments applied by this section shall apply as if the assets were vested in, and the acts of the liquidator in relation to the assets were the acts of, the company (acquisitions from or disposals to him by the company being disregarded accordingly). Deductions and additions in computation of profits for capital allowances and related charges. 14. —(1) In computing for purposes of corporation tax a company's profits for any accounting period there shall be made in accordance with this section all such deductions and additions as are required to give effect to the provisions of the Income Tax Acts which relate to allowances (including investment allowances) and charges in respect of capital expenditure, as those provisions are applied by this Act. (2) ( a ) Allowances and charges which fall to be made for any accounting period in taxing a trade shall be given effect by treating the amount of any allowance as a trading expense of the trade in that period and by treating the amount on which any such charge is to be made as a trading receipt of the trade in that period. ( b ) (i) A company to which an allowance under Part XV of the Income Tax Act, 1967 (Initial Allowances for Certain Capital Expenditure on Machinery and Plant and on Industrial Buildings and Structures), or under section 294 (1) ( a ) of the said Act (allowances for expenditure on dredging) as applied to corporation tax by this Act, falls to be made in taxing a trade for any accounting period may disclaim the allowance by notice in writing given to the inspector not later than two years after the end of that period. (ii) Any such notice shall be accompanied by a certificate signed by the person by whom the notice is given giving such particulars as show that the allowance would fall to be made if no such notice were given and the amount which would so fall to be made. (iii) Where notice is given under subparagraph (i) for any accounting period the inspector may make an assessment to corporation tax on the company for that accounting period on the amount, or the further amount, which in his opinion ought to be charged. (3) Where an allowance falls to be made to a company for any accounting period which is to be given by discharge or repayment of tax or in charging its income under Case V of Schedule D, and is to be available primarily against a specified class of income, it shall, as far as may be, be given effect by deducting the amount of the allowance from any income of the period, being income of the specified class. (4) Balancing charges for any accounting period not falling to be made in taxing a trade shall, notwithstanding any provision for them to be made under Case IV or V of Schedule D, as the case may be, be given effect by treating the amount on which the charge is to be made as income of the same class as that against which the corresponding allowances are available or primarily available. (5) Where an allowance which is to be made for any accounting period by way of discharge or repayment of tax, or in charging income under Case V of Schedule D, as the case may be, cannot be given full effect under subsection (3) in that period by reason of a want or deficiency of income of the relevant class, then (so long as the company remains within the charge to tax) the amount unallowed shall be carried forward to the succeeding accounting period, except in so far as effect is given to it under subsection (6); and the amount so carried forward shall be treated for purposes of this section, including any further application of this subsection, as the amount of a corresponding allowance for that period. (6) Where an allowance (other than an allowance which is carried forward from an earlier accounting period) which is to be made for any accounting period by way of discharge or repayment of tax, or in charging income under Case V of Schedule D as the case may be, and which is available primarily against income of a specified class cannot be given full effect under subsection (3) in that period by reason of a want or deficiency of income of that class, the company may claim that effect shall be given to the allowance against the profits (of whatever description) of that accounting period and, if the company was then within the charge to tax, of preceding accounting periods ending within the time specified in subsection (7); and, subject to that subsection and to any relief for earlier allowances or for losses, the profits of any of those accounting periods shall then be treated as reduced by the amount unallowed under subsection (3), or by so much of that amount as cannot be given effect under this subsection against profits of a later accounting period. (7) The time referred to in subsection (6) is a time immediately preceding the accounting period first mentioned in subsection (6) equal in length to the accounting period for which the allowance falls to be made; but the amount or aggregate amount of the reduction which may be made under that subsection in the profits of an accounting period falling partly before that time shall not, with the amount of any reduction falling to be made therein under any corresponding provision of this Act relating to losses, exceed a part of those profits proportionate to the part of the period falling within that time. (8) A claim under subsection (6) shall be made by notice in writing given to the inspector not later than two years from the end of the accounting period in which an allowance cannot be given full effect under subsection (3). Deduction of management expenses of Investment companies (including savings banks). 15. —(1) In computing for purposes of corporation tax the total profits for any accounting period of an investment company resident in the State there shall be deducted any sums disbursed on or after the 6th day of April, 1976, as expenses of management (including commissions) for that period, except any such expenses as are deductible in computing income for the purposes of Case V of Schedule D: Provided that there shall be deducted from the amount treated as expenses of management the amount of any income derived from sources not charged to tax, other than franked investment income. (2) Where in any accounting period of an investment company the expenses of management deductible under subsection (1), together with any charges on income paid in the accounting period wholly and exclusively for purposes of the company's business, exceed the amount of the profits from which they are deductible, the excess shall be carried forward to the succeeding accounting period; and the amount so carried forward shall be treated for purposes of this section (other than subsection (4)), including any further application of this subsection, as if it had been disbursed as expenses of management for that accounting period. (3) For the purposes of subsections (1) and (2) there shall be added to a company's expenses of management in any accounting period the amount of any allowances falling to be made to the company for that period by virtue of section 37 of the Finance Act, 1968 (relief for payments in respect of redundancy), or section 16 of the Finance Act, 1972 (certain approved occupational pension schemes: exemptions and reliefs). (4) Where an investment company proves that, in any accounting period, it has received franked investment income, it shall be entitled to claim payment of the amount of the tax credit comprised in so much of that income as is equal to the amount of any excess for the accounting period computed under subsection (2) but excluding any amount carried forward from a previous accounting period: Provided that any excess in respect of which relief is given under this subsection shall not be carried forward under subsection (2). (5) Notice of any claim under subsection (4), together with the particulars thereof, shall be given in writing to the inspector within two years after the end of the accounting period in respect of which the claim is made, and where the inspector objects to such claim the Appeal Commissioners shall hear and determine the same in like manner as in the case of an appeal to them against an assessment under Schedule D, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications. (6) For purposes of this section and of other provisions of this Act relating to expenses of management “investment company” means any company whose business consists wholly or mainly in the making of investments, and the principal part of whose income is derived therefrom, but includes any savings bank or other bank for savings. Relief for trading losses other than terminal losses. 16. —(1) Where in any accounting period a company carrying on a trade incurs a loss in the trade, the company may make a claim requiring that the loss be set off for purposes of corporation tax against any trading income from the trade in succeeding accounting periods; and (so long as the company continues to carry on the trade) its trading income from the trade in any succeeding accounting period shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot, on that claim or on a claim (if made) under subsection (2), be relieved against income or profits of an earlier accounting period. (2) Where in any accounting period a company carrying on a trade incurs a loss in the trade, then (subject to subsection (4)) the company may make a claim requiring that the loss be set off for purposes of corporation tax against profits (of whatever description) of that accounting period and, if the company was then carrying on the trade and the claim so requires, of preceding accounting periods ending within the time specified in subsection (3); and, subject to that subsection and to any relief for an earlier loss, the profits of any of those periods shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection against profits of a later accounting period. (3) The time referred to in subsection (2) is a time immediately preceding the accounting period first mentioned in subsection (2) equal in length to the accounting period in which the loss is incurred; but the amount of the reduction which may be made under that subsection in the profits of an accounting period falling partly before that time shall not exceed a part of those profits proportionate to the part of the period falling within that time. (4) Subsection (2) shall not apply to trades falling within Case III of Schedule D. (5) The amount of a loss incurred in a trade in an accounting period shall be computed for purposes of this section in like manner as trading income from the trade in that period would have been computed. (6) For purposes of this section “trading income” means, in relation to any trade, the income which falls or would fall to be included in respect of the trade in the total profits of the company; but where in an accounting period a company incurs a loss in a trade in respect of which it is within the charge to corporation tax under Case I or III of Schedule D, and in any later accounting period to which the loss or any part of it is carried forward under subsection (1) relief in respect thereof cannot be given, or cannot wholly be given, because the amount of the trading income of the trade is insufficient, any interest or dividends on investments which would fall to be taken into account as trading receipts in computing that trading income but for the fact that they have been subjected to tax under other provisions shall be treated for purposes of subsection (1) as if they were trading income of the trade. (7) Where in an accounting period the charges on income paid by a company— ( a ) exceed the amount of the profits against which they are deductible, and ( b ) include payments made wholly and exclusively for the purposes of a trade carried on by the company, then, up to the amount of that excess or of those payments, whichever is the less, the charges on income so paid shall in computing a loss for purposes of subsection (1) be deductible as if they were trading expenses of the trade. (8) In this section references to a company carrying on a trade refer to the company carrying it on so as to be within the charge to corporation tax in respect of it. (9) Where— ( a ) a claim is made under subsection (2), and ( b ) the claim relates to a loss (arrived at by apportionment if necessary) incurred in a trade in the twelve months immediately preceding the date on which the company ceases to carry on such trade, and ( c ) the claim is a claim to have any part of the loss set off against profits of an accounting period preceding the accounting period in which the loss was incurred, then, such set-off shall not apply so as to reduce the amount on which the company is chargeable to corporation tax for such preceding accounting period to an amount less than an amount the corporation tax chargeable on which for that preceding accounting period is a sum equal to the excess of the tax credits comprised in the franked payments made by the company in that preceding accounting period over the tax credits comprised in the franked investment income received by the company in the said preceding accounting period. (10) A claim under subsection (2) shall be made within two years from the end of the accounting period in which the loss is incurred. Restriction of relief for losses in farming or market gardening. 17. —(1) In this section— “prior three years” in relation to a loss incurred in an accounting period, means the last three years before the beginning of the accounting period; “prior period of loss” means the prior three years, or, if losses were incurred in successive accounting periods amounting in all to a period longer than three years (and ending when the prior three years end), that longer period; “farming” has the same meaning as in subsection (1) (inserted by the Finance Act, 1975 ) of section 13 of the Finance Act, 1974 (taxation of farming profits); “market gardening” has the same meaning as in section 54 of the Income Tax Act, 1967 (market gardening). (2) ( a ) Any loss incurred in a trade of farming or market gardening shall not be available for relief under section 16 (2) unless it is shown that, for the accounting period in which the loss is claimed to have been incurred, the trade was being carried on on a commercial basis and with a view to the realisation of profits in the trade. ( b ) Without prejudice to paragraph ( a ), any loss incurred in any accounting period in a trade of farming or market gardening shall not be available for relief under section 16 (2), if a loss, computed without regard to capital allowances, was incurred in carrying on that trade in that accounting period, and in each of the accounting periods wholly or partly comprised in the prior three years; and for the purpose of this paragraph “loss computed without regard to capital allowances” means a loss ascertained in accordance with the rules of Case I of Schedule D, but so that, notwithstanding section 14, no account shall be taken of any allowance or charge which otherwise would be taken into account under that section. ( c ) For the purposes of this section, the fact that a trade of farming or market gardening was being carried on at any time so as to afford a reasonable expectation of profit shall be conclusive evidence that it was then being carried on with a view to the realisation of profits. ( d ) This subsection shall not restrict relief for any loss if it is shown by the claimant company that the whole of its farming or market gardening activities in the year next following the prior three years are of such a nature, and carried on in such a way, as would have justified a reasonable expectation of the realisation of profits in the future if they had been undertaken by a competent farmer or market gardener, but that, if that farmer or market gardener had undertaken those activities at the beginning of the prior period of loss, he could not reasonably have expected the activities to become profitable until after the end of the year next following the prior period of loss. ( e ) This subsection shall not restrict relief where the carrying on of the trade forms part of and is ancillary to a larger trading undertaking. (3) Subsection (2) shall not restrict relief for any loss if the trade was set up and commenced within the prior three years, and, for the purposes of this subsection, a trade shall be treated as discontinued, and a new trade set up, in any event which under any of the provisions of the Tax Acts is to be treated as equivalent to the permanent discontinuance or setting up of a trade: Provided that a trade shall not be treated as discontinued if under section 20 (2) it is not to be treated as discontinued for the purpose of capital allowances and charges. (4) Where a trade of farming or market gardening is or falls to be treated as being carried on for a part only of an accounting period by reason of its being set up and commenced, or discontinued, or both, in that accounting period, subsection (2) shall have effect in relation to that trade as regards that part of that accounting period. (5) Where at any time there has been a change in the persons engaged in carrying on a trade of farming or market gardening, this section shall, notwithstanding subsection (3), apply to any person who was engaged in carrying on the trade immediately before and immediately after the change as if the trade were the same before and after without any discontinuance, and as if a person and another person with whom he is connected were the same person. In this subsection any question as to whether persons are connected shall be determined in accordance with the provisions of section 157 and accordingly relief from corporation tax may be restricted under this section by reference to losses some of which are incurred in years of assessment and some, computed without regard to capital allowances, are incurred in a company's accounting periods. Relief for terminal loss in a trade. 18. —(1) Where a company ceasing to carry on a trade has in any accounting period falling wholly or partly within the previous twelve months incurred a loss in the trade, the company may claim to set the loss off for purposes of corporation tax against trading income from the trade in accounting periods falling wholly or partly within the three years preceding those twelve months (or within any less period throughout which the company has carried on the trade); and, subject to the following subsections and to any relief for earlier losses, the trading income of any of those periods shall be then treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection against income of a later accounting period: Provided that relief shall not be given under this subsection in respect of any loss in so far as the loss has been or can be otherwise taken into account so as to reduce or relieve any charge to tax. (2) Where a loss is incurred in an accounting period falling partly outside the twelve months mentioned in subsection (1), relief shall be given under that subsection in respect of a part only of that loss proportionate to the part of the period falling within those twelve months; and the amount of the reduction which may be made under that subsection in the trading income of an accounting period falling partly outside the three years there mentioned shall not exceed a part of that income proportionate to the part of the period falling within those three years. (3) Section 16 (5) to (8) shall apply for purposes of this section as they apply for purposes of section 16 (1); and relief shall not be given under this section in respect of a loss incurred in a trade so as to interfere with any relief under section 10 in respect of payments made wholly and exclusively for purposes of that trade. (4) When the tax credits comprised in the total amount of the franked payments made by a company in an accounting period exceed the tax credits comprised in the total amount of the franked investment income received by the company in that accounting period, then, the set-off of loss provided for by subsection (1) shall not apply so as to reduce the amount on which the company is chargeable to corporation tax to an amount less than an amount the corporation tax chargeable on which for that period is a sum equal to the excess: Provided that where the accounting period falls partly outside the three years mentioned in subsection (1) the excess of the tax credits to be taken into account for the purpose of this subsection shall be the part of the excess for the whole of the accounting period proportionate to the part of the accounting period which falls within the three years mentioned in subsection (1). Losses in transactions from which income would be chargeable under Case IV or V of Schedule D. 19. —(1) Where in any accounting period a company incurs a loss in a transaction in respect of which the company is within the charge to corporation tax under Case IV of Schedule D, the company may claim to set the loss off against the amount of any income arising from transactions in respect of which the company is assessed to corporation tax under that Case for the same or any subsequent accounting period; and the company's income in any accounting period from such transactions shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this section against income of an earlier accounting period: Provided that where a company sustains a loss in a transaction which, if profit had arisen from it, would be chargeable to tax by virtue of section 55 (1) or (2) of the Finance Act, 1974 (transactions in certificates of deposit), then, if the company is chargeable to tax in respect of the interest payable on the amount of money the right to which has been disposed of, the amount of that interest shall be included in the amounts against which the company may claim to set off the amount of its loss under this subsection. (2) Where in any accounting period a company is within the charge to corporation tax under Case V of Schedule D and the aggregate of the deficiencies, computed in accordance with section 81 (4) of the Income Tax Act, 1967 (taxation of rents under short leases), exceeds the aggregate of the surpluses as so computed the excess may, on a claim being made in that behalf, be deducted from or set off, as far as may be, against the amount of any income in respect of which the company is assessed to corporation tax under the said Case V for previous accounting periods ending within the time specified in subsection (3); and, subject to that subsection and to any relief for an earlier excess of deficiencies, the said income of any of those periods shall then be treated as reduced, as far as may be, by the amount of the excess, and any portion of the excess for which relief is not so given shall be set off against the income in respect of which the company is assessed to corporation tax under Case V of Schedule D for any subsequent accounting period: Provided that any relief under this subsection by way of carrying forward any portion of such excess shall be given as far as possible from the first subsequent assessment and, so far as it cannot be so given, then from the next assessment and so on. (3) The time referred to in subsection (2) is a time immediately preceding the accounting period first mentioned in subsection (2) equal in length to the accounting period in which the excess of deficiencies occurred; but the amount of the reduction which may be made under that subsection in the income of an accounting period falling partly before that time shall not exceed a part of that income proportionate to the part of the period falling within that time. (4) A claim under subsection (2) shall be made within two years from the end of the accounting period in which the excess of deficiencies was incurred. Company reconstructions without change of ownership. 20. —(1) Where on or after the 6th day of April, 1976, on a company (“the predecessor”) ceasing to carry on a trade, another company (“the successor”) begins to carry it on, and— ( a ) on or at any time within two years after that event the trade or an interest amounting to not less than a three-fourths share in it belongs to the same persons as the trade or such an interest belonged to at some time within a year before that event; and ( b ) the trade is not, within the period taken for the comparison under paragraph ( a ), carried on otherwise than by a company which is within the charge to tax in respect of it; then this Act shall have effect subject to subsections (2) to (5). In paragraphs ( a ) and ( b ) references to the trade shall apply also to any other trade of which the activities comprise the activities of the first-mentioned trade. (2) The trade shall not be treated as permanently discontinued nor a new trade as set up and commenced for the purpose of the allowances and charges provided for by section 14; but there shall be made to or on the successor in accordance with that section all such allowances and charges as would, if the predecessor had continued to carry on the trade, have fallen to be made to or on it, and the amount of any such allowance or charge shall be computed as if the successor had been carrying on the trade since the predecessor began to do so and as if everything done to or by the predecessor had been done to or by the successor (but so that no sale or transfer which on the transfer of the trade is made to the successor by the predecessor of any assets in use for the purpose of the trade shall be treated as giving rise to any such allowance or charge). (3) The predecessor shall not be entitled to relief under section 18, except as provided by subsection (5) of this section; and, subject to any claim made by the predecessor under section 16 (2), the successor shall be entitled to relief under section 16 (1), as for a loss sustained by the successor in carrying on the trade, for any amount for which the predecessor would have been entitled to claim relief if it had continued to carry on the trade. (4) Any securities within the meaning of section 367 of the Income Tax Act, 1967 (purchase and sale of securities), which at the time when the predecessor ceases to carry on the trade form part of the trading stock belonging to the trade shall be treated for purposes of that section as having been sold at that time in the open market by the predecessor and as having been purchased at that time in the open market by the successor. (5) On the successor ceasing to carry on the trade— ( a ) if the successor does so within four years of succeeding to it, any relief which might be given to the successor under section 18 on its ceasing to carry on the trade may, so far as it cannot be given to the successor, be given to the predecessor as if the predecessor had incurred the loss (including any amount treated as a loss under section 18 (3)); and ( b ) if the successor ceases to carry on the trade within one year of succeeding to it, relief may be given to the predecessor under section 18 in respect of any loss incurred by it (or amount treated as such a loss under section 18 (3)); but for the purposes of section 18, as it applies by virtue of this subsection to the giving of relief to the predecessor, the predecessor shall be treated as ceasing to carry on the trade when the successor does so. (6) Where the successor ceases to carry on the trade within the period taken for the comparison under subsection (1) ( a ) and, on its doing so a third company