Finance Act, 1942

Amendment of section 39 of the Finance Act, 1941.

16.—(1) Section 39 of the Finance Act, 1941 (No. 14 of 1941), shall be construed and have effect and shall be deemed always to have had effect as if the following sub-section were inserted therein in lieu of the sub-section (2) now contained therein, that is to say:—

“(2) The standard payments of a company for dividends and interest in respect of any accounting period or part of an accounting period shall be taken for the purposes of this section to be the amount necessary to provide for whichever of the following amounts is the greater, that is to say:—

(a) the aggregate amount of the following payments in respect of the said accounting period or part of an accounting period, that is to say:—

(i) the dividends on the paid-up preference stock or shares of the company at the fixed rate at which such dividends are payable, and

(ii) dividends at the rate of six per cent, per annum on the paid-up ordinary stock or shares of the company, and

(iii) interest on the debentures or debenture stock (other than debentures or debenture stock issued by way of security for a bank overdraft) of the company at the fixed rate at which such interest is payable, or

(b) the aggregate amount of the following payments in respect of the said accounting period or part of an accounting period, that is to say:—

(i) dividends on the paid-up preference stock or shares of the company, if the company was incorporated before the 1st day of January, 1934, at the rate of seven and one-half per cent, per annum or, if the company was incorporated on “or after that date, at the rate of nine per cent, per annum, and

(ii) dividends on the paid-up ordinary stock or shares of the company, if the company was incorporated before the 1st day of January, 1934, at the rate of seven and one-half per cent, per annum or, if the company was incorporated on or after that date, at the rate of nine per cent, per annum, and

(iii) interest on the debentures or debenture stock (other than debentures or debenture stock issued by way of security for a bank overdraft) of the company, if the company was incorporated before the 1st day of January, 1934, at the rate of seven and one-half per cent, per annum or, if the company was incorporated on or after that date, at the rate of nine per cent, per annum.”

(2) In computing, under sub-section (2) of section 39 of the Finance Act, 1941 (No. 14 of 1941), (as amended by the foregoing sub-section of this section) the standard payments for dividends and interest in respect of any accounting period or part of an accounting, period, of a company which has issued capital after the 6th day of May, 1942, and before the end of the said accounting period or part of an accounting period, the following provisions-shall, apply, and have effect, that is to say:—

(a) the expression “fixed rate” wherever it occurs in the said sub-section (2) (as so amended) shall, in relation to the dividends or interest on the said capital so issued or any part of that capital, be construed and have effect—

(i) if the said company was incorporated before the 1st day of January, 1934, as meaning whichever of the following rates is the lesser, that is to say, the fixed rate at which the said dividends or interest (as the case may be) are or is actually payable or the rate of seven and one-half per cent. per annum, or

(ii) if the said company was incorporated on or after the 1st day of January, 1934, as meaning whichever of the following rates is the lesser, that is to say, the fixed rate at which the said dividends or interest (as the case may be) are or is actually payable or the rate of nine per cent. per annum;

(b) unless the Revenue Commissioners because of the existence of special circumstances in any particular case otherwise direct, whichever of the following sub-paragraphs is applicable shall apply and have effect, that is to say:—

(i) if the said capital so issued is the first issue of capital made by the said company and it is not shown to the satisfaction of the Revenue Commissioners that the said capital is represented fully by tangible assets owned by the said company at the time of the issue of the said capital, such amount (whether a part or the whole) of the said capital as is, in the opinion of the Revenue Commissioners, not so represented shall be excluded and deducted from the capital of the said company for the purpose of computing the said standard payments for dividends and interest and, if the said capital includes more than one class of capital, the amount of the said capital to be excluded and deducted as aforesaid shall be apportioned rateably amongst the different classes of the said capital, or

(ii) if the capital so issued is not the first issue of capital made by the said company and it is not shown to the satisfaction of the Revenue Commissioners that on the issue of the said capital so issued there had been an increase in the tangible assets of the said company in full proportion to the amount of that capital, such amount (whether a part or the whole) of the said capital so issued as is not fully represented by such increase of the said tangible assets shall be excluded and deducted from the capital of the said company for the purpose of computing the said standard payments for dividends and interest and, if the said capital so issued includes more than one class of capital, the amount of the said capital to be excluded and deducted as aforesaid shall be apportioned rateably amongst the different classes of that capital;

(c) in this sub-section—

(i) preference stock or shares, ordinary stock or shares, and debentures or debenture stock (other than debentures or debenture stock issued by way of security for a bank overdraft) and nothing else shall be regarded as capital, and the word “capital” shall be construed accordingly,

(ii) the amount of any capital shall be taken to be the nominal amount thereof,

(iii) preference stock or shares, ordinary stock or shares, and debentures or debenture stock (other than as aforesaid) shall each be taken to be a different class of capital.