Finance Act, 1982

Restriction of relief for losses etc. in relation to relevant disposals.

40.—(1) Notwithstanding any provision to the contrary in the Capital Gains Tax Acts, any losses accruing on disposals which are not relevant disposals shall not, in the computation of a person's liability to capital gains tax in respect of chargeable gains accruing on relevant disposals, be deducted from the amount of those chargeable gains.

(2) In the computation of the amount on which, under section 5 of the Principal Act, capital gains tax falls to be charged on chargeable gains accruing on relevant disposals, any allowable losses accruing on relevant disposals may be deducted in accordance with the said section 5 but, in so far as they are so deducted, they shall not be treated as relevant allowable losses within the meaning of subsection (1C) of section 13 of the Corporation Tax Act, 1976 , for the purposes of the calculation required to be made under subsection (1A) of that section, and, for the purposes of this subsection, any necessary assessments or additional assessments, as may be appropriate, may be made.

(3) Section 25 of the Corporation Tax Act, 1976 , is hereby amended by the insertion after subsection (7) of the following subsection:

“(8) (a) In this subsection ‘relevant profits’ means gains accruing on relevant disposals within the meaning of section 36 of the Finance Act, 1982.

(b) Where a company which is resident in the State makes a distribution in part out of relevant profits and in part out of other profits, the distribution shall be treated for the purposes of this subsection as if it consisted of two distributions respectively made out of relevant profits and other profits.

(c) Where, on or after the 28th day of January, 1982, a company (hereafter in this paragraph referred to as ‘the recipient company’) receives a distribution from another company (hereafter in this paragraph referred to as ‘the distributing company’) and—

(i) the distribution is made by the distributing company out of relevant profits (or out of a distribution received by the distributing company which, under this subsection, is deemed to be relevant profits of that company), and

(ii) the two companies are members of a group of companies within the meaning of section 107 (5),

then—

(I) the distribution shall be deemed for the purposes of this subsection to be relevant profits of the recipient company, and

(II) the aggregate of the amount or value of the distribution and the tax credit in respect of it shall, notwithstanding the provisions of section 24, be regarded as not being franked investment income of the recipient company for the purposes of subsection (1).”.