Finance Act, 1992
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Treatment of patent royalties and related distributions. |
19.—(1) Section 34 of the Finance Act, 1973 , is hereby amended by the insertion of the following subsection after subsection (2): | |
“(2A) Notwithstanding the provisions of subsection (2), an individual shall not be entitled to have any amount of income from a qualifying patent arising to him disregarded for any purpose of the Income Tax Acts to the extent that it— | ||
(a) is in excess of two-thirds of the amount arising to him in the period beginning on the 24th day of April, 1992, and ending on the 5th day of April, 1993, | ||
(b) is in excess of one-third of the amount arising to him in the year of assessment 1993-94, or | ||
(c) arises to him in the year of assessment 1994-95 or any subsequent year of assessment: | ||
Provided that this subsection shall not apply or have effect in relation to income from a qualifying patent received by an individual who carried out, either solely or jointly with another person, the research, planning, processing, experimenting, testing, devising, designing, developing or other similar activity leading to the invention which is the subject of the qualifying patent.”. | ||
(2) As respects distributions received by a person on or after the 24th day of April, 1992, section 170 of the Corporation Tax Act, 1976 , is hereby amended— | ||
(a) by the insertion after the definition of “disregarded income” in subsection (1) of the following definition: | ||
“‘eligible shares’ has the same meaning as in paragraph (a) of subsection (1A) of section 14 of the Finance Act, 1986 ;”, | ||
(b) by the insertion in subparagraph (ii) of paragraph (a) of subsection (3) after “company” of “and the distribution is in respect of eligible shares”, and | ||
(c) by the insertion after subsection (3) of the following subsection: | ||
“(3A) (a) Subject to paragraph (b), where a person receives any distributions on or after the 24th day of April, 1992, subparagraph (i) of paragraph (a) of subsection (3) shall not apply to those distributions: | ||
Provided that this paragraph shall not apply to— | ||
(i) two-thirds of the total amount of distributions, being distributions (hereafter in this paragraph referred to as ‘relevant distributions’) to which subparagraph (i) of paragraph (a) of subsection (3) would apply apart from the foregoing provisions of this paragraph, received by the person in the period beginning on the 24th day of April, 1992, and ending on the 5th day of April, 1993, or | ||
(ii) one-third of the total amount of relevant distributions received by the person in the year of assessment 1993-94. | ||
(b) Paragraph (a) shall not apply to any distribution received by a person, which is a distribution— | ||
(i) in respect of eligible shares, or | ||
(ii) made out of disregarded income, being income (hereafter in this subsection referred to, in relation to a person, as ‘relevant income’) which is referable to a qualifying patent in relation to which he carried out, either solely or jointly with another person, the research, planning, processing, experimenting, testing, devising, designing, development or other similar activity leading to the invention which is the subject of the qualifying patent. | ||
(c) For the purposes of paragraph (b), where a distribution for an accounting period is made by a company to a person in part out of relevant income, in relation to the person, and in part out of other disregarded income, the distribution shall be treated as if it consisted of two distributions, respectively, made out of relevant income and out of other disregarded income.”. |