Finance Act, 1993

Chapter V

Investment Incentive Schemes

Amendment of Chapter III (Income Tax: Relief for Investment in Corporate Trades) of Part I of Finance Act, 1984.

25.Chapter III of Part I of the Finance Act, 1984 , is hereby amended—

(a) in subsection (1) of section 11—

(i) by the insertion of the following definition after the definition of “factory building” (inserted by the Finance Act, 1990 ):

“‘full-time employee’ and ‘full-time director’ have the meanings assigned to them by section 8 of the Finance Act, 1978 ;”,

and

(ii) by the insertion of the following definitions after the definition of “ordinary shares”:

“‘relevant company’, in relation to a specified individual, means a qualifying company incorporated on or after the passing of the Finance Act, 1993

(a) in which he makes a relevant investment,

(b) with which he commences a relevant employment, and

(c) which intends to carry on relevant trading operations;

‘relevant employment’, in relation to a specified individual, means employment throughout the relevant period by a relevant company where the individual is a full-time employee or full-time director of the company;

‘relevant investment’, in relation to a specified individual, means the amount, or the aggregate of the amounts, subscribed by him for eligible shares in a relevant company in the year of assessment in which he commences relevant employment with the company;

‘relevant shares’ means eligible shares issued in respect of a relevant investment;

‘relevant trading operations’ means qualifying trading operations (other than such operations as are referred to in subparagraph (iiib) (inserted by the Finance Act, 1990 ) of paragraph (a) of subsection (2) of section 16) to be carried on by a relevant company in respect of which a certificate has been issued by an industrial development agency or by Bord Fáilte Éireann (hereinafter referred to as ‘the Bord’), as may be appropriate, certifying that the agency or the Bord, as may be the case, is, on the basis of such information as is supplied to it by the company or which it may reasonably require the company to furnish, satisfied that the carrying on of such operations by the company is, or will be, a bona fide new venture which, having regard to—

(a) the potential for the creation of additional sustainable employment, and

(b) the desirability of minimising the displacement of existing employment,

may be eligible, based on guidelines agreed, with the consent of the Minister for Finance, between (as may be appropriate in the circumstances)—

(i) the agency and the Minister for Enterprise and Employment or the Minister for Arts, Culture and the Gaeltacht, or

(ii) the Bord and the Minister for Tourism and Trade,

to be grant-aided under a scheme of assistance administered by such agency or the Bord:

Provided that—

(I) the carrying on of such qualifying trading operations shall not be regarded as not being a bona fide new venture by reason only that they were carried on as, or as part of, a trade by another person at any time before the issue of the relevant shares in respect of which relief is claimed, and

(II) such a certificate shall not be issued—

(A) by the Bord where the value of the relevant company's interests in land and buildings (excluding fixtures and fittings) is or is intended to be greater than half the value of its assets as a whole, or

(B) unless the relevant company undertakes in writing to furnish the agency or the Bord, as may be appropriate, when requested to do so with such details in relation to the carrying on of the relevant trading operations as the agency or the Bord may specify;

‘specified individual’ means an individual qualifying for relief who—

(a) exercises a relevant employment, and

(b) in each of the three years of assessment immediately prior to the year of assessment in which such employment commences—

(i) was, in respect of not less than 75 per cent. of his total income, if any, chargeable to tax under Schedule E, and

(ii) was not otherwise chargeable to tax in respect of income in excess of £5,000,

and

(c) throughout the relevant period possesses at least 15 per cent. of the issued ordinary share capital of the relevant company concerned, and

(d) at the date of the commencement of the relevant employment or within the period of 12 months immediately preceding that date, either directly or indirectly, does not possess or has not possessed, or was not or is not entitled to acquire, more than 15 per cent. of—

(i) the issued ordinary share capital of any other company, or

(ii) the loan capital (within the meaning of section 14 (5)) and the issued share capital of any other company, or

(iii) the voting power in any other company:

Provided that an individual shall not be regarded as ceasing to comply with paragraph (a) or (c) if he does so by reason of the relevant company concerned being wound up or dissolved without winding up before the end of the appropriate relevant period but only if it is shown that the winding up or dissolution is for bona fide commercial reasons and not as part of a scheme or arrangement the main purpose or one of the main purposes of which was the avoidance of tax.”,

(b) in section 12—

(i) in paragraph (c) of subsection (1), by the substitution of the following proviso for the proviso inserted by the Finance Act, 1990 :

“Provided that where the money raised was used, is being used or is intended to be used—

(i) for the purpose of the construction and the leasing of an advance factory building, the aforementioned evidence shall include a certificate by an industrial development agency certifying that it has satisfied itself—

(I) that the building is or will be an advance factory building, and

(II) that—

(A) the advance factory building is or will be situated in an area which, on the basis of guidelines agreed between it and the Minister for Enterprise and Employment or the Minister for Arts, Culture and the Gaeltacht (as may be appropriate in the circumstances) and with the consent of the Minister for Finance, was or is in particular need of development and of the creation of opportunities for employment, and

(B) the construction of the advance factory building contributes or will contribute significantly to meeting those needs,

(ii) for the purpose of qualifying trading operations such as are referred to in subparagraph (iiic) (inserted by the Finance Act, 1993) of paragraph (a) of subsection (2) of section 16 (hereafter in this proviso referred to as ‘the operations’) the aforementioned evidence shall include a certificate by an industrial development agency certifying that it is satisfied that the operations—

(I) have the potential to result in the commencement of qualifying trading operations such as are referred to in subparagraphs (i) (as amended by the Finance Act, 1990 ), (ii) (inserted by the Finance Act, 1990 ) and (iiia) (inserted by the Finance Act, 1988 ) of the said paragraph (a), and

(II) have commenced, and

(iii) for the purposes of a relevant investment, the aforementioned evidence shall include the certificate referred to in the definition of relevant trading operations (inserted by the Finance Act, 1993) in section 11(1).”,

(ii) in subsection (3), by the insertion, as respects a subscription for eligible shares made on or after the passing of this Act, of the following additional proviso:

“Provided also that a specified individual may, in relation to one, and only one, relevant investment made by him, elect, by notice in writing to the inspector, to have the relief due given as a deduction from his total income for any one of the five years of assessment immediately prior to the year of assessment in which the relevant shares are issued which he nominates for that purpose and, accordingly, subject to section 13 and paragraphs (a) and (b), for the purposes of granting such relief, but for no other purpose of this Chapter, the shares shall be deemed to have been issued in the year of assessment so nominated, and—

(a) where any of the years of assessment following the year of assessment nominated as aforesaid precede the year of assessment in which the relevant shares are, in fact, issued, subsections (2A), (2B) and (2C) (inserted by the Finance Act, 1987 ) of section 13 shall not operate to give relief in more than two such years of assessment which shall be nominated by the specified individual for that purpose, and

(b) to the extent that the amount of the relief which would be due in respect of the relevant investment by virtue of the said subsections (2A), (2B) and (2C) has not been given in accordance with the foregoing provisions, it shall, subject to the provisions of the aforesaid subsections, be given for the year of assessment in which the relevant shares are, in fact, issued or, if appropriate, a subsequent year of assessment.”,

(iii) in subsection (4)—

(I) by the substitution of the following paragraph for paragraph (a):

“(a) (i) in the case of a relevant investment, unless and until the company commences to carry on the trade, and

(ii) in any other case, unless and until the company has carried on the trade for four months, and”,

and

(II) by the insertion of the following additional proviso:

“Provided also that, in the case of qualifying trading operations to which section 16 (2) (a) (iiic) (inserted by the Finance Act, 1993) relates, the trade shall be deemed to have commenced on the date on which the certificate referred to in paragraph (ii) of the proviso (inserted by the Finance Act, 1993) to paragraph (c) of subsection (1) of section 12 was issued.”,

(iv) by the substitution of the following subsection for subsection (5):

“(5) Subject to subsection (4) (a) (inserted by the Finance Act, 1993), a claim for relief may be allowed at any time if the conditions for the relief are then satisfied.”,

(v) in subsection (7)—

(I) in paragraph (a), by the substitution for “shares; and” of “shares;”,

(II) in paragraph (b), by the substitution for “such a trade.” of “such a trade;”, and

(III) by the addition after paragraph (b) of the following paragraphs:

“(c) as respects a relevant employment, the period beginning on the date on which the shares are issued or, if later, the date on which the employment commences and ending 12 months after that date; and

(d) as respects a specified individual, the period beginning with the date on which the shares are issued and ending either two years after that date or, where the company was not at that date carrying on relevant trading operations, two years after the date on which it subsequently began to carry on such operations.”,

and

(vi) by the substitution of the following subsection for subsection (11) (inserted by the Finance Act, 1991 ):

“(11) This section applies only where the shares concerned are issued in the period commencing on the 6th day of April, 1984, and ending on the 5th day of April, 1996.”,

(c) in section 13—

(i) as respects subscriptions for eligible shares made on or after the 24th day of February, 1993, by the deletion of the proviso (inserted by the Finance Act, 1991 ) to subsection (2), and

(ii) by the substitution in the provisos to subsections (2A) and (2B) (inserted by the Finance Act, 1987 ) of “the year 1995-96” for “the year 1992-93” (inserted by the Finance Act, 1991 ), and the said provisos, as so amended, are set out, respectively, in the Table to this section,

(d) in section 13A (inserted by the Finance Act, 1989 ), as respects eligible shares issued on or after the 6th day of May, 1993—

(i) in subsection (1) (inserted by the Finance Act, 1991 )—

(I) by the substitution of “the 6th day of May, 1993” for “the 30th day of January, 1991”, and

(II) by the substitution of “£1,000,000” for “£500,000” in both places where it occurs,

and

(ii) in subsection (1A) (inserted by the Finance Act, 1991 )—

(I) by the substitution of “the 6th day of May, 1993” for “the 12th day of March, 1991”, and

(II) by the substitution of “£1,000,000” for “£500,000” in both places where it occurs,

(e) in section 14, by the insertion, as respects eligible shares issued on or after the passing of the Finance Act, 1993, of the following subsection after subsection (7):

“(7A) An individual shall not be connected with a company by reason only of the provisions of subsection (4), (6) or (7)—

(a) if, throughout the relevant period, the aggregate of all amounts subscribed for the issued share capital and the loan capital (within the meaning of subsection (5)) of the company does not exceed £150,000, or

(b) in the case of a specified individual, by virtue only of a relevant investment in respect of which he has been given relief in accordance with the provisions of the second proviso (inserted by the Finance Act, 1993) to subsection (3) of section 12:

Provided that relief granted to an individual in respect of a subscription for eligible shares at a time when by virtue of this subsection he was not connected with the company shall not be withdrawn by reason only that he subsequently became connected with the company by virtue of the said subsection (4), (6) or (7).”,

(f) in section 15, by the insertion in subsection (8) after “is not a qualifying company if” of “in the case of a relevant company, any transactions in the relevant period between the company and another company (being the immediate former employer of the individual), or a company which controls or is under the control of that other company, is otherwise than by way of a transaction at arm's length, or if”,

(g) in section 16—

(i) in paragraph (a) of subsection (2)—

(I) by the insertion in subparagraph (i) of the following additional proviso:

“Provided also that the production of a film (within the meaning of section 35 of the Finance Act, 1987 ) shall not, as respects a subscription for eligible shares made on or after the 6th day of May, 1993, be regarded as qualifying trading operations for the purposes of this Chapter,”, and

(II) by the insertion of the following subparagraph after subparagraph (iiib) (inserted by the Finance Act, 1990 ):

“(iiic) in respect of a subscription for eligible shares made on or after the passing of the Finance Act, 1993, the research and development or other similar activity undertaken with a view to the carrying on of trading operations referred to in subparagraphs (i) (as amended by the Finance Act, 1990 ), (ii) (inserted by the Finance Act, 1990 ) and (iiia) (inserted by the Finance Act, 1988 ),”,

and

(ii) by the substitution of the following paragraph for paragraph (b) of subsection (4) (inserted by the Finance Act, 1990 ):

“(b) as including—

(i) the construction and leasing of an advance factory building, and

(ii) the research and development or other similar activity as is referred to in subparagraph (iiic) (inserted by the Finance Act, 1993) of paragraph (a) of subsection (2):”,

(h) in subsection (1) of section 22, by the substitution of the following paragraph for paragraph (a):

“(a) not earlier than—

(i) in the case of a relevant investment, the date on which the company commences to carry on the trade, and

(ii) in any other case, the end of the period of four months mentioned in section 12 (4) (a) (ii) (inserted by the Finance Act, 1993),

and”,

and

(i) in subsection (7) of section 23—

(i) in paragraph (d) (ii) by the substitution for “was granted.” of “was granted;”, and

(ii) by the addition of the following paragraph after paragraph (d):

“(e) in the case of relief withdrawn by virtue of—

(i) a specified individual ceasing to hold a relevant employment, or

(ii) an individual ceasing to be a specified individual,

the date of the cessation.”.

TABLE

Provided that this subsection shall not apply or have effect for any year of assessment subsequent to the year 1995-96.

Provided that this subsection shall not apply or have effect for any year of assessment subsequent to the year 1995-96.