Direct Tax Acts, Finance Act 2018

4 Interpretation of Corporation Tax Acts
CTA76 s1(5)(a) to (d), s155(5), (9), (10), (11), (12) and (13); FA86 s57(1); FA90 s29(4); FA93 s42; FA97 s37(1); FA98 s43 and s51; FA05 s48(1), s147 and Sch6; FA06 s60(a); ETBA13 s72 and Sch6(24); LGRA14 s5(3) and Sch2 Pt5

(1) In the Corporation Tax Acts, except where the context otherwise requires –

accounting date” means the date to which a company makes up its accounts, and “period of account” means the period for which a company does so;

“allowable loss” does not include, for the purposes of corporation tax in respect of chargeable gains, a loss accruing to a company in such circumstances that if a gain accrued the company would be exempt from corporation tax in respect of the gain;

branch or agency” means any factorship, agency, receivership, branch or management;

chargeable gain” has the same meaning as in the Capital Gains Tax Acts, but does not include a gain accruing on a disposal made before the 6th day of April, 1976;

charges on income” has the meaning assigned to it by section 243(1);

close company” has the meaning assigned to it by sections 430 and 431;

company” means any body corporate and includes a trustee savings bank within the meaning of the Trustee Savings Banks Act, 1989, but does not include –

(a) [the Health Service Executive,]1

(b) a grouping within the meaning of section 1014,

[(c) an education and training board,]2

(d) a committee of agriculture established under the Agriculture Act, 1931, or

[(e) a local authority for the purposes of the Local Government Act 2001 (as amended by the Local Government Reform Act 2014) and includes a body established under the Local Government Services (Corporate Bodies) Act 1971;]3

distribution” has the meaning assigned to it by Chapter 2 [Meaning of distribution] of Part 6 and [sections 436 and 437, and subsection (2)(b) of section 816]4;

the financial year” followed by a reference to the year 1996 or any other year means the year beginning on the 1st day of January of such year;

franked investment income” and “franked payment” shall be construed in accordance with section 156;

[“generally accepted accounting practice” means –

(a) in relation to the affairs of a company or other entity that prepares accounts (in this section referred to as “IAS accounts”) in accordance with international accounting standards, generally accepted accounting practice with respect to such accounts;

(b) in any other case, Irish generally accepted accounting practice;]4

group relief” has the meaning assigned to it by section 411;

interest” means both annual or yearly interest and interest other than annual or yearly interest;

[“international accounting standards” means the international accounting standards, within the meaning of Regulation (EC) No. 1606/2002 of the European Parliament and the Council of 19 July 2002 on the application of international accounting standards (in this section referred to as “the Regulation”);

Irish generally accepted accounting practice” means generally accepted accounting practice with respect to accounts (other than IAS accounts) of companies incorporated or formed under the laws of the State, being accounts that are intended to give a true and fair view;]5

preference dividend” means a dividend payable on a preferred share or preferred stock at a fixed rate per cent or, where a dividend is payable on a preferred share or preferred stock partly at a fixed rate per cent and partly at a variable rate, such part of that dividend as is payable at a fixed rate per cent;

profits” means income and chargeable gains;

[“SE” means a European public limited-liability company (Societas Europaea or SE) as provided for by Council Regulation (EC) No. 2157/2001 of 8 October 2001, on the Statute for a European Company (SE)*;

SCE” means a European Cooperative Society (SCE) as provided for by Council Regulation (EC) No. 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society (SCE)**;]6

[“standard credit rate” for a year of assessment means –

(a) for the year of assessment 1997-98 –

(i) 21 per cent where it has application in relation to a distribution made or treated as having been made by a company before the 3rd day of December, 1997, and

(ii) 11 per cent where it has application in relation to a distribution made or treated as having been made by a company on or after the 3rd day of December, 1997,

and

(b) for the year of assessment 1998-99, 11 per cent,

and, accordingly, “standard credit rate per cent” for the year of assessment 1997-98 means 21 or 11, as the case may be, and for the year of assessment 1998-99 means 11;]7

standard rate per cent” for a year of assessment means 26 where the standard rate for that year is 26 per cent and similarly as regards any reference to the standard rate per cent for a year of assessment for which the standard rate is other than 26 per cent;

trade” includes vocation and includes also an office or employment.

(2) Except where otherwise provided by the Corporation Tax Acts and except where the context otherwise requires, words and expressions used in the Income Tax Acts have the same meaning in the Corporation Tax Acts as in those Acts; but no provision of the Corporation Tax Acts as to the interpretation of any word or expression, other than a provision expressed to extend to the use of that word or expression in the Income Tax Acts, shall be taken to affect its meaning in those Acts as they apply for the purposes of corporation tax.

(3) References in the Corporation Tax Acts to distributions or payments received by a company apply to any distributions or payments received by another person on behalf of or in trust for the company but not to any distributions or payments received by the company on behalf of or in trust for another person.

(4) References in the Corporation Tax Acts to –

(a) profits brought into charge to corporation tax are references to the amount of those profits chargeable to corporation tax before any deduction from those profits for charges on income, expenses of management or other amounts which can be deducted from or set against or treated as reducing profits of more than one description,

(b) total income brought into charge to corporation tax are references to the amount, calculated before any deduction mentioned in paragraph (a), of the total income from all sources included in any profits brought into charge to corporation tax, and

(c) an amount of profits on which corporation tax falls finally to be borne are references to the amount of those profits after making all deductions and giving all reliefs that for the purposes of corporation tax are made or given from or against those profits, including deductions and reliefs which under any provision are treated as reducing them for those purposes.

(5) For the purposes of the Corporation Tax Acts, except where otherwise provided, dividends shall be treated as paid on the date when they become due and payable.

(6) Except where otherwise provided by the Corporation Tax Acts, any apportionment to different periods to be made under the Corporation Tax Acts shall be made on a time basis according to the respective lengths of those periods.

[(7) For the purposes of this section, where the European Commission in accordance with the Regulation adopts an international accounting standard with modifications, then as regards matters covered by that standard –

(a) generally accepted accounting practice with respect to IAS accounts shall be regarded as permitting the use of the standard either with or without the modifications, and

(b) accounts prepared on either basis shall be regarded as prepared in accordance with international accounting standards.]8

Go to Revenue Guidance Notes on TCA

Amendments

1 Reference to “health board” substituted by reference to “Health Service Executive” as appropriate, in accordance with FA05 s146 and Sch6, with effect from 25 March 2005

2 Substituted by ETBA13 s72 and Sch6(24) and coming into operation on such day as the Minister may by order appoint - 1 July 2013 is the appointed day per S.I. No. 211 of 2013

3 Substituted by LGRA14 s5(3) and Sch2 Pt5 and coming into operation by Ministerial Order - S.I. No. 214/2014 appointed 1 June 2014 as the date of coming into operation

4 Substituted by FA98 s43

5 Inserted by FA05 s48 and applying as respects any period of account beginning on or after 1 January 2005

6 Inserted by FA06 s60(a) with effect from 1 January 2006

7 Substituted by FA98 s51 with effect from 3 December 1997

8 Inserted by FA05 s48 and applying as respects any period of account beginning on or after 1 January 2005

* OJ No. L294, 10.11.2001, p.1

** OJ No. L207, 18.8.2003, p.1

Case Law

In special circumstances, the courts looked to the transactions involved in deciding profit apportionment (rather than just time apportionment). Marshall Hus & Partners Ltd. v Bolton [1981] STC 18.

Partners financed capital contributions to partnership with loans and entered into transactions in relation to acquisition, distribution and marketing of films and the question arose as to whether partnership carried on trade. Eclipse Film Partners (No 35) LLP v Revenue and Customs Commissioners - [2014] STC 1114

Limited rights being attached to deferred shares and whether deferred shares ‘ordinary share capital’ for purposes of entrepreneurs’ relief legislation. Castledine v R&CC – [2016] UKFTT 145 (TC)

Corresponding UK Tax Provision

Formerly Section 834, Income and Corporation Taxes Act 1988. Now re-enacted at various places in the Corporation Tax Act 2010. Refer to the Destination Table of that Act for details.

Sections referred to in text

section 156 [Franked investment income and franked payments]

section 243 [Allowance of charges on income]

section 411 [Surrender of relief between members of groups and consortia]

section 430 [Meaning of close company]

section 431 [Certain companies with quoted shares not to be close companies]

section 436 [Certain expenses for participators and associates]

section 437 [Interest paid to directors and directors’ associates]

section 644AB [Treatment of profits or gains from land rezonings]

section 816 [Taxation of shares issued in place of cash dividends]

section 1014 [Tax treatment of profits, losses and capital gains arising from activities of a European Economic Interest Grouping (EEIG)]

Cross references

10 Connected persons

110 Securitisation

128 Tax treatment of directors of companies and employees granted rights to acquire shares or other assets

155 Restriction of certain reliefs in respect of distributions out of certain exempt or relieved profits

250A Restriction of relief to individuals in respect of loans applied in acquiring interest in companies

195B Exemption in respect of certain expense payments for relevant directors

195D Exemption in respect of certain expense payments for resident relevant directors

256 Interpretation (Chapter 4)

270 Meaning of “expenditure on construction of building or structure”

296 Balancing allowances and balancing charges: wear and tear allowances deemed to have been made in certain cases

409E Income tax: ringfence on use of certain capital allowances on certain industrial buildings and other premises

448 Relief from corporation tax

454 Restriction of certain charges on income

457 Application of section 448 where profits are charged to corporation tax at the reduced rate

486C Relief from tax for certain start-up companies

660 Farming: wear and tear allowances deemed to have been made in certain cases

665 Interpretation (Chapter 2)

705I Funds awaiting reinvestment

730F Deduction of tax on the happening of a chargeable event

730H Interpretation and application

738 Undertakings for collective investment

747B Interpretation and application

1035A Relieving provision to section 1035