{"id":11132,"date":"2022-04-19T18:39:16","date_gmt":"2022-04-19T18:39:16","guid":{"rendered":"http:\/\/legalblog.ie\/?p=11132"},"modified":"2024-04-07T18:16:10","modified_gmt":"2024-04-07T18:16:10","slug":"calculating-income-tax","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/calculating-income-tax\/","title":{"rendered":"Calculating Income Tax"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/#Commencement\" title=\"Commencement\">Commencement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/#Cessation\" title=\"Cessation\">Cessation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/#Based_on_Accounts\" title=\"Based on Accounts\">Based on Accounts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/#Commencement_Years_Basis\" title=\"Commencement Years Basis\">Commencement Years Basis<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/#Atypical_Cases\" title=\"Atypical Cases\">Atypical Cases<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/#Accounting_Date_Changes\" title=\"Accounting Date Changes\">Accounting Date Changes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/#Assessment_on_Cessation\" title=\"Assessment on Cessation\">Assessment on Cessation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/#Calculating_the_tax\" title=\"Calculating the tax\">Calculating the tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/#Adjustment\" title=\"Adjustment\">Adjustment<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#TAXES_CONSOLIDATION_ACT\" title=\"TAXES CONSOLIDATION ACT\">TAXES CONSOLIDATION ACT<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Income_tax_basis_of_assessment_under_Cases_I_and_II_ss_65-69\" title=\"Income tax: basis of assessment under Cases I and II (ss. 65-69)\">Income tax: basis of assessment under Cases I and II (ss. 65-69)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#65\" title=\"65.\">65.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Cases_I_and_II_basis_of_assessment\" title=\"Cases I and II: basis of assessment.\">Cases I and II: basis of assessment.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Special_basis_at_commencement_of_trade_or_profession\" title=\"Special basis at commencement of trade or profession.\">Special basis at commencement of trade or profession.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Special_basis_on_discontinuance_of_trade_or_profession\" title=\"Special basis on discontinuance of trade or profession.\">Special basis on discontinuance of trade or profession.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Short-lived_businesses\" title=\"Short-lived businesses.\">Short-lived businesses.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Changes_of_proprietorship\" title=\"Changes of proprietorship.\">Changes of proprietorship.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Computational_provisions_general_ss_81-88A\" title=\"Computational provisions: general (ss. 81-88A)\">Computational provisions: general (ss. 81-88A)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#General_rule_as_to_deductions\" title=\"General rule as to deductions.\">General rule as to deductions.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Restriction_of_deductions_for_employee_benefit_contributions\" title=\"Restriction of deductions for employee benefit contributions.\">Restriction of deductions for employee benefit contributions.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Equalisation_reserves_for_credit_insurance_and_reinsurance_business_of_companies\" title=\"Equalisation reserves for credit insurance and reinsurance business of companies.\">Equalisation reserves for credit insurance and reinsurance business of companies.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Emissions_allowances\" title=\"Emissions allowances.\">Emissions allowances.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Pre-trading_expenditure\" title=\"Pre-trading expenditure.\">Pre-trading expenditure.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Expenses_of_management_of_investment_companies\" title=\"Expenses of management of investment companies.\">Expenses of management of investment companies.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-25\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Expenditure_involving_crime\" title=\"Expenditure involving crime.\">Expenditure involving crime.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-26\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Expenses_in_relation_to_establishment_or_alteration_of_superannuation_schemes\" title=\"Expenses in relation to establishment or alteration of superannuation schemes.\">Expenses in relation to establishment or alteration of superannuation schemes.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-27\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Deduction_for_certain_industrial_premises\" title=\"Deduction for certain industrial premises.\">Deduction for certain industrial premises.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-28\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Cost_of_registration_of_trade_marks\" title=\"Cost of registration of trade marks.\">Cost of registration of trade marks.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-29\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Debts_set_off_against_profits_and_subsequently_released\" title=\"Debts set off against profits and subsequently released.\">Debts set off against profits and subsequently released.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-30\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Valuation_of_trading_stock_at_discontinuance_of_trade\" title=\"Valuation of trading stock at discontinuance of trade.\">Valuation of trading stock at discontinuance of trade.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-31\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Valuation_of_work_in_progress_at_discontinuance_of_profession\" title=\"Valuation of work in progress at discontinuance of profession.\">Valuation of work in progress at discontinuance of profession.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-32\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Receipts_accruing_after_discontinuance_of_trade_or_profession\" title=\"Receipts accruing after discontinuance of trade or profession.\">Receipts accruing after discontinuance of trade or profession.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-33\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Receipts_and_losses_accruing_after_change_treated_as_discontinuance\" title=\"Receipts and losses accruing after change treated as discontinuance.\">Receipts and losses accruing after change treated as discontinuance.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-34\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Cash_basis_etc_relief_for_certain_individuals\" title=\"Cash basis, etc: relief for certain individuals.\">Cash basis, etc: relief for certain individuals.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-35\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Change_of_basis_of_computation_of_profits_or_gains_of_a_trade_or_profession\" title=\"Change of basis of computation of profits or gains of a trade or profession.\">Change of basis of computation of profits or gains of a trade or profession.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-36\" href=\"https:\/\/legalblog.ie\/calculating-income-tax\/2\/#Schedule_17A_Accounting_Standards\" title=\"Schedule 17A Accounting Standards\">Schedule 17A Accounting Standards<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Commencement\"><\/span>Commencement<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The issue of when a trade commences may be important. It determines dates of liability for tax and raises issues in relation to allowable expenditure. A distinction is drawn between trading and commencing to trade. Market testing and feasibility is likely to predate trading.<\/p>\n<p>When assets are purchased in anticipation of trading, trading may not necessarily have begun. It depends on the circumstances. Where complex products are manufactured, trading may have commenced before the initial sale. In other cases there may be held to be no trading prior to the first sale.<\/p>\n<p>The acquisition of business premises, securing of plant and equipment and supply lines may not commence trading. In contrast, the purchase of materials for manufacture may be sufficient\u00a0 to commence to trade. However, each case will depend on its circumstances.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Cessation\"><\/span>Cessation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The cessation of trade usually occurs when all stock \u00a0has been disposed of. This may occur long after the decision to wind down or when winding down commences.<\/p>\n<p>A trade carried on by an individual ceases on his death. There is a concession by which Revenue allows a surviving spouse to take over the trade and treat it as continuing<\/p>\n<p>Posts cessation \u00a0receipts are taxed under a different category in the tax rules. Expenses\u00a0 may be deducted, and unused allowances may be set against receipts.<\/p>\n<p>Whether or not there has been commencement or cessation of trade is ultimately a matter of fact in the circumstances. If there is a radical change in the nature of the trade, there may be a cessation of one trade and the commencement of the other trade. There\u00a0 may be an overlap.<\/p>\n<p>A cessation may arise where a trade is transferred or sold.\u00a0 Balancing charges or allowances may arise. Stock may become taxable, and an option may be available to postpone the liability.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Based_on_Accounts\"><\/span>Based on Accounts<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Trading and professional income is assessed to tax by reference to business accounts, as adjusted under tax rules. The general rule is that the income tax on trading income is assessed on the basis of trading profits (or losses) for the 12 months\u2019 accounting period ending in that tax (calendar) year. Therefore, if the trader\u2019s year end is 31st January, \u00a0\u00a0then the basis of tax on trading income,\u00a0 for the year 2021 will be the accounts for the\u00a0 12 month period ending 31 January 2021.<\/p>\n<p>Where there is no accounts ending in the tax year, the tax is based on the profits \u00a0for the whole year. The profits referable to be relevant period are apportioned to the 12 months concerned <em>on a time basis<\/em>. Where there is more than one set of accounts, the basis is the 12 month period ending on the later date in the tax year.<\/p>\n<p>Where the accounting period is greater than 12 months, tax is \u00a0based in the 12 months prior to the end of the accounting period. Once again, this involves apportioning the profits in the period on a proportionate time basis.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Commencement_Years_Basis\"><\/span>Commencement Years Basis<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Where a trade commences,\u00a0 the first-year\u2019s tax is based on the profits from the commencement date to the end of the year (31<sup>st<\/sup> December). When neither the trader nor his spouse (with joint assessment) carry out any other trade the due date for the return may be postponed to the second year to allow for the fact that accounts may not yet be prepared. The preliminary tax liability remains if applicable.<\/p>\n<p>The second year\u2019s tax is based on the 12 month period of accounts ending in the second year. If the period is for less than 12 months, it is based on the 12 months to that date.<\/p>\n<p>If\u00a0 there are more than two periods of accounts, it is based on the 12 month period ending on the later date. If there is no accounting period in the second year of assessment and the trade commenced less than 12 months before the date on the second year the tax is based on the actual profits in the second year. If the accounts are apportioned, the assessable profit are apportioned \u00a0by reference to the number of months.<\/p>\n<p>In the third year, the normal basis applies The profits are based on the accounts for the 12 month accounting period ending in that year.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Atypical_Cases\"><\/span>Atypical Cases<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Because there may have been an overlap, the excess profits for the second year may be reassessed by reduction of the third year\u2019s <em>profits. <\/em>The excess is the difference between the actual profits in the second year and the profits assessed in the second year.<\/p>\n<p>If the originally assessed profits are greater than the actual profits the difference is the deduction against the third year profit. This may create a loss.<\/p>\n<p>If in any given year there is no accounting period, the profits assessed and those for the actual calendar year. Where there are two or more periods of account, the profits are based on the 12 months to the latest accounting end date. Where the accounting period is for more than 12 months profits are based on 12 months to the end date for the accounts.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Accounting_Date_Changes\"><\/span>Accounting Date Changes<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Where the accounting date is changed the prior year\u2019s tax may be reviewed. If the profits for the new basis period is higher than for the original basis period, the excess is taxable<\/p>\n<p>A business may decide to change its accounting date. Where there is more than one accounting period, the profits are assessed on the bases of the 12 months ending at the end of the later or latest accounting period. If there is no accounting period ending in the year, the profits are based on the actual profits of the tax (calendar) year.<\/p>\n<p>It is necessary to recalculate the profit in the previous years on the basis of the new accounting period to include any additional liability. If the profits in the previous period on the basis of the new accounting year exceed those originally assessed, the previous year\u2019s tax liability is revised.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Assessment_on_Cessation\"><\/span>Assessment on Cessation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Where a trade ceases, the tax is based on the profit in the final year, being the period from the beginning of the year to the date of the end of the trade. Because the previous year\u2019s profits are based on the 12 month accounting period ending in that previous years, there needs to be an adjustment.<\/p>\n<p>The assessment for the penultimate year is revised to the actual profits for the previous year. This adjustment must be included in the assessment for the last year. Any additional tax that may arise must be played at this point in time.<\/p>\n<p>Where the trade ceases within three years of commencement the profits may be opted to be based on the actual profits earned as revised.\u00a0 The taxpayer can accordingly have the assessment of the second last year revised to the actual profits by law,\u00a0 the first and final year being taxed on this basis under the default rules.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Calculating_the_tax\"><\/span>Calculating the tax<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Income tax is based on the profits of the business for the relevant year. This is ascertained by reference to the financial accounts for the relevant period, as set out above. Most commonly they will be based on the profits of the 12 month period expiring in the tax (calendar) year concerned.<\/p>\n<p>Non- trading income is deducted in calculating the trading income. It is taxed separately under the relevant tax category heading (e.g. capital gain, investment income, rental income etc.)<\/p>\n<p>Payments in kind will usually be treated as a receipt of value for what is received. The treatment will depend on whether they are effectively substituted income or capital in nature.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Adjustment\"><\/span>Adjustment<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The financial accounts are adjusted so as disallow non-revenue, restricted or prohibited expenses. For example capital expenses and depreciation are excluded.<\/p>\n<p>Personal, non-business expenses or a relevant proportion of them are added back. Expenses subject to special legislation such as motoring expenses or leasing are added back, and the adjusted amount is allowed..<\/p>\n<p>There is no absolute test of what constitutes capital income (or gains) as opposed to revenue income. The sale of assets would generally be capital income. Revenue receipts would include payments in lieu of revenue payments.<\/p>\n<p>Certain types adjustments are excluded such as changes in general provisions, but not in specific provisions for future losses, such as bad debts. It may be allowed, if justifiable under published accounting practices.<\/p>\n<p><!--nextpage--><\/p>\n<h2>TAXES CONSOLIDATION ACT<\/h2>\n<p>Chapter 3<\/p>\n<h4>Income tax: basis of assessment under Cases I and II (ss. 65-69)<\/h4>\n<h4>65.<\/h4>\n<h4>Cases I and II: basis of assessment.<\/h4>\n<p>(1)Subject to this Chapter, income tax shall be charged under Case I or II of Schedule D on the full amount of the profits or gains of the year of assessment.<\/p>\n<p>(2)Where in the case of any trade or profession it has been customary to make up accounts &#8211;<\/p>\n<p>(a)if only one account was made up to a date within the year of assessment and that account was for a period of one year, the profits or gains of the year ending on that date shall be taken to be the profits or gains of the year of assessment;<\/p>\n<p>(b)if an account, other than an account to which paragraph (a) applies, was made up to a date in the year of assessment, or if more accounts than one were made up to dates in the year of assessment, the profits or gains of the year ending on that date or on the last of those dates, as the case may be, shall be taken to be the profits or gains of the year of assessment;<\/p>\n<p>(c)in any other case, the profits or gains of the year of assessment shall be determined in accordance with subsection (1).<\/p>\n<p>(3)Where the profits or gains of a year of assessment have been computed on the basis of a period in accordance with paragraph (b) or (c) of subsection (2) and the profits of the corresponding period relating to the preceding year of assessment exceed the profits or gains charged to income tax for that year, then, notwithstanding anything to the contrary in section 66(2), the profits of that corresponding period shall be taken to be the profits or gains of that preceding year of assessment and the assessment shall be amended accordingly.<\/p>\n<p>(3A)As respects the year of assessment 2001, subsection (2) shall apply as if in both paragraph (a) and paragraph (b) of that subsection &#8217;74 per cent of the profits or gains of the year ending on that date&#8217; were substituted for &#8216;the profits or gains of the year ending on that date&#8217;,<\/p>\n<p>(3B)For the purposes of subsection (2)(a), an account made up for a period of one year to a date falling in the period from 1 January 2002 to 5 April 2002 shall, in addition to being an account made up to a date in the year of assessment 2002, be deemed to be an account for a period of one year made up to a date within the year of assessment 2001, and the corresponding period in relation to the year of assessment 2000-2001 for the purposes of subsection (3) shall be determined accordingly.<\/p>\n<p>(3C)Notwithstanding subsection (3), where the profits or gains of the year of assessment 2001 have been taken to be the full amount of the profits or gains of that year of assessment in accordance with subsection (2)(c), and the full amount of the profits or gains of the year of assessment 2000-2001 exceed the profits or gains charged to income tax for that year of assessment, then, the profits or gains of the year of assessment 2000-2001 shall be taken to be the full amount of the profits or gains of that year of assessment and the assessment shall be amended accordingly.<\/p>\n<p>(3D)Notwithstanding subsection (3), where the profits or gains of a period of one year ending in the year of assessment 2002 have been taken to be the profits or gains of that year of assessment in accordance with subsection (2)(b), and the profits or gains charged to income tax for the year of assessment 2001 are less than 74 per cent of the profits or gains of the corresponding period relating to the year of assessment 2001, then, the profits or gains of the year of assessment 2001 shall be taken to be 74 per cent of the profits or gains of that corresponding period and the assessment shall be amended accordingly.<\/p>\n<p>(3E)For the purposes of subsection (3D), where, apart from this subsection, a period (in this subsection referred to as the &#8216;relevant period&#8217;) would not be treated as the corresponding period relating to the year of assessment 2001 by virtue of the fact that the relevant period ends on a date falling in the period from 1 January 2001 to 5 April 2001, the relevant period shall, notwithstanding any other provision of the Income Tax Acts, be treated as the corresponding period relating to that year of assessment.<\/p>\n<p>(3F)Notwithstanding subsection (3), where the profits or gains of the year of assessment 2002 have been taken to be the full amount of the profits or gains of that year of assessment in accordance with subsection (2)(c), and the full amount of the profits or gains of the year of assessment 2001 exceed the profits or gains charged to income tax for that year of assessment, then, the profits or gains of the year of assessment 2001 shall be taken to be the full amount of the profits or gains of that year of assessment and the assessment shall be amended accordingly.<\/p>\n<p>(4)In the case of the death of a person who, if he or she had not died, would under this section have become chargeable to income tax for any year of assessment, the tax which would have been so chargeable shall be assessed and charged on such person&#8217;s executors or administrators, and shall be a debt due from and payable out of such person&#8217;s estate.<\/p>\n<p>66.<\/p>\n<h4>Special basis at commencement of trade or profession.<\/h4>\n<p>(1)Where a trade or profession has been set up and commenced within the year of assessment, the computation of the profits or gains chargeable under Case I or II of Schedule D shall be made either on the full amount of the profits or gains arising in the year of assessment or according to the average of such period, not being greater than one year, as the case may require and as may be directed by the inspector.<\/p>\n<p>(2)Any person chargeable with income tax in respect of the profits or gains of any trade or profession which has been set up and commenced within one year preceding the year of assessment shall be charged &#8211;<\/p>\n<p>(a)if only one account was made up to a date within the year of assessment and that account was for a period of one year, on the full amount of the profits or gains of the year ending on that date,<\/p>\n<p>(b)if &#8211;<\/p>\n<p>(i)an account, other than an account to which paragraph (a) applies, was made up to a date in the year of assessment or more accounts than one were made up to dates in the year of assessment, and<\/p>\n<p>(ii)the trade or profession was set up and commenced not less than 12 months before the first-mentioned date in subparagraph (i) or, as the case may be, the last of the second-mentioned dates in that subparagraph,<\/p>\n<p>on the full amount of the profits or gains of the year ending on that first-mentioned date or, as the case may be, the last of those second-mentioned dates, or<\/p>\n<p>(c)in any other case, on the full amount of the profits or gains of the year of assessment.<\/p>\n<p>(3)Any person chargeable with income tax in respect of the profits or gains of any trade or profession which has been set up and commenced within the year next before the year preceding the year of assessment shall be entitled, on including a claim in that behalf with the return required under Chapter 3 of Part 41A for the year of assessment, to have the assessment reduced by the amount (if any) by which the amount of the assessment for the year preceding the year of assessment exceeds the full amount of the profits or gains of that preceding year; but, where the excess is greater than the amount of the assessment, the difference between the excess and the amount of the assessment shall be treated for the purposes of section 382 as if it were a loss sustained in a trade in that year of assessment.<\/p>\n<p>(3A)As respects the year of assessment 2001, subsection (2) shall apply as if in both paragraph (a) and paragraph (b) of that subsection &#8217;74 per cent of the full amount of the profits or gains&#8217; were substituted for &#8216;the full amount of the profits or gains&#8217;.<\/p>\n<p>(3B)As respects the year of assessment 2002 &#8211;<\/p>\n<p>(a)subsection (2) shall apply as if &#8216;within the period from 6 April 2001 to 31 December 2001&#8217; were substituted for &#8216;within one year preceding the year of assessment&#8217;, and<\/p>\n<p>(b)subsection (3) shall apply as if &#8216;within the period from 6 April 2000 to 5 April 2001&#8217; were substituted for &#8216;within the year next before the year preceding the year of assessment&#8217;.<\/p>\n<p>(3C)As respects the year of assessment 2003, subsection (3) shall apply as if &#8216;within the period from 6 April 2001 to 31 December 2001&#8217; were substituted for &#8216;within the year next before the year preceding the year of assessment&#8217;.<\/p>\n<p>67.<\/p>\n<h4>Special basis on discontinuance of trade or profession.<\/h4>\n<p>(1)<\/p>\n<p>(a)Where in any year of assessment a trade or profession is permanently discontinued, then, notwithstanding anything in the Income Tax Acts &#8211;<\/p>\n<p>(i)the person charged or chargeable with income tax in respect of the trade or profession shall be charged for that year on the amount of the profits or gains of the period beginning on the first day of the year of assessment and ending on the date of the discontinuance, subject to any deduction or set-off to which such person may be entitled under section 382 and, if such person has been charged otherwise than in accordance with this paragraph, any tax overpaid shall be repaid, or an assessment made on or by such person may be amended, as the case may require;<\/p>\n<p>(ii)if the full amount of the profits or gains of the year of assessment preceding the year of assessment in which the discontinuance occurs exceeds the amount on which that person has been charged for that preceding year of assessment, or would have been charged if no such deduction or set-off to which such person may be entitled under section 382 had been allowed, an assessment on or by such person may be made or amended, so that such person shall be charged for that preceding year of assessment on the full amount of the profits or gains of that preceding year of assessment, subject to any such deduction or set-off to which such person may be entitled.<\/p>\n<p>(b)In the case of the death of a person who, if he or she had not died, would under this subsection have become chargeable to income tax for any year, the tax which would have been so chargeable shall be assessed and charged on such person&#8217;s executors or administrators, and shall be a debt due from and payable out of such person&#8217;s estate.<\/p>\n<p>(2)The reference in subsection (1) to the discontinuance of a trade or profession shall be construed as referring to a discontinuance occurring by reason of the death while carrying on such trade or profession of the person carrying on the same, as well as to a discontinuance occurring in the lifetime of such person, and for the purposes of subsection (1) such death shall be deemed to cause a discontinuance and such discontinuance shall be deemed to take place on the day of such death.<\/p>\n<p>68.<\/p>\n<h4>Short-lived businesses.<\/h4>\n<p>(1)This section shall apply to a trade or profession &#8211;<\/p>\n<p>(a)which has been set up and commenced in a year of assessment,<\/p>\n<p>(b)which is permanently discontinued within the second year of assessment following that year of assessment, and<\/p>\n<p>(c)in respect of which the aggregate of the profits or gains on which any person has been charged, or would be charged to income tax, by virtue of any other provision of the Income Tax Acts, exceeds the aggregate of the profits or gains arising in the period beginning on the date of set up and commencement and ending on the date of permanent discontinuance of the trade or profession.<\/p>\n<p>(2)Any person chargeable to income tax on the profits or gains of a trade or profession to which this section applies shall be entitled, on giving notice in writing to the inspector on or before the specified return date (within the meaning of section 959A) for the year of assessment in which the trade or profession is permanently discontinued, to have the assessment for the year of assessment immediately preceding that year reduced by the amount by which the amount of the assessment for that immediately preceding year exceeds the full amount of the profits or gains arising in that same year.<\/p>\n<p>(3)Subsection (2) of section 67 shall apply to this section as if references in that subsection to subsection (1) of that section included references to this section.<\/p>\n<p>69.<\/p>\n<h4>Changes of proprietorship.<\/h4>\n<p>(1)Where at any time a trade or profession which immediately before that time was carried on by an individual (in this subsection referred to as &#8220;the predecessor&#8221;) becomes carried on by another individual or by a partnership of persons (including a partnership in which the predecessor is a partner), the income tax payable for all years of assessment by the predecessor shall be computed as if the trade or profession had been permanently discontinued at that time.<\/p>\n<p>(2)Where at any time an individual (in this subsection referred to as &#8220;the successor&#8221;) succeeds to a trade or profession which immediately before that time was carried on by another individual or by a partnership of persons (including a partnership in which the successor was a partner), the income tax payable for all years of assessment by the successor shall be computed as if the successor had set up or commenced the trade or profession at that time.<\/p>\n<p>(3)In the case of the death of a person who, if he or she had not died, would under this section have become chargeable to income tax for any year, the tax which would have been so chargeable shall be assessed and charged on such person&#8217;s executors or administrators, and shall be a debt due from and payable out of such person&#8217;s estate.2#<\/p>\n<p>Chapter 6<\/p>\n<h4>Computational provisions: general (ss. 81-88A)<\/h4>\n<p>81.<\/p>\n<h4>General rule as to deductions.<\/h4>\n<p>(1)The tax under Cases I and II of Schedule D shall be charged without any deduction other than is allowed by the Tax Acts.<\/p>\n<p>(2)Subject to the Tax Acts, in computing the amount of the profits or gains to be charged to tax under Case I or II of Schedule D, no sum shall be deducted in respect of &#8211;<\/p>\n<p>(a)any disbursement or expenses, not being money wholly and exclusively laid out or expended for the purposes of the trade or profession;<\/p>\n<p>(b)any disbursements or expenses of maintenance of the parties, their families or establishments, or any sums expended for any other domestic or private purposes distinct from the purposes of such trade or profession;<\/p>\n<p>(c)the rent of any dwelling house or domestic offices or any part of any dwelling house or domestic offices, except such part thereof as is used for the purposes of the trade or profession, and, where any such part is so used, the sum so deducted shall be such as may be determined by the inspector and shall not, unless in any particular case the inspector is of the opinion that having regard to all the circumstances some greater sum ought to be deducted, exceed two-thirds of the rent bona fide paid for that dwelling house or those domestic offices;<\/p>\n<p>(d)any sum expended for repairs of premises occupied, or for the supply, repairs or alterations of any implements, utensils or articles employed, for the purposes of the trade or profession, over and above the sum actually expended for those purposes;<\/p>\n<p>(e)any loss not connected with or arising out of the trade or profession;<\/p>\n<p>(f)any capital withdrawn from, or any sum employed or intended to be employed as capital in, the trade or profession;<\/p>\n<p>(g)any capital employed in improvements of premises occupied for the purposes of the trade or profession;<\/p>\n<p>(h)any interest which might have been made if any such sums as aforesaid had been laid out at interest;<\/p>\n<p>(i)any debts, except bad debts proved to be such to the satisfaction of the inspector and doubtful debts to the extent that they are respectively estimated to be bad and, in the case of the bankruptcy or insolvency of a debtor, the amount which may reasonably be expected to be received on any such debts shall be deemed to be the value of any such debts;<\/p>\n<p>(j)any average loss over and above the actual amount of loss after adjustment;<\/p>\n<p>(k)any sum recoverable under an insurance or contract of indemnity;<\/p>\n<p>(l)any annuity or other annual payment (other than interest) payable out of the profits or gains;<\/p>\n<p>(m)any royalty or other sum paid in respect of the user of a patent;<\/p>\n<p>(n)without prejudice to the preceding paragraphs any consideration given for goods or services, or to an employee or director of a company, which consists, directly or indirectly, of shares in the company, or a connected company (within the meaning of section 10), or a right to receive such shares, except to the extent &#8211;<\/p>\n<p>(i)of expenditure incurred by the company on the acquisition of the shares at a price which does not exceed the price which would have been payable, if the shares were acquired by way of a bargain made at arm&#8217;s length,<\/p>\n<p>(ii)where the shares are shares in a connected company, of any payment by the company to the connected company for the issue or transfer by that company of the shares, being a payment which does not exceed the amount which would have been payable in a transaction between independent persons acting at arm&#8217;s length, or<\/p>\n<p>(iii)of other &#8211;<\/p>\n<p>(I)expenditure incurred, or<\/p>\n<p>(II)payment made to the connected company,<\/p>\n<p>by the company in connection with the right to receive such shares which is incurred or, as the case may be, made for bona fide commercial purposes and does not form part of any scheme or arrangement of which the main purpose or one of the main purposes is the avoidance of liability to income tax, corporation tax or capital gains tax;<\/p>\n<p>(o)any sum paid or payable under any agreement or understanding whereby a person is obliged to make a payment to a connected person resident in any territory outside the State for an adjustment made, or to be made, to the profits of the connected person for which relief may be afforded under the terms of an arrangement entered into by virtue of subsection (1) or (1B) of section 826, or for a similar adjustment made to the profits of a connected person resident in a territory in respect of which there are not for the time being in force any arrangements providing for such relief;<\/p>\n<p>(p)any taxes on income.<\/p>\n<p>(3)<\/p>\n<p>(a)In respect of a company &#8211;<\/p>\n<p>(i)interest payable by the company, and<\/p>\n<p>(ii)expenditure on research and development incurred by the company,<\/p>\n<p>shall not be prevented from being regarded for tax purposes as deductible in computing profits or gains of the company for the purposes of Case I or II of Schedule D by virtue only of the fact that for accounting purposes they are brought into account in determining the value of an asset.<\/p>\n<p>(b)Any amount shall not be regarded by virtue of paragraph (a) as deductible in computing profits or gains of a company for the purposes of Case I or II of Schedule D for an accounting period to the extent that &#8211;<\/p>\n<p>(i)a deduction has been made in respect of that amount in computing such profits or gains for a previous accounting period, or<\/p>\n<p>(ii)the company has benefited from a tax relief under any provision in respect of that amount for a previous accounting period.<\/p>\n<p>(4)In this section, \u2018doubtful debts to the extent that they are respectively estimated to be bad\u2019 means, in respect of a company, impairment losses as calculated in accordance with generally accepted accounting practice.<\/p>\n<p>81A.<\/p>\n<h4>Restriction of deductions for employee benefit contributions.<\/h4>\n<p>(1)<\/p>\n<p>(a)In this section &#8211;<\/p>\n<p>&#8216;accident benefit scheme&#8217; means an employee benefit scheme under which benefits may be provided only by reason of a person&#8217;s disablement, or death, caused by an accident occuring during the person&#8217;s service as an employee of the employer;<\/p>\n<p>&#8216;chargeable period&#8217; has the same meaning as in section 321;<\/p>\n<p>&#8217;employee benefit scheme&#8217; means a trust, scheme or other arrangement for the benefit of persons who are employees of an employer;<\/p>\n<p>&#8216;qualifying expenses&#8217;, in relation to a scheme manager and an employee benefit scheme, does not include expenses that, if incurred by the employer, would not be allowed as a deduction in calculating the profits or gains of the employer to be charged to tax under Case I or II of Schedule D but, subject to the foregoing, includes any expenses of a scheme manager (apart from the provision of benefits to employees of the employer) incurred in the operation of the employee benefit scheme;<\/p>\n<p>&#8216;scheme manager&#8217; means a person who administers an employee benefit scheme or any person to whom an employer pays money or transfers an asset and such person is entitled or required, under the provisions of an employee benefit scheme to retain or use the money or asset for or in connection with the provision of benefits to employees of the employer.<\/p>\n<p>(b)For the purposes of this section &#8211;<\/p>\n<p>(i)an employee benefit contribution is made if, as a result of any act or omission &#8211;<\/p>\n<p>(I)any assets are held, or may be used, under an employee benefit scheme, or<\/p>\n<p>(II)there is an increase in the total value of assets that are so held or may be so used (or a reduction in any liabilities under an employee benefit scheme),<\/p>\n<p>(ii)qualifying benefits are provided where there is a payment of money or a transfer of assets, otherwise than by way of a loan, and the recipient or a person other than the recipient is or would, if resident, ordinarily resident and domiciled in the State, be chargeable to income tax in respect of the provision of such benefits, and<\/p>\n<p>(iii)a reference to a person&#8217;s employee includes a reference to the holder of an office under that person.<\/p>\n<p>(2)<\/p>\n<p>(a)This section applies where &#8211;<\/p>\n<p>(i)a calculation is made of the amount of a person&#8217;s profits or gains to be charged to tax under Case I or II of Schedule D for a chargeable period beginning on or after 3 February 2005, and<\/p>\n<p>(ii)a deduction would, but for this section, be allowed by the Tax Acts for that period in respect of employee benefit contributions made, or to be made, by that person (referred to in this section as the &#8217;employer&#8217;).<\/p>\n<p>(b)Notwithstanding paragraph (a), this section does not apply in respect of a deduction referred to in subsection (7).<\/p>\n<p>(3)<\/p>\n<p>(a)A deduction in respect of employee benefit contributions referred to in subsection (2)(a) shall be allowed only to the extent that, during the chargeable period in question or within 9 months from the end of it &#8211;<\/p>\n<p>(i)qualifying benefits are provided out of the contributions, or<\/p>\n<p>(ii)qualifying expenses are paid out of the contributions.<\/p>\n<p>(b)<\/p>\n<p>(i)For the purposes of paragraph (a), any qualifying benefits provided or qualifying expenses paid by a scheme manager after the receipt by the scheme manager of employee benefit contributions shall be regarded as being provided or paid out of those contributions, up to the total amount of the contributions as reduced by the amount of any benefits or expenses previously provided or paid as referred to in paragraph (a).<\/p>\n<p>(ii)In the application of this paragraph, no account shall be taken of any other amount received or paid by the scheme manager.<\/p>\n<p>(4)<\/p>\n<p>(a)An amount which is disallowed under subsection (3) shall be allowed as a deduction for a subsequent chargeable period to the extent that qualifying benefits are provided out of the employee benefit contributions in question before the end of that subsequent chargeable period.<\/p>\n<p>(b)<\/p>\n<p>(i)For the purposes of paragraph (a), any qualifying benefits provided by a scheme manager after the receipt by the scheme manager of employee benefit contributions shall be regarded as being provided out of those contributions, up to the total amount of the contributions as reduced by the amount of any benefits or expenses previously provided or paid as referred to in subsection (3)(a) or paragraph (a) of this subsection.<\/p>\n<p>(ii)In the application of this paragraph, no account shall be taken of any other amount received or paid by the scheme manager.<\/p>\n<p>(5)<\/p>\n<p>(a)This subsection applies where the provision of a qualifying benefit takes the form of the transfer of an asset.<\/p>\n<p>(b)The amount provided shall be taken for the purposes of this section to be the total of &#8211;<\/p>\n<p>(i)<\/p>\n<p>(I)the amount, if any, expended on the asset by a scheme manager, or<\/p>\n<p>(II)where the asset consists of new shares in a company connected (within the meaning of section 10) with the employer, or rights in respect of such shares, issued by the connected company, the market value of those shares or rights, as the case may be, at the time of the transfer,<\/p>\n<p>and<\/p>\n<p>(ii)in a case in which the asset was transferred to a scheme manager by the employer, the amount of the deduction that would be allowed as referred to in subsection (2) in respect of the transfer.<\/p>\n<p>(c)Where the amount calculated in accordance with paragraph (b) is greater than the amount (referred to in this paragraph as the &#8216;second-mentioned amount&#8217;) in respect of which an employee is chargeable to income tax in respect of the transfer, the deduction to be allowed in accordance with subsection (3) or (4) shall not exceed the second-mentioned amount.<\/p>\n<p>(6)In any case where the calculation referred to in subsection (2)(a) is made before the end of the 9 month period mentioned in subsection (3) &#8211;<\/p>\n<p>(a)for the purposes of making the calculation, subsection (3) shall be construed as if the reference to that 9 month period were a reference to the period ending at the time when the calculation is made, and<\/p>\n<p>(b)after the end of the 9 month period the calculation shall if necessary be adjusted to take account of any benefits provided, expenses paid or contributions made within that period but after the time of the calculation.<\/p>\n<p>(7)This section does not apply in relation to any deduction that is allowable &#8211;<\/p>\n<p>(a)in respect of anything given as consideration for goods or services provided in the course of a trade or profession,<\/p>\n<p>(b)in respect of contributions under an accident benefit scheme,<\/p>\n<p>(c)under Part 17, or<\/p>\n<p>(d)under Part 30.<\/p>\n<p>81B.<\/p>\n<h4>Equalisation reserves for credit insurance and reinsurance business of companies.<\/h4>\n<p>(1)In this section &#8211;<\/p>\n<p>&#8216;credit insurance risks&#8217; means risks included in class 14 of Section A of the Annex to the First Council Directive 73\/239\/EEC of 24 July 1973 ;<\/p>\n<p>&#8216;Principal Regulations&#8217; means the European Communities (Non-Life Insurance) Regulations 1976 (S.I. No. 115 of 1976) as amended from time to time;<\/p>\n<p>&#8216;Reinsurance Regulations&#8217; means the European Communities (Reinsurance) Regulations 2006 (S.I. No. 380 of 2006);<\/p>\n<p>&#8216;relevant rules&#8217; means the rules as set out in point D, as inserted by Council Directive 87\/343\/EEC of 22 June 1987, to the Annex to the First Council Directive 73\/239\/EEC of 24 July 1973.<\/p>\n<p>(1A)This section applies to &#8211;<\/p>\n<p>(a)an insurance company whose business has at any time been, or included, business in respect of which it was required, by virtue of Regulation 24 of the Reinsurance Regulations, to establish and maintain an equalisation reserve, or<\/p>\n<p>(b)an insurance company which is underwriting credit insurance risks and which is required by Article 14(8) of the Principal Regulations to set up an equalisation reserve.<\/p>\n<p>(2)Subject to the following provisions of this section, full account shall be taken of all amounts in accordance with the rules in subsection (3) in making any computation, for the purposes of Case I of Schedule D, of the profits or losses for any accounting period of an insurance company to which this section applies.<\/p>\n<p>(3)The rules specified in this subsection are &#8211;<\/p>\n<p>(a)amounts which, in accordance with the relevant rules, are transferred into the equalisation reserve in respect of the company&#8217;s business in a period are to be deductible in that period,<\/p>\n<p>(b)amounts which, in accordance with the relevant rules, are transferred out of the reserve in respect of the company&#8217;s business in a period are to be treated as receipts of that business in that period, and<\/p>\n<p>(c)it shall be assumed that all such transfers as are required by the Reinsurance Regulations or the Principal Regulations to be made into or out of the reserve in respect of the company&#8217;s business for any period are made as required.<\/p>\n<p>(4)Where an insurance company having any business in respect of which it is required, by virtue of Regulation 24 of the Reinsurance Regulations or Article 14(8) of the Principal Regulations, to maintain an equalisation reserve ceases to trade &#8211;<\/p>\n<p>(a)any balance which exists in the reserve at that time for the purposes of the Corporation Tax Acts shall be deemed to have been transferred out of the reserve immediately before the company ceases to trade, and<\/p>\n<p>(b)that transfer out shall be deemed to be a transfer in respect of the company&#8217;s business for the accounting period in which the company ceases and to have been required by virtue of the Reinsurance Regulations or the Principal Regulations.<\/p>\n<p>(5)To the extent that any actual or assumed transfer in accordance with the Reinsurance Regulations or the Principal Regulations of any amount into an equalisation reserve is attributable to arrangements entered into wholly or mainly for tax purposes &#8211;<\/p>\n<p>(a)subsection (2) shall not apply to that transfer, and<\/p>\n<p>(b)the making of that transfer shall be disregarded in determining, for the purposes of the Tax Acts, whether and to what extent there is subsequently any requirement to make a transfer into or out of the reserve in accordance with the Reinsurance Regulations or the Principal Regulations,<\/p>\n<p>and this subsection applies irrespective of whether the insurance company in question is a party to the arrangements.<\/p>\n<p>(6)For the purposes of this section, the transfer of an amount into an equalisation reserve is attributable to arrangements entered into wholly or mainly for tax purposes to the extent that the arrangements to which it is attributable are arrangements &#8211;<\/p>\n<p>(a)the sole or main purpose of which is, or<\/p>\n<p>(b)the sole or main benefit accruing from which might, apart from subsection (7), be expected to be,<\/p>\n<p>the reduction by virtue of this section of any liability to tax.<\/p>\n<p>(7)Where &#8211;<\/p>\n<p>(a)any transfer made into or out of an equalisation reserve maintained by an insurance company is made in accordance with the Reinsurance Regulations or the Principal Regulations in respect of business carried on by that company over a period (in this subsection referred to as the &#8216;equalisation period&#8217;), and<\/p>\n<p>(b)parts of the equalisation period are in different accounting periods,<\/p>\n<p>then the amount transferred shall be apportioned for the purposes of this section between the different accounting periods in the proportions that correspond to the number of days in the equalisation period that are included in each of those accounting periods.<\/p>\n<p>81C.<\/p>\n<h4>Emissions allowances.<\/h4>\n<p>(1)In this section &#8211;<\/p>\n<p>&#8216;Directive&#8217; has the same meaning as in section 540A;<\/p>\n<p>&#8217;emissions allowance&#8217; means &#8211;<\/p>\n<p>(a)an allowance within the meaning of Article 3 of the Directive,<\/p>\n<p>(b)an emission reduction unit or ERU, within the meaning of Article 3 of the Directive, or<\/p>\n<p>(c)a certified emission reduction or CER, within the meaning of Article 3 of the Directive;<\/p>\n<p>&#8216;profit and loss account&#8217;, in relation to an accounting period of a company, has the meaning assigned to it by generally accepted accounting practice and includes an income and expenditure account where a company prepares accounts in accordance with international accounting standards.<\/p>\n<p>(2)Notwithstanding anything in section 81, any amount, computed in accordance with generally accepted accounting practice, charged to the profit and loss account of a company, for the period of account which is the same as the accounting period, in respect of expenditure, for the purposes of a trade carried on by the company, on the purchase of an emissions allowance shall be allowed to be deducted as expenses in computing the amount of the profits or gains of the company to be charged to tax under Case I of Schedule D for the accounting period.<\/p>\n<p>(3)Subject to section 540A, where a company disposes of an emissions allowance which it purchased for the purposes of a trade carried on by it, the consideration for such disposal shall be treated as a trading receipt of the trade.<\/p>\n<p>82.<\/p>\n<h4>Pre-trading expenditure.<\/h4>\n<p>(1)This section shall apply to expenditure incurred for the purposes of a trade or profession set up and commenced on or after the 22nd day of January, 1997.<\/p>\n<p>(2)Subject to subsection (3), where a person incurs expenditure for the purposes of a trade or profession before the time that the trade or profession has been set up and commenced by that person, and such expenditure &#8211;<\/p>\n<p>(a)is incurred not more than 3 years before that time, and<\/p>\n<p>(b)is apart from this section not allowable as a deduction for the purpose of computing the profits or gains of the trade or profession for the purposes of Case I or II of Schedule D, but would have been so allowable if it had been incurred after that time,<\/p>\n<p>then, the expenditure shall be treated for that purpose as having been incurred at that time.<\/p>\n<p>(3)The amount of any expenditure to be treated under subsection (2) as incurred at the time that a trade or profession has been set up and commenced shall not be so treated for the purposes of section 381, 396(2), 396A, 396B, 420, 420A or 420B.<\/p>\n<p>(4)An allowance or deduction shall not be made under any provision of the Tax Acts other than this section in respect of any expenditure or payment which is treated under this section as incurred on the day on which a trade or profession is set up and commenced.<\/p>\n<p>83.<\/p>\n<h4>Expenses of management of investment companies.<\/h4>\n<p>(1)For the purposes of this section and of the other provisions of the Corporation Tax Acts relating to expenses of management, &#8220;investment company&#8221; means any company whose business consists wholly or mainly of the making of investments, and the principal part of whose income is derived from the making of investments, but includes any savings bank or other bank for savings.<\/p>\n<p>(2)In computing for the purposes of corporation tax the total profits for any accounting period of an investment company resident in the State &#8211;<\/p>\n<p>(a)there shall be deducted any sums disbursed as expenses of management (including commissions) for that period, except any such expenses as are deductible in computing income for the purposes of Case V of Schedule D; but<\/p>\n<p>(b)there shall be deducted from the amount treated as expenses of management the amount of any income derived from sources not charged to tax, other than franked investment income.<\/p>\n<p>(3)Where in any accounting period of an investment company the expenses of management deductible under subsection (2), together with any charges on income paid in the accounting period wholly and exclusively for the purposes of the company&#8217;s business, exceed the amount of the profits from which they are deductible, the excess shall be carried forward to the succeeding accounting period, and the amount so carried forward shall be treated for the purposes of this section, including any further application of this subsection, as if it had been disbursed as expenses of management for that accounting period.<\/p>\n<p>(4)For the purposes of subsections (2) and (3), there shall be added to a company&#8217;s expenses of management in any accounting period the amount of any allowances to be made to the company for that period by virtue of section 109 or 774.<\/p>\n<p>(5)[deleted]<\/p>\n<p>(6)[deleted]<\/p>\n<p>83A.<\/p>\n<h4>Expenditure involving crime.<\/h4>\n<p>(1)In computing any income chargeable to tax under Schedule D, no deduction shall be made for any expenditure incurred &#8211;<\/p>\n<p>(a)in making a payment the making of which constitutes the commission of a criminal offence, or<\/p>\n<p>(b)in making a payment outside of the State where the making of a corresponding payment in the State would constitute a criminal offence.<\/p>\n<p>(2)Any expenditure specified in subsection (1) shall not be included in computing any expenses of management in respect of which relief may be given under the Tax Acts.<\/p>\n<p>84.<\/p>\n<h4>Expenses in relation to establishment or alteration of superannuation schemes.<\/h4>\n<p>Where a superannuation scheme is established in connection with a trade or undertaking or a superannuation scheme so established is altered, and the person by whom the trade or undertaking is carried on makes a payment in respect of expenses (including a payment in respect of professional fees, but not including a payment by means of contribution towards the cost of providing the benefits payable under the scheme) in connection with such establishment or alteration, then, if the scheme or, as the case may be, the altered scheme is approved by the Revenue Commissioners under section 772, the amount of the payment shall be allowed to be deducted in the computation, for the purposes of assessment to tax, of the profits or gains of the trade or undertaking as an expense incurred when the payment is made.<\/p>\n<p>85.<\/p>\n<h4>Deduction for certain industrial premises.<\/h4>\n<p>(1)In this section, &#8220;premises&#8221; means an industrial building or structure within the meaning of section 268 which is not a building or structure to which section 272 applies.<\/p>\n<p>(2)In estimating the amount of annual profits or gains arising or accruing from any trade the profits of which are chargeable to tax under Case I of Schedule D, there shall be allowed to be deducted, as expenses incurred in any year on account of any premises owned by the person carrying on that trade and occupied by such person for the purposes of that trade, a deduction equal to five-twelfths of the rateable valuation of those premises.<\/p>\n<p>(3)In estimating the profits for any year of any of the concerns which by virtue of section 18(2) are charged under Case I(b) of Schedule D, there shall be allowed to be deducted, as expenses incurred in any year on account of any premises owned by the person carrying on the concern and occupied by such person for the purposes of that concern, a deduction equal to five-twelfths of the rateable valuation of those premises.<\/p>\n<p>(4)<\/p>\n<p>(a)Where, in the case of property valued under the Valuation Acts as a unit, a part is and a part is not premises, the rateable valuation of each part shall be arrived at by apportionment of the rateable valuation of the property.<\/p>\n<p>(b)Any apportionment required by this subsection shall be made by the inspector according to the best of his or her knowledge and judgment.<\/p>\n<p>(c)An apportionment made under paragraph (b) may be amended by the Appeal Commissioners in determining an appeal against an assessment made on the basis of the apportionment; but, during the adjudication of any such appeal, a certificate of the Commissioner of Valuation tendered by either party to the appeal and stating, as regards property valued under the Valuation Acts as a unit, the amount of the rateable valuation of the property attributable to any part of the property shall be evidence of the amount so attributable.<\/p>\n<p>86.<\/p>\n<h4>Cost of registration of trade marks.<\/h4>\n<p>Notwithstanding anything in section 81, in computing the amount of the profits or gains of any trade, there shall be allowed to be deducted as expenses any fees paid or expenses incurred in obtaining for the purposes of the trade the registration of a trade mark or the renewal of registration of a trade mark.<\/p>\n<p>87.<\/p>\n<h4>Debts set off against profits and subsequently released.<\/h4>\n<p>(1)Where, in computing for tax purposes the profits or gains of a trade or profession, a deduction has been allowed for any debt incurred for the purposes of the trade or profession, then, if the whole or any part of that debt is thereafter released, the amount released shall be treated as a receipt of the trade or profession arising in the period in which the release is effected.<\/p>\n<p>(2)If in any case referred to in subsection (1) the trade or profession has been permanently discontinued at or after the end of the period for which the deduction was allowed and before the release was effected, or is treated for tax purposes as if it had been so discontinued, section 91 shall apply as if the amount released were a sum received after the discontinuance.<\/p>\n<p>87A. Deductions for gifts to Foundation for Investing in Communities.<br \/>\nRepealed from 6 April 2001<br \/>\n(1)In this section, &#8216;the Company&#8217; means the company incorporated on 11 November 1998 as The Foundation for Investing in Communities Limited or any of its 90 per cent subsidiaries as may be approved for the purposes of this section by the Minister for Finance.<\/p>\n<p>(2)This section shall apply to a gift of money which &#8211;<\/p>\n<p>(a)on or before 5 April 2001 is made to the Company and accepted by it,<\/p>\n<p>(b)is to be applied by the Company solely for the objects set out in its memorandum of association,<\/p>\n<p>(c)apart from subsection (3), would not be deductible in computing for the purposes of corporation tax the profits or gains of a trade or profession, and<\/p>\n<p>(d)is not income to which section 792 applies.<\/p>\n<p>(3)<\/p>\n<p>(a)Subject to paragraph (b) and subsection (2), where a company (in this section referred to as a &#8216;donor&#8217;) makes a gift to which this section applies and claims relief from tax by reference to the gift, the net amount of the gift shall be treated for the purposes of corporation tax as &#8211;<\/p>\n<p>(i)a deductible trading expense of a trade carried on by the donor, or<\/p>\n<p>(ii)an expense of management deductible in computing the total profits of the donor,<\/p>\n<p>incurred by it in the accounting period in which the gift is made.<\/p>\n<p>(b)In determining for the purposes of paragraph (a) the net amount of the gift, the amount or value of any consideration received by a donor as a result of making the gift, whether received directly or indirectly from the Company or any other person, shall be deducted from the amount of the gift, and relief under this section shall not be given to a donor for an accounting period &#8211;<\/p>\n<p>(i)if the net amount of the gift (or the aggregate of the net amounts of gifts) made by the donor in that accounting period, being a gift or gifts, as the case may be, to which this section applies, does not exceed \u00a3500,<\/p>\n<p>(ii)if at the time a donor makes a gift to which this section applies the aggregate of the net amounts of all gifts to which this section applies exceeds \u00a35,000,000.<\/p>\n<p>(4)A claim under this section shall be made with the return required to be delivered under section 951 for the accounting period in which the payment is made.<\/p>\n<p>(5)Where a donor makes a gift in respect of which relief is not to be given by virtue of subsection (3)(b)(ii), the Company shall, by notice in writing given to the donor within 30 days of the making of the gift, advise the donor accordingly.<\/p>\n<p>(6)Where a gift to which this section applies is made by a donor in an accounting period of the donor which is less than 12 months, the amount specified in subsection (3)(b)(i) shall be proportionately reduced.<\/p>\n<p>87B. Release of debts in certain trades.<br \/>\n(1)In this section &#8211;<\/p>\n<p>&#8216;specified debt&#8217; means any debt incurred by an individual in respect of borrowed money employed in the purchase or development of land held as trading stock (within the meaning of section 89) of a specified trade;<\/p>\n<p>&#8216;specified trade&#8217; means a trade, or a business which is deemed to be a trade by virtue of section 640(2)(a), consisting of or including dealing in or developing land to which Chapter 1 of Part 22 applies;<\/p>\n<p>&#8216;tax year&#8217; means a year of assessment.<\/p>\n<p>(2)If at any time the whole or part of a specified debt of an individual who is engaged in a specified trade is released, the amount released shall be treated as a receipt of the specified trade arising in the tax year in which the release is effected.<\/p>\n<p>(3)If, in any case referred to in subsection (2), the specified trade has been permanently discontinued or is treated for tax purposes as if it had been so discontinued, in a tax year before the release was effected, section 91 shall apply as if the amount released were a sum received after the discontinuance.<\/p>\n<p>(4)For the purposes of this section, the release of the whole or part of a specified debt is treated as having been effected on the earliest of the following dates &#8211;<\/p>\n<p>(a)the date when the lender has confirmed that release to the borrower,<\/p>\n<p>(b)the date on which the lender and the borrower have first come to an agreement (whether formal or informal) that the debt or part of the debt is no longer required to be repaid,<\/p>\n<p>(c)in a case in which the agreement under which the money was borrowed provides for any release or non-collection of the debt or part of the debt, the date when the conditions necessary for that release or non-collection are first satisfied, or<\/p>\n<p>(d)in a case in which the release is a result of &#8211;<\/p>\n<p>(i)a discharge from bankruptcy, or<\/p>\n<p>(ii)a discharge from debt under the provisions of the Personal Insolvency Act 2012,<\/p>\n<p>the date of that discharge.<\/p>\n<p>88. Deduction for gifts to Enterprise Trust Ltd.<br \/>\nRepealed from 6 April 2001<br \/>\n(1)In this section,&#8217;the company\u2019 means the company incorporated on the 30th day of October, 1991, as The Enterprise Trust Limited or such successor body of The Enterprise Trust Limited as may be approved for the purposes of this section by the Minister for Finance.<\/p>\n<p>(2)This section shall apply to a gift of money which &#8211;<\/p>\n<p>(a)on or before the 31st day of December, 2002, is made to the company and accepted by it,<\/p>\n<p>(b)is to be applied by the company solely for the objects set out in its memorandum of association,<\/p>\n<p>(c)apart from subsection (3) would not be deductible in computing for the purposes of corporation tax the profits or gains of a trade or profession, and<\/p>\n<p>(d)is not income to which section 792 applies.<\/p>\n<p>(3)<\/p>\n<p>(a)Subject to paragraph (b) and subsection (2), where a company (in this section referred to as a &#8220;donor&#8221;) makes a gift to which this section applies and claims relief from tax by reference to the gift, the net amount of the gift shall be treated for the purposes of corporation tax as &#8211;<\/p>\n<p>(i)a deductible trading expense of a trade carried on by the donor, or<\/p>\n<p>(ii)an expense of management deductible in computing the total profits of the donor,<\/p>\n<p>incurred by it in the accounting period in which the gift is made.<\/p>\n<p>(b)In determining for the purposes of paragraph (a) the net amount of the gift, the amount or value of any consideration received by a donor as a result of making the gift, whether received directly or indirectly from the company or any other person, shall be deducted from the amount of the gift, and relief under this section shall not be given to a donor for an accounting period &#8211;<\/p>\n<p>(i)if the net amount of the gift (or the aggregate of the net amounts of gifts) made by the donor in that accounting period, being a gift or gifts, as the case may be, to which this section applies, does not exceed \u00a3500,<\/p>\n<p>(ii)in respect of a gift made at any time in the year ending on the 31st day of December in the year 1999, 2000, 2001 or 2002, if at that time the aggregate of the net amounts of all gifts to which this section applies made to the company within that year exceeds \u00a35,000,000.<\/p>\n<p>(4)A claim under this section shall be made with the return required to be delivered under section 951 for the accounting period in which the payment is made.<\/p>\n<p>(5)Where a donor makes a gift in respect of which relief is not to be given by virtue of subparagraph (iii) of subsection (3)(b), the company shall, by notice in writing given to the donor within 30 days of the making of the gift, advise the donor accordingly.<\/p>\n<p>(6)Where a gift to which this section applies is made by a donor in an accounting period of the donor which is less than 12 months, the amount specified in subparagraph (i) of subsection (3)(b) shall be proportionately reduced.<\/p>\n<p>88A. Double deduction in respect of certain emoluments.<br \/>\nCeased from 1 July 2013<br \/>\n(1)In this section &#8211;<\/p>\n<p>&#8216;chargeable period&#8217; has the same meaning as in section 321(2);<\/p>\n<p>&#8217;emoluments&#8217;, &#8217;employment&#8217;, &#8217;employment scheme&#8217;, &#8216;qualifying employment&#8217;, and &#8216;qualifying individual&#8217; have the same meanings, respectively, as in section 472A;<\/p>\n<p>&#8216;qualifying period&#8217;, in relation to a qualifying employment, means the period of 36 months beginning on the date when that employment commences.<\/p>\n<p>(2)<\/p>\n<p>(a)Where in the computation of the amount of the profits or gains of a trade or profession for a chargeable period, a person is, apart from this section, entitled to a deduction (in this subsection referred to as &#8216;the first-mentioned deduction&#8217;) on account of &#8211;<\/p>\n<p>(i)emoluments payable to a qualifying individual in respect of a qualifying employment, and<\/p>\n<p>(ii)the employer&#8217;s contribution to the Social Insurance Fund payable, in respect of those emoluments, under the Social Welfare Acts,<\/p>\n<p>that person shall be entitled in that computation to a further deduction (in this subsection referred to as &#8216;the second-mentioned deduction&#8217;) equal to the amount of the first-mentioned deduction as respects that qualifying employment.<\/p>\n<p>(b)Relief under this section, in respect of a qualifying employment, shall not be granted &#8211;<\/p>\n<p>(i)in respect of a second-mentioned deduction which relates to a chargeable period or part of a chargeable period outside the qualifying period in relation to such qualifying employment, or<\/p>\n<p>(ii)if the claimant or the qualifying individual is benefiting, or has benefited, under an employment scheme, whether statutory or otherwise.<\/p>\n<p>(c)For the purposes of this section, an activity, programme or course mentioned in section 472A(1)(b)(i) shall be deemed not to be an employment scheme.<\/p>\n<p>(3)This section shall cease to have effect in respect of all claims relating to &#8211;<\/p>\n<p>(a)emoluments payable in respect of an employment commencing on or after such day as the Minister for Finance may by order appoint, and<\/p>\n<p>(b)the employer&#8217;s contribution to the Social Insurance Fund payable, in respect of those emoluments, under the Social Welfare Acts.<\/p>\n<p>Chapter 7<\/p>\n<p>Special measures on discontinuance of, and change of basis of computation of profits or gains of, a trade or profession (ss. 89-95A)<\/p>\n<h4>Valuation of trading stock at discontinuance of trade.<\/h4>\n<p>(1)<\/p>\n<p>(a)In this section, &#8220;trading stock&#8221; means, subject to paragraph (b), property of any description, whether real or personal, which is either &#8211;<\/p>\n<p>(i)property such as is sold in the ordinary course of the trade in relation to which the expression is used or would be so sold if it were mature or if its manufacture, preparation or construction were complete, or<\/p>\n<p>(ii)materials such as are used in the manufacture, preparation or construction of property such as is sold in the ordinary course of that trade.<\/p>\n<p>(b)For the purposes of this section &#8211;<\/p>\n<p>(i)&#8217;trading stock&#8217;, in relation to a trade, includes any services, article or material which, if the trade were a profession, would be treated as work in progress of the profession for the purposes of section 90, and references to the sale or transfer of trading stock shall be construed accordingly;<\/p>\n<p>(ii)two persons are connected with each other if &#8211;<\/p>\n<p>(I)they are connected with each other within the meaning of section 10;<\/p>\n<p>(II)one of them is a partnership and the other has a right to a share in the partnership;<\/p>\n<p>(III)one of them is a body corporate and the other has control over that body;<\/p>\n<p>(IV)both of them are partnerships and some other person has a right to a share in each of them; or<\/p>\n<p>(V)both of them are bodies corporate or one of them is a partnership and the other is a body corporate and, in either case, some other person has control over both of them;<\/p>\n<p>and in this subparagraph the references to a right to a share in a partnership are references to a share of the assets or income of the partnership and control has the meaning given by section 11.<\/p>\n<p>(c)References in this section to a trade having been discontinued or to the discontinuance of a trade shall be construed as not referring to or including any case where such trade was carried on by a single individual and is discontinued by reason of such individual&#8217;s death (whether such trade is or is not continued by another person after such death), but shall be construed as referring to and including every other case where a trade has been discontinued or is, by virtue of any of the provisions of the Tax Acts, treated as having been discontinued for the purpose of computing tax.<\/p>\n<p>(2)In computing the profits or gains of a trade which has been discontinued, any trading stock belonging to the trade at the discontinuance of the trade shall be valued in accordance with the following provisions:<\/p>\n<p>(a)in the case of any such trading stock &#8211;<\/p>\n<p>(i)which is sold, or is transferred for valuable consideration, to a person who carries on or intends to carry on a trade in the State, and<\/p>\n<p>(ii)the cost of which to such person on such sale or transfer may be deducted by such person as an expense in computing for any purpose of the Tax Acts the profits or gains of the trade carried on or intended to be carried on by such person,<\/p>\n<p>the value of such trading stock shall be taken to be the amount determined in accordance with subsections (3) and (4);<\/p>\n<p>(b)in the case of any other such trading stock, the value of such other trading stock shall be taken to be the amount which it would have realised if it had been sold in the open market at the discontinuance of the trade.<\/p>\n<p>(3)Subject to subsection (4), paragraph 2(2) of Schedule 16 and paragraph 4(2) of Schedule 17, the value of any trading stock falling to be valued under subsection (2)(a) shall be taken &#8211;<\/p>\n<p>(a)except where the person to whom it is sold or transferred is connected with the person who makes the sale or transfer, to be the amount (in this subsection and subsection (4) referred to as &#8216;the price actually received for it&#8217;) realised on the sale or, as the case may be, which is in fact the value of the consideration given for the transfer, and<\/p>\n<p>(b)if those persons are connected with each other, to be what would have been the price actually received for it had the sale or transfer been a transaction between independent persons dealing at arm&#8217;s length.<\/p>\n<p>(4)If &#8211;<\/p>\n<p>(a)trading stock is sold or transferred to a person in circumstances where subsection (3)(b) would, apart from this subsection, apply for determining the value of stock so sold or transferred,<\/p>\n<p>(b)the amount which would be taken in accordance with subsection (3)(b) to be the value of the stock sold or transferred to that person is more than the acquisition value of that stock and also more than the price actually received for it, and<\/p>\n<p>(c)the person by whom the stock is sold or transferred includes in a return required to be delivered under Chapter 3 of Part 41A for the chargeable period in which the trade is discontinued an election signed by both parties to the sale or transfer that this subsection shall apply,<\/p>\n<p>then the stock so sold or transferred shall be taken to have a value equal to whichever is the greater (taking all the stock so sold or transferred together) of its acquisition value and the price actually received for it or, in a case where they are the same, to either of them.<\/p>\n<p>(5)In subsection (4) &#8216;acquisition value&#8217;, in relation to any trading stock, means the amount which, in computing for any tax purposes the profits or gains of the discontinued trade, would have been deductible as representing the purchase price of that stock if &#8211;<\/p>\n<p>(a)the stock had, immediately before the discontinuance, been sold in the course of the trade for a price equal to whatever would be its value in accordance with subsection (3)(b), and<\/p>\n<p>(b)the period for which those profits or gains were to be computed began immediately before the sale.<\/p>\n<p>(6)Where any trading stock falls to be valued under subsection (2)(a), the amount determined in accordance with subsections (3) and (4) to be the amount to be brought into account as the value of that stock in computing profits or gains of the discontinued trade shall also be taken, for the purpose of making any deduction in computing the profits or gains of any trade carried on by the purchaser, to be the cost of that stock to the purchaser.<\/p>\n<p>90.<\/p>\n<h4>Valuation of work in progress at discontinuance of profession.<\/h4>\n<p>(1)Where, in computing for any of the purposes of the Tax Acts the profits or gains of a profession which has been discontinued, a valuation is taken of the work of the profession in progress at the discontinuance, that work shall be valued as follows:<\/p>\n<p>(a)if the work is transferred for money or any other valuable consideration to a person who carries on or intends to carry on a profession in the State, and the cost of the work may be deducted by that person as an expense in computing for any such purpose the profits or gains of that profession, the value of the work shall be taken to be the amount paid or other consideration given for the transfer;<\/p>\n<p>(b)if the work is not to be valued under paragraph (a), its value shall be taken to be the amount which would have been paid for a transfer of the work on the date of the discontinuance as between parties at arm&#8217;s length.<\/p>\n<p>(2)Where a profession is discontinued and the person by whom it was carried on immediately before the discontinuance so elects, by notice in writing sent to the inspector at any time within 24 months after the discontinuance, the amount, if any, by which the value of the work in progress at the discontinuance (as ascertained under subsection (1)) exceeds the actual cost of the work shall not be taken into account in computing the profits or gains of the period immediately before the discontinuance, but the amount by which any sums received for the transfer of the work exceed the actual cost of the work shall be included in the sums chargeable to tax under section 91 as if it were a sum to which that section applies received after the discontinuance.<\/p>\n<p>(3)Subsections (1) and (2) shall apply where a profession is treated for any of the purposes of the Tax Acts as permanently discontinued as they apply in the case of an actual discontinuance, but shall not apply in a case where a profession carried on by a single individual is discontinued by reason of such individual&#8217;s death.<\/p>\n<p>(4)References in this section to work in progress at the discontinuance of a profession shall be construed as references to &#8211;<\/p>\n<p>(a)any services performed in the ordinary course of the profession, the performance of which was wholly or partly completed at the time of the discontinuance and for which it would be reasonable to expect that a charge would have been made on their completion if the profession had not been discontinued, and<\/p>\n<p>(b)any article produced, and any such material as is used, in the performance of any such services,<\/p>\n<p>and references in this section to the transfer of work in progress shall include references to the transfer of any benefits and rights which accrue, or might reasonably be expected to accrue, from the carrying out of the work.<\/p>\n<p>91.<\/p>\n<h4>Receipts accruing after discontinuance of trade or profession.<\/h4>\n<p>(1)Subject to subsection (2), this section shall apply to all sums arising from the carrying on of a trade or profession during any period before the discontinuance of the trade or profession (not being sums otherwise chargeable to tax), in so far as the amount or value of the sums was not taken into account in computing the profits or gains for any period before the discontinuance, and whether or not the profits or gains for the period were computed on an earnings basis or on a conventional basis.<\/p>\n<p>(2)This section shall not apply to any of the following sums &#8211;<\/p>\n<p>(a)sums received by a person beneficially entitled to such sums who is not resident in the State, or by a person acting on such person&#8217;s behalf, which represent income arising directly or indirectly from a country or territory outside the State,<\/p>\n<p>(b)a lump sum paid to the personal representatives of the author of a literary, dramatic, musical or artistic work as a consideration for the assignment by them, wholly or partially, of the copyright in the work,<\/p>\n<p>(c)sums realised by the transfer of trading stock belonging to a trade at the discontinuance of the trade or, in a case in which the profits or gains of a profession were computed on an earnings basis at the discontinuance of the profession, sums realised by the transfer of the work of the profession in progress at the discontinuance, and<\/p>\n<p>(d)sums arising to an individual from a work which is such that any profits or gains that might have arisen to the individual from its publication, production or sale, as the case might be, would in accordance with section 195(3) have been disregarded for the purposes of the Income Tax Acts if they had arisen before the discontinuance of that individual&#8217;s profession.<\/p>\n<p>(3)Where any trade or profession, the profits or gains of which are chargeable to tax under Case I or II of Schedule D, has been permanently discontinued, tax shall be charged under Case IV of that Schedule in respect of any sums to which this section applies received after the discontinuance subject to any such deduction as is authorised by subsection (4).<\/p>\n<p>(4)In computing the charge to tax in respect of sums received by any person which are chargeable to tax by virtue of this section (including amounts treated as sums received by such person by virtue of section 87 or 87B), there shall be deducted from the amount which apart from this subsection would be chargeable to tax &#8211;<\/p>\n<p>(a)any loss, expense or debit (not being a loss, expense or debit arising directly or indirectly from the discontinuance itself) which, if the trade or profession had not been discontinued, would have been deducted in computing for tax purposes the profits or gains of the person by whom the trade or profession was carried on before the discontinuance, or would have been deducted from or set off against those profits or gains as so computed, and<\/p>\n<p>(b)any capital allowance to which the person who carried on the trade or profession was entitled immediately before the discontinuance and to which effect has not been given by means of relief before the discontinuance.<\/p>\n<p>(5)For the purposes of this Chapter &#8211;<\/p>\n<p>(a)the profits or gains of a trade or profession in any period shall be treated as computed by reference to earnings where all credits and liabilities accruing during that period as a consequence of the carrying on of the trade or profession are taken into account in computing those profits or gains for tax purposes, and not otherwise, and &#8220;earnings basis&#8221; shall be construed accordingly,<\/p>\n<p>(b)the profits or gains of a trade or profession in any period shall be treated as computed on a conventional basis where they are computed otherwise than by reference to earnings, and<\/p>\n<p>(c)the value of any sum received in payment of a debt shall be treated as not taken into account in the computation to the extent that a deduction has been allowed in respect of that sum under section 81(2)(i).<\/p>\n<p>92.<\/p>\n<h4>Receipts and losses accruing after change treated as discontinuance.<\/h4>\n<p>(1)This section shall apply in any case where, as a result of a change in the persons engaged in carrying on a trade or profession, the trade or profession is treated for any of the purposes of the Tax Acts as if it had been permanently discontinued and a new trade or profession set up and commenced.<\/p>\n<p>(2)<\/p>\n<p>(a)Sections 91 and 95 shall apply in the case of any such change as if the trade or profession had been permanently discontinued.<\/p>\n<p>(b)Notwithstanding paragraph (a), where the right to receive any sums to which section 91 applies is or was transferred at the time of the change to the persons carrying on the trade or profession after the change, tax shall not be charged by virtue of that section, but any sums received by those persons by virtue of the transfer shall be treated for all purposes as receipts to be taken into the computation of profits or gains of the trade or profession in the period in which they are received.<\/p>\n<p>(3)In computing for tax purposes the profits or gains of the trade or profession in any period after the change, there may be deducted a sum equal to any amount proved during that period to be irrecoverable in respect of any debts credited in computing for tax purposes the profits or gains for any period before the change (being debts the benefit of which was assigned to the persons carrying on the trade or profession after the change), in so far as the total amount proved to be irrecoverable in respect of those debts exceeds any deduction allowed in respect of them under section 81(2)(i) in a computation for any period before the change.<\/p>\n<p>93.<\/p>\n<h4>Cash basis, etc: relief for certain individuals.<\/h4>\n<p>(1)In this section &#8211;<\/p>\n<p>&#8220;the net amount&#8221; with which a person is chargeable to tax under section 91 means the amount with which such person is so chargeable after making any deduction authorised by section 91(4) but before giving any relief under this section;<\/p>\n<p>&#8220;relevant date&#8221; means &#8211;<\/p>\n<p>(a)in relation to tax under section 91, the date of the permanent discontinuance, and<\/p>\n<p>(b)in relation to tax under section 94, the date of the change of basis.<\/p>\n<p>(2)Where an individual born before the 6th day of April, 1919, or the personal representative of such an individual, is chargeable to tax under section 91 or 94 and &#8211;<\/p>\n<p>(a)the individual was engaged in carrying on the trade or profession on the 4th day of August, 1970, and<\/p>\n<p>(b)the profits or gains of the trade or profession were not computed by reference to earnings in the period in which the date specified in paragraph (a) fell, or in any subsequent period ending before or on the relevant date,<\/p>\n<p>the net amount with which such individual is so chargeable to tax shall be reduced by multiplying that net amount by the fraction specified in subsection (4).<\/p>\n<p>(3)Where section 94 applies in relation to a change of basis taking place on a date before the 4th day of August, 1970, then, in relation to tax chargeable by reference to that change of basis, subsection (2) shall apply as if &#8211;<\/p>\n<p>(a)that earlier date were substituted for the date specified in paragraph (a) of that subsection, and<\/p>\n<p>(b)paragraph (b) of that subsection were deleted.<\/p>\n<p>(4)The fraction referred to in subsection (2) is &#8211;<\/p>\n<p>(a)where on the 6th day of April, 1970, the individual had not attained the age of 52 years, nineteen-twentieths,<\/p>\n<p>(b)where on that date the individual had attained the age of 52 years, but had not attained the age of 53 years, eighteen-twentieths, and so on, reducing the fraction by one-twentieth for each year the individual had attained, up to the age of 64 years,<\/p>\n<p>(c)where on that date the individual had attained the age of 65 years or any greater age, five-twentieths.<\/p>\n<p>94. Conventional basis: general charge on receipts after change of basis.<br \/>\n(1)Where in the case of any trade or profession the profits or gains of which are chargeable to tax under Case I or II of Schedule D there has been &#8211;<\/p>\n<p>(a)a change from a conventional basis to the earnings basis, or<\/p>\n<p>(b)a change of conventional basis which may result in receipts dropping out of computation,<\/p>\n<p>tax shall be charged under Case IV of Schedule D in respect of sums to which this subsection applies which are received after the change and before the trade or profession is permanently discontinued.<\/p>\n<p>(2)Subsection (1) shall apply to all sums arising from the carrying on of the trade or profession during any period before the change (not being sums otherwise chargeable to tax) in so far as their amount or value was not taken into account in computing the profits or gains for any period.<\/p>\n<p>(3)Where in the case of any profession the profits or gains of which are chargeable to tax under Case II of Schedule D &#8211;<\/p>\n<p>(a)there has been a change from a conventional basis to the earnings basis, or a change of conventional basis, and<\/p>\n<p>(b)the value of work in progress at the time of the change was debited in the accounts and allowed as a deduction in computing profits for tax purposes for a period after the change,<\/p>\n<p>then, in so far as no counterbalancing credit was taken into account in computing profits for tax purposes for any period ending before or on the date of the change, tax shall be charged under subsection (1) in respect of that amount for the year of assessment in which the change occurred as if that amount were a sum to which subsection (2) applies and the change of basis were a change of the kind described in subsection (1).<\/p>\n<p>(4)In this section, references to work in progress at the time of a change of basis shall be construed in accordance with section 90(4) but as if references in that section to the change of basis were references to the discontinuance.<\/p>\n<p>(5)There shall be a change from a conventional basis to the earnings basis at the end of a period, the profits or gains of which were computed on a conventional basis, if the profits or gains of the next succeeding period are computed by reference to earnings and, if the profits or gains of 2 successive periods are computed on different conventional bases, a change of conventional basis shall occur at the end of the earlier period.<\/p>\n<p>95. Supplementary provisions as to tax under section 91 or 94.<br \/>\n(1)In the case of a transfer for value of the right to receive any sums described in section 91(1) or 94, any tax chargeable by virtue of either of those sections shall be charged in respect of the amount or value of the consideration (or, in the case of a transfer otherwise than at arm&#8217;s length, in respect of the value of the right transferred as between parties at arm&#8217;s length), and references in those sections to sums received shall be construed accordingly.<\/p>\n<p>(2)Where an individual is chargeable to tax by virtue of section 91 in respect of any sums received after the discontinuance of a trade or profession, and the profits or gains of the trade or profession to which such individual was entitled before the discontinuance fell to be treated as earned income for the purposes of the Income Tax Acts, those sums shall also be treated as earned income for those purposes but after any reduction in those sums under section 93.<\/p>\n<p>(3)Where any sum chargeable to tax by virtue of section 91 or 94 is received in any year of assessment beginning not later than 4 years after the discontinuance or, as the case may be, change of basis by the person by whom the trade or profession was carried on before the discontinuance or change or by such person&#8217;s personal representatives, such person or (in either case) such person&#8217;s personal representatives may, by notice in writing sent to the inspector within 2 years after the end of that year of assessment, elect that the tax so chargeable shall be charged as if the sum in question were received on the date on which the discontinuance took place or, as the case may be, on the last day of the period at the end of which the change took place, and, in any such case, an assessment made on or by such person shall (notwithstanding anything in Chapter 5 of Part 41A) be amended accordingly and, in connection with that assessment, no further deduction or relief shall be made or given in respect of any loss or allowance deducted in pursuance of section 91(4).<\/p>\n<p>(4)Where work in progress at the discontinuance of a profession, or the responsibility for its completion, is transferred, the sums to which section 91 applies include any sums received by means of consideration for the transfer and any sums received by means of realisation by the transferee on behalf of the transferor of the work in progress transferred.<\/p>\n<p>(5)No amount shall be deducted under section 91(4) if that amount has been allowed under any other provision of the Tax Acts.<\/p>\n<p>(6)No amount shall be deducted more than once under section 91(4) and, as between sums chargeable for one year of assessment and sums chargeable for a subsequent year of assessment, any deduction in respect of a loss or capital allowance shall be made against sums chargeable for the earlier year of assessment but, in the case of a loss which by virtue of this subsection or section 91(4) is to be allowed after the discontinuance, a deduction shall not be made from any sum chargeable for a year of assessment preceding that in which the loss is incurred.<\/p>\n<p>95A.<\/p>\n<h4>Change of basis of computation of profits or gains of a trade or profession.<\/h4>\n<p>(1)In this section &#8211;<\/p>\n<p>&#8216;Accounting Standards Board&#8217; means the body known as the Accounting Standards Board established under the articles of association of The Accounting Standards Board Limited, a company limited by guarantee and registered in England;<\/p>\n<p>&#8216;chargeable period&#8217; has the same meaning as in section 321(2).<\/p>\n<p>(2)Where &#8211;<\/p>\n<p>(a)in a case to which section 94(3) does not apply there has been a change in the basis of valuing work in progress for the purposes of computing profits or gains of a trade or profession chargeable under Case I or II of Schedule D, and<\/p>\n<p>(b)the amount (in this subsection referred to as the &#8216;relevant amount&#8217;) of the value of work in progress at the time of the change is allowed as a deduction in computing profits or gains for tax purposes for a chargeable period after the change (in this section referred to as the &#8216;relevant period&#8217;),<\/p>\n<p>then, in so far as the counterbalancing credit in connection with that work in progress, taken into account in computing profits or gains for tax purposes for the period preceding the relevant period, is less than the relevant amount, tax shall be charged under Case I or II of Schedule D for the relevant period on so much of the relevant amount as exceeds that credit.<\/p>\n<p>(3)Where subsection (2) applies in respect of a partnership trade or profession, any amount chargeable to tax under subsection (2) shall be treated for the purposes of the Tax Acts as an amount of profits or gains of the partnership trade or profession.<\/p>\n<p>(4)Where subsection (2) applies to a change in the basis of computing profits or gains for a chargeable period ending in the period of 2 years beginning on 22 June 2005 and the change arises by virtue only of the guidance issued on 10 March 2005 by the Urgent Issues Task Force of the Accounting Standards Board on Application Note G of Financial Reporting Standard 5 (known as &#8216;UITF Abstract 40&#8217;), then tax shall not be charged in respect of the excess amount in the relevant period but instead &#8211;<\/p>\n<p>(a)where the person by whom the trade or profession is carried on is a person other than a company, tax shall be charged &#8211;<\/p>\n<p>(i)on one-fifth of the excess amount for the relevant period, and<\/p>\n<p>(ii)on a further one-fifth of the excess amount for each succeeding chargeable period until the whole amount has been accounted for, and<\/p>\n<p>(iii)where any chargeable period referred to in subparagraph (i) or (ii) is the chargeable period in which the trade or profession was permanently discontinued, then tax shall be chargeable for that chargeable period on such fraction of the excess amount referred to in those subparagraphs as is required to ensure that the whole of that excess amount is accounted for,<\/p>\n<p>and<\/p>\n<p>(b)where the person by whom the trade or profession is carried on is a company &#8211;<\/p>\n<p>(i)tax shall be charged on a part of the excess amount for each chargeable period falling wholly or partly into the period of 5 years beginning at the commencement of the relevant period referred to in subsection (1): and the part of the excess amount on which tax is to be charged for any such chargeable period shall be such amount as bears to the excess amount the same proportion as the length of the chargeable period, or the part of the chargeable period falling into the period of 5 years, bears to 5 years, and<\/p>\n<p>(ii)where any chargeable period referred to in subparagraph (i) is the last chargeable period in which the company carried on a trade or profession then tax shall be charged for that chargeable period on such part of the excess amount as is required to ensure that the whole of that amount is accounted for.<\/p>\n<h4>Schedule 17A Accounting Standards<\/h4>\n<p>Section 76.<\/p>\n<p>Interpretation<\/p>\n<p>1.In this Schedule &#8216;relevant accounting standards&#8217; means &#8211;<\/p>\n<p>(a)international accounting standards,<\/p>\n<p>(b)as regards the matters covered by those published standards, Irish generally accepted accounting practice which is based on published standards &#8211;<\/p>\n<p>(i)which are stated so as to embody, in whole or in part, international accounting standards, and<\/p>\n<p>(ii)the application of which would produce results which are substantially the same as results produced by the application of international accounting standards, or<\/p>\n<p>(c)in relation to any accounting period beginning on or after 1 January 2015, Irish generally accepted accounting practice based on published standards to the extent that practice is based on the provisions of those published standards that are stated to embody international accounting standards.<\/p>\n<p>Transitional Measures (amounts receivable and deductible)<\/p>\n<p>2.<\/p>\n<p>(1)In this paragraph &#8211;<\/p>\n<p>&#8216;deductible amount&#8217;, in relation to a company, means the aggregate of the amounts of &#8211;<\/p>\n<p>(a)so much of any amounts receivable by the company which falls to be taken into account as a trading receipt in computing the profits or gains for the purposes of Case I or II of Schedule D of the company for an accounting period computed in accordance with relevant accounting standards as was also taken into account as a trading receipt in computing such profits or gains of the company for any accounting period ending before the first accounting period in respect of which such profits or gains of the company were so computed, and<\/p>\n<p>(b)so much of an expense incurred by the company, being an expense which would have been deductible in computing profits or gains for the purposes of Case I or II of Schedule D of the company if the expense had been incurred in an accounting period for which such profits or gains were computed in accordance with relevant accounting standards, as &#8211;<\/p>\n<p>(i)was not deducted in computing the profits or gains for the purposes of Case I or II of Schedule D of the company for an accounting period ending before the first accounting period in respect of which such profits or gains of the company are computed in accordance with relevant accounting standards, and<\/p>\n<p>(ii)is not deductible in computing the profits or gains for the purposes of Case I or II of Schedule D of the company for any accounting period for which such profits or gains of the company are so computed;<\/p>\n<p>&#8216;taxable amount&#8217;, in relation to a company, means the aggregate of the amounts of &#8211;<\/p>\n<p>(a)so much of an amount receivable by the company, being an amount receivable which would have been taken into account as a trading receipt in computing the profits or gains for the purposes of Case I or II of Schedule D of the company if the amount had accrued in an accounting period for which such profits or gains were computed in accordance with relevant accounting standards, as is not so taken into account &#8211;<\/p>\n<p>(i)for an accounting period for which such profits or gains of the company are computed in accordance with relevant accounting standards, or<\/p>\n<p>(ii)for an accounting period ending before the first accounting period in respect of which such profits or gains are so computed,<\/p>\n<p>and<\/p>\n<p>(b)so much of an expense incurred by the company which is deductible in computing the profits or gains for the purposes of Case I or II of Schedule D of the company for an accounting period for which such profits or gains of the company are computed in accordance with relevant accounting standards as was deducted in computing such profits or gains of the company for any accounting period ending before the first accounting period of the company in respect of which such profits or gains were so computed.<\/p>\n<p>(2)<\/p>\n<p>(a)An amount equal to the excess of the taxable amount in relation to a company over the deductible amount in relation to the company shall, subject to subparagraph (4), be treated as a trading receipt of the company for the first accounting period of the company in respect of which profits or gains for the purposes of Case I or II of Schedule D of the company are computed in accordance with relevant accounting standards.<\/p>\n<p>(b)Notwithstanding clause (a), an amount (in this subparagraph referred to as the &#8216;relevant amount&#8217;) which is treated under clause (a) as a trading receipt for an accounting period (in this clause referred to as the &#8216;relevant accounting period&#8217;) shall not be taken into account in computing the profits or gains for the purposes of Case I or II of Schedule D of the company for that accounting period but instead, subject to clause (c), a part of the relevant amount shall be so taken into account for each accounting period falling wholly or partly into the period of 5 years beginning at the commencement of the relevant accounting period. The part of the relevant amount to be so taken into account for any such accounting period shall be such amount as bears to the relevant amount the same proportion as the length of the accounting period, or the part of the accounting period falling into the period of 5 years, bears to 5 years.<\/p>\n<p>(c)Where any accounting period referred to in clause (b) is the last accounting period in which a company carried on a trade or profession, then such part of the relevant amount shall be taken into account for that accounting period as is required to ensure that the whole of that amount is accounted for.<\/p>\n<p>(3)<\/p>\n<p>(a)An amount equal to the excess of the deductible amount in relation to a company over the taxable amount in relation to the company shall, subject to subparagraph (4), be treated as a deductible trading expense of the trade carried on by the company for the first accounting period of the company in respect of which profits or gains for the purposes of Case I or II of Schedule D of the company are computed in accordance with relevant accounting standards.<\/p>\n<p>(b)Notwithstanding clause (a), an amount (in this subparagraph referred to as the &#8216;relevant amount&#8217;) which is treated under clause (a) as a deductible trading expense for an accounting period (in this clause referred to as the &#8216;relevant accounting period&#8217;) shall not be taken into account in computing the profits or gains for the purposes of Case I or II of Schedule D of the company for that accounting period but instead, subject to clause (c), a part of the relevant amount shall be so taken into account for each accounting period falling wholly or partly into the period of 5 years beginning at the commencement of the relevant accounting period. The part of the relevant amount to be so taken into account for any such accounting period shall be such amount as bears to the relevant amount the same proportion as the length of the accounting period, or the part of the accounting period falling into the period of 5 years, bears to 5 years.<\/p>\n<p>(c)Where any accounting period referred to in clause (b) is the last accounting period in which a company carried on a trade or profession, then such part of the relevant amount shall be taken into account for that accounting period as is required to ensure that the whole of that amount is accounted for.<\/p>\n<p>(4)This paragraph does not apply as respects any amount taken into account under paragraph 3 or 4.<\/p>\n<p>Transitional Arrangements (bad debts)<\/p>\n<p>3.<\/p>\n<p>(1)In this paragraph &#8211;<\/p>\n<p>&#8216;current bad debts provision&#8217;, in relation to a period of account of a company, means so much of the aggregate value of debts at the end of the period of account as represents the extent to which they are estimated to be impaired in accordance with relevant accounting standards;<\/p>\n<p>&#8216;first relevant period of account&#8217;, in relation to a company, means the first period of account in respect of which the company prepares its accounts in accordance with relevant accounting standards;<\/p>\n<p>&#8216;opening bad debts provision&#8217;, in relation to a company, means so much of the aggregate value of debts at the beginning of the first relevant period of account of the company as represents the extent to which they are estimated to be impaired in accordance with those standards;<\/p>\n<p>&#8216;specific bad debts provision&#8217;, in relation to a company, means the aggregate of the amounts of doubtful debts which were respectively estimated to be bad at the end of the period of account immediately preceding the first relevant period of account of the company.<\/p>\n<p>(2)This paragraph applies as respects a period of account in respect of which a company prepares its accounts in accordance with relevant accounting standards.<\/p>\n<p>(3)Where, as respects any period of account for which a company prepares its accounts in accordance with relevant accounting standards, the amount of the opening bad debts provision exceeds the higher of &#8211;<\/p>\n<p>(a)the current bad debts provision, or<\/p>\n<p>(b)the specific bad debts provision,<\/p>\n<p>the excess, reduced by any amount treated under this section as a trading expense for any earlier period of account or, if there is more than one such amount, by the aggregate of such amounts, shall be treated as a trading expense of the company&#8217;s trade for the period of account.<\/p>\n<p>(4)A debt shall not be taken into account for the purposes of paragraph 4 if it may be taken into account for the purposes of this paragraph.<\/p>\n<p>Transitional Measures (gains and losses in financial instruments)<\/p>\n<p>4.<\/p>\n<p>(1)In this paragraph &#8211;<\/p>\n<p>&#8216;changeover day&#8217;, in relation to a company, means the last day of the accounting period immediately preceding the first accounting period of the company in respect of which profits or gains for the purposes of Case I or II of Schedule D of the company are computed in accordance with relevant accounting standards which are, or include, relevant accounting standards in relation to profits or gains or losses on financial assets and financial liabilities;<\/p>\n<p>&#8216;deductible amount&#8217;, in relation to a company, means the aggregate of &#8211;<\/p>\n<p>(a)so much of any amount of loss accruing on or before the changeover day on a financial asset or financial liability of the company, being a loss which had not been realised on or before that day and which would have been taken into account in computing profits or gains for the purposes of Case I or II of Schedule D of the company if it had accrued in an accounting period commencing after the changeover day, as, apart from this paragraph, would not be so taken into account for any accounting period of the company, and<\/p>\n<p>(b)so much of any amount of profits or gains, accruing and not realised in a period or periods (in this clause referred to as the &#8220;first-mentioned period or periods&#8221;) ending on or before the changeover day on a financial asset or financial liability of the company, which falls to be taken into account in computing the profits or gains for the purposes of Case I or II of Schedule D of the company for an accounting period or periods commencing before the changeover day as would, apart from this paragraph, be taken into account twice in computing profits or gains for the purposes of Case I or II of Schedule D of the company, by virtue of a profit, gain or loss, accruing in a period which includes the first-mentioned period or periods, being taken into account in computing profits or gains for the purposes of Case I or II of Schedule D of the company for an accounting period commencing after the changeover day;<\/p>\n<p>&#8216;taxable amount&#8217;, in relation to a company, means the aggregate of &#8211;<\/p>\n<p>(a)so much of any amount of profits or gains accruing on or before the changeover day on a financial asset or financial liability of the company, being profits or gains which had not been realised on or before that day and which would have been taken into account in computing the profits or gains for the purposes of Case I or II of Schedule D of the company if they had accrued in an accounting period commencing after the changeover day, as apart from this paragraph, would not be so taken into account for any accounting period of the company, and<\/p>\n<p>(b)so much of any amount of loss, accruing and not realised in a period or periods (in this clause referred to as the &#8220;first-mentioned period or periods&#8221;) ending on or before the changeover day on a financial asset or financial liability of the company, which falls to be taken into account in computing the profits or gains for the purposes of Case I or II of Schedule D of the company for an accounting period or periods commencing before the changeover day as would, apart from this paragraph, be taken into account twice in computing profits or gains for the purposes of Case I or II of Schedule D of the company, by virtue of a profit, gain or loss, accruing in a period which includes the first-mentioned period or periods, being taken into account in computing profits or gains for the purposes of Case I or II of Schedule D of the company for an accounting period commencing after the changeover day.<\/p>\n<p>(2)<\/p>\n<p>(a)An amount equal to the excess of the taxable amount in relation to a company over the deductible amount in relation to the company shall be treated as a trading receipt of the company for the first accounting period of the company commencing after the changeover day.<\/p>\n<p>(b)Notwithstanding clause (a), an amount (in this subparagraph referred to as the &#8216;relevant amount&#8217;) which is treated under clause (a) as a trading receipt for an accounting period (in this clause referred to as the &#8216;relevant accounting period&#8217;) shall not be taken into account in computing the profits or gains for the purposes of Case I or II of Schedule D of the company for that accounting period but instead, subject to clause (c), a part of the relevant amount shall be so taken into account for each accounting period falling wholly or partly into the period of 5 years beginning at the commencement of the relevant accounting period. The part of the relevant amount to be so taken into account for any such accounting period shall be such amount as bears to the relevant amount the same proportion as the length of the accounting period, or the part of the accounting period falling into the period of 5 years, bears to 5 years.<\/p>\n<p>(c)Where any accounting period referred to in clause (b) is the last accounting period in which a company carried on a trade or profession, then such part of the relevant amount shall be taken into account for that accounting period as is required to ensure that the whole of that amount is accounted for.<\/p>\n<p>(3)<\/p>\n<p>(a)An amount equal to the excess of the deductible amount in relation to a company over the taxable amount in relation to the company shall be treated as a deductible trading expense of the trade carried on by the company for the first accounting period of the company commencing after the changeover day.<\/p>\n<p>(b)Notwithstanding clause (a), an amount (in this subparagraph referred to as the &#8216;relevant amount&#8217;) which is treated under clause (a) as a deductible trading expense for an accounting period (in this clause referred to as the &#8216;relevant accounting period&#8217;) shall not be taken into account in computing the profits or gains for the purposes of Case I or II of Schedule D of the company for that accounting period, but instead, subject to clause (c), a part of the relevant amount shall be so taken into account for each accounting period falling wholly or partly into the period of 5 years beginning at the commencement of the relevant accounting period. The part of the relevant amount to be so taken into account for any such accounting period shall be such amount as bears to the relevant amount the same proportion as the length of the accounting period, or the part of the accounting period falling into the period of 5 years, bears to 5 years.<\/p>\n<p>(c)Where any accounting period referred to in clause (b) is the last accounting period in which a company carried on a trade or profession, then such part of the relevant amount shall be taken into account for that accounting period as is required to ensure that the whole of that amount is accounted for.<\/p>\n<p>(4)<\/p>\n<p>(a)Subparagraph (5) applies to a loss incurred by a company on the disposal at any relevant time of any financial asset or financial liability where, within a period beginning 4 weeks before and ending 4 weeks after that disposal, the company acquired a financial asset or financial liability of the same class providing substantially the same access to economic benefits and exposure to risk as would have been provided by the reacquisition of the asset or liability disposed of.<\/p>\n<p>(b)In this paragraph &#8216;relevant time&#8217; means a time after 1 January 2005 which is in a period of 6 months ending on the changeover day.<\/p>\n<p>(5)A loss to which this subparagraph applies (in this subparagraph referred to as the &#8216;relevant loss&#8217;), which would otherwise be taken into account in computing profits or gains or losses of a company for the purposes of Case I or II of Schedule D for an accounting period (in this subparagraph referred to as the &#8216;relevant accounting period&#8217;), shall not be so taken into account but instead &#8211;<\/p>\n<p>(a)<\/p>\n<p>(i)a part of the relevant loss shall be so taken into account for each accounting period falling wholly or partly into the period of 5 years beginning at the commencement of the relevant accounting period, and<\/p>\n<p>(ii)the part of the relevant loss to be so taken into account for any such accounting period to which this clause applies shall be such amount as bears to the relevant loss the same proportion as the length of the accounting period, or the part of the accounting period falling into the period of 5 years, bears to 5 years,<\/p>\n<p>(b)notwithstanding clause (a), where any accounting period referred to in that clause is the last accounting period in which a company carried on a trade or profession, then such part, of the amount referred to in that clause, shall be taken into account for that accounting period as is required to ensure that the whole of that amount is accounted for.<\/p>\n<p>(6)[deleted]<\/p>\n<p>&nbsp;<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-11132\" data-postid=\"11132\" class=\"themify_builder_content themify_builder_content-11132 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Commencement The issue of when a trade commences may be important. It determines dates of liability for tax and raises issues in relation to allowable expenditure. A distinction is drawn between trading and commencing to trade. Market testing and feasibility is likely to predate trading. When assets are purchased in anticipation of trading, trading may [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[335],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/11132"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=11132"}],"version-history":[{"count":9,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/11132\/revisions"}],"predecessor-version":[{"id":34954,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/11132\/revisions\/34954"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=11132"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=11132"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=11132"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}