Revenue Note for Guidance

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Revenue Note for Guidance

143 Distributions out of profits from coal, gypsum and anhydrite mining operations

Summary

This section is concerned with distributions made out of profits derived from the mining of coal, gypsum and anhydrite which were relieved from taxation for years up to and including 1968– 69 under the Finance (Miscellaneous) Provisions Act, 1956, section 32 of the Finance Act, 1960 or section 395 of the Income Tax Act, 1967. Such a distribution which is received by a company is treated in the hands of the receiving company as if it were itself relieved income of the recipient company. Individuals in receipt of such dividends are liable to income tax at a reduced rate.

Details

Definitions

(1)relieved income” is income of a company on which income tax was paid, or borne by deduction, at a reduced rate by virtue of relief under —

or which is franked investment income, which consists of a distribution made out of relieved income.

Distributions

(3) Where a distribution is made partly out of relieved income and partly out of unrelieved income, the distribution is treated as if it consisted of 2 distributions, one made out of the relieved income and the other made out of the unrelieved income.

(4) A distribution received by a company and made out of relieved income is treated in the hands of the receiving company as if it were itself relieved income of the recipient company, with the same consequences as if the receiving company had itself being granted mining relief.

(6) An individual chargeable to income tax at the standard rate who is in receipt of distributions made out of relieved income is charged to income tax in respect of such distributions at a rate equal to 50 per cent of the standard rate of income tax.

(7) An individual chargeable to income tax at the higher rate who is in receipt of distributions made out of relieved income is charged to income tax at the higher rate on only 50 per cent of the distributions received.

Attribution to accounting periods

(10) Subsections (7) and (8) of section 144 apply to distributions out of relieved income. These provisions provide that a distribution for an accounting period is regarded as made as far as possible out of the distributable income of that period and any excess of the distribution over that income is attributed to the preceding accounting period or periods.

Subsections (8) and (9) of section 140 apply to distributions made out of relieved income. These provisions provide, respectively, for the apportionment of distributions where the period for which a company makes up accounts is partly within and partly outside an accounting period for corporation tax purposes, and for regarding a distribution which is not for any specified period as having being made for the accounting period in which it is made.

Dividend warrants

(11) The statements required to accompany dividends and other distributions must show, where appropriate, that distributions are made out of relieved income.

Relevant Date: Finance Act 2020