Revenue Note for Guidance

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Revenue Note for Guidance

Part 48

Miscellaneous and Supplemental

Overview

This Part contains a number of provisions which —

  • are incidental or supplementary to the principal provisions of this Act relating to income tax, corporation tax or capital gains tax, and
  • impact on the operation or administration of the tax code relating to those taxes (for example, disclosure of information to the Ombudsman (section 1093), tax clearance (sections 1094 and 1095) and the electronic storage of tax records (section 1096B)).

1087 Charge and deduction of income tax not charged or deducted before passing of annual act

Summary

While an increase in a rate of tax applies from the beginning of a tax year, such increase cannot generally apply until it is authorised by law. This is usually on the passing of the annual Finance Bill into law. In cases where the increased rate of tax is to apply before the passing of the Finance Bill, the authorisation for same is by way of a “financial resolution” under the provisions of the Provisional Collection of Taxes Act, 1927. However, in some instances, a financial resolution may not be in place to cover payments made before the passing of the Finance Bill.

Under various provisions of the Tax Acts, tax at the standard rate must be deducted by the payer on payment of interest, dividends and other annual payments. If at the time of payment, the rate of tax (which may be nil) deducted under the law in force at the time of payment is less than the rate of tax which should have been deducted had the revised law applied at the time of payment, the difference may be recouped by way of an assessment under Case IV of Schedule D.

Details

(1) Where in any year of assessment, the tax deducted at source on the payment of interest, dividends or other annual payments is less than the tax which would have been deducted had the payments been made after the passing of the Finance Bill, then —

  • the “lost tax” (that is, the difference between the tax actually deducted and the tax which would have been deducted had the revised law for that year been in force at the time of payment) may be recovered by means of a Schedule D, Case IV assessment, and
  • when requested to do so by Revenue, the payer must supply —
    • the names and addresses of the persons to whom such payments have been made, and
    • the amount of those payments.

(2) Where the tax deducted at source is less than the tax which, following the passing of legislation increasing the rate of tax, should have been deducted, the payer may either —

  • recoup the difference in tax from future payments, or
  • seek to recover the additional tax paid direct from the recipient.

(3) This section does not apply to distributions.

Relevant Date: Finance Act 2021