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Taxes Consolidation Act, 1997 (Number 39 of 1997)

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CHAPTER 2A

Limitation on amount of certain reliefs used by certain high income individuals.

485C Interpretation (Chapter 2A).

(1) [2]>In this Chapter and Schedule 25B,<[2][2]>In this Chapter and in Schedules 25B and 25C,<[2] except where the context otherwise requires—

adjusted income”, in relation to a tax year and an individual, means the amount determined by the formula—

(T + S) − R

where—

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T is the amount of the individual’s taxable income for the tax year determined on the basis that this Chapter, other than section 485F, does not apply to the individual for that year,

<[3]

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T is the amount of the individual’s taxable income for the tax year determined on the basis that—

(a) this Chapter, other than section 485F, does not apply to the individual for the tax year, and

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(b) if the individual, being a married person, is assessable to tax for the tax year otherwise than under section 1016, the provisions under which the individual is assessable are modified in accordance with paragraphs (i) to (vi) of section 485FA,

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(b) (i) if the individual, being a married person, is assessable to tax for the tax year otherwise than under section 1016, the provisions under which the individual is assessable are modified in accordance with paragraphs (i) to (vi), but excluding paragraph (iia) of section 485FA,

(ii) if the individual, being a civil partner, is assessable to tax for the tax year otherwise than under section 1031B, the provisions under which the individual is assessable are modified in accordance with paragraphs (i), (iia) and (vi) of section 485FA,

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S is the aggregate of the specified reliefs for the tax year, and

R is the amount of the individual’s ring-fenced income, if any, for the tax year;

“aggregate of the specified reliefs”, in relation to a tax year and an individual, means the aggregate of the amounts of specified reliefs used by the individual in respect of the tax year;

amount of specified relief”, in relation to a specified relief used by an individual in respect of a tax year, [12]>but subject to subsection (1A),<[12] means the amount of the specified relief used by the individual in respect of the tax year determined by reference to the entry in column (3) of Schedule 25B opposite the reference to the specified relief concerned in column (2) of that Schedule;

excess relief”, in relation to a tax year and an individual, means the amount by which the individual’s taxable income for the tax year determined in accordance with section 485E exceeds the amount that the individual’s taxable income for the tax year would have been had this Chapter, other than section 485F, not applied to that individual for that year;

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income threshold amount”, in relation to a tax year and an individual, means—

(a) €125,000, or

(b) in a case where the individual’s income for the tax year includes ring-fenced income and his or her adjusted income for the tax year is less than €400,000, the amount determined by the formula—

€125,000

×

A

B

where—

A is the individual’s adjusted income for the year, and

B is an amount determined by the formula—

T + S

where T and S have the same meanings respectively as they have in the definition of “adjusted income”;

relief threshold amount”, in relation to a tax year and an individual, means €80,000;

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Revenue officer” means an officer of the Revenue Commissioners;

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ring-fenced income”, in relation to a tax year and an individual, means the aggregate of the following amounts, if any, charged to tax on the individual for the tax year—

(a) income chargeable to tax in accordance with subparagraph (i) of paragraph (c) of section 261 where clause (II) of that subparagraph applies to the income concerned,

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(b) income chargeable to tax in accordance with section 267M;

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(b) income referred to in section 261B or 267M,

(c) income charged to tax in accordance with clause (I) or (II)(B) of section 730J(1)(a)(i) or section 730K(1)(b), and

(d) income charged to tax in accordance with section 747D(a)(i) or section 747E(1)(b);

<[5]

specified relief”, in relation to a tax year and an individual, means [6]>any of the reliefs<[6][6]>any relief arising under, or by virtue of, any of the provisions<[6] set out in column (2) of Schedule 25B;

tax year” means a year of assessment;

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threshold amount”, in relation to a tax year and an individual, means—

(a) €250,000, or

(b) in a case where the individual’s income for the tax year includes ring-fenced income and his or her adjusted income for the tax year is less than €500,000, the amount determined by the formula—

€250,000

×

A

B

where—

A is the individual’s adjusted income for the year, and

B is an amount determined by the formula—

T + S

where T and S have the same meanings respectively as they have in the definition of “adjusted income”.

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(1A) Where a balancing charge is made under section 274, in relation to a building or structure, on an individual for a tax year, then—

(a) to the extent that any unused capital allowances attributable to capital expenditure incurred on the construction or refurbishment of that building or structure, have been carried forward in accordance with section 304 or 305 to the tax year, and are used in that tax year to reduce the amount of the balancing charge, those allowances so used shall not be treated as an amount of specified relief under this Chapter, and

(b) any amount by which the balancing charge has been reduced in the manner referred to in paragraph (a), shall not be taken into account for the purposes of determining the adjusted income of the individual for the tax year.

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(1B) (a) For the purposes of this subsection and Schedule 25B “specified plant and machinery” means plant and machinery on which a wear and tear allowance may be granted under section 284, whether by virtue of section 298 or otherwise, which would be restricted by section 403(3) save for the provisions of section 403(9).

(b) Subject to paragraph (d), a wear and tear allowance granted under section 284, or deemed to have been made to an individual under section 287, whether by virtue of section 298 or otherwise, shall only be a specified relief to the extent it relates to specified plant and machinery.

(c) Subject to paragraph (d), a balancing allowance arising under section 288 shall only be a specified relief to the extent it relates to specified plant and machinery.

(d) This subsection and the matters set out opposite reference numbers 15C and 15D in Schedule 25B shall not apply to allowances granted to an individual who in respect of the trade to which the allowances relate is an active trader, within the meaning of section 409D, or an active partner, within the meaning of section 409A.

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(2) (a) For the purposes of this Chapter, references in this Chapter to specified reliefs used by the individual in respect of the tax year include references in the Tax Acts to—

(i) an allowance having been made to the individual for the year, in respect of which allowance, effect has been given, in full or in part, for that year,

(ii) a deduction having been given or allowed to the individual for the year, in respect of which deduction, effect has been given, in full or in part, for that year,

(iii) a deduction from or set off against income of whatever description being allowed to the individual for the year, in respect of which deduction or set off, effect has been given, in full or in part, for that year,

(iv) relief given to the individual for the year by way of repayment or discharge of tax in respect of which repayment or discharge effect has been given, in full or in part, for that year,

(v) income, profits or gains arising to the individual in the year being exempt from income tax for the year,

(vi) income, profits or gains arising to the individual in the year being disregarded or not reckoned for the purposes of the Income Tax Acts or, as the case may be, for the purposes of income tax for the year,

and other references in the Tax Acts to methods of affording relief from tax, however expressed, and in respect of which effect, in full or in part, has been given in the tax year shall likewise be construed as included in any reference in this Chapter to specified reliefs used by the individual in respect of the tax year.

(b) For the purposes of the definition of the “amount of specified relief”, in relation to a specified relief which is of a kind referred to in subparagraph (v) or (vi) of paragraph (a), the amount of any income, profits or gains, as the case may be, shall be computed in accordance with the Tax Acts as if the specified relief concerned had not been enacted.

(3) Notwithstanding any other provision of the Tax Acts, the following provisions shall apply for the purposes of those Acts—

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(a) effect shall be given for a tax year in respect of a capital allowance which is not included in the aggregate of the specified reliefs in priority to any such allowance which is included in the aggregate of the specified reliefs,

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(a) where, in relation to any tax year and the capital allowances to be given effect to in that year, any provision of the Tax Acts requires allowances (in this paragraph referred to as the “first-mentioned allowances”) for one period to be given effect to, or to be deemed to be given effect to, in priority to allowances for another period (in this paragraph referred to as the “second-mentioned allowances”), then—

(i) as respects the first-mentioned allowances, effect shall be given, or be deemed to be given, as the case may be, for an allowance which is not a specified relief in priority to any such allowance which is a specified relief and in priority to the second-mentioned allowances, and

(ii) as respects the second-mentioned allowances, effect shall be given, or be deemed to be given, as the case may be, for an allowance which is not a specified relief in priority to any such allowance which is a specified relief,

(ab) a deduction authorised by subsection (2) of section 97 shall be allowed in respect of a matter which is specifically referred to in that subsection in priority to a deduction authorised to be made under that subsection by virtue of a specified relief,

(ac) a deduction from total income shall be made in respect of a relief due for a tax year which is not a specified relief in priority to any such deduction due for the tax year which is a specified relief,

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(b) loss relief for any tax year shall be given in respect of a loss which is not referable to a specified relief in priority to relief being given for a loss which is referable to a specified relief,

(c) a further deduction due under section 324, 333, 345, 354 or paragraph 13 of Schedule 32 for a tax year shall only be given effect for that year after effect is given to any other deduction the individual is entitled to for that year in computing the amount of the individual’s profits or gains to be charged to tax for that year under Case I or II of Schedule D.

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(4) Schedule 25B shall have effect for the purposes of this Chapter.

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(4) Schedules 25B and 25C shall have effect for the purposes of this Chapter.

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Inserted by FA06 s17(1). Applies for the year of assessment 2007 and subsequent years of assessment.

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Substituted by FA07 s18(1)(a)(i)(I). Applies for the year of assessment 2007 and subsequent years of assessment.

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[-] [+]

Substituted by FA07 s18(1)(a)(i)(II). Applies for the year of assessment 2007 and subsequent years of assessment.

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Inserted by FA07 s18(1)(a)(i)(III). Applies for the year of assessment 2007 and subsequent years of assessment.

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[-] [+]

Substituted by FA07 s18(1)(a)(i)(IV). Applies for the year of assessment 2007 and subsequent years of assessment.

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[-] [+]

Substituted by FA07 s18(1)(a)(i)(V). Applies for the year of assessment 2007 and subsequent years of assessment.

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[-] [+]

Substituted by FA07 s18(1)(a)(ii). Applies for the year of assessment 2007 and subsequent years of assessment.

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[-] [+]

Substituted by FA07 s18(1)(a)(iii). Applies for the year of assessment 2007 and subsequent years of assessment.

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Inserted by FA10 s23(1)(a). Applies as respects the year of assessment 2010 and subsequent years of assessment.

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[-]

Deleted by FA10 s23(1)(b). Applies as respects the year of assessment 2010 and subsequent years of assessment.

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[-] [+]

Substituted by F(No.3)A11 sched1(124).

[12]

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Inserted by FA12 s16(3)(a). Applies to a balancing charge (within the meaning of section 274) that is made on or after 1 January 2012.

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Inserted by FA12 s16(3)(b). Applies to a balancing charge (within the meaning of section 274) that is made on or after 1 January 2012.

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Inserted by F(No.2)A13 s16(b). Comes into operation on 1 January 2014.