83A Expenditure involving crime.

Summary

This section denies a tax deduction in computing the amount of any income chargeable to tax under Schedule D for any payment if the making of the payment constitutes a criminal offence under Irish law. A deduction is denied also in the case of a payment made outside of the State where the making of the payment might not constitute a criminal offence in the State because it is made outside of the State. Deductibility is denied in the case of such a payment where the payment, if it were made in the State, would constitute a criminal offence.

Details

No relief

(1)(a) No deduction is available in computing income chargeable to tax under Schedule D for expenditure incurred in making a payment which constitutes the commission of a criminal offence in the State. The question of whether the making of a payment constitutes a criminal offence is a matter of law. For a deduction to be denied there does not have to be any conviction. The making of the payment has to constitute a criminal offence. The decision is to be made in the first place by the taxpayer under self-assessment. In the event of an audit, the taxpayer would have to be able to stand over any decision to take a deduction in respect of such a payment.

(1)(b) A tax deduction is also unavailable for expenditure incurred in respect of a payment made outside the State, the making of which would constitute the commission of a criminal offence in the State if it were made in the State. This covers a situation where a payment might not constitute a criminal offence under Irish law because it is made abroad. The issue to be considered in relation to such a payment is whether, if it had been made in the State, it would constitute a criminal offence under Irish law. If it would, then no deduction may be made in respect of the payment.

Expenses of management

(2) The type of payments mentioned in subsection (1) may not be included in computing expenses of management for the purposes of the Tax Acts. This would be relevant, for example, in the case of certain investment companies where expenses of management are deductible for tax purposes.

Relevant Date: Finance Act 2021