488 Interpretation (Part 16)

Summary

This section gives the meaning for various expressions and terms used throughout this Part.

Details

Definitions

(1) “associate” has the same meaning as in section 433(3) with the reference to “participator” being replaced by one to “persons”.

“basic pay rate”, in relation to a qualifying employee of a qualifying company, means the employee’s emoluments (other than non-pecuniary emoluments) per hour from the company in respect of an employment held with the company

“control” except in section 492(7) and section 505(2)(b) is construed in accordance with subsections (2) to (6) of section 432.

“debenture” has the same meaning as in section 2 of the Companies Act, 1963. Essentially, “debenture” includes debenture stock, bonds and any other securities of a company whether constituting a charge on the assets of the company or not.

“director” has the meaning set out in section 433(4).

“eligible shares” are new ordinary shares which throughout the “relevant period” —

• carry no present or future preferential right to dividends or to a company’s assets on a winding up, and
• carry no present or future preferential right to be redeemed.

“emoluments” has the same meaning as in section 983;

“employment relevant number” means the total number of qualifying employees in receipt of emoluments from the qualifying company in the year of assessment in which, in relation to a subscription for eligible shares, a relevant period ends;

“employment threshold number” means the total number of qualifying employees in receipt of emoluments from the qualifying company in the year of assessment preceding the year of assessment in which the subscription for eligible shares was made;

“energy from renewable sources” means energy from renewable non-fossil sources, that is to say wind, solar, aerothermal, geothermal, hydrothermal and ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases and includes the development of any facilities for the storage of energy from renewable sources;

“expenditure on research and development” has the same meaning as in section 766;

“financial activities” means the provision of, and all matters relating to the provision of, financing or refinancing facilities by any means which involves, or has the effect equivalent to the extension of credit;

“financing or refinancing facilities” includes –

1. loans, mortgages, leasing, lease rental, and hire-purchase, and all similar arrangements,
2. equity or other investment
3. the factoring of debts and the discounting of bills, invoices and promissory notes, and all similar instruments, and
4. the underwriting of debt instruments and all other kinds of financial securities;

“financial assets” includes shares, gilts, bonds, foreign currencies and all kinds of futures, options and currency and interest rate swaps, and similar instruments, including commodity futures and commodity options, invoices and all types of receivables, obligations evidencing debt (including loans and deposits), leases and loan and lease portfolios, bills of exchange, acceptance credits and all other documents of title relating to the movement of goods, commercial paper, promissory notes and all other kinds of negotiable or transferable instruments;

“full-time employee” and “full-time director” have the meanings set out in section 250.

“green energy activities” means activities undertaken with a view to producing energy from renewable sources;

“grid connection agreement” means an agreement with the transmission system operator or distribution system operator, or an offer from the transmission system operator or distribution system operator to enter into an agreement for connection to, or use of, the transmission or distribution system;

“internationally traded financial services” means, with the exception of activities listed in subparagraphs (b) or (c) of the definition of “relevant trading activities”, the services specified in the schedule to the Industrial Development (Service Industries) Order 2010 (S.I. No. 81 of 2010).

“market value” has the meaning set out in section 548 (that is, the price which assets might reasonably be expected to fetch on a sale in the open market).

“ordinary shares” are shares forming part of a company’s ordinary share capital.

“planning consent” means any consent, permission or approval required under the Planning and Development Acts 2000 to 2010 before development can be lawfully carried out;

“qualifying company” has the meaning set out in section 494.

“qualifying employee”, in relation to a qualifying company, means an employee (within the meaning of section 983), other than a director, of that company –

1. who throughout his or her period of employment with that company is employed by that company for at last 30 hours duration per week,
   and
2. his or her employment is capable of lasting at least 12 months.

“qualifying new venture” means a venture consisting of relevant trading activities which are set up and commenced by a new company other than –

1. activities which were previously carried on by another person and to which the company has succeeded, or
2. a venture, the activities of which were previously carried on as part of another person’s trade or profession;

“relevant employment” requires a specified individual (that is, an individual making a SURE investment) to take up full-time employment for a specified period of 12 months in the company in which he/she has made his/ her SURE investment (being the first tranche of such an investment).

“relevant investment” is the total amount subscribed by a specified individual (that is, an individual making a SURE investment) in a year of assessment for eligible shares in a qualifying company which carries on or intends to carry on relevant trading operations.

“qualifying nursing home” means

1. a nursing home within the meaning of section 2 of the Health (Nursing Homes) Act 1990 and which is registered in accordance with section 4 of that Act,
   and
2. where applicable, a qualifying residential unit constructed on the site of, and operated by, a nursing home,

It should be noted that a nursing home that is subject to any arrangement which results in the nursing home, or any part of the nursing home, being disposed of to the person, or any person acting on behalf of that person, from who it was purchased is not considered to be a “qualifying nursing home”.

“qualifying residential unit” means a house which

1. is constructed on the site of, or on a site that is immediately adjacent to the site of, a registered nursing home.
2. is either
   a single story house
   or
   a house that is in a building of one or more storeys which has a fire safety certificate under Part III of the Building Control Regulations 1997 (S.I. No.496 of 1997) by a building control authority (within the meaning of section 2 of the Building Control Act 1990) where the house is situated where
1. the house is designed and constructed to meet the needs of persons with disabilities, including in particular the needs of those in wheelchairs
   and
2. the house has one or two bedrooms, a kitchen, a living room, bath or shower facilities, toilet facilities and a nurse call system linked to the registered nursing home.
   and
3. is in a development where
   those units are operated or managed by the registered nursing home and an on-site caretaker is provided
   and
   back-up medical care, including nursing care, is provided by the registered nursing home to the occupants of those units when required by the occupants.

“relevant amount” means the total emoluments (other than non-pecuniary emoluments) paid by a qualifying company to qualifying employees as referred to in the definition of “employment relevant number”, in the year of assessment in which, in relation to a subscription for eligible shares, a relevant period ends.

The term “relevant period” can apply in relation to 3 distinct aspects of the relief. Accordingly, the phrase has a different meaning depending on the context in which it is used.

1. subject to paragraphs (b), (c) and (d) the “relevant period” is the period beginning on the date of issue of the shares and ending 4 years after the date of the issue of the shares or, where the company was not at that date carrying on relevant trading activities, 4 years after the date on which it subsequently began to carry on such activities
2. as respects a “relevant employment”, the “relevant period” is the period beginning on the date on which the shares are issued, or if later, the date on which the employment commences and ending 12 months after that date,.
3. in the case of a “specified individual”, the “relevant period” is the period beginning on the share issue date and ending 1 year after that date, or where the company was not at that date carrying on relevant trading operations, 1 year after the date it commenced to carry on such operations,
4. for the purposes of section 489(2)(b), section 501(1)(a)(ii)i, and the definition of “relevant amount”, and “employment relevant number”,) the “relevant period” is the period beginning on the share issue date and ending 3 years after that date, or where the company was not at that date carrying on relevant trading operations, 3 year after the date it commenced to carry on such operations.

“relevant trading activities” means activities carried on in the course of a trade the profits or gains of which are charged to tax under Case I of Schedule D, excluding activities related to –

1. adventures or concerns in the nature of trade,
2. dealing in commodities or futures or in shares, securities or other financial assets,
3. financing activities
4. the provision of services, which would result in a close company (within the meaning of section 430) that provides those services being treated as a service company for the purpose section 441 if that close company had no other source of income,
5. dealing in or developing land,
6. the occupation of woodlands within the meaning of section 232,
7. operating or managing hotels, guest houses, self catering accommodation or comparable establishments or managing property used as an hotel, guest house, self catering accommodation or comparable establishment, except where the operating or managing of such hotels, guest houses, self catering accommodation or comparable establishment is a tourist traffic undertaking. The extension of the scheme to cover the operation of hotels, guest houses etc applies in respect of shares issued on or after 1 January 2013,
8. operations carried on in the coal industry or in the steel and shipbuilding sectors, and
9. the production of a film (within the meaning of section 481), but including tourist traffic undertakings;

“research and development activities” has the same meaning as in section 766;

“specified individual” has the meaning set out in section 495.

“specified period” means the period beginning on the incorporation of the company (or, if the company was incorporated more than 2 years before the date on which the shares were issued, beginning 2 years before that date) and ending 3 years after the issue of the shares;

“specified relevant period” has the meaning assigned in section 766 to relevant period;

“relief” means relief under section 489 and 493, as the case may be, and references to the amount of the relief shall be construed in accordance with subsection (2) of section 489 and subsection (2) and (3) of section 493, as the case may be;

“threshold amount” means the total emoluments (other than non-pecuniary emoluments) paid by a qualifying company to qualifying employees as referred to in the definition of “employment threshold number”, in the year of assessment preceding the year in which the subscription for eligible shares was made. Where there was a general reduction in the basic pay rate of qualifying employees then the threshold amount shall be reduced accordingly..

“tourist traffic undertakings means” –

1. the operation of tourist accommodation facilities (other than hotels, guest houses and self catering accommodation) for which the National Tourism Development Authority (trading as Fáilte Ireland) maintains a register,
2. the operation of such other classes of facilities as may be approved of for the purposes of the relief by the Minister for Finance in consultation with the Minister for Tourism, Culture and Sport on the recommendation of the National Tourism Development Authority (trading as Fáilte Ireland) in accordance with specific codes of standards laid down by it, or
3. the promotion outside the State of any one of the foregoing facilities, including such hotels, guest houses and self catering accommodation so registered.

“transmission system operator” has the same meaning as in the Electricity Regulation Act 1999;

“unquoted company” is a company none of whose shares are listed in the official list of a stock exchange or quoted on an unlisted securities market other than —

• on the Enterprise Securities Market of the Irish Stock Exchange, or
• on the Enterprise Securities Market of the Irish Stock Exchange and on any similar or corresponding market of the stock exchange of one or more EU Member States provided the quotation on the Enterprise Securities Market of the Irish Stock Exchange occurs before or at the same time as the first quotation on an unlisted securities market of a stock exchange of another EU Member State.

Disposal of shares

(2) A disposal of shares is treated as occurring on the disposal of an interest or right in or over those shares. Section 587 applies to a scheme of reconstruction or amalgamation whereby a company (the first company) issues shares to the shareholders in a second company. This is treated for capital gains tax purposes as comprising an “exchange of shares”. However, for the purposes of relief under this Part, such a deemed “exchange” of shares is treated as a disposal of the shares in the second company by the shareholders of that company and, for the purpose of restricting the relief under section 496 (disposal of shares), the value of the shares in the first company is a measure of the consideration received for the shares treated as disposed of by those shareholders.

Reduction of amounts

(3) Where there is a reference in this Part to the reduction of any amount the reference is to be taken as including the reduction of the amount to nil.

Relevant Date: Finance Act 2019