409C Income tax: restriction on use of losses on approved buildings.

(1) In this section—

“approved building”, “the Minister” and “qualifying expenditure” have, respectively, the meaning assigned to each of them by section 482(1)(a);

“the claimant” has the meaning assigned to it by section 482(2)(a);

“eligible charity” has the meaning assigned to it by paragraph 1 of Part 3 of Schedule 26A;

“ownership interest”, in relation to a building, means an estate or interest in a building which would entitle the person who holds it, to make a claim under section 482 as owner of the building;

“relevant determinations”, in relation to a building, means the determinations made by the Minister and the Revenue Commissioners, respectively, in accordance with section 482(5)(a).

(2) For purposes of this section, a scheme shall be a passive investment scheme, in relation to a building, in any case where—

(a) an ownership interest, in relation to the building, is transferred by one person (in this section referred to as the “transferor”) to another person (in this section referred to as the “transferee”),

(b) at the time of the transfer, or at any time in the period of 5 years commencing at that time, the building is an approved building, and

(c)(i) at the time of the transfer, arrangements subsist (whether express or implied and whether or not enforceable by legal proceedings) under or by virtue of which the transferor, or any person connected with the transferor (within the meaning of section 10)—

(I) may retain the right to determine how any qualifying expenditure in relation to the building is to be incurred,

(II) may obtain, whether directly or indirectly, a payment or other benefit representing any part of the value to the transferee of relief under the Tax Acts by virtue of a claim under section 482(2) in respect of qualifying expenditure in relation to the building, or

(III) may re-acquire the transferee’s ownership interest (referred to in paragraph (a)),

or

(ii) the transfer is made for the sole or main purpose of facilitating a claim by the transferee under section 482(2).

(3) This section applies where—

(a) by virtue of subsection (2) of section 482, qualifying expenditure in relation to an approved building is treated as a loss sustained in a trade carried on by a claimant, as owner of the building, in a chargeable period (referred to in paragraph (b)(i) of that subsection),

(b) the claimant is an individual who is a transferee ^[2]>under a passive investment scheme^<[2], and

(c) relief is claimed under section 381 in respect of the loss referred to in paragraph (a).

(4) Where this section applies, the amount of the loss referred to in subsection (3)(a) which can be treated as reducing income for a year of assessment under section 381(1) shall be—

(a) the full amount of the loss, or

(b) €31,750,

whichever is the lesser.

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(4A) (a) Notwithstanding subsection (4), where this section applies for the year of assessment 2010 or a later year of assessment, the amount of the loss referred to in subsection (3)(a) which can be treated as reducing income for each such year of assessment under section 381(1) shall be nil.

(b) This subsection shall not apply for the years of assessment 2010 or 2011 in relation to—

(i) work which was completed before 4 February 2010,

(ii) work which was underway on 4 February 2010, or

(iii) work carried out under a contractual commitment entered into before 4 February 2010 and evidenced in writing before that date where the work begins after that date.

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(5) Where by virtue of subsection (4) relief cannot be given for a year of assessment for part of the loss referred to in subsection (3)(a), then for the purposes of section 482(3) such relief shall be treated as not being given owing to an insufficiency of income.

(6) This section shall not apply—

(a) to qualifying expenditure, in relation to an approved building, incurred before 5 December 2001,

(b) to qualifying expenditure, in relation to an approved building, incurred on or after 5 December 2001 and before 31 December 2003, where the relevant determinations have been made in relation to that building before 5 December 2001,

(c) to qualifying expenditure, incurred before 31 December 2003, in relation to a building, in respect of which—

(i) the Revenue Commissioners have, before 5 December 2001, indicated in writing, that proposals made to them are broadly acceptable, so as to enable them to make a determination under section 482(5)(a), and

(ii) an officer of the Department of Arts, Heritage, Gaeltacht and the Islands has, before 5 December 2001, indicated in writing that, having inspected the building, the officer is satisfied that, if required, the officer would recommend to the Minister that a determination under section 482(5)(a) be made by the Minister, or

(d) to qualifying expenditure, incurred before 31 December 2003, in relation to a building where—

(i) the Minister has made a determination under section 482(5)(a) before 5 December 2001, in relation to the building, and

(ii) the claimant has undertaken to gift, whether directly or indirectly, to the transferor, who is an eligible charity, the full value of the relief to which the individual is entitled under the Tax Acts by virtue of making a claim under section 482(2), and the individual does so.