Notional Loans Relating to Shares

Section 122A Taxes Consolidation Act 1997 [as inserted by Section 15 Finance Act 1998] and Approved Share Option Schemes & Approved Profit Sharing Schemes

Revenue have received a number of queries on the effect of Section 122A Taxes Consolidation Act 1997 [as inserted by Section 15 Finance Act 1998] on shares obtained by directors/employees under:

• Rights acquired between the 6 April 1986 and 28 January 1992 (both dates inclusive) under a share option scheme approved by the Revenue Commissioners for the purposes of Section 10 Finance Act 1986
• Revenue approved profit sharing schemes.

Revenue are prepared to accept that the provisions of:

• Subsection (2) - charge in respect of a notional loan
  and
• Subsection (6) - charge in respect of a deemed write off of a notional loan of Section 122A Taxes Consolidation Act 1997 [as inserted by Section 15 Finance Act 1998] will not apply to shares acquired by directors/ employees as outlined above.

It will not be necessary, therefore, to include the acquisition of such shares in the normal benefit-in-kind returns.

It must be emphasised, however, that:

• This practice relates only to the provisions of Subsections (2) and (6) of the new Section 122A and in relation only to shares acquired as above
  and
• Subsection (7) [an income tax charge where shares are disposed of at an overvalue] of Section 122A will apply to these shares.