Annex 1: Minor changes in the law made by the Act: Change 26: Expenses connected with foreign trades: Irish trades: section 92
This change allows a deduction for certain expenses incurred in connection with trades carried on wholly in Ireland whatever the basis adopted for the assessment of a taxpayer’s other foreign income.
Section 80 of ICTA allows a deduction for the expenses that would otherwise be disallowed as not being incurred wholly and exclusively for the purposes of a trade assessable under Schedule D Case V. But it excludes an individual who satisfies the Board of Inland Revenue “as mentioned in section 65(4) [of ICTA]”. That individual is assessable under Schedule D Case V on the basis of sums received in the United Kingdom (the “remittance basis”).
The remittance basis does not apply to income arising in the Republic of Ireland (see section 68(1) of ICTA). So a person with other foreign income assessable on the remittance basis may have Irish income assessed on the basis of the income arising. In such a case there is no reason why the rules in section 80 of ICTA should not apply to the Irish income.
Section 92(2) of this Act makes it clear that the rules apply in calculating the profits of any trade that are not assessed on the remittance basis.
This change is in taxpayers' favour in principle and may benefit some in practice. But the numbers affected and the amounts involved are likely to be small.