This section regulates the manner in which the election may be made or terminated for the purposes of section 105. The inspector has three months in which to accept or reject the election of the companies. If he rejects it within that time the companies may appeal against the decision and the normal appeal provisions in relation to assessment will apply. If he accepts it within three months it takes effect from the notification of acceptance. If he neither accepts nor rejects it within the three months it will take effect at the end of the three months. An election will cease to have effect if at any time the companies cease to be entitled to election. It may also be revoked if at any time either company gives the inspector notice in writing to that effect.

(Dublin Central): On what grounds would he reject it? If the company had 51 per cent would that qualify within the rules? What would be the reason for his rejection?

If there was the fear that the liability to tax might be avoided, that the company might not pay up, he could decline to approve of the election.

(Dublin Central): The company it was being transferred to?

Yes.

If, as the Minister has told us, everything ends up the same, no matter what way they do it, what is the point of making the election and what is the point of giving the inspector discretion whether or not to allow it?

It is to enable the company to avoid the inconvenience of the double tax transaction. The Deputy can see a sample on the front of the book of examples of the more complicated procedures to be followed if there is no election than if there is an election.

One would have to get them not to change their minds on this.

It is an option that is open to companies who want to avail of it. If they do not want to they need not.

Why should the inspector of taxes either allow or disallow an election?

He would only disallow it if he had reason to believe that the tax due would not be paid. It is desirable that he should have that power. He has a duty to ensure that tax due is paid. If the parties are not satisfied they can appeal against his refusal.

(Dublin Central): The Revenue Commissioners have in mind a company being transferred to a company that is likely to become insolvent?

Yes.