Finance Act, 1990
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Exploration expenditure. |
39.—As respects expenditure incurred on or after the 1st day of April, 1990, the Finance (Taxation of Profits of Certain Mines) Act, 1974 , is hereby amended— | |
(a) by the deletion of the proviso to subsection (1) of section 2, | ||
(b) by the deletion, in subsection (2) of section 3, of “but was incurred within a period of ten years prior to the date on which he commences to carry on the said trade”, | ||
(c) by the insertion in subsection (1) of section 4 of “or section 2 as applied by section 7A,” after “section 2 or 3,”, and | ||
(d) by the insertion after section 7 of the following section: | ||
“7A.— (1) For the purposes of this section— | ||
‘exploration company’ means a company, the business of which for the time being consists primarily of exploring for scheduled minerals; | ||
‘exploring for scheduled minerals’ means searching in the State for deposits of scheduled minerals or testing such deposits or winning access thereto, and includes the systematic searching for areas containing scheduled minerals and searching by drilling or other means for scheduled minerals within those areas but does not include operations which are operations in the course of developing or working a qualifying mine. | ||
(2) Subject to subsections (3) to (5), for as long as a company— | ||
(a) is an exploration company, | ||
(b) does not carry on a trade of working a qualifying mine, and | ||
(c) incurs capital expenditure (including such expenditure incurred on the provision of plant and machinery) for the purposes of exploring for scheduled minerals, | ||
it shall be deemed for the purposes of sections 2, 3 (4), 6 and 7 and the other provisions of the Tax Acts, except the other provisions of this Act— | ||
(i) to be carrying on a trade of working a qualifying mine, | ||
(ii) to come within the charge to corporation tax in respect of that trade when it first incurs the said capital expenditure, and | ||
(iii) to incur for the purposes of that trade the said expenditure incurred on the provision of plant and machinery, | ||
so that all allowances or charges which fall to be made for an accounting period by virtue of this subsection and section 2, 6 or 7 shall be given effect by treating the amount of any allowance as a trading expense of that trade in the period and by treating the amount on which any such charge is to be made as a trading receipt of that trade in the period. | ||
(3) Where, by virtue of subsection (2), a company is to be treated as incurring a loss in a trade in an accounting period, the company— | ||
(a) shall be entitled to relief in respect of the loss under subsections (1) to (3) of section 16, subsections (1) and (2) of section 18 and section 25 of the Corporation Tax Act, 1976 , as if for the term ‘trading income from the trade’ or ‘trading income’, wherever occurring in sections 16 and 18, there were substituted ‘profits (of whatever description)’, and | ||
(b) subject to subsection (4) (b) (ii), shall not otherwise be entitled to relief in respect of the loss or to surrender relief under subsection (1) of section 116 of the Corporation Tax Act, 1976 , in respect of the loss. | ||
(4) (a) Any asset representing exploration expenditure, in respect of which an allowance or deduction has been made, by virtue of subsection (2) and section 2, to a company shall, for the purposes of section 245 (11) of the Income Tax Act, 1967 , be treated as an asset representing capital expenditure incurred in connection with the mine which the company is deemed to be working by virtue of subsection (2), and the company shall not cease to be deemed to be carrying on the trade of working that mine, so as to be within the charge to corporation tax in respect of that trade, before any sale of such an asset in the event of such a sale. | ||
(b) Where a company begins at any time (in this paragraph referred to as the relevant time) to carry on a trade of working a qualifying mine and, accordingly, ceases to be deemed to carry on such a trade, it shall be treated as carrying on the same trade before and after that time for the purposes of— | ||
(i) any allowance, charge or trade receipt treated as arising by reference to any capital expenditure incurred before the relevant time, and | ||
(ii) relief, other than by virtue of subsection (3), under section 16 (1) of the Corporation Tax Act, 1976 , for any losses arising before the relevant time, in so far as relief has not already been given for those losses by virtue of this section: | ||
Provided that the provisions of this paragraph shall not apply where there is a change in the ownership of the company within a period of— | ||
(I) twelve months ending at the relevant time, or | ||
(II) twenty-four months beginning at the relevant time. | ||
(c) The provisions of the Fifth Schedule to the Finance Act, 1973 , other than paragraphs 8 and 10 of Part I thereof, shall have effect for the purposes of supplementing this subsection as if the references therein to section 39 of that Act were references to this subsection. | ||
(5) (a) Notwithstanding any other provision of the Tax Acts, if an allowance or deduction has been given by virtue of this section in respect of any expenditure, then no other allowance or deduction shall be given by virtue of any provision of the Tax Acts, including this section, in respect of that expenditure. | ||
(b) Paragraph (b) of subsection (1) of section 35 of the Finance Act, 1986 , shall apply to a company for as long as it is deemed by virtue of subsection (2) to be carrying on a trade of working a qualifying mine, as if ‘who is not a company within the charge to corporation tax in respect of the payment’ were deleted from that paragraph.”, | ||
and the said subsection (2) of section 3 and subsection (1) of section 4 (other than the proviso), as so amended, are set out in the Table to this section. | ||
TABLE | ||
(2) Where a person who commences to carry on a trade of working a qualifying mine after the 6th day of April, 1974, incurred exploration expenditure on or after the 6th day of April, 1967, and that expenditure was not incurred in connection with the said qualifying mine, then in taxing the said trade for the chargeable period in which he commenced to carry on the said trade, there shall be made an allowance of an amount equal to the amount of that expenditure. | ||
(1) Where exploration expenditure, in respect of which an allowance may be claimed by virtue of section 2 or 3, or section 2 as applied by section 7A, is or has been incurred by a body corporate (hereinafter in this section referred to as the exploration company) and— | ||
(a) another body corporate is, or is deemed to be, a wholly-owned subsidiary of the exploration company, or | ||
(b) the exploration company is, or is deemed to be, a wholly-owned subsidiary of another body corporate, | ||
the expenditure or so much of it as the exploration company specifies | ||
(i) in the case referred to in paragraph (a) may, at the election of the exploration company, be deemed to have been incurred by such other body corporate (being a body corporate which is, or is deemed to be, a wholly-owned subsidiary of the exploration company) as the exploration company specifies, | ||
(ii) in the case referred to in paragraph (b) may, at the election of the exploration company, be deemed to have been incurred by the body corporate (hereinafter referred to as the parent body) of which the exploration company was, at the time the expenditure was incurred, a wholly-owned subsidiary or by such other body corporate (being a body corporate which is, or is deemed to be, a wholly-owned subsidiary of the parent body) as the exploration company specifies, | ||
and in a case where the said expenditure was incurred on a date prior to the incorporation of the body corporate so specified, the provisions of this Act shall apply, in relation to the granting of any allowance in respect of such expenditure, as if the said body corporate had been in existence at the time the expenditure was incurred and had incurred the expenditure at that time: |