Corporation Tax Act, 1976
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Relief in respect of corporation profits tax losses. |
184.—(1) In this section, subject to the proviso to section 174 (3), “relevant deficiency” means, in relation to a company, the aggregate of the following amounts— | |
(a) the total of the amounts which, under section 25 of the Finance Act, 1964 , could (on the footing that for corporation profits tax purposes an accounting period of the company ended on the 5th day of April, 1976, and a new accounting period commenced on the 6th day of April, 1976, and the enactments in relation to corporation profits tax mentioned in the Third Schedule had not been repealed) be deducted from or set off against profits of the company's business in an accounting period commencing on the 6th day of April, 1976; and | ||
(b) the total of the amounts by which, under section 181 (1) (3), losses and allowances in respect of capital expenditure are reduced for the purposes of corporation tax: | ||
Provided that any loss or any excess of deficiencies over surpluses which if such loss or excess were a profit or an excess of surpluses over deficiencies would be chargeable to corporation tax on the company for the accounting period shall not be taken into account for the purposes of paragraph (a). | ||
(2) Relief, as provided in subsection (3), shall be allowed in respect of a relevant deficiency against corporation tax payable by the company and such relief shall be given as far as possible from the tax payable for the first accounting period for which the company is within the charge to corporation tax and, in so far as it cannot be so given, from the tax payable for the next accounting period and so on: | ||
Provided that relief shall not be allowed against corporation tax payable for any accounting period against the profits of which (if this Act had not been enacted and if the enactments in relation to corporation profits tax referred to in the Third Schedule had not been repealed) a loss incurred prior to the 6th day of April, 1976, could not be set off under section 25 of the Finance Act, 1964 . | ||
(3) (a) For the purposes of this subsection— | ||
(i) the income of a company for an accounting period is its income charged to corporation tax for that period as defined in section 28 (8) (reduction of corporation tax liability of small companies), | ||
(ii) the appropriate amount is the smaller of the amount of the relevant deficiency in respect of which relief has not been allowed and the amount of the company's income for the accounting period. | ||
(b) The relief for an accounting period shall be an amount determined by the formula A − B | ||
where— | ||
A is the excess of the amount of corporation tax which, apart from this section, section 58 (basis of relief from corporation tax for export profits) and section 182, is chargeable for the accounting period over an amount calculated by applying a rate equal to the standard rate for the year of assessment in which the accounting period ends to the amount of the company's income for the accounting period, and | ||
B is the excess of the amount of corporation tax which, apart from sections 58, 182 and this section, would be chargeable for the accounting period if the amount of the company's income for the accounting period were reduced by the appropriate amount over an amount calculated by applying a rate equal to the standard rate for the year of assessment in which the accounting period ends to the amount of the company's income for the accounting period as reduced by the appropriate amount: | ||
Provided that— | ||
(i) where the corporation tax payable by a company for an accounting period is reduced by virtue of a claim under section 58 (1) the amount of relief to be allowed under the foregoing provisions of this section shall be reduced in the proportion which the corporation tax referable to the income attributable to the excess referred to in section 58 (1) (c) bears to the relevant corporation tax; | ||
(ii) where the corporation tax payable by a company for an accounting period is reduced by virtue of a claim under section 58 (3) the amount of relief to be allowed under the foregoing provisions of this section shall be reduced in the proportion which the corporation tax referable to the income from the sale of goods exported bears to the relevant corporation tax; and | ||
(iii) the amount of a reduction made for an accounting period under paragraph (i) or (ii) of this proviso shall, for the purposes of section 64, be deemed to be a reduction of the amount of relief allowed under section 58. | ||
For the purposes of this proviso “corporation tax referable to the income attributable to the excess”, “corporation tax referable to the income from the sale of goods exported” and “relevant corporation tax” have the meanings assigned to them in section 58. | ||
(4) Subsections (2) and (3) shall not apply to a company which by virtue of agreements between the Government and the United Kingdom Government in respect of double income tax was entitled to exemption from income tax for the year 1975-76 in respect of income arising in the State but in such case the relevant deficiency shall be set off against income coming within the charge to corporation tax for the accounting period commencing on the 6th day of April, 1976, and in so far as the relevant deficiency cannot be so set off it shall be set off against income coming within the charge to corporation tax for the next succeeding accounting period and so on: | ||
Provided that a relevant deficiency shall not be set off against income arising in any accounting period against the profits of which (if this Act had not been enacted and if the enactments in relation to corporation profits tax mentioned in the Third Schedule had not been repealed) a loss incurred prior to the 6th day of April, 1976, could not be set off under section 25 of the Finance Act, 1964 . |