Finance Act, 1992
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Restriction of certain losses and charges on income and consequential amendments. |
46.—(1) Part II of the Corporation Tax Act, 1976 , is hereby amended, as respects accounting periods ending on or after the 1st day of April, 1992— | |
(a) by the insertion after section 10 of the following section: | ||
“Restriction of certain charges on income. | ||
10A.—(1) (a) In this section ‘trade’, ‘income from the sale of goods’, ‘charges on income paid for the purpose of the sale of goods’ and ‘the sale of goods and merchandise’ have the same meanings, respectively, as they have in subsection (1) (as amended by section 46 of the Finance Act, 1992) of section 116A (inserted by section 34 of the Finance Act, 1988 ) for the purposes of that section. | ||
(b) For the purposes of this section— | ||
(i) where an accounting period begins before the 1st day of April, 1992, and ends on or after that date, it shall be divided into one part, beginning on the day on which the accounting period begins and ending on the 31st day of March, 1992, and another part, beginning on the 1st day of April, 1992, and ending on the day on which the accounting period ends, and both parts of the accounting period shall be treated as if they were separate accounting periods, and | ||
(ii) where an accounting period begins before the 1st day of January, 2011, and ends on or after that date, it shall be divided into one part beginning on the day on which the accounting period begins and ending on the 31st day of December, 2010, and another part, beginning on the 1st day of January, 2011, and ending on the day the accounting period ends, and both parts shall be treated as if they were separate accounting periods. | ||
(2) Notwithstanding section 10, so much of the total amount of charges on income paid for the purpose of the sale of goods by a company, in an accounting period falling within the period from the 1st day of April, 1992, to the 31st day of December, 2010, in the course of a trade or trades, as the case may be, shall not be allowed as a deduction against the total profits of the company for the period as exceeds the total amount, reduced by any loss relief under subsection (3) of section 16A (inserted by section 46 of the Finance Act, 1992), of the company's income from the sale of goods in the course of the trade or trades, as the case may be, in the period. | ||
(3) (a) Notwithstanding the provisions of subsection (3) of section 41 of the Finance Act, 1980 , in determining the income of a company, referred to in the expression ‘the income from the sale of those goods’, for the purposes of subsection (2) of the said section 41, it shall be the sum determined by subsection (3) of the said section 41 for that period reduced by any charges on income paid for the purpose of the sale of goods which are allowed as a deduction against the total profits of the company for that period and paid on or after the 1st day of April, 1992. | ||
(b) Where for any accounting period of a company— | ||
(i) the corporation tax referable to the income of the company from the sale of goods falls to be reduced under section 41 of the Finance Act, 1980 , and | ||
(ii) charges on income paid, on or after the 1st day of April, 1992, for the purpose of the sale of goods have been allowed as a deduction against total profits, | ||
then, notwithstanding section 46 of the said Act, the charges on income paid for the purpose of the sale of goods shall be deducted from the amount of the relevant deduction in relation to the period for charges on income in subsection (1) of section 46 of the said Act.”, | ||
(b) in subsection (1) of section 16 by the insertion after “subsection (2)” of “or under section 16A (3) (inserted by section 46 of the Finance Act, 1992)”, and | ||
(c) by the insertion after section 16 of the following section: | ||
“Restriction of certain losses. | ||
16A.—(1) (a) In this section ‘trade’, ‘income from the sale of goods’, ‘a loss from the sale of goods’, and ‘the sale of goods and merchandise’ have the same meanings, respectively, as they have in subsection (1) (as amended by section 46 of the Finance Act, 1992) of section 116A (inserted by section 34 of the Finance Act, 1988 ). | ||
(b) Paragraph (b) of subsection (1) of section 10A (inserted by section 46 of the Finance Act, 1992) shall have effect for the purposes of this section as it has effect for the purposes of that section. | ||
(2) Notwithstanding subsection (2) of section 16, for the purposes of that subsection the amount of a loss in a trade incurred by a company in an accounting period ending on or after the 1st day of April, 1992, shall be deemed to be reduced by the amount of a loss from the sale of goods, if any, incurred in the trade by the company in the accounting period. | ||
(3) Where in an accounting period ending on or after the 1st day of April, 1992, a company carrying on a trade incurs a loss from the sale of goods, the company may make a claim requiring that the loss be set off for the purposes of corporation tax against its income from the sale of goods— | ||
(a) of that accounting period, and | ||
(b) if it was then carrying on the first-mentioned trade and if the claim so requires, of preceding accounting periods ending within the time specified in subsection (4), | ||
and, subject to any relief for an earlier loss, to the extent that the trading income of any of those accounting periods consists of, or includes, income from the sale of goods, that trading income shall then be reduced by so much of the loss as cannot be relieved against trading income of a later accounting period. | ||
(4) For the purposes of subsection (3), the time referred to in paragraph (b) of that subsection is the time immediately preceding the accounting period first-mentioned in subsection (3) equal in length to that accounting period: | ||
Provided that the amount of the reduction which may be made under subsection (3) in the trading income of an accounting period falling partly before that time shall not exceed such part of the income from the sale of goods included in that trading income as bears to the said income from the sale of goods the same proportion as the part of the accounting period falling within the said time bears to the whole of that accounting period. | ||
(5) (a) In subsection (3) of section 41 of the Finance Act, 1980 , and for the purposes of determining ‘the amount’ in the expression ‘the amount of the company's income for the relevant accounting period from the sale in the course of the trade mentioned in that subsection of goods and merchandise’, it shall be determined in accordance with subsection (4) of the said section 41 as if no relief for a loss in a trade had been claimed under this section. | ||
(b) Notwithstanding the provisions of subsection (3) of the said section 41, for the purposes of determining ‘the income’ in the expression ‘the income from the sale of those goods’ in an accounting period for the purposes of subsection (2) of the said section 41, it shall be the sum determined by subsection (3) of the said section 41 for that period reduced by any relief for a loss in a trade allowed under this section against income of the trade mentioned in subsection (2) of the said section 41 in that period. | ||
(6) This section shall not apply to so much of a company's loss from the sale of goods in the course of a trade in an accounting period as does not exceed the amount of the capital allowances under Part XIII , XV or XVI of the Income Tax Act, 1967 , section 11 of the Finance Act, 1967 , section 26 of the Finance Act, 1971 , or section 25 of the Finance Act, 1978 , which fall to be made for the accounting period in taxing the trade: | ||
Provided that for the purposes of this subsection no account shall be taken of capital allowances other than capital allowances in respect of machinery or plant or an industrial building or structure— | ||
(a) which is provided for the purposes of a project approved within the period of two years ending on the 31st day of December, 1988, by the Industrial Development Authority, | ||
(b) the expenditure on the provision of which is incurred on or before the 31st day of March, 1995, and | ||
(c) more than half of the expenditure on the provision of which was incurred, or was the subject of a binding contract entered into, before the 1st day of April, 1992. | ||
(7) This section shall not apply to so much of a company's loss from the sale of goods in the course of a trade in an accounting period as does not exceed the amount of the capital allowances under section 42 (2) of the Finance Act, 1986 , deducted by the company in computing the loss which it has incurred in that period in carrying on trading operations specified in a certificate given to it, and not subsequently revoked, by the Minister for Finance under section 39B (2) of the Finance Act, 1980 .”, | ||
and the said subsection (1) of section 16, as amended by paragraph (b), is set out in the Table to this section. | ||
(2) Section 116A (inserted by section 34 of the Finance Act, 1988 ) of the Corporation Tax Act, 1976 , is hereby amended— | ||
(a) in paragraph (a) of subsection (1) by the insertion, in subparagraph (i) of the definition of “income from the sale of goods”, after “section” of “or loss relief under subsection (3) of section 16A (as inserted by section 46 of the Finance Act, 1992)”, | ||
(b) in subparagraph (ii) of paragraph (b) of subsection (1) by the substitution of “the 1st day of January, 2011,” for “the 1st day of January, 2001,” in both places where it occurs and of “the 31st day of December, 2010,” for “the 31st day of December, 2000,”, and | ||
(c) in subsection (2) by the substitution for paragraph (a) of the following paragraph: | ||
“(a) Notwithstanding subsections (1) and (6) of section 116 and section 117, if, in any accounting period falling within the period from the 1st day of January, 1989, to the 31st day of December, 2010, the surrendering company incurs a loss from the sale of goods or an excess of charges on income paid for the purpose of the sale of goods, that loss or excess may be set off for the purposes of corporation tax against income from a trade of the claimant company for its corresponding accounting period to the extent of that income or, if it is less, to the extent of the income from the sale of goods in the course of the trade reduced by— | ||
(i) any loss relief under subsection (3) of section 16A (inserted by section 46 of the Finance Act, 1992), and | ||
(ii) charges on income paid for the purposes of the sale of goods within the meaning of section 10A (inserted by section 46 of the Finance Act, 1992), | ||
but no other relief shall be given in respect of that loss or excess to a company other than the surrendering company.”, | ||
and the said subparagraph (i) of the definition of “income from the sale of goods” and the said subparagraph (ii) of paragraph (b) of subsection (1), as so amended, are set out in the Table to this section. | ||
TABLE | ||
(1) Where in any accounting period a company carrying on a trade incurs a loss in the trade, the company may make a claim requiring that the loss be set off for purposes of corporation tax against any trading income from the trade in succeeding accounting periods; and (so long as the company continues to carry on the trade) its trading income from the trade in any succeeding accounting period shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot, on that claim or on a claim (if made) under subsection (2) or under section 16A (3) (inserted by section 46 of the Finance Act, 1992), be relieved against income or profits of an earlier accounting period. | ||
(i) no group relief under this section or loss relief under subsection (3) of section 16A (inserted by section 46 of the Finance Act, 1992) were allowed against income from the trade in that period, | ||
(ii) where an accounting period begins before the 1st day of January, 2011, and ends on or after that date it shall be divided into one part beginning on the day on which the accounting period begins and ending on the 31st day of December, 2010, and another part, beginning on the 1st day of January, 2011, and ending on the day the accounting period ends, and both parts shall be treated as if they were separate accounting periods. |