Finance Act, 1946
|
Allowance for mining development. |
6.—(1) In this section— | |
the word “mine” means an underground excavation made for the purpose of getting minerals; | ||
references to capital expenditure incurred in connection with a mine shall be construed as references to capital expenditure incurred— | ||
(a) in the development of the mine on searching for or on discovering and testing mineral deposits or winning access thereto, or | ||
(b) on the construction of any works which are of such a nature that when the mine has ceased to be operated they are likely to have so diminished in value that their value will be little or nothing, | ||
but as excluding references to— | ||
(c) any expenditure on the acquisition of the site of the mine or of the site of any such works or of rights in or over any such site, or | ||
(d) any expenditure on the acquisition of, or of rights over, the deposits, or | ||
(e) any expenditure on works constructed wholly or mainly for subjecting the raw product of the mine to any process except a process designed for preparing the raw product for use as such; | ||
references to assets representing capital expenditure incurred in connection with a mine shall— | ||
(a) be construed as including, in relation to expenditure on searching for, discovering and testing deposits, references to any information or other results obtained from any search, exploration or enquiry upon which the expenditure was incurred, and | ||
(b) be construed as also including references to any part of such assets, and | ||
(c) be construed as also including, in the case of any such assets destroyed or damaged, references to any insurance moneys or other compensation moneys in respect of such destruction or damage. | ||
(2) Expenditure shall not, for the purposes of this section, be regarded as having been incurred by a person carrying on the trade of working a mine in so far as it has been or is to be met directly or indirectly out of moneys provided by the Oireachtas or by any other person (not being a person who has carried on the trade of working that mine). | ||
(3) Any person, who carries on the trade of working a mine and who has, on or after the 6th day of April, 1946, incurred any capital expenditure in connection with the said mine, may apply for the grant of an allowance (in this section referred to as a mine development allowance) in respect of such capital expenditure. | ||
(4) Application for a mine development allowance for any year of assessment may be made to the inspector of taxes not later than twelve months after the end of such year. | ||
(5) The following provisions shall have effect in relation to the amount of a mine development allowance for any year of assessment in respect of any capital expenditure incurred in connection with a mine— | ||
(a) the inspector of taxes shall estimate to the best of his judgment the life (in this subsection referred to as the estimated life) of the deposits, but shall not estimate such life at more than twenty years, | ||
(b) the inspector of taxes shall then estimate the amount of the difference (in this subsection referred to as the estimated difference) between the said capital expenditure and the amount which, in his opinion, the assets representing the said capital expenditure are likely to be worth at the end of the estimated life, | ||
(c) the said inspector shall, subject to the provisions of this section, allow, as the mine development allowance for the said year of assessment, an amount equal to a sum which bears to the estimated difference the same proportion as the length of the said year of assessment bears to the length of the estimated life, | ||
(d) if the said capital expenditure was incurred during the said year of assessment, then the said year of assessment shall, for the purposes of paragraph (c) of this subsection, be taken to comprise so much only of the said year of assessment as is subsequent to the date on which the said capital expenditure was incurred. | ||
(6) A mine development allowance to any person carrying on the trade of working a mine shall be made as a deduction in charging the profits or gains of that trade and paragraph (3) of Rule 6 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, and section 4 of the Finance Act, 1937 (No. 18 of 1937), shall apply in relation to the allowance as they apply in relation to deductions for wear and tear of plant and machinery. | ||
(7) A mine development allowance shall not be granted in respect of any capital expenditure incurred in connection with a mine in any case where the asset representing such capital expenditure is an asset in respect of which a deduction could be claimed under Rule 6 or Rule 7 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918; or is allowable under section 3 of the Finance Act, 1942 (No. 14 of 1942), or under section 8 of the Finance Act, 1944 (No. 18 of 1944). | ||
(8) Where a mine development allowance for any year of assessment has been granted in respect of capital expenditure incurred in connection with a mine, then, for that year of assessment— | ||
(a) paragraph (2) of Rule 5 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, shall have effect as regards any asset which represents the said capital expenditure as if the proviso to the said paragraph (2) were omitted therefrom, and | ||
(b) section 18 of the Finance Act, 1919 , shall not apply as respects any such asset. | ||
(9) Any capital expenditure incurred, on or after the 6th day of April, 1946, in connection with a mine by a person about to carry on the trade of working the said mine but before commencing such trade shall, for the purposes of this section, be treated as if it had been incurred on the first day of the commencement of such trade. | ||
(10) Where mine development allowances in respect of capital expenditure incurred in connection with a mine have been granted and the mine has finally ceased to be operated— | ||
(a) the inspector of taxes shall review the said mine development allowances, | ||
(b) if, on such review, it appears that the amount of the difference (in this subsection referred to as the said difference) between the said capital expenditure and the amount which the assets, representing the said capital expenditure at such cessation, were worth at such cessation exceeds the total of the said mine development allowances, then further mine development allowances totalling in amount the excess may be granted for any year of assessment (being the year in which the said mine has finally ceased to be operated or any previous year) so however that the total of such further mine development allowances shall not amount to more than the said excess, and if necessary effect may be given to this paragraph by way of repayment, | ||
(c) if, on such review, it appears that the said difference is less than the total of the said mine development allowances, then, the deficiency or the total of the said mine development allowances, whichever is the less, shall be treated as a trading receipt of the trade of working the said mine accruing immediately before such cessation. | ||
(11) Where the person (in this subsection referred to as the vendor) carrying on the trade of working a mine sells to any other person (not being a person who succeeds the vendor in the said trade) any asset representing capital expenditure incurred in connection with the said mine and by reference to which mine development allowances have been granted, the following provisions shall have effect— | ||
(a) if the total of the said mine development allowances when added to the sum realised on the sale of the said asset is less than the said capital expenditure, by any amount (in this subsection referred to as the unexhausted allowance), then, further mine development allowances may be granted to the vendor in respect of any year of assessment (being the year of such sale or any previous year), so however that the total of such further mine development allowances shall not exceed the unexhausted allowance, | ||
(b) if the total of the said mine development allowances when added to the sum realised on the sale of the said asset exceeds the said capital expenditure, then, the amount of such excess or the said total of the mine development allowances, whichever is the less, shall be treated as a trade receipt of the said trade accruing immediately before the said sale. | ||
(12) Where— | ||
(a) mine development allowances in respect of capital expenditure incurred in connection with a mine have been granted to a person (in this subsection referred to as the original trader) carrying on the trade of working the mine, and | ||
(b) another person (in this subsection referred to as the successor) succeeds to the said trade, | ||
mine development allowances may continue to be granted in respect of the said capital expenditure to the successor, but in no case shall the amount of such allowances exceed the amount to which the original trader would have been entitled if he had continued to carry on the said trade. | ||
(13) Where— | ||
(a) deductions for wear and tear have been allowed under Rule 6 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, in respect of any plant or machinery used for the purposes of a mine in relation to which mine development allowances have been granted, and | ||
(b) the mine has finally ceased to be operated, | ||
the provision of subsection (10) of this section shall apply as if such plant and machinery were assets representing capital expenditure incurred in connection with the mine and as if any allowance or deduction made under the Income Tax Acts in respect of such plant or machinery were a mine development allowance. | ||
(14) An appeal to the Special Commissioners shall lie on any question arising under this section in like manner as an appeal would lie against an assessment and the provisions of the Income Tax Acts relating to appeals shall apply and have effect accordingly. |