Finance Act, 1996
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Amendment of section 12A (foreign currency: computation of income and chargeable gains) of Corporation Tax Act, 1976. |
45.—(1) Section 12A (inserted by the Finance Act, 1994 ) of the Corporation Tax Act, 1976 , is hereby amended— | |
(a) in subsection (1) (a) by the insertion after the definition of “relevant contract” of the following definition: | ||
“‘relevant tax contract’, in relation to an accounting period of a company, means any contract entered into by the company for the purpose of eliminating or reducing the risk of loss being incurred by the company due to a change in the value of money payable in discharge of a liability of the company to corporation tax for the accounting period being a change resulting directly from a change in a rate of exchange of the functional currency (within the meaning of section 14A) of the company for the currency of the State;”, and | ||
(b) by the addition after subsection (3) of the following subsection: | ||
“(4) Notwithstanding section 13, so much of the amount of any gain or loss arising to a company which carries on a trade in the State in an accounting period as— | ||
(a) is attributable to any relevant tax contract in relation to the accounting period, | ||
(b) results directly from a change in a rate of exchange, and | ||
(c) (i) where it is a gain, does not exceed the amount of the loss which, if the company had not entered into the relevant tax contract, would have been incurred by the company, and | ||
(ii) where it is a loss, does not exceed the amount of the gain which, if the company had not entered into the relevant tax contract, would have arisen to the company, | ||
due to a change in the value of money payable in discharge of a liability of the company to corporation tax for the accounting period, | ||
shall not be a chargeable gain or an allowable loss, as the case may be, of the company.”. | ||
(2) This section shall apply and have effect as respects accounting periods ending on or after the 1st day of April, 1996. |