Finance Act, 1959
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Allowances and charges in relation to corporation profits tax. |
69.—(1) Where any of the following allowances: | |
(a) an allowance under Rule 6 of the Rules applicable to Cases I and II of Schedule D, | ||
(b) an allowance under subsection (3), or paragraph (b) of subsection (4), of section 5 or section 6 of Finance Act, 1946 , | ||
(c) an allowance under Part V of Finance Act, 1956 , in respect of expenditure incurred after the commencement of this Part of this Act, | ||
(d) an allowance under Part IV of Finance (Miscellaneous Provisions) Act, 1956 , in respect of expenditure incurred after the commencement of this Part of this Act, | ||
(e) an annual allowance or a balancing allowance under Chapter I , II or III of this Part of this Act, or | ||
(f) an initial allowance, annual allowance or other allowance under Chapter IV of this Part of this Act, | ||
is made to any company for the purposes of income tax for any year of assessment and the allowance is related to any business carried on by that company, the appropriate amount shall be deducted in computing the profits of the business for the purposes of corporation profits tax for any accounting period (being an accounting period ending on or after the commencement of this Part of this Act) any part of which falls within that year of assessment. | ||
(2) For the purposes of subsection (1) of this section, an allowance shall be treated as related to a business if, and only if, either— | ||
(a) it is made in charging the profits or gains of a trade which is, or is comprised in, that business, | ||
(b) it is made in charging the profits or gains of a trade and is so made in respect of, or of expenditure on, property used for the purposes of a part of the trade which is, or is comprised in, that business, or | ||
(c) it is an allowance made by way of discharge or repayment of tax under or by virtue of any of the provisions of this Part of this Act and is in respect of, or of expenditure on, property the rent of which is included in the profits of the business for the purposes of corporation profits tax for any period or would have been so included if there had been any such rent. | ||
(3) Where any of the following charges: | ||
(a) a balancing charge under Chapter I , II or III of this Part of this Act, or | ||
(b) a charge under section 50 of this Act, | ||
is made on any company for the purposes of income tax for any year of assessment, and the charge is related to a business, the appropriate amount shall be treated as a trading receipt in computing the profits of the business for the purposes of corporation profits tax for any accounting period any part of which falls within that year of assessment. | ||
(4) For the purposes of subsection (3) of this section, a charge shall be treated as related to a business if, and only if, either— | ||
(a) it is made in charging the profits or gains of a trade which is, or is comprised in, that business, | ||
(b) it is made in charging the profits or gains of a trade and is a balancing charge in respect of, or of expenditure on, property used for the purposes of a part of the trade which is, or is comprised in, that business, | ||
(c) it is a balancing charge in respect of, or of expenditure on, property the rent of which is included in the profits of the business for the purposes of corporation profits tax for any accounting period or would have been so included if there had been any such rent, or | ||
(d) it is a charge under section 50 of this Act and the patent rights in question have at any time been used for the purposes of the business. | ||
(5) In subsections (1) and (3) of this section “the appropriate amount” shall be construed as follows: | ||
(a) in a case in which the business commenced or discontinued during the year of assessment in question, the said expression— | ||
(i) if no more than one accounting period of the business falls, whether wholly or partly within the year of assessment, means the whole amount of the allowance or, as the case may be, the whole amount on which the charge is made, and | ||
(ii) if more than one accounting period of the business falls, whether wholly or partly, within the year of assessment, means, in relation to each such accounting period, the portion of the allowance, or, as the case may be, the portion of the amount on which the charge is made, which bears to the whole thereof the same proportion as the length of the said accounting period, so far as included in the said year of assessment, bears to the total length of all such accounting periods, so far as so included; | ||
(b) in any other case, the said expression— | ||
(i) where the year of assessment in question and the accounting period in question coincide, means the whole amount of the allowance, or, as the case may be, the whole amount on which the charge is made, and | ||
(ii) where part only of the year of assessment falls within that accounting period, means such portion of the allowance or, as the case may be, such portion of the amount on which the charge is made as is apportioned to that part of the year of assessment which falls within that accounting period. | ||
(6) Where the profits of a business are not chargeable or not wholly chargeable to income tax, the like deductions and additions shall be made under subsections (1) and (3) of this section in computing the profits of the business for the purposes of corporation profits tax (being deductions and additions in respect of matters in respect of which no deductions or additions otherwise fall to be made under those subsections respectively) as would have fallen to be made for income tax purposes if the profits of the business had been so chargeable or wholly so chargeable. | ||
(7) Where, under this section, an amount falls to be apportioned to a part of a year of assessment or accounting period, the apportionment shall be made by reference to the number of months or fractions of months contained in that part, and in the remainder, of that year or period. | ||
(8) In this section— | ||
(a) “business” means any trade or business or any undertaking of a similar character the profits whereof are profits to which Part V of the Finance Act, 1920 , applies, and | ||
(b) any reference to an allowance made for any year of assessment does not include a reference to any amount carried forward from any previous year of assessment. | ||
(9) In relation to any accounting period ending on or after the commencement of this Part of this Act— | ||
(a) paragraph (e) of the proviso to subsection (2) of section 53 of the Finance Act, 1920 , shall cease to have effect in so far as it is inconsistent with the provisions of this section, and | ||
(b) section 27 of Finance Act, 1956 , and section 20 of Finance (Miscellaneous Provisions) Act, 1956 , shall cease to have effect as respects expenditure incurred after such commencement. |