Finance Act, 1987
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Chapter V Corporation Tax | ||
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Relief in relation to income from qualifying shipping trade. |
28.—(1) In this section— | |
“qualifying ship” means a sea-going vessel which— | ||
(a) is owned to the extent of not less than 51 per cent. by a person or persons ordinarily resident in the State, | ||
(b) is registered in the State under Part II of the Mercantile Marine Act, 1955 , | ||
(c) is of not less than 100 tons gross tonnage, and | ||
(d) is self-propelled, | ||
but notwithstanding anything in paragraphs (a), (b), (c) or (d) of this definition does not include— | ||
(i) a fishing vessel, | ||
(ii) a tug, | ||
(iii) a vessel (including a dredger) used primarily as a floating platform for working machinery or as a diving platform, | ||
(iv) a vessel used for the purposes of transporting supplies or personnel to, or providing services in respect of, a mobile or fixed rig, platform, vessel or installation of any kind at sea, and | ||
(v) any other vessel of a type which is not normally used for the purposes of qualifying shipping activities; | ||
“qualifying shipping activities” means activities carried on by a company in the course of a trade and which consist of— | ||
(a) the use of a qualifying ship for the purpose of carrying by sea passengers or cargo for reward, | ||
(b) the provision, on board the qualifying ship, of services ancillary to the said use of the qualifying ship, | ||
(c) the granting of rights by virtue of which another person provides, or will provide, the said services, on board the said qualifying ship, and | ||
(d) the letting on charter of a qualifying ship for use for the said purposes where the operation of the ship, and the crew of the ship, remain under the direction and control of the company; | ||
“qualifying shipping trade” means a trade, the income from which is within the charge to corporation tax, carried on in the relevant period, which consists solely of the carrying on of qualifying shipping activities or, in the case of a trade consisting partly of the carrying on of such activities and partly of the carrying on of other activities, that part of the trade consisting solely of the carrying on of qualifying shipping activities and which is treated, by virtue of subsection (2), as a separate trade; | ||
“the relevant period” means the period from the 1st day of January, 1987, to the 31st day of December, 2000; | ||
“specified capital allowances” means capital allowances in respect of— | ||
(a) expenditure incurred by any person, in the relevant period, on the provision of a qualifying ship which is in use in, or is intended to be used in, a qualifying shipping trade, or | ||
(b) the diminished value by reason of wear and tear during the relevant period of a qualifying ship in use for the purposes of a qualifying shipping trade, | ||
and any such capital allowances shall be specified capital allowances notwithstanding that they are not treated as trading expenses of the qualifying shipping trade. | ||
(2) Where, during the relevant period, a company carries on, as part of a trade, qualifying shipping activities, those activities shall be treated for all the purposes of the Tax Acts, other than any provisions of those Acts relating to the commencement or cessation of a trade, as a separate trade, distinct from all other activities carried on by the company as part of the trade, and any necessary apportionment shall be made of receipts or expenses: | ||
Provided that this subsection shall not apply in relation to a claim by the company for the set off, under section 16 (1) of the Corporation Tax Act, 1976 — | ||
(a) against income arising during the relevant period, of a loss incurred before the commencement of the relevant period, and | ||
(b) against income arising after the end of the relevant period, of a loss incurred during the relevant period. | ||
(3) Section 39 of the Finance Act, 1980 , is hereby amended, as respects a company carrying on a qualifying shipping trade in any accounting period or part of an accounting period of that company falling within the relevant period, by the insertion after subsection (1CC) (inserted by the Finance Act, 1984 ) of the following subsection: | ||
“(1CC1) (a) In this subsection ‘qualifying shipping activities’ and ‘qualifying shipping trade’ have, respectively, the same meanings as in section 28 of the Finance Act, 1987. | ||
(b) The following provisions shall apply, for the purposes of relief under this Chapter, in relation to a company carrying on a qualifying shipping trade: | ||
(i) qualifying shipping activities carried on in the course of the qualifying shipping trade shall be regarded as the manufacture within the State of goods, | ||
(ii) any amount receivable from the carrying on of the said activities shall be regarded as an amount receivable from the sale of goods, and | ||
(iii) subsection (1D) shall have effect as respects the company in relation to a claim by it for relief from tax by virtue of this subsection as it has effect as respects a company in relation to a claim by it for relief from tax by virtue of subsection (1B) or (1C).”. | ||
(4) Notwithstanding any other provision of the Tax Acts, for the purposes of granting relief from tax (and in this subsection “tax” shall mean income tax or corporation tax, as the case may be) in respect of any income or profits arising in the relevant period, or for the purposes of determining the amount of such income or profits which is chargeable to tax— | ||
(a) specified capital allowances shall be allowed only— | ||
(i) in computing the income from a qualifying shipping trade, or | ||
(ii) in computing or charging to tax any income arising from the letting on charter of the qualifying ship to which the specified capital allowances refer, other than letting on charter which is a qualifying shipping activity, | ||
and shall not be allowed in computing any other income or profits or in taxing any other trade or in charging any other income to tax, | ||
(b) a loss incurred in the relevant period in a qualifying shipping trade shall not be set off— | ||
(i) against any profits under section 16 (2) of the Corporation Tax Act, 1976 , except to the extent of the amount of income from a qualifying shipping trade included in those profits, or | ||
(ii) against the total profits of a claimant company under section 116 (1) of the Corporation Tax Act, 1976 , except to the extent of the amount of income from a qualifying shipping trade included in those total profits, | ||
and | ||
(c) the letting on charter of a ship referred to at paragraph (a) (ii), in the course of a trade, shall be deemed, notwithstanding paragraph (b) of subsection (1) of section 40 of the Finance Act, 1984 , to be a trade of leasing for the purposes of that section and to be a separate trade as provided for in subsection (2) of that section. | ||
(5) A qualifying shipping trade shall not be regarded as a specified trade for the purposes of— | ||
(a) section 40 of the Finance Act, 1984 (as amended by the Finance Act, 1986 ), or | ||
(b) section 84A (inserted by the Finance Act, 1984 ) of the Corporation Tax Act, 1976 (as so amended). |