Finance Act, 1994
|
Capital allowances in relation to construction or refurbishment of certain commercial premises. |
41.—(1) In this section “qualifying premises” means a building or structure the site of which is wholly within a designated area, or which fronts onto a designated street, and which— | |
(a) apart from this section, is not an industrial building or structure within the meaning of section 255 of the Income Tax Act, 1967 , and | ||
(b) (i) is in use for the purposes of a trade or profession, or | ||
(ii) whether or not it is so used, is let on bona fide commercial terms for such consideration as might be expected to be paid in a letting of the building or structure which was negotiated on an arm's length basis, | ||
but does not include any part of a building or structure in use as, or as part of, a dwelling-house or an office: | ||
Provided that where part of a building or structure is a qualifying premises and part thereof (hereafter in this proviso referred to as “the second-mentioned part”) is not a qualifying premises and— | ||
(I) the second-mentioned part is in use as, or as part of, an office, and | ||
(II) the capital expenditure which has been incurred in the qualifying period on the construction or refurbishment of the second-mentioned part is not more than one-tenth of the total capital expenditure which has been incurred in that period on the construction or refurbishment of the building or structure, then the building or structure and every part thereof shall be treated as a qualifying premises. | ||
(2) Subject to subsection (3) and the modifications provided for in subsections (4) to (6), all the provisions of the Tax Acts (other than section 40 ) relating to the making of allowances or charges in respect of capital expenditure which is incurred on the construction or refurbishment of an industrial building or structure shall, notwithstanding anything to the contrary therein, apply— | ||
(a) as if a qualifying premises were, at all times at which it is a qualifying premises, a building or structure in respect of which an allowance falls to be made for the purposes of income tax or corporation tax, as the case may be, under Chapter II of Part XV, or Chapter I of Part XVI, of the Income Tax Act, 1967 , by reason of its use for a purpose specified in section 255 (1) (a) of that Act, and | ||
(b) where any activity carried on in the qualifying premises is not a trade, as if it were a trade: | ||
Provided that an allowance shall be given by reason of this subsection in respect of any capital expenditure which is incurred on the construction or refurbishment of a qualifying premises only in so far as that expenditure is incurred in the qualifying period. | ||
(3) In the case of a qualifying premises which fronts onto a designated street, subsection (2) shall apply only in relation to capital expenditure which is incurred in the qualifying period on the refurbishment of the qualifying premises and only if the following conditions are also satisfied, that is to say— | ||
(a) the qualifying premises are comprised in an existing building or structure (hereafter in this section referred to as “the existing building”) as on the 1st day of August, 1994, which fronts onto the designated street, and | ||
(b) apart from the capital expenditure which is incurred in the qualifying period on the refurbishment of the qualifying premises, expenditure is incurred on the existing building which is— | ||
(i) conversion expenditure within the meaning of section 44 , or | ||
(ii) relevant expenditure within the meaning of section 45 , or | ||
(iii) qualifying expenditure within the meaning of section 46 (being qualifying expenditure on refurbishment within the meaning of that section), | ||
and in respect of which a deduction has been given, or would, on due claim being made, be given, under section 44 , 45 or 46 , as the case may be: | ||
Provided that subsection (2) shall not apply in relation to so much (if any) of the capital expenditure incurred in the qualifying period on the refurbishment of the qualifying premises as exceeds the amount of the deduction, or the aggregate amount of the deductions, which has been given, or which would, on due claim being made, be given, under section 44 , 45 or 46 , as the case may be, in respect of the said conversion expenditure, the said relevant expenditure or, as the case may be, the said qualifying expenditure. | ||
(4) For the purposes of the application by subsection (2) of section 254 of the Income Tax Act, 1967 , and section 25 of the Finance Act, 1978 , in relation to capital expenditure which is incurred in the qualifying period on the construction or refurbishment of a qualifying premises— | ||
(a) the said section 254 shall, notwithstanding section 22 of the Finance Act, 1991 , have effect— | ||
(i) as if, in paragraph (a) of subsection (2A), the reference to “the 1st day of April, 1991” (as provided for in section 50 of the Finance Act, 1988 ) were a reference to “the 1st day of August, 1997”, | ||
(ii) as if paragraph (aa) (inserted by section 74 of the Finance Act, 1990 ) of subsection (2A) were deleted, and | ||
(iii) as if subsection (2B) (inserted by the said section 74) were deleted, | ||
and | ||
(b) the said section 25 shall have effect— | ||
(i) as if paragraph (b) (as amended by section 76 of the Finance Act, 1990 ) of subsection (2) (inserted by section 48 of the Finance Act, 1988 ) were deleted, and | ||
(ii) as if subsection (2A) (inserted by the said section 76) were deleted. | ||
(5) Notwithstanding section 265 (1) of the Income Tax Act, 1967 , no balancing charge shall be made in relation to a qualifying premises by reason of any of the events specified in the said section 265 (1) which occurs— | ||
(a) more than 13 years after the qualifying premises were first used, or | ||
(b) in a case where section 26 of the Finance Act, 1991 , applies and has effect, more than 13 years after the capital expenditure on refurbishment of the qualifying premises was incurred. | ||
(6) (a) Notwithstanding subsections (2) to (5), any allowance or charge which, apart from this subsection, would fall to be made by reason of subsection (2) in respect of capital expenditure which is incurred on the construction or refurbishment of a qualifying premises shall be reduced to one-half of the amount which, apart from this subsection, would be the amount of that allowance or charge. | ||
(b) For the purposes of paragraph (a) the amount of an allowance or charge falling to be reduced to one-half thereof shall be computed as if— | ||
(i) this subsection had not been enacted, and | ||
(ii) effect had been given to all allowances taken into account in so computing that amount. | ||
(c) Nothing in this subsection shall affect the operation of section 265 (5) of the Income Tax Act, 1967 . | ||
(7) For the purposes only of determining, in relation to a claim for an allowance by virtue of subsection (2), whether and to what extent capital expenditure incurred on the construction or refurbishment of a qualifying premises is incurred or not incurred in the qualifying period, only such an amount of that capital expenditure as is properly attributable to work on the construction or refurbishment of the premises which was actually carried out during the qualifying period shall (notwithstanding any other provision of the Tax Acts as to the time when any capital expenditure is, or is to be treated as, incurred) be treated as having been incurred in that period. |